Types of Companies in Japan

When you think of settling a company in Japan, you will have to consider which type of company is better for your business.

There are four types of companies in Japan as described below;

1) Kabushiki-Kaisha (KK, Stock Company)

It is widely used from large to small companies.
The investors (shareholders) provide the capital and the management runs the company.
Nowadays, it is possible to establish a stock company with a capital of only one yen in Japan.

Advantages

— Stock companies have a high level of trust in society and are easier to raise funds
— The investors (shareholders) are only liable to the extent of their investment (limited liability)

Disadvantages

— High establishment costs compared to other companies
— Many legal restrictions

2) Godo-Kaisha (GK, Limited Liability Company)

Generally, investors themselves manage the company.
A company is composed solely of members with limited liabilities.
This type of company is often used for small businesses.

ADVANTAGES

— No certification of the articles of incorporation is required (which reduces cost for establishment)
— The procedure for setting up is simple and less expensive compared to stock companies
— This type of company is essentially free to design its own institutions through its articles of association.

Disadvantages

— Less social recognition compared to a stock company

3) Gomei-Kaisha (General Readership Company)

Generally, investors themselves manage the company.
As a company is composed solely of members with unlimited liability, this type of company is not used often.

ADVANTAGES

— No certification of the articles of incorporation is required.
— Members can also invest in labor, credit, etc., instead of cash.
— Less expensive to establish a company compared to a stock company.

Disadvantages

— In the event of a company’s bankruptcy etc., members would have unlimited liabilities against the company’s creditors.
— Less social recognition compared to a stock company

4) Goshi-Kaisha(Limited Partnership Company)

Generally, investors themselves manage the company.
Company is composed of members with unlimited liabilities and members with limited liabilities.

ADVANTAGES

— No certification of the articles of incorporation is required.
— Members with unlimited liabilities can also invest in labor, credit, etc., instead of cash.
— Less expensive to establish a company compared to a stock company.

Disadvantages

— In the event of a company’s bankruptcy etc., members with unlimited liability would have unlimited liabilities against the company’s creditors.
— Less social recognition compared to a stock company

There are many other differences between these types of companies.
You should consider which type of company to set up, taking into account the features, advantages and disadvantages of each company.

Published by

Shiho Suzuki

Shiho Suzuki

Attorney-at-Law, Sumikawa Law Office, Kawasaki city | English, Português, Japanese language available.