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【Company Secretary】Starting a Business in Japan

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ARK Outsourcing KK provides one-stop service mainly to Japanese branches or subsidiaries of foreign-based companies.
In this article, we will introduce the basic information about making English company documents such as articles of incorporation or meeting minutes in a dialogue style. The contents of this article are based on discussions in our internal study group.

Ken (male) :      Ken is 22 years old. He has been with ARK for a year.
Emma (female) :  Emma is 34 years old. She is a mother of one child and a trainer at ARK.
George (male) :   George is 46 years old. He has been working hard to become a paralegal.

Ken : 
I received an inquiry from an American company. They are considering starting business in Japan. How should I give them advice?

Emma :
Well, there are four types of companies under Japan’s Companies Act: Kabushiki-Kaisha (KK), Godo-Kaisha (GK), Goshi-Kaisha, and Gomei-Kaisha. Most foreign-based companies choose KK or GK because the responsibility of investors is limited to the amount contributed. They can also consider a branch office or a representative office for other options.

George : 
That’s right! You can think of three types of business entities when setting up business in Japan: ① a subsidiary (KK, GK) ② a branch office, and ③ a representative office. Let’s check the pros and cons for each entity.

① Subsidiary (mainly, KK or GK)
A subsidiary is a separate independent entity form its overseas parent company. The registration of establishment is required. In general, KK is more reliable and better-known than GK. On the other hand, GK has more freedom of self-government through its articles of incorporation, and the administrative works are simpler than KK.

② Branch office
A branch office is a unit of an overseas parent company. It can operate continuous business operations by registration. An overseas parent company needs to take tax or litigation risks which might happen in Japan. Also, it might have to bear tax burdens such as size-based business tax and per-capita tax in Japan.

③ Representative Office
A representative office can conduct preparatory operations for future sales activities. The registration of establishment is not required. It can conduct supplementary works such as market survey and information gathering, but it is just a liaison office and not allowed to engage in any sales activities.

In this article, we introduced three types of business entities when starting business in Japan. 
Please note that this article only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.

Ark Outsourcing KK
Procedures for Doing Business in Japan Part 1 Types of Organization and Taxation 
(Accessed on 17 January 2023)