The general legal forms of business entity in Japan are as follows;

-subsidiary in the form of company, as KK company(called ‘ kabushiki kaisha’) or GK company(called ‘godo kaisha’)

– a branch office

– a liaison

(1)about a subsidiary

A KK company, which is a joint stock corporation, is the most common entity as a legal form of subsidiary in Japan. A GK company, which is a limited liability company, is also commonly used because the regulations for it are quite flexible.

(2) a KK company

Each member of a shareholder is required to make a capital contribution to the extent of the subscription price of the shares and will not own any liability directly against the creditors of the corporation.

The number of the shareholders is not limited, so that the corporation is allowed to have only a single shareholder.

Fundamental issues such as amendment of the articles of incorporation needs an approval at a shareholders meeting.

A KK company is required to have at least one director. It depends on the size of the corporation if it is required to have a board of directors, accounting adviser, statutory auditors, board of statutory auditors. The requirement that at least one representative director or representative executive officer must have a residential address in Japan was removed in2015.

(3) a GK company

A GK company is an LLC and is formed by only limited liability members.

You can be a member of the company through a capital contribution and unanimous resolution by the all members.

Each limited liability member of the GK company is liable for debts and obligations of the company to the extent of the amount of their capital contribution. On the other hand, each member in charge of the operation of the company is liable for damages caused by third parties if they know or should know the bad operation caused the damaged or if they are negligent in performing the duties.

The number of the member is not limited. Fundamental issues such as amendment of the articles of incorporation should be resolved by all members. If any member is not a natural person, that one must appoint a natural person, who will be in charge of the operation.

Any GK company is not required to disclose its balance sheet to the public, while a KK company is required to do so. And it is not required to appoint an accounting auditor whatever the size is.

A GK company can be operated more flexibly and closely than a KK company.

(4)A branch office

As for a branch office, there are no particular limitations on its activities. A representative in Japan must be registered on the commercial registration of the legal affairs bureau, and at least one representative in Japan must have a residential address in Japan.

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