How to Establish a Joint Stock Company in Japan

What is the process of incorporating a Joint Stock Company?

Let’s look at how to establish a Joint Stock Company in Japan, and what follow-up is required after the company is established. Here are the steps involved…

1. Decide on the basics of the company
2. Create a registered seal for the company
3. Draft the Articles of Incorporation and receive certification
4. Pay the investment (capital)
5. Create registration application documents and apply at the Legal Affairs Bureau

STEP 1: Decide on the basics of the company

When setting up a company, the basics of the company must first be decided. The main items required for the company profile are as follows.

Company name

The company name is also known as the ‘trade name’. When thinking about a company name, make sure there are no similar company names that already exist. You can search for similar trade names by visiting the website of the Ministry of Justice at this link, or by going to the Legal Affairs Bureau that has jurisdiction over the location of your head office and using one of their computer terminals.

In addition, be sure to include the corporate status of “株式会社” (KK = Kabushiki Kaisha) either before or after the company name.

Location

The ‘Location’ is the legal address of your business. It may differ from the actual place of your business activity. There are also cases where you use your home as an office, or you can register the address of a rental office or virtual office. If you decide to change the legal address of your company after incorporation, you will need to change the registration and pay a fee.

Capital

Under the Companies Act of Japan, there is no minimum amount of capital required, so it is possible to establish a company with capital of as little as just 1 yen. However, if seeking financing, the company’s capital, as well as sales figures, will be considered, so keep this in mind.  

Date of incorporation

The date of incorporation of the company is the date on which the application for incorporation was successfully filed with the Legal Affairs Bureau. If you send the registration application documents by post, the incorporation date will be the date the application is accepted at the Legal Affairs Bureau. Even if the date is specified at the time of mailing, it may not be the specified incorporation date if the legal affairs bureau is not in session or the documents are incomplete.

Fiscal year

By law, companies are obliged to organize their income and expenses for a certain period of time and prepare financial statements. To define your fiscal year, you need to decide when your financial year ends. When closing accounts, work such as income and expenditure calculations and inventory will occur, so it is best to avoid the company’s busiest season.

Business Purpose

The ‘Business purpose’ is a statement relating to what the company intends to do. If you wish to change the business purpose later, you will need to change the Articles of Incorporation and registration which requires a fee. There is no problem listing activities that are not currently carried out, but will be carried out at some point in the future.

Shareholders

The term ‘Shareholders’ refers to those who own shares in the company.

Officers

The term ‘Officers’ refers to those who handle the actual day-to-day activities of the company; including directors, representative directors, and auditors. It is possible to establish a company with just one director.

STEP 2: Create a registered seal for the company

When applying to the Legal Affairs Bureau for incorporation, the registered seal of the company (代表者印) is required. Once you have decided on a company name, you should have a seal made.  Then you will need to register the seal at the Legal Affairs Bureau.  There are many situations where a registered seal is used so it is better to make a registered seal in time for the initial incorporation. In addition to the registered seal, it is recommended that you also prepare two additional seals; one which is used to open a corporate bank account (銀行印), and a square seal (角印), which is used to stamp invoices and statements of delivery.

STEP 3: Draft the Articles of Incorporation and receive certification

The ‘Articles of Incorporation’ is a set of rules for the operation of a company, and is also known as the company’s constitution. The preparation of the Articles of Incorporation is the most time-consuming part of the incorporation process, so please allow yourself plenty of time to prepare.

In the Articles of Incorporation, the contents of the company profile decided in STEP 1 are described. As part of the content, the articles must include the following five “required matters” as dictated by law. If the five “required matters” are not included, the Articles of Incorporation will be deemed invalid.

Required matters to be stated in the Articles of Incorporation:

• Trade name
• Business purpose
• Head office location
• The value of assets to be contributed at the time of incorporation or the minimum amount thereof
• Name and address of founders

There is no fixed format for the Articles of Incorporation, however there are two ways to submit them: paper or electronic. In the case of paper, it is generally created on a computer, printed and bound.

Alternatively, the electronic Articles of Incorporation is a method of electronically authenticating PDF data. With the electronic Articles of Incorporation, there is no revenue stamp fee (40,000 yen) that is required for paper Articles of Incorporation, so recently there are more and more cases where electronic Articles of Incorporation are used. However, creating electronic Articles of Incorporation requires software and equipment for electronic signatures.

In the case of a Joint Stock Company (K.K.), submit the created Articles of Incorporation to a notary public office and carry out the authentication procedure.

STEP 4: Pay the investment capital

The payment of capital is to be made after the Articles of Incorporation applied in STEP 3 are certified. At this point, the company’s bank account cannot be created, because the company establishment registration application in STEP 5 has not been completed. Therefore, the capital will be transferred to the personal account of one of the founders.

Under the Companies Act of Japan, there is no minimum capital amount required, so you can apply upwards from an amount of just 1 yen. However, as minimum amount of capital, it is recommended to prepare for the initial costs, plus an additional three months of working capital.

