Crisis Management

Responding to Regulatory Investigations and Dawn Raids

A report order or written inquiry arrives from a regulator out of the blue — or investigators appear unannounced for an on-site inspection. How you respond can affect the authorities' findings and any eventual sanctions. Misjudging whether you are obliged to answer, or the legal nature of the investigation, can mean that careless answers become evidence against you, while false statements in response to statutory report orders or inspections, or refusal or obstruction without justifiable grounds, can themselves attract sanctions. Our attorneys advise on dealings with the authorities, from responding to written inquiries to managing on-site inspections and searches as they happen.

Last updated: August 17, 2026

When a Regulator Contacts or Visits You

Confirm the officials' affiliation and names, the legal basis, any documents or warrants, and the response deadline
Contact the legal/compliance department and counsel, and centralize the company's point of contact
Issue an evidence preservation instruction: stop any deletion or alteration of emails, documents and devices, and any unauthorized removal by staff
Keep a chronological record of the authorities' questions, demands, the items produced, retained or seized, and the company's answers
Avoid false explanations and physical obstruction; do not guess — confirm the facts before answering

* Where individual officers or employees are questioned or interrogated, also check whether the company's interests and the individual's may conflict.

How we can helpAssessing the nature and deadlines of the investigation / responding to inquiries and on-site inspections / strategy and procedures in view of possible sanctions

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Contents

1. Identifying the Type of Investigation
2. The Main Authorities and How They Investigate
3. Responding to Inquiries and Report Orders
4. On the Day of an On-Site Inspection or Search
5. Questioning and Interrogation of Officers and Employees
6. Using the Available Procedures: Leniency, Commitments and Hearings
7. How We Support You
FAQ

1. Identifying the Type of Investigation

Government investigations take several forms: (i) voluntary inquiries and interviews; (ii) administrative investigations based on statutory powers, such as report orders, on-site inspections and production orders; (iii) quasi-criminal (hansoku) investigations by administrative agencies conducted with criminal referral in view, or criminal investigations by special judicial police officials; and (iv) criminal investigations by the police and prosecutors (both voluntary measures and searches and seizures under warrants). Rather than a simple "voluntary or compulsory" distinction, the legal basis, the purpose of the investigation, the duty to respond and the consequences of refusal or false answers need to be confirmed in each case.

Even a voluntary inquiry cannot be taken lightly, since the answers can form the basis for later sanctions. Administrative investigations, on the other hand, often carry penalties for refusal, obstruction or false reporting, depending on the underlying statute.

2. The Main Authorities and How They Investigate

(1) Consumer Affairs Agency (Premiums and Representations Act)

Investigations into misleading representations of quality or of advantageous terms can proceed through report orders and on-site inspections to cease-and-desist orders and surcharge payment orders. In particular, under the substantiation rule applicable to misleading quality representations, where the company is asked in writing to produce materials providing reasonable grounds for its representations, the deadline is, in principle, 15 days after the date of the demand. If the materials are not produced in time, or do not amount to reasonable grounds, the representation is deemed misleading for the purposes of a cease-and-desist order, and presumed misleading for the purposes of a surcharge order. The surcharge is in principle 3% of sales of the relevant goods or services, subject to requirements concerning the covered period and sales, and to increases, reductions and exclusions. Where the company receives a commitment procedure notice and its commitment plan is approved, no cease-and-desist or surcharge order will be issued for the suspected conduct as long as the approval is not revoked (availability and approval are decided case by case).

(2) Japan Fair Trade Commission (Antimonopoly Act and the Subcontract/Toriteki Act)

In investigations of cartels, bid rigging, abuse of superior bargaining position and other Antimonopoly Act violations, unannounced on-site inspections are common, and the matter can lead to cease-and-desist orders and surcharge orders. On-site inspections and production orders under the Antimonopoly Act are administrative investigations backed by penalties, and differ procedurally from quasi-criminal investigations and criminal investigations.

Where cartel or bid-rigging conduct is suspected, preserve the evidence and promptly consider using the leniency program. The reduction available depends on the order and timing of the application (before or after the investigation begins) and the extent of cooperation, so the timing of an application must be judged while facts are still being confirmed within a limited circle. The Antimonopoly Act also has commitment procedures, but hard-core conduct such as price cartels and bid rigging is in principle excluded.

