Starting a business in Japan – Business operation

Posted on 25/10/2012 by Koji Takahashi

Case 11 
<Question>
Foreign companies generally engage in business operations by establishing a subsidiary company, or limited liability partnership though, could you tell me about business operation of each type of companies in Japan?
<Answer>
The legal differences between each of these are summarized in the following table.

 

 Joint-stock company

(K.K.)

 Limited liability

company

 Limited partnership company　　　　　　
Capital 1 yen or more 1 yen or more 2 yen or more (if 2 partners)
Number of investors 1 or more 1 or more 2 or more
Liablity of equity participants/parent company toward creditors Limited to amount of equity participation Limited to amount of equity participation Limited to amount of equity participation
Incorporation formality Require great care compared to other companies Relatively easier Relatively easier
Promotion expense Appointment of 1 or more required. Executive officer with right of representation if no representative director is appointed. No legally stipulated minimum. In principle, all members are executive officers, but a representative member may be appointed No legally stipulated minimum. All partners are executive officers
Top legislative body Shareholders meeting General meeting of members General meeting of members
Directors No Appointment of 1 or more required. Executive officer with right of representation if no representative director is appointed. No legally stipulated minimum. In principle, all members are executive officers, but a representative member may be appointed No legally stipulated minimum. All partners are executive officers
Term 2 years in principle. Extendable up to 10 years. Indefinite Indefinite
Company auditor In case of no board of meeting, company auditor is not necessary. － －
Statutory auditor

(Accounting auditor)

 The amount of capital is more than JPY 500 million, or the amount of liabilities is more than JPY 20 billion, statutory auditor is necessary. － －
Entity conversion to K.K. － Possible Possible

Traditionally the most usual form of company is that of Kabushiki-gaisha (K.K./joint-stock company). Recently however, the LLC system, introduced from abroad and most likely familiar to people coming from the United States has become increasingly known.

Making the right choice on what form your company should take is of elevated importance, which is why it is recommended that you consult with a Japanese judicial scrivener, tax accountant or CPA before making your next step.

 

Reference
Starting a business in Japan – Blue tax return for Income Tax  11/10/2012
Starting a business in Japan – Opening bank accounts and borrowing money  28/09/2012
Starting a business in Japan – Tax merit (a corporateor an individual owned business?)  10/09/2012
Starting a business in Japan – Consumption tax  03/09/2012
Starting a business in Japan  18/08/2012

 

By Certified Public Accountant (CPA) & Tax Accountant, Koji Takahashi
Tokyo & Yokohama