Expanding your company into Japan is something to celebrate. However, you'll need a thorough understanding of all Japanese subsidiary laws before you can decide where you should establish your company and what...
Read MoreExpanding your company into Japan is something to celebrate. However, you'll need a thorough understanding of all Japanese subsidiary laws before you can decide where you should establish your company and what kind of corporation works best for your needs.
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Expanding your company into Japan is something to celebrate. However, you’ll need a thorough understanding of all Japanese subsidiary laws before you can decide where you should establish your company and what kind of corporation works best for your needs.
Before you start the Japan subsidiary setup process, decide what kind of business structure to use. The four most common include:
The KK model is the most popular business structure in Japan, and it is best for foreign companies looking to establish a subsidiary.
Liability in both the KK and Goshi-Kaisha models is limited to the assets the equity participants choose to contribute. You can establish both by using a similar procedure:
Japan subsidiary laws state that a KK must have at least three 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 one of the three directors must reside in Japan.
A subsidiary is not for everyone, but it carries many benefits for US companies wanting to expand to Japan.
Japanese subsidiaries can operate independently from the US parent company. They can tailor operations based on Japanese cultural norms and offer additional services that meet the needs of individuals in the nation.
Subsidiaries also do not transfer liability to the US parent company, so your US business will not be held responsible for any compliance issues. The parent company can operate without fear of reprisal for anything that happens in their Japanese subsidiary.
The subsidiary setup process involves a significant amount of time and money. The timeframe of each step in the process can range from a few days or a few weeks, resulting in a months-long wait to expand your company in Japan. Filing articles and paperwork can cost from 450 to 20,800 Japanese yen.
You will also need to hire individuals to work as directors in the Japan office 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 create bank accounts.
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