Is It Safe to Purchase an Existing Company for My Business Manager Visa Instead of Establishing a New One?

Q8. A company sales agent advised me that buying an existing company is easier than establishing a new one when applying for a Business Manager Visa. Is this really a safe approach?

A8. Purchasing an existing company (hereinafter referred to as Company A) may be an option, but it comes with significant legal and financial considerations. Before proceeding, it is critical to ensure that:

• Company A has no ties to anti-social forces or organized crime groups.
• There are no legal violations, ongoing disputes, or regulatory issues.
• The ownership structure is accurate, with shares and shareholders properly registered and legitimate.
• The company carries no off-balance-sheet liabilities or contingent debts.

These are standard due diligence items in corporate mergers and acquisitions (M&A). Typically, the seller provides representations and warranties confirming the absence of such risks. However, acquiring an existing company inherently exposes you to legal and financial risks related to its past operations, tax filings, and banking relationships.

Even when comparing the time and cost savings of acquiring an existing entity versus establishing a new Kabushiki Kaisha (KK) or Godo Kaisha (GK), acquisition only makes sense if you can verify the company’s integrity and the purchase price is appropriate. Particularly for dormant companies with no business activities or assets, purchasing often provides little benefit.

Additionally, after acquisition, you will likely need to change the representative director, company address, business objectives, and capital structure. Even if the company has an existing corporate bank account, there is no guarantee that financial institutions will continue allowing its use under new ownership due to strict compliance requirements.

For these reasons, while acquisition can be a strategic option under certain conditions, thorough professional due diligence and legal guidance are essential before proceeding.