In the previous section about setting up a Japanese KK kabushiki kaisha company for starting business in Japan, we noted that most of Venture Japan’s clients decide to incorporate a KK kabushiki kaisha, often after independent in-depth evaluations of Japan’s available business entities. We also noted that before the Japanese government introduced Japan’s Company Law (sometimes called the Corporation Law or Companies Act) in 2006, the KK kabushiki kaisha was generally considered an overly expensive and time-consuming entity to set up and manage. That is definitely no longer the case; the process for incorporating and registering a KK kabushiki kaisha is now so streamlined that in urgent cases we can complete an incorporation in less than a week.
- Appointment of an Incorporator
Any person resident in Japan, Japanese or foreigner, can act as incorporator. The incorporator must own at least one share of the KK kabushiki kaisha’s issued shares at incorporation, which he or she then transfers to the beneficial shareholder after incorporation.
- Deposit of Paid-In Capital
For practical reasons such as satisfying concerns of landlords when leasing office space and satisfying a bank that the KK kabushiki kaisha is a legitimate business, we recommend minimum paid-in capital of JPY1,000,000. The KK can use the paid-in capital immediately after incorporation. The shareholder must deposit the paid-in capital in the incorporator’s bank-account before the date of incorporation.
- Incorporator’s Resolution and Articles of Incorporation
The incorporator must create the Incorporator’s Resolution and the Articles of Incorporation in Japanese and the contents must conform to the Ministry of Justice’s guidelines or the Notary Public will refuse to notarize them. For bilingual documents, only the Japanese text has legal effect. To create these documents, the incorporator needs the following information:
- Company Name
A KK kabushiki kaisha can have an English name, such as “ABC 株式会社”, or in Japanese phonetic translation, such as “エービーシー株式会社”, but must have the words “kabushiki kaisha” registered in the Japanese kanji characters “株式会社”. It is legitimate, although old-fashioned, to write the characters “株式会社” at the beginning, such as “株式会社ABC”.
- Authorized Shares and Issued Shares
The number of shares authorized, the number of shares issued at incorporation, and the issue price per share. The shareholder must pay for all issued shares at the issue price at incorporation, so the paid-in capital equals the number of issued shares multiplied by the issue price of each share.
- Shareholder’s Details
Name and registered address of the shareholder. Shareholder details of a private KK kabushiki kaisha are not public record, but it must report any changes to the Ministry of Justice if the company’s registered details change. A non-resident company or person can own 100% of a KK kabushiki kaisha’s shares.
- Registered Office Address
A KK kabushiki kaisha must have a registered office address in Japan where it can receive official documents.
- Scope of Business
Details of the KK kabushiki kaisha’s proposed business purpose. A KK kabushiki kaisha can only do the specific businesses described in its Articles of Incorporation, but can amend and re-register its Articles of Incorporation after incorporation to change or expand its business purpose.
- Directors and Auditor
The registered name and address of each KK kabushiki kaisha director and auditor. The name and address of each director and auditor are public record. Each director and the auditor should take legal advice about the joint and several liabilities of directors and auditors of Japanese companies. A KK does not need a representative director or ordinary director resident in Japan.
- Financial Year
A KK kabushiki kaisha’s financial year can start on any day of the year and end within 12 months of starting. A KK’s first financial year must end within 12 months of its date of incorporation.
- Company Name
- Letters of Acceptance of Inauguration
Each director, and the auditor, must notarize a Letter of Acceptance of Inauguration, unless he or she has a personal seal registered in Japan.
- Representative Seal and Registration of Representative Seal
At least one representative director of a KK kabushiki kaisha must have a seal registered for use on the company’s official documents. The Japanese government registers the representative seal in a specific representative director’s name, thus only he or she can legally apply the representative seal to documents. The representative director must apply his or her registered personal seal to the application for registration of the representative seal. If a non-resident, then he or she must sign the application and provide a notarized evidence of signature.
- Certificate of Receipt of Paid-In Capital
The shareholder must deposit the exact amount of paid-in capital, in a single transaction, into the incorporation bank-account (which is a domestic Japanese bank-account in the incorporator’s name). The incorporator then takes a copy of the bank-account passbook, highlights the paid-in capital deposit, and attaches it to the Certificate of Receipt of Paid-In Capital.
- Notarization and Filing
After the public notary checks the Incorporator’s Resolution, Articles of Incorporation, Letters of Acceptance of Inauguration, Registration of Representative Seal, and Certificate of Receipt of Paid-In Capital documents, the incorporator must file them at the Bureau of Legal Affairs in the area where the KK kabushiki kaisha has its registered office. At this point the company legally exists, but its name will not show on the official Company Register for 7 – 10 days.
- Receipt of Certificate of Incorporation and Representative Seal ID Card
7 – 10 days after filing, the incorporator can collect the KK kabushiki kaisha’s Certificate of Incorporation and the Representative Seal ID Card, from the Bureau of Legal Affairs in the area where the company has its registered office.
- Organizational Meeting of the Board of Directors
After incorporation, the company will convene a first meeting of the Board of Directors to approve the transfer of the incorporation shares from the incorporator to the beneficial shareholder.