How to incorporate a GK godo kaisha
In the previous section about setting up a Japanese GK godo kaisha company for starting business in Japan, we noted that paradoxically a GK goudou kaisha is often the best choice for very small domestic businesses with limited capital at one end of the corporate spectrum, and cash-rich US corporations and sophisticated GK-TK investment structures at the other end. The Japanese government deliberately designed a simple incorporation process for the GK godo kaisha, so in urgent cases we can complete a GK godo kaisha incorporation in less than a week. Note that for a foreign sole member, there is a second registration needed after formation to transfer ownership to it. So let’s look at the two-step process to incorporate a GK goudo kaisha company with a single foreign member, up to JPY10,000,000 paid-in capital, and the requisite resident Executive Manager.
Step 1 – Incorporate the GK Company.
- Appointment of an Incorporator
Any person resident in Japan, Japanese or foreigner, can act as the incorporator of a GK goudou kaisha. The incorporator must own at least one unit of the GK godo kaisha’s units, which he or she then transfers to the beneficial member after incorporation. In this first step, the incorporator also acts as the goudou kaisha’s resident Managing Member. - Deposit of Paid-In Capital
For practical reasons, such as satisfying concerns of landlords when leasing office space and satisfying a bank that the GK goudo kaisha is a legitimate business, we recommend minimum paid-in capital of JPY1,000,000. Note that the GK can use the paid-in capital immediately after incorporation. The member must deposit the paid-in capital in the incorporation bank-account (which is a bank-account in the incorporator’s name, not in the company’s name) 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. Keep in mind, that although a Notary Public checks a KK kabushiki kaisha’s Articles of Incorporation for compliance before the incorporator files it with the Ministry of Justice, there is no such check for a GK godo kaisha’s Articles of Incorporation. For bilingual documents, only the Japanese text has legal effect, so it’s important to understand exactly what the Articles of Incorporation contain. To create these documents, the incorporator needs the following information:- Company Name
A GK goudo kaisha can have an English name, such as “ABC 合同会社”, or in Japanese phonetic translation, such as “エービーシー合同会社”, but must have the words “goudou kaisha” registered in the Japanese kanji characters “合同会社”. - Units and Contributions
The number of units issued at incorporation and the member’s “cash or kind” contributions. The member must pay for all issued units at the issue price at incorporation, so the paid-in capital equals the number of issued units multiplied by the issue price of each unit. - Member’s Details
Name and registered address of the member. Members of a GK godo kaisha also manage the company, so their details are public record. A non-resident company or person can own 100% of a GK goudou kaisha’s shares. - Registered Office Address
A GK goudou kaisha must have a registered office address in Japan where it can receive official documents. - Scope of Business
Details of the GK goudou kaisha’s proposed business purpose. A GK godo 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. - Financial Year
A GK godo kaisha’s financial year can start on any day of the year and ends 12 months after starting. The company’s first financial year must end within 12 months of its date of incorporation.
- Company Name
- Representative Seal and Registration of Representative Seal
The Managing Member (for this first step the incorporator) must have a seal registered for use on the company’s official documents. The Japanese government registers the representative seal in the Managing Member’s name, so only he or she can legally apply the representative seal to documents. The Managing Member must apply his or her registered personal seal to the Application for Registration of Representative Seal and Application for Representative Seal ID Card. - Certificate of Receipt of Paid-In Capital
The member must deposit the exact amount of paid-in capital, in a single transaction, into the incorporation bank-account. The incorporator then takes a copy of the bank-account passbook, highlights the paid-in capital deposit, and affixes it to the Certificate of Receipt of Paid-In Capital. - Filing
The incorporator files the Incorporator’s Resolution, Articles of Incorporation, Registration of Representative Seal, Application for Registered Seal ID Card, and Certificate of Receipt of Paid-In Capital, at the Bureau of Legal Affairs in the area where the GK goudou 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 collects the GK goudou 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.
At this point the GK goudou kaisha exists, but the incorporator (the acting Managing Member) must transition it to the beneficial member and its resident Executive Manager.
- Transfer Units to the Beneficial Member
The existing Managing Member prepares an agreement to transfer the unit(s) he or she holds to the non-resident member (the future Managing Member). - Managing Member’s Affidavit
The future Managing Member prepares a notarized Managing Member’s Affidavit to appoint its Executive Manager. - Executive Manager
The future Managing Member elects an Executive Manager who is Japanese or a foreigner, but who is resident in Japan. - Re-registration of Representative Seal
The Executive Manager must apply his or her registered personal seal to an Application for Registration of Representative Seal and to the Application for Representative Seal ID Card. - Letter of Acceptance of Inauguration
The Executive Manager must notarize a Letter of Acceptance of Inauguration, unless he or she has a personal seal registered in Japan, in which case he or she applies such seal to the letter. - Filing
The existing Managing Member files the future Managing Member’s Affidavit, Registration of Representative Seal, and Application for Registered Seal ID Card at the Bureau of Legal Affairs in the area where the GK goudou kaisha has its registered office. At this point, the change of Managing Member and appointment of the Executive Manager takes effect, but the changed details 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 Executive Manager collects the GK goudou kaisha’s amended 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.