Economy Profile of Japan

Ease of Doing Business in Japan

ease of doing business in japan

Rankings on Doing Business topics – Japan

rankings on doing business topics japan

Topic Scores

topic scores japan

Starting a Business

This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city.

To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Procedures to legally start and formally operate a company (number)

  • Preregistration (for example, name verification or reservation, notarization)

  • Registration in the economy’s largest business city

  • Postregistration (for example, social security registration, company seal)

  • Obtaining approval from spouse to start a business or to leave the home to register the company

  • Obtaining any gender specific document for company registration and operation or national identification card

    Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day (2 procedures cannot start on the same day)

  • Procedures fully completed online are recorded as ½ day

  • Procedure is considered completed once final document is received

  • No prior contact with officials

    Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • No professional fees unless services required by law or commonly used in practice

    Paid-in minimum capital (% of income per capita)

  • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation

To make the data comparable across economies, several assumptions about the business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes.

The business:

-Is a limited liability company (or its legal equivalent). If there is more than one type of limited liability company in the economy, the limited liability form most common among domestic firms is chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office.

-Operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

-Performs general industrial or commercial activities such as the production or sale to the public of goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily polluting production processes.

-Does not qualify for investment incentives or any special benefits.

-Is 100% domestically owned.

-Has five business owners, none of whom is a legal entity. One business owner holds 30% of the company shares, two owners have 20% of shares each, and two owners have 15% of shares each.

-Is managed by one local director.

-Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals.

-Has start-up capital of 10 times income per capita.

-Has an estimated turnover of at least 100 times income per capita.

-Leases the commercial plant or offices and is not a proprietor of real estate.

-Has an annual lease for the office space equivalent to one income per capita.

-Is in an office space of approximately 929 square meters (10,000 square feet).

-Has a company deed that is 10 pages long.

The owners:

-Have reached the legal age of majority and are capable of making decisions as an adult. If there is no legal age of majority, they are assumed to be 30 years old.

-Are in good health and have no criminal record.

-Are married, the marriage is monogamous and registered with the authorities.

-Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population.

Starting a Business – Tokyo

starting a business tokyo

Figure – Starting a Business in Tokyo – Score

figure starting a business in tokyo score

Figure – Starting a Business in Tokyo and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

figure starting a business in tokyo and comparator economies ranking and score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Tokyo – Procedure, Time and Cost

figure starting a business in tokyo procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Tokyo – Procedure, Time and Cost

1 Search the company name

Agency : Legal Affairs Bureau of the Ministry of Justice

Under the Japanese Company Laws, entrepreneurs may not file an application for incorporating a company if the same company name and head office address are already registered. There is no need for entrepreneurs to check the uniqueness of the company name and make the name reservation at the Legal Affairs Bureau of the Ministry of Justice. Entrepreneurs usually check if the proposed company name and head office address has been registered. This can be easily be checked through books or personal computers installed and offered for searching at the Legal Affairs Bureaus or online at http://www1.touki.or.jp/gateway.html.

Less than one day

(online procedure)

no charge

2 Make a company seal

Agency : Seal maker

A company seal is required by law: Article 20 of the Commercial Registration Act. The associated fee is JPY 10,000 for machine-carved seal or JPY 20,000 for hand-carved seal. The company seal must be registered at the Legal Affairs Bureau at the time of the incorporation under the Commercial Registration Act. An entrepreneur usually files the registration of the company seal as well as the registration of incorporation of the company with the competent Legal Affairs Bureau.

3 days JPY 10,000 – JPY 20,000

3 Register the company at the Legal Affairs Bureau of the Ministry of Justice

Agency : Legal Affairs Bureau of the Ministry of Justice

To apply for registration, the entrepreneur must submit supporting documents with the application to the Legal Affairs Bureau headquarter or any of its branch offices designated in major cities, including:

  • Articles of incorporation (signed by 5 entrepreneurs who contributed capital)

  • Application of seal registration

  • Letter of proxy (if company is registered by a lawyer or a judicial scrivener)

  • Personal seal of the executive member

  • Proof of paid-in capital (bank statement or letter from the company's representative certifying the receiving of capital contributions)

  • Proof of address

  • Confirmation of appointment of the company representative

  • Confirmation from company representative that he agrees to the appointment.

Additionally, the company’s seal must be registered at the Legal Affairs Bureau of the Ministry of Justice upon registration of the company. The Certificate of corporation seal registration costs Yen 450.

Once the filed documents are reviewed and approved, the company applies for the issuance of a company registration certificate. Normally, a judicial scrivener completes this registration procedure on behalf of the company.

By virtue of the amended Commercial Registration Regulations in force since June 2004, company registration applications can be submitted online. To do so, the user must first obtain an electronic signature or a digital certification. There are two types of digital certifications: data file and IC card. The user must purchase an IC card reader to use the IC card system.

3 days 0.7% of the capital amount or JPY 60,000, whichever is higher plus Yen 450 for the Certificate of corporation seal registration

4 File the notification of company incorporation and the opening of a payroll office and apply for the approval of blue tax returns

Agency : National Tax Agency

A notification of the company incorporation must be filed to the Tax Agency (District Tax Office) within 2 months of the incorporation date. The notification of opening a payroll office must be filed within one month of the opening of a payroll office.

As of January 2016, 13-digit "corporation identification numbers" (houjin bangou) must be indicated on (a) the notification of company incorporation, (b) notification of the opening of a payroll

office and (c) application for the approval of blue tax returns.The application for the approval of blue tax returns must be filed either within 3 months of the incorporation date, or a day prior to the end of the first fiscal year, whichever comes first.

5 File the notification of commencement of business at the local tax office

Agency : Local tax department of Tokyo Metropolitan Government

A notification of commencement of business must be provided to the relevant authorities. If the head office of the company is located within Tokyo’s 23 wards, the company must file a Notification for the Commencement of Business at the tax office of the Tokyo Metropolitan Government within 15 days of company incorporation.

1 day

no charge

If the head office of the company is located outside Tokyo’s 23 wards, the company must file a Notification of Incorporation at the tax office of the municipal government and the tax office of the

prefectural government within 1 month of company incorporation.

Applicants can submit their application either online or in person.

1 day no charge

6 File the labor insurance notifications and employment rules

Agency : Labor Standards Inspection Office

Employees are automatically provided with labor insurance as soon as they are hired. Labor insurance usually includes employment and worker's compensation insurance.

1 day

no charge

Upon recruitment, the company must file without delay the following documents at the competent Labor Standards Inspection Office:

  • Notification of the application for labor insurance within 10 days of the insurance coverage commencement date

  • Notification of the approximate insurance contributions within 50 days of the insurance coverage commencement date

  • The rules of employment (once the company hires 10 or more employees)

  • Certificate of Registered Matters (Certificate of Company Registration)

7 File the applications for health insurance and public welfare pension

Agency : Japan Pension Service

As soon as the company and its employees are covered for health insurance and public welfare pension, the company must file the following documents at the Social Insurance Office within 5 days of the business insurance coverage commencement date:

The insurance details covering Health and Employee Pension insurance

8 File the company application for employment insurance

Agency : Public Employment Security Office

The notification of the company's application for employment insurance must be filed at the Public Employment Security Office within 10 days of commencement of employment by the company.

1 day

no charge

When a new employee is recruited, he/she is automatically insured under the company's employment insurance. The company must thus file a "Notification of Acquisition of Insured Status under Employment Insurance" at the Public Employment Security Office by the 10th day of the

month immediately consecutive to that of the employee's appointment date.

Starting a Business – Osaka

starting a business tokyo

Figure – Starting a Business in Osaka – Score

figure starting a business in tokyo score

Figure – Starting a Business in Osaka and comparator economies – Ranking and Score

DB 2020 Starting a Business Score

figure starting a business in tokyo and comparator economies ranking and score

Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators.

Figure – Starting a Business in Osaka – Procedure, Time and Cost

figure starting a business in tokyo procedure time and cost

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Details – Starting a Business in Osaka – Procedure, Time and Cost

1 Search the company name

Agency : Legal Affairs Bureau of the Ministry of Justice

Under the Japanese Company Laws, entrepreneurs may not file an application for incorporating a company if the same company name and head office address are already registered. There is no need for entrepreneurs to check the uniqueness of the company name and make the name reservation at the Legal Affairs Bureau of the Ministry of Justice. Entrepreneurs usually check if the proposed company name and head office address has been registered. This can be easily be checked through books or personal computers installed and offered for searching at the Legal Affairs Bureaus or online at http://www1.touki.or.jp/gateway.html.

Less than one day

(online procedure)

no charge

2 Make a company seal

Agency : Seal maker

A company seal is required by law: Article 20 of the Commercial Registration Act. The associated fee is JPY 10,000 for machine-carved seal or JPY 20,000 for hand-carved seal. The company seal must be registered at the Legal Affairs Bureau at the time of the incorporation under the Commercial Registration Act. An entrepreneur usually files the registration of the company seal as well as the registration of incorporation of the company with the competent Legal Affairs Bureau.

3 days JPY 10,000 – JPY 20,000

3 Register the company at the Legal Affairs Bureau of the Ministry of Justice

Agency : Legal Affairs Bureau of the Ministry of Justice

To apply for registration, the entrepreneur must submit several supporting documents with the application to the Legal Affairs Bureau headquarter or any of its branch offices designated in major cities, including:

  • Articles of incorporation

  • Application of seal registration

  • Letter of proxy (if company is registered by a lawyer or a judicial scrivener)

  • Personal seal of the director or a lawyer registering the company

  • Proof of paid-in capital (bank statement or letter from the company's representative certifying the receiving of capital contributions)

  • Proof of address

  • Confirmation of appointment of the company representative

  • Confirmation from company representative that he agrees to the appointment.

Additionally, the company’s seal must be registered at the Legal Affairs Bureau of the Ministry of Justice upon registration of the company. Certificate of corporation seal registration costs Yen 450.

Once the filed documents are reviewed and approved, the company applies for the issuance of a company registration certificate. Normally, a judicial scrivener completes this registration procedure on behalf of the company.

By virtue of the amended Commercial Registration Regulations in force since June 2004, company registration applications can be submitted online. To do so, the user must first obtain an electronic signature or a digital certification. There are two types of digital certifications: data file and IC card. The user must purchase an IC card reader to use the IC card system.

2 days 0.7% of the capital amount or JPY 60,000, whichever is higher plus Yen 450 for the Certificate of corporation seal registration

4 File the notification of company incorporation and the opening of a payroll office and apply for the approval of blue tax returns

Agency : National Tax Agency

The notification of the company incorporation must be filed within 2 months of the incorporation date.

The notification of opening a payroll office must be filed within one month of the opening of a payroll office.

The application for the approval of blue tax returns must be filed either within 3 months of the incorporation date, or a day prior to the end of the first fiscal year, whichever comes first.

Applicants can submit their application either online or in person.

1 day no charge

5 File the notification of commencement of business at the local tax office

Agency : Local tax department

The company must file a Notification of Incorporation at the tax office of the municipal government and the tax office of the prefectural government within 2 months of company incorporation.

1 day no charge

6 File the labor insurance notifications and employment rules

Agency : Labor Standards Inspection Office

Employees are automatically provided with labor insurance as soon as they are hired. Labor insurance usually includes employment and worker's compensation insurance.

1 day

no charge

Upon recruitment, the company must file without delay the following documents at the competent Labor Standards Inspection Office:

  • Notification of the application for labor insurance within 10 days of the insurance coverage commencement date

  • Notification of the approximate insurance contributions within 50 days of the insurance coverage commencement date

  • The rules of employment (once the company hires 10 or more employees)

  • Certificate of Registered Matters (Certificate of Company Registration)

7 File the applications for health insurance and public welfare pension

Agency : Japan Pension Service

As soon as the company and its employees are covered for health insurance and public welfare pension, the company must file the following documents at the Social Insurance Office within 5 days of the business insurance coverage commencement date:

  • Notification of the acquisition of insured status

  • The insurance details covering Health and Employee Pension insurance

    8

    File the company application for employment insurance

    Agency : Public Employment Security Office

    The notification of the company's application for employment insurance must be filed at the Public Employment Security Office within 10 days of commencement of employment by the company.

    1 day

    no charge

    When a new employee is recruited, he/she is automatically insured under the company's employment insurance. The company must thus file a "Notification of Acquisition of Insured Status under Employment Insurance" at the Public Employment Security Office by the 10th day of the

    month immediately consecutive to that of the employee's appointment date.

  • Certificate of Registered Matters (Certificate of Company Registration)

1 day no charge

Takes place simultaneously with previous procedure.

Dealing with Construction Permits

This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information

What the indicators measure

Procedures to legally build a warehouse (number)

  • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates

  • Submitting all required notifications and receiving all necessary inspections

  • Obtaining utility connections for water and sewerage

  • Registering and selling the warehouse after its completion

    Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

    Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

    Building quality control index (0-15)

  • Quality of building regulations (0-2)

  • Quality control before construction (0-1)

  • Quality control during construction (0-3)

  • Quality control after construction (0-3)

  • Liability and insurance regimes (0-2)

  • Professional certifications (0-4)

To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used.

The construction company (BuildCo):

  • Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or topographical experts.

  • Owns the land on which the warehouse will be built and will sell the warehouse upon its completion.

    The warehouse:

  • Will be used for general storage activities, such as storage of books or stationery.

  • Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita.

  • Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further documentation or getting prior approvals from external agencies, these are counted as procedures.

  • Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements).

    The water and sewerage connections:

  • Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built.

  • Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 gallons) a day.

  • Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection.

image

Standardized Warehouse

Estimated value of warehouse

JPY 225,125,001.20

Dealing with Construction Permits – Tokyo

image

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Procedures (number)

12

12.7

None in 2018/19

City Covered Tokyo

image

image

Cost (% of warehouse value)

0.5

1.5

None in 2018/19

Time (days) 108 152.3 None in 2018/19

image

Figure – Dealing with Construction Permits in Tokyo – Score

Building quality control index (0-15) 13.0 11.6 15.0 (6 Economies)

image

image

72.0

image

76.4

image

97.4

image

86.7

Procedures

Time

Cost

Building quality control index

Figure – Dealing with Construction Permits in Tokyo and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

image

0 100

89.9: Malaysia (Rank: 2)

86.5: New Zealand (Rank: 7)

84.4: Korea, Rep. (Rank: 12)

83.1: Tokyo

83.0: Osaka

80.0: United States (Rank: 24)

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Figure – Dealing with Construction Permits in Tokyo – Procedure, Time and Cost

100

Time (days) Cost (% of warehouse value)

image

image

image

0.25

Cost (% of warehouse value)

0.2

80

Time (days)

0.15

60

40 0.1

20 0.05

0

1 * 2

0

3 * 4 5 6 7 8 9 10 11 12

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Dealing with Construction Permits in Tokyo and comparator economies – Measure of Quality

image

15.0

13.0

12.0

13.0

12.4

13.0

11.6

16

14

Index score

12

10

8

6

4

2

0

Tokyo Korea,

Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

Details – Dealing with Construction Permits in Tokyo – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. Obtain consent of neighborhood

    Agency : Local Authority

    BuildCo must post a sign board with specific information about the planned construction on the plot. BuildCo must obtain the non objection of neighbors and cannot begin construction until 30 days have elapsed.

    image

  2. Hold initial consultation with local authority

Agency : Local Authority

BuildCo must obtain clearance at the initial consultation phase with as many as 14 different departments at the prefecture level. The consultations are mandated by the the Building Standards Law of Japan (Law No.201 from May 24th 1950) and vary according to the prefecture.

