Japan Branch & Company Registration, KK, GK, LLC Incorporation, formation & various options re setting up a legal entity!

"Since 1993"

"One Stop Solution" for Business & Administrative requirements pre-entry & post-entry level support (Page 1 of 9)

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ABriefSummaryreJapanBusinessEstablishment

OpeningaCompanyinJapan

Howaforeigncompanyorentreprenuersetsupbusinesspresenceintermsofformationofalegalentitydependsuponthenatureandmagnitudeofthebusiness,proposedbusinessoperation,aswellaslegal,taxandotherconsiderations.Manyoptionsexist,rangingfromaBranchofficeoralocalJapanesesubsidiarycompanysuchasKabushiki-Kaisha(KKCo),Godo-Kaisha(GKCo)andthereareseverallocaltypesofcompanyformationsavailable.ThereisalsoaJapaneseversionofalimitedliabilitypartnership(LLP),isnotacorporation,butapartnershipformat.ForeigncompaniesdoingsomeresearchwillfindthatadministrativelegalmattersredoingbusinessinJapanmayevensometimeseasiercomparetotheirownhome-country(dependinguponthenationalityoftheforeigncompany).Withrightprofessionalassistance“SettingUpCompany,AdministrativeOperation&DoingBusinessinJapan”isquitesimpleandnotthatverydifficulttask,asmanyforeigncompaniesorentreprenuermighthaveperceivedit!InrecentpastJapanesegovernmenthasalsotakeneffortsforattractingforeignbusinessestoJapanandmadepromisestosolveinconveniencebyremovinglanguagebarriersinretailoutlets,enhancingeducationalenvironmentforexpatriatechildren,furtherimprovinginternetconnectivity(FreeWi-Fi)etc.

SettingupabusinesspresenceinJapan

AforeigncompanycansetupabusinesspresenceinJapaninanyoneoffollowing4(four)formats:

Ø RepresentativeOfficeØ BranchOfficeØ SubsidiaryCompanyØ LimitedLiabilityPartnership(LLP)

RepresentativeOffice:

Representativeofficesaregenerallyestablishedforcarryingoutmarketresearch&liaisonactivitiesonbehalfofheadoffice.ItdoesnotallowtoconductcommercialbusinessactivitiesinJapanandnoregistrationisrequiredundertheCommercialCodeinprinciple.

BranchOffice

ThesimplestmodeforaforeigncompanytoestablishalegalentityforcommercialbusinessoperationsinJapanistosetupabranchoffice.Intermsoftherangeofbusinessactivitiesallowed,therearenobasicdifferencesbetweenbranchofficeanddomesticcorporations.Taxedonbranchincomeonlybutrateissameaslocalco.Forregistrationthereisnorequirementtoestablishstatutoryofficers/managementbody,itonlyneedsalocalphysicaladdress(notPOBox)&aRepresentativeinJapan(mustbearesidentofJapan).

SubsidiaryCompany

Aforeigncompanywillingtoestablishasubsidiarycompanymaychoosefromthefollowings:

(a) Joint-stockcorporation(Kabushiki-Kaisha)[K.K.](b) LimitedLiabilityCompany(LLC)(Godo-Kaisha)[G.K.]orsimilarentitystipulatedbyJapan'sCompaniesAct.

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Thereareformatssuchasunlimitedpartnerships(Gomei-Kaisha)andlimitedpartnerships(Goshi-Kaisha)undertheCompaniesAct,buttheyarerarelychoseninpracticebecauseequityparticipantsburdenunlimitedratherthanlimitedliability.

Asubsidiaryisaseparatelegalentityfromtheforeigncompany,thereforeforeigncompanywillbeartheliabilityofanequityparticipantstipulatedbylawforalldebtsandcreditsgeneratedbytheactivitiesofthesubsidiary.

MinimumrequirementforestablishingasubsidiarycoinJapanistohavealocalphysicaladdress(notPOBox)andalocalresidentinJapan.

