Some Basic Practical Things To Do Before Forming a Japanese Company

I have written an article previously about the basic procedures to incorporate a company in Japan. In this article, I'd like to explain the very basics which you need to decide before executing your decision.

Decide Your Company Name in Japanese

It is obvious that you'd need a company name in Japanese. If you're unsure on how to brand your company or business for the Japanese market, you're advised to seek professional help from a branding and identity specialist. The name of your company reflects your image, story, background and marketing communications message to consumers and the society.

The word「株式会社」is necessary as part of your company name to denote it as a legal stock-based corporation (Kabushiki-gaisha or KK). It can be either a prefix before your business name or as a suffix after your company name. As an interesting note, most domestic companies prefer the former style, while most foreign companies prefer the latter.

Decide Your Company Name in English

You should have the accompanying name in English. It should have the same pronunciation of the counterpart Japanese name. Generally, you can use "Co. Ltd.", "Ltd.", "Inc.", or "Corporation" as the corporate ending.

Decide the Business Address

If you're an entrepreneur starting out by bootstrapping or to test your market before establishing a real functional office, you can have the option of using your home address or contract with an address service provider, before renting an office space.

If you're an established foreign company entering the Japanese market, you'll most probably want to rent an office space. However, the Japanese landlords won't deal with you unless you're a fully formed corporation. Therefore, you'll still need to use an address service provider. Once you're incorporated, you can rent the office space and change to the new address in the official records.

International serviced executive offices operating in Japan can provide you a package - such as a full-time or part-time office room or co-working space, or virtual office services - can solve your problem of using the address for incorporation. These international firms can provide English-language support for your business needs. Their charges for just an address usage package is usually about ¥15,000 per month in the downtown Tokyo area.

There are also domestic virtual office providers who can offer you address usage services and their price can range from ¥1,000 to ¥10,000 per month. However, these domestic providers do not speak English and can only provide you customer service in Japanese.

Define Your Business Purposes

Your business purposes (Japanese: 定款目的) are very important and they need to be clearly and fully defined when drafting the Articles of Incorporation. You'll first need to think and write all your purposes in point form (in English or Japanese), and then hire an experienced businessman or paralegal/lawyer can help you to draft these items.

Decide and Prepare the Initial Capitalization

You'll need to prepare the initial capitalization (Japanese: 資本金) amount before filing the incorporation. There is actually a procedure which you'll need to proof that the amount exist for your incorporation to be approved by the government authority.

Get Your Corporate Seals

Corporate Seals (Japanese: 法人印鑑) are essential for incorporation and existence of a Japanese company. You'll need 3 seals for your company: Representative Seal (Japanese: 代表印), Bank Seal (Japanese: 銀行印) and Contract Seal (Japanese: 角印). The costs generally ranges from ¥10,000 to ¥30,000 - depending whether you want the lower-quality wooden type, or the premium-quality metal version.

Other issues

There are issues like total authorized shares, per-share value and types of shares which are not covered here. These are important but usually non-issues if you case is handled by someone who can get it done for you.