This page refers to setting up a new corporate entity in Japan pursuant to the Japanese Companies Act.

Foreign company can set up a 100%-owned subsidiary in Japan by injecting its money as the initial capital. Also, each foreign individual can set up a corporate entity by investing his/her own money.

Most popular structure is called Kabushiki Kaisha (株式会社; hereinafter referred to as “KK”), a joint-stock companies incorporated in Japan. Godo Kaisha (合同会社; hereinafter referred to as “GK”) is also getting familiar, which is similar to the Limited Liability Company (LLC) in the US offering limited liability for all investors (members).

Jump to the following page to check types of business operation in Japan as well as advantages and disadvantages of Incorporation >> Types of Business Operation

For the procedures of setting up a company, jump to the website of the Ministry of Justice of Japan;

For further detailed assistance, you may contact JETRO, the government related organization which is providing services to expand your business into Japan >> JETRO: SETTING UP BUSINESS

IF YOU ARE NOT FAMILIAR WITH VISA PROCEDURES IN JAPAN, JUMP TO INTRODUCTORY PAGES BELOW FIRST:

Contents
  1. COMPARISON of the CHARACTERISTICS
  2. HOW to DECIDE CORPORATE NAME
  3. HOW to DECIDE FISCAL YEAR-END
  4. ARTICLES of INCORPORATION (定款)
  5. ITEMS to REGISTER
  6. PROCESS to COMPANY REGISTRATION
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COMPARISON of the CHARACTERISTICS

ItemsKK (株式会社)GK (合同会社)
Corporate Name (商号)Required to include “Kabushiki Kaisha (株式会社)” at the beginning or at the end of the nameRequired to include “Kabushiki Kaisha (合同会社)” at the beginning or at the end of the name
Registration Tax (登録免許税)JPY 150,000 at minimum
(amount of initial capital × 0.7%)		JPY 60,000 at minimum
(amount of initial capital × 0.7%)
Notarization of the Articles of IncorporationRequired
Notarial fee (around JPY 50,000) is charged		Not required
Amount of Initial capital At least JPY 1at least JPY 1
InvestorsShareholder (株主)Member (社員)
社員 here is different meaning from “employee”
Number of investors required1 Shareholder and Director at least

If Shareholder and Director is the same person, one person is enough. 		1 Member at least

Note that you cannot be a Member without any investment for the GK.
Liability of equity participants toward creditorsLimited to amount of equity participationLimited to amount of equity participation
Voting rightsOne share, one voteOne Member, one vote
ExecutivesDirectors (取締役) All Members (社員) in general

Number of executives can be stipulated in Articles of Incorporation.
Number of executives requiredAt least oneNot stipulated – all the members are executives in principle. It can be determined by Articles of Incorporation.
Representative of executivesRepresentative Director (代表取締役)

It must be elected among the directors of the KK		Representative Member (代表社員)

It must be elected among the Members of the GK

In case the Representative Member (代表社員) of GK is a corporation, the corporation must appoint an Executor of Duties (職務執行者) who execute GK’s business on behalf of the corporation.
Relationship between the person who executes the business and the investorShareholders appoint the person who executes the business of KK. The person does not have to be a shareholder.Investor = Member

Only the Member can be the person who executes the business of GK.
Terms of office for executivesIn case of KK subject to restrictions on the transfer of issued shares: Up to 10 years

In case of KK publicly traded joint-stock corporations: Up to 2 years		Not limited
General MeetingIt must be held annually in generalNot required
Public Notice for year-end Financial StatementEvery fiscal yearNot required
Distribution of profits and lossesAllocated according to equity participation ratioMay be allocated freely by specifying in Article of Incorporation
Public offer of shares/equityOptional Not possible
Transfer of Shares/equityNot limited, but may be limited in case it is stipulated in Articles of Incorporation.Unanimous consent of members is required
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HOW to DECIDE CORPORATE NAME

Corporate name (商号; Name of Company) must be decided based on provisions of the Companies Act.

Confirm whether there is identical or similar corporate name at the same address

The law prohibits to register identical or similar corporate name at the same address. Some companies don’t register the floor number or room number in the Company Registration, so we recommend confirming the name of the companies in the same building in advance especially in the case that shared offices or virtual office services are located at the same building.

