As a foreign investor, launching your company in Japan will require good preparation and a thorough understanding of your options for company incorporation. As of this writing, you have 4 alternatives for company registration:
(1) Kabushiki Kaisha-KK (similar to the American C Corp)
(2) Branch Office
(4) Sole proprietorship (generally not recommended due to lack of personal liability protection)
(1) Kabushiki Kaisha-KK (Joint Stock Company)
This is the most common type of company in Japan (about 80% of all companies), due to its established history and credibility with the marketplace and society at large. Though it is the most costly type of company to register, most investors find that the practical benefits far outnumber the potential drawbacks.
Because of the perception of commitment and prestige that a KK commands, attracting new vendors, customers, and quality employees are much easier—which can be critical to the success of a brand new company. Because of the available means for raising capital (selling stocks, issuing stock options, etc.), scaling and expansion plans can be easily accommodated with no disruption to the existing company structure.
Because KKs are considered a native legal entity, it is responsible for its own assets, liabilities and disputes, and is completely and legally separate from its overseas parent company (if applicable). It also provides limited liability protection for its shareholders, protecting their personal assets in the event of a legal dispute.
(2) Branch Office
Branch offices are seen as an extension of the overseas parent company, which means that the parent company is legally responsible for any liabilities or disputes the branch office incurs while transacting in Japan. When choosing to establish as a branch office, be sure to keep the following in mind:
・There is no capital required and no requirement for a management body (just a representative in Japan) and the range of business is generally the same as that of a corporation.
・As branches are not regarded as an independent legal entity in Japan, its administration and any changes to the articles of incorporation will need permission and documentation from the head office.
・Formal documentations proving the existence of a branch can establish the credibility of the head office.
・Bank accounts can be opened under the branch office name. In Japan, for instance, you can open a bank account registered with the name of the branch company (Co. Ltd.) and of the representative director in Japan.
・Capital-based taxes in Japan are to be levied with the capital amount of overseas head office.
・The foreign parent company is ultimately responsible for all debts, credits, and disputes generated by its Japanese branch.
This type of company shares some of the advantages of the KK, which includes limited liability protection for its shareholders and the ability to remit profits to the overseas parent company. Compared to KKs, GKs are simpler and less expensive to register, which may be more convenient if you are looking to launch a small-scale business. Before committing to register as a GK, make sure to consider how the following will impact your business goals:
・GK shareholders are legally liable up to the amount they invested
・Rather than having a transferable stock in the company, shareholders can instead share the capital as partners.
・While the GK has low set up costs, it has less credibility than the KK in Japan. It may be more practical to register as a KK if you want to have a long-term market presence and solid relationships with Japanese partners and vendors.
・The GK is similar to the Limited Liability Company (LLC) in the United States, however, the pass through taxation system does not apply to the American LLC in Japan. It is also necessary to understand that the tax advantages that this type of company receives overseas may not apply in Japan.
Quality professional services for all your business and legal needs
PKF Shiodome Partners offers comprehensive incorporation services for foreign and native investors in Japan, including corporate support and legal services:
(1)Full Company Incorporation and Registration (KK, GK)
While the incorporation process can be a tedious and complicated procedure for both international and native investors alike, we can provide peace of mind and eliminate costly delays with our professional experience and expertise.
(2)Branch or Representative Office registration and set-up
(3)English to Japanese Translation & Notarization, Chinese to English Translation and Notarization
Upon incorporation in Japan, there is paperwork involved in the translation of the documents. PKF Shiodome Partners offers translation services of affidavit and other notarial documents as required for notary offices and embassies. Bilingual support (English and Chinese) is also available.
(4)Corporate bank account set-up
(5)Business Investor Visa Application Services
Our immigration specialists will make sure everything is in order and all requirements are met so you can secure visa approval as soon as possible.
(6)Temporary Nominee Director (Representative Director) services
While it is not a legal requirement for a company to have a representative director who is a legal resident, it is still a practical requirement because most banks and commercial landlords will not deal with non-residents. For your convenience, we provide temporary Nominee Director services to ease your transition until you are ready to take over your company’s directorship.
(7)After-establishment services (Accounting, Recruitment, Tax, Employee enrollment procedures)
Upon the completion of incorporation, we also provide corporate support services such as accounting, recruitment, tax, personnel and labor services.
(8)Business license assistance
We offer professional assistance for business license applications, including the services of our administrative scrivener.
(9)Temporary Virtual Office Registration for Purpose of Incorporation
(10)Amendments to the Articles of Incorporation
Sometimes, it can be necessary to amend your Articles of Incorporation. We can handle the cumbersome process for you, so you can focus on running your business instead of losing time over wearisome paperwork.
If you would like to schedule a consultation, you can contact us at [email protected], call our Tokyo office at 81-3-6228-4162, or submit a Contact Request Form at your convenience.