In Japan, there are firm legal distinctions between non-profit organizations or NGOs, and for-profit companies. For-profit companies come in two categories; the KK (kabushiki kaisha/株式会社) and the GK (godo kaisha/合同会社). Each and every one of the 15 organizations legally operating in the state of Japan as registered VCESPs (virtual currency exchange providers) are registered as KKs (a list can be found here). This is due to the legislative requirements on virtual currency and ICOs under Japanese law pursuant to the VCA (virtual currency act). The KK should be seen as the primary, and (as of Jan 2 2018) only way to legitimately operate exchanges for virtual currency and initiate ICOs in Japan. However, it is recommended that you seek legal counsel from a business attorney registered in Japan prior to taking action.

For-profit companies - KK

1. Find an office address.
   • A representative director who is a legal resident in Japan and operates from the registered business address must be located in order to provide a bank account through which capital will initially be deposited.:
   • In the case of a Japanese branch of a foreign company, the ‘representative director’ role is called ‘branch manager’.
2. Prepare the required documents.
   • For a standard KK, these include:
   • A recently issued seal certificate (inkan shomeisho/印鑑証明書) of both investor and director, obtained within the last 3 months. If the investor becomes a director, two copies are required. These can be obtained at local city halls by registered Japanese residents.
     • It is possible to replace these with notarized signatures certified by the embassy or consulate in Japan of the foreigner’s citizenship.
   • The signature or seal of the investor and director must be present on the articles of incorporation and other necessary documents.
   • One of the investors’ personal bank account passbook (tsucho/通帳) and bank statement must be provided for the initial deposit of capital. This can be from either a new or an existing account. Japanese banks, such as SMBC, are ideal. * The required documents for a Japanese subsidiary of a foreign company are:
   • A registry certificate of the parent company issued within 3 months.
   • Notarized signature attestation of the parent company representative.
   • The same with respect to all other requirements for individuals.
3. Prepare the articles of incorporation (teikan/定款). Sample articles of incorporation can be found here. Articles of incorporation must contain:
   • Company Name (alphabet, numbers, kanji, hiragana, katakana, or a mix of all of these).
   • Company Address (office address as in 1).
   • Company’s Activities (all activities that the company intends to perform, even if not immediately. There is no obligation to perform all activities listed, and this can be changed or amended later).
   • Administration (at least one director must be appointed. An investor/shareholder can also become a director at the time of founding).
   • A representative director must also be elected amongst the directors. If there is only one director, that person is also the representative director. There can be several representative directors.
     • Corporate Capital (formatting error)
   • A fixed sum of capital to pay for the initial expenses of founding the business. 5 million yen in declared capital of foreign origin is required to be able to obtain an investor or business manager visa.
     • Fiscal Year (formatting error)
   • Companies are free to select their fiscal years, but in Japan it is typical to select the year that ends on March 30.
4. Deposit of Capital
   • An initial capital deposit is required in order to complete the registration. The sum for this transaction should be deducted from the personal bank account of one of the named investors.
   • In the case of a foreign company establishing a subsidiary, this can be the account of the representative director instead.
5. Filing the application for registration
   • This can be performed at a registry office/homukyoku/法務局. Registration fees vary by jurisdiction, but a good estimate is 150,000 JPY for KK, and 60,000 JPY for GK.
   • Once this process is completed, it is possible to obtain a registry certificate and company’s seal certificate, which are required to open a corporate bank account or signing contracts in the company name.
6. Tax and social insurance procedures
   • After establishing a branch office or corporation in Japan, tax notification must be submitted to tax authorities within a prescribed period after establishment.
   • All firms located in Japan are obliged to enroll their employees in the following categories of insurance. This is collectively referred to as social insurance/shakai hoken/社会保険.
   • Worker’s accident compensation insurance
   • Unemployment insurance
   • Health insurance and nursing care insurance
   • Employee’s pension insurance

Key sources

• Guide to requirements for establishing as a registered virtual currency trader/provider
• Guide to company type in Japan
• Guide to documents for incorporation