30 days no charge

24 days no charge

image

3 Obtain building permit from Japan Building Center

Agency : Japan Building Center

After the initial consultation with the local authority, BuildCo must submit a building permit application. A building official from the Japan Building Center shall, upon receiving an application, examine the plan for the building concerned as to whether it conforms to the provisions related to building regulations.

Normally, architects submit the application on behalf of their clients. The Fire Office is also involved in the permit examination process. The application must be amended when any changes are made after the building permit is obtained.

image

4 Request and obtain workmen’s compensation insurance proof from Labor Control Office

Agency : Labor Control Office

BuildCo must submit the Labor insurance proof 10 days prior to the first day of construction. BuildCo must also submit the estimated insurance premiums declaration to the Labor Control Office within 20 days after the construction work starts and must pay the labor insurance premiums.

No cost is incurred for obtaining confirmation.Worker compensation insurance is valid for a year, and it must be extended every year between April 1 and May 20. The Labor insurance for the construction industry is 0.2185% of the construction cost.

21 days JPY 225,000

2 days no charge

image

  1. Purchase and post statutory construction notice sign board

    Agency : Local Authority

    The construction notice sign board should include the following information:

    • Construction company registry certificate number

    • Proof of worker compensation insurance

    • Building permit number

    • Name of client, designer, contractor, project name, address, the person in charge, etc.

      1 day JPY 50,000

  2. Submit construction method plan to local authority and obtain approval

    Agency : Local Authority

    The construction method plan is submitted to the local authority with the project drawings along with an application form. The local authorities have seven days to object to the final construction method plan. A water and sewerage request is included in the submission.

    1 day no charge

    image

  3. Submit project safety and health and resources recycling plan to local authority and obtain approval

    Agency : Local Authority

    According to the Building Recycling Law, BuildCo must submit the project safety, health and resources recycling plan to the local authorities seven days before the first day of construction.

    1 day no charge

    image

  4. Conduct intermediate inspection and submit inspection report to the Japan Building Center

    Agency : Japan Building Center

    The in-house engineer responsible for building quality control must inspect structural conditions and conduct new building position surveys when the construction is half-completed. The inspection report must be submitted to the Japan Building Center. Larger buildings require the Japan Building Center and the Fire Department to conduct an on site inspection.

    2 days JPY 211,000

  5. Receive connection to water and sewage services

Agency : Tokyo Water Company

image

10

Request and receive final inspection from Japan Building Center

Agency : Japan Building Center

A final inspection must be conducted by the Japan Building Center. If there are any outstanding issues pointed out by inspectors, remedial work must be completed and the building re-inspected before the completion certificate is issued.

1 day

JPY 220,000

The installation cost is included in water and sewerage charges.

21 days no charge

11 Obtain completion certificate

Agency : Japan Building Center

image

12

Register the building with the Land and Building Registry

Agency : Land and Building Registry

The building registration involves two steps. First, the description of the building should be registered (usually through a notary public). This part cannot be done by BuildCo or its lawyer. No formal registration cost is required.

12 days

JPY 450,250

Second, proof of building ownership should be registered. It takes about 10 to 14 days for the registration to be completed. The cost of proof of building ownership registration varies depending

on the value of the building (0.2% of the building’s taxable value).

The completion certificate is required to start occupying and using the building.

18 days no charge

image

Takes place simultaneously with previous procedure.

image

Details – Dealing with Construction Permits in Tokyo – Measure of Quality

image

Answer

Score

Building quality control index (0-15)

13.0

image

How accessible are building laws and regulations in your economy? (0-1)

Available online; Free 1.0

of charge.

Quality of building regulations index (0-2) 2.0

Which requirements for obtaining a building permit are clearly specified in the building regulations or on any accessible website, brochure or pamphlet? (0-1)

List of required documents; Fees to be paid; Required preapprovals.

1.0

image

Quality control before construction index (0-1)

1.0

image

Quality control during construction index (0-3)

2.0

Which third-party entities are required by law to verify that the building plans are in compliance with existing building regulations? (0-1)

Licensed architect; Licensed engineer.

1.0

What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by

image

Do legally mandated inspections occur in practice during construction? (0-1)

Mandatory inspections are always done in

practice.

1.0

external engineer or firm; Inspections at various phases.

1.0

image

Is there a final inspection required by law to verify that the building was built in accordance with the approved

plans and regulations? (0-2)

Yes, final inspection is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for

final inspection.

2.0

Quality control after construction index (0-3)3.0

image

Liability and insurance regimes index (0-2)

1.0

Do legally mandated final inspections occur in practice? (0-1) Final inspection always occurs in practice.

1.0

Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1)

Architect or engineer; Construction company; Owner or investor.

1.0

image

Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or

problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1)

No party is required by law to obtain

insurance .

0.0

image

What are the qualification requirements for the professional responsible for verifying that the architectural plans

or drawings are in compliance with existing building regulations? (0-2)

Minimum number of 2.0

years of experience; University degree in architecture or engineering; Being a registered architect or engineer.

Professional certifications index (0-4) 4.0

image

What are the qualification requirements for the professional who supervises the construction on the ground? (0-

2)

Minimum number of years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing

a certification exam.

2.0

image

Standardized Warehouse

Estimated value of warehouse

JPY 225,125,001.20

Dealing with Construction Permits – Osaka

image

Indicator

Osaka

OECD high income

Best Regulatory Performance

Procedures (number)

12

12.7

None in 2018/19

City Covered Osaka

image

image

Cost (% of warehouse value)

0.5

1.5

None in 2018/19

Time (days) 109 152.3 None in 2018/19

image

Figure – Dealing with Construction Permits in Osaka – Score

Building quality control index (0-15) 13.0 11.6 15.0 (6 Economies)

image

image

72.0

image

76.1

image

97.4

image

86.7

Procedures

Time

Cost

Building quality control index

Figure – Dealing with Construction Permits in Osaka and comparator economies – Ranking and Score

DB 2020 Dealing with Construction Permits Score

image

0 100

89.9: Malaysia (Rank: 2)

86.5: New Zealand (Rank: 7)

84.4: Korea, Rep. (Rank: 12)

83.1: Tokyo

83.0: Osaka

80.0: United States (Rank: 24)

Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators.

Figure – Dealing with Construction Permits in Osaka – Procedure, Time and Cost

100

Time (days) Cost (% of warehouse value)

image

image

image

0.25

Cost (% of warehouse value)

0.2

80

Time (days)

0.15

60

0.1

40

20 0.05

0

1 * 2

0

3 * 4 5 6 7 8 9 10 11 12

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Dealing with Construction Permits in Osaka and comparator economies – Measure of Quality

image

15.0

13.0

12.0

13.0

12.4

13.0

11.6

16

14

Index score

12

10

8

6

4

2

0

Osaka Korea,

Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

Details – Dealing with Construction Permits in Osaka – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. Obtain consent of neighborhood

    Agency : Local Authority

    BuildCo must post a sign board with specific information about the planned construction on the plot. BuildCo must obtain the non objection of neighbors and cannot begin construction until 30 days have elapsed.

    image

  2. Hold initial consultation with local authority

Agency : Local Authority

image

3

Obtain building permit from Japan Building Center

Agency : Japan Building Center

After the initial consultation with the local authority, BuildCo must submit a building permit application. A building official from the Japan Building Center shall, upon receiving an application, examine the plan for the building concerned as to whether it conforms to the provisions related to building regulations.

22 days

JPY 225,000

Normally, architects submit the application on behalf of their clients. The Fire Office is also involved in the permit examination process. The application must be amended when any changes are made after the building permit is obtained. In addition, a change permit must be obtained prior

to final inspection by local authorities.

BuildCo must obtain clearance at the initial consultation phase with as many as 14 different departments at the prefecture level. The consultations are mandated by the the Building Standards Law of Japan (Law No.201 from May 24th 1950) and vary according to the prefecture.

30 days no charge

24 days no charge

image

4 Request and obtain workmen’s compensation insurance proof from Labor Control Office

Agency : Labor Control Office

BuildCo must submit the Labor insurance proof 10 days prior to the first day of construction. BuildCo must also submit the estimated insurance premiums declaration to the Labor Control Office within 20 days after the construction work starts and must pay the labor insurance premiums.

No cost is incurred for obtaining confirmation.Worker compensation insurance is valid for a year, and it must be extended every year between April 1 and May 20. The Labor insurance for the construction industry is 0.2185% of the construction cost.

2 days no charge

image

5 Purchase and post statutory construction notice sign board

Agency : Local Authority

The construction notice sign board should include the following information:

  • Construction company registry certificate number

  • Proof of worker compensation insurance

  • Building permit number

  • Name of client, designer, contractor, project name, address, the person in charge, etc.

1 day JPY 50,000

6 Submit construction method plan to local authority

Agency : Local Authority

The construction method plan is submitted to the local authority with the project drawings along with an application form. The local authorities have seven days to object to the final construction method plan. A water and sewerage request is included in the submission.

1 day no charge

image

7 Submit project safety and health and resources recycling plan to local authority

Agency : Local Authority

According to the Building Recycling Law, BuildCo must submit the project safety, health and resources recycling plan to the local authorities seven days before the first day of construction.

1 day no charge

8 Conduct intermediate inspection and submit inspection report to the Japan Building Center

Agency : Japan Building Center

image

The in-house engineer responsible for building quality control must inspect structural conditions and conduct new building position surveys when the construction is half-completed. The inspection report must be submitted to the Japan Building Center. Larger buildings require the Japan Building Center and the Fire Department to conduct an on site inspection.

2 days JPY 211,000

9 Request and receive connection to water and sewage services

Agency : Osaka City Water

The installation cost is included in water and sewerage charges.

21 days

no charge

10 Request and receive final inspection from Japan Building Center

Agency : Japan Building Center

1 day

JPY 220,000

A final inspection must be conducted by the Japan Building Center. If there are any outstanding

issues pointed out by inspectors, remedial work must be completed and the building re-inspected

before the completion certificate is issued.

11 Obtain completion certificate

Agency : Japan Building Center

18 days

no charge

The completion certificate is required to start occupying and using the building.

12 Register the building with the Land and Building Registry

Agency : Land and Building Registry

12 days

JPY 450,250

The building registration involves two steps. First, the description of the building should be

registered (usually through a notary public). This part cannot be done by BuildCo or its lawyer. No

formal registration cost is required.

Second, proof of building ownership should be registered. It takes about 10 to 14 days for the

registration to be completed. The cost of proof of building ownership registration varies depending

on the value of the building (0.2% of the building’s taxable value).

image

Takes place simultaneously with previous procedure.

image

Details – Dealing with Construction Permits in Osaka – Measure of Quality

image

Answer

Score

Building quality control index (0-15)

13.0

image

How accessible are building laws and regulations in your economy? (0-1)

Available online; Free 1.0

of charge.

Quality of building regulations index (0-2) 2.0

Which requirements for obtaining a building permit are clearly specified in the building regulations or on any accessible website, brochure or pamphlet? (0-1)

List of required documents; Fees to be paid; Required preapprovals.

1.0

image

Quality control before construction index (0-1)

1.0

image

Quality control during construction index (0-3)

2.0

Which third-party entities are required by law to verify that the building plans are in compliance with existing building regulations? (0-1)

Licensed architect; Licensed engineer.

1.0

What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections at various

image

Do legally mandated inspections occur in practice during construction? (0-1)

Mandatory inspections are always done in

practice.

1.0

phases.

1.0

image

Is there a final inspection required by law to verify that the building was built in accordance with the approved

plans and regulations? (0-2)

Yes, final inspection is done by government agency; Yes, in-house engineer submits report for final inspection; Yes, external engineer submits report for

final inspection.

2.0

Quality control after construction index (0-3)3.0

image

Liability and insurance regimes index (0-2)

1.0

Do legally mandated final inspections occur in practice? (0-1) Final inspection always occurs in practice.

1.0

Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use (Latent Defect Liability or Decennial Liability)? (0-1)

Architect or engineer; Construction company; Owner or investor.

1.0

image

Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or

problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1)

No party is required by law to obtain

insurance .

0.0

image

What are the qualification requirements for the professional responsible for verifying that the architectural plans

or drawings are in compliance with existing building regulations? (0-2)

Minimum number of 2.0

years of experience; University degree in architecture or engineering; Being a registered architect or engineer.

Professional certifications index (0-4) 4.0

image

What are the qualification requirements for the professional who supervises the construction on the ground? (0-

2)

Minimum number of years of experience; University degree in engineering, construction or construction management; Being a registered architect or engineer; Passing

a certification exam.

2.0

image

Getting Electricity

This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Procedures to obtain an electricity connection (number)

  • Submitting all relevant documents and obtaining all necessary clearances and permits

  • Completing all required notifications and receiving all necessary inspections

  • Obtaining external installation works and possibly purchasing material for these works

  • Concluding any necessary supply contract and obtaining final supply

    Time required to complete each procedure (calendar days)

  • Is at least 1 calendar day

  • Each procedure starts on a separate day

  • Does not include time spent gathering information

  • Reflects the time spent in practice, with little follow-up and no prior contact with officials

    Cost required to complete each procedure (% of income per capita)

  • Official costs only, no bribes

  • Value added tax excluded

    The reliability of supply and transparency of tariffs index (0-8)

  • Duration and frequency of power outages (0–3)

  • Tools to monitor power outages (0–1)

  • Tools to restore power supply (0–1)

  • Regulatory monitoring of utilities’ performance (0–1)

  • Financial deterrents limiting outages (0–1)

  • Transparency and accessibility of tariffs (0–1)

    To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used.

    The warehouse:

    • Is owned by a local entrepreneur and is used for storage of goods.

    • Is located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

    • Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway.

    • Is a new construction and is being connected to electricity for the first time.

    • Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters (10,000 square feet).

      The electricity connection:

    • Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW).

    • Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more common in the area where the warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.

    • Does not require work to install the internal wiring of the warehouse. This has already been completed up to and including the customer’s service panel or switchboard and the meter base.

      The monthly consumption:

    • It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh.

    • If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier.

    • Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used.

    Price of electricity (cents per kilowatt-hour)*

  • Price based on monthly bill for commercial warehouse in case study

*Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity.

image

Standardized Connection

Name of utility Tokyo Electric Power Company (TEPCO) Power Grid, Inc.

