Foreigners who are thinking of obtaining a business management visa and establishing a company in Japan may be concerned about the type of company they should have. There are four types of companies, but I think many people are concerned about whether to establish a “stock company” or a “limited liability company”. This page introduces the difference between a stock company and a limited liability company, the establishment process for each, and the advantages and disadvantages of each.
What is a corporation?
A company raises funds by issuing shares and uses that money to run its operations.The profits are paid out as dividends to the “shareholders” who invested in the company, or reinvested in order to further grow the business and provide better services.
What is a limited liability company?
This is one of the company forms established by the new Company Law in 2006. Its distinctive feature is that the people who invest in the company also manage it.
The company’s decisions are made at meetings of management, resulting in fast and flexible management.
Differences between a joint stock company and a limited liability company
| Joint Stock Company | limited liability company (US, Australia, etc.) | |
|---|---|---|
| Articles of incorporation certification | 50,000 yen | Not required |
| 登録免許税 | 150,000円 | 60,000円 |
| Representative title | Representative director | Representative employee |
| Requirements to become an office | Nothing in particular | investment required |
| Term of office of officers | 10 years | No term of office |
| social credibility | expensive | somewhat low |
| Public obligation to settle accounts | can be | none |
| Possibility of listing | can be | impossible |
Flow of establishing a corporation
- Creating articles of incorporation
- Articles of incorporation certification
- Create a company seal
- Payment of capital
- Register your company with the Legal Affairs Bureau
- Notification to each office
- Applying for a Business Manager Visa
①Create articles of incorporation
Decide on the basics of the company and document them
- Company Name
- Company head office address
- Business purpose
- promoter
- Total number of authorized shares
②Articles of incorporation certification
- The articles of incorporation will be certified by a notary public.
*This must be certified by a notary public office that has jurisdiction over the head office location of the newly established company.
③Create a company seal
- This is required when registering your company at the Legal Affairs Bureau.
④Payment of capital
- The articles of incorporation must be certified by a notary public before the funds are transferred to the promoters’ personal accounts.
⑤Register the incorporation with the Legal Affairs Bureau
- The date of application for registration will be the date of incorporation of the company.
⑥Notification to each organization
- Various notifications regarding the establishment of a corporation are required to be submitted to the tax office, city/ward/town/village office, prefecture, and pension office.
- Licenses and permits must be obtained depending on the business you are starting (e.g., if you are opening a restaurant, you will need a restaurant business license).
⑦Application for a business manager visa
Flow of establishing a LLC
- Creating articles of incorporation
- Payment of capital contribution
- Register your company with the Legal Affairs Bureau
- Notification to each office
- Applying for a Business Manager Visa
①Create articles of incorporation
- Decide on the basics of the company and document them
- Trade name
- Company head office address
- Business Objectives
- Names and addresses of shareholders (investors)
- Employees’ Liability for Company Obligations
- Employee contributions
②Payment of capital contribution
- The members (investors) listed in the articles of incorporation will pay the capital contribution into the promoter’s personal bank account and prepare a payment certificate.
③Register the incorporation with the Legal Affairs Bureau
- The date of application for registration will be the date of incorporation of the company.
④ Notification to each office
- Various notifications regarding the establishment of a corporation are required to be submitted to the tax office, city/ward/town/village office, prefecture, and pension office.
- Licenses and permits must be obtained depending on the business you are starting (e.g., if you are opening a restaurant, you will need a restaurant business license).
⑤ Applying for a business manager visa
Advantages of a joint stock company
High social trust
Because corporations have greater social recognition, they have advantages over LLCs in many areas, such as obtaining loans from financial institutions and recruiting personnel.
You can raise a lot of money by issuing shares.
There are various ways to raise funds using stocks, and in principle you do not have to repay the funds you raise, so it is possible to continue to secure a certain amount of money.
Disadvantages of joint stock companies
The establishment costs are higher than those of a limited liability company.
The establishment costs for a corporation and a limited liability company are as follows:
| Joint Stock Company | limited liability company (US, Australia, etc.) | |
|---|---|---|
| Articles of incorporation revenue stamp duty ※No stamp duty required if you use electronic articles of incorporation |
40,000 yen | 40,000 yen |
| Articles of incorporation certification fee | 50,000 yen | none |
| Articles of incorporation fee | 2,000 yen | none |
| Registration license tax | 150,000 yen | 60,000 yen |
| Establishment fee ※When requesting a judicial scrivener |
By a judicial scrivener | By a judicial scrivener |
| total | From 242,000 yen | From 100,000 yen |
There is a public obligation to settle accounts.
Companies are required to publish their financial figures at the end of each fiscal year, and publication fees are charged.
There is a term of office for officers
The term of office for directors of a joint-stock company is a maximum of 10 years. Even if they are reappointed, registration is required and registration license tax is levied.
Benefits of LLC
The cost of incorporation is lower than that of a joint stock company
※See above
Easy procedure
Since the articles of incorporation do not need to be certified by a notary public, the procedure is simple.
There is no official obligation to settle accounts
Since there are no official accounting requirements, you can save on listing fees.
Disadvantages of LLC
Social trust is often seen as low
Because they have lower social recognition than corporations, there is a possibility that they will not be able to obtain loans or will not be trusted by general customers.
Can’t be listed
A limited liability company cannot be listed on the stock exchange because it does not have the concept of shares. If you are considering listing on the stock exchange in the future, you will need to change your form to a joint-stock company.
