SAKURA Law Office is pleased to announce the launch of its External Whistleblowing Hotline services to further support companies and other organizations in strengthening their compliance, corporate governance, and risk management frameworks.

As the legal and social environment surrounding corporate activities continues to evolve rapidly, the ability of companies to identify at an early stage, appropriately investigate, and remediate violations of laws and regulations, improper accounting practices, falsification of quality data, data manipulation, fraudulent billing, harassment, and other misconduct or inappropriate conduct has become an extremely important management issue for maintaining corporate value and protecting public trust.

Corporate misconduct does not necessarily cause serious damage to a company at the moment the underlying issue first arises. Rather, an initially limited issue may develop into a serious corporate scandal because individuals within the organization were aware of the problem but the information did not reach management through appropriate channels, because the response after a report was received was inadequate, or because the company failed to conduct an appropriate investigation and take corrective action despite being aware of the issue.

In this sense, SAKURA Law Office believes that a whistleblowing system is not merely a mechanism for formally establishing a reporting channel as required by law. It is an important part of corporate infrastructure that enables a company to identify problems within its organization at an early stage, take corrective action on its own initiative, and prevent such problems from developing into serious corporate misconduct.

Under Japan’s Whistleblower Protection Act, businesses that regularly employ more than 300 workers are required to establish systems and take other necessary measures to appropriately respond to internal whistleblowing reports, while businesses with 300 or fewer regularly employed workers are required to make reasonable efforts to establish such systems. In addition, persons engaged in handling whistleblowing reports are subject to a statutory duty of confidentiality regarding information that may identify a whistleblower. Companies are therefore expected not merely to establish a reporting channel, but to operate an effective system that includes preventing adverse treatment of whistleblowers, appropriately managing information that may identify whistleblowers, avoiding conflicts of interest, and conducting necessary investigations and implementing corrective measures.

Furthermore, the amended Whistleblower Protection Act will take effect on December 1, 2026. Under the amendment, certain freelancers will be added to the scope of persons protected under the Act, and rules concerning dismissal or disciplinary action on the grounds of whistleblowing will be strengthened. Accordingly, ensuring the effectiveness of corporate whistleblowing response systems will become more important than ever.

While the legal framework continues to develop, an even more important issue in practice is whether employees and others considering making a report can genuinely trust the reporting channel.

No matter how comprehensive a company’s internal regulations may be, a whistleblowing system will not function effectively if potential whistleblowers are concerned that their report may become known to their supervisors, that they may suffer adverse treatment in the workplace as a result of making a report, or that their report may be suppressed within the company. In an organization where employees who are aware of problems cannot speak up, serious risks may continue to develop without management becoming aware of them.

For this reason, it is essential for a whistleblowing system to provide a channel through which whistleblowers can safely and confidently provide information.

Appointing an external law firm as a whistleblowing contact point has the significant advantage of allowing reports to be received in an environment that maintains a certain degree of distance from internal personal relationships and organizational hierarchies. In particular, from a corporate governance perspective, it is important to establish in advance an independent reporting route separate from ordinary internal channels for reports concerning managers or senior executives, cases in which a whistleblower may hesitate to consult the company’s compliance or human resources departments, or matters that may involve the company’s representative or other senior management.

Establishing an external hotline operated by attorneys is not solely for the benefit of whistleblowers.

For management, one of the greatest risks is that a serious problem may exist within the company without the relevant information ever reaching senior management. Establishing a system through which significant risk information—including information that may not necessarily be welcome to the company or its management—can reach the appropriate persons through an external reporting channel is also important for ensuring that management has the information necessary to make informed decisions.

Receiving a whistleblowing report is not itself a corporate risk. A far greater risk is allowing an existing problem to go unreported and to escalate without the company becoming aware of it.

Based on this approach, SAKURA Law Office serves as an external whistleblowing contact point for companies and provides, based on the professional expertise of our attorneys, services including receiving reports, conducting an initial review and organization of the matters reported and relevant facts, communicating with whistleblowers, reporting matters to the appropriate bodies within the company, and providing advice on investigation methods and response policies where necessary.

Rather than simply receiving reports and forwarding them to the company, we carefully consider the appropriate body to which a matter should be reported, the scope of information that should be disclosed, and the appropriate method of reporting, taking into account the nature, urgency, and seriousness of the report as well as any potential conflicts of interest. Where the company’s top executive or the person who would ordinarily receive such reports is the subject of the report, we consider reporting routes to independent bodies such as corporate auditors, boards of corporate auditors, audit and supervisory committees, outside directors, or other independent bodies, in accordance with each company’s organizational structure and corporate governance framework.

Our support does not end with the receipt of a report. Where necessary, we assist companies in determining an appropriate response through consultation regarding fact-finding methods, interviews with relevant individuals, preservation of evidence and documents, legal assessments, corrective measures, measures to prevent recurrence, feedback to whistleblowers, and other related actions. To ensure that a whistleblowing system functions effectively, it is important to design the entire process—from receipt of a report through investigation, assessment, remediation, prevention of recurrence, and feedback to the whistleblower—as an integrated process.

