Kabushiki Kaisha in Japan
A Kabushiki Gaisha, or Kabushiki Kaisha, usually abbreviated as KK, is a type of business corporation defined under Japanese law.
Japanese companies often translate the phrase as Co., Ltd, Corporation or Incorporated. The Japanese Government uses the term “stock company” as the official translation.
A KK is not allowed to buy back its own stock according to Japanese law.
It is possible to set up a business entity in Japan in 4 days. In order to promote start-ups and foreign direct investment, the government lowered the required capital for setting up a joint stock company (Kabushiki Gaisha) to JPY 1 from JPY 10 million 2003. The total cost, therefore, of an incorporation stands at JPY 240,000 (around USD 2,500).
The main steps in incorporation are as follows:
- Preparation and notarisation of articles of incorporation
- Recipt of capital (directly or through an offering)
KKs require only one incorporator, which may be an individual or a corporation. If there multiple incorporators are involved, a partnership agreement must be signed before incorporation of the company can occur.
Under current Japanese law, a KK must have a board of directors comprised of at least three individuals. Directors will serve a term of two years, and auditors will serve a term of four years.
Japanese tax laws also require that Kabushiki Kaisha be subject to double taxation of profits and dividends – similar to many other countries.
Differing from other countries however, Japan also levies double taxes on close corporations (yugen gaisha and godo gaisha).
Due to this, taxation should not be a factor when deciding how best to structure your business in Japan.
All publicly traded companies follow the KK structure, and so smaller businesses often choose to incorporate as a KK simply to appear more prestigious.
In addition to income taxes, KKs must also pay registration taxes to the national government, and may be subject to local taxes as well.
Japan‘s Ministry of Economy, Trade & Industry (METI) sponsors programmes to promote foreign investment into Japan, and this includes bank loans through the Japan Bank for International Cooperation and the Development Bank of Japan.
Entry-level business support programs are provided by the Japan External Trade Organisation (JETRO) as well as by some municipal and prefectural governments. Current information on investing in Japan, establishing an office, and other JETRO programs for foreign businesses can be found on JETRO‘s website.
Questions about setting up a company in Japan?