Incorporation Of Company Japan

The law relating to incorporation of Company in Japan is governed by the Japan Commercial Code. 'Company' as used in the Commercial Code of Japan shall mean a legal entity incorporated for the purpose of engaging in commercial transactions as a business. There are three types of companies recognized under the Commercial Code of Japan, and in addition, the Yugen Gaisha form (limited liability corporation) is recognized under the Yugen Gaisha Law which came into effect in 1940. Thus, there are a total of four different forms that a company can organize into:
  1. Go-mei Gaisha (commercial partnership),
  2. Go-shi Gaisha (limited partnership),
  3. Kabushiki Kaisha (general corporation), and
  4. Yugen Gaisha (limited liability corporation).
All forms come into effect after incorporation which requires registration with the appropriate public office.
The Limited Liability Company form was created to meet the demands of small and medium sized companies. It is better suited for small operations, easier to adopt, less costly to incorporate and register, and requires less observance of corporate formalities. It differs from a General Corporation in that it has limitations on the number of shareholders it can have and limitations on transfer of shares. Liability characteristics are very similar to a General Corporation.
The basic procedures for incorporating a Japanese company include
  1. the preparation of its articles of incorporation,
  2. actual payment of capital through a bank in Japan,
  3. registration of its incorporation with the relevant Regional Legal Affairs Bureau (RLAB) and
  4. filing of an after-the-fact report with the Bank of Japan regarding the shares acquired by the shareholders.
Under the Japanese Commercial Code (Law Number 48 of 1899 as amended), one or more incorporators should prepare the articles of incorporation and take other steps necessary for the incorporation. Each incorporator is required to subscribe for at least one share to be issued by the new company.
The company's name must start or end with the words Kabushiki Kaisha and the part of the name should be in Japanese language. Research is usually conducted at the relevant RLAB to ensure that the proposed name does not conflict with that of an existing company doing similar business within the same jurisdiction.
If a corporation of any similar name is already registered or such name is reserved at RALB (reserving a name for one year is allowed, for a fee), in the same place where the new corporation is planning to have its registered office, the application for registration in such a name will be rejected.
Also, one should check with the Patent Office if there is a similar trade name or service name registered there. In addition, one should not use well-known trade names, because even if such name is not registered at RALB or Patent Office, the one who has used such a name could protest against you under the Law for Preventing Unfair Trade for your use of such a name in the same industry.
Symbols and numerals in Roman/Chinese characters and Arabic numerals may be used to indicate a trade name. There are limitations on the use of certain words such as bank and trust. If necessary, filing for reservation of a trade name may be made with the relevant RLAB after the articles of incorporation are notarised.
The 'articles of incorporation' set out basic matters relating to the company such as its trade name, business purpose, authorised share capital, the class and number of shares issued upon incorporation, matters pertaining to the shareholders, directors, representative directors and statutory auditors and its fiscal year. The appendix lists the information needed to prepare the articles of incorporation.
Once the articles of incorporation are finalised, they should be notarised by a public notary. However, before this it is usual to notify the relevant RLAB to confirm that the wording used to describe the company's business purpose is appropriate. Two or three consultations may be needed to obtain confirmation.
Matters to be specified in the articles of incorporation:
Articles of incorporation must include the following:
  1. The objective of the corporation;
  2. trade name;
  3. total number of shares authorized to be issued;
  4. the value of each share, if the shares have par value;
  5. total number of shares authorized to be issued at the time of incorporation, and the numbers of shares having par value and shares without par value;
  6. place of the principal office;
  7. method the company is to give public notice;
  8. name and address of each promoter.
The minimum capital amount of Genera Corporation is Yen 10,000,000 (Yen 3,000,000 for Yugen Kaisha), and the value of a share times the number of shares issued at the time of incorporation should be Yen 10,000,000 or more.
The minimum value per share is Yen 50,000. There are few cases where unvalued shares are issued; in such case the price of such unvalued share should be at least Yen 50,000.
Authorizing the issuance of only one share is not prohibited by the Commercial Code, but there is an indirect restriction from minimum capital amount mentioned. Also, this number should not be more than four times as many as the number of shares already issued.
Other than legal fees, the major costs of incorporation are as follows.
Notarization Fees
A revenue stamp of ¥40,000, a notarisation fee of ¥50,000 and approximately ¥1,500 per notarised copy will be necessary to have the articles of incorporation notarised. At least three copies should be notarised, one of which will be kept at the public notary's office, one filed with the RLAB and one kept for company records.
Corporate Registration Tax
When filing the registration of the incorporation, the higher of
  1. an amount equal to 0.7 per cent of the share capital amount; or
  2. ¥150,000 should be paid as corporate registration tax to the National Treasury through the relevant RLAB or by way of bank remittance.
Bank handling fees and consumption tax
A bank handling fee, determined on the basis of the share capital amount, will have to be paid to the receiving bank. A consumption tax of 5 per cent will be imposed on this bank fee. It depends on the bank when and how the payment must be made. Usually, when the bank accepts payment in cash, payment must be made when the certificate for the receipt of the subscription money is delivered.
When the bank requires this to be withdrawn from the company's bank account, it will be made when registration of the incorporation is complete. The bank handling fee will depend on the bank used for payment of the subscription money. In general, approximately 70,000 to 80,000 yen must be paid if the share capital is less than ¥50m.
Other necessary information:
  1. number of shares issued upon incorporation;
  2. name, branch office and address of the bank handling the payment of the subscription money for the new shares to be issued upon incorporation, plus contact information of the person in charge at the bank;
  3. name of directors and auditors in Japanese and English;
  4. home address and date of birth of representative directors;
  5. company name and address and name of a shareholders' representative; and
  6. business purpose and amount of paid-in share capital of shareholder.
The articles of incorporation becomes effective after being sealed by incorporators and notarized before a Japanese Notary Public.
After creating the articles of incorporation, the incorporators shall invite subscriptions for shares. The incorporators must receive payments for the shares. For registration before RLAB, one needs the certificate of a bank to certify that the amount of capital is received by a particular account for General Corporation.
After all the payments have been made, the incorporators must convene a constituent general meeting. In the constituent general meeting, officers shall be appointed.
Finally, the registration of the company is made within two weeks of the date of when a constituent general meeting has been completed and the Process of Incorporation is nailed.