Businesses are no longer exclusive to domestic markets in the era of globalization. One aspect of development in a contemporary company is the establishment of overseas branches and subsidiaries.
Asia has become one of the world's most dynamic and competitive markets, prompting many companies to establish branches on the continent. Situated in the heart of Asia, Japan plays a key role in the continent's economic development since the late 20th Century. Securing a business base in Japan can prove to be an excellent entry point into the Asian market.
We Tokyo Consulting Group have the experience and expertise to provide the services required for incorporation in Japan. We support your startup processes by dispatching our staff for accounting, labor, and tax-related tasks.
Before starting a business in Japan, the company has to be registered as a legal entity. The business will be recognized as such after the complete registration of its branch office or subsidiary company.
Registration is necessary for daily operations in the country. For instance, when opening a bank account, a newly established business in Japan will be required to show a certificate of registration as a legal entity.
Accounting rules and processes differ between entities. It is essential that the method of incorporation matches your strategy, and this is also an area we can offer support.
There are several possible strategies for setting up a company in Japan. Due to the enactment of Japanese Corporate Law in 2006, some restrictions on business startup were lifted. Since then, business incorporation has become simpler for foreign companies, allowing easier access into the Japanese market.
Below are the most common methods of business incorporation in Japan: Subsidiary Company(Kabushiki-Kaisha or Godo-Kaisha), Branch, Representative Office, and Representative Service.
The Kabushiki-Kaisha (KK) is similar to joint stock corporation in the United States, and is the predominant method for starting up a business in Japan. Large scale corporations always choose KK, because a variety of methods are available to gather funds (e.g: stock options and convertible bonds).
The Godo-Kaisha(GK) is similar to the limited liability company, and is especially effective for smaller businesses. The fee for establishment is less than that of KK, and they have greater freedom of self-governance. Moreover, the GK does not require annual approval and publishing of their financial statements.
When starting up a business in Japan as a KK or GK, the main factors to take into consideration are:
For other details, refer to the table below:
|Transfer of equity participation share||Freely transferred; may require approval of Board of Directors if stipulated in articles of incorporation||Approval of all equity participants required|
|Number of Executives||At least one director; to form a board of directors, at least three directors and one auditor are necessary. |
One or more of the directors should be representative directors, and at least one representative director should be a resident of Japan
|At least one director; all members are executive officers but a representative may be appointed|
|Regular Shareholder Meetings||Held annually||Not required|
|Distribution of profits/losses||Allocation by equity participation||May be at different rates if stated otherwise in the article of incorporation|
For both KK and GK, the parent company bears responsibility to the liabilities for equity participants of the subsidiary. It is possible for a GK to reorganize into a KK, and vice versa.
Other methods of subsidiary startup include Gomei-Kaisha(Unlimited Partnership) and Goshi-Kaisha(Limited Partnership), but these options are rarely considered in practice since their equity participants bear unlimited liability. Equity participation and joint ventures with local enterprises are also possible measures for starting business in Japan.
Unlike a subsidiary company, starting up a branch does not require new articles of incorporation. Instead, an affidavit is required from the embassy of the parent company's country. If the embassy located in Japan does not provide notary services, certification by a public notary from the parent company's country is also acceptable.
The registration process is relatively simple. Expenses start at approximately JPY 90,000; name seal expenses and services fees paid to professionals, however, still apply. There are no significant differences between the regulations that apply to the business activities of companies and those that apply to branches.
Establishing a representative office is a very effective method of startup in Japan when the company is still at advertising or market research stage of its incorporation. Although a representative office cannot perform actual business activities, it generally does not have to be registered unless it is representing a finance institution (Banking Law, Securities Exchange Law). Registration costs do not apply and tax notices do not need to be submitted.
A representative office is required to register as a subsidiary or branch when the need to engage in business activities arises.
Representative Service is a type of outsourced business startup in Japan, in which the representatives of the parent company work with agents to process accounting or taxation work. A need for extra staff and specialists during the peak periods, or sudden shortage of human resources is usually when a company may consult a representative service.
It takes about 2 months for the company to be registered as a KK after the determination of profile. See below for the list of required processes for a KK:
It takes about a month for the company to be registered as a GK after the determination of profile. See below for the list of required processes for a GK:
It takes about a month for the branch office to be registered. See below for the list of required processes for a branch office:
Today, as Japan faces rapid economic changes across all industries, foreign companies face potential crises. Considering the complexity of Japan's tax system and legislation, it can be difficult for foreign companies to establish themselves in the country without the assistance of a highly knowledgeable, professional business consulting firm.
Established in 20 countries across Asia, Tokyo Consulting Group is at an advantageous position in the globalizing market. With our expertise, experience, and resources, we are able to give full support at every step on the way of business incorporation in Japan.
When starting up a business, the incorporation process has to be planned and considered thoroughly. Some of them are crucial like laws and regulations; others include customs and other social norms which may affect business in the long-term.
We Tokyo Consulting Group are highly experienced in setting up subsidiaries of foreign companies in Japan. Since 1998, we have continually enhanced and updated our knowledge base through our professional experience and market research.
We are capable of providing support with all the aspects required to start up in Japan. Our Japanese CPAs, USCPAs, tax accountants, and social insurance specialists provide the necessary services you may need. We also support with the publishing of financial statements under Japanese GAAP, US GAAP, or IFRS. A team of specialists with different areas of expertise will assist you throughout your incorporation processes.
We guarantee to provide services with the highest level of professionalism at reasonable prices, in the most efficient and effective methods that would meet your expectations. Our staff speak English and Japanese among other languages such as French, Chinese, Spanish, Portuguese, Mongolian, and Khmer, and are capable to serve companies worldwide, regardless of scale. We readily provide our services to fulfill your requirements fully and promptly.
To learn more about our incorporation assistance and a range of other services, send us a message or call us at +81-3-5369-2930.