MiCasa Legal provides assistance with business establishment in Japan.
The three most common types of businesses established by overseas companies in Japan are Kabushiki-Kaisha(K.K.), Godo-Kaisha(G.K.) and branch office.
Descriptions of each type of establishment are as follows.
Please feel free to contact us for more details.
Kabushiki-Kaisha (K.K.) and Godo-Kaisha (G.K.)
K.K. and G.K. are subsidiary companies of your parent company and are considered separate legal entities under Japanese law. Liability is limited to your investment in the subsidiary itself and does not extend to your parent company.
The main differences between these types of companies are in regards to their different structures of corporate governance. Generally speaking, K.K. is similarly structured to US corporation (Inc.), while G.K. is similarly structured to US limited liability company (LLC).
K.K. is the most commonly established and traditional type of company in Japan and is subject to many rules under the Companies Act.
G.K. is a newer type of company and has been gaining more popular lately, since the structure and method of the operations are simpler than K.K.. For example, G.K. does not need to hold an annual ordinary meeting of members(owners) and members have no term of office to renew.
For small companies, G.K.s can be a more flexible option with less ongoing compliance. However, K.K.s are more trusted by customers in Japan since the company type is much more widely recognized.
Please see more details in the table below.
|Minimum Capital||JPY 1 or more|
|Whether Entity can be a Shareholder (Owner)||Possible|
|Whether Entity can be a (Board) Member||Impossible (Person Only)||Possible*|
|Status of Shareholder and (Board) Member||Separate||Same|
|Annual Shareholders' Meeting||Mandatory||Voluntary|
|Public Notice of Financial Statements||Mandatory||Voluntary|
|Term of Office of Member||For 10 years at the longest***||None|
|Initial and Running Cost||Higher||Lower|
|Recognition||Higher||Lower compared to K.K.|
*If entity, a person who acts on behalf of the entity must be appointed.
**G.K. can be reorganized as K.K..
***It depends on the structure of the company. Upon expiration of the term of office, the company can either re-elect the same director or appoint a new person as director at a shareholders’ meeting.
A branch office is an extension of an existing overseas business in Japan and is not considered a separate legal entity. As such, your company would have unlimited liability for any claims against its Japanese branch office.
This type is usually only recommended for small businesses in Japan.