However,effectiveMar’15JapanesegovernmenthasallowedforeigncompanytoregisteraJapaneseKKcowithdirectorsresidingabroadandthemandatoryrequirementofatleastonelocalResidentDirectorhasbeenrelaxed/abolished!(Butfortheprocedureof“paid-upcapital”ofthelocalcoalocalresidentshareholderisrequiredatthetimeofregistration&uponcompletiontheshareoflocalresidentcanbetransferredbacktoforeigncoorindividualforholding100%shareintheJapanKKCo.).PleaserefertonotebelowwithregardtoK.K.CoformationunderthenewregulationeffectiveMar’15.Forfurtherdetailsandorclarificationpleasecontactus.

LimitedLiabilityPartnership(LLP)

ThisformatisalsoallowstodobusinessbyusingaYugenSekininJigyoKumiai.ItisconsideredasJapaneseversionofalimitedliabilitypartnership(LLP),isnotacorporation,butapartnershipformedonlybytheequityparticipants,whohavelimitedliability.

TaxesareleviedonprofitsallocatedtoequityparticipantsbutnotaxonLLP.Theformatisnormallyusedforcarryingoutatimeboundproject.

However,pleasenotethatforallformatsofformingalegalentity(Branchorasubsidiarycompany)inJapan“aregisteredofficeaddressinJapan”(notP.O.Box)ismandatory.OptionreformationofalegalbusinessentityinJapanforcommercialbusinessactivities:

TheoptioniseithertoestablishaBranchOfficeoraLocalSubsidiaryCo(eitheraJoint-stockcorporation(Kabushiki-Kaisha)[K.K.]orLimitedLiabilityCompany(LLC)(Godo-Kaisha)[G.K.]).ForanyofthesaidformatstheminimumrequirementisalocaladdressinJapan(notPOBoxaddress)andalocalresidentinJapan(exceptK.K.Co)(eitheraJapaneseoraforeignnationalbutincaseofaforeignnationalthepersonmusthaveanappropriatestatusofresidenceormayrequirechangeofstatusofresidence).

Branchofficeallowsamaximumof2(two)RepresentativeinJapantoberegisteredandashareholder/director/stafffromheadofficecanberegisteredasaRepresentativeinJapanwithoverseasaddressinadditiontothelocalresident.

LocalSubsidiaryCoallowsregisteringdirectorswithoverseasaddressinadditiontothelocalresidentdirector.v NotewithregardtoK.K.CoformationunderthenewregulationeffectiveMar’15.PleasenoteeffectiveMar’15theJapanesegovernmenthasallowedforeigncompanyandorindividualtoregisterJapaneseKKCompanywithdirector(s)andshareholdersresidingabroadandthemandatoryrequirementofatleastonelocalResidentDirectorhasbeenrelaxed!(Butfortheprocedureof“paid-upcapital”

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ofthelocalcoalocalresidentshareholderisrequiredatthetimeofregistration&uponcompletiontheshareoflocalresidentcanbetransferredbacktoforeigncoorindividualforholding100%shareintheJapanKKCo.).

AndthereafterthereportingtoNational&LocalTaxauthoritiesisdonewith100%foreignshareholding.(However,ontheBankofJapanreportingofforeigninvestmentitwillonlyreflectthefactatthetimeofregistrationi.e.99+1share!)

ThepracticalhurdlesthattheforeignownedKKcowithoutalocalresidentdirectormightface(dependinguponthecase)intheareassuchas:

§ InopeningaCorporatebanka/cinJapan;anddependingonthebank&localKKcompany’sproposedactivitiesthesituationmayvarycasebycase!JFYI,localbanksareverystrictinopeningupanordinarycorporatebankaccountevenforlocalJapanesecompanyownedbythelocalcitizenorresident.Usuallyittakesabouttwo(2)weeksforthemtocheckthedocumentsandtoevaluatetoformtheirfinaldecision.

