10 Frequently Asked Questions About Incorporating a Company in Japan

September 18th, 2013By Category: Starting a Business


1. Is there a residency requirement to incorporate a company? Do I need a Japanese business partner?

The Companies Act requires that you can name at least one legal resident of Japan as the Representative Director (if a KK) or Representative Member (if a GK) of the company. The legal resident can be of any nationality as long as they have a valid Status of Residence (visa) and are registered as a resident at their local city hall. Therefore, non-Japanese residents of Japan can incorporate a company without a Japanese business partner.

2. Can I register my home as the registered address of the company?

Yes, a residential address can be used as the registered address of a company. It is however necessary to obtain the consent of your landlord if you wish to register a rental residence as the head office of the new company. Also, certain classes of visas require that a company be registered at an actual commercial use office in order to satisfy requirements of immigration authorities.

3. How many people do I need to incorporate a company?

One, as long as that person is a legal resident of Japan.

4. What is the recommended amount of capital?

According to the Companies Act, a company can be incorporated with a minimum of one yen capital. There is no “rule” as to the right amount of capital, but the capital amount is useful to demonstrate the “credibility” of a company. Under old laws, a KK required a minimum of 10 million yen capital, so some still view this as the traditional capital of a KK, but smaller amounts are fine. The capital can be increased in the future, so it is perfectly acceptable to incorporate with a smaller amount and increase at a later date as well.

5. Which is better for me, a KK or GK?

With its longer history, the KK is much better known in Japan than a GK however it does tend to be a little more expensive to setup. Some Japanese companies prefer to deal with KKs, but if you think most of your clients will not be concerned with the type of entity they are doing business with, then the GK is a perfectly fine choice as well. Both entities are taxed the same, and with its simpler structure and no requirements for annual shareholder meetings etc, the GK may be the more attractive choice for smaller scale operations.

6. Can I convert a GK to a KK in the future?

Yes, a GK can be converted into a KK. There is a process involved, but it can be done.

7. What are the fees I can expect?

The major costs to incorporate a company consist of the professional fees charged by legal specialists and government registration taxes. With the exception of cases of very large capital amounts, the registration tax for a KK is ¥150,000 and for a GK ¥60,000. In addition the Articles of Incorporation of a KK must be notarized adding about another ¥50,000 in expenses. Professional fees charged will of course depend on the legal firm you select.

8. How long does it take to incorporate a company?

This really depends on a number of factors, including how quickly documents are collected and finalized, whether you are incorporating from outside of Japan etc, however generally speaking expect the whole process to take between one and two months for a KK (a little quicker for a GK).

9. When can I open a corporate bank account?

Rules for opening a corporate bank account are set forth by each bank, but generally a bank account can only be opened after your company has been incorporated.

10. Can I use my company to apply for a visa for myself?

Yes, this is typically done by applying under the Investor/Business Manager category. In addition to the minimum incorporation requirements set forth in the Companies Act, the immigration authorities also require that the incorporated company has a minimum of 5 million yen capital and is registered at commercial use property. There are of course other conditions, but these are the requirements you will need to consider when incorporating.

Author of this article

Shinonome Group

Shinonome Group provides counsel on a range of matters including business and commercial, immigration and visa, real estate, and estate planning and administration issues in Japan. Our goal is to achieve workable solutions quickly, accurately and professionally. We possess both the business knowledge and the legal expertise required to successfully handle a wide spectrum of issues.

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