Q37: When establishing a company in Japan, which is better: a stock company (Kabushiki Kaisha) or a limited liability company (Godo Kaisha)?
ringo tax corporation
Japanese Certified Public Accountant ・Tax Accountant Hiroya Aihara
Ringo Tax Corporation
A: When establishing a company, the choice between a stock company and a limited liability company depends on the purpose of the business. Generally, for profit-oriented businesses, a stock company is recommended. Briefly explaining the differences, a stock company has higher visibility and makes it easier to distribute voting rights and dividends to investors according to their investment, while a limited liability company has lower establishment and maintenance costs, and offers more flexibility in its structure.
Q: Can you explain the differences between a stock company and a limited liability company in more detail?
A: Certainly. A stock company includes "Kabushiki Kaisha" in its name, and its investors are called shareholders, who are given voting rights according to the number of shares they hold. On the other hand, a limited liability company includes "Godo Kaisha" in its name, and its investors are called members, with each member having one vote. Also, while a stock company is required to make an annual financial statement public, a limited liability company is not. Furthermore, a stock company is represented by a representative director, while a limited liability company is represented by a representative member.
Q: It's said that a limited liability company can be abbreviated as LLC, but there are differences between a Japanese Godo Kaisha and an American LLC, right? What are the specific differences?
A: That's correct. While a Japanese limited liability company can be abbreviated as LLC, there are significant differences between a Japanese Godo Kaisha and an American LLC. A Japanese limited liability company is subject to corporate taxation and is not a pass-through entity for taxation purposes. Therefore, attention is needed regarding the differences in tax treatment and legal handling.