§ Andtheperceptionoflocalbusinesspartner(s)andorclient(s)inJapanabouttheforeignownedlegalentity(KKCo)withoutanylocalresidentdirectorfordoingbusinessinJapan!Thiswouldalsogoingtovarycasebycasedependinguponthenewcompany’spurposeandactivitiesinJapan!

v Tosuggestasuitablelegalformatdependsonanswersonthefollowingissues!:

Choosingtherighttypeoflegalentityformationdependingonthespecificrequirementoftheclient.Andhencetheyneedtoaddressthefollowingbasicissueswhilesendingtheinquiryforquotation:

1](a)Mainreason(s)toestablishalegalentityinJapan?Briefinfo.repastorpresentbusinessactivitiesinJapan(ifany)?(b)BusinessobjectivesandactivitiestobeconductedthroughNewCompany/legalenityinJapan?

2](a)Proposedformofentity:incorporatebranchoralocalsubsidiarycompany?(intheeventyouhavealreadygatheredandstudiedpreliminaryinformationonthesettingupabusinessentityinJapan)

(b)Incaseoflocalsubsidiarycowhatwillbeshareholdingstructure,i.e.IndividualorForeignCompany?

3]WhowillbecomeLocalRepresentativeinJapan(incaseofbranch)&LocalResidentDirector(incaseoflocalsubsidiarycompany)?[KKcanberegisteredwithoutlocalresidentdirector]Theregisteredofficeaddress?Incaseofalocalsubsidiaryco.whatwillbecapitalization?InJ.yen?(Paid-up-capitalamount)

4]Otherrelatede.g.briefinformationonforeigncoorentreprenuer?URL,Coprofile,etc!

Furthermore,informationonthefollowingareawouldbehelpfulinpreparingthecostestimation:

ü Requirementofpost-incorporationmandatoryadministrativeservicessuchas:corporatetaxreturn,book-keeping,staffpayroll,annualyear-endwithholdingstafftaxadjustment,socialinsurance,etc.

ü Anyotheradministrativebusinessservicesandorbusinessoperationalsupportrequired(ifrequired)?

JapanRepresentativeOffice

Representativeofficeisgenerallyestablishedforcarryingoutpreparatoryandsupportingtasksaimedatenablingforeigncompaniestoengageinfull-scalecommercialbusinessoperationsinJapaninfuture.

Representativeofficeisgenerallyestablishedforcarryingoutmarketresearch&liaisonactivitiesonbehalfofheadoffice.ItdoesnotallowtoconductcommercialbusinessactivitiesinJapanandthereforenoregistrationisrequiredatthelegalaffairsbureaunorbesubjectedtocorporatetaxunderJapanesetaxlaws.However,representativeofficesestablishedbyforeignbanks,insurancecompanies,securitiescompanies,orother

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financialinstitutionsareexceptions;priornotificationmustbeprovidedtotheFinancialServicesAgencyforsuchrepresentativeoffices(asstipulatedintheBankingLaw,SecuritiesExchangeLawandotherlaws).

Inprinciple,arepresentativeofficeisnotacompany,whichisregisteredasacorporation.Theofficeformatmaybeusedbyforeigncorporations,whichdonotconductcommercialbusinessinJapanbutexpecttocarryouttheactivitiessuchas:

Ø Advertisingandpromotionalactivities,providinginformation,carryingoutmarketresearch,conductingbasicresearchandotheractivitiestosupporttheundertakingsoftheforeigncorporation.

Ø Purchasing&storingofgoodsonbehalfoftheheadoffice(parentcompanyinoverseas).

MainFeaturesofaRepresentativeOffice

v NoregistrationisrequiredundertheCommercialCodeinprinciple.

v NoreportofdirectinwardinvestmenttotheMinistryofFinanceviatheBankofJapanisrequiredundertheForeignExchangeLaw.

v SincerepresentativeofficesdonotconductbusinessinJapan,theyarenotregardedaspermanentestablishmentsandarethereforenotsubjecttocorporatetaxes.

v Theadvantageofnorequiredreportingdoesnotapply,however,inthecaseoffinancialinstitutionssuchasforeignbanks,insurancecompanies,orsecuritiescompanies.Underthelawsconcerningbanking,foreigninsuranceoperations,andforeignsecuritiesbrokers,suchinstitutionsmustsubmitareportinadvancetotheMinistryofFinance,eventoestablisharepresentativeoffice.

