Japan Company Formation 2026: KK vs GK Costs & Procedures

Japan is the world's fourth-largest economy, offering a stable legal framework, excellent infrastructure, and access to a consumer market of 125 million people. For foreign entrepreneurs, forming a Japanese entity is often the gateway to establishing business operations in the country. This guide covers the complete process under Japan's Companies Act (会社法, Act No. 86 of 2005), comparing the two most common entity types and providing practical guidance for non-resident foreign founders.

While Japan's Companies Act recognizes four types of companies (Article 2(i)), virtually all new formations choose between these two:

The KK is Japan's equivalent of a corporation (similar to a US C-Corp or UK Ltd). It is governed by Articles 25 through 103 of the Companies Act (formation provisions) and remains the most widely recognized corporate form in Japan.

Key characteristics: - Shareholders' limited liability (Article 104) - Separation of ownership and management - Board of directors optional for small companies (Article 326) - Can issue shares and go public (IPO) - Director terms up to 10 years for non-public companies (Article 332(2)) - Highest level of credibility with Japanese banks, partners, and customers

Introduced in 2006, the GK is modeled after the American LLC. It is governed by Articles 575 through 675 of the Companies Act.

Key characteristics: - All members have limited liability (Article 580(2)) - No distinction between owners and managers — members manage directly (Article 590) - No director term limits - Profit distribution can be customized in the articles of incorporation (not tied to capital contribution ratios) - Cannot go public - Notable users: Apple Japan G.K., Amazon Japan G.K., Google G.K. — many major foreign companies use this form

The GK saves approximately ¥140,000–¥150,000 compared to the KK — a significant advantage for bootstrapped startups.

Both KK and GK can be formed with as little as ¥1 in capital (Articles 27(4) and 576(1)(vi)). However, in practice:

• ¥1 capital is not recommended — it raises red flags with banks, landlords, and potential partners
• ¥500,000 or more is generally advisable for bank account opening
• ¥5,000,000 or more is required if you plan to apply for a Business Manager visa
• The capital amount appears on the company registry (登記簿謄本), which is a public document

Before drafting your articles of incorporation, determine the following:

• Company name (商号): Must include "株式会社" (for KK) or "合同会社" (for GK). Can include Roman letters, Arabic numerals, and certain symbols (Article 6(2))
• Head office address (本店所在地): Must be a physical address in Japan (virtual offices are acceptable for registration purposes)
• Business purposes (事業目的): List all intended business activities. Be broad but specific — you can only engage in activities listed in your articles
• Capital amount (資本金): See minimum capital discussion above
• Fiscal year (事業年度): You can choose any 12-month period; many companies choose April–March to align with Japan's fiscal year
• Founders (発起人/社員): At least one founder required (Article 25(1) for KK)

The articles of incorporation (定款, "teikan") are the company's constitutional document.

For KK, mandatory provisions include (Article 27): 1. Business purposes 2. Company name 3. Head office location 4. Amount of stated capital at the time of formation 5. Names and addresses of founders

For GK, mandatory provisions include (Article 576): 1. Business purposes 2. Company name 3. Head office location 4. Names and addresses of members 5. Members' liability (limited liability in all cases) 6. Amount of capital contribution from each member

This step applies only to KK formation. Under Article 30(1) of the Companies Act, KK articles of incorporation must be certified by a notary public (公証人) at the notary office with jurisdiction over the head office location.

• You can submit paper articles (requiring a ¥40,000 revenue stamp) or electronic articles (no stamp required)
• The notary fee ranges from ¥30,000 to ¥50,000 depending on stated capital (Notary Fee Ordinance Article 35)
• Most judicial scriveners (司法書士, "shihō shoshi") can handle electronic submission on your behalf, saving the ¥40,000 stamp fee

GK articles do not require notarization, which is one of the key reasons GK formation is cheaper and faster.

Each founder deposits their capital contribution into a personal bank account (since the company does not yet exist, it cannot have a corporate account). After deposit:

• Prepare a certificate of capital payment (払込証明書)
• Include a copy of the bank passbook or statement showing the deposit
• The deposit date must be after the date of the articles of incorporation

File the incorporation registration at the Legal Affairs Bureau (法務局, "Hōmukyoku") that has jurisdiction over your head office location (Article 49 for KK; Article 579 for GK).

Required documents: - Registration application form - Articles of incorporation (certified copy for KK) - Founders' resolution/consent documents - Directors' acceptance of appointment (KK) - Certificate of capital payment - Company seal registration form (印鑑届書) - CD-R or electronic media with registration details

Registration tax: - KK: ¥150,000 or 0.7% of stated capital (whichever is higher) - GK: ¥60,000 or 0.7% of stated capital (whichever is higher)

The company legally exists from the date of registration (Article 49). Processing typically takes 1–2 weeks. The total process from initial planning to registration completion is usually 2–4 weeks.

Previously, at least one representative director of a KK was required to be a resident of Japan. This requirement was abolished by a Ministry of Justice directive in 2015. Today, a company can be formed and directed entirely by individuals residing outside Japan.

However, there are practical considerations: - A Japanese address is still needed for the company's registered head office - Some procedures (bank account opening, tax filings) are significantly easier with a Japan-based representative - Many foreign entrepreneurs engage a judicial scrivener or administrative scrivener (行政書士) to handle formation procedures remotely

If you plan to live in Japan and manage your company, you will need a Business Manager (経営・管理) visa under the Immigration Control and Refugee Recognition Act.

Key requirements: - Secure a physical office space in Japan (a room in a co-working space may qualify, but a virtual office generally will not) - ¥5,000,000 or more in stated capital, OR employ at least 2 full-time Japanese residents - Submit a detailed business plan demonstrating stability and continuity - The business must be genuinely operational (not a paper company)

Processing time: 1–3 months for initial application

Important: You can form the company first (even without a visa), then apply for the Business Manager visa with the company's registration documents. Some immigration offices accept simultaneous applications.

Opening a corporate bank account is one of the biggest practical challenges for foreign-owned companies in Japan. Here is what to expect:

Tips for successful account opening: 1. Prepare a clear, detailed business plan in Japanese 2. Have your company registry extract (登記簿謄本), articles of incorporation, and representative's ID (residence card or passport) ready 3. Apply at multiple banks simultaneously — rejection at one does not affect others 4. Consider opening a personal account first, then applying for a corporate account at the same bank 5. An office lease agreement strengthens your application 6. Wait 3–6 months after formation if initially rejected, then reapply

After registration, you must complete several mandatory filings:

Critical: The blue-form tax return (青色申告) application should be filed immediately upon incorporation. It provides substantial tax benefits, including the ability to carry forward losses for up to 10 years.

Many foreign entrepreneurs start with a GK to minimize initial costs, then convert to a KK once the business is established. This conversion requires a special resolution, public notice to creditors, and a new registration — total cost and effort is moderate, and it allows you to benefit from the GK's simplicity during the critical early stage.

• Companies Act (会社法): Articles 25–103 (KK formation), Articles 575–675 (GK formation)
• Commercial Registration Act (商業登記法): Registration procedures
• Registration and License Tax Act (登録免許税法): Registration tax amounts
• Notary Act (公証人法) & Notary Fee Ordinance (公証人手数料令): Notary procedures and fees
• Immigration Control and Refugee Recognition Act (出入国管理及び難民認定法): Business Manager visa