What is the minimum capital to set up a company in Japan?

Legally, one yen. There is no meaningful statutory minimum capital for a KK or a GK. In practice the figure matters for other reasons: it signals substance to banks and counterparties, it affects consumption-tax treatment at certain thresholds, and above all it interacts with immigration, because obtaining a Business Manager visa in practice expects capital on the order of five million yen. So while you can incorporate with almost nothing, the capital figure should be set with the tax and visa consequences in mind, not minimized on principle.

Can a foreigner set up a company in Japan, and do you need a resident director?

Yes, a foreign individual or company can own a Japanese company outright, and the historical requirement that at least one representative director be resident in Japan has been relaxed: it is now possible to incorporate without a Japan-resident representative. In practice, however, a local presence still matters, because opening a corporate bank account, which the company needs to function, is difficult without someone resident and without demonstrable substance in Japan. The formal barrier has come down; the practical one, a bank willing to open an account for an entity with no local footprint, has not entirely.

What is a representative office in Japan and what can it do?

A representative office (駐在員事務所) is the lightest presence: it requires no registration, but it is strictly limited to preparatory and auxiliary activities such as market research, information gathering, liaison, and promotion. It cannot conduct sales or generate revenue, cannot sign business contracts in its own name, and generally cannot open a bank account or hire staff as the office itself. It is useful only as a scouting or support foothold; the moment you want to actually do business, you need a branch or a subsidiary.

How long does it take to set up a company in Japan?

Once the documents and decisions are in place, registration itself takes on the order of a couple of weeks: articles of incorporation are prepared (and notarized for a KK), capital is deposited, and the registration application is filed with the Legal Affairs Bureau under the Companies Act and the Commercial Registration Act. The realistic timeline is longer, because the gating steps are deciding the structure, arranging the capital deposit, and opening a corporate bank account, which for a foreign entrant with no local footprint is often the slowest part. Plan it as a two-to-three-month project end to end, not a two-week filing.

Setting Up a Company in Japan: KK vs GK vs Branch vs Representative Office

Q: What is the difference between a KK and a GK in Japan?

Both are Japanese companies with limited liability, but they differ in form and perception. A kabushiki kaisha (株式会社, KK) is the traditional joint-stock company: it issues shares, has a more formal governance structure, and carries the most credibility with customers, banks, and partners. A godo kaisha (合同会社, GK) is closer to a limited liability company: members hold membership interests rather than shares, governance is simpler and cheaper to run, and registration costs less. Many large foreign companies operate in Japan as a GK because the simplicity suits a wholly-owned subsidiary; a KK is often preferred where external credibility, fundraising, or an eventual listing matters. Both are separate legal entities that shield the parent from the subsidiary's liabilities.

Q: Should a foreign company set up a subsidiary or a branch in Japan?

A subsidiary (a KK or GK) is a separate Japanese legal entity: the parent's liability is limited to its investment, it has the most credibility, and it is the normal choice for a real operating business. A branch (支店) is not a separate entity: it is the foreign company operating directly in Japan, so the foreign head office bears the branch's liabilities, though a branch is faster and cheaper to establish and can conduct full business. The choice turns on liability exposure, tax, credibility, and how permanent the commitment is. Most companies building a lasting business choose a subsidiary; a branch can suit a lighter or earlier-stage presence.

The first decision on entering Japan is which legal vehicle to use, and it is not a formality: the choice sets your liability, your tax position, your credibility, and in the case of a representative office, what you are even permitted to do. Get it wrong and you can find yourself with the parent company exposed to Japanese liabilities, or with an office that legally cannot sell anything.

There are four realistic options, and they fall into three levels of commitment: a subsidiary (in one of two company forms, the KK or the GK), a branch of the foreign company, or a representative office. Each is established, and taxed, differently. Company registration itself runs through the Companies Act (会社法) and the Commercial Registration Act (商業登記法), filed at the local Legal Affairs Bureau (法務局), and it is one of the highest-volume procedures in the entire Japanese administrative system.

What follows is a map of the four options and what setting one up actually involves. It is an orientation, not incorporation advice for a specific business, which is exactly the decision worth taking properly.

The subsidiary: a separate Japanese company

For most foreign companies building a real, lasting business in Japan, the answer is a subsidiary: a Japanese company, wholly or partly owned by the foreign parent, that is a separate legal entity. Its central advantage is limited liability: the parent’s exposure is confined to its investment, and the subsidiary’s debts and obligations are its own. It is also the most credible form in the eyes of Japanese customers, banks, landlords, and partners, who take a locally-incorporated company more seriously than a foreign branch.

A subsidiary comes in two forms, and choosing between them is the first fork.

KK (株式会社): the joint-stock company

The kabushiki kaisha is the traditional Japanese corporation, the form most people mean by “a company.” It issues shares, has a more formal governance structure with directors and defined officer terms, and can raise capital and, in principle, list. It carries the most credibility: for a business where external perception, fundraising, or an eventual public offering matters, the KK is usually the right choice. The cost of that is more formality and higher registration expense.

GK (合同会社): the simpler form

The godo kaisha, introduced in 2006, is closer to a limited liability company. Ownership is held as membership interests rather than shares, governance is simpler, ongoing formalities are lighter, and it is cheaper to register and run. It has become a common choice for wholly-owned subsidiaries of large foreign companies, where the parent does not need shares or outside credibility and values the simplicity, a number of the best-known foreign technology companies operate their Japanese businesses as a GK. What it gives up is the immediate name recognition of a KK and the ability to raise capital through share issuance.

