Setting up a business in Japan

TOP > ENGLISH > Services > RE/MAX Interface > Life in Japan > Setting up a business in Japan
(Updated on December 1, 2016)

How non-Japanese people can set up a business in Japan

What preparations are required when a non-Japanese person wants to establish a company in Japan to develop a business or migrate to Japan? To be more specific, if you want to open a restaurant, start a home renting business with your property, or establish a marketing base to sell your products in Japan, where should you start? Here we present the basic information for non-Japanese people to establish a company, including explanations on types of companies in Japan, required status of residence, and expenses and processes necessary for establishing a company. There are several types of offices you can establish to start your business in Japan, such as a Japanese subsidiary (company), a Japan branch office, and a representative office, but here we would like to focus on providing you with information on establishing a company. As for information on how to establish a branch or a representative office, comparisons between each type of office, and the like, please contact us for further details.

 

 

Types of companies in Japan

As stipulated in the Companies Act, there are four types of companies in Japan: Stock Companies (Kabushiki-Kaisha), Limited Liability Companies (Goudou-Kaisha), General Partnership Companies (Gomei-Kaisha), and Limited Partnership Companies (Goushi-Kaisha).

Stock Company (Kabushiki-Kaisha)

This is a company in which the investors, called shareholders, make capital contributions while the directors carry out business execution. The ownership and management of such company are separated and profits earned through business operations are distributed to investors.

 

The following points are the advantages of establishing a stock company:

 

It is well recognized by society.
The investor bears an “indirect limited liability” against creditors within the scope of the invested amount. That is, even if the company goes bankrupt, the investor does not bear a liability that exceeds his/her invested amount.
Capital contributions can start from \1.
It can be a one-person company (a company composed of one director).

 

Its disadvantages, however, compared with other company forms are as follows:

 

It requires a large amount of cost for its establishment, including expenses required for the certification of the articles of incorporation (\60,000) and expenses for the registration of incorporation (\150,000). 

It is obliged to announce its financial results. Having an obligation to disclose its financial results every year requires time and effort for their preparation. 

Obligation to reelect officers: The term of office is determined for each officer, and although extension of terms is possible (10 years), each officer must be reelected. Also, about \10,000 is required to change the registered information when officers are reelected. Those who fail to complete such procedures will be punished with penalties.

 

Membership company

Membership Companies are companies in which all investors are called members and make decisions upon consent of all the members while the investors themselves carry out business execution, therefore the ownership and management are not separated. Membership companies can be categorized into the following three groups:

 

Limited Liability company (Goudou-Kaisha)

This is a company in which investors are called members and all the members assume an indirect limited liability. This type of company in Japan was modeled after LLCs in the U.S. and the U.K. 

 

Pros 

  • ・The liability assumed by all members is an indirect limited liability. 

  • ・It has no obligation to announce its financial results (however, as this is a transitional measure, future law amendments may obligate the company to announce financial results). 

  • ・Decisions can be made promptly because members act as investors as well as directors.  

  • ・Costs for its establishment are low. Certification of the articles of incorporation is not required. Expenses for the registration of incorporation are \60,000, which is less than the \150,000 for stock companies.  

  • ・It can be a one-person company. 

  • ・The distribution ratio of profits and authority can be determined regardless of the invested amount. 

     

Cons 

  • ・Its social recognition is low. 

  • ・It has a closed nature compared with a stock company (no disclosures of financial results, etc.), and therefore, some counterparties may restrict transactions.  

     

General Partnership Company (Gomei-Kaisha)

This is a company composed of “unlimited liability members,” who are investors directly assuming liability against the company’s creditors. 

 

Pros

  • ・Announcements of its financial results are not required.
  • ・Costs for its establishment are low, at a similar level with limited liability companies.
  • ・With no capital system implemented, investment made by cash is not an obligation. 
  • ・It can be a one-person company.

 

Cons

  • ・Members assume unlimited liabilities: If the company goes bankrupt, the liability against creditors extends to every asset of the members. It is convenient for creditors to make transactions with such company since they can demand performance of obligations. However, for members of the company, they have to take larger risks, and now that a limited liability company is also an option, the number of establishments of general partnership companies is declining. 
  •  
Limited Partnership Company (Goushi-Kaisha)

This is a company composed of “members with unlimited liabilities” and “members with limited liabilities.” As with General Partnership Companies, the members need to take a larger risk, and therefore, the number of cases in which limited partnership companies are being established is declining. 

 

Pros

  • ・Announcements of its financial results are not required.
  • ・Costs for its establishment are low at a similar level with limited liability companies.
  • ・With no capital system implemented, investment made by cash is not an obligation.

