Types of Companies

Type of Companies

 

There are four types of companies in Japan.

 

Limited Liability Separation of Management and Ownership
(i)Kabushiki Kaisha All equity holders are limited in liability.  It is equivalent to LLC. Can be separeted.
(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, either Kabushiki Kaisha (“K.K.”) or Godo Kaisha (or “G.K.”) is selected.

 

  1. Difference 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 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. 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 freely decided.
Representative of the Company The directors or the board of Directors may appoint Representative Director(s) or the 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 the profits of the company must be made to each shareholder in proportion to percentage of shares held by such shareholder. Members may decide how the profits of the company will be distributed.  Distribution does not have to be made in proportion to percentage of equity (or membership interest) held by each member.

 

  1. 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, from an international tax perspective, it is written in some articles that there are the following advantages:

– 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.

 

  1. 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.
[Source: Japanese newspapers]

 

  1. 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) Fees for preparation of articles of incorporation /registration fees (for our office)

Preparing Japanese AOI and filing documents only

100,000 yen

If English referential translations are required

Additional 100,000 yen

 

5. Our Services

 

(1)  Establishment of Company

We will be able to provide advice and counsel on formation of G.K. and prepare required documents in Japanese, and English referential translation if you request.

 

(2)  Other Services

We provide support making various types of company documents, filing documents required for authorization of the Japanese government, and such other documents, if necessary.

We may give you advices on other matters as well.