Godo Gaisha (GK)
A gōdō gaisha (in Japanese: 合同会社, pronounced as godo gaisha) is a type of business organization in Japan. The term gōdō gaisha is commonly abbreviated as GK and is almost similar to the American limited liability company (LLC). Therefore, its nickname is “Japanese LLC” (in Japanese: 日本版LLC, pronounced as Nihon-ban LLC). The internal structure of the GK is simplified as a partnership company. It is a kind of limited liability company for all investors. Typically, GKs are smaller companies. The Diet of Japan passed the new Companies Act (in Japanese: 会社法, pronounced as kaisha-hō) on June 29, 2005, and the gōdō gaisha became effective on May 1, 2006.
Kabushiki Gaisha (KK)
A kabushiki gaisha (in Japanese: 株式会社, pronounced as kabushiki gaisha) is a type of business organization in Japan. The term kabushiki gaisha is commonly abbreviated as KK, and it means “joint-stock company”, or “stock corporation”, or “stock company”. The stock or share of a kabushiki gaisha (KK) can be traded in the securities and stock. Typically, KKs are bigger companies. The first kabushiki gaisha (Dai-ichi Bank) was incorporated in 1873.
Differences between Godo Gaisha and Kabushiki Gaisha
- The main difference between godo gaisha (GK) and kabushiki gaisha (KK) is KKs can be traded publicly as a stock or share, whereas the GKs can not be traded publicly in Japan.
- GKs are closer to small and medium-sized enterprises, while KKs are typically larger to medium or large-sized companies.
- In terms of setting up a company, the documentary requirements of KK are higher than the GK. The initial cost of set-up for KK is also higher than the GK.
- Switching from a GK to KK or vice versa is possible. But the procedure is a little bit complex process.
- For a GK to transfer any equity, the rule is- Unanimous approval of equity participants (members) are required. For KK to transfer the equity or share, the rule is that it is possible to do freely in principle and following articles of incorporation, which is approved by the Board of Directors of KK .
- There are no requirements for annual meetings and declaration of yearly financial statements for GK. On the other hand, the annual requirements of KKs include the public announcements of financial statements and meetings of shareholders.
- With a GK, for any important issues, the decisions are approved unanimously. In the case of KK, for any important issues, the decisions are approved by the board of directors and are relative to the amount of financial investment .
Common features of GK and KK
- It is possible to establish both GK and KK by one or more people.
- There is no limitation for the shareholders in terms of nationality.
- The timeframe for incorporation is about one to three months.
- In both cases, GKs and KKS are subsidiary companies and are considered separate from their parent companies.
- The investors of GKs and KKs face limited liability relative to the amount of money invested in the corporation.
Other types of companies in Japan
- Gōmei gaisha
- Gōshi gaisha
- Yūgen gaisha
- Jetro: Investing in Japan.
- Jetro: How to Set up Business in Japan Series. URL: https://www.jetro.go.jp/en/invest/setting_up/