v Theleaseforarepresentativeoffice’sofficespacemaybesignedbetweentheheadofficeinthehomecountryandtheJapanesebuildingowner.Inmanycases,however,theownerwillrequirethattherepresentativeofficehaveaguarantor(residentofJapan)residentinJapan.

v ItispossibleforarepresentativeofficetoopenanordinarysavingsaccountataJapanesebankusinganaccountnamesuchas“TomSmith,XXXInc.RepresentativeOfficeinJapan,”ahybridofindividualandcorporatestatus.

v ArepresentativeofficemaynotdobusinessinJapan,whetheritexpectsaprofitornot.

v ForeigncorporationsintendingtodocommercialbusinessactivitiesinJapanmay,however,notusetherepresentativeofficeformat.Theirchoicesareestablishingabranchofficeorformingasubsidiarydomesticcorporation(LocalCompanyinJapan).

JapanBranch

ForeigncompanieswillingtoengageincommercialbusinessoperationsinJapanmustestablishabranchofficeoralocalsubsidiarycompanyasalegalentityinJapan.

ThesimplestmodeforaforeigncompanytoestablishalegalentityforbusinessoperationsinJapanistosetupabranchoffice.Branchofficecanstartbusinessoperationsassoonasregistrationiscompletedwiththelocalauthorityandallnecessarypost-registrationmandatoryreportingarecompleted.

AbranchofficeofaforeigncompanycarriescommercialtransactionsinJapanasperthedecision/instructionoftheparentcompany,andusuallyisnotexpectedtoindependentdecision-making.

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Abranchofficedoesnothaveitsownindependentlocallegalcorporatestatus,butinsteadisdeemedtobewithintheumbrellaofcorporatestatusoftheparentcompanyoutsideofJapan.AtthetimeofregistrationofabranchinJapanthusthereisnorequirementtoestablishstatutoryofficers/managementbodysuchasdirectors,auditors,abranchneedsarepresentativeonly(aresidentofJapan).

Ingeneral,therefore,theforeignparentcompanyisultimatelyresponsibleforalldebtsandcreditsgeneratedbytheactivitiesofitsJapanbranchoffice.

Abranchoffice,however,canopencompanybankaccountsandleaserealestateinitsownname,carrycommercialactivitiesaspercorporateobjectivesderivedfromparentco,onceitsregisteredinJapan.

Intermsoftherangeofbusinessactivitiesallowed,therearenobasicdifferencesbetweenbranchofficesanddomesticcorporations.

AbranchofficeinJapanisobligedtosubmitcorporatetaxreturntolocalauthoritywithintwomonthsfromthedateofclosingoffiscalyearandfiscalyearisregisteredinJapanaspertheparentcompany'sfiscalyearestablishedin-homecountry.TaxappliesonthenetincomegeneratedinJapanasperlocalregulationandratesappliedaresameasdomesticcompany.

Theproceduresforclosingabranchofficemustalsobecompletedwhenupgradingabranchofficetoasubsidiarycompany.Becauseabranchofficecannotbedirectlyreorganizedintoajoint-stockcorporation(Kabushiki-Kaisha{K.K.})oralimitedliabilitycompany(Godo-Kaisha{LLC}),thebranchofficeclosureproceduresandthesubsidiarycompanyestablishmentproceduresmustbecarriedoutsimultaneously.Insuchinstances,however,thebranchoffice'sassetsmaybepassedontothesubsidiarythroughinvestmentinkind.

SomeBasicdifferencesbetweenOpeningaBranchandEstablishingaDomesticCorporationinJapan

Intermsoftherangeofbusinessactivitiesallowed,therearenobasicdifferencesbetweenbranchofficesanddomesticcorporations.Butregardlessofthefirmbeingforeignornot,somecompanies,dependingonthecategoryofbusiness,arerequiredtosecureauthorizationofthesupervisoryministriesatthetimeoffounding.

