Incorporation In Japan > Business Establishment Options

Types of Company Structures

There are 3 alternatives for foreigners/ foreign corporations to set up a company in Japan.

(1)Incorporations  (Stock Company or Godo Kaisha)

(2)Branch

(3)Resident offices

(1a) Incorporations  (Stock Company ” KK” )
[Advantages]
-Stable image and is highly trusted by Japanese customers and
employees. (Capital amounts of stock companies are also a good way to
show stability)
-Higher Credibility with vendors and banks
-Admin procedures are quicker as does not need Head office approval.
-Lower
taxable income as separate entity from Headquarters. ( Can also get a
tax break in start up stages depending on capital amount)
-More control than a GK, in KK the authority is determined by the amount determined by each investor.
[Disadvantages]
-Registration expenses are higher for KK

(1b) Incorporations  (Godo Kaisha “GK”)
[Advantages]
-Lower costs than KK
[Disadvantages]
-Not as credible and is more harder to get bank loans
-There is a risk of issues arising if investors have a disagreement.

(2) Branch
[Advantages]
-Credibility relating to the parent company can be obtained (can
allow for smooth bank opening and real estate securing procedures etc)
-Bank accounts can be opened in head office names.
[Disadvantages]
-Capital based taxes of Japan are to be levied with the capital amount of overseas head offices.
-Local Paperwork and documentation must all require signing authority and permission from head office.
-Parent company is liable to Liability of the KK’s shareholders the creditors.

(3) Resident Offices
[Advantages]
-No costs inherent in establishments and registrations.
[Disadvantages]
-Not assumed for business operations.
-Cannot commence business transactions
-Less creditability with no formal documentation from the governments etc.
-Difficult to hire personnel with Japanese nationality
-Not applicable for opening bank accounts

Still have questions on which structure is for you?  Contact us to make an inquiry or book a free initial consultation.

Which is best for you?

Case (1)
You do not want to start business transactions, and you have no need for a bank account.  The purpose is to gather information and conduct market research.
→ Make a resident office

Case (2)
Your overseas head office has good reputation. ( In Japan, this credibility  can be useful for securing property, opening bank accounts, contracts).
→ Establish a branch
→ Establish a subsidiary stock company 

Case (3)
You would like to keep the information of the overseas HQ private.
→ Establish  a Corporation

Case (4)
The overseas’ controlling companies’ capital is JPY 10 million or more. You would like your Japanese  entity to operate with less taxes in the start up stages or keep the books separate. .
→ Establish as a corporation 

Flow: Standard Incorporation Procedures for Stock Companies

【1】 Preparation of Company Structure
After deciding the purpose and activity of your business, you can decide the trade name, location, capital, shareholder and company directors can be decided.
In the case of corporations, a company director must be a
resident of Japan.

If you want to start a company smoothly and minimal time, it is important to have a director who is a resident of Japan.    If you do not have a resident director, you can also become your own companys resident director by applying for a business investor visa.

【2】Creation of Articles of Corporation and Certification
With the decisions you made in part one 1, we will create your articles of incorporation.  We will make recommendations based on your situation, check the availability of your trade name and prepare the required documents to be submitted.  We will translate your documents into Japanese as they are not accepted in English. After this is completed the articles of incorporation will be notarized by a notary public.

【3】Remittance of Paid In Capital
The capital is to remitted to a Japanese bank account.   It ishighly recommended to remit into a Japanese major bank (Sumitomo, Mitsubishi UFJ, Resona, Mizuho etc). Online banking or banks that do not issue a passbook are not recommended.

【4】Creation of Additional Documents 
Proof of remittance, proof of residence (of the resident director) etc and other documents are submitted to the legal offices.

【5】Registration of Stock Company
After all required documents are submitted. the registration can take place.  Your company will be official.

There are other procedures you may want to consider after this, such as bank account opening procedures,  mandatory initial tax filing and social insurance procedures for new companies.  If you are interested in our after-incorporation services, please ask about it in our initial free consultation.  

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