Include a word showing the type of company

Corporate name must include “Kabushiki Kaisha” or “Godo Kaisha” at the start or the end of the name.

e.g. 株式会社〇〇〇 or 〇〇〇株式会社 / 合同会社△△ or △△合同会社

There are limitation of word to register as a corporate name

Corporate name may include Hiragana, Katakana, Kanji (Chinese character), numbers, alphabet (upper/lower case) and the following mark/symbol.

  • & (ampersand)
  • ‘ (apostrophe)
  • , (comma)
  • － (hyphen)
  • . (period)
  • ・ (middle dot / interpoint)

** These marks/symbols can be included to separate words only. It cannot be put at the start or the end of the name.
** Space character can be used only to separate words consisting of alphabetical letters.

There are some words which cannot be used for a corporate name:
e.g. any word which is contrary to public order or morality

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HOW to DECIDE FISCAL YEAR-END

In Japan, the fiscal year of the company must be the period of consecutive 12 months and the fiscal year-end can be set freely according to the business of the company.

The first fiscal year starts on the date of the establishment of the company (the same as the date of application for the registration at the Legal Affairs Bureau). The company must file the tax return within 2 months (*) after the fiscal year-end.

Therefore, you should note that the company will need to file the tax return for the first fiscal year soon after setting up the company in case the fiscal year-end of the company comes in the short period after the date of establishment.

(*) 3 months in case the company has submitted “Application of extension of due date for filing the return”.

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ARTICLES of INCORPORATION (定款)

Articles of Incorporation (定款; hereinafter referred to as “AoI”) is a necessary documents to set up a company. The company should be governed by rules and regulations stipulated in the AoI and amend the AoI when it is necessary.

There are simple templates (only in Japanese) on the website of the Legal Affairs Bureau (法務局), you can use it if you are familiar with the Japanese language for the company establishment and you set up a small company by your investment only.

法務局 webpage >> Example and template for Company Registration (see page 7 for example of AoI)

In case of KK

Articles of Incorporation for KK must be notarized by Public Notary (公証人) before the registration at the Legal Affairs Bureau.

  1. Mandatory items / 絶対的記載事項 (Article 27 of the Companies Act)
    Items which must be included mandatory in the Articles of Incorporation for KK;
    • Corporate name
    • Head office (at least the smallest administrative division)
    • Purpose of business
    • Amount of investment for establishment or the minimum amount
    • Name and address of the promoter/incorporator
  2. Relative items / 相対的記載事項 (Article 28 of the Companies Act)
    Items which must be included if it has to be effective/valid;
    • Anomalous items for establishment (e.g. items which are necessary to be stipulated by the AoI, such as contribution in kind/現物出資 etc.)
    • Restriction of transfer of shares
    • Number of issue of shares
    • Placement of Representative Director, Board of Directors, Accounting Advisor, Auditor etc.
    • Method of Public Notice, etc.
  3. Optional items / 任意的記載事項（Article 29 of the Companies Act）
    Items which are included in the AoI even they are not obliged to;
    • Fiscal year
    • Number of Directors, Auditors and other executives
    • Rules to hold the Shareholders Meeting
    • Period of calling the general shareholders meeting
    • Remuneration for Directors and other executives
    • Record date, etc.

In case of GK

  1. Mandatory items / 絶対的記載事項（576-1 of the Companies Act）
    Items which must be included mandatory in the Articles of Incorporation for GK;
    • Corporate name
    • Head office (at least the smallest administrative division)
    • Purpose of business
    • Name and address of Member
    • Principle that all the Members of GK is a member with limited liability
    • Purpose, amount/value and the standards of evaluation regarding each member’s investment/contribution
  2. Relative items / 相対的記載事項
    Items which must be included if it has to be effective/valid;
    • Method of designation or appointment of Executive Members (Article 590-1 of the Companies Act)
    • Method of decision of business in case that there are 2 or more Executive Members in the GK (Article 590-2, 591-1 of the Companies Act)
    • Designation or mutual election of Representative Member of GK.
    • Duration or dissolution (Article 641-1 and 641-2 of the Companies Act)
  3. Optional items / 任意的記載事項
    Items which are included in the AoI even they are not obliged to;
    • Fiscal Year
    • Number of Executive Members
    • Remuneration for Executive Members, etc.
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ITEMS to REGISTER

Items listed here will be registered at the Legal Affairs Bureau as the Registered Corporate Information and will be open to the public. Anyone can confirm registered information by obtaining “Certificate of Company Register; 登記事項証明書”.

