Company Formation in Japan
Japan is one of the global hubs with the quickest growth. It is ranked second for Gross Domestic Product in Asia (GDP). The nation has the third-largest Economy in the world, according to data. All of these advantages would entice businesspeople to choose Japanese company formation. In Japan, forming a company is a simple process. To be in compliance with local legislation is crucial for the investor, though.
- Procedure for Company Formation in Japan
- Documents required for Company Formation in Japan
- Liaising the regulatory agency for company formation in Japan
- End-to-End Support
Company Formation in Japan- An Overview
In Japan, forming a corporation is a simple process. There are numerous advantages that draw many investors. The nation is flourishing and offers numerous prospects for foreign businesses to run their operations. Japan’s position in the world market is thanks to the country’s advancements in technology and infrastructure. For international businesses to start up, the government also offers advantages.
Large cities like Tokyo and Yokohama, which are important commerce and financial hubs, are found in Japan. The eight-largest seaport in the world is in Japan. As a result, the country’s commercial maritime industry is also flourishing.
There are several free trade zones to meet the needs of domestic and foreign firms when it comes to business setup and development. Tokyo, Nagasaki, and Niigata are the locations of these free trade zones. In Japan, modernised developments and infrastructure are available. An investor would benefit from choosing the Japanese company creation process for all of the aforementioned reasons.
Benefits of Company Formation in Japan
There are different benefits by carrying out company registration in Japan. The following are the benefits:
- Infrastructure Resources
Japan provides businesses and various industries with a strong infrastructure. Large international corporations like Sony and Toyota have operated and expanded their presence globally. Japan’s superb infrastructure makes it simple for businesses to operate there.
- Hub of Development in the World
In terms of GDP, Japan is rated second in Asia. In terms of GDP, it ranks third in the globe. Infrastructure facilities give businesses a major boost that gives them all the advantages they need to succeed. The GDP is steadily increasing as a result of this.
- Important Trading Hub
The world’s largest trading centre is Japan. This would be in the fisheries-related areas. The country’s commercial maritime and airline sectors are also flourishing.
- There are no double taxes.
Japan and other nations have agreed into a variety of double taxation agreements. There are already more than 90 similar agreements with different nations. So, these double taxation treaties would be a useful defence against paying taxes twice if any type of investment from Japan was to be repatriated. Withholding tax would be directly reduced as a result of this.
- Regulatory Framework
One of the most robust regulatory environments is found in Japan. As a result, various investors are setting up businesses in Japan. Japan has ratified international agreements protecting several types of intellectual property rights.
Entrepreneurs and investors choose the Japanese business creation process because of the aforementioned advantages.
Eligible Business Structures for Company Formation in Japan
It is crucial for the investor to select a legal business structure while forming a Japanese corporation. While launching a business, the entrepreneur must select the appropriate type of business structure. The company structures used in Japan are as follows:
- Joint Stock Company (Kabushiki Kaisha (KK)
Also, this business is known as Kabushiki Kaisha (KK). Investors who want to incorporate a firm in Japan typically choose this organisation type. Shareholders enjoy limited liability status. As a result, their liability would only extend to the share contributions made. Businesses might use this type of organisation if they desire to have corporate governance systems.
- Christo Kaisha (GK)
The Japanese Companies Act of 2006 codified this type of entity. This form of entity also has limited liability status for the shareholders. In contrast, there is more latitude in management choice-making. The annual compliance costs for Godo Kaisha are lower than those of Kabushiki Kaisha. Many tax advantages come with using this structure.
- Registered Office Branch
This structure would be appropriate if an investor wanted to create a business in Japan. This form is typically used by international businesses that are incorporated outside of Japan to conduct operations. This kind of entity can be established if the company want to conduct regular business in Japan. If this type of organisation is formed, a foreign corporation would not be required to set up a subsidiary in Japan.
Eligibility Criteria for Company Formation in Japan
The following eligibility criteria must be sufficed for company registration in Japan
- Capital Minimum Requirements
Even though there are no formal minimum capital requirements for establishing a Kabushiki Kaisha or Godo Kaisha, it is nonetheless critical to have some minimum cash when establishing a business in Japan. There would be some sort of minimum capital requirements even for opening a branch office in Japan.
- Details about the shareholders
The application must be submitted with shareholder information. Name, address, and other details of the stockholders would be included.
- Details about Directors
The application must include information on the directors. If the directors have any additional appointments, this would also include their name, address, and other information. It should be emphasised that choosing a resident director is not necessary in Japan. So, a non-resident of any nationality may serve as a director.
- Additional prerequisites
There might be special conditions that must be met in order to incorporate a company in Japan. Several committee types, such as the shareholders committee and executive directors committee, are available to Kabushiki Kaisha. To conduct business linked to execution, a Godo Kaisha must appoint “gyomu shikko shain,” or executive members. An executive manager known as a “shokumu shikkosha” who resides in Japan is required for the Godo Kaisha.
Procedure for Company Formation in Japan
Kabushiki Kaisha- Company formation in Japan
- The applicant must supply information about the shareholders and directors if they intend to form the aforementioned company in Japan. This kind of organisation would take four weeks or so to form.
