Optia Partners

Corporate Entities

Understanding your financial and business goals will be key in determining what kind of company to set up in Japan. One should consider a variety of factors such as the Owners or Headquarters’ liabilities, the size and complexity of the business, local regulations and costs and reputation in the market. Below is a list of the main types of corporate entities in Japan. Most companies aim for setting up a Kabushiki Kaisha and one should check on recent Japanese corporate laws concerning the requirements and application process as they change from time to time.

Representative Office

A Representative Office is not permitted to conduct sales activities in Japan and cannot open a bank account or lease real estate under its own name. They do not need to be officially registered and are convenient for the purposes of market research and analysis, purchasing of goods and materials and launching publicity campaigns.

Branch Office

Foreign companies wishing to engage in business operations in Japan can establish a branch office or a subsidiary company. A Branch office is the simplest means to establish a base in Japan and can begin operations as soon as an office location is secured, a representative is decided and it is formally registered. A branch office should not act independently of HQ’s and will not have its own legal corporate status. HQ’s is ultimately responsible for all debts and credits generated by the activities of its Japanese branch office. A branch office, however, may open bank accounts and lease real estate in its own name.

Limited Liability Partnership (LLP)

It is possible to conduct business through a Yugen Sekinin Jigyo Kumiai, the Japanese version of a Limited Liability Partnership (LLP). It is not considered to be a corporation, but a partnership formed by the equity partners, who will only have limited liability.

Subsidiary Company

Most foreign companies establish a subsidiary company to conduct sales activities in Japan and they can set up a joint-stock corporation (Kabushiki-Kaisha - KK) or a Limited Liability company (Yugen-Kaisha -YK), although recent changes in Japanese corporate laws have incorporated YK’s into KK’s. A subsidiary is considered a separate corporation from the foreign company, so the foreign company will bear the liability of an equity participant stipulated by law for all debts and credits generated by the activities of the subsidiary. The new corporate laws will also make accommodation for a new type of corporation called a "Godo Kaisha." This is considered the Japanese version of a Limited Liability company (LLC), and will combine limited liability for equity participants with greater flexibility of organizational structure.

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