Setting Up A Business In Japan

Thinking About Setting Up a Business in Japan?

Starting your own business in Japan is not as difficult as one might think.  With the need to promote start-ups, the Japanese government has lowered the required capital for setting up a joint stock company (KK) for 10 million yen to 1 yen in 2003. Theoretically, it is possible to set up an entity in 14 days.

There are the 4 options for setting up a business in Japan:

Representative Office

A Representative Office does not require registration with the legal affairs bureau and tax forms.  It is only permitted to carry out functions such as market research, PR etc and no sales activities may be undertaken.  It may be suitable if Japanese clients already have established a good relationship with the UK exporter and the sales transaction and paperwork is being carried out entirely between the UK exporter and the Japanese client and the Japanese Representative Office’s role is limited. It is not possible to open a bank account or sign a tenant agreement with this status.

Japan branch office

A branch office may engage in sales activities. After the Ministry of Justice abolished the law which required companies to appoint a local Japanese representative, once confirming an office address it has become significantly easier to open a Japan branch office. You will need to create an affidavit document concerning establishment of a branch office and have it notarised at the British Embassy.  You will then need to register the branch office at the legal affairs bureau and register the company seal. This is often regarded as an easier option compared to setting up a Japanese incorporation.

Japanese subsidiary

This could be in the form of either a joint-stock corporation (KK) or a Godo Kaisha (LLC).

The KK is the most prevalent form of entity and can enjoy credibility and a good social standing.  An LLC is less recognised but the number of such incorporations has been rising rapidly including adaptation by some of the large foreign companies eg Apple,  Walmart.

Since the shareholders and managers of the companies are not separated in the case of an LLC, it has the benefit of having more management freedom eg sharing of profits.

It is necessary to have at least one director who is resident in Japan to set up a KK.  For setting up an LLC, it is necessary to have a personal seal certificate of a representative member who has to be resident in Japan.

Limited Liability Partnership (LLP)

An LLP is formed when two or more individuals/corporations conclude a limited liability partnership agreement, pay the investment as agreed and register at the legal affairs bureau.  At least one member of an LLP must be resident in Japan.  It is not possible to convert an LLP to a KK and nor does an LLP have the authority to be an applicant for licenses/approvals required in regulated business sectors.

Questions about setting up a company in Japan?