As for subcontracting, the amending act passed and promulgated in 2025 took effect on January 1, 2026: the former Subcontract Act was renamed as the act commonly known as the Toriteki Act, and the covered transactions and businesses were revised. In addition to investigations, guidance and recommendations by the Japan Fair Trade Commission, investigations by the Small and Medium Enterprise Agency and requests by that agency for JFTC action can also occur, and each procedure needs to be handled appropriately.

(3) Financial Services Agency and the Securities and Exchange Surveillance Commission

Financial instruments business operators, banks and other regulated financial businesses are subject to supervisory powers including report orders, on-site inspections and business improvement orders. The Securities and Exchange Surveillance Commission conducts securities inspections of regulated firms as well as transaction investigations into insider trading and market manipulation, disclosure inspections concerning false statements in disclosure documents, and quasi-criminal investigations aimed at criminal referral. The subject, powers and possible outcomes differ with each type of procedure.

(4) Ministry of Health, Labour and Welfare / Labor Standards Inspection Offices

Labor standards inspectors conduct on-site inspections to check compliance, and in serious or malicious cases may act as special judicial police officials conducting criminal investigations. A correction recommendation is administrative guidance, but the underlying violation — and refusal of an inspection or false statements — can attract separate penalties. In investigations concerning long working hours, unpaid wages or industrial accidents, consistency between the documentation and the explanations given on site is critical.

(5) Ministry of Economy, Trade and Industry, the Tax Authorities and Others

Report orders, inspections, administrative sanctions, repayment claims and criminal proceedings can also arise in areas such as security export control under the Foreign Exchange and Foreign Trade Act and fraudulent receipt of subsidies. As for the tax authorities, ordinary tax audits and criminal tax investigations (search-based investigations aimed at prosecution for serious evasion) differ in procedure, powers and the appropriate response. For tax audits we work with tax accountants, and where additional tax for fraud is at issue or a criminal tax investigation or referral is anticipated, we divide roles and provide legal support.

3. Responding to Inquiries and Report Orders

Confirm the legal basis: whether the request is voluntary or a statutory report order determines the duty to respond and the consequences of refusal.
Ensure accuracy: false reports can attract penalties or sanctions depending on the statute, and inaccurate or insufficiently verified answers can damage credibility and affect further investigation and the assessment of sanctions. Carry out the necessary internal checks, and answer while distinguishing verified facts, assessments or estimates, and unverified matters. For items that cannot be verified by the deadline, say so explicitly and consider supplementary responses.
Design the scope of the response: answer precisely what is asked without volunteering unnecessarily broad information; draft written responses with counsel's input as appropriate, confirming what has been requested and the scope of production.
Manage deadlines and negotiate: where a deadline is not practicable, request an adjustment with reasons and a feasible date — but until the authority agrees, work to the original deadline.

4. On the Day of an On-Site Inspection or Search

An unannounced inspection or search demands accurate decisions amid confusion on the ground. Preparing an initial-response manual and training in ordinary times has a decisive impact on the quality of the response on the day.

(1) Common First Steps

Contact the legal department and counsel immediately, and centralize responsibility and the point of contact with the authorities. Promptly issue an evidence preservation instruction suspending automatic email deletion, document destruction and device replacement, and record the course of the investigation (questions, demands, items and answers) chronologically. Instruct employees not to hide, destroy or alter materials and not to give false explanations: such conduct can constitute refusal or obstruction of an inspection or false reporting under the relevant statutes, and in criminal cases can raise issues of evidence destruction. Explanations to the authorities should be factual and concise, without guessing.

(2) Administrative On-Site Inspections

Check the identification, inspection certificates, notices and other documents presented or delivered by the officials, and identify the statutory basis and the scope of the inspection. Where production orders or inventories of retained items are issued, review and keep them. If the scope appears questionable, raise questions or objections appropriately in consultation with counsel — without physically hindering the inspection — and record the exchange. Copies of data needed for business continuity are not guaranteed as of right, but can be requested by explaining the necessity.

(3) Searches and Seizures under Judicial Warrants

For warrants in quasi-criminal investigations and search-and-seizure warrants in criminal investigations, confirm the executing officials' identity, the matters stated, the places and items covered and the period of validity. Record the execution, and review and keep the inventories of seized items. If the scope appears questionable, respond through questions, requests and records of the exchange — again without physically obstructing execution.

(4) Communications with Counsel and Confidential Materials

Japanese law has no general system allowing a company to withhold material from the authorities solely because it is a communication with counsel. In certain JFTC administrative investigations there is a limited procedure for determining the treatment of confidential communications with independent outside counsel concerning suspected conduct eligible for leniency, but it is subject to requirements as to the cases, documents and storage covered, and does not apply to quasi-criminal investigations. Do not unilaterally exclude confidential documents from production; confirm the applicable procedures and respond accordingly.

