New Corporation Law to Grow Market for Professional Services, Improve Landscape for Investors | Print |

September 2006 – The reforms to Japan's Corporate Laws that went into effect this past May are expected to increase demand for professional services, such as cross-border legal, accounting, consulting and proxy voting services, while providing an even more appealing landscape to foreign investors.  The recent reforms were made to

•  Increase flexibility in establishing a new company
•  Strengthen corporate governance and
•  Allow triangular mergers beginning in May 2007

More flexibility

No minimum capital required
Before the reforms, a minimum of 3 million yen was required to establish a Yugen-Kaisha and 10 million yen for a Kabushiki-Kaisha (joint-stock corporation). 

Due to the recent reforms, however, a new company can now technically be established without paid-in capital.  While not possible in practice to incorporate a company without paid-in capital, this provision eliminates the minimum capital requirement, intended to give more flexibility to those wanting to establish a company in Japan.

Board of directors and auditors not required for all Kabushiki-Kaishas
The reforms also eliminated the requirement of all Kabushiki-Kaishas to have a board of directors and auditors.  Now, only large corporations are required to have a board of directors and auditors.

For a full comparison of the most current types of business operation and their requirements, see "Incorporating Your Business in Japan."