- The “Legal Affairs Bureau” must grant the applicant’s request for permission to use the company’s name. For the purpose of forming a corporation in Japan, the applicant must select a different name if there is a name that conflicts. The ‘Ministry of Justice’ includes the ‘Legal Affairs Bureau’. This is the principal agency in charge of company registrations and other types of compliances.
The articles of association and other paperwork must be drafted and prepared as the next step.
- The parent company is required to give an affidavit confirming the existence of the company. Such an affidavit needs to be certified by a public notary in the applicant’s country of residence. The articles of incorporation would then be notarized by a recognised Japanese notary after this.
- The company’s representative director in Japan receives funds in the next phase. The company’s directors must be chosen after this procedure is completed.
- The applicant would then need to submit an application to the “Japanese Legal Affairs Bureau” for company formation in Japan after completing the aforementioned procedure.
- Within ten days of receiving the application, the Japanese Legal Affairs Bureau would issue an acquisition certificate. This would be proof that the applicant has completed the requirements necessary for Japanese company creation.
- Following completion of the aforementioned step, the Kabushiki Kaisha would open a bank account and transfer all funds from the resident director to this account.
Godo Kaisha- Company Formation in Japan
- To conduct business linked to execution, a Godo Kaisha must appoint “gyomu shikko shain,” or executive members. An executive manager known as a “shokumu shikkosha” who resides in Japan is required for the Godo Kaisha.
- In Japan, establishing this kind of organisation would take roughly 4 weeks. This would include the time needed to file all the necessary papers.
- The applicant must supply information about the shareholders and directors if they intend to form the aforementioned company in Japan.
- With regards to the name the applicant intends to use for the business, “Legal Affairs Bureau” approval is required. The applicant for a Japanese company creation would need to select a different name if there is a name that conflicts. Legal Affairs Bureau is a division of the Ministry of Justice. The primary organisation in charge of company registration and other types of compliances is this one.
- The process would then move on to creating the applicant’s MOA and AOA, two documents required for incorporation.
- The resident director of the Godo Kaisha would get the money after this. The legal requirements for forming a company will be met as a result of this.
- The applicant would next need to create an application with the Japanese Legal Affairs Bureau when this was completed.
- Within ten days of receiving the application, the Japanese Legal Affairs Bureau would issue an acquisition of certificate. This would be proof that the applicant has completed the requirements necessary for Japanese company creation (Godo Kaisha).
- The firm would need to open a bank account and transfer the money from the resident director account to the company as the last stage.
Registered Branch Office- Company Formation in Japan
- It would be necessary to appoint one representative in order to launch this type of organisation. The company’s branch manager is this representative. The representative has to be a citizen of Japan.
- The remaining stages in establishing a registered branch office would be the same as those in Kabushiki Kaisha and Godo Kaisha.
Other Compliances for Company Formation in Japan
Each and every company must adhere to the following regulations:
- payment of corporate tax in Japan
- The current rate of Japanese corporate tax is 23.4%. This would apply to businesses with annual sales of more exceeding JPY 8 million. Businesses with a turnover below this would only be required to pay corporate tax at a rate of 15%.
- Labor law – All businesses must abide by the rules of the Labour Standards Act.
- the selection of a statutory auditor.
- Businesses are required to hold at least one annual general meeting. A board meeting for (Kabushiki Kaisha) must be conducted once every three months.
- The Legal Affairs Bureau must receive all compliances.
- Constitutional Documents
- Memorandum of Association Affidavit confirming the company’s existence from the parent corporation
- information on the company’s shareholders
- information about the company’s directors
- representatives of the main company’s signatures
- Details about the company’s registered office
- details about the appointment of the executive members
Frequently Asked Questions
How much time would it take to launch a business in Japan?
In Japan, incorporating a business typically takes three to four weeks.
What kinds of businesses are there in Japan?
The sorts of businesses in Japan are as follows:
Kabushiki Kaisha (KK) and Godo Kaisha (GK) Registered Branch Offices are joint stock companies.
Which business structure would be appropriate under Japanese company formation?
Using the company models mentioned above has many benefits. Nonetheless, it would be inexpensive for your business to build a branch office. However, this kind of structure should only be used if you are conducting regular business in Japan.
Will there be VAT in Japan?
In Japan, VAT will undoubtedly be imposed. VAT is charged at 8%.
Do foreign businesses have access to various government grants?
The government does indeed provide substantial grants to foreign businesses. For instance, foreign owners are not obliged to obtain permission in order to manage the business.
Do all businesses in Japan have limited liability status?
All businesses do really have limited liability.
Who is responsible for creating the company’s financial documents?
The accounting advisor must produce all of the company’s financial paperwork. The Companies Act recently outlined the requirements for the accounting advisor.
Can corporate governance committees be established in Japan?
Indeed, a single applicant for a company formation in Japan is allowed to set up governance committees to run the business.
What information must be made public throughout the Japanese company creation process?
When forming a business in Japan, the following information must be disclosed:
- Name of the Business
- Capital Contribution The Company’s Registered Office
- information about the directors and shareholders
- Quantity of Shares, including Authorized Shares and Issued Shares, and the Business’s Purpose
- the directors’ addresses
- details about each officer.