5. Questioning and Interrogation of Officers and Employees

In the course of an investigation, individual officers and employees may be questioned or interrogated. Whether they must answer, and whether they may refuse, depends on the legal nature of the questioning. Criminal suspects have the right to remain silent; by contrast, statutory administrative hearings may penalize non-appearance, refusal to answer or false statements, and report orders may penalize refusal or false reports. Before any questioning, confirm the person's position, the legal basis, whether attendance is voluntary and whether the person may refuse to answer or leave.

Where statements are recorded in a protocol or other document, review the content under the applicable procedure and request corrections of anything inconsistent with the facts. In criminal interrogations, corrections should be requested where the record is wrong, and signing or sealing an inaccurate protocol calls for great caution. Any briefing of the persons to be questioned should be limited to explaining the procedure and their rights and confirming that they should answer truthfully — never coordinating stories or encouraging false explanations.

Company counsel acts for the company. Where an individual officer's or employee's own criminal or administrative liability is at stake and the company's and the individual's interests may conflict, the need for separate counsel for the individual should be considered.

6. Using the Available Procedures: Leniency, Commitments and Hearings

Responding to a government investigation need not be purely passive. Options include the leniency and investigation-cooperation programs under the Antimonopoly Act, the commitment procedures under the Premiums and Representations Act and the Antimonopoly Act (limited to eligible conduct), and — before sanctions are imposed — statutory procedures such as hearings and opportunities to submit opinions and evidence. Used properly where the requirements are met, these can lead to reduced surcharges, correction of the suspected state of affairs and effective advocacy before a decision. Each system differs in scope, requirements and effect, and neither availability nor outcome is guaranteed. Which route to take is a management decision informed by the merits, the conduct of other parties involved and the implications for disclosure and shareholders — we help organize the considerations and execute the chosen strategy.

7. How We Support You

Setting response strategy for inquiries and report orders, drafting written responses, and negotiating with the authorities
Responding to on-site inspections and searches (attendance or remote advice depending on the authority's practice and the circumstances), and preparing internal initial-response manuals and training
Internal fact-finding investigations designed together with the regulatory and disclosure response
Leniency applications, commitment procedures, hearings and submissions, and appeals and revocation litigation against administrative sanctions
Supporting officers and employees facing questioning, and assessing and coordinating separate counsel for individuals
Timely disclosure, public announcements and media response, and building structures to prevent recurrence

FAQ

Q1. The interview is said to be voluntary. Can we simply decline?

Even where there is no legal duty to comply, refusal can affect how the authority views the company and how the investigation proceeds. Whether to comply, and if so what to explain and how to prepare, should be decided on an assessment of the matter — neither casual refusal nor unprepared acceptance is advisable.

Q2. Can we ask the inspectors to wait until our lawyer arrives?

There is no general right to have an administrative inspection or a warrant-based search postponed until counsel arrives. The extent to which counsel may attend, enter the premises or confer with officers and employees varies with the statute, the authority's practice and the situation, and may be restricted. Contact counsel immediately without hindering the inspection or search, seek opportunities for attendance and consultation, and record the scope of the investigation and the items produced or seized.

Q3. An internal investigation suggests we were involved in a cartel. What should we do?

Where cartel or bid-rigging conduct is suspected, preserve the evidence and promptly consider a leniency application. Because the available reduction depends on the order and timing of applications and the degree of cooperation, the timing must be judged while confirming the facts within a limited circle. We recommend seeking advice at an early stage.

Q4. Can we refuse to produce materials demanded during an on-site inspection?

Whether you must produce materials depends on the legal basis of the investigation and the form of the demand. A voluntary request does not necessarily create a legal obligation, but statutory production orders, report orders and on-site inspections often carry penalties for refusal, obstruction or false reporting without justifiable grounds. Even where the scope seems questionable, or the materials include trade secrets, personal information or communications with counsel, do not destroy, hide or unilaterally withhold them — confirm the scope, negotiate the method of production and the handling of confidential information, and consider any applicable protective procedures (such as the procedure described in section 4(4)).

The initial response can shape the entire course of the investigation, the sanctions and the disclosure that follows. Contact us when an inquiry or a visit from the authorities arrives — or as soon as a potential violation comes to light internally.

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Contact Us at an Early Stage

Consulting us early helps preserve your options for response.