Your Incorporation Guide For Japan

Choosing A Company Type: Godo Kaisha vs Kabushiki Kaisha

Comparison: GK vs. KK

Feature	Godo Kaisha (GK)	Kabushiki Gaisha (KK)
Governing laws	Governed by the Companies Act. Regulations are generally less strict.	Subject to both the Financial Instruments and Exchange Act and the Companies Act. Regulations are stricter compared to GK
Ownership	Owned by members who contribute capital.	Owned by shared holders holding shares. Usually larger and more established.
Management	Decentralized management. Each member can participate in management.	Centralized management with a board of directors overseeing operations.
Liability	Limited liability based on members' contributions.	Limited liability is based on shareholders' investment through shares.
Tax implications	Subject to corporate tax rates. Partners pay individual tax on dividends. If entirely owned by an American corporation, it can be treated as a US branch for purposes of taxation.	Subject to corporate tax, shareholders may face double taxation due to dividend tax. Even if it is entirely owned by an American corporation, it cannot be treated as a US branch for tax purposes.

What is a Kabushiki Kaisha (株式会社)?

Frequently shortened to KK, kabushiki kaisha is a type of Japanese corporation similar to a C corporation in America. It allows shareholders to raise the company’s capital by selling shares to investors. All KKs are subject to strict regulations and must have the board of directors and statutory auditors to hold annual shareholders' meetings.

This type of business is considered prestigious and credible in Japan and is often chosen by larger companies expanding to Japan.

What is a Godo Gaisha (合同会社)?

Often referred to as GK, godo gaisha is a business structure in Japan similar to a Limited Liability Company (LLC) in America. It is best for small to medium-sized companies because it does not allow trading public shares. All GK owners are referred to as partners and are liable based on their contributions to the company.

This business structure is popular for smaller businesses because of its simpler requirements, lower initial capital needs, and more control for the owner.

What's the main difference between a GK and a KK?

KKs have a more traditional corporate structure, where shareholders own the company by holding shares. In a GK, the company is owned by its members, who contribute capital to the business. KKs are usually larger and more established, while GKs are often smaller and more flexible.