Getting Electricity – Tokyo

Price of electricity (US cents per kWh)

23.7

City Covered

Tokyo

image

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Procedures (number)

2

4.4

3 (28 Economies)

Time (days)

104

74.8

18 (3 Economies)

Cost (% of income per capita)

0.0

61.0

0.0 (3 Economies)

Reliability of supply and transparency of tariff index (0-8)

8

7.4

8 (26 Economies)

Figure – Getting Electricity in Tokyo – Score

100.0

62.6

100.0

100.0

image

image

Procedures

image

Time

image

Cost

Reliability of supply and transparency of tariff index

Figure – Getting Electricity in Tokyo and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

image

0 100

99.9: Korea, Rep. (Rank: 2)

99.3: Malaysia (Rank: 4)

97.8: Osaka

90.7: Tokyo

84.0: New Zealand (Rank: 48)

82.2: United States (Rank: 64)

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Tokyo – Procedure, Time and Cost

100

Time (days) Cost (% of income per capita)

image

image

image

1.2

Cost (% of income per capita)

1

80

Time (days)

0.8

60

0.6

40

0.4

20 0.2

0 0

1 2

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures

reflected here, see the summary below.

Figure – Getting Electricity in Tokyo and comparator economies – Measure of Quality

image

8

8

8

8

7.4

7

7

8.2

8

Index score

7.8

7.6

7.4

7.2

7

6.8

6.6

6.4

Tokyo Korea,

Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

Details – Getting Electricity in Tokyo – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

1 Submit application to TEPCO Power Grid, Inc. and await external connection works

Agency : TEPCO Power Grid, Inc.

Required documents for the application are single-line diagram, a lay-out of premise, harmonic calculation documents and application form. There is no external inspection. As there is no inspection of the internal wiring, TEPCO Power Grid, Inc. is asking the customer for the necessary information regarding the licensed electrician who did the internal wiring. Japanese laws require every owner/user to hire a licensed electrician to install the wiring. The information is submitted on the formatted application document and contains the name, license number and contact information of the electrician. There is no notarization needed for the documents, however the signature of the customer needs to be on the documents when applying online. The contractor building the warehouse will usually make an application for power supply and connection several months before the required date of the connection to allow TEPCO Power Grid, Inc. sufficient time to survey the proposed area in terms of electricity supply route and capacity required for the specific building. If the electricity main supply is not suitable, TEPCO Power Grid, Inc. will carry out necessary infrastructure work to provide the required utility services. There is usually no estimate prior to the determination of the actual contract start date. There is no connection fee: In case of overhead wiring, up to 1000 meters long, construction work does not require any financial responsibility by the customer.

93 calendar days JPY 0

2 Receive connection works and meter installation by TEPCO Power Grid, Inc.

Agency : TEPCO Power Grid, Inc.

With this class of customer TEPCO Power Grid, Inc. provides electricity on high-voltage (6600V) power line. On the primary side, TEPCO Power Grid, Inc. builds an aerial high-voltage service wire with some related equipments such as pole-mounted switches, and on the secondary side of the transformer (usually 200V) it installs a meter at a specified location and connects it to the internal wiring system. TEPCO Power Grid, Inc. usually executes the external wiring construction and meter installation at the same time. All the material is provided by TEPCO Power Grid, Inc.

11 calendar days JPY 0

Takes place simultaneously with previous procedure.

Details – Getting Electricity in Tokyo – Measure of Quality

Answer

Reliability of supply and transparency of tariff index (0-8)8

Total duration and frequency of outages per customer a year (0-3)3

System average interruption duration index (SAIDI)0.0

System average interruption frequency index (SAIFI)0.0

What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0

Does the distribution utility use automated tools to monitor outages? Yes

Mechanisms for monitoring outages (0-1)1

Does the distribution utility use automated tools to restore service? Yes

Mechanisms for restoring service (0-1) 1

Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes

Regulatory monitoring (0-1) 1

Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes

Financial deterrents aimed at limiting outages (0-1)1

Are effective tariffs available online? Yes

Communication of tariffs and tariff changes (0-1)1

Link to the website, if available online http://www.tepco.co.jp/ep/

image

Are customers notified of a change in tariff ahead of the billing cycle? Yes

corporate/plan_h/index- j.html

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

image

Standardized Connection

Name of utility The Kansai Electric Power Co., INC.- KEPCO

Getting Electricity – Osaka

Price of electricity (US cents per kWh)

16.7

City Covered

Osaka

image

Indicator

Osaka

OECD high income

Best Regulatory Performance

Procedures (number)

3

4.4

3 (28 Economies)

Time (days)

38

74.8

18 (3 Economies)

Cost (% of income per capita)

0.0

61.0

0.0 (3 Economies)

Reliability of supply and transparency of tariff index (0-8)

8

7.4

8 (26 Economies)

Figure – Getting Electricity in Osaka – Score

100.0

91.3

100.0

100.0

image

image

Procedures

image

Time

image

Cost

Reliability of supply and transparency of tariff index

Figure – Getting Electricity in Osaka and comparator economies – Ranking and Score

DB 2020 Getting Electricity Score

image

0 100

99.9: Korea, Rep. (Rank: 2)

99.3: Malaysia (Rank: 4)

97.8: Osaka

90.7: Tokyo

84.0: New Zealand (Rank: 48)

82.2: United States (Rank: 64)

Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity.

Figure – Getting Electricity in Osaka – Procedure, Time and Cost

image

image

image

Time (days) Cost (% of income per capita)

35

30

1.2

Cost (% of income per capita)

1

Time (days)

25 0.8

20 0.6

15

0.4

10

0.2

5

0 0

1 * 2 3

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Getting Electricity in Osaka and comparator economies – Measure of Quality

8.2

8

Index score

7.8

7.6

7.4

7.2

7

6.8

6.6

6.4

image

8

8

8

8

7.4

7

7

Osaka Korea,

Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

Details – Getting Electricity in Osaka – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. Submit application to Kepco and await external connection works

    Agency : Kepco

    The application form is submitted along with other documents including single-line diagram, a lay- out of premise, harmonic calculation documents . As there is no inspection of the internal wiring, KEPCO asks the customer for the necessary information regarding the licensed electrician who did the internal wiring. Japanese laws require every owner/user to hire a licensed electrician to install the wiring. The information is submitted on the formatted application document and contains the name, license number and contact information of the electrician. There is no notarization needed for the documents, however the signature of the customer needs to be on the documents when applying online. If the electricity main supply is not suitable, KEPCO will carry out necessary infrastructure work to provide the required utility services. There is usually no estimate prior to the determination of the actual contract start date. There is no connection fee.

    image

  2. Receive external site inspection by Kepco for preparing technical study

Agency : Kepco

The utility visits the location of the building and conducts external site inspection necessary for preparation of technical study. It is necessary that the customer is present on the plot during this inspection.

30 calendar days JPY 0

1 calendar day JPY 0

image

3 Await and receive meter installation and final connection

Agency : Kepco

With this class of customer KEPCO provides electricity on high-voltage (6600V) power line. On the primary side, KEPCO builds an aerial high-voltage service wire with some related equipment such as pole-mounted switches, and on the secondary side of the transformer (usually 200V) it installs a meter at a specified location and connects it to the internal wiring system. All the material is provided by KEPCO free of charge because all costs are included in consumption charges.

image

Takes place simultaneously with previous procedure.

8 calendar days JPY 0

Details – Getting Electricity in Osaka – Measure of Quality

image

Answer

Reliability of supply and transparency of tariff index (0-8)8

System average interruption duration index (SAIDI)0.1

Total duration and frequency of outages per customer a year (0-3)3

What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 1.0

System average interruption frequency index (SAIFI)0.1

Does the distribution utility use automated tools to monitor outages? Yes

Mechanisms for monitoring outages (0-1)1

Does the distribution utility use automated tools to restore service? Yes

Mechanisms for restoring service (0-1) 1

Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes

Regulatory monitoring (0-1) 1

Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes

Financial deterrents aimed at limiting outages (0-1)1

Are effective tariffs available online? Yes

Communication of tariffs and tariff changes (0-1)1

Link to the website, if available online http://www.kepco.co.jp/en

image

Are customers notified of a change in tariff ahead of the billing cycle? Yes

glish/ http://kepco.jp/biz http://kepco.jp/biz/oshiras e/

Note:

If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index.

If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index.

Registering Property

This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Procedures to legally transfer title on immovable property (number)

  • Preregistration procedures (for example, checking for liens, notarizing sales agreement, paying property transfer taxes)

  • Registration procedures in the economy's largest business city.

  • Postregistration procedures (for example, filling title with municipality)

    Time required to complete each procedure (calendar days)

  • Does not include time spent gathering information

  • Each procedure starts on a separate day – though procedures that can be fully completed online are an exception to this rule

  • Procedure is considered completed once final document is received

  • No prior contact with officials

    Cost required to complete each procedure (% of property value)

  • Official costs only (such as administrative fees, duties and taxes).

  • Value Added Tax, Capital Gains Tax and illicit payments are excluded

    Quality of land administration index (0-30)

  • Reliability of infrastructure index (0-8)

  • Transparency of information index (0–6)

  • Geographic coverage index (0–8)

  • Land dispute resolution index (0–8)

  • Equal access to property rights index (-2–0)

To make the data comparable across economies, several assumptions about the parties to the transaction, the property and the procedures are used.

The parties (buyer and seller):

  • Are limited liability companies (or the legal equivalent).

  • Are located in the periurban (that is, on the outskirts of the city but still within its official limits) area of the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Are 100% domestically and privately owned.

  • Perform general commercial activities.

    The property (fully owned by the seller):

  • Has a value of 50 times income per capita, which equals the sale price.

  • Is fully owned by the seller.

  • Has no mortgages attached and has been under the same ownership for the past 10 years.

  • Is registered in the land registry or cadastre, or both, and is free of title disputes.

  • Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required.

  • Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its entirety.

  • Will not be subject to renovations or additional construction following the purchase.

  • Has no trees, natural water sources, natural reserves or historical monuments of any kind.

  • Will not be used for special purposes, and no special permits, such as for residential use, industrial plants, waste storage or certain types of agricultural activities, are required.

  • Has no occupants, and no other party holds a legal interest in it.

image

Registering Property – Tokyo

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Procedures (number)

6

4.7

1 (5 Economies)

Time (days)

13

23.6

1 (2 Economies)

Cost (% of property value)

5.3

4.2

0.0 (Saudi Arabia)

Quality of the land administration index (0-30)

25.5

23.2

None in 2018/19

Figure – Registering Property in Tokyo – Score

image

58.3

image

94.3

image

64.8

image

85.0

Procedures

Time

Cost

Quality of the land administration index

Figure – Registering Property in Tokyo and comparator economies – Ranking and Score

DB 2020 Registering Property Score

image

0 100

94.6: New Zealand (Rank: 2)

79.5: Malaysia (Rank: 33)

76.9: United States (Rank: 39)

76.3: Korea, Rep. (Rank: 40)

75.6: Osaka

75.6: Tokyo

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Tokyo – Procedure, Time and Cost

image

image

image

Time (days) Cost (% of property value)

12

10

4

Cost (% of property value)

3.5

3

Time (days)

8 2.5

2

6

1.5

4

1

2 0.5

0 0

1 * 2 * 3 * 4 5 6

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Registering Property in Tokyo and comparator economies – Measure of Quality

image

25.5

27.5

26.5

26.5

25.5

23.2

17.6

30

Index score

25

20

15

10

5

0

Tokyo

Korea, Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

Details – Registering Property in Tokyo – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. The seller obtains a certificate of evaluation for fixed asset tax of the real property at a local tax office

    Agency : Tax Authority

    The owner of the property must obtain the latest certificate of evaluation for fixed asset tax of the real property before to apply for registration. Registration license tax will be calculated based on the most updated value resulting from evaluation. The certificate is obtained from the relevant local tax authority.

    image

  2. Prepare the sale agreement and obtain the stamp tax

Agency : Legal Affairs Bureau, post offices or convenience stores

It is not a legal requirement for title registration to prepare a written sales agreement. However, it is common in practice to make the agreement between the parties. The agreement is subject to the stamp tax. Taxpayers can buy stamps in various places such as post offices, Legal Affairs Bureaus and convenience stores and receive an imprint on the agreement.

1 day JPY 500; (JPY 400 for

land + JPY 100 for building (for two or more certificates of the same type of the certificate in one application, it will cost JPY 100 per certificate from the second certificate))

1 day JPY 60,000

image

3

Obtain a corporate registry certificate

Agency : Legal Affairs Bureau

The parties (as companies) obtain a corporate registry certificate issued within 3 months before the registration application. In November 2015, the Real Property Registration Order was revised. As a result, the parties can submit the corporate identification number for title registration instead of the certificate. However, it is still common to obtain the certificate for due diligence. The certificate is obtained at the Legal Affairs Bureau.

Less than one day,

online

JPY 960; (JPY 480 each

copy (Applying online and obtaining the certificate at the Legal Affairs Bureau), JPY 500 each copy (Applying online and receiving the certificate by post), JPY 600 each copy (applying and obtaining the certificate at the Legal Affairs Bureau)

Two copies needed

(480×2))

image

4 Obtain a certificate of Seller's seal impression (inkan shomei)

Agency : Legal Affairs Bureau

The seller must obtain a certificate of its seal impression to be attached to the application for registration of transfer of the title. The certificate must be issued within 3 months before the application. It can be obtained from the Legal Affairs Bureau.

Less than one day, online

JPY 780; (JPY 390 for

each copy (Applying online and obtaining the certificate at the Legal Affairs Bureau), JPY 410 for each copy (Applying online and receiving the certificate by post), JPY 450 for each copy (applying and obtaining the certificate at the Legal Affairs Bureau).

Two copies needed (390×2))

image

image

5

File an application at the Legal Affairs Bureau

Agency : Legal Affairs Bureau

An application for registration is filed at the Legal Affairs Bureau. The Legal Affairs Bureau will register the title under the name of the new owner. The parties can apply for the registration by themselves. However, it is common to retain a judicial scrivener (Shiho-Shoshi) for the application because the registration process requires legal knowledge. The registration and license tax are paid at the Legal Affairs Bureau.

9 days

JPY 3,939,687.52; (2% of

building value + 1.5% of land value evaluated for fixed asset tax (registration and license tax))

There is an 8% (from April 2014) consumption tax in Japan. Sales or leases of land are exempted from consumption tax. However, sales or leases of buildings are subject to consumption tax. In case the transaction includes the sales or lease of the building, the consumption tax is imposed only on the price of the building.

The application can be made online. However, most of the attachments necessary for the application should be submitted to the Legal Affairs Bureau by mail or in person. It takes between 7 and 10 days.

The necessary documents for the application are:

  • Information certifying the reason of registration

  • Certificate of registration of seller's title of the real property (Toukizumi kenri sho) or registration identification code (Touki shikibetsu joho) (Already in his possession)

  • Certificate of corporate registry or corporate identification numbers of the parties (if any of them is a corporation) (obtained in Procedure 3)

  • Certificate of the seller’s seal impression (obtained in Procedure 4)

  • Certificate of evaluation for fixed asset tax of the real property (obtained in Procedure 1)

  • Power of attorney of the parties (if a judicial scrivener applies for the registration on behalf of any of the parties)

6 Payment of the real property acquisition tax

Agency : Metropolitan Tax Office

This is a post-closing matter. The purchaser will receive a tax paper from the Metropolitan taxation office after the registration. The real property acquisition tax must be paid by the deadline stated on the tax paper at the tax office.

4% is the normal tax rate. Since 2006, the 3% reduced tax rate is applicable for lands and residential buildings. The reduced rate is applied from April 1, 2006, to March 31, 2021 unless the law providing such reduced rate is extended.