When applying for registration in STEP 5, you will need a document that proves the transfer of capital. If you have a bank passbook, you should make a copy of the front cover and the first page of your bank passbook, as well as the page that contains the details of the transfer. Otherwise you should obtain a statement from your bank that shows details of the transfer.

STEP 5: Create registration application and apply at the Legal Affairs Bureau

Prepare application documents for registering the corporation. The documents to be prepared vary depending on the type of company, but in general, the following are required for a joint-stock company.

Document	Document Name in Japanese	Explanation
Application for Registration of Incorporation	設立登記申請書 (setsuritsu-tōki-shinseisho)	Application form used for registering the company
Payment slip for registration and license tax	登録免許税納付用台紙 (tōroku menkyo-zei nōfu-yō daishi)	Document that you need to fill out and submit along with the payment for the registration and license tax.
Certified copy of the Articles of Incorporation	定款(謄本) (teikan tōhon)	The Articles of Incorporation set out the fundamental rules, structure, and purpose of a company.
Founders Agreement	発起人の(同意書、決定書、or 会議事録） (hakkinin no dōi-sho, kettei-sho, or kaigi-jiroku)	The founders need to prepare and submit some kind of record that states the intent of the founders/promoters to establish the company.
Acceptance Letter of appointment of Representative Director	代表取締役の就任承諾書 (daihyō torishimariyaku no shūnin shōdakusho)	Written statement from the appointed Representative Director that confirms their acceptance of the role and responsibilities.
Acceptance Letter(s) of appointment of Director(s)	取締役の就任承諾書 (torishimariyaku no shūnin shōdakusho)	Written statement from the appointed Director(s) that confirms their acceptance of the role and responsibilities.
Acceptance Letter of appointment of Auditor	監査役の就任承諾書 (kansa-yaku no shūnin shōdakusho)	Written statement from the appointed Auditor that confirms their acceptance of the role and responsibilities.
Seal Certificate of Representative Director	代表取締役の印鑑証明書 (torishimariyaku no inkan shōmeisho)	Certificate that verifies the authenticity of the Representative Director’s seal. This Certificate is typically issued by the Representative Director’s local municipal office.
Certificate of payment of capital	出資金（資本金）の払込証明書 (shusshikin (shihonkin) no haraikomi shōmei)	This document may be issued by the bank where the funds have been deposited, or could be a bank statement or a transaction receipt that shows the deposit of the capital funds.
Company Seal registration certificate	印鑑届書 (inkan todokesho)	a document that records the company’s official seal or corporate seal, known as 法人印鑑 (hōjin inkan) or 法人はんこ (hōjin hanko), which is used to authenticate official documents and transactions.

In principle, the application for registration is made by the representative, but it is also possible to have it done by an agent such as an Administrative Scrivener (行政書士). If an agent does the application on your behalf, a power of attorney will also be required, in addition to the above documents.

After applying for registration, if there are no issues with any of the paperwork, the registration should be completed in about 7 to 10 days.

What are the procedures after incorporation?

After incorporation, the following procedures are required. Some deadlines are short, so be sure to check in advance. In addition, if the business requires legal approval procedures, apart from the following, it is necessary to ask an administrative scrivener to carry out the procedures.

Corporate Registration (登記 = Toki)

There are many procedures that must be followed when establishing a company. The most important of these is the “corporate registration” (company incorporation registration) with the Legal Affairs Bureau.  You must carry out corporate registration (登記) after establishing the corporation. There are various documents to be submitted when applying for registration. Please click this link to understand the process of Corporate Registration (登記).

Tax-related procedures

Companies are subject to various taxes. After completing the establishment registration, submit the necessary documents such as the notification of incorporation to the tax office that has jurisdiction over the location of the company. After doing this, do not forget to submit a notification to the prefectural tax office and municipal office.

Procedures related to social insurance

In order to enroll in social insurance, such as health insurance and welfare pension insurance, you must notify the pension office. Even if you are a company with only one president, you still in principle must enroll in social insurance.

Procedures related to labor insurance

If you wish to hire employees, you will need to apply for industrial accident insurance and employment insurance. Workmen compensation insurance is handled by the Labor Standards Inspection Office, and employment insurance is handled by Hello Work.

After incorporation, there is a variety of paperwork to take care of, in addition to the above procedures. The most important of these is accounting. It is a good idea to introduce accounting software and speak with an accountant at or after the time of incorporation to assist with these matters.

Establishing a company requires various procedures that are different from those required for sole proprietorships, but if you prepare well in advance, you should be able to proceed without any problems.

It is certainly possible to establish a company on your own, however even if you speak Japanese, we still highly recommend using an administrative scrivener (行政書士 = gyosei shoshi), a CPA (公認会計士 = Konin-Kaikeishi) or a tax accountant (税理士 = Zeirishi) to handle the process on your behalf.

To learn more about setting up a company in Japan, we recommend checking the following: Types of Company Structures in Japan