When starting a new business in Japan, you need to select a business structure. Godo-Kaisha (GK) and Kabushiki-Kaisha (KK) are the most common structures in Japan. In this article, we will introduce the difference between GK and KK.
(1) Godo-Kaisha (GK)
(a) Characteristics of GK
GK is a legal entity formed in compliance with Japanese corporation law and is a separate legal entity distinct from its owners called Shain (members).
All members (Shain) owe limited liability for GK debts and obligations and must participate in management.
Generally, all of the membership interest is not freely transferable without the consent of the other members.
(c) Taxable entity
GK is similar to LLC. However, GK is different in that members of the GK are not recognized as taxable entity, GK itself is recognized as a taxable entity for Japanese corporate tax purposes.
(2) Kabushiki-Kaisha (KK)
(a) Characteristics of KK
KK is a legal entity formed in compliance with Japanese corporation law. KK is a legal entity in itself and is treated separately from shareholders (its owner) and management.
A shareholder’s liability for the corporate debts is limited to their capital contribution.
A shareholder has a right to assign his/her shares unless otherwise provided in the articles of incorporation.
(c) Taxable entity
KK is recognized as a taxable entity for Japanese corporate tax purposes.
(3) Pros and Cons
Pros and Cons for GK and KK are as follows;
|GK||・Establishment cost is low compared to KK (Generally, it costs JPY60K~) .
・GK is given some discretion for management and profit distribution can be decided by members.
・No obligation to announce financial results.
|・Low recognition and reliability compared to KK.
・GK cannot be listed company
|KK||・High recognition and reliability compared to GK.
・KK can issue shares to raise funds.
|・Establishment cost is high compared to GK (Generally, it costs JPY200K~).
・It takes some running cost for the announcement of financial results.
・There is a term of office for directors.
Even if GK does not have high recognition, world-famous companies, such as Amazon, e-Bay etc., have established GK in Japan and it is still worth considering when considering the cost benefit.
If you want to start your business in Japan, but don’t want to spend a lot of money to set it up, you can start GK first and then move to KK.
However, since procedures and costs are required to change the organization from GK to KK, please be sure to understand this in advance.
If you are thinking of starting business by yourself or with a small number people, you may be able to take full advantage of the benefit of GK.
If you are interested in establishing a corporation in Japan, please contact us from the following.
Please click the link below!↓