1 day JPY 7,879,375.04; (4 % of

building value + 3 % of land value)

image

image

Takes place simultaneously with previous procedure.

image

Details – Registering Property in Tokyo – Measure of Quality

Answer

Score

Quality of the land administration index (0-30)

25.5

Reliability of infrastructure index (0-8)

8.0

Type of land registration system in the economy:

Title Registration System

What is the institution in charge of immovable property registration?

Legal Affairs Bureau

In what format are past and newly issued land records kept at the immovable property registry of the largest business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, restrictions and the like)?

Yes

1.0

Institution in charge of the plans showing legal boundaries in the largest business city:

Legal Affairs Bureau

In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business city of the economy—in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information system)?

Yes

1.0

Is the information recorded by the immovable property registration agency and the cadastral or mapping agency kept in a single database, in different but linked databases or in separate databases?

Single database

1.0

Do the immovable property registration agency and cadastral or mapping agency use the same identification number for properties?

Yes

1.0

Transparency of information index (0–6)

4.0

Who is able to obtain information on land ownership at the agency in charge of immovable property registration in the largest business city?

Anyone who pays the official fee

1.0

Is the list of documents that are required to complete any type of property transaction made publicly available– and if so, how?

Yes, online

0.5

Link for online access:

http://www.moj.go.jp/ MINJI/minji72.html https://www.touki- kyoutaku- online.moj.go.jp/touki net/fudosan/fudosan_ 2.html

Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how?

Yes, online

0.5

Link for online access:

http://www.moj.go.jp/ MINJI/TESURYO/

http://www.nta.go.jp/t axes/shiraberu/taxan swer/inshi/7191.htm

Does the agency in charge of immovable property registration agency formally commit to deliver a legally binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard?

Yes, online

0.5

Link for online access:

http://houmukyoku.m oj.go.jp/tokyo/static/k anryoyotei.htm#RAN GE!A61

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property registration?

No

0.0

Contact information:

Are there publicly available official statistics tracking the number of transactions at the immovable property registration agency?

Yes

0.5

Number of property transfers in the largest business city in 2018:

1225973.0

Who is able to consult maps of land plots in the largest business city?

Anyone who pays the official fee

0.5

Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how?

Yes, online

0.5

Link for online access:

http://www.moj.go.jp/ MINJI/TESURYO/

http://houmukyoku.m oj.go.jp/homu/content

/000130938.pdf

Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and if so, how does it communicate the service standard?

No

0.0

Link for online access:

http://houmukyoku.m oj.go.jp/tokyo/static/k anryoyotei.htm#RAN GE!A61

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the cadastral or mapping agency?

No

0.0

Contact information:

Geographic coverage index (0–8)

8.0

Are all privately held land plots in the largest business city formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the economy formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the largest business city mapped?

Yes

2.0

Are all privately held land plots in the economy mapped?

Yes

2.0

Land dispute resolution index (0–8)

5.5

Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third parties?

Yes

1.5

Legal basis:

Article 177 of the Civil Code and Aritcle 4 of the Real Property Registration Act

Is the system of immovable property registration subject to a state or private guarantee?

No

0.0

Type of guarantee:

Legal basis:

Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry?

No

0.0

Legal basis:

Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)?

Yes

0.5

If yes, who is responsible for checking the legality of the documents?

Registrar;

Does the legal system require verification of the identity of the parties to a property transaction?

Yes

0.5

If yes, who is responsible for verifying the identity of the parties?

Registrar; Lawyer

Is there a national database to verify the accuracy of government issued identity documents?

Yes

1.0

What is the Court of first instance in charge of a case involving a standard land dispute between two local businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city?

District Court

How long does it take on average to obtain a decision from the first-instance court for such a case (without appeal)?

Between 1 and 2 years

2.0

Are there publicly available statistics on the number of land disputes at the economy level in the first instance court?

No

0.0

Number of land disputes in the economy in 2018:

Equal access to property rights index (-2–0)

0.0

Do unmarried men and unmarried women have equal ownership rights to property?

Yes

Do married men and married women have equal ownership rights to property?

Yes

0.0

image

Registering Property – Osaka

Indicator

Osaka

OECD high income

Best Regulatory Performance

Procedures (number)

6

4.7

1 (5 Economies)

Time (days)

13

23.6

1 (2 Economies)

Cost (% of property value)

5.3

4.2

0.0 (Saudi Arabia)

Quality of the land administration index (0-30)

25.5

23.2

None in 2018/19

Figure – Registering Property in Osaka – Score

image

58.3

image

94.3

image

64.8

image

85.0

Procedures

Time

Cost

Quality of the land administration index

Figure – Registering Property in Osaka and comparator economies – Ranking and Score

DB 2020 Registering Property Score

image

0 100

94.6: New Zealand (Rank: 2)

79.5: Malaysia (Rank: 33)

76.9: United States (Rank: 39)

76.3: Korea, Rep. (Rank: 40)

75.6: Osaka

75.6: Tokyo

Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators.

Figure – Registering Property in Osaka – Procedure, Time and Cost

image

image

image

Time (days) Cost (% of property value)

12

10

4

Cost (% of property value)

3.5

3

Time (days)

8 2.5

2

6

1.5

4

1

2 0.5

0 0

1 * 2 * 3 * 4 5 6

Procedures (number)

* This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure.

Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below.

Figure – Registering Property in Osaka and comparator economies – Measure of Quality

image

25.5

27.5

26.5

26.5

25.5

23.2

17.6

30

Index score

25

20

15

10

5

0

Osaka

Korea, Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

Details – Registering Property in Osaka – Procedure, Time and Cost

image

No. Procedures Time to Complete Associated Costs

  1. The seller obtains a certificate of evaluation for fixed asset tax of the real property at the Municipal Authority

    Agency : Municipal Authority

    The owner of the property must obtain the latest certificate of evaluation for fixed asset tax of the real property before to apply for registration. Registration license tax will be calculated based on the most updated value resulting from evaluation. The certificate is obtained from the Municipal Authority.

    image

  2. Prepare the sale agreement and obtain the stamp tax

Agency : Legal Affairs Bureau, post offices or convenience stores

image

3

Obtain a corporate registry certificate

Agency : Legal Affairs Bureau

The parties (as companies) obtain a corporate registry certificate issued within 3 months before the registration application. In November 2015, the Real Property Registration Order was revised. As a result, the parties can submit the corporate identification number for title registration instead of the certificate. However, it is still common to obtain the certificate for due diligence. The certificate is obtained at the Legal Affairs Bureau.

Less than one day,

online

JPY 960; (JPY 480 each

copy (Applying online and obtaining the certificate at the Legal Affairs Bureau), JPY 500 each copy (Applying online and receiving the certificate by post), JPY 600 each copy (applying and obtaining the certificate at the Legal Affairs Bureau)

Two copies needed

(480×2))

It is not a legal requirement for title registration to prepare a written sales agreement. However, it is common in practice to make the agreement between the parties. The agreement is subject to the stamp tax. Taxpayers can buy stamps in various places such as post offices, Legal Affairs Bureaus and convenience stores and receive an imprint on the agreement.

1 day JPY 600; (JPY 300 for the certificate of land + JPY 300 for the certificate of building)

1 day JPY 60,000

image

4 Obtain a certificate of Seller's seal impression (inkan shomei)

Agency : Legal Affairs Bureau

The seller must obtain a certificate of its seal impression to be attached to the application for registration of transfer of the title. The certificate must be issued within 3 months before the application. It can be obtained from the Legal Affairs Bureau.

Less than one day, online

JPY 780; (JPY 390 for

each copy (Applying online and obtaining the certificate at the Legal Affairs Bureau), JPY 410 for each copy (Applying online and receiving the certificate by post), JPY 450 for each copy (applying and obtaining the certificate at the Legal Affairs Bureau).

Two copies needed (390×2))

image

image

5

File an application at the Legal Affairs Bureau

Agency : Legal Affairs Bureau

An application for registration is filed at the Legal Affairs Bureau. The Legal Affairs Bureau will register the title under the name of the new owner. The parties can apply for the registration by themselves. However, it is common to retain a judicial scrivener (Shiho-Shoshi) for the application because the registration process requires legal knowledge. The registration and license tax are paid at the Legal Affairs Bureau.

9 days

JPY 3,939,687.52; (2% of

building value + 1.5% of land value evaluated for fixed asset tax (registration and license tax))

There is an 8% (from April 2014) consumption tax in Japan. Sales or leases of land are exempted from consumption tax. However, sales or leases of buildings are subject to consumption tax. In case the transaction includes the sales or lease of the building, the consumption tax is imposed only on the price of the building.

The application can be made online. However, most of the attachments necessary for the application should be submitted to the Legal Affairs Bureau by mail or in person. It takes between 7 and 10 days.

The necessary documents for the application are:

  • Information certifying the reason of registration

  • Certificate of registration of seller's title of the real property (Toukizumi kenri sho) or registration identification code (Touki shikibetsu joho) (Already in his possession)

  • Certificate of corporate registry or corporate identification numbers of the parties (if any of them is a corporation) (obtained in Procedure 3)

  • Certificate of the seller’s seal impression (obtained in Procedure 4)

  • Certificate of evaluation for fixed asset tax of the real property (obtained in Procedure 1)

  • Power of attorney of the parties (if a judicial scrivener applies for the registration on behalf of any of the parties)

6 Payment of the real property acquisition tax

Agency : Local Tax Office

This is a post-closing matter. The purchaser will receive a tax paper from the local taxation office after the registration. The real property acquisition tax must be paid by the deadline stated on the tax paper at the local tax office.

4% is the normal tax rate. Since 2006, the 3% reduced tax rate is applicable for lands and residential buildings. The reduced rate is applied from April 1, 2006, to March 31, 2021, unless the law providing such reduced rate is extended.

1 day JPY 7,879,375.04; (4 % of

building value + 3 % of land value)

image

image

Takes place simultaneously with previous procedure.

image

Details – Registering Property in Osaka – Measure of Quality

Answer

Score

Quality of the land administration index (0-30)

25.5

Reliability of infrastructure index (0-8)

8.0

Type of land registration system in the economy:

Title Registration System

What is the institution in charge of immovable property registration?

Legal Affairs Bureau

In what format are past and newly issued land records kept at the immovable property registry of the largest business city of the economy —in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, restrictions and the like)?

Yes

1.0

Institution in charge of the plans showing legal boundaries in the largest business city:

Legal Affairs Bureau

In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business city of the economy—in a paper format or in a computerized format (scanned or fully digital)?

Computer/Fully digital

2.0

Is there an electronic database for recording boundaries, checking plans and providing cadastral information (geographic information system)?

Yes

1.0

Is the information recorded by the immovable property registration agency and the cadastral or mapping agency kept in a single database, in different but linked databases or in separate databases?

Single database

1.0

Do the immovable property registration agency and cadastral or mapping agency use the same identification number for properties?

Yes

1.0

Transparency of information index (0–6)

4.0

Who is able to obtain information on land ownership at the agency in charge of immovable property registration in the largest business city?

Anyone who pays the official fee

1.0

Is the list of documents that are required to complete any type of property transaction made publicly available– and if so, how?

Yes, online

0.5

Link for online access:

http://www.moj.go.jp/ MINJI/minji72.html https://www.touki- kyoutaku- online.moj.go.jp/touki net/fudosan/fudosan_ 2.html

Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property registration in the largest business city made publicly available–and if so, how?

Yes, online

0.5

Link for online access:

http://houmukyoku.m oj.go.jp/homu/content

/000130945.pdf

http://www.moj.go.jp/ MINJI/TESURYO/

http://www.nta.go.jp/t axes/shiraberu/taxan swer/inshi/7191.htm

Does the agency in charge of immovable property registration agency formally commit to deliver a legally binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard?

Yes, online

0.5

Link for online access:

http://houmukyoku.m oj.go.jp/osaka/static/k anryobi.html#honkyok u

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency in charge of immovable property registration?

No

0.0

Contact information:

Are there publicly available official statistics tracking the number of transactions at the immovable property registration agency?

Yes

0.5

Number of property transfers in the largest business city in 2018:

646888.0

Who is able to consult maps of land plots in the largest business city?

Anyone who pays the official fee

0.5

Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how?

Yes, online

0.5

Link for online access:

http://www.moj.go.jp/ MINJI/TESURYO/

http://houmukyoku.m oj.go.jp/homu/content

/000130945.pdf

http://houmukyoku.m oj.go.jp/homu/content

/000130938.pdf

Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and if so, how does it communicate the service standard?

No

0.0

Link for online access:

Is there a specific and independent mechanism for filing complaints about a problem that occurred at the cadastral or mapping agency?

No

0.0

Contact information:

Geographic coverage index (0–8)

8.0

Are all privately held land plots in the largest business city formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the economy formally registered at the immovable property registry?

Yes

2.0

Are all privately held land plots in the largest business city mapped?

Yes

2.0

Are all privately held land plots in the economy mapped?

Yes

2.0

Land dispute resolution index (0–8)

5.5

Does the law require that all property sale transactions be registered at the immovable property registry to make them opposable to third parties?

Yes

1.5

Legal basis:

Article 177 of the Civil Code and Article 4 of the Real Property Registration Act

Is the system of immovable property registration subject to a state or private guarantee?

No

0.0

Type of guarantee:

Legal basis:

Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry?

No

0.0

Legal basis:

Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., checking the compliance of contracts with requirements of the law)?

Yes

0.5

If yes, who is responsible for checking the legality of the documents?

Registrar;

Does the legal system require verification of the identity of the parties to a property transaction?

Yes

0.5

If yes, who is responsible for verifying the identity of the parties?

Registrar; Lawyer

Is there a national database to verify the accuracy of government issued identity documents?

Yes

1.0

What is the Court of first instance in charge of a case involving a standard land dispute between two local businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city?

District Court

How long does it take on average to obtain a decision from the first-instance court for such a case (without appeal)?

Between 1 and 2 years

2.0

Are there publicly available statistics on the number of land disputes at the economy level in the first instance court?

No

0.0

Number of land disputes in the economy in 2018:

Equal access to property rights index (-2–0)

0.0

Do unmarried men and unmarried women have equal ownership rights to property?

Yes

Do married men and married women have equal ownership rights to property?

Yes

0.0

image

Getting Credit

This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Strength of legal rights index (0–12)

  • Rights of borrowers and lenders through collateral laws (0-10)

  • Protection of secured creditors’ rights through bankruptcy laws (0-2)

    Depth of credit information index (0–8)

  • Scope and accessibility of credit information distributed by credit bureaus and credit registries (0-8)

    Credit bureau coverage (% of adults)

  • Number of individuals and firms listed in largest credit bureau as a percentage of adult population

    Credit registry coverage (% of adults)

  • Number of individuals and firms listed in credit registry as a percentage of adult population

Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit information index measures rules and practices affecting the coverage, scope and accessibility of credit information available through a credit registry or a credit bureau. The strength of legal rights index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary secured transactions system exists. Then two case scenarios, case A and case B, are used to determine how a nonpossessory security interest is created, publicized and enforced according to the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a secured lender, BizBank.

