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Company Formation in Japan


Company Formation in Japan

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Japan Company Formation

Procedures for setting up a business

The new Japanese Corporate Law has made it a lot easier to set up a company in Japan.

Registration in Japan is an 8-stage process. This is as follows:

    1. Have a seal made - this takes 3 days and costs approximately 20,000 JPY. Obtain a copy of registry and a registration certificate of the company's seal. Once done a bank account can be opened with the companies name.
    2. Submit a copy of the certificate of seal registration to the Ministry of Justice. This takes 1 day and costs approximately 400 JPY.
    3. Registration with the Legal Affairs Bureau. This takes 1 to 3 weeks and costs approximately 60,000 JPY.
    4. Notify the tax office of the incorporation of the company, opening of a payroll office and apply for an approval blue tax returns. This takes 1 day.
    5. Notify the tax office of the commencement of business. This takes 1 day.
    6. Submit employment regulations and start of business and labour insurance notifications to the Labour Standards Supervisory Office. This takes 1 day.
    7. Apply for health insurance and public welfare pension with the Social Insurance Office. This takes 1 day.
    8. Apply to the Public Employment Security Office for employment insurance and accident compensation insurance. This takes 1 day.

      Foreign companies generally establish a business in Japan in one of four modes.

      Representative office

      Setting up a representative office is the simplest way of establishing a business in Japan. However, it is very restricted and is only allowed to engage in limited activities. A representative office is typically employed when a foreign company wants to undertake market research or advertising in Japan before making a permanent commitment, such as a branch or subsidiary. Representative offices can conduct market surveys, collect information, purchase goods and engage in publicity/advertising. They are not, however, permitted to engage in sales operations. Establishing a representative office does not require registration. A representative office cannot open bank accounts or lease real estate in its own name, so agreements for such purposes must, instead, be signed by the head office of the foreign company or a delegate of the representative office.

      Branch office

      Setting up a branch office is the simplest means for a foreign company to establish a base for business operations in Japan. A branch office is an extension of a foreign parent company in a different location. Even though the two are separate in legal jurisdictions, a Japanese branch office is not a separate legal entity from its foreign parent company. All liabilities of a branch office are liabilities of its foreign parent office. Similarly, when the Japanese branch office sells a product/service, it does so on behalf of the foreign parent office. The branch office can begin business operations as soon as:

      • the office location is secured
      • the branch office representative is decided
      • the necessary information has been registered

      A branch office must be registered with Japan's Ministry of Justice, must have a registered representative resident in Japan and a registered business address in Japan. A Japanese branch office may open bank accounts and lease real estate in its own name.

      Subsidiary company

      A foreign company establishing a subsidiary company in Japan must establish it either as a joint-stock corporation (Kabushiki-Kaisha), limited liability company (Godo-Kaisha (LLC)), or a similar entity set by Japan's Corporate Law. Unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) are granted corporate status under the Corporate Law, but they are not usually chosen because equity participants bear unlimited rather than limited liability. The most typical form of business corporation in Japan is a Kabushiki-Kaisha (K.K). For a K.K, you are required to have a minimum share capital of 1 JPY and there are no limitations to the number of shareholders a K.K may have, functioning similarly to a Western corporation. It is an independent legal entity so liabilities do not automatically become liabilities of the parent foreign company.

      Limited liability partnership (LLP)

      It is also possible to do business by using a Yugen Sekinin Jigyo Kumiai. This type of entity, very similar to a Limited Liability Partnership (LLP), is not a corporation but a contractual relationship between the partners, who have limited liability. This mode of business may be formed for any purpose clearly stated in the partnership agreement and must have full limited liability. Each partner must take an active role in the business; therefore it is suitable for joint adventures and small businesses.

      • Application of the visa and status of residence
      • Application of business licences for types of activities that require the

Offshore Companies

By choosing to incorporate an offshore company, business owners and investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

  • Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  • Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
  • Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
  • Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability

Characteristics of an offshore company:

  • Memorandum and Articles of Association
  • Certificate of Incorporation
  • Registered Office/Agent
  • Shareholders / Members
  • Directors / Managers
  • Company secretary
  • Statutory Register
  • Bookkeeping

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

Click here to Ask an Expert about Company Formation in Japan

Organisations that can assist with Company Formation

  • >

    When expanding your business to Japan, donít forget to protect your brand. We provide Trademark Registration Services in Japan and in all Asian countries

    More Details Visit Website

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