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
