General Procedures of Establishing a Godo-Kaisha as a Subsidiary

This article explains the procedural steps for one foreign company in Delaware, USA to establish a limited liability company (Godo-Kaisha) in Japan.

1. Determination of important matters of establishing company

Some key factors of establish company shall be determined such as the trade name, location of the head office, business purpose, amount of initial capital, contributing amount, fiscal year, executive managers (who will actually execute their duties), etc. For details on the rules and essential points to be considered for each item, please refer to the respective links.

~ Regarding the amount of initial capital ~

Unlike a stock company (Kabushiki-Kaisha), Godo-Kaisha is free to determine the amount of capital out of the amount invested. Any amount not accounted for as stated capital will be credited to capital surplus.
Example: Investment of 10 million yen　
Of this amount, 1million yen can be charged to Capital
Whereas 9 million yen can be charged to Capital surplus

2. Preparation of Articles of Incorporation

The Articles of Incorporation are prepared based on the details stipulated in 1 above. Please note that the Articles of Incorporation shall be written in Japanese (English can be written in parallel).

~The notarization of the Articles of Incorporation~

Unlike a Kabushiki-Kaisha, the notarization of the Articles of Incorporation is not required for a Godo-Kaisha.
Therefore fee to be paid to the notary public (approximately 30,000-50,000 yen depending on the amount of capital) is not required, which lowers the cost of incorporation.

3. Payment of capital contribution

After the Articles of Incorporation are prepared, the investor (in this case, the U.S. Company) needs to remit the determined amount of capital contribution to the bank account of their own in Japan (in the case of cash). On the other hand, in most cases, foreign companies do not have an account in Japan in advance; thus, in such cases, the foreign company can remit the capital contribution to the account held by the local executive manager by authorizing the him/her to act as an agent for receiving payment.
(This is one of the reasons why it is recommended to appoint at least one Japanese resident as an executive manager in the establishment of a Godo-Kaisha. For more details, please click here.)
It is also possible to remit investing money in foreign currency (e.g., U.S. dollars). However, please note that in such case, the amount in Japanese yen will be calculated based on the exchange rate on the day the payment is made.

4. Creation of a Corporate Seal

When incorporating a Godo-Kaisha, a corporate seal shall be registered with the Legal Affairs Bureau at the same time.
If the sole representative partner is an entity, such registration shall be done under the name of executive manager.

5. Obtain necessary documents, sign, seal, notarization, etc.

6. Apply for registration at the Legal Affairs Bureau.

The date of application for registration is the date of incorporation. Therefore, it is not possible to incorporate a company on Saturdays, Sundays, or holidays when the Legal Affairs Bureau is out of their services.

7. Application of the registration

Generally, it takes 4-5 business days to complete the registration.

General documents to be prepared on your end when you ask judicial scriveners for the registration (in this sample case).

(1) Corporate Registry and Articles of Incorporation (and by Law) of the U.S. Company.
(2) Signature certificate of the representative of the U.S. Company
(3) ID of the Representative of the U.S. Company
(4) ID of the Executive Manager
(5) Documents which certify that the U.S. Company appointed their Executive Manager.

In general the contents of above (1) to (5) would be combined as one notarized “Affidavit”.

(6) Proof of the Contribution (click here for a sample document)
(7) Personal seal of the company to be established (Or you can ask a judicial scrivener to prepare them for you.)

MK @ 09/01/2022