WE ARE TRUSTED
Japanese culture, process and protocol can be overwhelming and confusing for most new companies entering the marketplace and for many foreign companies already operating within the territory. Navigating Japanese corporate registrations, regulations, and requirements has become a refined expertise that many of our clients utilize allowing them to conduct business more quickly and to avoid unforeseen and costly bureaucracy.
Our goal is to keep our clients teams focused on what they do best by absorbing high level back office and operational administrative support to determine and establish
WE SERVICE OUR CLIENTS SETTING UP A COMPANY (REGISTERING AN ENTITY)
Companies (entities) are established to create a fixed place of business in Japan. If activities related to business development, sales, marketing, manufacturing and construction are being conducted on a continuous basis, an entity will likely need to be established. Numero One can assist with the establishment of Japanese corporations, special purpose companies (SPC) and branch offices as needed.
Permanent Establishment (PE)
Tax law defines permanent establishment as a branch, factory or other fixed place of business in Japan. Even if there isn’t a physical fixed place of business, activity in Japan can be considered de facto permanent establishment. Once permanent establishment is confirmed, in most cases an entity should be formed to handle appropriate compliance related to such permanent establishment. This compliance includes human resource and social benefit statutory administration for employees, corporate tax compliance and corporate secretarial compliance as required by company law.
Establishing an entity
Entities are registered through the Legal Affairs Bureau. The application date for registration will also be the date of establishment, and the company may carry out business operations from that date. For subsidiary establishment procedures, foreign companies need to provide documents certifying the profile, authority and authenticity of signature of the foreign company and its representatives, which can include the foreign company’s articles of incorporation, establishment certificate, registration certificate and other official documents; or an affidavit notarized by a notary public in the home country of the foreign company. A company name availability check, drafting of the local articles of incorporation and company bylaws, confirming of directors and evidence of capital should be handled before application for establishment.
There are four main types of entities available for establishment, but only three (Kabushiki Kaisha, Goudou Kaisha and Branch Office) of these entities can book revenue and are required to pay taxes.
Most Common Entity Choices in Japan:
▪ Kabushiki Kaisha (KK)
▪ Goudou Kaisha (GK)
▪ Branch Office (BO)
▪ Representative Office (not a registered entity, see Setting Up a Representative Office below)
General Overview of Each Entity:
The Representative Director of a Kabushiki Kaisha (called an Executive Manager for a Goudou Kaisha) must be appointed at the time of establishment. As of March 16, 2015, this person no longer needs to be a resident of Japan, but common practice suggests appointing a Nominee individual locally in order to ensure a smooth setup. The individual in this position gives up their right to unemployment and workman’s compensation, and bears the risk that any litigation toward the company could fall upon them, as they are not considered an employee but a principal of the company. They also have the ability to independently bind the company to any contract. Given this, foreign companies are hesitant to appoint someone living in Japan to this role. With all of these risks, some companies will choose to appoint a Nominee Resident Director, which ultimately resolves all these issues by practically reinstating the power of attorney of the foreign office and removing any risk associated with appointing someone locally.
NOMINEE REGISTERED ADDRESS
Foreign companies that do not need a physical office space to operate their business must still register an address with the local authorities. A Nominee Address is used so the foreign company can remain compliant while paying a minimal amount for a registered address. Tricor offers its own offices as a Nominee Address and will handle any government notices and forward personal mail appropriately.