"Kabushiki Kaisha" (K.K.) is in English often referred to as "Co., Ltd.", “Corporation” or “Incorporated” or as "joint stock corporation” and is the most credible and widely utilized and legal form in Japan.

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A Kabushiki Kaisha is a separate corporation from the foreign company, so the foreign company will bear the liability of an equity participant stipulated by law for all debts and credits generated by the activities of the subsidiary.


A Kabushiki Kaisha may be technically started with capital as low as ¥1, making the total cost of a K.K. incorporation approximately ¥240,000 (about US$2,500) in taxes and notarization fees with service fees charged separately. 

The main steps in incorporation are the following:

The incorporation of a K.K. is carried out by one or more incorporators (発起人 hokkinin, sometimes referred to as "promoters"). A K.K. now only needs one incorporator, which may be an individual or a corporation. If there are multiple incorporators, they must sign a partnership agreement before incorporating the company.


Articles of incorporation

The articles of incorporation of a K.K. must include, at a minimum:

1.The trade name of the company
2. The business objectives of the company
3. The location of its head office
4. The Initial capital 
5. The name and address of the incorporator(s)


Additionally, the articles of incorporation must contain the following if applicable:

1. Any non-cash assets contributed as capital to the company, the name of the contributor and the number of shares issued for such assets
2. Any assets promised to be purchased after the incorporation of the company and the name of the provider
3. Any compensation to be paid to the incorporator(s)
4. Non-routine incorporation expenses that will be borne by the company

Other matters may also be included, such as limits on the number of directors and auditors. 

The articles must be sealed by the incorporator(s) and notarized by a notary public, then filed with the Legal Affairs Bureau in the jurisdiction where the company will have its head office.


Receipt of capital

In a direct incorporation, each incorporator receives a specified amount of stock as designated in the articles of incorporation. Each incorporator must then promptly pay its share of the starting capital of the company, and if no directors have been designated in the articles of incorporation, meet to determine the initial directors and other officers.

The other method is an "incorporation by offering," in which each incorporator becomes the underwriter of a specified number of shares (at least one each), and the other shares are offered to other investors. As in a direct incorporation, the incorporators must then hold an organizational meeting to appoint the initial directors and other officers. Any person wishing to receive shares must submit an application to the incorporator, and then make payment for his or her shares by a date specified by the incorporator(s).

Capital must be received in a commercial bank account of the incorporator(s), and the bank must provide certification that payment has been made. Once the capital has been received and certified, the incorporation may be registered at the Legal Affairs Bureau.


Board of directors

Under Corporate Law, a Kabushiki Kaisha must have at least one director and provision may also be made in the articles of incorporation for the appointment of a board of directors (取締役会 torishimariyaku kai), statutory auditor(s) or board of auditors.

At least one director has to be designated as a representative director (代表取締役 daihyō torishimariyaku), usually holds the corporate seal and is empowered to represent the company in any transactions. At least one representative director must be a resident of Japan.


Auditing and reporting

Every K.K. with a board of directors must have at least one statutory auditor (監査役 kansayaku). Statutory auditors report to the shareholders, and are empowered to demand financial and operational reports from the directors.

K.K.s with capital of over ¥500m, liabilities of over ¥2bn and/or publicly traded securities are required to have three statutory auditors, and must also have an annual audit performed by an outside CPA. Public K.K.s must also file securities law reports with the Ministry of Finance.

A statutory auditor may be any person who is not an employee or director of the company. In practice, the position is often filled by a very senior employee close to retirement, or by an outside attorney or accountant.



Kabushiki Kaisha are subject to double taxation of profits and dividends, as are corporations in most countries. In contrast to many other countries, however, Japan also levies double taxes on close corporation (gōdō gaisha). This makes taxation a minor issue when deciding how to structure a business in Japan. As all publicly traded companies follow the K.K. structure, smaller businesses often choose to incorporate as a K.K. simply to appear more prestigious.

In addition to income taxes, K.K.s must also pay registration taxes to the national government, and may be subject to local taxes.