In case the registered items have been changed, each company has to process the change of company register within 14 days after the change occurs.

In case of KK

Here is the list of items to be registered at the Legal Affairs Bureau (Article 911-3 of the Companies Act);

  1. Corporate name
  2. Address of head office and branch office
  3. Purpose of Business
  4. Amount of Initial Capital
  5. Total number of shares authorized to be issued
  6. Contents of shares to be issued
  7. Total number of issued shares, types of shares and number of each type of shares
  8. Name of Director
  9. Name and residence address of Representative Director
  10. Company with Board of Directors if applicable
  11. Company with Auditors if applicable and name of Auditor
  12. Method of Public Notice if it is stipulated in the AoI, etc.

In case of GK

Here is the list of items to be registered at the Legal Affairs Bureau (Article 914 of the Companies Act);

  1. Corporate name
  2. Address of head office and branch office
  3. Purpose of business
  4. Duration or Dissolution if it is stipulated in the AoI
  5. Amount of Initial Capital
  6. Name of Executive Member
  7. Name and Residence Address of Representative Member
  8. Executor of Duties to execute duties of Representative Member in case the Representative Member is a corporate entity.
  9. Method of Public Notice if it is stipulated in the AoI, etc.
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PROCESS to COMPANY REGISTRATION

In Japan, branch/corporate registration and other initial process (report for Tax Office, opening a bank account etc.) are separated, so you should proceed with the next step after company registration is completed at the Legal Affairs Bureau.

1. Decide basic items for the company

Decide the following items necessary for the company registration;

  • Type of company; KK or GK
  • Corporate name
  • Head office
  • Purpose of business
  • Amount of Initial capital
  • fiscal year-end
  • Company structure (directors/members, representative directors/members etc.)

2. Prepare the Articles of Incorporation

According to the items you decided, you prepare the Articles of Incorporation of the company. In case of KK, the Articles of Incorporation has to be notarized by notary public.

3. Payment of Initial Capital

After the AoI is prepared, each promoter/investor transfers money for Initial capital to a personal bank account of the representative promoter/investor.

4. Prepare the documents to submit for the company registration

  • Prepare application form and other supplemental documents according to the type of company
  • In order to register corporate inkan/seal, you should make a corporate hanko in advance. You will register the inkan (imprint) under the name of the Representative Director/Member of the company.
  • Date of Establishment of the company will be the date of submission of the registration at the Legal Affairs Bureau.

5. Complete of the Registration

The Legal Affairs Bureau informs you the expected date of completing the registration. However, there will be no announcement when the registration is completed. If you don’t receive any phone call from the Legal Affairs Bureau by the scheduled date, generally, the process is completed at their side.

You can obtain Certificate of Company Register and Certificate of Company Inkan/seal after that and proceed to other administrative procedures and open a corporate bank account.

6. Proceed to other administrative procedures (taxes, social insurance etc.)

You need to report the company establishment/registration to the Tax Offices which have jurisdiction over the area of the head office of the company;

  • National Tax Office (税務署)
  • Prefectural Tax Office (都道府県税事務所)
  • Municipal Tax Offices (市区町村税事務所)

Enrollment of Social Insurance is mandatory, you need to process the enrollment at Pension Office (年金事務所) which has jurisdiction over the area of the head office of the company.

Regarding taxes, you should consult a certified Tax Accountant (税理士) who specializes in taxes and accounting for the details.

Regarding social insurance, you should consult a certified Labor and Social Security Attorney (社会保険労務士) who specializes in social insurance (health insurance, employees insurance and pension) and labor matters for the details.

7. Open a corporate bank account.

Some banks requires a copy of tax related reports/notifications as well as Certificate of Company Register, you should open a corporate bank account after you finish the reports/notifications.

8. (if necessary) Application for business license/permit and visa application for employees etc.

If the company’s business requires license or permit, you need to obtain the license/permit before you start the actual business in general.

In case you would like to invite someone outside Japan to engage in the business in Japan, you should process visa related application. Mostly, it will take several months to complete whole process for visa application, it would be better to start with the preparation at the same time as the company setup.

9. Start your business

Now you can start the business!

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