In some economies the legal framework for secured transactions will allow only case A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral.

Several assumptions about the secured borrower (ABC) and lender (BizBank) are used:

  • ABC is a domestic limited liability company (or its legal equivalent).

  • ABC has up to 50 employees.

  • ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Both ABC and BizBank are 100% domestically owned.

The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests).

In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets.

image

Getting Credit – Tokyo

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Strength of legal rights index (0-12)

5

6.1

12 (5 Economies)

Depth of credit information index (0-8)

6

6.8

8 (53 Economies)

Credit registry coverage (% of adults)

0.0

24.4

100.0 (2 Economies)

Credit bureau coverage (% of adults)

100.0

66.7

100.0 (14 Economies)

Figure – Getting Credit in Tokyo – Score

image

55.0

Score – Getting Credit

Figure – Getting Credit in Tokyo and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

image

0 100

95.0: United States (Rank: 4)

75.0: Malaysia (Rank: 37)

65.0: Korea, Rep. (Rank: 67)

55.0: Osaka

55.0: Tokyo

100: New Zealand (Rank: 1)

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Tokyo and comparator economies

image

12

11

7

6.1

5

5

5

14

12

Index Score

10

8

6

4

2

0

Tokyo Korea,

Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

Details – Legal Rights in Tokyo

image

Strength of legal rights index (0-12) 5

image

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description

of collateral?

Yes

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy?

image

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the

original assets?

No

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral?

image

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an

electronic database indexed by debtor's name?

No

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Yes

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes

image

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Figure – Credit Information in Tokyo and comparator economies

image

8

8

8

8

6.8

6

6

9

8

Index Score

7

6

5

4

3

2

1

0

Tokyo Korea,

Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

image

Details – Credit Information in Tokyo

image

Depth of credit information index (0-8)

Credit bureau

Credit registry

Score

Are data on both firms and individuals distributed?

No

No

0

image

Are data from retailers or utility companies – in addition to data from banks and

financial institutions – distributed?

Yes

No

1

Are both positive and negative credit data distributed? Yes No 1

image

Are data on loan amounts below 1% of income per capita distributed?

Yes

No

1

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

Yes No 1

By law, do borrowers have the right to access their data in the credit bureau or credit registry?

Yes No 1

image

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?

Yes No 1

image

Total Score ("yes" to either public bureau or private registry)

6

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?

No No 0

image

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Coverage

Credit bureau

Credit registry

Number of individuals

88,753,867

0

Number of firms

0

0

Total

88,753,867

0

Percentage of adult population

100.0

0.0

image

Getting Credit – Osaka

Indicator

Osaka

OECD high income

Best Regulatory Performance

Strength of legal rights index (0-12)

5

6.1

12 (5 Economies)

Depth of credit information index (0-8)

6

6.8

8 (53 Economies)

Credit registry coverage (% of adults)

0.0

24.4

100.0 (2 Economies)

Credit bureau coverage (% of adults)

100.0

66.7

100.0 (14 Economies)

Figure – Getting Credit in Osaka – Score

image

55.0

Score – Getting Credit

Figure – Getting Credit in Osaka and comparator economies – Ranking and Score

DB 2020 Getting Credit Score

image

0 100

95.0: United States (Rank: 4)

75.0: Malaysia (Rank: 37)

65.0: Korea, Rep. (Rank: 67)

55.0: Osaka

55.0: Tokyo

100: New Zealand (Rank: 1)

Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index.

Figure – Legal Rights in Osaka and comparator economies

image

12

11

7

6.1

5

5

5

14

12

Index Score

10

8

6

4

2

0

Osaka Korea,

Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

Details – Legal Rights in Osaka

image

Strength of legal rights index (0-12) 5

image

Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description

of collateral?

Yes

Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy?

image

May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the

original assets?

No

Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral?

image

Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an

electronic database indexed by debtor's name?

No

Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered?

Yes

Does a notice-based collateral registry exist in which all functional equivalents can be registered? No

Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party?

Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes

Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes

image

Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt?

Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it?

Figure – Credit Information in Osaka and comparator economies

image

8

8

8

8

6.8

6

6

9

8

Index Score

7

6

5

4

3

2

1

0

Osaka Korea,

Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

image

Details – Credit Information in Osaka

image

Depth of credit information index (0-8)

Credit bureau

Credit registry

Score

Are data on both firms and individuals distributed?

No

No

0

image

Are data from retailers or utility companies – in addition to data from banks and

financial institutions – distributed?

Yes

No

1

Are both positive and negative credit data distributed? Yes No 1

image

Are data on loan amounts below 1% of income per capita distributed?

Yes

No

1

Are at least 2 years of historical data distributed? (Credit bureaus and registries that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.)

Yes No 1

By law, do borrowers have the right to access their data in the credit bureau or credit registry?

Yes No 1

image

Can banks and financial institutions access borrowers’ credit information online (for example, through an online platform, a system-to-system connection or both)?

Yes No 1

image

Total Score ("yes" to either public bureau or private registry)

6

Are bureau or registry credit scores offered as a value-added service to help banks and financial institutions assess the creditworthiness of borrowers?

No No 0

image

Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0.

Coverage

Credit bureau

Credit registry

Number of individuals

88,753,867

0

Number of firms

0

0

Total

88,753,867

0

Percentage of adult population

100.0

0.0

image

Protecting Minority Investors

This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

  • Extent of disclosure index (0–10): Disclosure, review, and approval requirements for related-party transactions

  • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for prejudicial related-party transactions; Available legal remedies (damages, disgorgement of profits, disqualification

    from managerial position(s) for one year or more, rescission of the transaction)

  • Ease of shareholder suits index (0–10): Access to internal corporate documents; Evidence obtainable during trial and allocation of legal expenses

  • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of shareholder suits indices

  • Extent of shareholder rights index (0-6): Shareholders’ rights and role in major corporate decisions

  • Extent of ownership and control index (0-7): Governance safeguards protecting shareholders from undue board control and entrenchment

  • Extent of corporate transparency index (0-7): Corporate transparency on ownership stakes, compensation, audits and financial prospects

  • Extent of shareholder governance index (0–20): Sum of the extent of shareholders rights, extent of ownership and control and extent of corporate transparency indices

  • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices

To make the data comparable across economies, a case study uses several assumptions about the business and the transaction.

The business (Buyer):

  • Is a publicly traded corporation listed on the economy’s most important stock exchange.

  • Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not specifically required by law.

  • Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members.

  • Has not adopted bylaws or articles of association that go beyond the minimum requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory.

  • Is a manufacturing company with its own distribution network.

    The transaction involves the following details:

  • Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to Buyer’s five-member board.

  • Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores.

  • Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of Buyer’s assets and is higher than the market value.

  • The proposed transaction is part of the company’s principal activity and is not outside the authority of the company.

  • Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently.

  • The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and directors that approved the transaction.

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Stock exchange information

Stock exchange

Japan Stock Exchange

Protecting Minority Investors – Tokyo

image

Listed firms with equity securities

2414

Stock exchange URL https://www.jpx.co.jp

image

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Extent of disclosure index (0-10)

7.0

6.5

10 (13 Economies)

City Covered Tokyo

image

image

Ease of shareholder suits index (0-10)

8.0

7.3

10 (Djibouti)

Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies)

image

Extent of ownership and control index (0-7)

2.0

4.5

7 (9 Economies)

Extent of shareholder rights index (0-6) 4.0 4.7 6 (19 Economies)

image

Figure – Protecting Minority in Tokyo – Score

image

64.0

Extent of corporate transparency index (0-7) 5.0 5.7 7 (13 Economies)

image

Score – Protecting Minority Investors

Figure – Protecting Minority Investors in Tokyo and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

image

0 100

88.0: Malaysia (Rank: 2)

86.0: New Zealand (Rank: 3)

74.0: Korea, Rep. (Rank: 25)

71.6: United States (Rank: 36)

64.0: Osaka

64.0: Tokyo

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

Figure – Protecting Minority Investors in Tokyo and comparator economies – Measure of Quality

image

image

image

5

6

7

2

4

8

6

6

8

5

4

8

6

9

10

6

5

8

5

9

10

5

5

9

5

6

7

2

4

8

5

9

7

3

2

9

5.6

5.6

6.6

4.3

4.5

7.4

Tokyo

Korea, Rep.

Malaysia

New Zealand

Osaka

United States

OECD high income

0 5 10 15 20 25 30 35 40 45 50

Sub-Indicator Score

image

image

image

image

image

image

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

image

Details – Protecting Minority Investors in Tokyo – Measure of Quality

Answer

Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10)

7.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)

Board of directors excluding interested members

2.0

Must an external body review the terms of the transaction before it takes place? (0-1)

No

0.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2)

Full disclosure of all material facts

2.0

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)

Disclosure on the transaction and on the conflict of interest

2.0

Must Buyer immediately disclose the transaction to the public? (0-2)

Disclosure on the transaction only

1.0

Extent of director liability index (0-10)

6.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Buyer? (0-1)

Yes

1.0

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)

Liable if unfair or prejudicial

2.0

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)

Liable if unfair or prejudicial

2.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)

Yes

1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)

No

0.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1)

No

0.0

Can a court void the transaction upon a successful claim by shareholders? (0-2)

Only in case of fraud or bad faith

0.0

Ease of shareholder suits index (0-10)

8.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? (0-1)

Yes

1.0

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)

Any relevant document

3.0

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)

No

0.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2)

Yes

2.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1)

Yes

1.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2)

Yes if successful

1.0

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6)

4.0

Does the sale of 51% of Buyer's assets require shareholder approval?

Yes

1.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders?

Yes

1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares?

No

0.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares?

No

0.0

Do shareholders elect and dismiss the external auditor?

Yes

1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?

Yes

1.0

Extent of ownership and control index (0-7)

2.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?

No

0.0

Must the board of directors include independent and nonexecutive board members?

No

0.0

Can shareholders remove members of the board of directors without cause before the end of their term?

Yes

1.0

Must the board of directors include a separate audit committee exclusively comprising board members?

No

0.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?

No

0.0

Must Buyer pay declared dividends within a maximum period set by law?

No

0.0

Is a subsidiary prohibited from acquiring shares issued by its parent company?

Yes

1.0

Extent of corporate transparency index (0-7)

5.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?

Yes

1.0

Must Buyer disclose information about board members’ primary employment and directorships in other companies?

Yes

1.0

Must Buyer disclose the compensation of individual managers?

No

0.0

Must a detailed notice of general meeting be sent 21 days before the meeting?

No

0.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?

Yes

1.0

Must Buyer's annual financial statements be audited by an external auditor?

Yes

1.0

Must Buyer disclose its audit reports to the public?

Yes

1.0

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Stock exchange information

Stock exchange

Japan Stock Exchange

Protecting Minority Investors – Osaka

image

Listed firms with equity securities

2414

Stock exchange URL https://www.jpx.co.jp

image

Indicator

Osaka

OECD high income

Best Regulatory Performance

Extent of disclosure index (0-10)

7.0

6.5

10 (13 Economies)

City Covered Osaka

image

image

Ease of shareholder suits index (0-10)

8.0

7.3

10 (Djibouti)

Extent of director liability index (0-10) 6.0 5.3 10 (3 Economies)

image

Extent of ownership and control index (0-7)

2.0

4.5

7 (9 Economies)

Extent of shareholder rights index (0-6) 4.0 4.7 6 (19 Economies)

image

Figure – Protecting Minority in Osaka – Score

image

64.0

Extent of corporate transparency index (0-7) 5.0 5.7 7 (13 Economies)

image

Score – Protecting Minority Investors

Figure – Protecting Minority Investors in Osaka and comparator economies – Ranking and Score

DB 2020 Protecting Minority Investors Score

image

0 100

88.0: Malaysia (Rank: 2)

86.0: New Zealand (Rank: 3)

74.0: Korea, Rep. (Rank: 25)

71.6: United States (Rank: 36)

64.0: Osaka

64.0: Tokyo

Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index.

Figure – Protecting Minority Investors in Osaka and comparator economies – Measure of Quality

image

image

image

5

6

7

2

4

8

6

6

8

5

4

8

6

9

10

6

5

8

5

9

10

5

5

9

5

6

7

2

4

8

5

9

7

3

2

9

5.6

5.6

6.6

4.3

4.5

7.4

Osaka

Korea, Rep.

Malaysia

New Zealand

Tokyo

United States

OECD high income

0 5 10 15 20 25 30 35 40 45 50

Sub-Indicator Score

image

image

image

image

image

image

Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10)

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Details – Protecting Minority Investors in Osaka – Measure of Quality

Answer

Score

Extent of conflict of interest regulation index (0-30)

Extent of disclosure index (0-10)

7.0

Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3)

Board of directors excluding interested members

2.0

Must an external body review the terms of the transaction before it takes place? (0-1)

No

0.0

Must Mr. James disclose his conflict of interest to the board of directors? (0-2)

Full disclosure of all material facts

2.0

Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2)

Disclosure on the transaction and on the conflict of interest

2.0

Must Buyer immediately disclose the transaction to the public? (0-2)

Disclosure on the transaction only

1.0

Extent of director liability index (0-10)

6.0

Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Buyer? (0-1)

Yes

1.0

Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2)

Liable if unfair or prejudicial

2.0

Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2)

Liable if unfair or prejudicial

2.0

Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1)

Yes

1.0

Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1)

No

0.0

Is Mr. James disqualified upon a successful claim by shareholders? (0-1)

No

0.0

Can a court void the transaction upon a successful claim by shareholders? (0-2)

Only in case of fraud or bad faith

0.0

Ease of shareholder suits index (0-10)

8.0

Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? (0-1)

Yes

1.0

Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3)

Any relevant document

3.0

Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1)

No

0.0

Can the plaintiff directly question the defendant and witnesses at trial? (0-2)

Yes

2.0

Is the level of proof required for civil suits lower than that of criminal cases? (0-1)

Yes

1.0

Can shareholder plaintiffs recover their legal expenses from the company? (0-2)

Yes if successful

1.0

Extent of shareholder governance index (0-20)

Extent of shareholder rights index (0-6)

4.0

Does the sale of 51% of Buyer's assets require shareholder approval?

Yes

1.0

Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders?

Yes

1.0

Must Buyer obtain its shareholders’ approval every time it issues new shares?

No

0.0

Do shareholders automatically receive preemption rights every time Buyer issues new shares?

No

0.0

Do shareholders elect and dismiss the external auditor?

Yes

1.0

Are changes to the rights of a class of shares only possible if the holders of the affected shares approve?

Yes

1.0

Extent of ownership and control index (0-7)

2.0

Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors?

No

0.0

Must the board of directors include independent and nonexecutive board members?

No

0.0

Can shareholders remove members of the board of directors without cause before the end of their term?

Yes

1.0

Must the board of directors include a separate audit committee exclusively comprising board members?

No

0.0

Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer?

No

0.0

Must Buyer pay declared dividends within a maximum period set by law?

No

0.0

Is a subsidiary prohibited from acquiring shares issued by its parent company?

Yes

1.0

Extent of corporate transparency index (0-7)

5.0

Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%?

Yes

1.0

Must Buyer disclose information about board members’ primary employment and directorships in other companies?

