How to register a company in Japan
We have discussed in detail how to register a company in Japan as foreign investor. Proper knowledge is the prerequisite to register a new company in other country. If one wants to invest or set up a company in Japan, one will get the full opportunity to know the necessary things from JETRO (The Japan External Trade Organization) library. Here, the JETRO library card will be helpful to get the specific information in English, download that from its vast amount of resources. Besides it provides free consulting services which undoubtedly help the foreign investors.
Investors will find that there are 3 types of operation categories which one could be preferable for them. These are establishing Representative office, Branch office and Subsidiary; starting a joint venture with local Japanese or purchasing an existed business in Japan. The description of 3 different parts is provided in the following individually:
Investors will run their commercial activities in Branch office and subsidiary rather representative office is required just for doing the market activities included researching market, setting up public relation, planning for sales activities. The role of the representative office is congested in the sense of opening a bank account or making a tenant agreement is impossible from here. On the other hand, to open a branch office will be very easy after confirming office address given by the government. The work of the branch office may monitor the sales activities in the market. The representative of the branch office should be a resident in Japan.
Kabushiki Kaisha (KK) and Godo Kaisha (GK) are the most common and suitable structure of business right now in Japan. If the investors have big size of company, they can choose Kabushiki Kaisha as it is granted as a trustable structure in Japan. Through this process, a shareholder and a director are required. A big advantage is that a shareholder can appear himself/ herself as a director of the company. Moreover, it is possible to appoint such a person who doesn’t have any share in Japan. Publication of financial statements is essential here. There is a fix term ranging 1- 10 years of re – election which should be registered initially. Profit sharing should be tied up to the investment rate.
On the other hand, if investors have small and medium size of companies, they can go with Godo Kaisha (GK). It should be owned and managed by partners and minimum a partner is required. No fixed director term is available here and to publish the financial statements is not necessary there. Investment rate will not make any effect in terms of sharing profit. This structure is financially helpful for the investors because the partners will share their knowledge, skills and network without charging big amounts. If investors have any intention to transfer shares in the future, they can choose Kabushiki Kaisha. In contrast of dividing the part of dividends from the actual investment, they can choose Godo Kaisha. Again, Godo Kaisha is highly recommended for the sole investors who prefer to register a company in the easiest way.
Godo Kaisha is less expensive where Kabushiki Kaisha is more in terms of costing. The setting up or registration cost of KK and GK is almost 400,000 yen (3588.51 USD) and 250,000 yen (2242.82 USD) respectively. Kabushiki Kaisha’s structure defends an investor from being liable personally and gets the opportunity to increase capital through selling shares. Minimum 1 yen is required as starting capital for both Kabushiki Kaisha and Godo Kaisha.
Investors will get a lot of advantages on choosing Kabushiki Kaisha such as it has already established reputation, it is trusted by customers, shareholders and employees though it is expensive and regulated some strict requirements. In contrast that Godo Kaisha is less expensive and considered as a pass for US parent investors.
Investors of outsiders would prefer joint venture to enter the market in Japan though it takes long time to negotiate with the appropriate term and condition initially. There is some legal advice which should be followed by the external investors. Knowing Japanese language will be very effective in this sector otherwise investors should appoint an adviser who will get them aware of all the risks, law and enforcement in Japan. Sometimes, it is found that investors don’t want to sign in the regulatory approval on the basis of trustworthiness, foreign exchange and other laws. Adviser will help to recover from that situation though friendly acquisition occurs in most of the cases. The execution time of certain deal is a bit longer but once a deal agrees, both party will be very stick on point.
Next come to the dealing process. If the investors want to deal with all the stakeholders and stockholders, they must understand the dealing process such as the local company the local companies always maintain hierarchy, corporate decisions always take in a collective way. The middle class of management gets the opportunity to generate ideas even sometimes before to the high command. All the departments share their views and then gather it to make a consensus which ultimately appears as a final decision. All the stated things in above are very important to bear in mind for the outside investors to register a company in Japan.