ABranchofficeisnotregardedasanindependentlegalentity,butasactingonthebasisofdecisionsandinstructionsfromtheheadofficetoprovideservicesandcarryoutbusinessactivities,includingpurchasing,importing,andsales.Intransactionswithotherbusinesses,thebranchofficeconcludescontractsastherepresentativeofitsheadoffice.

SomemajordifferencesbetweenabranchofficeandAdomesticJapanesecorporation

Eitherabranchofficeoradomesticcorporationmayenterintobusinessactivitiesbyitsownnameasanentity.Taxratesarealsofundamentallythesameforabranchofficeoradomesticcorporation.

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1)Anewmanagementbodyneednotbesetupforabranchandthereisnodetailedstatutoryrequirementforthemanagementofabranch.Whileadomesticcorporationmusthavestatutoryofficersoramanagementbodysuchasdirectors,auditors,boardofdirectorsmeetingsandshareholdersmeetings,abranchdoesnotrequiretodosobutonlyneedsaRepresentativeinJapan.

2)Dividendspaidbyadomesticcorporationtoaforeignshareholderaresubjecttowithholdingtax,whileremittanceofbranchprofitsaftertaxtoitsheadofficeisnotsubjecttowithholdingtax.

3)Expensesincurredbytheheadofficeforitsbranchmaybeallocatedtoitsbranch.

4)Interestorroyaltypaidbytheheadofficeforactivitiesofitsbranch,maybedeductedbyitsbranchalthoughsuchinterestorroyaltyissubjecttowithholdingtax.

Note:InbothbranchorasubsidiaryCoalocalresidentisrequired(RepresentativeinJapanforbranch&LocalResidentDirectorforsubsidiaryCo[exceptforK.K.Co.]),eitheraJapanesenationaloraforeignerwithproperresidentpermitinJapan,andalocalphysicaladdressisrequiredforregistrationofabranchorsubsidiaryCoandnotaP.O.address.

EstablishingaSubsidiaryCoinJapanKKCo(Kabushiki-Kaisha)[Joint-stockcorporation]{KabushikiJotoSeigenKaisha–(IfNoCommitteeisEstablished)}

Or

GKCo(Godo-Kaisha)[LimitedLiabilityCo]LLC

ForincorporationofeitheraKKorGKtheminimumcommoncriteriaisasfollows:-1. Alocalphyisicaladdressforalocalsubsidiaryco’s“RegisteredOfficeaddress”(physicaladdress&nota

POBoxaddress)2. Alocalresident(Japaneseorforeigner)asa"ResidentDirector"(incaseofaforeignerhis/herVisa

statusneedtobeverifiedandifrequiredchangeofstatusmayneedtobeappliedattheimmigrationbureau)[ExceptforK.K.Co.]

ThefollowingfeaturesappliestobothKKandGK:

1.MinimumNumberofDirectors:1(one)(ButincaseofoneorseveralonemustberesidentofJapan[ExceptforK.K.Co.])2.ResidentDirectorRequired:Yes,atleastonemustberesident.[ExceptforK.K.Co.] 3.MinimumNumberofShareholders:1(one)[IncaseogGKeuityholders(Member)&alldirectorsmustbefromMembers]4.CorporateShareholderAllowed:Yes(Incaseofcorporateshareholdingprocedureislengthy&complex)5.ResidentShareholder(Member)Required:No.[Forincorporationprocedureitisnecessarytoallocate1(one)shareinthenameofthelocalresidentshareholder/directorandusehis/herpersonalbanka/ctotransferthecapitalamountfromabroadasforeignconoraforeignresidentcanholdalocalbanka/cinJapan.Uponcompletionofregistrationthisshareistransferredback{throughinternalcodocstatingthetransfer}.Theactualsharepositionneednotificationtotaxofficeandthenameofthepromoter&actualsharepositionreflectsontaxreturndocs.]P.S.Theabove-procedureisadoptedbothforKK&GK.ButincaseofGKthedirectorofacomustbeashareholder/equityholder[Member].(However,ifGKpromoterdecidestostayoutsideofJapanthenthereisnootheralternativebuttoholdshare(equity]remaininthenameoftheresidentdirector/member.)6.Liabilityofequityparticipants/parentcompanytowardcreditors:Limitedtoamountofequityparticipation7.CompanySecretary:Notrequired8.RegisteredOffice:Yes,physicalladdressisrequiredandP.O.Boxaddressisnotallowed.9.MinimumRegisteredCapital:1(one)yen