Yes

1.0

Must Buyer disclose the compensation of individual managers?

No

0.0

Must a detailed notice of general meeting be sent 21 days before the meeting?

No

0.0

Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda?

Yes

1.0

Must Buyer's annual financial statements be audited by an external auditor?

Yes

1.0

Must Buyer disclose its audit reports to the public?

Yes

1.0

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Paying Taxes

This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information.

image

What the indicators measure

Case study assumptions

Tax payments for a manufacturing company in 2018 (number per year adjusted for electronic and joint filing and payment)

  • Total number of taxes and contributions paid or withheld, including consumption taxes (value added tax, sales tax or goods and service tax)

  • Method and frequency of filing and payment

    Time required to comply with 3 major taxes (hours per year)

  • Collecting information, computing tax payable

  • Preparing separate tax accounting books, if required

  • Completing tax return, filing with agencies

  • Arranging payment or withholding

    Total tax and contribution rate (% of commercial profits)

  • Profit or corporate income tax

  • Social contributions, labor taxes paid by employer

  • Property and property transfer taxes

  • Dividend, capital gains, financial transactions taxes

  • Waste collection, vehicle, road and other taxes

    Postfiling Index

  • Time to comply with VAT refund (hours)

  • Time to obtain VAT refund (weeks)

  • Time to comply with a corporate income tax correction (hours)

  • Time to complete a corporate income tax correction (weeks)

Using a case scenario, Doing Business records taxes and mandatory contributions a medium size company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax laws, time taken to comply with the requirements of postfiling processes and time waiting.

To make data comparable across economies, several assumptions are used:

  • TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government.

    The VAT refund process:

  • In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018.

    The corporate income tax audit process:

  • An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period.

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Paying Taxes – Tokyo

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Payments (number per year)

19

10.3

3 (2 Economies)

Time (hours per year)

129

158.8

49 (3 Economies)

Total tax and contribution rate (% of profit)

46.7

39.9

26.1 (33 Economies)

Postfiling index (0-100)

95.2

86.7

None in 2018/19

Figure – Paying Taxes in Tokyo – Score

image

73.3

image

87.7

image

70.4

image

95.2

Payments

Time

Total tax and contribution rate

Postfiling index

Figure – Paying Taxes in Tokyo and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

image

0 100

91.0: New Zealand (Rank: 9)

87.4: Korea, Rep. (Rank: 21)

86.8: United States (Rank: 25)

81.6: Osaka

81.6: Tokyo

76.0: Malaysia (Rank: 80)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Figure – Paying Taxes in Tokyo and comparator economies – Measure of Quality

image

95.2

93.9

96.9

94.0

95.2

86.7

51.0

120

Index score

100

80

60

40

20

0

Tokyo Korea,

Rep.

Malaysia New

Zealand

United States

Osaka OECD

high income

image

Details – Paying Taxes in Tokyo

image

Tax or mandatory contribution

Payments (number)

Notes on Payments

Time (hours)

Statutory tax rate

Tax base

Total tax and contribution rate (% of profit)

Notes on TTCR

Corporate

income tax

1.0

38.0

23.4%

taxable profit

15.96

image

Employer paid –

Health insurance

1.0

online

70.5

4.95% from April

2018

gross salaries

5.59

Employer paid – Welfare pension insurance

0.0 jointly 9.15% gross salaries 10.32

Tokyo Metropolitan – Enterprise Tax (on income)

0.0 jointly First 4,000,000 yen at (0.395% + 0.3%*414.2%),

next 4,000,000

yen at (0.635%

+0.5%*414.2%),

image

Inhabitants tax

1.0

jointly

16.3%

taxable profit (plus 530,000

yen)

2.72

and profits above 8,000,000 yen at (0.88%+0.7%*41 4.2%)

taxable profits 5.25

image

Tokyo City – Depreciable

Fixed Assets Tax

0.0

jointly

1.4%

net value of fixed 1.65

assets

Employer paid – Workmen's accident compensation

0.0 jointly 1.8% as from

April 2018

gross salaries 1.79

image

Tokyo Metropolitan – Real Property Acquisition Tax (for building

expansion)

1.0

4%

70% of building

expansion value

0.85

Tokyo City – Fixed Assets Tax (on land and building)

4.0 jointly 1.4% property value 1.28

Employer paid – Employment insurance

2.0 jointly 0.6% gross salaries 0.59

image

Employer paid – Child allowance contribution

0.0 jointly 0.29% as of April

2018

gross salaries 0.30

image

Tokyo Metropolitan –

Automobile Tax

1.0

90,900 yen

fixed fee

0.04

Tokyo City – City Planning Tax (on land and building)

  1. jointly 0.3% property value 0.27

    National – Stamp Tax (on contracts for land sale and building expansion)

  2. 90,000 yen per contract 0.04

Page 72

image

National – Automobile Tonnage Tax

1.0

65,600 yen

fixed fee

0.03

Local corporation tax

1.0

4.4%

corporate income tax

0.00

included in other taxes

Tax on interest

0.0

jointly

15.315%

interest income

0.00

included in other taxes

Fuel tax

1.0

34,900 yen per kiloliter

fuel consumption

0.00

small amount

Employee paid – Employment insurance

0.0

jointly

0.325%

gross salaries

0.00

withheld

Employee paid – Health insurance

0.0

jointly

4.955% as of

September 2017

gross salaries

0.00

withheld

Employee paid – Welfare pension insurance

0.0

jointly

9.15% as of

September 2017

gross salaries

0.00

withheld

Value added tax (VAT)

4.0

20.0

8%

value added

0.00

not included

Totals

19

129

46.7

Details – Paying Taxes in Tokyo – Tax by Type

image

Taxes by type

Answer

Profit tax (% of profit)

23.9

Labor tax and contributions (% of profit)

18.6

Other taxes (% of profit)

4.2

image

Details – Paying Taxes in Tokyo – Measure of Quality

Answer

Score

Postfiling index (0-100)

95.2

VAT refunds

Does VAT exist?

Yes

Does a VAT refund process exist per the case study?

Yes

Restrictions on VAT refund process

none

Percentage of cases exposed to a VAT audit (%)

0% – 24%

Is there a mandatory carry forward period?

No

Time to comply with VAT refund (hours)

1.0

98.0

Time to obtain VAT refund (weeks)

11.0

85.4

Corporate income tax audits

Does corporate income tax exist?

Yes

Percentage of cases exposed to a corporate income tax audit (%)

0% – 24%

Time to comply with a corporate income tax correction (hours)

3.0

97.2

Time to complete a corporate income tax correction (weeks)

No tax audit per case study scenario

100

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

image

Paying Taxes – Osaka

Indicator

Osaka

OECD high income

Best Regulatory Performance

Payments (number per year)

19

10.3

3 (2 Economies)

Time (hours per year)

129

158.8

49 (3 Economies)

Total tax and contribution rate (% of profit)

46.8

39.9

26.1 (33 Economies)

Postfiling index (0-100)

95.2

86.7

None in 2018/19

Figure – Paying Taxes in Osaka – Score

image

73.3

image

87.7

image

70.2

image

95.2

Payments

Time

Total tax and contribution rate

Postfiling index

Figure – Paying Taxes in Osaka and comparator economies – Ranking and Score

DB 2020 Paying Taxes Score

image

0 100

91.0: New Zealand (Rank: 9)

87.4: Korea, Rep. (Rank: 21)

86.8: United States (Rank: 25)

81.6: Osaka

81.6: Tokyo

76.0: Malaysia (Rank: 80)

Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold.

Figure – Paying Taxes in Osaka and comparator economies – Measure of Quality

image

95.2

93.9

96.9

94.0

95.2

86.7

51.0

120

Index score

100

80

60

40

20

0

Osaka Korea,

Rep.

Malaysia New

Zealand

United States

Tokyo OECD

high income

image

Details – Paying Taxes in Osaka

image

Tax or mandatory contribution

Payments (number)

Notes on Payments

Time (hours)

Statutory tax rate

Tax base

Total tax and contribution rate (% of profit)

Notes on TTCR

Corporate

income tax

1.0

38.0

23.4%

taxable profits

15.92

image

Employer paid –

Health insurance

1.0

online

70.5

5.085% as of

April 2018

gross salaries

5.73

Employer paid – Welfare pension insurance

0.0 jointly 9.15% gross salaries 10.32

Osaka Metropolitan – Enterprise Tax (on income)

0.0 jointly First 4,000,000 yen at (0.395% + 0.3%*414.2%),

next 4,000,000

yen at (0.635%

+0.5%*414.2%),

image

Inhabitants tax

1.0

jointly

11.9% + 4.2%

taxable profit (plus 660,000

yen)

2.74

and profits above 8,000,000 yen at (0.88%+0.7%*41 4.2%)

taxable profits 5.24

image

Osaka City – Depreciable

Fixed Assets Tax

0.0

jointly

1.4%

net value of fixed 1.65

assets

Employer paid – Workmen's accident compensation

0.0 jointly 1.8% as from

April 2018

gross salaries 1.79

image

Osaka Metropolitan – Real Property Acquisition Tax (for building

expansion)

1.0

4%

70% of building

expansion value

0.85

Osaka City – Fixed Assets Tax (on land and building)

4.0 jointly 1.4% property value 1.30

Employer paid – Employment insurance

2.0 jointly 0.6% gross salaries 0.59

image

Employer paid – Child allowance contribution

0.0 jointly 0.29% as of April

2018

gross salaries 0.30

image

National – Stamp Tax (on contracts for land sale and building

expansion)

1.0

90,000 yen

per contract

0.04

Osaka City – City Planning Tax (on land and building)

  1. jointly 0.3% property value 0.28

    Osaka Metropolitan – Automobile Tax

  2. 90,900 yen fixed fee 0.04

Page 78

image

National – Automobile Tonnage Tax

1.0

65,600 yen

fixed fee

0.03

Local corporation tax

1.0

4.4%

corporate income tax

0.00

included in other taxes

Fuel tax

1.0

34,900 yen per kiloliter

fuel consumption

0.00

small amount

Employee paid – Employment insurance

0.0

jointly

0.325%

gross salaries

0.00

withheld

Employee paid – Health insurance

0.0

jointly

5.065% as of

September 2017

gross salaries

0.00

withheld

Employee paid – Welfare pension insurance

0.0

jointly

9.15% as of

September 2017

gross salaries

0.00

withheld

Tax on interest

0.0

jointly

15.315%

interest income

0.00

included in other taxes

Value added tax (VAT)

4.0

20.0

8%

value added

0.00

not included

Totals

19

129

46.8

Details – Paying Taxes in Osaka – Tax by Type

image

Taxes by type

Answer

Profit tax (% of profit)

23.9

Labor tax and contributions (% of profit)

18.7

Other taxes (% of profit)

4.2

image

Details – Paying Taxes in Osaka – Measure of Quality

Answer

Score

Postfiling index (0-100)

95.2

VAT refunds

Does VAT exist?

Yes

Does a VAT refund process exist per the case study?

Yes

Restrictions on VAT refund process

none

Percentage of cases exposed to a VAT audit (%)

0% – 24%

Is there a mandatory carry forward period?

No

Time to comply with VAT refund (hours)

1.0

98.0

Time to obtain VAT refund (weeks)

11.0

85.4

Corporate income tax audits

Does corporate income tax exist?

Yes

Percentage of cases exposed to a corporate income tax audit (%)

0% – 24%

Time to comply with a corporate income tax correction (hours)

3.0

97.2

Time to complete a corporate income tax correction (weeks)

No tax audit per case study scenario

100

Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable.

The hours for Social Security include all the hours for labor taxes and mandatory contributions in general.

The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction.

N/A = Not applicable.

image

Trading across Borders

Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Documentary compliance

  • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in origin economy

  • Obtaining, preparing and submitting documents required by destination economy and any transit economies

  • Covers all documents required by law and in practice, including electronic submissions of information

    Border compliance

  • Customs clearance and inspections

  • Inspections by other agencies (if applied to more than 20% of shipments)

  • Handling and inspections that take place at the economy’s port or border

    Domestic transport

  • Loading or unloading of the shipment at the warehouse or port/border

  • Transport between warehouse and port/border

  • Traffic delays and road police checks while shipment is en route

To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions:

Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours.

Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector experts in international trade logistics and are informed about exchange rates.

Assumptions of the case study:

  • For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy.

  • It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from its natural import partner—the economy from which it imports the largest value (price times quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000.

  • The mode of transport is the one most widely used for the chosen export or import product and the trading partner, as is the seaport or land border crossing.

  • All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process.

  • A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy.

  • Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities.

Trading across Borders – Tokyo

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Time to export: Border compliance (hours)

27

12.7

1 (19 Economies)

Cost to export: Border compliance (USD)

241

136.8

0 (19 Economies)

Time to export: Documentary compliance (hours)

3

2.3

1 (26 Economies)

Cost to export: Documentary compliance (USD)

54

33.4

0 (20 Economies)

Time to import: Border compliance (hours)

48

8.5

1 (25 Economies)

Cost to import: Border compliance (USD)

275

98.1

0 (28 Economies)

Time to import: Documentary compliance (hours)

3

3.4

1 (30 Economies)

Cost to import: Documentary compliance (USD)

107

23.5

0 (30 Economies)

Figure – Trading across Borders in Tokyo – Score

Time

Cost

Time

Cost

Time

Cost

Time

Cost

to

to

to

to

to

to

to

to

export:

export:

export:

export:

import:

import:

import:

import:

Border

Border

Documentary

Documentary

Border

Border

Documentary

Documentary

compliance

compliance

compliance

compliance

compliance

compliance

compliance

compliance

Figure – Trading across Borders in Tokyo and comparator economies – Ranking and Score

image

83.6

image

77.3

image

98.8

image

86.5

image

83.2

image

77.1

image

99.2

image

84.7

DB 2020 Trading Across Borders Score

image

0 100

92.5: Korea, Rep. (Rank: 36)

92.0: United States (Rank: 39)

88.5: Malaysia (Rank: 49)

86.3: Tokyo

85.3: Osaka

84.6: New Zealand (Rank: 63)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Tokyo – Time and Cost

image

image

Time (hours) Cost (USD)

image

275

241

48

27

107

54

3

3

60

50

300

250

Time (hours)

Cost (USD)

40 200

30 150

20

10

0

Export

Border Compliance

Export

Documentary Compliance

Import

Border Compliance

Import

Documentary Compliance

100

50

0

image

Details – Trading across Borders in Tokyo

image

Characteristics

Export

Import

Product

HS 84 : Nuclear reactors, boilers, machinery and

mechanical appliances; parts thereof

HS 8708: Parts and accessories of motor vehicles

image

Border

Yokohama port

Yokohama port

Trade partner China China

image

Domestic transport time (hours)

3

3

Distance (km) 20 20

image

Domestic transport cost (USD) 380 380

image

Details – Trading across Borders in Tokyo – Components of Border Compliance

Time to Complete (hours)

Associated Costs (USD)

Export: Clearance and inspections required by customs authorities

2.5

50.0

Export: Clearance and inspections required by agencies other than customs

0.0

0.0

Export: Port or border handling

27.0

191.0

Import: Clearance and inspections required by customs authorities

2.5

90.0

Import: Clearance and inspections required by agencies other than customs

0.0

0.0

Import: Port or border handling

48.0

185.0

Details – Trading across Borders in Tokyo – Trade Documents

image

Export

Import

Customs export declaration Invoice

Commercial invoice Packing list

Handling manual Bill of lading

Packing list Customs import declaration

SOLAS certificate SOLAS certificate

Bill of lading

image

image

Trading across Borders – Osaka

Indicator

Osaka

OECD high income

Best Regulatory Performance

Time to export: Border compliance (hours)

26

12.7

1 (19 Economies)

Cost to export: Border compliance (USD)

331

136.8

0 (19 Economies)

Time to export: Documentary compliance (hours)

1

2.3

1 (26 Economies)

Cost to export: Documentary compliance (USD)

54

33.4

0 (20 Economies)

Time to import: Border compliance (hours)

24

8.5

1 (25 Economies)

Cost to import: Border compliance (USD)

389

98.1

0 (28 Economies)

Time to import: Documentary compliance (hours)

4

3.4

1 (30 Economies)

Cost to import: Documentary compliance (USD)

107

23.5

0 (30 Economies)

Figure – Trading across Borders in Osaka – Score

Time

Cost

Time

Cost

Time

Cost

Time

Cost

to

to

to

to

to

to

to

to

export:

export:

export:

export:

import:

import:

import:

import:

Border

Border

Documentary

Documentary

Border

Border

Documentary

Documentary

compliance

compliance

compliance

compliance

compliance

compliance

compliance

compliance

Figure – Trading across Borders in Osaka and comparator economies – Ranking and Score

image

84.3

image

68.8

image

99.9

image

86.5

image

91.8

image

67.6

image

98.7

image

84.7

DB 2020 Trading Across Borders Score

image

0 100

92.5: Korea, Rep. (Rank: 36)

92.0: United States (Rank: 39)

88.5: Malaysia (Rank: 49)

86.3: Tokyo

85.3: Osaka

84.6: New Zealand (Rank: 63)

Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import.