The practical rule of thumb: a KK where credibility, outside investment, or listing matters; a GK where you want a clean, low-overhead wholly-owned subsidiary and none of those apply. Converting from GK to KK later is possible but is itself a process, so it is worth deciding deliberately rather than defaulting.

The branch: the foreign company, operating directly

A branch office (支店) is a fundamentally different thing from a subsidiary. It is not a separate legal entity: it is the foreign company itself, registered to operate in Japan. That distinction drives everything. The foreign head office bears the branch’s liabilities directly, because in law they are the same entity. A branch can conduct full business and generate revenue, and it is faster and cheaper to establish than a subsidiary, but it is registered under the Companies Act’s rules for foreign companies (会社法, Articles 817 and following), which require appointing a representative in Japan and registering the foreign company’s details.

A branch is taxed on its Japan-source income and is a legitimate, functional way to operate. It tends to suit a business that wants a real presence but is not ready to commit to a separate capitalized entity, or where the parent is comfortable carrying the liability. For most companies intending a permanent, growing business, the liability exposure and the lower credibility push them toward a subsidiary instead, but the branch is a real option, not a lesser one.

The representative office: a foothold that cannot trade

The representative office (駐在員事務所) is the lightest presence of all, and its defining feature is what it cannot do. It requires no registration, which makes it quick and cheap to stand up, but it is strictly confined to preparatory and auxiliary activities: market research, gathering information, liaison with the head office, and promotion. It cannot conduct sales, generate revenue, or sign business contracts in its own name, and it generally cannot open a bank account or employ staff as the office itself.

It is a scouting foothold, useful for a company studying the market or supporting existing relationships before committing. The moment the plan is to actually do business, sell, invoice, hire, sign, the representative office is not enough, and you need a branch or a subsidiary. Treating it as a cheap way to “start operating” is the common mistake; it is not an operating vehicle.

What registration actually involves

For a subsidiary, the mechanics run in a defined sequence:

Draft the articles of incorporation (定款). For a KK these must be notarized by a notary; for a GK they need not be, one of the GK’s cost savings.
Deposit the capital into a designated bank account and evidence it.
File the registration application with the Legal Affairs Bureau (法務局) under the Companies Act and the Commercial Registration Act. This is the act that brings the company into legal existence.
Register the company seal (印鑑) and obtain the registration certificate and seal certificate that Japanese business runs on.
Then complete tax notifications, social-insurance enrollment, and, the practical bottleneck, open a corporate bank account.

Once decisions and documents are ready, the registration step itself is a matter of a couple of weeks. The realistic end-to-end timeline is longer, because the slow parts are upstream and downstream: settling the structure and capital, and opening a bank account, which for a foreign-owned entity with no local footprint is frequently the single most time-consuming step. The historical requirement for a Japan-resident representative director has been relaxed, but banks’ caution about entities with no local substance has not, so a local presence still smooths the path materially.

Where this becomes a public affairs question

Incorporation itself is administrative and legal work: corporate service providers and judicial scriveners (司法書士) handle the filing, and tax advisers handle the structuring. That part is a solved problem, and it is not where Gemini Group’s work sits.

The reason the vehicle decision matters strategically is what comes after it. Choosing to be in Japan means choosing to operate under a specific sector’s regulation, and the incorporation is simply the doorway. Once the entity exists, the questions that decide whether the business succeeds are regulatory and policy questions: which ministries and rules govern your activity, what licensing your sector requires, what is changing in the rules that apply to you, and where you are exposed. The company registration is the easy part; understanding and engaging the regulatory terrain you have just stepped into is the substance.

If you have decided to enter Japan and need the regulatory landscape you are entering mapped, get in touch.

How to plan it

Choose the vehicle deliberately. Subsidiary for a real, lasting business; branch for a lighter presence where the parent will carry liability; representative office only for scouting, and know it cannot trade.
KK or GK on credibility, not habit. KK where outside credibility, investment, or listing matters; GK for a clean wholly-owned subsidiary where they do not.
Set the capital with tax and visa in mind. The legal minimum is one yen, but the figure interacts with consumption tax and, decisively, with the Business Manager visa.
Solve the bank account early. It is the practical bottleneck for foreign entrants, harder than the incorporation itself, and worth arranging in parallel.
Map the regulation before you commit, not after. The vehicle is a filing; the regulatory environment your sector sits in is the thing that decides the business.

Why this matters for public affairs in Japan

Setting up a company reads like the definitive market-entry act, and administratively it is straightforward, one of the most routine, highest-volume procedures the Japanese system handles. But it is also the least strategic part of entering Japan. The choice of vehicle has real consequences for liability and tax, and those deserve proper advice, yet the decision that determines whether a Japanese business works is not which entity form you filed. It is how well you understand the policy and regulatory environment you have just entered, and how effectively you can engage it. A company that treats incorporation as the finish line has mistaken the doorway for the building. The entity is where entering Japan begins; the regulatory landscape is where it is won or lost.

Gemini Group helps companies that are entering or have entered Japan understand the regulatory and policy environment their business sits in, and build the engagement strategy around it. Contact us to map the terrain beyond the incorporation.

Further reading: our market-entry regulatory checklist maps which institutions and rules apply to your sector, and the government ministry engagement guide covers how to work with the ministries that regulate you.