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10.Timeframeforregistration:Dependsonthetypeofentity,thewaytheclientwantstoformthelegalbusinessestablishment,i.e.Shareholding,Directors,formingstructure,etc.andtheclient'sresponsetimeinthewholeprocess.Oncealldocumentsareready/preparedandappliedatLegalAffairsBureauforregistrationittakesabout2(two)weekstoobtaincompanyregistrationcertificateandcompanysealregistrationcertificate;andourapprox.timeframeforourpreparationofdocumentsandprocedureareindicatedintheflowchartbothforKK&GKCo.11.YearlyAuditingofaccounts:Notmandatory

BasicdifferencebetweenKKandGK:

KK(KabushikiJotoSeigenKaisha)[IfNoCommitteeisEstablished]

GK(Godo-Kaisha)[LimitedLiabilityCo]LLC

Transferofequityparticipationshare

Maybetransferredfreelyinprinciple.MaybestipulatedinarticlesofincorporationthatapprovalofBoardofDirectorsisneededfortransferofshares.

Unanimousapprovalofequityparticipants(members)required

Numberofexecutivesrequired

Appointmentof1ormorerequired.Representativedirectorwithrighttoexecutebusiness.Ifnorepresentativedirectorisappointed,executiveofficerseachhavetherightofrepresentation.#AtleastonerepresentativemusthaveanaddressinandbearesidentinJapan.#(Nomoreundernewlaweff.Mar’15)

Nolegallystipulatedminimum.Inprinciple,allmembersareexecutiveofficers,butarepresentativemembermaybeappointed.AtleastonerepresentativemusthaveanaddressinandbearesidentinJapan.

Legallystipulatedtermofofficeforexecutives

2yearsinprinciple.Extendableupto10years

Nolegallystipulatedterm

PossibilityofaCompanytobeaDirector

Notpossible Possible.However,thecoshouldnominateanindividualstafffromtheco.1(one)mustbeJapanresident.OnregistrationbothCo&individualnamewillappear.

Directormustbefromshareholder(member)

Notnecessarily Must

Regulargeneralmeetingofshareholders(members)

Inprinciple,mustbeheldeveryyear Notrequired

Possibilityofpublicofferofstock(equityparticipationshare)

Possible Notpossible

Possibilityofreorganization Ajoint-stockcorporation(KK)maybereorganizedintoalimitedliabilitycompany(LLC)(GK).

Alimitedliabilitycompany(LLC)(GK)maybereorganizedintoajoint-stockcorporation(KK)

Distributionofprofitsandlosses

Allocatedaccordingtoequityparticipationratio

Maybeallocatedatadifferentratefromequityparticipationrateifspecifiedinarticlesofassociation

Disclaimer:Thisinformationisforillustrationpurpose,nowarrantyisgiventhatitisfreefromerrororomission,andSarkarOffice®cannotbeheldliableforanydecisionmadebasedonthisinformationonly!.

"Since 1993"



ComparisonoftypesoflegalbusinessentityinJapanForeigncompaniesorindividualsgenerallyengageinbusinessoperationsbyestablishingabranchoffice,subsidiarycompany,orlimitedliabilitypartnership,andthelegaldifferencesbetweeneachofthesearesummarizedinthefollowingtable. SubsidiaryCompany

BranchOfficeKabushiki-Kaisha

(KKCo)(Joint-stockCorporation){(KabushikiJotoSeigenKaisha)(IfNoCommitteeisEstablished)}

Godo-Kaisha(GKCo)

LimitedLiabilityCo(LLC)

LimitedLiabilityPartnership

(LLP)

Restrictionsonequityparticipation

NotificationnotrequiredwiththeBankofJapan(Exceptcertainindustries)