Figure – Trading across Borders in Osaka – Time and Cost

image

26

389

331

24

107

54

4

1

image

30

Time (hours)

25

20

15

10

5

0

Export

image

Export

Time (hours) Cost (USD)

Import

Import

450

400

Cost (USD)

350

300

250

200

150

100

50

0

Border Compliance

Documentary Compliance

Border Compliance

Documentary Compliance

image

Details – Trading across Borders in Osaka

image

Characteristics

Export

Import

Product

HS 84 : Nuclear reactors, boilers, machinery and

mechanical appliances; parts thereof

HS 8708: Parts and accessories of motor vehicles

image

Border

Kobe port

Kobe port

Trade partner China China

image

Domestic transport time (hours)

2

2

Distance (km) 37 37

image

Domestic transport cost (USD) 326 326

image

Details – Trading across Borders in Osaka – Components of Border Compliance

Time to Complete (hours)

Associated Costs (USD)

Export: Clearance and inspections required by customs authorities

2.7

60.8

Export: Clearance and inspections required by agencies other than customs

0.0

0.0

Export: Port or border handling

26.0

270.0

Import: Clearance and inspections required by customs authorities

4.8

95.8

Import: Clearance and inspections required by agencies other than customs

0.0

0.0

Import: Port or border handling

24.0

293.0

Details – Trading across Borders in Osaka – Trade Documents

image

Export

Import

Customs export declaration Invoice

Commercial invoice Packing list

Handling manual Bill of lading

Packing list Customs import declaration

SOLAS certificate SOLAS certificate

Bill of lading

image

image

Enforcing Contracts

The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information.

image

What the indicators measure

Case study assumptions

Time required to enforce a contract through the courts (calendar days)

  • Time to file and serve the case

  • Time for trial and to obtain the judgment

  • Time to enforce the judgment

    Cost required to enforce a contract through the courts (% of claim value)

  • Average attorney fees

  • Court costs

  • Enforcement costs

    Quality of judicial processes index (0-18)

  • Court structure and proceedings (-1-5)

  • Case management (0-6)

  • Court automation (0-4)

  • Alternative dispute resolution (0-3)

The dispute in the case study involves the breach of a sales contract between two domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement.

To make the data on the time and comparable across economies, several assumptions about the case are used:

  • The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of adequate quality.

  • The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater.

  • The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater.

  • The Seller requests the pretrial attachment of the defendant’s movable assets to secure the claim.

  • The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods was not adequate.

  • The judge decides in favor of the seller; there is no appeal.

  • The Seller enforces the judgment through a public sale of the Buyer’s movable assets.

image

Standardized Case

Claim value

JPY 8,932,620

Enforcing Contracts – Tokyo

image

City Covered

Tokyo

Court name Tokyo District Court

image

Figure – Enforcing Contracts in Tokyo – Score

image

Indicator

Tokyo

OECD high income

Best Regulatory Performance

Time (days)

360

589.6

120 (Singapore)

image

Quality of judicial processes index (0-18)

7.5

11.7

None in 2018/19

Cost (% of claim value) 23.4 21.5 0.1 (Bhutan)

image

80.3

image

73.8

image

41.7

Time

Cost

Quality of judicial processes index

Figure – Enforcing Contracts in Tokyo and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

image

0 100

84.1: Korea, Rep. (Rank: 2)

73.4: United States (Rank: 17)

71.5: New Zealand (Rank: 23)

68.2: Malaysia (Rank: 35)

65.3: Osaka

65.3: Tokyo

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Tokyo – Time and Cost

700

600

Time (days)

500

400

300

200

100

0

Time (days) Cost (% of claim value)

image

37.9

589.6

30.5

27.2

425

21.5

23.4

23.4

444

360

360

290

12.7

216

image

image

Cost (% of claim value)

40

35

30

25

20

15

10

5

0

Korea, Rep.

Malaysia New

Zealand

OECD

high income

Osaka Tokyo United States

Figure – Enforcing Contracts in Tokyo and comparator economies – Measure of Quality

Tokyo

Korea, Rep.

Malaysia

New Zealand

Osaka

United States

OECD high income

image

image

2.5

1

1

3

3

4

4

3.5

2.5

4

2.5

4

2

3

1.5

3

2.5

1

1

3

2.5

4.7

3

4.4

2.5

3.2

2.4

3.6

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

image

image

image

image

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Tokyo

image

Indicator

Time (days) 360

Trial and judgment280

Filing and service20

Cost (% of claim value)23.4

Enforcement of judgment60

Court fees 4.5

Attorney fees 18.5

Quality of judicial processes index (0-18) 7.5

Enforcement fees0.4

Case management (0-6)1.0

Court structure and proceedings (-1-5)3.0

image

Alternative dispute resolution (0-3)2.5

Court automation (0-4)1.0

image

Details – Enforcing Contracts in Tokyo – Measure of Quality

Answer

Score

Quality of judicial processes index (0-18)

7.5

Court structure and proceedings (-1-5)

3.0

1. Is there a court or division of a court dedicated solely to hearing commercial cases?

No

0.0

2. Small claims court

1.5

2.a. Is there a small claims court or a fast-track procedure for small claims?

Yes

2.b. If yes, is self-representation allowed?

Yes

3. Is pretrial attachment available?

Yes

1.0

4. Are new cases assigned randomly to judges?

Yes, but manual

0.5

5. Does a woman's testimony carry the same evidentiary weight in court as a man's?

Yes

0.0

Case management (0-6)

1.0

1. Time standards

0.0

1.a. Are there laws setting overall time standards for key court events in a civil case?

Yes

1.b. If yes, are the time standards set for at least three court events?

No

1.c. Are these time standards respected in more than 50% of cases?

Yes

2. Adjournments

0.0

2.a. Does the law regulate the maximum number of adjournments that can be granted?

No

2.b. Are adjournments limited to unforeseen and exceptional circumstances?

No

2.c. If rules on adjournments exist, are they respected in more than 50% of cases?

n.a.

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

No

0.0

4. Is a pretrial conference among the case management techniques used before the competent court?

Yes

1.0

5. Are there any electronic case management tools in place within the competent court for use by judges?

No

0.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers?

No

0.0

Court automation (0-4)

1.0

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?

No

0.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court?

No

0.0

3. Can court fees be paid electronically within the competent court?

No

0.0

4. Publication of judgments

1.0

4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

Alternative dispute resolution (0-3)

2.5

1. Arbitration

1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects?

Yes

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— that cannot be submitted to arbitration?

No

1.c. Are valid arbitration clauses or agreements usually enforced by the courts?

Yes

2. Mediation/Conciliation 1.0

image

2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

Yes

2.a. Is voluntary mediation or conciliation available? Yes

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)?

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Standardized Case

Claim value

JPY 8,932,620

Enforcing Contracts – Osaka

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City Covered

Osaka

Court name Osaka District Court

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Figure – Enforcing Contracts in Osaka – Score

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Indicator

Osaka

OECD high income

Best Regulatory Performance

Time (days)

360

589.6

120 (Singapore)

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Quality of judicial processes index (0-18)

7.5

11.7

None in 2018/19

Cost (% of claim value) 23.4 21.5 0.1 (Bhutan)

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80.3

image

73.8

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41.7

Time

Cost

Quality of judicial processes index

Figure – Enforcing Contracts in Osaka and comparator economies – Ranking and Score

DB 2020 Enforcing Contracts Score

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0 100

84.1: Korea, Rep. (Rank: 2)

73.4: United States (Rank: 17)

71.5: New Zealand (Rank: 23)

68.2: Malaysia (Rank: 35)

65.3: Osaka

65.3: Tokyo

Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators.

Figure – Enforcing Contracts in Osaka – Time and Cost

700

600

Time (days)

500

400

300

200

100

0

Time (days) Cost (% of claim value)

image

37.9

589.6

30.5

27.2

425

21.5

23.4

23.4

444

360

360

290

12.7

216

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image

Cost (% of claim value)

40

35

30

25

20

15

10

5

0

Korea, Rep.

Malaysia New

Zealand

OECD

high income

Osaka Tokyo United States

Figure – Enforcing Contracts in Osaka and comparator economies – Measure of Quality

Osaka

Korea, Rep.

Malaysia

New Zealand

Tokyo

United States

OECD high income

image

image

2.5

1

1

3

3

4

4

3.5

2.5

4

2.5

4

2

3

1.5

3

2.5

1

1

3

2.5

4.7

3

4.4

2.5

3.2

2.4

3.6

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

image

image

image

image

Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5)

Details – Enforcing Contracts in Osaka

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Indicator

Time (days) 360

Trial and judgment280

Filing and service20

Cost (% of claim value)23.4

Enforcement of judgment60

Court fees 4.5

Attorney fees 18.5

Quality of judicial processes index (0-18) 7.5

Enforcement fees0.4

Case management (0-6)1.0

Court structure and proceedings (-1-5)3.0

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Alternative dispute resolution (0-3)2.5

Court automation (0-4)1.0

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Details – Enforcing Contracts in Osaka – Measure of Quality

Answer

Score

Quality of judicial processes index (0-18)

7.5

Court structure and proceedings (-1-5)

3.0

1. Is there a court or division of a court dedicated solely to hearing commercial cases?

No

0.0

2. Small claims court

1.5

2.a. Is there a small claims court or a fast-track procedure for small claims?

Yes

2.b. If yes, is self-representation allowed?

Yes

3. Is pretrial attachment available?

Yes

1.0

4. Are new cases assigned randomly to judges?

Yes, but manual

0.5

5. Does a woman's testimony carry the same evidentiary weight in court as a man's?

Yes

0.0

Case management (0-6)

1.0

1. Time standards

0.0

1.a. Are there laws setting overall time standards for key court events in a civil case?

Yes

1.b. If yes, are the time standards set for at least three court events?

No

1.c. Are these time standards respected in more than 50% of cases?

Yes

2. Adjournments

0.0

2.a. Does the law regulate the maximum number of adjournments that can be granted?

No

2.b. Are adjournments limited to unforeseen and exceptional circumstances?

No

2.c. If rules on adjournments exist, are they respected in more than 50% of cases?

n.a.

3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report?

No

0.0

4. Is a pretrial conference among the case management techniques used before the competent court?

Yes

1.0

5. Are there any electronic case management tools in place within the competent court for use by judges?

No

0.0

6. Are there any electronic case management tools in place within the competent court for use by lawyers?

No

0.0

Court automation (0-4)

1.0

1. Can the initial complaint be filed electronically through a dedicated platform within the competent court?

No

0.0

2. Is it possible to carry out service of process electronically for claims filed before the competent court?

No

0.0

3. Can court fees be paid electronically within the competent court?

No

0.0

4. Publication of judgments

1.0

4.a Are judgments rendered in commercial cases at all levels made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website?

Yes

Alternative dispute resolution (0-3)

2.5

1. Arbitration

1.5

1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects?

Yes

1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— that cannot be submitted to arbitration?

No

1.c. Are valid arbitration clauses or agreements usually enforced by the courts?

Yes

2. Mediation/Conciliation 1.0

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2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or

section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig

Yes

2.a. Is voluntary mediation or conciliation available? Yes

2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)?

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Resolving Insolvency

Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information.

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What the indicators measure

Case study assumptions

Time required to recover debt (years)

  • Measured in calendar years

  • Appeals and requests for extension are included

    Cost required to recover debt (% of debtor’s estate)

  • Measured as percentage of estate value

  • Court fees

  • Fees of insolvency administrators

  • Lawyers’ fees

  • Assessors’ and auctioneers’ fees

  • Other related fees

    To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used:

    • A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties.

    • The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater.

    • The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. The hotel cannot pay back the loan, but makes enough money to operate otherwise.

    In addition, Doing Business evaluates the quality of legal framework applicable to judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered.

    Outcome

  • Whether business continues operating as a going concern or business assets are sold piecemeal

    Recovery rate for creditors

  • Measures the cents on the dollar recovered by secured creditors

  • Outcome for the business (survival or not) determines the maximum value that can be recovered

  • Official costs of the insolvency proceedings are deducted

  • Depreciation of furniture is taken into account

  • Present value of debt recovered

    Strength of insolvency framework index (0- 16)

  • Sum of the scores of four component indices:

  • Commencement of proceedings index (0-3)

  • Management of debtor’s assets index (0-6)

  • Reorganization proceedings index (0-3)

  • Creditor participation index (0-4)

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Indicator

Tokyo

OECD high income

Best Regulatory Performance

Recovery rate (cents on the dollar)

91.8

70.2

92.9 (Norway)

Resolving Insolvency – Tokyo

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Cost (% of estate)

4.5

9.3

1.0 (Norway)

Time (years) 0.6 1.7 0.4 (Ireland)

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Figure – Resolving Insolvency in Tokyo – Score

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Strength of insolvency framework index (0-16)

13.0

11.9

None in 2018/19

Outcome (0 as piecemeal sale and 1 as going concern) 1 .. ..

