The answer to your question will depend a bit on your priorities. The company form called Kabushiki Kaisha (KK) tends to have a bit more value in terms of recognizabilty in comparison to a Godo Kaisha (GK), but it also costs more to establish and requires at least one shareholder’s meeting a year – which may not fit your needs. On the other hand, the GK form is increasing in numbers due to its lower incorporation costs as well as the fact that a GK has no need to hold an annual shareholder’s meeting.
More specifically, the main differences between the two company forms are as follows:
- Stakeholder responsibility
KK is a company form that allows shareholders to have limited responsibility by separating ownership from the directors, executive officers, and management that run a company. On the other hand, GK is also a company form that allows stakeholders to have a limited responsibility but with the stakeholders also serving as the managing members running the company.
- Corporate management
In the case of the KK, directors and executive officers run a company under the Japanese Companies Act. They are subject to the restrictions and business procedures that are required under this law and therefore decision-making may at times seem slow. Management will serve under fixed-term contracts, and the KK will need to make their financial statements public, adding an additional layer of cost. Profit and authority is proportional to the amount of investment.In the case of the GK, senior management directs the company under the Articles of Incorporation that they originally created for the company. They can therefore manage with a high degree of flexibility, speed, and freedom. Profit and authority can be assigned without taking into account the individual’s amount of investment.
KK is the most popular form of company in Japan, and nearly everyone knows this company form. It is the form of company that has the highest degree of trust from a social and business perspective – one of the most important advantages of a KK over a GK. The GK form is much lesser-known as this form of company has only been permitted since 2006.
- Cost for company formation
The costs associated with formation of a KK are greater than for the formation of a GK. In the case of a KK, the amount of the cost of establishment is around JPY 240,000, but for a GK, only JPY 100,000 will be required. Therefore, those that are wary of keeping costs down, might prefer to choose the GK form of company. To establish a GK, the minimum capital amount is JPY 1, and the requirements for opening a bank account is the same for a GK as it is for a KK.
Overall, in the end, if you do not think that your customers, clients and so on will care about the form of company, a GK will likely suffice for your purposes.