Godo Kaisha Incorporation Overview

The Godo Kaisha (GK) is a newer type of corporate entity introduced with the enactment of revisions to the Companies Act in 2006, that places emphasis on the personal relationship between company members, and is characterized by granting the company considerable flexibility with respect to methods of decision making for operations, distribution of profits and other internal matters.

While the investors in a Stock Company (KK) are referred to as “Shareholders,” the investors in a GK are known as “Members.” In principle, each Member, in addition to executing operations, possesses company representative rights (it is possible to designate executional powers and representative rights to specific Members).

Members of a GK have limited liability, similar to the shareholders of a KK, and each Member’s liability to the company is limited to the amount which they have invested.

The GK is characterized by relatively simple setup and operations as compared to a KK, and startup costs are usually not as much as those needed to incorporate a KK.

Godo Kaisha Incorporation Procedures

When incorporating a GK, matters such as the company name, business purposes, etc. of the company must be decided, and Articles of Incorporation of the company are drafted by the Members. The GK may be incorporated by just one Member.

While the Articles of Incorporation of a KK must be notarized by a Japanese Notary Public before having legal effect, the Articles of Incorporation of a GK do not require notarization.

Once the Articles of Incorporation have been drafted, each Member must contribute their specified capital investments, and an incorporation application is submitted to the Legal Affairs Bureau with various supporting documentation verifying that the incorporation procedures have been followed. All documents attached to the application must be written in Japanese.

The following chart briefly summarizes the steps required to incorporate a GK.

Please expect the process to take approximately one to two months from commencement to the completion of registration.

1. Decide details of the company

Decide the basic matters of the company such as the Trade Name, Head Office Location and Business Purposes.

2. Drafting the Articles of Incorporation

Create the Articles of Incorporation of the GK. In addition to Trade Name, Business Purposes, name, address and investment particulars of each Member, Members have flexibility in specifying rules for execution of operations and distribution of profits in the Articles of Incorporation.

3. Payment of capital contribution

After the Articles of Incorporation have been created, each Member must make their investment. The investments of the Members are managed by the Representative Member, and temporarily placed into his/her bank account.

4. Incorporation registration application

Submit an application for registration with supporting documentation to the Legal Affairs Bureau verifying that all incorporation procedures have been completed.

5. Commence business activities

Business activities may commence from the date of registration. Once the registration has been completed, company bank accounts may be opened and various notifications to the tax and social insurance authorities must be submitted.

Necessary Documents

Generally speaking, the following documents are required for GK incorporation.
All documents must be written in Japanese (English versions are only considered as reference translations).

Articles of Incorporation

Articles of Incorporation are drafted and execcted by the signature or seal of all Members.

Proof of Paid-In Capital

This document demonstrates that each Member has made his/her capital investment. A copy of the bankbook of the Representative Member’s account is submitted as part of the incorporation registration for this purpose.

Company Seal

In Japan it is customary to use seals rather than signatures on official documents. Therefore, a Company Seal is required, and an imprint of the seal of the Representative Member will need to be registered with the Legal Affairs Bureau of Japan. We can order the necessary seals for our clients. The cost of seals can vary considerably depending on the material used to make the seal.

Registered Seal Certificate (Signature Certificate)

The registered personal seal certificate of the Representative Member is required to register the company seal with the Legal Affairs Bureau. For foreign nationals who have not registered a personal seal with their local government office, a Signature Certificate may be used as an alternative. The Signature Certificate must be notarized by a Notary Public or consul of the foreign national’s same nationality. We can provide a Signature Certificate template as a part of our services.

For cases when a non-domestic corporation is a Member

When a non-domestic corporation is to become either a Managing Member or a Representative Member, the following procedures are also required.

Election of an Executive Manager

The Executive Manager can be thought of as the individual belonging to the non-domestic corporation, charged with being responsible for the GK, for cases where a corporation is the Representative Member (or Managing Member) of the GK.

The selection of an Executive Manager is required since, when the Representative Member or Managing Member of the GK is a corporation, it may be unclear as to where actual responsibility for the GK lies.

Affidavit summarizing the corporation

When the Representative Member (or Managing Member) is a corporation, an Affidavit summarzing the details of the corporation (including the trade name, location of head office, business purposes, capital, shares, and officers) must be submitted to the Legal Affairs Bureau. The Affidavit must be notarized by a Notary Public of the home country of the corporation, or a consul of the home country of the corporation at an embassy or consulate in Japan.

First time consultation is free either in person or by telephone appointment. Consultation can be provided in English or Japanese.