Company Formation in Japan
Updated on Friday 22nd March 2024
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Listed as the fourth in rank (as of 2024) when it comes to economic power, Japan is one of the most developed countries in the world. When talking about opening a company, investors should know that depending on the country they are from, Japan has visa exemptions. If your country is on the visa waiver list, a passport is all you need in order to proceed with your business plan.
Types of business entities in Japan
You can choose from several business entities: limited liability companies, joint stock corporations, offshore companies, representative offices or you can opt for creating a branch office for a parent company overseas.
They all have their advantages, but the one that most foreign investors prefer is the limited liability company type and this is due to the fact that it is more easier to establish. In order to set up a company like this in Japan, you need to meet some requirements:
- at least one shareholder;
- a share capital of minimum $1;
- no less than one director (in case there are more directors, one of them has to be a Japanese resident);
- providing an annual financial situation.
An important advantage of the limited liability company type is that you can have employees of any nationality. If you need assistance on employing foreign workforce, you can rely on our team, who can advise on the immigration formalities that can apply.
How to incorporate an LLC in Japan
A limited liability company (LLC) in Japan gains legal recognition after the articles of incorporation have been signed. The LLC is known as Good Kaisha (GK). According to the Japanese Ministry of Justice, the process of company formation in Japan for an LLC must comply with the following:
- the articles of incorporation must state a set of provisions stipulated under the Articles 576-577 of the Companies Act;
- the company can be registered by applying online or by submitting paper documents, as per the rules of Article 17, paragraph (1) of the Commercial Registration Act;
- there is a registration tax, which is calculated by multiplying the company’s stated capital to 7/1,000 – but in the case in which the resulting sum is less than JPY 60,000, then the company will pay JPY 60,000;
- additional rules concerning the registration of a Japanese legal entity can also derive from the Ordinance for Enforcement of the Companies Act (Ordinance of the Ministry of Justice No. 12 of 2006).
The main provisions of the articles of incorporation in Japan
The articles of incorporation have to provide a clear image on the company’s management, shareholding, capital, activities and many others. All these aspects have to be stipulated in the founding document, in accordance with the Japanese law.
According to the Article 914 of the Companies Act, the articles of incorporation of an LLC registered in this country must provide details about the following:
- the trading name of the company and the purpose for which it was set up;
- the registered address and the capital;
- the names of the founders (who can be legal entities or individuals);
- provided that the company is set up for a specific amount of time, the document must state the date at which the company will enter the dissolution phase.
What are the characteristics of the joint stock company in Japan?
Another way to set up a company in Japan is by registering a joint stock company, which is known here as Kabushiki Kaisha. The characteristics of this structure are similar to the ones of the LLC. Both companies provide limited liability against corporate debts, which is why both of them are very popular for those interested in company formation in Japan.
This legal entity gains legal recognition through the same founding document – the articles of incorporation. The main difference between this legal entity and the LLC is that the first is ideally suited for the needs of large corporations.
Another major difference is that this legal entity allows an easy transfer of shares, which is not the case of an LLC. Our team of specialists in company registration in Japan can provide further information on the similarities and differences between these 2 structures and can help you choose the legal entity that is most suitable for your business needs.
We invite you to address us when you will set up a bank account for your Japanese company. You can also rely on us if you need to set up an offshore bank account. This is necessary when initiating the process of offshore company setup.
Can investors register partnerships in Japan?
Yes, the commercial legislation in Japan offers the possibility to incorporate partnerships, which have similar characteristics as the ones of partnerships that can be met in other countries. There are 2 types of partnerships – the Goshi Kaisha and the Gomei Kaisha.
The first type of partnership is set up by at least 2 partners, one of which has limited liability, while the other has unlimited liability, while in the case of the 2nd partnership, both partners have unlimited liability.
General steps to register a company in Japan
The registration process of a company in Japan will take a few weeks and these are some of the steps that you need to complete. You begin by choosing a name for your company and after that you can also open the bank account with the company's name.
Then, a copy of the seal registration certificate has to be submitted to the Ministry of Justice. You also have to register with the Legal Affairs Bureau. A notification of the company's registration has to be sent to the tax office and also let them know that you are starting your business.
The Labor Standards Supervisory Office also has to be notified concerning your employment regulations and labor insurance documents. The last step is to apply for health, employment and accident compensation insurance.
Although it has been seen as an expensive country, Japanese authorities have become more and more supportive with foreign entrepreneurs who want to form a company in Japan. For more information, do not hesitate to contact our specialists, who can also assist you in offshore incorporation matters.