Incorporating a Business in Japan with Naoki Maekawa of Shinmei Law Office

What’s it like talking to a lawyer in Japan? Pretty normally really. Of course, it helps when they speak English and understand cultural differences when dealing with the demands of establishing a business in Japan. I had the good fortune of chatting with Mr. Naoki Maekawa, partner lawyer of Shinmei Law Office in Osaka, Japan to learn more about the process.

Naoki Maekawa of Shinmei Law Office

Basically, there are three types of businesses you can set-up in Japan. “The first is being freelance (自営業), the second is a limited liability company, kabushiki kaisha (株式会社or KK), and the third is goudou kaisha (合同会社 or GK),” Naoki explains.

What is the difference between a KK and GK? They are both variants of a limited liability company in Japan. In regards to GK:

  • It is less costly to set-up
  • You have more control over profit distribution
  • There is no need to provide an annual report
  • It is becoming more popular, but still fewer compared to KK

In regards to KK:

  • It is the major type of company, is well organized and recognized in Japan, therefore has a better reputation.

As an ex-pat, which is better? “It depends on your business purpose,” Naoki states. “If you are planning to hire many people or have shareholders or several members on your board of directors then KK is recommended. If you want to start small and you are the only director then GK is recommended as it takes less money to set-up the business.”

“The most difficult thing you will encounter is preparing all the documentations in Japanese such as Articles of incorporation,” Naoki says.

Please visit the Japan External Trade Organization, JETRO, for further details.

There are other benefits of having a lawyer working as a member of your team. It will improve your reputation as a company when having a lawyer. Prevention is better than cure when dealing with legal issues. Having a lawyer can also act as a cushion between parties during negotiations and disputes.

Different types of lawyers provide different legal services. Here are a few examples. To manage your accounts and prepare your annual tax returns, then a tax lawyer is needed. An attorney at law, will help you with due diligence in areas such as employment details, contracts, patents, trademarks and copywriting. If you have labor issues, then you need a labor lawyer.

For more information, please visit the Japan Federation of Bar Associations, JFBA, website.

Cost? According to Naoki, if you are looking into establishing a KK, it would cost about 350,000yen. All the paperwork would cost about 240,000yen and lawyer fess between 50,000yen to 150,000yen.

Time? It should take about 1 to 2 weeks if everything goes smoothly and all the appropriate documents have been prepared such as company name, list of directors and shareholders, and initial capital.

What if I already have a company aboard and want to set-up a branch office in Japan? “It is basically the same as establishing a KK or GK,” Naoki explains. “You will need an address of your branch office and a locally based representative in Japan. The upside is that there is no initial capital needed.”

Naoki’s final advice is that, “There will be obstacles and worries along the way, whether it be language barriers or lack of information, it is better to consult professionals.”

Questions to consider

  • Why do you need to establish a company in Japan?
  • Which type of company is best suited to your situation and needs?
  • What other legal services will you need in the future after setting-up your company?

Much appreciation goes to Mr. Naoki Maekawa, partner lawyer of Shinmei Law Office for his time and sharing his experiences with us. For more information about Mr. Naoki Maekawa and Shinmei Law Office, please check out the links.

For further information and assistance please contact the various chambers of commerce in Japan connected to your country. Here is a just a sample.

Here are other resources mentioned in this segment.

Thank you for joining us on Kansai Business Break and we look forward to connecting with you again during our next segment.