 

Cons

  • ・Some of the members assume unlimited liabilities: If the company goes bankrupt, the liability against creditors extends to the entire assets of the members with unlimited liabilities.
  • ・At least two members are required: This is attributable as a Limited Partnership Company and is composed of members with unlimited liability and members with limited liabilities. 
  •  

Relaxed requirements for non-Japanese to establish companies

Since 2015, requirements have been relaxed for non-Japanese people who want to establish a company in Japan. Specifically, 1) requirements for capital stock have been abolished (before the revision, capital stock of \5,000,000 was required). In accordance with this, the name of the status of residence, “investor and business manager” was changed to “business manager.” 2) Also, before the revision, if the person had not yet arrived in Japan or only had a visa of a temporary visitor, he/she could not open a bank account in Japan, which posed a serious obstacle for those who wanted to establish a company in Japan but could not make capital contributions through bank accounts. However, after the revision, even if the person has not yet completed the registration of incorporation when applying for the status of residence of “business manager,” he/she can make applications by submitting materials that prove the commencement of business, such as the articles of incorporation. 3) Furthermore, a status of “business manager” with a period of stay of four months has been newly introduced. With a shorter period of stay than the status of “investor and business manager,” which is six months, the shortest for this status, it has become possible to establish a company more flexibly. 

 

Advance preparation for establishing a company: Obtaining a status of residence

A non-Japanese person who wants to stay in Japan needs to possess a status of residence. Further, if you want to establish a company and engage in activities corresponding to its management (to become a director, etc.), you need to possess a specific status of residence. If you possess the status of “permanent resident,” “spouse of Japanese national,” “spouse of permanent resident,” or “long-term resident,” your activities in Japan are not limited, and therefore, there is no need for another status. However, if you have not yet obtained a status of residence, such as if you have not yet arrived in Japan, or when you are staying in Japan with the status of residence of “temporary visitor,” “student,” and such, you need to obtain a status of “business manager.” 

 

How to obtain the status of “business manager” to establishing a company

1) Apply for the status of “business manager” (usually requires 2-4 months)

2) Visit the local Japanese embassy or consulate in your country with the issued “certificate of eligibility” to receive a visa.

* If you have already arrived in Japan and are staying with a status other than “business manager,” you can apply for a change in your status of residence to “business manager” without returning to your country.

3) Arrive in Japan and obtain the status of residence of “business manager” and your residence card.

4) Register your personal seal at the local municipality office and open a personal account at a bank.

 

For more information on other VISA requirements, click here.

Flow of procedures to establish a company

The basic flow of procedures to establish a company in Japan is as follows:

 

1) Determine fundamental items of the company

Determine the company’s trade name, location, details of business, scale of business (fulfilling the requirements of two or more full-time employees or \5,000,000 of capital stock), capital stock, composition of officers, etc. 

 

2) Prepare articles of incorporation

Prepare articles of incorporation including fundamental items of the company. The articles of incorporation need to be certified by a notary public.

Select a representative director at the establishment of the company. Appoint directors and other officers at the establishment of the company. 

 

3) Payment of capital stock

As there are no bank accounts of the company yet, deposit money into a bank account of the incorporator (or the person becoming the representative director) for the payment of capital stock. This payment must be made to a financial institution whose establishment was approved by the Financial Services Agency. 

 

4) Apply for registration of incorporation

Prepare documentation required to apply for the registration of incorporation and apply for the registration at the Regional Legal Affairs Bureaus having jurisdiction over the region where the company is located. 

 

Costs for establishing a company

For establishing a stock company, certain expenses must be paid as initial costs prescribed by law. Below are the list of expenses required for a stock company. 

 

Commission for the certification of the articles of incorporation (to be paid to a notary public): \50,000

Revenue stamp fee for the articles of incorporation: \40,000

Certified copy fee for the articles of incorporation: About \2,000 (depends on the number of pages of the articles of incorporation)

Registration and license tax: Seven thousandth of the amount of capital stock with a lower limit of \150,000

 

Total: \242,000

 

In addition, besides statutory expenses, there are various expenses which are very likely to be incurred when the company is established. Such expenses are shown below. Please note that the amounts are rough estimates and expenses other than these can be incurred in some cases (such as expenses required for the opening of offices when locating offices and service charges to be paid to licensed judicial scriveners (shihoushoshi) when asking them to prepare various application documents). For further details, please feel free to contact us

 

  • ・Bank statements: \1,000 to \3,000
  • ・Certified copy of registration: \600 per copy
  • ・Registered seal certificate: \450 per copy (usually for all directors)
  • ・Making a registered seal: About \20,000

 

 

 

  • 海外ビジネスパートナーをお探しの方は、当社までご相談ください
  • CONTACT