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JpJapan Subsidiary.

Population

125,416,877

Languages

1.

Japanese

Country Capital

Tokyo

Currency

Japanese yen (¥) (JPY)

Expanding your company into Japan is something to celebrate. However, you’ll need a thorough understanding of all subsidiary laws in the country before you start building your global team.

How to establish a Japan subsidiary

Before you start the Japan subsidiary setup process, you’ll have to decide what kind of business structure to use. The 4 most common include:

  • Godo-Kaisha: A limited liability company
  • Goshi-Kaisha: A limited partnership company
  • Gomei-Kaisha: A general partnership organization
  • Kabushiki-Kaisha (KK): A joint-stock corporation

The KK model is a popular business structure in Japan, particularly for international companies looking to establish a local subsidiary.

Liability in both the KK and Goshi-Kaisha business models is limited to the assets the equity participants choose to contribute. You can establish both by following a similar procedure:

  • Check the availability of the name you want to use. Branch offices must use the company name, but subsidiaries can choose any name they want.
  • Choose and register the company’s managing and representative members.
  • Obtain a company stamp.
  • Establish an office and open bank accounts in Japan to pay employees.

Japan subsidiary laws

If you select the KK model for your business, you must appoint at least 3 directors. One should be designated as a representative director and hold the corporate seal. This director will represent the company in transactions. Additionally, at least 1 of the 3 directors must reside in Japan.

Benefits of establishing a Japan subsidiary

A subsidiary is not for everyone, but it carries many benefits for companies wanting to expand to Japan.

Subsidiaries in Japan can operate independently from the parent company. They can tailor operations based on cultural norms and offer additional services that meet the needs of individuals in the country.

Subsidiaries also do not transfer liability to the parent company. The parent company can operate without fear of reprisal for anything that happens in their Japan-based subsidiary.

Other important considerations

The subsidiary setup process involves a significant amount of time and money. The timeframe for each step in the process can range from a few days to a few weeks. Filing articles and paperwork can cost from JPY 450 to JPY 20,800.

You will also need to hire individuals to work as directors in the Japan subsidiary or move current employees to Japan, often creating a significant strain on your resources. Companies cannot hire employees until they officially set up a subsidiary, meaning you could lose valuable talent while you file the paperwork, find an office, and open bank accounts.

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Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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