Example of establishing a Japanese subsidiary of a French listed company

Outline of the Case

A French listed company has proposed to us that they would like to establish an entity in Japan because of an increase in orders from Japanese customers. With regard to the establishment of a Japanese entity, we need to choose whether it should be a subsidiary, a branch, or a liaison office. Depending on the type of entity you choose, you will have different business needs, such as hiring employees and drafting business contracts, as well as tax treatment and visa issues. In order to advise you on what type of entity to establish in Japan, you should have an accurate understanding of these differences based on your client’s needs.
In addition, the Japanese Companies Act provides for four types of companies: kabushiki kaisha (joint stock company), godo kaisha (limited liability company), gomei kaisha (general partnership company), and goshi kaisha (limited partnership company). Even if it is decided to establish a Japanese subsidiary, a separate decision must be made as to which type of company to establish.

Services offered by Kuribayashi Sogo Law Office

We communicated with the French company via e-mail, explaining the types of entities and companies in Japan, in order to gain their understanding. The client then decided to establish a Kabushiki Kaisha as the Japanese entity. Based on our checklist, the client decided on the basic matters of the company to be established, which we then incorporated into the Articles of Incorporation in both Japanese and English. In this case, the Japanese operations had just begun, and in order to accommodate the request for the Japanese subsidiary to have as simple an organizational design as possible, we designed the company to have a general shareholders’ meeting but no board of directors or auditors.
As a result, the company became a corporation with only one director, allowing us to omit complicated procedures such as holding board of directors meetings. On the other hand, the term of office of directors is set at two years, so that the shareholders can supervise the directors through the procedures for the election and dismissal of directors at the general shareholders’ meeting. The articles of incorporation and all other documents related to the establishment of the company are prepared in both English and Japanese. In addition, while money laundering regulations have recently become stricter, the number of financial institutions that provide payment certificate services has been decreasing. When a foreign company is the promoter, it is often the case that there is no representative in Japan at the company’s establishment stage, so it is necessary to consider how to open an account for the transfer of capital. In addition, depending on the company’s situation, there are an increasing number of requests to use a virtual office as the head office address because the company cannot afford to rent an office at the initial stage. We advise our overseas clients on how to open a bank account to receive payment of the payment depending on their situation, and when an overseas client requests a virtual office, we introduce them to several companies that offer virtual offices.

Support for Foreign Companies by Kuribayashi Sogo Law Office

We are often asked to establish entities in Japan by companies from the U.S., Europe, China, and ASEAN countries. When establishing an entity in Japan, it is necessary to decide whether to establish a subsidiary, open a branch office, or set up a liaison office, depending on the type of business activity planned in Japan. We explain the legal and tax differences between these entities in English and assist our foreign clients in making these decisions smoothly. When establishing a subsidiary, it is necessary to decide whether it will be a joint stock company, a limited liability company, a general partnership company, or a limited partnership company. The differences arise from whether the investors have limited liability (joint stock company or limited liability company) or unlimited liability (unlimited partnership company or limited partnership company), and how to design the organization, such as directors and general meetings of shareholders. We provide detailed explanations of the differences in incorporation costs, reputations in Japan, distribution of surplus funds, and the authority of directors and officers. In addition, recently, in accordance with the Act on Prevention of Transfer of Criminal Proceeds, a declaration regarding the beneficial owner of the newly established company is required to be submitted when the articles of incorporation are certified by a notary public starting November 2018. Through close communication with our overseas clients, we can advise on the determination of the beneficial controlling person and assist them in smoothly completing the reporting of the beneficial controlling person by translating the relevant documents, the ID of the beneficial controlling person, and the articles of incorporation. In addition, amendments to the Foreign Exchange and Foreign Trade Law may require prior notification to the Bank of Japan and subsequent reporting when establishing a company that develops security software or conducts business that is significant for Japan’s defense or industrial policy. We handle procedures related to the establishment of a Japanese subsidiary of a foreign company on its behalf, including representation for various types of filings based on these latest laws.

 Fees (excluding consumption tax)

Attorney’s fees for establishment of a subsidiary of a foreign company

Establishment of a joint stock company: 400,000 yen
Establishment of a limited liability company: 300,000 yen
*If prior notification under the Foreign Exchange and Foreign Trade Act is required, an additional fee of 100,000 yen will be charged. Our firm will submit an advance notification under the Foreign Exchange Law on behalf of your company. (No additional fee will be charged in the case of after-the-fact notification.

Registration and license tax, fees for certification of articles of incorporation, etc., in connection with the establishment of a subsidiary of a foreign company

350,000 yen for a joint stock company
In the case of a limited liability company: 250,000 yen

Secretarial services for subsidiaries

In connection with the establishment of a foreign subsidiary, we provide secretarial services related to the operation of the Japanese subsidiary. Secretary services include advising on holding ordinary and extraordinary shareholders’ meetings, acting as agent for holding such meetings, preparing minutes of shareholders’ meetings and other related documents, applying for registration with the Legal Affairs Bureau, preparing minutes of board of directors meetings, acting as agent for public notice of financial results, and remitting dividends overseas. We also act as an agent for the election and dismissal of directors, change of company address, change of business purpose, capital increase and decrease, and resolution and overseas remittance of dividends.
In order to ensure that foreign clients understand these procedures, all documents prepared in connection with these procedures, including minutes of various meetings, are prepared in both English and Japanese. Our monthly fee for secretarial services for subsidiaries ranges from 30,000 yen to 100,000 yen (fixed fee based on the size of the subsidiary). We urge you to consider utilizing Kuribayashi’s secretarial services in order to save costs related to the operation and management of your Japanese subsidiary.