[Blog]The Shock of ‘No Minimum Capital’ — Rethinking EU Inc. and Japan’s Business Manager System -

2026-06-01

EU Inc. Signals “Light Corporate Formation” but Heavy Human Mobility Rules

According to the Fragomen article, the European Commission announced in March 2026 a new corporate framework known as “EU Inc.” or the “28th Regime.” The proposal aims to establish an optional EU-wide corporate system separate from existing national company laws, enabling businesses to operate more easily across the EU single market.

48 Hours, Less Than €100, and No Minimum Capital Requirement

One of the most notable features of EU Inc. is its attempt to allow online company incorporation within 48 hours, for less than €100, and without any minimum capital requirement. The proposal also includes a “once-only principle,” under which company information only needs to be submitted once, together with a common digital registration framework. The objective is to reduce administrative friction for startups and small businesses seeking to operate across borders within Europe.

Corporate Integration Without Immigration Integration

However, as the article points out, even if corporate structures become unified under EU Inc., immigration, labor, social security, and tax systems will continue to remain largely under the authority of individual member states. As a result, while companies may gain access to a common EU corporate framework, the people working within those companies will still be subject to fragmented national systems regarding residence status, employment authorization, taxation, and social insurance.

This complexity is likely to become particularly significant in cases involving intra-company transfers, cross-border remote work, and multinational employment structures. Questions regarding which country’s immigration rules, labor laws, or social security obligations apply may become increasingly difficult to answer.

Japan Previously Emphasized Startup Promotion as Well

This discussion is also highly relevant when considering Japan’s “Business Manager” residence status system. As discussed in our previous article, Japan had historically introduced various mechanisms to encourage foreign entrepreneurship, including startup visas, preparatory business activities, national strategic special zones, and local government support programs.

These systems were based on the idea that promising entrepreneurs should be given opportunities to establish businesses even before they possess large amounts of capital or extensive operational history.

The Contrast Between “No Minimum Capital” and Tightening Business Manager Rules

In this context, EU Inc.’s “no minimum capital requirement” is symbolically important. During the early stages of a startup, the size of initial capital is often less important than the actual business model, growth potential, transparency, and operational continuity of the enterprise.

In contrast, Japan has recently moved toward stricter standards for the Business Manager residence status, including tighter scrutiny regarding capital levels and business scale. Certainly, preventing sham companies and purely nominal business activities is necessary. However, excessively burdensome entry requirements risk excluding precisely the kind of small-scale and innovative entrepreneurs that startup policies were originally designed to attract.

A Structural Inconsistency in Policy Objectives

The deeper issue is that startup promotion policies and the tightening of Business Manager requirements do not necessarily appear to move in the same direction. On one hand, the government encourages foreign entrepreneurs to establish businesses in Japan. On the other hand, increasingly high financial and organizational thresholds may discourage exactly those early-stage entrepreneurs.

For foreign entrepreneurs, predictability is critical. The question is not merely whether residence status can be obtained, but whether there is a clear and understandable pathway for growing a business over time.

The Balanced Coexistence Model Perspective

From the perspective of the Balanced Coexistence Model, immigration systems should not be understood simply as a binary choice between exclusion and acceptance. Rather, they are institutional mechanisms for building trust between foreign nationals and society.

For foreign residents, trust means the ability to predict future legal and social stability. For the receiving society, trust means the ability to verify actual business activities, monitor compliance, and implement corrective measures where necessary.

Accordingly, the central issue is not whether high capital thresholds exist at the point of entry. Instead, the important question is whether governments can continuously verify business substance, tax compliance, social insurance participation, employment relationships, and broader social integration over time.

Shifting the Standard from Capital Size to Explainability

EU Inc. attempts to lower barriers to incorporation while simultaneously improving administrative transparency through digital registration systems and the once-only principle. In other words, it seeks to reduce entry barriers while strengthening institutional visibility.

Japan’s Business Manager system may ultimately require a similar transition. Rather than relying primarily on fixed capital thresholds, the system could place greater emphasis on explainable and digitally verifiable indicators such as business plans, funding sources, operational records, employment activities, tax filings, and social insurance compliance.

From Entry Restrictions to Continuous Trust Formation

Foreign entrepreneurs do not necessarily require immediate large-scale business structures. What they require is the ability to begin operations under transparent conditions and gradually build trust and responsibility as their businesses develop.

Likewise, society requires systems capable of preventing fraudulent or purely nominal companies without unnecessarily excluding legitimate entrepreneurs with future potential. Achieving this balance is precisely what the Balanced Coexistence Model seeks to accomplish.

What Japan May Need Going Forward

EU Inc. demonstrates that simplifying corporate establishment does not automatically produce unified human mobility systems. At the same time, it also illustrates how lighter incorporation rules combined with stronger digital transparency may create a more flexible framework for accepting entrepreneurs.

For Japan, the challenge is not simply whether to tighten or loosen Business Manager requirements. Rather, the challenge is how to combine accessibility, transparency, predictability, and continuous verification into a coherent institutional framework. Ultimately, trust should not be measured solely by the amount of initial capital invested, but by the extent to which business activities remain continuously connected to society.