Establishing a Company for a Business Manager Visa: Stock Company vs. LLC

Foreign nationals who are thinking of obtaining a Business Manager visa and establishing a company in Japan will probably wonder what kind of company form to choose.

There are four types of company, but among them, many people are torn between a “stock company” (kabushiki kaisha) and an “LLC” (godo kaisha).

This page introduces the differences between a stock company and an LLC, the establishment process for each, and their advantages and disadvantages.
We hope you will find it helpful when preparing to establish a company for a Business Manager visa.

What is a stock company (kabushiki kaisha)?

It is a company that raises funds by issuing shares and runs its business with that money.

The money it earns is paid out to the “shareholders” who invested, in the form of dividends, or used for reinvestment to grow the business further and provide better services.

What is an LLC (godo kaisha)?

It is one of the company forms established by the new Companies Act in 2006.

A key feature is that the people who invest in the company also run it. Because of this, the company’s decisions are made at meetings of the people running it, which makes management fast and flexible.

Differences between a stock company and an LLC

	Stock company	LLC
Articles of incorporation notarization	50,000 yen	Not required
Registration and license tax	0.7% of capital (210,000 yen if capital is 30 million yen)	0.7% of capital (210,000 yen if capital is 30 million yen)
Title of the representative	Representative Director	Representative Member
Requirements to become an officer	None in particular	A capital contribution is required
Term of office for officers	10 years	No fixed term
Social credibility	High	Somewhat low
Public obligation to disclose financial results	Yes	No
Possibility of going public	Yes	Not possible

 

The process for establishing a stock company

(1) Drafting the articles of incorporation

Decide the company’s basic matters and put them in writing

• Company name
• Address of the company’s head office
• Business purpose
• Incorporators
• Total number of authorized shares

(2) Notarization of the articles of incorporation

• You have the articles of incorporation notarized at a notary office.
  *They must be notarized at the notary office with jurisdiction over the location of the head office of the company being established.

(3) Making the company seal

• It is required for the establishment registration at the Legal Affairs Bureau.

(4) Payment of the capital

• Always have the articles of incorporation notarized at the notary office first, then transfer the funds to the incorporator’s personal account.

(5) Corporate establishment registration at the Legal Affairs Bureau

• The date the registration application is filed becomes the company’s establishment date.

(6) Notifications to the relevant authorities

• Various notifications relating to the establishment of the corporation must be filed with the tax office, the municipality, the prefecture, and the pension office.
• Depending on the business you are starting, you need to obtain permits and licenses
  (Example: if you open a restaurant, a restaurant business permit is required)

(7) Application for the Business Manager visa

 

The process for establishing an LLC

(1) Drafting the articles of incorporation

• Decide the company’s basic matters and put them in writing
• Trade name
• Address of the company’s head office
• Business purpose
• The names and addresses of the members (investors)
• The members’ liability for the company’s debts
• The members’ capital contributions

(2) Payment of the capital contribution

• Those who will become the members (investors) listed in the articles of incorporation pay their contributions into a bank account in the personal name of the person acting as incorporator, and a payment certificate is prepared.

(3) Corporate establishment registration at the Legal Affairs Bureau

• The date the registration application is filed becomes the company’s establishment date.

(4) Notifications to the relevant authorities

• Various notifications relating to the establishment of the corporation must be filed with the tax office, the municipality, the prefecture, and the pension office.
• Depending on the business you are starting, you need to obtain permits and licenses
  (Example: if you open a restaurant, a restaurant business permit is required)

(5) Application for the Business Manager visa

 

Disadvantages of a stock company

Establishment costs are slightly higher than for an LLC

The establishment costs of a stock company and an LLC are as follows.

	Stock company	LLC
Revenue stamp duty on the articles of incorporation *No stamp duty if you use electronic articles of incorporation	40,000 yen	40,000 yen
Articles of incorporation notarization fee	50,000 yen	None
Cost of a certified copy of the articles of incorporation	2,000 yen	None
Registration and license tax	0.7% of capital (210,000 yen if capital is 30 million yen)	0.7% of capital (210,000 yen if capital is 30 million yen)
Establishment fee *If you commission a judicial scrivener	Depends on the judicial scrivener	Depends on the judicial scrivener
Total	From 242,000 yen	From 100,000 yen

In the era when you could obtain a Business Manager visa with capital of 5 million yen, for a company with capital of 5 million yen the registration and license tax was 150,000 yen for a stock company against 60,000 yen for an LLC — a difference of 90,000 yen. But now that the scale requirement has been raised to 30 million yen, the registration and license tax is 0.7% of capital for both a stock company and an LLC.

There is a public obligation to disclose financial results

There is an obligation to publish the financial figures at every fiscal year-end, and a publication fee is incurred

There are terms of office for officers

The term of office for officers of a stock company is up to 10 years. Even when they are reappointed, registration is required and registration and license tax is incurred.

Advantages of an LLC

Establishment costs are slightly lower than for a stock company

*See above

The procedures are simple

There is no notarization of the articles of incorporation at a notary office, so the procedures are simpler.

There is no public obligation to disclose financial results

Since there is no public disclosure obligation for financial results, you can save on publication fees.

Disadvantages of an LLC

It tends to be seen as having low social credibility

Because it has lower public recognition than a stock company, there is a possibility that you may not be able to obtain financing, or that ordinary customers may not trust you.

However, it has already been 20 years since the LLC framework was introduced, and the Japanese subsidiaries of several major overseas companies have also been established as LLCs (Apple, Amazon, and others). Recognition of LLCs is gradually improving.

It cannot go public

An LLC has no concept of shares, so it cannot go public. If you are considering an IPO in the future, you need to change the company form to a stock company.