What kind of companies exist ?
Except for the sole proprietorships, there are 4 types of companies recognised by Japanese laws :
- Go-mei Gaisha (commercial partnership)
- Go-shi Gaisha (limited partnership)
- Yugen Kaisha (limited liability
corporation ; Ltd.)
- Kabushiki Kaisha (general corporation limited by shares)
We could also add the Go-ben Gaisha (joint venture).
What are the advantages and disadvantages of each ?
Both the sole proprietorships and partnerships have unlimited liabilities, which can be very dangerous, as any personal
possessions (house, car, savings...) can be seized to repay potential debts. The go-shi gaisha type of partnership actually
has unlimited and limited liabilities, depending on whether they are general or limited partners. In any case, there must
be people carrying unlimited liabilities, and all partners have direct liabilities (i.e. each person can be sued individually).
The advantage of incorporating one's business into a yugen or kabushiki kaisha, is that the shareholders have an indirect
and limited liability, which means they are only liable to creditors for the amount they have invested (shares) and cannot
be sued personally, but always in the name of the corporation.
- Partnerships must have at least 2 partners. It is difficult to increase the size of the company, as new partners
must be approved unanimously by other partners.
- Yugen Kaisha requires just one director and the number of employees is restricted to 50 people.
- Kabushiki Kaisha must have at least 3 directors and 1 accountant, but are not limited in size.
Partnerships are cheaper to establish than corporations. They do not require any notary fee (50.000yen) nor the revenue
stamp (40.000yen) for the articles of incorporation of the Y.K. and K.K. Among corporations, the Kabushiki Kaisha's complex
structure will cost more in lawyer's fee than the Yugen Kaisha.
Corporations are safer than partnerships but more costly to establish. I would anyway recommend to
go for a yugen kaisha as a first, small or medium company. Partnerships are too risky and difficult to increase in size. Kabushiki kaisha
have more obligations, such as submitting an annual report (which requires an accountant), are more suitable for big
Both Y.K. and K.K. command more prestige than partnerships, and therefore faciltate business with other Japanese companies. The
most prestigious of the two is of course the K.K.
How much does it cost ?
Since early 2003, the minimum capital to create a company in Japan is only 1 yen. Nevertheless, they must reach a minimum
capital within 5 years (3 million yen for the Y.K. and 10 million yen for the K.K.).
The registration fee cost at least 181.000 yen for a Yugen Kaisha and 321.000 yen for a Kabushiki Kaisha (this is if
you start with a 1yen capital, otherwise, it's a bit more).
These cost cover :
- certification of the articles of incorporation (teikan ninshouryou) : 50.000yen
stamp for the articles of incorporation (tekian ni haru inshidai) : 40.000 yen
- registration licence tax (touroku menkyo
zei) : 60.000 yen for Y.K. / 150.000 yen for K.K.
- company's seals (kaisha inkan) : 30.000 yen (includes real seal, bank
seal, square seal, rubber seal)