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【Company Secretary】GK Parent-Subsidiary Relationship

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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 our discussions in the internal study group.

Ken (male):      
Ken is 22 years old. He has been with ARK for a year.
(He is suffering from hay fever.)
Emma (female):  
Emma is 34 years old. She is a mother of one child and a trainer at ARK.
(She is worried about her child getting flu.)
George (male):   
George is 46 years old. 
(He wants to go see the cherry blossoms.)

I’ve finished closing the books for Godo Kaisha (GK). I am wondering how you could explain a parent-subsidiary relationship in a GK structure. As for Kabushiki Kaisha (KK), a parent company can purchase a controlling amount of voting stock in another company.  What about GK? GK does not issue shares.

That’s a good question. Let’s check it out! 
KK can control another KK by obtaining majority voting rights. In Japan, the number of business establishments by GK is increasing. As for GK, it does not have a concept of shares, so how about judging its subsidiaries by the amount of contribution?

Frankly speaking, a parent-subsidiary relationship in a GK structure is judged by the control over the management. It is possible that GK can judge its parent-subsidiary relationship by the amount of contribution. However, in the case of GK, not only cash contribution but also investment in kind, provision of patent rights, and technology and labor investment are available. In case there are several partners in GK, you need to check the contents of articles of incorporation to make correct judgments about a parent-subsidiary relationship in its GK structure.

In this article, we mentioned “GK- Parent-Subsidiary Relationship.” 
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.

The Companies Act Article 2-3(4)
Ordinance for Enforcement of the Companies Act Article 3