For companies introducing a whistleblowing system for the first time, we provide support not only in establishing an external reporting channel but also in designing a system appropriate to the company’s size, industry, organizational structure, and existing compliance framework. This may include developing internal whistleblowing regulations, determining the scope of reportable matters and eligible users, defining the respective roles of internal and external reporting channels, establishing independent reporting routes for matters involving senior management, appointing personnel responsible for handling whistleblowing reports, establishing rules concerning information management and confidentiality, designing investigation and remediation procedures, and developing methods for communicating the system to employees and other relevant persons.

Companies that already have an internal whistleblowing system may also consult us regarding reviews of their existing systems and the establishment of additional external reporting channels. Such reviews may consider whether sufficient reports are actually being received, whether whistleblowers can use the system with confidence, whether appropriate independence from management and human resources departments has been secured, whether mechanisms are in place to avoid conflicts of interest, and whether the investigation and remediation processes following receipt of a report are clearly defined.

In particular, companies that currently appoint their regular outside counsel as their whistleblowing contact point may benefit from reconsidering the relationship between ordinary advisory services and the neutrality and independence of the whistleblowing channel from the perspective of potential whistleblowers. To ensure the effectiveness of the whistleblowing system, appointing a law firm separate from the firm’s regular outside counsel as the external reporting channel and separating their respective roles may be an effective option.

SAKURA Law Office can also advise on establishing an external reporting channel that accepts not only statutory whistleblowing reports concerning violations of laws and regulations, but also, depending on the design of each company’s system, internal reports and consultations concerning harassment, accounting fraud, fraudulent billing, quality or safety issues, and other compliance-related concerns.

A whistleblowing system is not a mechanism designed to attack a company.

Rather, it is a system that enables a company to appropriately receive information from individuals who identify problems at an early stage, investigate and correct those problems before they develop into serious issues, prevent recurrence, and thereby enable the company to exercise its own capacity for self-correction. A properly designed whistleblowing system can complement a company’s compliance framework, internal audit, risk management, and corporate governance functions and serve as an important mechanism for protecting both the company and its management from serious corporate misconduct.

Responding to a crisis only after misconduct has developed into a broader social issue can impose a significant burden on a company. In addition to legal liability, the consequences may have long-term effects on corporate value, including the trust of business partners, customers, shareholders, employees, and other stakeholders, as well as the company’s brand, ability to recruit talent, and access to financing.

On the other hand, if a company can identify problems at an early stage, conduct its own investigation, and implement necessary corrective and preventive measures, it can help prevent the damage caused by misconduct from escalating while maintaining confidence in its corporate governance and compliance framework.

The goal should not be to create a company in which “no one reports problems,” but rather a company in which information is promptly communicated when a problem arises and the company is able to identify and correct the problem itself.

Through its External Whistleblowing Hotline services, SAKURA Law Office places importance both on the appropriate protection of whistleblowers and on sound corporate risk management, and supports the establishment and operation of effective whistleblowing systems tailored to the circumstances of each company.

Matters on Which We Can Advise

We welcome consultations from companies seeking to establish a new external whistleblowing hotline; establish an independent external reporting channel in addition to an existing internal channel; confirm whether their current internal whistleblowing system complies with the Whistleblower Protection Act and applicable guidelines; establish an independent reporting channel separate from their existing outside counsel; prepare for the amended Whistleblower Protection Act taking effect on December 1, 2026; establish an independent reporting route for reports concerning senior executives or other management personnel; or review their existing internal whistleblowing regulations and operational procedures.

Regardless of company size or industry, we propose an appropriate framework based on each company’s organizational structure, composition of officers, number of employees, existing compliance framework, presence of overseas offices, and other relevant circumstances.

Companies do not need to have finalized the specific design of their whistleblowing system before consulting us about introducing an external whistleblowing hotline. After reviewing your current internal structure and challenges, we can propose an approach suited to your company, whether that involves outsourcing only the external reporting channel, operating internal and external channels in parallel, or comprehensively reviewing the system from internal regulations through ongoing operations.

Inquiries Regarding the Introduction of an External Whistleblowing Hotline

For consultations regarding the establishment of a new external whistleblowing hotline, reviews of existing systems, compliance with the Whistleblower Protection Act, development of internal whistleblowing regulations, or other matters concerning whistleblowing and internal reporting systems, please contact SAKURA Law Office.

When contacting us, please include “Consultation Regarding an External Whistleblowing Hotline” in the subject line or description of your inquiry so that we can direct your inquiry to the appropriate attorney.

SAKURA Law Office
ARK Hills South Tower 4F
1-4-5 Roppongi, Minato-ku, Tokyo 106-0032, Japan
TEL: +81-3-6910-0692
FAX: +81-3-6910-0693
Managing Partner: Kenshiro Michishita

We welcome consultations not only from companies that are specifically considering establishing an external whistleblowing hotline, but also from companies that are still assessing whether their current system is sufficient, whether they should establish an external reporting channel separate from their regular outside counsel, or how they should prepare for the amended Act.

After reviewing the size of your company and its existing framework, we will propose practical measures regarding implementation methods, operational structures, reporting routes, and other necessary matters.