Deciding your business form


Deciding your business form

When starting up a business, we tend to mainly consider the side of advantages or disadvantages about forms of organization and tax matters.


For example:

Which form do you choose to start up your business?

Sole proprietorship or establishing a company?

What shareholder composition do you take?

Who will be on the list of directors of your company?  and so on.


However, in terms of starting up a business in Japan, whether you can get the status of residence or not is the most important point.

If you can’t get it, you will be forced to leave Japan, even if you are ready to start up your business.


So, from here, I will explain to you how to make incorporated company, or kabushiki-gaisha(株式会社)as we call it, that is most commonly used in Japan, with keeping the Immigration Bureau’s investigation on the status of residence-Investor/Business Manager in mind.



Incorporation of the Company

Company is formed by registering of establishment at the location of the head office.


Corporation Law

Article 49;

A Stock Company shall be formed by the registration of the incorporation at the location of its head office.

Article 579;

A Membership Company shall be incorporated by the registration of the incorporation at the location of its head office.


In other words, your company can get juridical personality by registration.


In its present state, you are not required to get your company registered if you want to get the status of residence-Investor/Business Manager.

So, seemingly, it can be said that you don’t need to give your company juridical personality.


However, Stock Corporation or Limited Liability Company is commonly used because of the following reasons.


1.It would help you to prove how much money you have invested into your business, because your company’s capital amount will be posted publicly on the register book.

2.The immigration bureau would be able to judge easily from attachment documents (ex. stockholders’ list) whether the investment was done by foreigners or not.



Types of Company

In Japan’s corporate law, you are allowed to establish four types of company.

That is to say, “Company” means any Stock Company, General Partnership Company, Limited Partnership Company or Limited Liability Company.


General Partnership Company, or gou-mei-kaisha(合名会社) as we call it, is a company that consists of members with unlimited liability.


Limited Partnership Company, or gou-shi-kaisha(合資会社) as we call it, is a company that consists of members with both unlimited liability and limited liability.


These two types are less used in comparison with Stock Company because they are based on a personal relationship of trust and there is no concept of capital stock in them.


In 2006, Japan’s corporate law created a new style of company.

The company is called Limited Liability Company, or gou-dou-kaisha(合同会社) in Japanese.


Main features of Limited Liability Company

– Securing investor’s limited liability

– Application of partnership rules


Limited Liability Company has the same characteristics as General Partnership Company and Limited Partnership Company in that it is a membership company.

Limited Liability Company has the same characteristics as Stock Company in that it consists of only limited partners.



Thank you.

Solicitor Hitoshi Oishi (司法書士・行政書士 大石人士)