Provided below is a guide on the types of companies in Japan and their differences.
| Limited Liability | Separation of Management and Ownership |
| (i) Kabushiki Kaisha | All equity holders are limited in liability. It is equivalent to LLC. | Can be separated. |
| (ii) Godo Kaisha | All equity holders are limited in liability. It is equivalent to LLC. | Not separate. |
| (iii) Gomei Kaisha | All equity holders owe un-limited liability. | Not separate. |
| (iv) Goshi Kaisha | There are both un-limited liability equity holder(s) and limited liability equity holder(s). | Not separate. |
When foreign companies set up subsidiaries in Japan, in most cases, they either select Kabushiki Kaisha (“K.K.”) or Godo Kaisha (“G.K.”).
1. Differences Between K.K. and G.K.
| K.K. | G.K. | |
| Equity Holder | Shareholder (“Kabu-nushi”) | Members of the company (“Sha-in”) |
| Responsibility of the Equity Holder | Limited liability | Limited liability |
| Number of persons required for establishment and operation | One or more | One or more |
| Highest Decision-Making Body | General Meeting of Shareholders | Meeting of the members |
| Voting Rights | Proportionate to the number of shares held by each shareholder | Each member has one vote. |
| Person(s) who (make important decisions on) the Execution of the Operations of the Company |
Directors / Executing Person(s) |
Executing Person(s) If there is no election of an Executing Person, then all members become Executing Person(s). |
| Who can become the Executing Person | Non-shareholders can also be appointed as Director or Executing Person. | A person who is not a member of the company cannot be appointed as Executing Person. |
| Term of office for Executing Persons | Up to 10 years. Many companies make the term 2 years. | No limitation. Can be decided freely. |
| Representative of the Company | The Directors or the Board of Directors may appoint Representative Director(s) or Representative Executing Person(s). | Members may appoint Representative Executing Person(s)/ |
| Financial Statements | Publication is necessary. | Publication is not necessary. |
| Distribution of Profits to Equity Holders | Distribution of company’s profits to each shareholder must be proportionate to the percentage of shares held by each shareholder. | Members may decide how the company’s profits will be distributed. Distribution does not have to be made in proportion to percentage of equity (or membership interest) held by each member. |
2. General Advantages of G.K. over K.K.
- Costs to establish G.K. are less than those for K.K.
- Corporate management structures can be implemented more flexibly.
- No obligations to publicize financial statements.
In addition, in the case of U.S. companies, , it is written in some articles that there are the following advantages from an international tax perspective:
– Pass-through taxation may be selected under U.S. tax law.
– Not subject to U.S. “controlled foreign company” (CFC) rules or the so-called “anti-tax haven” rules.
3. Reputable Foreign Companies that have set up G.K. as Japanese Subsidiary or Affiliate
| U.S. Parent Company | Japanese Subsidiary or Affiliate |
| Google L.L.C. | Google G.K. |
| Apple Inc. | Apple Japan G.K. |
| Amazon.com, Inc. | Amazon Japan G.K. |
| The Procter & Gamble Company | P&G Prestige G.K. |
| Exxon Mobil Corporation | Exxon Mobil Japan G.K. |
| Universal Music Group | Universal Music G.K. |
| Warner Bros. Entertainment. Inc | Warner Brothers Japan G.K. |
| Cisco Systems. Inc | Cisco Systems G.K. |
4. Fees for Establishing G.K. and K.K.
(1) Fees to be Paid to the Government and Public Offices
| K.K. | G.K. |
| Registration Tax |
150,000 Yen – (If “0.7% of the stated capital amount” is greater than the above amount, then such amount will be the registration tax fee.) |
60,000 Yen – (If “0.7% of the stated capital amount” is greater than the above amount, then such amount will be the registration tax fee.) |
|
Stamp Tax for Articles of Incorporation (exempted, if created electronically) |
40,000 Yen (We handle electronic AOI, to have this 40 thousand yen exempted) |
40,000 Yen (We handle electronic AOI, to have this 40 thousand yen exempted) |
| Fee for Notary Public for the Certification of Articles of Incorporation | 50,000 yen | 0 |
| Fees for Certified Copy of Articles of Incorporation | App. 2,000 Yen | App. 2,000 Yen |
| Total fee | 242,000 Yen – | 102,000 Yen – |
(2) Law Firm Fees for preparation of Articles of Incorporation /registration fees
Preparing Japanese AOI and filing documents only:
100,000 yen
If English referential translations are required:
An additional 100,000 yen
5. Our Services
(1) Establishment of Company
We provide advice and counsel on formations of G.K. and prepare required documents in Japanese (and referential translations in English upon request).
(2) Other Services
We provide support in making various types of company documents and documents required for authorization by the Japanese government.
Please contact us if you have any questions.