Setting Up a Company in Japan: Capital, Representative Directors and Proof of Contribution

More and more people are asking me what it takes to set up a company in Japan. Many think you need ¥30 million in capital, but that mixes up company formation with the requirements for the Business Manager status of residence.

1. How much capital does a company need?

Japanese company law sets no fixed minimum capital for forming a company. The conditions for forming a company and the conditions a foreign national must meet for the Business Manager status are separate legal questions. If you want to run your own company in Japan, you need to check the status-of-residence requirements in addition to completing company formation. These two questions must be judged separately:

1. Can the company be formed?
2. Can a foreign national actually run it in Japan?

2. Must a representative director live in Japan?

Not necessarily. Under a Ministry of Justice notice, the former practice requiring at least one representative director of a domestic kabushiki kaisha to have an address in Japan has been abolished. So you can register a kabushiki kaisha even if all representative directors live abroad, and they do not need Japanese nationality.

Being able to register the company, however, is not the same as being able to actually run it.

3. Proof of contribution for a godo kaisha

You also need to consider how payment of capital is proved. For a kabushiki kaisha, payment by the promoters is usually confirmed through financial institution records. For a godo kaisha (LLC), proof is not limited to bank records: if the requirements are met, it can be a receipt showing that the representative member received the contribution. This gives the godo kaisha some flexibility.

Since the capital requirement for the Business Manager status rose, actually transferring a large sum into Japan can be a hurdle for foreign founders. In such cases, the godo kaisha's method of proving contribution can make formation smoother. The documents actually required should still be confirmed with the registry office for your case.

4. What foreign founders should check

Setting up a company in Japan is about more than preparing capital. Before you start, check:

• The type of company: kabushiki kaisha, godo kaisha, etc.
• The representative's place of residence and status
• Who actually contributes capital, how, and the supporting documents
• The business and the business plan
• The status of residence the manager needs

Understanding the legal relationships before you start lets you prepare with a clear plan.

Understanding Japan through law.

This article provides general legal information, not legal advice on any individual case. Please consult us about your own situation; for disputes or litigation, consult an attorney.