Establishing a Business Presence in Japan: A Guide for Global Companies

Setting up a company in Japan can significantly enhance your business credibility and trustworthiness. Many clients and partners prefer engaging with firms that have a physical presence in Japan, making it a strategic move for global expansion. This guide outlines the key company types, registration steps, and legal considerations from an HR perspective, helping you navigate the process efficiently.

Common Company Structures in Japan

Japan offers several business entities, each with distinct requirements. Selecting the right one depends on your operational needs and long-term goals.

Kabushiki Kaisha (KK)

A Kabushiki Kaisha, or joint-stock corporation, is the most prevalent form for medium to large enterprises. It provides strong liability protection and is ideal for raising capital.

Minimum of one shareholder and one director (can be the same person)
No minimum capital requirement (can start with as little as 1 JPY)
Requires articles of incorporation and shareholder meetings for major decisions
A registered office address in Japan is mandatory

Godo Kaisha (GK)

A Godo Kaisha, or limited liability company, offers flexibility for smaller businesses or startups, with simpler governance.

At least two partners (individuals or entities)
No statutory capital, but partner contributions must be defined in an agreement
Partnership agreement outlines management and profit-sharing
Must have a physical address in Japan

Gomei Kaisha

A Gomei Kaisha is a general partnership where partners have unlimited liability, suited for professional services.

Minimum two partners
Capital requirement starts at 1 JPY
Partnership contract governs operations
Japanese office address required

Step-by-Step Registration Process

Registering a company in Japan involves clear stages. Proper planning can reduce delays, which typically span weeks to months.

Company Name Reservation: Choose a unique name including the entity type (e.g., "KK") and check availability with the Legal Affairs Bureau.
Shareholder/Partner Identification: Define roles, contributions, and responsibilities in legal documents.
Capital Injection: For KK and Gomei Kaisha, deposit capital (min. 1 JPY) into a Japanese bank account; notarize proof if needed.
Document Preparation: Draft articles of incorporation or partnership agreements, detailing governance.
Licenses and Permits: Secure industry-specific approvals before operation.
Office Setup: Lease or own a compliant address in Japan.

Key documents include notarized seal certificates, passport/ID copies of directors, office lease agreements, and bank statements post-capital deposit. Non-residents can serve as shareholders or directors but may need a local agent for bank account opening.

Understanding Japanese Corporate Law

Compliance with Japan’s Companies Act is critical to avoid penalties and ensure smooth operations.

Shareholding: No restrictions on shareholder nationality; minimum one shareholder.
Registration: File with the Legal Affairs Bureau, submitting articles, shareholder lists, and board resolutions.
Legal Adherence: Follow labor, tax, and corporate laws, including obtaining business licenses.
Financial Reporting: Submit annual financial statements and undergo audits as required.
Shareholder Liability: Generally limited to capital contributions, except in cases of legal breaches.
Annual General Meeting (AGM): Hold AGMs within three months of the fiscal year-end; failure can lead to fines up to 1 million JPY.
Financial Disclosure: Publish balance sheets (and income statements for large firms) post-AGM; non-compliance risks fines.
Foreign Investment Reporting: Report investments under the Foreign Exchange Act; some sectors require pre-approval for national security.

Regularly monitor legal updates to stay compliant. For instance, a tech startup entering Japan must report foreign investment if acquiring a local firm in a sensitive industry.

Alternative: Employing Talent Without a Local Entity

For companies seeking flexibility, SailGlobal offers Employer of Record (EOR) services. This allows you to hire, manage, and pay employees in Japan without establishing a legal entity. SailGlobal acts as the legal employer, handling payroll, benefits, tax filings, and compliance, while you focus on business growth. This model is ideal for testing markets or hiring remote teams quickly.

Japan Company Registration Guide: Types, Steps, and Compliance