NotificationmustbefiledtotheBankofJapan

NotificationmustbefiledtotheBankof

Japan

NotificationnotrequiredwiththeBank

ofJapan(Exceptcertainindustries)

Capital Nocapital(sameasHO)

1yenormore(*1) 1yenormore(*1) 2yenormore(if2Partners)

Numberofinvestors Notapplicable 1ormore 1ormore 2ormore(*3)Liabilityofequityparticipants/parentcompanytowardcreditors

Unlimited

Limitedtoamountofequityparticipation

Limitedtoamountofequity

participation

Limitedtoamountofequity

participation

Transferofequityparticipationshare

Noequityparticipationshare

Maybetransferredfreelyinprinciple.MaybestipulatedinarticlesofincorporationthatapprovalofBoardofDirectorsisneededfortransferofshares.

Unanimousapprovalofequity

participants(members)required

Unanimousapprovalofpartnersrequired

Numberofexecutivesrequired

RepresentativeinJapan

1or2(*2)

Appointmentof1ormorerequired(*2).

Representativedirectorwithrighttoexecutebusiness.

Ifnorepresentativedirectorisappointed,executiveofficerseachhavetherightofrepresentation.

Nolegallystipulatedminimum.

Inprinciple,allmembersareexecutiveofficers,buta

representativemembermaybeappointed(*2).

Nolegallystipulatedminimum.Allpartnersareexecutiveofficers(*3).

PossibilityofaCompanytobeaDirector

Notapplicable Notpossible Possible.However,thecomustnominateastafffromtheco.(*2)

Notapplicable

Directormustbefromshareholder(member)

Notapplicable Notnecessarily Must Notapplicable

Legallystipulatedtermofofficeforexecutives


2yearsinprinciple.Extendableupto10years



Regulargeneralmeetingofshareholders(members)

Notrequired

Inprinciple,mustbeheldeveryyear

Notrequired

Notrequired

Possibilityofpublicofferofstock(equityparticipationshare)

Noequityparticipationshare

Possible Notpossible Notpossible

Possibilityofreorganizationintojoint-stockcorporation

Notpossible.Needtoseparatelyclosebranchofficeandestablishjoint-stockcorporation(*4)

- Possible Notpossible.Needtoseparatelydissolvepartnershipandestablishjoint-stockcorporation(*5)

Possibilityofreorganization

Notpossible Ajoint-stockcorporation(KK)maybereorganizedintoalimited

liabilitycompany(GK).

LLP(GKCo)maybereorganizedintoaKK

Notpossible

Distributionofprofitsandlosses

- Allocatedaccordingtoequityparticipationratio

Maybeallocatedatadifferentratefromequity

participationrateifspecifiedinarticlesofassociation

Maybefreelyallocatedwiththeunanimousapprovalof

partners

Taxationofprofits

IncomearisingwithinJapanisinprinciple

taxed

TaxedonprofitsaccordingtoalocalCoandprofitsallocatedtoshareholders

TaxedonprofitsaccordingtoalocalCoandprofitsallocatedto

participants

Notaxationofpartnershipsthemselves.

Taxationofprofitsallocatedtopartners

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(*1)Althoughestablishmentwithcapitalofzeroyenistheoreticallypossible,approvalisgrantedexpostfacto,anditisnotinpracticepossibletoincorporateacompanywithoutpayingincapital.(*2)AtleastonerepresentativemusthaveanaddressinandberesidentinJapan.[ExceptforK.K.CoundernewregulationeffectiveMar’15](*3)OneormorepartnermustbeanindividualwhohasanaddressinandisresidentinJapanformorethan1year,oraJapanesecorporation.(*4)Refer"Closureofbranchoffices".(*5)Refer"Dissolutionandliquidationoflimitedliabilitypartnerships".

Disclaimer:Thisinformationisforillustrationpurpose,nowarrantyisgiventhatitisfreefromerrororomission,andSarkarOffice®cannotbeheldliableforanydecisionmadebasedonthisinformationonly!.