Types of business in Japan

If you are considering starting a business in Japan, it is worth acquainting yourself with the types of company that it is possible to establish.

The diversity of the company types in the country reflects Japan’s dynamic and exciting business landscape. There are four options to consider including company types suitable for small businesses and larger corporations.

Kabushiki Kaisha (KK)

The most widely known and credible type of company in Japan, a KK is a joint-stock, limited liability company. A KK is usually the most suitable option for medium to large businesses. It can be registered with a capital investment of 1 yen and with only one investor that is both a shareholder and director. A Japanese address is required but shareholders and directors can all be non-residents.

Requires at least one company director and one shareholder. These can be the same person.
Directors are appointed for one to ten years and can be re-elected or appointed for a fixed term of 2 years.
All investors have limited liability.
Financial statements must be published.
Must have an accounting counsellor or appoint auditors.
Foundation process is based on the Articles of Association which must be registered with the Legal Affairs Bureau.
Distribution of profits tied to the number of shares held.
A KK is costly to incorporate.
This type of company can be listed.
Wide range of financing options available.
Enables you to raise funds via stock options and selling shares.
It can be easier to attract Japanese employees to this type of business.

A KK company is the right choice if you have sufficient funds and will be trading regularly with Japanese businesses. It is also the best option if you wish to bring in further investors and to sell or transfer shares in the future. You should consider establishing a KK if you wish to distribute profits (dividends) in a way other than according to the percentage of shares owned. For instance, you might wish to reward individuals for their skills and performance rather than for having made an investment in the company.

Godo Kaisha (GK)

Introduced in 2006, the Godo Kaisha type of company remains a little under the radar. Suitable for small to medium businesses, a GK is less expensive to establish than a KK and offers certain tax benefits. It is a form of limited liability company similar to a limited company in the UK.

Less credible than a KK.
Limited access to funding and loans.
Owned and managed by members with at least one member/investor required.
No fixed term for members.
Members have similar responsibilities to those of the directors of a limited company in the UK.
Complicated procedure for resolving disputes between partners.
Cannot be listed.
Certification of Articles of Incorporation not required.
Less complicated to establish than a KK.
Publication of financial statements not required.
Affords freedom of management.
Facilitates speedy decision making.
An individual or corporation can register a GK without being resident in Japan.
Can become a KK in the future.

A GK is an appropriate choice if you will primarily trade with overseas businesses, if your budget is limited, if you are the sole investor or if you wish to control how profits are distributed.

Gomei Kaisha

A Gomei Kaisha is a general partnership. All partners are jointly and severally liable for any liabilities incurred by the business. If the partnership cannot pay its debts and obligations, the personal assets of the partners may be seized. For this reason, a Gomei kaisha is a type of company rarely chosen by overseas investors.

Goshi Kaisha

This is a partnership formed by two types of partners, those with unlimited liability (general partners) and those with liability only to the extent of their contribution to the business’s capital (silent partners). In the past, a Goshi kaisha was a good option for entrepreneurs with only a small amount of capital. But the abolition of a minimum capital investment for KK companies has meant that a Goshi Kaisha is now rarely chosen.

How do you establish a business in Japan?

Regardless of which type of company you decide would be most appropriate, there will be several steps you will need to take in order to set up your business. You may require professional guidance or assistance in tackling these, but you can learn more about the process in our article How to Set Up a Business in Japan.