Visa Stipulation in Contract

I was recently offered a position. I've been employed in Japan before and I never noticed anything significant about visa stipulations detailed in my previous contracts. This contract states that if the company were to sponsor my visa (which I need them to do) and I leave the company with time remaining on my visa (example: 1 year left on a 3 year visa), then I would not be permitted to work anywhere else or I'd risk facing legal action from them. This stipulation is in addition to and separate from when an employee breaks contract and is then forced to pay back the visa fees to the company.

A couple questions:

1.) Is this even legal?

2.) Is this a red flag? I can understand that they're trying to deter contract breakers, but I don't know if I'll want to work for them for more than a year or two.

3.) Would the risk of legal action be nullified if I do not renew my contract and report to immigration that I've formally left them?

Thanks for any help y'all can give. I don't have long before I need to give them my answer on the offer and I kind of feel like they might be trying to get me to rush into it.

1.) Is this even legal?
I don`t think they are referring to the visa. You may change your job with a visa in the same related work. But from a company point of view, maybe they don`t want you to work for another company.
It is a so called non competition obligation, which is often used and means that upon termination of the contract, the employee shall not enter into any activity in any business, company and/or partnership which competes, directly or indirectly, with the business of the company and/or the business of the Group.

2.) Is this a red flag? I can understand that they're trying to deter contract breakers, but I don't know if I'll want to work for them for more than a year or two.
See point 1

3.) Would the risk of legal action be nullified if I do not renew my contract and report to immigration that I've formally left them?
I believe it is not related to your Visa, just ask the company what the meaning is, but i think it is the non competition obligation clause.

I don't want to copy and paste the wording exactly, just in case my potential employer is floating around on the forums, but it states that I can't do -any- work outside of the company even after my contract has finished. I'd at least understand the reasoning if it was limited to competitors.

I'm a little wary of asking directly, because I don't want to sound like I intend to break contract or anything. I'm just concerned that if I get a 3 or 5 year visa, I'd be obligated to work for them or go back to my home country.

Completely illegal. A company cannot stop you from quitting and using your work visa with a different employer. After you quite, you're supposed to inform immigration within 14 days of changing jobs, and then they are the only ones who can decide if you can keep using it or if it should be revoked. Generally speaking, there's no reason for it to be revoked unless you try to engage in activities completely unrelated to the type of visa or you have been a not so good citizen during that time (not paying taxes, etc...)

It's also illegal to threaten with such wording in a contract, as well as asking reimbursement for visa expenses in case you resign!

Either your company is small, with no experience hiring foreigners and without a legal department, or they just want to scare you to keep you from doing a nasty move on them (like using them to get into Japan, then leave to a better job in a few months)

For me, that's a red flag. No serious company behaves like this. When a company makes it sound like they are the only ones making you a favor by giving you a job and a visa, it's generally a bad sign.

I'm also not so sure if it's legal to ask you not to work with their competitors, that seems like too much. I work in the automotive sector, and if that was something legal to put in a contract, we wouldn't be stealing employees from each other all the time and wouldn't have to deal with employee turnover.
What they can do is to make you sign a non-disclosure-agreement (NDA) in which you agree not to share any private information, intellectual property, etc. with others.

1) I don't think so.
They would of course want to stop you from going to a competitor, or to switch to "greener pastures" after a few months, let's say, of you working there, but what would you do IF they signed you up for a long contract to begin with, and you HAPPEN to get a full 3 or 5 year visa, and you don't want to stay beyond 2 years to begin with?
At least they have to specify that you are not to go to a competitor after you leave them, for a limited time (like 6 months or 1 year or something).
By the way do they specify "visa fee"? It's only several thousand yen if they went and applied themselves, but some employers try to get you to pay the immigration attorney's fee, which is far higher.

2) Yet, it is a red flag. I would not want to work for a company that imposes that wording.

3) They can threaten you with a legal action, but another thing is that after you tell them you are leaving them (and unless you are going home immediately) they can withold the last salary payment, or harasse you in some other ways. I would avoid this company.

if they spend some money to get your visa, they may have a right to collect some money from you, if you quit the job so quickly.
so, depends on a case.
but, generally speaking, I think that their expense will not be worth for your one year working, if your visa is a regular working visa.