Registration of company in Japan

Registration of a company in Japan

Japan is an island country in Eastern Asia. Being situated in the Pacific Ocean, eastward of the Sea of Japan, China, North and South Korea, Russia, it occupies the territory from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south.

The state is located on the Japanese archipelago, consisting of 6852 islands. Such four largest islands as Honshu, Hokkaido, Kyushu and Shikoku compound 97% of the total area of the archipelago. Most of the islands are mountainous, many of them are volcanic. The volcano of Fujiyama is the peak of Japan.

Being populated with more than 127 million people, Japan ranks tenth in the world. Big Tokyo, which includes the capital of Japan (Tokyo) and several nearby prefectures with the population of more than 30 million people, is the largest urban agglomeration in the world.

The means of doing business in Japan

The most prevalent organizational and legal forms are the following:

• joint-stock company (kabusiki kaysya),
• limited liability company (godo kaysya),
• subsidiary (siten) of parent foreign company.

Due to the limited liability of the contributors, the advantages of financing and high confidence of the society, the joint-stock company is the most used organizational and legal form. Given the fact that in order to register joint-stock company in Japan, the minimum capital in the amount of 100 thousand USD (10 million yen) or more is required, this organizational and legal form can only be profitable for representatives of big business.

For companies representing the segment of medium-sized business in the market, it will be more cost-efficient to make choice in favor of the LLC (the Limited Liability Company), because the minimum of the statutory capital prescribed by law is limited to the amount of 30,000 USD (3 million yen).

For entrepreneurs tending to be engaged in small business in the market, it will be more profitable to register the branch of the company in Japan, and the minimal capital is not provided at all for such organizational and legal form.

The joint-stock company in Japan can be registered by two methods:

• as incorporation of the joint-stock company when the shares belong to the founders;
• as incorporation of the public joint stock company, the shares are sold for the purpose of attracting investors.

For each method, different packages of documents are required and a bit different registration processes are provided for.

Particulars regarding company formation in Japan.

Due to the fact that the registration procedure itself is a bit complicated by bureaucratic red tape, it entails to be present in the territory Japan and requires special legal, economic and accounting knowledge to establish and maintain the enterprise. In order to save time and money, entrepreneurs interested in registration of business in Japan take into service the companies providing services in this jurisdiction.

In this case it should be noted that there are very few companies in the state which provide comprehensive legal and accounting services.

When the company registration documents are submitted to the registration authority, they should be accompanied by the "certificate on apposition of the seal" from the representative director. If the founder or the representative director of the joint-stock company is not the citizen of Japan who has not obtained the certificate of registration of the foreigner, then such person can not obtain the certificate on apposition of the seal, and in this case the documents are endorsed by his signature, instead of seal.

However, in this case, each time when the signature is endorsed, it should be necessarily accompanied by the certificate on authentication of the signature issued by the notary in the home country of the founder or representative director.

Laws and regulations related to foreign investments

The most important laws and regulations related to investments include the following:

• The Law "On Control over Conducting Foreign Economic Activity and Foreign Trade".
• The Commercial Code (the Legislation on Corporations) and the Antitrust Law.
• The Law "On Intellectual Property Rights".
• The Law "On Supporting Small and Medium Entrepreneurship" (Chusho Kigyou Chosen Sien Hou).
• The Law "On Facilitation of the Establishment of New Business".

When registering company in Japan, the regulatory documents governed by labor legislation and the Law "On Intellectual Property Rights" should also be kept in mind. Depending on the type of business, it may be necessary to obtain license or confirmation of the competent authority in accordance with effective laws and regulations.

The Law "On Control over Conducting Foreign Economic Activity and Foreign Trade" provides for norms of proper management of foreign economic activity based on the principle of freedom of foreign trade. It means that in the event the company with foreign capital makes direct investments in Japan, it is obliged to comply with certain rules upon the principles of "notification ex post facto", "prior permission" or "notification in part" in accordance with the provisions provided for by the law.

Measures on minimizing the requirements for the amount of the initial capital.

As minimization of the requirements for the initial amount of capital, the Law "On Supporting Small and Medium Enterprises" (Chusho Kigyou Chosen Sien Hou) is in force in the state, and the Law "On Facilitation of the Establishment of New Business" was also reconsidered. As a result, starting from 2003, it became possible to circumvent the minimums provided by law for the initial capital of the company.

The conditions under which joint-stock company, limited liability company, business in Japan can be registered with the capital of one yen are the following:

1. You will be required to submit notification to the Bureau of Economics of that particular region where the enterprise will be registered, and obtain corresponding document, which shall be submitted with package of documents prepared in advance.
2. If the company fails to meet the abovementioned requirements for the minimum amount of capital within five years from the date of its establishment, its organizational and legal form will be changed or it will be stricken off.
3. Shareholders or co-founders, depending on the organizational and legal form, will not gain profits until the requirements for the minimum capital are met.
4. Such enterprise is obliged to publish financial data. The requirements concerning minimum amount of capital shall be met within five years from the date of registration, otherwise the company will be stricken off.

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