Setting up a company in Japan

The kabushiki kaisha is the standard Japanese joint-stock company and the most widely recognised form. Shareholders' liability is limited to their contribution. A KK without a board needs at least one director (torishimariyaku); larger companies can adopt a board of at least three directors with a statutory auditor or one of the committee-type structures. At least one representative director acts for the company.

The articles of incorporation must be certified by a notary public. A KK must publish a summary of its annual balance sheet (kessan kōkoku) and is the only form that can list on a stock exchange. Many customers, banks and job applicants regard it as the most credible form.

The gōdō kaisha, introduced in 2006 and modelled on the US limited liability company, combines limited liability with flexible internal rules. Its members (shain) are both owners and, unless otherwise agreed, managers; profit distribution can deviate from capital shares. Articles need no notarisation, registration costs are lower and there is no duty to publish financial statements.

The GK has become popular with foreign groups for wholly owned subsidiaries; the Japanese arms of several large US technology companies are GKs. It cannot be listed, but it can later be converted into a KK. Some traditional Japanese partners regard it as less established than a KK.

A foreign company can register a branch (shiten) in Japan without forming a separate legal entity. It must register as a foreign company and appoint at least one representative in Japan, at least one of whom must have an address in Japan. The branch may conduct business, but the foreign parent is fully liable for its obligations, and the branch is taxed on its Japanese income.

A representative office (chūzai-in jimusho) needs no registration but may only carry out preparatory and auxiliary activities such as market research, information gathering and liaison; it may not sell or conclude business contracts. It suits the early exploration phase.

For a KK or GK, the founders draw up the articles, decide on the company name, head office address, business purposes, capital and officers, and pay in the capital to a bank account, typically that of a founder or director. With the payment evidence and other documents, the company is registered at the Legal Affairs Bureau; the date of filing becomes the date of incorporation. Companies usually register a company seal at the same time.

Since 2015 there is no longer a requirement that at least one representative director of a KK live in Japan, but in practice a resident director eases bank account opening and administration. Documents from abroad, such as the parent's certificate of registration and signatures, need certification and Japanese translations.

Within set deadlines the new company files notifications with the tax office, the prefectural and municipal tax offices and, as soon as it pays remuneration, the pension office for health and pension insurance; with employees, also with the Labour Standards Inspection Office and Hello Work for labour and employment insurance. Filing for 'blue return' status early brings tax advantages.

Under the Foreign Exchange and Foreign Trade Act, foreign direct investment is generally reported after the fact via the Bank of Japan; investments in designated sectors related to national security and infrastructure require prior notification. Since 1 October 2023, businesses that wish to issue invoices allowing customers to deduct consumption tax must register under the qualified invoice system.

Foreign nationals who manage or work for the new company in Japan need an appropriate status of residence, such as Business Manager for owners and executives running the business, Intra-company Transferee for staff sent from the parent, or Engineer/Specialist in Humanities/International Services. Requirements for the Business Manager status were tightened considerably on 16 October 2025, including a much higher capital requirement, the employment of at least one full-time staff member and further criteria. The Immigration Services Agency publishes the current rules.