A. BUSINESS MODELS:-
A foreign individual wishing to start a business in Japan can do so either as a sole proprietor (Kojin Jigyo) or by setting up a company. Besides these a foreign company may also open up a representative office or a branch office in Japan.
- Sole Proprietorship- Sole Proprietorship is not an option that is open for everyone. Those with Spouse of Japanese National visa, Long Term Resident visa, Permanent Resident visa, Spouse of Permanent Resident visa can choose to become a sole proprietor without any restriction.If a person has stable contracts with Japanese companies, it is also possible to work as a sole proprietor with some conditions under “Specialist in Humanities” visa or “Engineer” visa. No registration procedure is required to become a sole proprietor. A person is just required to submit certain notifications to the tax office within 2 months after the beginning of the activities and file the tax declaration (kakutei shinkoku) once a year, between February and March for the income earned during the previous year.
- Company- There are currently 4 different types of company in Japan-
- Gomei Kaishaconsists of partners with unlimited liability;
- Goshi Kaishahas at least one partner with unlimited liability and other partner(s) with limited liability;
- Godo Kaisha(GK)– works in a similar way to what is known as LLC (limited liability company) in Western countries and has one or more partners with limited liability.
The incorporation process involves- Determination of basic information (i.e., registered address and managing members), Conformation with the Legal Affairs Bureau that there are bi conflicting corporate name and address; receipt from the GK’s parent company of an affidavit attesting to its existence and its basic information and affidavits bearing the true signatures of parent company representatives. Affidavits must be attested to by a public notary from the signor’s home country; preparation of incorporation documents including articles of incorporation; application to register incorporation of the GK with the Legal Affairs Bureau; acquisition of a certificate evidencing the company’s registration and a certificate evidencing the registration of its seal (approximately 10 days after the application for registration); opening of a bank account under the GK’s name; remittance of capital by a member to the GK’s bank account; and notification to the Bank of Japan of the establishment of GK by the foreign parent company.
- Kabushiki Kaisha (KK)- is run by shareholders with limited liability and by directors who are appointed by shareholders. This is the most well known, prevailing form of incorporation in Japan, used by most major companies.
The incorporation process involves- selection of the type of KK corporate structure and determination of its basic information (e.g., registered address, director(s) and shareholders); confirmation with the Legal Affairs Bureau that there are no conflicting corporate names at the same address; preparation of incorporation documents including articles of incorporation; receipt from the KK’s parent company of an affidavit attesting to its existence and its basic information and affidavits bearing the true signatures of parent company representatives. Affidavits must be attested to by a public notary from the signor’s home country; notarization of the articles of incorporation by a Japanese Public Notary; remittance of the KK’s capital to the personal bank account of the KK’s representative director who is resident in Japan; appointment of directors (and other officers if applicable, such as representative directors and statutory auditors); examination by directors (and statutory auditors, if applicable) of the legality of the establishment procedures; application to register the incorporation of the KK with the Japan Legal Affairs Bureau; acquisition of a certificate evidencing the company’s registration and a certificate evidencing the registration of its seal (approximately 10 days after the application for registration); opening of a bank account under the KK’s name; transfer of the funds kept in the personal bank account of the representative director resident in Japan to the KK bank account; and notification to the Bank of Japan of the establishment of the KK by the foreign parent company.
There is hardly any interest in newly setting up a Gomei Kaisha or Goshi Kaisha since they need to include partners with unlimited liability. Therfore, practically, Kabushiki Kaisha (KK) or Godo Kaisha (GK / LLC) are the only viable options available.
B. ENTREPRENEURSHIP IN JAPAN:-
Foreign entrepreneurs wanting to open businesses in Japan are required to obtain a business manager visa, which serves as the legal permit allowing them to launch commercial operations in the country. Under the recent Program to Increase Foreign Entrepreneurs, launched on January 29, 2016, prospective foreign enterprises who meet all requirements provided by Tokyo Metropolitan Government will be given a six-month preliminary business manager visa. This allows them to start commerce in Japan under the condition that within six months the company fulfills the requirements needed to obtain the visa.