There are some directors and representative directors in Japan subsidiary without any power to make decisions on the direction of Japan. It is because that a business model on the basis of cost plus model for revenue in ISA. In this case, almost all decision and contract is decided by a parent company. We, BzTOM also have kept the company seal on our side. It means that unless there is any approval from a parent company, the director cannot use the company seal for any contract and execution. Of course, in the case of direct revenue model, it is different story.
We do not strongly recommend an employee to become a director as below reason.
1. Demerits for the parent company
Generally, bonuses and commissions paid to directors in Japan are not deductible for corporation tax purposes. long as the senior staffs are contracted as just employee not director, the amount of bonuses are included as expense in tax. In Japanese culture senior staff enjoy holding such a position as a director for doing business. However, as internal title, they can be titled like same level of directors image (i e. head of Japan, country manager, etc).
To keep internal control, there could be custody service to keep company seal off from a local client separately. As long as employees can handle the company seal easily, any agreement is possible behind the company by making fake power of attorney.
2. Demerits for the employee
A director cannot be covered under labor insurance (employment insurance and work accident insurance) which is mandatory paid for any employee in Japan
A director has to take a responsibility for the company and third part officially and a representative director has take higher proportion in responsibilities. In Japanese culture, sometime representative director should be requested of the of company or loans of bank individually. Even when company office is leased, the director is sometime requested to become a guarantor (Recently, there is insurance company to cover it instead of a representative director as well).
