Which company style should we choose: GK or KK?
When we launch a company, you have two options:
G.K. (Go-do Kaisha) or K.K. (Kabushiki Kaisha).
K.K. is the most popular legal entity form to establish in Japan, but the number of G.K. established is increasing.
Reference : https://llc-myself.com/llc/touki-suii.html
Some of the differences between the two styles are
1. Cost of launching the company
2. Decision making process within the company + stock options
3. Mandatory report & the cost
Let’s closely look at each of the options.
- Cost of launching the company
The establishment cost for GK is less than half of that of KK.
KK needs 150,000 yen registration fee at minimum, but GK needs only 60,000 yen. In addition to the price, KK needs 50,000 yen for notary fee + documentation fee (approximately 2,000 yen in total).
In total, KK needs over 200,000 yen just to register whereas GK only needs 60,000 yen + documentation fee.
※All KK has to pay 40,000 for “certification fee for articles of incorporation”, but if you submit the certification electronically, you do not have to pay it.
You need “My Number Card” + data of Articles of Incorporation (Word file)
2. Decision making process within the company & stock options
KK has shares within the company, and each shareholder has rights to make decision based on the % of shares they have.
GK is like a partnership among the members, and all the decision making needs agreement from all the members.
Since GK does not have any shares, GK is not an authorized legal entity form for IPO. Investment from investors or VC also requires share, so as long as your company is planning to get investment, KK is the way to go.
3. Mandatory report & the cost
KK has to submit mandatory publication of financial statements every year, but GK does not have to. In addition, GK does not have “tenure of office” for the executive members, so there is no running cost for registering the executive members again when they turn the last year of the term.
The operation of GK is just like operating a business as a sole-proprietor, but it can reduce taxation as a legal entity. Sole-proprietor can counts the rent for the business expenses for the specific area that he/she is using for business purpose, but GK can counts all the rent for the business expenses.
Registering your business as a legal entity can get benefit in terms of taxation as well.
KK is still the popular legal entity to establish, but Google, Apple, Amazon, DMM and the other leading companies are choosing GK instead of KK.
In addition, GK can be transformed to KK, so starting with GK and transforming it to KK when you need investment might be a good idea to start with…?
