how to establish a company in japan – How to Start a Business in Japan

What the differences between a joint stock company(Kabushki-gaisya) and a limited liability company(Godo-gaisya)?

by kigyo-kaji 2020-05-03

There are multiple forms of companies in Japan.

When setting up a company for your business, it is common to choose a joint stock company(Kabushiki-gaisya) or a limited liability company(Godo-gaisya).

You can also start your own business as a sole proprietorship without setting up a company. However, if you need a visa, it is better to set up a joint stock company or a joint-stock company.

If a foreigner wants to start a business in Japan, it is not necessary to find a Japanese collaborator.

Only one foreigner can be an investor and set up a company.

What’s the difference between a joint stock company(Kabushiki-gaisya) and a limited liability company(Godo-gaisya)?

A joint stock company(Kabushiki-gaisya) and a limited liability company(Godo-gaisya) are both limited liability companies and must be registered.

It’s also the same treatment in taxes and in employment.

There is no major difference between a joint-stock company(Kabishiki-gaisya) and a limited liability company (Godo-gaisya) in the establishment procedure except for the cost, but there is a difference in the management of the company.

They differ in the following ways

Profit sharing
Role of the investor
Whether the company can be listed or not
Fees required for establishment (certification and registration)
Term of office of officers
Creditworthiness in Japan

Think carefully about what kind of business you’re going to do and who you’re going to be doing business with.

Profit sharing

In a joint stock company(Kabushiki-gaisya), the investors become shareholders, and profits are distributed according to the percentage of investment.

In a limited liability company(Godo-gaisya) , on the other hand, it is not a percentage of the company’s investment, but rather a decision freely made by the employees who are the investors.

However, as profits grow, there is a possibility that there will be a dispute over profit sharing.

Role of the investor

In a joint-stock company(Kabushiki-gaisya), the investors become shareholders after the establishment of the company.

The investor does not automatically become an officer involved in the management of the company.

In a limited liability company(Godo-gaisya), the investors become responsible person and participate in the management of the company.

Whether the company can be listed or not

A joint-stock company(Kabushiki-gaisya) can be listed.

On the other hand, a limited liability company(Godo-gaisya) can NOT be listed.

Fees required for establishment(certification and registration)

A joint-stock company(Kabushiki-gaisya)
Certificate of Incorporation	\50,000-
Registration and License tax	\150,000~
A limited liability company(Godo-gaisya)
Certificate of Incorporation	No certification required
Registration and License tax	\60,000-

Term of office of officers

In the case of a joint stock company(Kabishiki-gaisya), the term of office of the officers is between 2 and 10 years.

You can choose a term of office between 2 and 10 years.

If you want to continue as an officer after the end of your term of office, you will have to register again.

A limited liability company(Godo-gaisya), on the other hand, does not have to set the term of office of its officers.

Creditworthiness in Japan

If you are in the business of doing business between companies, a joint stock company(Kabushiki-gaisya) is more likely to be trusted.

In Japan, a joint stock company(Kabushiki-gaisya) is still more credible in BtoB business.

If your business is aimed at the general public, a limited liability company(Godo-gaisya) would also be a good choice.

For financing, neither form of financing is different, as it is judged by previous performance and business plan.