FAQs for incorporating a GK (合同会社) in Japan

Dispelling myths and confusion about company formation

Author

Michael Wu
October 11, 2023

I recently set up in Japan an LLC company, otherwise known as a gōdō gaisha (合同会社). There are many articles out there on how to set up a such a company (TokyoCheapo, SME Japan, VentureJapan) but still some confusion remains in some of the finer details. Here are my learnings along the way aimed at dispelling some of that confusion. As I’m going along this journey, I’ll write more about how to actually operate a company successfully in Japan.

Table of Contents

What do you need to set up a GK?

These are the basic requirements to set up a GK, which will be discussed in details in the FAQs.

  1. Basic Company Profile Details. You should decide basic details, like the business name, objectives, fiscal calendar, total amount of capital, the members and their addresses, their contribution amount, if multiple members who should be an Executive Director (業務執行社員, gyōmu shikkō shain), Representive Director (代表社員, daihyo shain).

  2. An Address in Japan

  3. Seal Certificates or Signatures. For residents of Japan intending to be an Executive Director, they should obtain a personal seal certificate issued within the last 3 months. For non-residents becoming an Executive Director, they should get a document notarized with their signature.

  4. Affidavits of foreign companies joining the GK. If a foreign company is to be a member, a notarized affidavit summarizing details of the corporation is required.

  5. Preparing the GK's Articles of Association (定款 or teikan) and other documents required for registration. A judicial scrivener (司法書士 or shihoshoshi) can help you prepare this.

  6. Capital. Deposit of the GK's capital amount in the incorporator’s bank account.

  7. Company seals. Japan still uses seals for many procedures!

FAQs

Do you (or someone in the company) need to be a resident of Japan to form the company?

No. With a 2015 amendment to the Companies Act, it is no longer needed to appoint a local representative director to form a GK. However, this made it more uncertain how to prove paid-in capital. Typically, you can find a resident business partner to help incorporate, or use an agency service to help incorporate, where the incorporator would hold equity, and then would optionally transfer full ownership of the equity to the non-Japan resident if the incorporator has no actual business relationship.

However, you will find it difficult to open a corporate bank account without a local resident representative director. The vast majority of Japanese banks will not open a corporate bank account without a local representative.

Does the paid-in capital need to be in yen or can it be in foreign currency before being transferred to the Japanese corporate bank account?

Unless further clarifications in the law prove otherwise, Incorporation must be done by showing paid-in funds in yen in a Japanese bank account(s) under the incorporators name. The Articles of Incorporation (定款 or teikan) will have exact yen amounts written in it.

How do you prove the capital has been deposited?

Showing your judicial scrivener the bank passbook, or in our case a screenshot of a bank account statement on their app/website was sufficient. The funds can be split across bank accounts, but this complicates things.

What is the minimum investment for a company to be able to sponsor a business visa?

The minimum is 5,000,000 yen to be able to sponsor a business visa. Other articles claim it is 5,000,000 yen invested from the person receiving the business visa, but this is not true. However, to cause less confusion in processing, the business visa applicant may want to invest 5,000,000 yen.

What are the name requirements for a GK?

Company names in Japan may include Hiragana, Katakana, Kanji, numbers, alphabet (upper/lower case) and the following mark/symbols:

  • & (ampersand)

  • ‘ (apostrophe)

  • , (comma)

  • － (hyphen)

  • . (period)

  • ・ (middle dot / interpoint)

The company name must begin or end with 合同会社 and must not be previously registered or confused for another company at the same address. The following are all okay:

  • ABC合同会社

  • 合同会社エービーシー

  • 田中合同会社

What address can you use to incorporate?

Any address in Japan can be used to incorporate including residential addresses, however in practicality you must be able to receive mail there as important documents will be sent to the registered address. If you are renting the building at the registered address, it is advised to ask your landlord. Furthermore, if you intend to apply for the Business Visa, it must be an appropriate office space for the business. Thus many businesses choose to rent office space as the registered incorporation address.

However, for opening a company bank account, the Certificate of Registered Information (登記事項証明書 or touki-jikou-shomeisho) and a Registered Seal Certificate (印鑑証明書 or inkan-shomeisho in Japanese) can be obtained from the Legal Affairs Bureau in the incorporation jurisdiction.

What are the incorporation fees for a GK?

For a GK, the Articles of Incorporation (定款 or teikan) do not need to be notarized, so no notary fee is needed. However, there is still the Registration License Fee, which is the greater of 0.7% of paid in capital or 60,000 yen. This works out to be a capital amount of a little over 8.5 million yen (8571429 yen to be exact) to not pay extra in registration fees. There is a revenue stamp duty for the Articles of Incorporation of 40,000 yen, but this is not necessary when digitally filed. Fees from incorporation services can vary wildly, from 60,000 yen and up. Look for a judicial scrivener (司法書士 or shihoshoshi). Individual agents will be cheaper, and larger agencies focused on foreigners will be more expensive.

Can you use the paid-in capital immediately after incorporation without transferring to a company bank account?

Yes you may, as setting up a company bank account takes some time and effort after incorporation. Keeping track of finances is important if you are intermingling personal and company funds though.

Can expenses prior to company formation be reimbursed?

Yes, again with appropriate book-keeping.

How to notarize signatures and affidavits for foreign members and companies?

These should be done at the notary public of the country of residence / origin of the member or company. If the member happens to be in Japan, they can potentially go to their home country embassy or use a notary public in Japan (公証役場, kōshō yakuba).

What seals are necessary / recommended?

Only one company seal is truly required, the representative seal (代表印 or daihyo-in), but others are recommended for practicality reasons. To open a bank account, as a company is not a person, a banking seal (銀行印 or ginko-in) is needed. You can register the representative seal as the banking seal, but as the representative seal is so valuable, most companies choose to use a separate seal. A identification seal (角印, kaku-in) is a less important seal that doesn’t need to be registered and is usually used for day to day operations. The most reasonable place I found to order company seals was Inkan no Takumi, which made a complete set for 9980 yen and shipped same day for delivery the next day. Unfortunately, corporate seals are too complicated for the automatic seal creation machines you find around Japan.

Representative Seal (代表印, daihyo-in), Banking Seal (銀行印, ginko-in) and Identification Seal (角印, kaku-in)

If there are further questions, I will be updating this article as time goes on so please reach out at [email protected]. Remember you can support this publication by becoming a paid subscriber or becoming a Patreon!

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