Starting up a Company in Japan
When you want to apply for a business manager visa and start up a company, we can take care of both your needs at once. We mainly assist the founding of a joint-stock company (kabushiki kaisha) and a limited liability company (godo kaisha). Let’s be clear on the advantages and disadvantages of each type of company.
The Companies Act in Japan currently defines 4 types of companies. The majority of the companies in Japan are either a joint-stock company (Kabushiki Kaisha) or a limited liability company (Godo Kaisha). There are also “joint venture companies” and “limited partnership companies.” They come with their own particular traits and disadvantages, but I will not elaborate on them here. “Limited liability company (Godo Kaisha)” is a new form of company introduced in the Companies Act of 2006. There also exist companies in the form of “Yugen Kaisha” (which is literally translated as “limited liability company” but legally differentiated from “Godo Kaisha”) as well, but this type of company cannot be newly formed anymore under the current Company Act. Existing “Yugen kaisha” type of companies were formed before 2006. When “Godo Kaisha (limited liability company)” was still relatively unheard of to many people, many companies had difficulty in getting investment or hiring workers because of the name. But recently, Google Japan, Apple Japan, Amazon Japan and other large companies operate in the form of “Godo Kaisha.” After all, if you are running a business privately or do not include the form of business in the trading name, it does not make such a big difference.
Joint-stock companies and limited liability companies have different forms of decision making on important subjects. Joint-stock companies make important corporate decisions at a shareholder’s meeting. Shareholders are given the right to vote on a “one vote per share” basis, which means the larger the share is, the more influence the shareholder has on the decision making. If a business owner wants to reflect his own intention in the corporate decision, he can do so by holding more than 51 percent of the share and thus single handedly making an ordinary resolution (on almost all corporate decision making including appointment and dismissal of board members). To single handedly make a special resolution (on transfer of business, amendment of corporate articles, etc.), more than 67 percent of the share is needed. Limited liability companies can only make corporate decisions by unanimous agreement of all business partners regardless of the size of share.
The term of office for directors and other executive officers is usually 2 years (4 years for auditor), but joint-stock companies can extend it to 10 years at maximum. But a long term of office is not necessarily always advantageous. If you want to dismiss an officer for his/her poor performance, for example, a long term of office can be an obstacle. Contrarily, a short term comes with the trouble of frequent renewal procedures and a risk of having an officer headhunt by a competitor. These advantages and disadvantages should be well considered when setting the length of term of office. With limited liability companies, there is no legal requirement about the length of term of office. The term of office at a limited liability company is basically permanent unless the officer leaves the company or is dismissed for misconduct.
The title of the representative of a company is “Chief Executive Office” in the case of a joint-stock company and “Senior Partner” in the case of a limited liability company. Some people choose to found a joint-stock company only because “senior partner” doesn’t quite sound like someone representing a company, but let’s not overthink it because the title name won’t change who represents the company.
The administrative fees necessary when founding a joint-stock company is 200 thousand yen or more, and for a limited liability company, it’s 60 thousand yen or more. If you hire an administrative procedures legal specialist or judicial scrivener, you would also need to pay the service fee. If the expense is your main concern, a limited liability company should be a better option.
