Choosing the Type of Company to Establish in Japan
| Kabushiki Kaisha (KK) | Godo Kaisha (GK) | |
|---|---|---|
| Structure | Limited liability company by share | Used by small and medium sized companies and functions more like a partnership |
| Credibility | Widely known, the most credible form of company in Japan | Newly introduced in 2006 to replace Yugen Kaisha. Still not very well known |
| Setting up costs | Around 500,000 yen including our fees and relevant costs | Around 300,000 yen including our fees and relevant costs |
| Governance | Investors / owners (shareholders) and managers of the company (Directors) are separated (a shareholder can become a director at the same time) | Owned and managed by partners. Necessary to invest (regardless of the amount) in order to manage the company. |
| Minimum number of people required | At least one shareholder and one Representative Director (can be the same person) | At least one partner |
| Publication of financial statements | Necessary | Not necessary |
| Directors term of office | 1 to 10 years with possibility of re-election (which needs to be registered) | No fixed term |
| Profit sharing | Tied to the investment rate (number of shares held) | Possible to decide freely without being bound to the investment rates |
| Advantages | Easily recognized or trusted when working with big Japanese companies. Possible to appoint directors who don’t hold shares. | Useful when you have partners who can contribute by providing their knowledge, skills or network without making large financial contribution. |
| Disadvantages | More expensive when setting up | Less credible |
It is possible to change from GK to KK, or from KK to GK, after the company is registered. The costs of the transformation is about the same as the difference in the setting up costs between KK and GK (around 200,000 yen).
Which should I choose, KK or GK?
- If you have sufficient funds for and will work regularly with Japanese companies: KK
- If you budget is limited and the main clients/customers will most likely be individuals or foreign companies: GK
- If you intend to have other investors or to transfer/sell shares in the future: KK
- If you wish to divide the profit (dividends) with different percentage than the actual investment rate (for having partner(s) who will provide workforce, skills or know-how rather than contributing financially): GK
- If you are the sole investor/manager of the company and wish to set up a company in the easiest and fastest way: GK
