Japan Business Set Up @ Asia Business Set Up

Japan Business Set Up

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Several different forms of corporate entity are available to foreign investors choosing Japan business set up. The following is a description of features of the different entities, incorporation requirements and their benefits and disadvantages:

Of the many legal entities permissible in Japan, the limited liability company or Godo Kaisha, introduced in 2006, is the preferred entity for foreign investors. The government fee to register a limited liability company is US$5,570. Through this entity, an entrepreneur can i) open a corporate bank account ii) obtain local residence and employment visas and iii) lease office or factory premises following Japan business set up.

Company law is outlined in the New Companies Law of Japan 2006 and company incorporation is controlled by the Legal Affairs Bureau of the Ministry of Justice. Through the Ministry of Justice, companies are registered and administered, corporate compliance and disclosure requirements are monitored, and statutory audits by public accountants are regulated following Japan business set up.

In accordance with the New Companies Law of Japan 2006, each company must:

i) appoint at least one director, who need not be resident in Japan. Thereafter, an unlimited number of local and international directors may be appointed. Local and international, corporate and individual directors are allowed;

ii) appoint at least one shareholder. Both local and international, corporate and individual shareholders are allowed;

iii) appoint a local, Japan-resident company representative. Only individual company representatives are allowed;

iv) lease office space in Japan, submitting a tenancy agreement prior to Japan business set up;

v) increase its share capital from 1 Yen at incorporation to 10 million Yen (US$87,000) within five years;

vi) submit an annual tax return to the National Tax Agency following Japan business set up.

The government fee to register a Kabushiki Kaisha is US$5,570. Also established through the Legal Affairs Bureau, this is the simplest type of Japan business set up through which a foreign company can conduct business in the country. However, because it is considered a form of foreign investment, a Branch Office is also required to submit notification to the Ministry of Finance, as well as the ministry responsible for the industry or sector in which the Branch Office operates.

Another popular corporate entity in Japan among some foreign entrepreneurs is the Joint Stock Corporation or Kabushiki Kaisha. The legal and regulatory requirements of a Kabushiki Kaisha are the same as for a Godo Kaisha, except that a Kabushiki Kaisha is required to appoint an internal auditor and submit annual audited financial statements. Consequently, this type of Japan business set up is expensive to maintain due to high legal, accounting and administrative expenses. That said, some business people prefer a Kabushiki Kaisha because it has been in existence as an entity type for longer than a Godo Kaisha, and is therefore more respected.

A Branch Office retains the legal identity of its foreign parent, so the foreign parent is liable for debts and credits generated by the Branch Office. A Branch Office is required to maintain a physical office premises in Japan, and appoint a local resident representative individual, who can be any nationality. It can open a local corporate bank account and lease real estate in its own name.

A Branch Office is taxed as a limited liability company in Japan, and is required to submit annual financial statements to the National Tax Agency. The government fee for this type of Japan business set up is US$2,960.

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