The Process of Setting Up a Company in Japan: Which Is Better, a KK or a GK?

When an overseas company or a foreign entrepreneur tries to start a business in Japan, the first thing they face is the choice of “what type of company to set up.” Japan has several company types, but the two most commonly used in practice are the joint-stock company (KK) and the limited liability company (GK).

This article lays out the differences between a joint-stock company and a limited liability company, and then explains the concrete process of setting up a company in Japan, step by step.

What Is the Difference Between a Joint-Stock Company and a Limited Liability Company?

Joint-Stock Company (KK: Kabushiki Kaisha)

The joint-stock company is the most widely used company type in Japan. It raises funds by issuing shares and has a structure in which shareholders and management can be separated. Its characteristics are high social recognition and credibility, and the ease of gaining the trust of business partners and financial institutions.

On the other hand, the setup procedure requires notarization of the articles of incorporation by a notary public, and that cost (about ¥50,000) does not apply to a limited liability company. It is also a type with relatively many operational obligations, such as the duty to give public notice of financial results.

Limited Liability Company (GK: Godo Kaisha)

The limited liability company is a relatively new company type introduced by the 2006 revision of the Companies Act. It is a concept close to the LLC (Limited Liability Company), with a structure in which the investors (members) participate directly in management.

Its setup costs are lower than those of a joint-stock company (registration and license tax of ¥60,000, versus ¥150,000 for a joint-stock company), and because notarization of the articles is not required, it can be set up speedily. Many foreign-affiliated companies—such as Apple Japan, Amazon Japan, and Google Japan—choose the limited liability company, and its recognition has been rising in recent years.

Which Should You Choose?

Item	Joint-Stock Company	Limited Liability Company
Approximate setup cost	From about ¥250,000	From about ¥100,000
Articles of incorporation notarization	Required (about ¥50,000)	Not required
Registration and license tax	From ¥150,000	From ¥60,000
Social credibility	High	Somewhat lower (recognition rising)
Public notice of financial results	Required	Not required
Management flexibility	Somewhat low	High

If full-fledged business development in Japan and credibility with business partners are important, a joint-stock company is the safe choice. On the other hand, if you want to keep costs down or are establishing a Japanese corporation as a foreign-affiliated company, a limited liability company is also a strong option.

When obtaining a Business Manager visa is the premise, you can satisfy the requirements with either a joint-stock company or a limited liability company, but because the judgment can change depending on the business substance and the details of the application, we recommend confirming with a specialist.

The Process of Setting Up a Company (Explained Step by Step)

Step 1: Deciding the Basic Matters

Before setting up the company, you need to decide the following basic matters.

Because these decisions also affect the later visa application and licensing procedures, it is important to organize them carefully at the very first stage.

Step 2: Drawing Up and Notarizing the Articles of Incorporation

In the case of a joint-stock company, you must draw up the articles of incorporation and then have them notarized by a notary public. Notarization at the notary office requires an advance appointment, and the cost is about ¥50,000.

In the case of a limited liability company, drawing up the articles is required, but notarization by a notary public is not.

Step 3: Paying In the Capital

After the articles are notarized, you transfer the capital into an investor’s personal account (such as the representative’s account). Because no corporate account exists yet at this point, you substitute payment into a personal account. You prepare a “document proving that payment was made,” which shows the fact of payment, and attach it to the registration application.

Step 4: Applying for Registration (Legal Affairs Bureau)

You assemble the full set of documents required for setup and apply for registration of incorporation with the Legal Affairs Bureau that has jurisdiction over the head-office location. The main required documents are as follows.

From the application to the completion of registration usually takes around seven to ten business days. When registration is complete, the corporation is formally established, and you become able to obtain a certificate of registered matters (the so-called certified copy of the registry).

Step 5: Various Notifications and Opening a Bank Account

After registration is complete, you carry out the following notifications and procedures.

Tax-related

Social insurance-related

Opening a Bank Account

Opening a corporate account requires the certificate of registered matters, the articles of incorporation, the representative’s identity verification documents, and so on. In recent years, some financial institutions have tightened their screening for foreign representatives and newly established corporations, so it is important to proceed with the procedure with a comfortable margin.

