When setting up a company in Japan you want to consider the most suitable operation and structure for your business. The three types of operations are Representative Office, Branch Office, and a Subsidiary Company.
The following article will provide some information on the types of business structures there are for Subsidiary Company, the necessary documents and steps required in order to incorporate in Japan, the types of Visas available and how to acquire the Visa.
A foreign company establishing a subsidiary company in Japan can choose to establish it as a joint-stock company, known in Japanese as a “Kabushiki-Kaisha” （株式会社）commonly abbreviated as “KK”. The advantage of a KK is it is the most well-known and common form of business structure in Japan and is viewed more trustworthy than other business structures within Japanese society. A KK can choose to be publicly traded on the open market and appoint directors who do not hold shares. The drawbacks of a KK are it is more expensive when setting up and board of directors must be reappointed once their term ends.
The other option when establishing a subsidiary in Japan is an LLC, known in Japanese as a “Godo Kaisha” （合同会社）commonly abbreviated as “GK”. If your budget is limited GK is cheaper to incorporate compared to a KK and profit sharing is not bound to the investment rates. Disadvantages of a GK is it was introduced in 2006 so it is still not very well known thus being less credible when working with Japanese companies. Some multinational companies such as Amazon.com, Inc. and Apple Inc. have chosen to set up as a GK in Japan.
Both KK and GK is a subsidiary company, separate corporation from the foreign parent company, so the foreign company is not liable for the subsidiary’s debt or obligations, but they can bear liability as an equity participant. Reorganization from KK to a GK is possible and vise-a-versa.
Some business operations, you will need to obtain special permits before or after incorporating your company in Japan. These include:
The trade name of the subsidiary company to be established must be checked to ensure it does not conflict with any existing Japanese companies with the same name and address. This can be done online in less than half a day requiring zero fees.
During this point of the process it is highly recommended to have at least one director who is Japanese or has residence in Japan to secure a business address and provide Japanese Bank Account for the remittance of initial capital/investment.
The Articles of Incorporation will include details such as:
The Articles of Incorporation once prepared must be notarized by a Japanese notary public.
To establish a company in Japan, most if not all official documents must be notarized and translated to Japanese. We can provide you with the full list of documents and notarization necessary and the Japanese translations.
For small to medium companies being established in Japan, generally there are number of predetermined formats that individuals or parent companies use. Our judicial scriveners can provide you with an outline that is both in Japanese and English. The details you must decide on the Articles of Incorporation are the following.
This can be in kanji, hiragana, katakana, alphabet, numbers, or a mixture of these. You can select any trade name as long as it does not conflict with any existing organization registered with the same name and address as yours.
There is no guideline for the where the company should operate but local government incentives and brand image should be taken into consideration. Using a virtual office or director’s home address are potions to consider, physical office space is required if you plan to obtain a business manager visa.
The minimum capital required to establish a company in Japan is 1 yen, though we do recommend a minimum of 5 million yen for you to be able to obtain a business manager visa and allow you to pay for initial expenses when incorporating.
There is no law determining the initial number of shares and their value. As long as the numbers equate to the capital amount you may decide freely. You will also need to choose how the shares/stocks are transferred. In the case of an GK, you will also choose how profits/dividends are distributed among investors.
As a company you will also need to determine the directors, auditors, and shareholder/investors at the time of incorporation. A company needs at least done director and this role can be done by investor/shareholder. A KK must specify the duration of its director’s term, which is 2 to 10 years.
The activities and operations the company is doing to undertake must be on the company register. You can list all the activities you will undertake including those that you will not be engaging immediately. These activities and operations can be changed later and there is no obligation to undertake all the operations listed. Business operations requiring certain licenses and permits must be mentioned in the Articles of Incorporation.
Here will you decide on the company’s fiscal year. Many Japanese companies have their fiscal year starting in April 1st and end on March 30th. Due to this reason many companies and their accountants get busy during this time, so to avoid this you may choose a period which is less hectic.
Once your company has been registered at the Legal Affairs Bureau and your corporate bank account has been opened you must notify the proper authorities. These notices are not all mandatory, some require when the company hires employees. These are:
The procedures of starting up your company in Japan, whether it be a KK or GK are not too difficult and can be generally completed in 2 to 4 weeks. The steps that many entrepreneurs find challenging when first looking to enter the Japanese market are securing a resident Director and the procedures required post company registration at the Legal Affairs Bureau.
With the proper, professionals, and Certified team of Judicial Scriveners, Labor and Social Insurance Consultants, CPA and more, Gerbera Partners Group can assist your through the whole process of establishing your company, acquisition of working visa, post incorporation process, social and labor insurance/requirements to bookkeeping and corporate tax returns.
Connect today and find how our depth of knowledge and proven, hands on experience and knowledge can elevate your business in the Japanese Market.