Early detection, appropriate investigation, and remediation of legal violations, accounting fraud, fraudulent billing, quality or safety issues, harassment, and other compliance-related concerns within a company are critically important for protecting its social credibility and corporate value.
An internal whistleblowing system is not merely a mechanism for formally establishing a reporting channel as required by law. It is an important corporate governance and risk management mechanism that enables management to identify issues within the organization at an early stage and to investigate, remediate, and prevent recurrence before such issues develop into serious misconduct or corporate scandals.
SAKURA Law Office provides external whistleblowing hotline services on behalf of companies and other organizations, receiving reports from employees and other eligible persons through an independent external channel.

Ensuring an Effective Internal Whistleblowing System

What matters in an internal whistleblowing system is not simply that a reporting channel exists, but that employees and other potential whistleblowers trust that they can safely raise concerns through that channel.
Where only an internal reporting channel is available, employees may refrain from reporting concerns when the subject of the report is their supervisor or a member of senior management, due to concerns that the fact that they made a report may be disclosed to the person concerned, that they may suffer adverse treatment in the workplace, or that the matter may not be handled appropriately within the company.
For a company, however, the greatest risk is not receiving a whistleblowing report. Rather, it is allowing an existing problem to escalate because relevant information does not reach management and the company remains unaware of the issue.
By appointing an external law firm that maintains a certain degree of independence from the company as a whistleblowing contact point, companies can establish a reporting route separate from internal personal relationships and organizational hierarchies. In particular, establishing an alternative route in advance, separate from the ordinary internal reporting channel, is important for enhancing the effectiveness of the whistleblowing system in cases involving managers, senior executives, compliance departments, or human resources departments.

SAKURA Law Office's External Whistleblowing Hotline

As an external whistleblowing contact point for companies, SAKURA Law Office not only receives reports but also provides the necessary support associated with the reporting process based on the professional expertise of our attorneys. This includes an initial review and organization of the report and relevant facts, communication with the whistleblower, legal analysis of the matters reported, and reporting to the appropriate body within the company.
Rather than simply forwarding reports to the company, we assess the nature, seriousness, and urgency of each report, as well as any potential conflicts of interest, and consider to whom the matter should be reported, what information should be disclosed, and the appropriate method of reporting.
If the subject of a report is the company's top executive or another person who would ordinarily receive such reports, we may propose an alternative reporting route to an independent body, such as a corporate auditor, board of corporate auditors, audit and supervisory committee, outside director, or other independent body, depending on the company's organizational structure and corporate governance framework.
If a factual investigation becomes necessary after a report is received, we can also provide advice and assistance, depending on the circumstances, regarding the preservation of evidence and documents, interviews with relevant individuals, fact-finding investigations, legal assessments, remedial measures, measures to prevent recurrence, and other necessary actions.
An internal whistleblowing system does not end with the receipt of a report. It can function as an effective mechanism supporting a company's ability to identify and correct its own problems only when the entire process—from receiving reports through investigation, legal assessment, remediation, prevention of recurrence, and necessary feedback—is appropriately designed and implemented.

Compliance with the Whistleblower Protection Act

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. Businesses with 300 or fewer regularly employed workers are subject to an obligation to make reasonable efforts to establish such systems.
In addition, persons engaged in handling internal whistleblowing reports are subject to confidentiality obligations regarding information that may identify a whistleblower. Companies are therefore expected not only to establish a reporting channel but also 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. Among other changes, certain freelancers will be added to the scope of protected persons, and the rules concerning dismissal or disciplinary action taken on the grounds of whistleblowing will be strengthened. Accordingly, the importance of establishing an effective corporate whistleblowing response system will continue to increase.
SAKURA Law Office assists companies not only in complying with the current law but also in reviewing and updating their internal whistleblowing regulations and operational systems in light of the amended Act.

From Establishing an External Hotline to Designing the Entire Whistleblowing System

For companies that are establishing an internal whistleblowing system for the first time, we can provide advice not only on establishing an external whistleblowing hotline but also on designing the overall system. This may include drafting or revising internal whistleblowing regulations, determining the scope of reportable matters and eligible users, defining the respective roles of internal and external reporting channels, appointing personnel responsible for handling whistleblowing reports, establishing rules concerning information management and confidentiality, creating independent reporting routes for cases involving senior management, designing procedures for investigation, remediation, and prevention of recurrence, and developing methods for communicating the system to officers and employees.
For companies that already have an internal whistleblowing system in place, we can also assist in reviewing the existing system and establishing an additional external reporting channel. Such reviews may consider whether the current system is genuinely accessible and used in practice, whether sufficient independence of the internal reporting channel has been secured, whether information that could identify whistleblowers is appropriately managed, whether mechanisms exist to avoid conflicts of interest, and whether the procedures for investigation and remediation following receipt of a report are clearly defined.
In particular, where a company's regular outside counsel also serves as its internal whistleblowing contact point, appointing a separate law firm as an external reporting channel and separating the respective roles of the two firms may be an effective option from the perspective of independence and the confidence of potential whistleblowers in the system.

Handling Internal Reports and Consultations Beyond Statutory Whistleblowing

Not every report submitted to a company necessarily qualifies as a "whistleblowing report" under the Whistleblower Protection Act.
From the perspective of corporate risk management, however, there is value in ensuring that a company's internal reporting system appropriately captures not only reports that legally qualify for whistleblower protection, but also concerns involving harassment, violations of internal rules, improper accounting practices, quality or safety concerns, and other compliance-related issues.
SAKURA Law Office can advise each company on the appropriate scope of internal reports and consultations to be accepted through its external reporting channel, taking into account the company's business activities, size, organizational structure, and particular risk characteristics, in addition to reports falling within the statutory whistleblowing framework.

An Internal Whistleblowing System That Protects and Strengthens the Company

A whistleblowing system is not a mechanism designed to attack a company.
Rather, it is a system that enables a company to receive information from individuals who identify potential problems at an early stage, establish the relevant facts, take necessary corrective action, prevent issues from developing into serious misconduct or corporate scandals, and enable the company to exercise its own capacity for self-correction.
If a company begins responding only after misconduct has become publicly known and developed into a broader social issue, it may face not only legal liability but also serious consequences such as loss of trust among customers, business partners, shareholders, financial institutions, employees, and other stakeholders, as well as damage to its corporate brand.
By contrast, a company that can identify problems early, conduct its own investigations, and implement appropriate corrective and preventive measures can be regarded as a company capable of making its own compliance and governance systems function effectively.
SAKURA Law Office supports the establishment and operation of external whistleblowing hotlines based on the goal not of creating a company in which "no one reports problems," but of creating a company in which relevant information is promptly communicated when a problem arises, enabling the company to investigate and correct the issue itself.
Companies seeking to establish a new external whistleblowing hotline, review an existing internal whistleblowing system, establish an independent external reporting channel separate from their regular outside counsel, or prepare for the amended Whistleblower Protection Act taking effect on December 1, 2026 are welcome to consult SAKURA Law Office.
Even if the specific details of your whistleblowing system have not yet been determined, we can review your current structure and challenges and propose an external whistleblowing hotline and internal reporting framework suited to your organization.