If you plan to lend money in Japan, you must carefully consider the requirements of the Money Lending Business Act (MLBA) (kashikin-gyou-hou). Under this law, lending money in Japan may not be permissible unless you are registered as a Money Lending Business Operator (kashikin-gyousha).

Consequences of Non-Compliance

Operating without the required registration is a serious offense and may result in criminal sanctions, including:
– Imprisonment for up to 10 years, and/or
– A fine of up to JPY 30 million.

Additionally, the process for obtaining registration as a Money Lending Business Operator is complex, and registered operators face numerous ongoing compliance obligations. Unless you intend to operate a formal money-lending business in Japan, seeking registration is generally impractical.

When Is Registration Required?

You must be registered as a Money Lending Business Operator if you plan to lend money continuously in Japan. This applies to cases where lending is conducted as a business activity rather than on an occasional or incidental basis.

When Is Registration Not Required?

You may not need to register as a Money Lending Business Operator in the following scenarios:

1. Occasional Loans
If the loan is extended temporarily and not as part of a continuous business, registration is typically not required. For example:
– Lending money to a client facing financial difficulty, at the request of such client and to maintain the business relationship.
– Not extending loans to other clients or on a recurring basis.
In such cases, the activity would not usually qualify as “lending money as a business.”

2. Intra-Group Loans
Loans extended within a corporate group are exempt from registration requirements, even if conducted on a continuous basis. Examples include:
– Loans to affiliates, such as a parent company, subsidiary, or a subsidiary of the parent company.
– Loans to certain joint venture in which you hold 20% or more of voting rights.

3. Employee Loans
Loans extended to employees are also exempt from registration requirements.

Disclaimer: This column intends to provide a high-level summary of the subject matter, and it does not aim to provide exhaustive information. Also, this column is for informational purposes only and does not constitute legal advice. For specific issues, we recommend consulting an expert. If you have any query, please contact us via inquiry form in this homepage.