Establishing a business in Japan

As Japan is single jurisdiction unlike the United Kingdom and China, there is no difference in formalities and requirements for establishing and/or doing a business anywhere in Japan.

First, existing businesses can establish their presence in Japan indirectly. They can find a local business partner who acts as their agent, distributor or franchisee to promote and sell their products and services in Japan. Joint venture is another way to do business together with a local partner in a way both of which are involved with its management.

For more direct ways, they can set up their subsidiary (or a company), branch or representative office. A branch and representative office do not have a legal entity and thus the foreign company/individual is responsible for all debts generated by the activities of its Japanese branch. Further, a representative office is not permitted to engage in sales activities i.e. their capacity is limited to marketing etc.

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Setting up a company

There are two main types of companies are available under the Japanese Companies Code: Kabushiki Kaisha (KK) and Godo Kaisha (GK).

KK is the most common type of company and over 90% of existing companies in Japan use KK. GK was created as a new type of business vehicle in 2006, designed to be used by small companies whereby the company can save initial and maintenance costs. As KK is the most recognised by both consumers and businesses for a long time, KK has, in most cases, been recommended when setting up a company. However, you can choose GK as it is less expensive and getting more and more recognised.

Steps

The steps for the incorporation of a KK are as follows:

1. Drafting the articles of incorporation.
2. Notarisation of the articles of incorporation by a notary public with JPY50,000 notarisation fee (this process can be omitted for GK).
3. Capital contribution (JPY1 or more) by the promoters and other subscribers.
4. Appointment of directors of incorporation.
5. Registration of the incorporation of the KK on the commercial registry maintained by the Ministry of Justice, at the location of its head office with JPY150,000 (JPY60,000 for GK) registration fee.

How to start

You can do it yourself. Starting a business has never been easier. There are many websites helping you prepare necessary documents to be filed with.

However, as those websites are typically designed for Japanese entrepreneurs, those who do not understand Japanese had better hire someone. Further, as the notarisation process requires a personal appearance before a notary, those who wish to set up a company from abroad had better find someone in Japan to act for you.

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