Establishing a Subsidiary Company in Japan
A foreign company willing to establish a subsidiary company may choose from the followings:
There are formats such as unlimited partnerships (Gomei-Kaisha) and limited partnerships (Goshi-Kaisha) under the Companies Act, but they are rarely chosen in practice because equity participants burden unlimited rather than limited liability.
A subsidiary is a separate legal entity from the foreign company, therefore foreign company will bear the liability of an equity participant stipulated by law for all debts and credits generated by the activities of the subsidiary.
For incorporation of either a KK or GK the minimum common criteria is as follows: -
Note re #2 for KK Co: Please note effective Mar’15 Japanese government has allowed foreign company to register a Japanese KK co with directors residing abroad and the mandatory requirement of at least one local Resident Director has been relaxed / abolished!
Note re #2 for GK Co: Please note that “Resident Director” or Director must be from shareholders / equity holders (Member). Same applies for Non-Resident Director(s).
The following features applies to both KK and GK:
1. Minimum Number of Directors: 1(one) (But in case of one or several one must be resident of Japan [Except for K.K. Co.])
2. Resident Director Required: Yes, at least one must be resident. [Except for K.K. Co. under new law eff.Mar'15]
3. Minimum Number of Shareholders: 1(one) [In case of GK equity holders (Member) & all directors must be from Members]
4. Corporate Shareholder / Equity holder Allowed: Yes (In case of corporate shareholding procedure is lengthy & complex)
5. Resident Shareholder (Member) Required: No.
6. Liability of equity participants/parent company toward creditors: Limited to amount of equity participation
7. Company Secretary: Not required
8. Registered Office: Yes, physical address is required and P.O. Box address is not allowed.
9. Minimum Registered Capital: 1 (one) yen
10. Time frame for registration: Depends on the type of entity, the way the client wants to form the legal business establishment, i.e. Shareholding, Directors, forming structure, etc. and the client's response time in the whole process. Once all documents are ready / prepared and applied at Legal Affairs Bureau for registration it takes about 2(two) weeks to obtain company registration certificate and company seal registration certificate; and our approx. time frame for our preparation of documents and procedure are indicated in the flowchart.
11. Yearly Auditing of accounts: Not mandatory
[P.S. Please note effective Mar’15 Japanese government has allowed foreign company to register a Japanese KK co with directors residing abroad and the mandatory requirement of at least one local Resident Director has been relaxed / abolished!] However at the time of registration temporarily “a local resident shareholder” is required for the procedure of paid-up capital!
For further information please send us a mail :
sojk-enquiry @ sarkaroffice dot com
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