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98.8

image

81.3

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Tokyo and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

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0 100

90.6: Osaka

90.5: United States (Rank: 2)

90.0: Tokyo

82.9: Korea, Rep. (Rank: 11)

69.5: New Zealand (Rank: 36)

67.0: Malaysia (Rank: 40)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Tokyo – Time and Cost

1.8

1.6

Time (years)

1.4

1.2

1

0.8

0.6

0.4

0.2

0

Time (years) Cost (% of estate)

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1.7

1.5

10.0

1.3

9.3

10.0

1.0

1.0

3.5

3.5

0.6

4.5

3.5

0.6

image

image

12

Cost (% of estate)

10

8

6

4

2

0

Korea, Rep.

Malaysia New

Zealand

OECD

high income

Osaka Tokyo United States

Figure – Resolving Insolvency in Tokyo and comparator economies – Measure of Quality

Tokyo

Korea, Rep.

Malaysia

New Zealand

Osaka

United States

OECD high income

image

image

6

3

1

3

5.5

2.5

1

3

2

3

2

0.5

3

3

2

0.5

6

3

1

3

6

3

3

3

5.3

2.8

2.1

1.9

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

image

image

image

image

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Tokyo and comparator economies – Recovery Rate

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91.8

92.8

84.3

81.0

79.7

81.0

70.2

Recovery rate(cents on the dollar)

100

90

80

70

60

50

40

30

20

10

0

Tokyo Korea, Rep. Malaysia New Zealand United States Osaka OECD high income

Details – Resolving Insolvency in Tokyo

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Indicator

Answer

Score

Proceeding

reorganization

The most likely procedure applicable to our case study would be a reorganization (civil rehabilitation). Mirage may use the rehabilitation proceeding to gain time, find a new investor, or renegotiate its debt. The rehabilitation proceeding starts with Mirage (debtor) filing for court-supervised rehabilitation with the Tokyo District Court. Mirage’s managers will draft a rehabilitation plan which is likely to be approved by creditors. BizBank will likely support the rehabilitation proceedings as according to the case assumption the continuation of Mirage’s operations as a going concern would

fetch 100% of Mirage's market value.

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Time (in years)

0.6

According to the standard schedule of Tokyo District Court, civil rehabilitation proceedings will take approximately 6 to 7 months in total. Immediately after the filing, the court issues a temporary restraining order and supervision order.

And, about 1 week after the filing, the court issues the order to commence civil rehabilitation proceedings. After that, creditors will file proofs of claim within about 1 month after the commencement order and Mirage will investigate the proofs of claim. In the meantime, Mirage will evaluate its properties and prepare the rehabilitation plan. The rehabilitation plan will be submitted 3 months after the commencement (the court designates the date). The supervisor will submit his opinion regarding the plan and a creditor's meeting will be convened to approve the plan about 5 months after the commencement. If the rehabilitation plan is approved in the creditor's meeting, the court will issue an order to confirm the approved plan immediately after the meeting. The rehabilitation plan becomes effective about 1

month after the confirmation order.

Outcome going concern Yes, the hotel will continue operating as a going concern after approval of the rehabilitation plan by creditors.

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Recovery rate

(cents on the dollar)

91.8

Cost (% of estate) 4.5 Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (2%), costs of notification and publication (<1%), insolvency representative or receiver fees (1%), and fees of accountants, assessors, inspectors and other professionals (<1%).

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Details – Resolving Insolvency in Tokyo – Measure of Quality

Answer

Score

Strength of insolvency framework index (0-16)

13.0

Commencement of proceedings index (0-3)

3.0

What procedures are available to a DEBTOR when commencing insolvency proceedings?

(a) Debtor may file for both liquidation and reorganization

1.0

Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor?

(a) Yes, a creditor may file for both liquidation and reorganization

1.0

What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value of its assets

(c) Both (a) and (b) options are available, but only one of them needs to be complied with

1.0

Management of debtor's assets index (0-6)

6.0

Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor?

Yes

1.0

Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts?

Yes

1.0

Does the insolvency framework allow avoidance of preferential transactions?

Yes

1.0

Does the insolvency framework allow avoidance of undervalued transactions?

Yes

1.0

Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings?

Yes

1.0

Does the insolvency framework assign priority to post-commencement credit?

(b) Yes over ordinary unsecured creditors but not over secured creditors

1.0

Reorganization proceedings index (0-3)

3.0

Which creditors vote on the proposed reorganization plan?

(b) Only creditors whose rights are affected by the proposed plan

1.0

Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation?

Yes

1.0

Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally?

Yes

1.0

Creditor participation index (0-4)

1.0

Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative?

No

0.0

Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor?

No

0.0

Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative?

No

0.0

Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims?

Yes

1.0

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

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Indicator

Osaka

OECD high income

Best Regulatory Performance

Recovery rate (cents on the dollar)

92.8

70.2

92.9 (Norway)

Resolving Insolvency – Osaka

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Cost (% of estate)

3.5

9.3

1.0 (Norway)

Time (years) 0.6 1.7 0.4 (Ireland)

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Figure – Resolving Insolvency in Osaka – Score

image

Strength of insolvency framework index (0-16)

13.0

11.9

None in 2018/19

Outcome (0 as piecemeal sale and 1 as going concern) 1 .. ..

image

99.9

image

81.3

Recovery rate Strength of insolvency framework index

Figure – Resolving Insolvency in Osaka and comparator economies – Ranking and Score

DB 2020 Resolving Insolvency Score

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0 100

90.6: Osaka

90.5: United States (Rank: 2)

90.0: Tokyo

82.9: Korea, Rep. (Rank: 11)

69.5: New Zealand (Rank: 36)

67.0: Malaysia (Rank: 40)

Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index.

Figure – Resolving Insolvency in Osaka – Time and Cost

1.8

1.6

Time (years)

1.4

1.2

1

0.8

0.6

0.4

0.2

0

Time (years) Cost (% of estate)

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1.7

1.5

10.0

1.3

9.3

10.0

1.0

1.0

3.5

3.5

0.6

4.5

3.5

0.6

image

image

12

Cost (% of estate)

10

8

6

4

2

0

Korea, Rep.

Malaysia New

Zealand

OECD

high income

Osaka Tokyo United States

Figure – Resolving Insolvency in Osaka and comparator economies – Measure of Quality

Osaka

Korea, Rep.

Malaysia

New Zealand

Tokyo

United States

OECD high income

image

image

6

3

1

3

5.5

2.5

1

3

2

3

2

0.5

3

3

2

0.5

6

3

1

3

6

3

3

3

5.3

2.8

2.1

1.9

0 2 4 6 8 10 12 14 16

Sub-Indicator Score

image

image

image

image

Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3)

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Figure – Resolving Insolvency in Osaka and comparator economies – Recovery Rate

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92.8

91.8

84.3

81.0

79.7

81.0

70.2

Recovery rate(cents on the dollar)

100

90

80

70

60

50

40

30

20

10

0

Osaka Korea, Rep. Malaysia New Zealand United States Tokyo OECD high income

Details – Resolving Insolvency in Osaka

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Indicator

Answer

Score

Proceeding

reorganization

The most likely procedure applicable to our case study would be a reorganization (civil rehabilitation). Mirage may use the rehabilitation proceeding to gain time, find a new investor, or renegotiate its debt. The rehabilitation proceeding starts with Mirage (debtor) filing for court-supervised rehabilitation with the Osaka District Court. Mirage’s managers will draft a rehabilitation plan which is likely to be approved by creditors. BizBank will likely support the rehabilitation proceedings as according to the case assumption the continuation of Mirage’s operations as a going concern would

fetch 100% of Mirage's market value.

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Time (in years)

0.6

A reorganization (civil rehabilitation) procedure will approximately take 7 months in total. Creditors will file the proof of claims and, in the meantime, Mirage will prepare the plan. The plan will be submitted 3 months from the commencement (the court designates the date). The supervisor will submit his opinion regarding the plan and a

creditors' meeting will be convened to approve the plan.

Outcome going concern Yes, the hotel will continue operating as a going concern after approval of the rehabilitation plan by creditors.

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Recovery rate

(cents on the dollar)

92.8

Cost (% of estate) 3.5 The costs associated with the case would amount to approximately 3.5% of the value of the debtor's estate (JPY 13,600,000). Cost incurred during the entire insolvency process mainly include court or government agency fees (1%), attorney fees (up to 2%), costs of notification and publication (<1%), insolvency representative or receiver fees (1%), and fees of accountants, assessors, inspectors and other professionals (<1%).

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Details – Resolving Insolvency in Osaka – Measure of Quality

Answer

Score

Strength of insolvency framework index (0-16)

13.0

Commencement of proceedings index (0-3)

3.0

What procedures are available to a DEBTOR when commencing insolvency proceedings?

(a) Debtor may file for both liquidation and reorganization

1.0

Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor?

(a) Yes, a creditor may file for both liquidation and reorganization

1.0

What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value of its assets

(c) Both (a) and (b) options are available, but only one of them needs to be complied with

1.0

Management of debtor's assets index (0-6)

6.0

Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor?

Yes

1.0

Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts?

Yes

1.0

Does the insolvency framework allow avoidance of preferential transactions?

Yes

1.0

Does the insolvency framework allow avoidance of undervalued transactions?

Yes

1.0

Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings?

Yes

1.0

Does the insolvency framework assign priority to post-commencement credit?

(b) Yes over ordinary unsecured creditors but not over secured creditors

1.0

Reorganization proceedings index (0-3)

3.0

Which creditors vote on the proposed reorganization plan?

(b) Only creditors whose rights are affected by the proposed plan

1.0

Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation?

Yes

1.0

Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally?

Yes

1.0

Creditor participation index (0-4)

1.0

Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative?

No

0.0

Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor?

No

0.0

Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative?

No

0.0

Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims?

Yes

1.0

Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.”

Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business.

The most recent round of data collection was completed in May 2019. See the methodology for more information.

What the indicators measure

Case study assumptions

Hiring

(i) whether fixed-term contracts are prohibited for permanent tasks; (ii) maximum cumulative duration of fixed-term contracts;

(iii) length of the maximum probationary period; (iv) minimum wage;(v) ratio of minimum wage to the average value added per worker.

Working hours

(i) maximum number of working days allowed per week; (ii) premiums for work: at night, on a weekly rest day and overtime;

(iii) whether there are restrictions on work at night, work on a weekly rest day and for overtime work; (iv) length of paid annual leave.

Redundancy rules

(i) whether redundancy can be basis for terminating workers; (ii) whether employer needs to notify and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment.

To make the data comparable across economies, several assumptions about the worker and the business are used.

The worker:

  • Is a cashier in a supermarket or grocery store, age 19, with one year of work experience.

  • Is a full-time employee.

  • Is not a member of the labor union, unless membership is mandatory.

    The business:

  • Is a limited liability company (or the equivalent in the economy).

  • Operates a supermarket or grocery store in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city.

  • Has 60 employees.

  • Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them.

  • Abides by every law and regulation but does not grant workers more benefits than those mandated by law, regulation or (if applicable) collective bargaining agreements.

Redundancy cost

(i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected.

Employing Workers – Tokyo

Details – Employing Workers in Tokyo

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? No

Maximum length of a single fixed-term contract (months)36.0

Maximum length of fixed-term contracts, including renewals (months) No limit

Minimum wage applicable to the worker assumed in the case study (US$/month) 1567.6

Maximum length of probationary period (months) n.a.

Ratio of minimum wage to value added per worker0.3

Working hours

Standard workday 8.0

Maximum number of working days per week6.0

Premium for night work (% of hourly pay)25.0

Premium for work on weekly rest day (% of hourly pay)35.0

Premium for overtime work (% of hourly pay)25.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? Yes

Paid annual leave for a worker with 1 year of tenure (working days)10.0

Paid annual leave for a worker with 5 years of tenure (working days)16.0

Paid annual leave for a worker with 10 years of tenure (working days)20.0

Redundancy rules

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.3

Third-party notification if one worker is dismissed? No

Dismissal due to redundancy allowed by law? Yes

Third-party notification if nine workers are dismissed? No

Third-party approval if one worker is dismissed? No

Retraining or reassignment obligation before redundancy? No

Third-party approval if nine workers are dismissed? No

Priority rules for reemployment? No

Priority rules for redundancies? No

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary)4.3

Redundancy cost

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary)4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary)4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary)0.0

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary)0.0

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0

Unemployment protection after one year of employment? Yes

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0

Employing Workers – Osaka

Details – Employing Workers in Osaka

Answer

Hiring

Fixed-term contracts prohibited for permanent tasks? No

Maximum length of a single fixed-term contract (months)36.0

Maximum length of fixed-term contracts, including renewals (months) No limit

Minimum wage applicable to the worker assumed in the case study (US$/month) 1489.6

Maximum length of probationary period (months) n.a.

Ratio of minimum wage to value added per worker0.3

Working hours

Standard workday 8.0

Maximum number of working days per week6.0

Premium for night work (% of hourly pay)25.0

Premium for work on weekly rest day (% of hourly pay)35.0

Premium for overtime work (% of hourly pay)25.0

Restrictions on night work? No

Restrictions on weekly holiday? No

Restrictions on overtime work? Yes

Paid annual leave for a worker with 1 year of tenure (working days)10.0

Paid annual leave for a worker with 5 years of tenure (working days)16.0

Paid annual leave for a worker with 10 years of tenure (working days)20.0

Redundancy rules

Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 15.3

Third-party notification if one worker is dismissed? No

Dismissal due to redundancy allowed by law? Yes

Third-party notification if nine workers are dismissed? No

Third-party approval if one worker is dismissed? No

Retraining or reassignment obligation before redundancy? No

Third-party approval if nine workers are dismissed? No

Priority rules for reemployment? No

Priority rules for redundancies? No

Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary)4.3

Redundancy cost

Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary)4.3

Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary)4.3

Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary)0.0

Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3

Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary)0.0

Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 0.0

Unemployment protection after one year of employment? Yes

Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 0.0

Business Reforms in Japan

From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by

Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008.

=Doing Business reform making it easier to do business. = Change making it more difficult to do business.

DB2018

Paying Taxes: Japan made paying taxes less costly by reducing the statutory rate for corporate income tax and rates for other taxes including mandatory labor contributions. This reforms apply to Osaka and Tokyo.

DB2017

Getting Electricity: Japan (Osaka) made getting electricity more efficient by introducing online application and eliminating preliminary consultation.

Paying Taxes: Japan made paying taxes easier by disclosing the technical specifications of the eTax platform and allowing the upload of additional information in comma separated value (CSV) format. The restoration surtax was also abolished. However, a local corporation tax was introduced and the rates of special local corporation tax, inhabitants tax and enterprise tax were raised. Welfare pension premiums were also raised. These reforms apply to both Tokyo and Osaka. However, the rate for health insurance contributions paid by employers was reduced only in Osaka.

DB2013

Paying Taxes: Japan made paying taxes less costly for companies by reducing the corporate income tax rate—though it also introduced a restoration surtax for a 3- year period.

DB2012

Dealing with Construction Permits: Japan made dealing with construction permits costlier by increasing inspection fees.

DB2011

Paying Taxes: Japan made paying taxes easier by introducing an online payment system for the health insurance contributions paid by the employer.

Resolving Insolvency: Japan made it easier to deal with insolvency by establishing a new entity, the Enterprise Turnaround Initiative Corporation, to support the revitalization of companies suffering from excessive debt but professionally managed.

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