A Guide to How Long Setup Takes

Phase	Approximate Period
Deciding basic matters and drawing up the articles	1–2 weeks
Notarizing the articles (joint-stock company)	A few days to 1 week
Paying in the capital	A few days
Registration application to completion	1–2 weeks
Various notifications and account opening	1–3 weeks
Total	About 1–2 months

Even when things go smoothly, it generally takes more than a month from starting the setup until you are in a state where you can begin business. If you are also advancing a Business Manager visa application in parallel, you need to allow even more margin in your schedule.

Points to Note When Someone Residing Overseas Sets Up a Company

When the representative resides overseas, the following points require attention.

Obtaining a certificate of seal registration: Setting up a Japanese corporation requires the representative’s certificate of seal registration. For a foreign national, if they do not have a resident registration in a Japanese municipality, they cannot obtain a Japanese certificate of seal registration, so a procedure to substitute it with a signature certificate (issued by an overseas mission) and the like may be needed.

Notarized and authenticated documents: Documents drawn up by someone residing overseas may require local notarization and an apostille (authentication of foreign public documents).

Whether a visit to Japan is necessary: There are cases where parts of the procedure (notarization at the notary office, opening a bank account, and so on) require handling in person in Japan. By entrusting matters to an administrative scrivener or a judicial scrivener, there is also a range that can be handled by proxy.

Handling foreign-language documents: When a foreign corporation is an investor, you need to translate that corporation’s certificate of registration, articles of incorporation, and other foreign-language documents into Japanese and submit them. Because translation accuracy and obtaining the documents can take time, we recommend starting preparations early.

Securing a Japanese address: You need an address that can be used as the registered head-office location. When using a virtual office, you need to confirm in advance whether it can be used for your industry and for a Business Manager visa application. Because there are cases where an office with genuine substance is required, choose the address carefully.

Are There Options Other than a Joint-Stock Company or a Limited Liability Company?

Besides the joint-stock company and the limited liability company, Japan also has the company types of the general partnership company and the limited partnership company, but these are hardly used in current practice. For an overseas company’s expansion into Japan, it is common to consider the two choices of a joint-stock company or a limited liability company.

The choice between a joint-stock company and a limited liability company also affects post-setup operating costs. A joint-stock company has the duty to give public notice of financial results, and it also requires re-appointment registration in line with the officers’ terms (up to ten years). Because a limited liability company has none of these obligations, it is advantageous when you want to keep maintenance costs down after setup. However, if you want to issue shares to raise funds in the future or aim for a listing, the joint-stock company is the only choice. It is important to choose the type with the future vision of the business in mind as well. Because obtaining a Business Manager visa is premised on setting up a corporation, setting up a company is basically necessary for foreign nationals who require a status of residence.

Don’t Forget the License and Visa Procedures Needed After Setup

Even when company setup is complete, that alone does not necessarily mean you can begin business. Depending on the industry, obtaining a separate license is required. For example, a food service business needs a public health center’s business permit, a construction business needs a construction business license, and a staffing business needs a worker dispatch business license. Because some licenses take several months from application to acquisition, it is important to confirm early—in parallel with company setup—whether a license is needed.

In addition, when the representative or an officer is a foreign national, a status of residence (visa) application is also required. In a Business Manager visa application, the completion of the company’s registration of incorporation, the securing of an office, the substance of the business, and so on are reviewed. If you do not appropriately design the timing of setup and the timing of the visa application, there is a risk that your arrival in Japan is delayed or that the application is denied. In particular, because the Business Manager visa reviews the continuity and stability of the business, a posture of building up business substance from right after setup is important.

Company setup, licensing, and the visa application are each independent procedures, yet they are closely interlinked with one another. Advancing them methodically with a view to the whole is the key to a smooth expansion into Japan.

Summary

Setting up a company in Japan starts with deciding the basic matters and proceeds through drawing up and notarizing the articles of incorporation, paying in the capital, applying for registration, and making various notifications. Whether to choose a joint-stock company or a limited liability company needs to be judged comprehensively in terms of cost, credibility, management flexibility, visa requirements, and so on.

If you “don’t know which type suits your company” or “want to advance the setup procedures from overseas,” please consult a specialist once. At Touch Immigration Law Firm, we provide one-stop support for the practical work required for expanding into Japan, from company setup to the Business Manager visa application. By consulting us from the pre-setup stage, it is possible to consistently organize the choice of type, document preparation, and the arrangement of the visa application. The initial consultation is free, so please feel free to get in touch first.