FAQ: Incorporation of a Japanese subsidiary.
Even after registering your company with the Legal Affairs Bureau, the
process isn't complete. Depending on when you want to start your business,
it's crucial to work backwards from your desired start date and prepare
accordingly, ensuring all procedures, including opening a bank account,
are completed by the time you begin trading with customers.
These are frequently asked questions regarding the establishment of a wholly owned subsidiary in Japan of a foreign corporation.
Procedures for establishing a Japanese subsidiary of a foreign corporation.
| Issues | FAQ | Example answer |
|---|---|---|
| KK vs GK | Which is better, a KK(=Kabushiki Kaisha: joint stock company) or a GK (=Godo Kaisha: limited liability company)? | For Japanese subsidiaries of U.S. companies, a limited liability company (Godo Kaisha) is generally preferred from the perspective of U.S. tax law. Otherwise, a joint-stock company (Kabushiki Kaisha) is recommended from a customer perspective. |
| Amount of capital stock | How much capital is appropriate? Since there's no minimum capital requirement, can we establish a company with just 1 yen in capital? | The amount of capital you'll need will vary depending on the type of business you're starting. While it's technically possible to establish a company with just 1 yen, from a business perspective, it's highly unlikely you'll be able to open a bank account with only 1 yen in capital. It's best to decide on a minimum capital of around 3 million yen (the minimum for a limited liability company in the past) or 10 million yen (for a joint-stock company), depending on the needs of your business. |
| Director of the Japanese subsidiary | Do we need an executive residing in Japan? Can an executive from a foreign parent company be appointed as the representative of a Japanese subsidiary? | Even if you don't reside in Japan, you can become an officer of a Japanese subsidiary. However, if it's better from a business perspective to have a representative residing in Japan, we will do so. |
| The time required to establish a company | How long does it take to establish a company? | Generally, after receiving all the answers to the questionnaire regarding company establishment, the judicial scrivener will prepare the registration documents in about 2-3 weeks. It also takes about 2-3 weeks to receive the answers. The review period after submitting the application to the Legal Affairs Bureau is usually about 2 weeks, but this can vary depending on how busy the Legal Affairs Bureau is (i.e., the number of applications it is receiving). The entire process at the Legal Affairs Bureau takes about 1.5 to 2 months. |
| Opening a bank account | How long does it take to open a bank account? | You can only apply to open a bank account after your company registration is complete at the Legal Affairs Bureau and you have obtained a certified copy of the company register and a corporate seal certificate. The time it takes after applying to a bank depends on the bank you apply to. Recently, it's been as quick as three weeks, but there have been cases where it took four and a half months because multiple banks rejected the application based on the nature of the business. |
| Online banks vs. banks with physical branches | When opening a bank account, is it better to use a bank with physical branches, or is an online bank easier? | Opening a corporate bank account for a newly established company often involves stricter screening criteria from banks. This doesn't mean online banks are easier; banks with physical branches will also accept applications if you can prove the existence of a real business. Since a bank account is necessary for conducting business, the current situation for newly established companies is that they have no choice but to apply to various banks one by one until they can open an account with at least one. |
| Consumption tax business registration number | Do we need a business registration number for consumption tax purposes? | This will vary depending on the company's business model (i.e., relationships with business partners), sales forecasts, planned capital investments, etc. Each company will need to be considered on an individual basis. |
| Employee employment contract | Is it sufficient for employees hired in Japan to have employment contracts with the foreign headquarters? | For those working in Japan, Japanese labor laws apply, so we recommend having your work reviewed by a labor law expert (= lawyer or social insurance labor consultant) to ensure it does not violate those laws. |