When a foreigner holding the status of residence of "Business Manager" applies for the permission for extension of period of stay, he/she should submit evidential documents showing his/her business continuity.
The Immigration Services Agency issues its own internal guidelines concerning the stability of business. The Immigration Bureau normally examines the financial statements of the business for two year period. The overall outline of flowchart on the guidelines is as follows.
Example: The end of the most recent accounting period of the business is on March 31, 2020, and a foreigner applies for the permission in July 2020. The company’s stockholders’ equity has only "Common Stock" and "Retained Earnings".
(1) Company has "Positive Gross Profit" in either 2020 or 2019. ☞ (3)
(2) Company has "Negative Gross Profit" in both 2020 and 2019. ☞ (A)
(3) Company has "Positive Retained Earnings" in 2020. ☞ OK
Company has "Negative Retained Earnings" in 2020. ☞ (4)
(4) Company has "Positive Stockholders' Equity" in 2020. ☞ (B)
Company has "Negative Stockholders' Equity" in 2020. ☞ (5)
(5) Company has "Positive Stockholders' Equity" in 2019. ☞ (C)
Company has "Negative Stockholders' Equity" in 2019. ☞ (A)
(A) If the company has "Negative Gross Profit" or "Negative Stockholders’ Equity" for 2 consecutive accounting periods, the business shall be considered "Unstable", and the permission is not given in most cases unless there is a plan to increase the capital or receive a support from other companies.
(B) Applicant needs to submit the evidential documents** such as business plan and prove that his/her business will not be the financial condition as mentioned (A) above in near future.
(C) Applicant needs to submit the report prepared by a specialist** such as the small and medium enterprise management consultants or certified public accountants. The report should prove that his/her business condition will improve and overcome the current financial condition within one year accounting period.
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