A Chinese man (38) was arrested on suspicion of illegally assisting a Chinese man in “renewing his period of stay”; the man’s residence status was revoked as his application was found to be false (2025/01/16 NST Niigata Sogo TV) is summarized below.
A 38-year-old Chinese man (A) from Soka City, Saitama Prefecture, was arrested for providing false information to assist a Chinese man (B) he knew in applying for a visa renewal. The man (A) is suspected of helping the Chinese man (B), who does not actually run a company, obtain a visa renewal by falsely claiming to run a company through an Gyouseishoshi, depositing 5 million yen, which is not the capital, into the bank account of the Chinese man (B), and creating false documents. This incident came to light during an investigation into the theft crime for which the man was arrested last year, and the police are investigating the possibility of organizational involvement.
What happened
The details are unclear from the summary above and the article itself, but I think it is probably something like the following.
- B entered the country with a “Business Manager” residence status (4 months – for people who have not yet registered their company).
- A transferred 5 million yen to B’s X Bank account.
- B registered the company using a payment certificate issued by X Bank.
- Four months after entering the country, B applied for a renewal of his period of stay using a certified copy of the registry, and was granted permission for one year.
- However, either A or B was investigated by the police on a separate matter, and during the investigation it was discovered that the 5 million yen was a “dummy capital” (probably based on a history of B immediately paying the 5 million yen back to A after the company was established).
- The investigative agency contacted the Immigration Bureau, and procedures were started to revoke B’s residence status due to the false declaration.
What is Business Manager (4 months)?
In the past, foreigners who wanted to set up a company in Japan would enter the country with a “temporary visitor” status of residence, complete alien registration, and then use that place of residence to register the establishment of their company.
However, when the Alien Registration Act was abolished in 2012 and the Resident Management System was introduced, foreigners were no longer able to register the establishment of a company themselves under their previous status of residence, because only mid- to long-term residents (those staying for three months or more) were issued residence cards and had no basis for a place of residence. Therefore, as a countermeasure to this, a new four-month period of stay was added to the “business manager” status of residence.
In other words, even if the new company does not have a certified copy of the registry, it is now possible to apply for a Certificate of Eligibility for the status of residence of “Business Manager” (4 months).
The “sham funds” loophole
The case in the article turned out to be a “sham funds” the police’s investigation in a different case. When establishing a company or obtaining a loan, borrowing money from others to make it appear as if the capital is temporarily larger, and then paying it back after completing the registration or other necessary tasks, is called “sham funds”. “sham funds” is illegal.
Typically, sham funds are discovered when a bank that is asked to lend money discovers improper flows of funds, or when an investigation is launched into a separate matter, as in this case.
During the various residency examinations, it seems that they do not even check whether the capital amount listed on the certified copy of the company registry was a “sham funds” or not.
If this is the case, a foreign national can enter the country under “business manager (4 months)” status, registers using “sham funds”, and then receives permission to renew his/her period of stay, which was renewed for one year easily. It means that he/she would be able to stay in Japan legally for a total of 16 months.
Though I don’t know what activities they plan to carry out over the next 16 months, but I can’t help but feel that it is being used as a loophole in the underworld.
Summary
If there is an application for permission to renew the period of stay from “Business Manager (4 months)”, I think it is necessary to closely examine the source of the capital written in the certified copy of the registry.