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Local business incentives - Legal forms of companies - Registration and licensing procedures - Legal framework - Foreign exchange control - Regulations concerning equity investment - FDI inflows - Expertise of the political risk

Local business incentives

Prefectures are likely to grant to companies setting up on their territory, diverse exemptions and/or tax reductions and local land tax, especially for land purchase in order to build a factory.
Companies setting up in Japanese free trade zones can benefit from customs duties and consumption tax exemptions and reduced tax rates. For further information about investment incentives, foreign investors should contact the METI (Ministry of Economy, Trade and Industry) and the JETRO.


Legal forms of companies

Form Number of partners/shareholders Minimum and/or maximum capital Liability Registration fee Release of financial documents
Kabushiki Kaisha (KK) is a Public Limited Company. No minimum since the reform of the Trade Code. At least 3 administrators, with no condition of residence Minimum YEN 10 million, no maximum Liability is limited to the amount contributed. 0.7% of the capital with a minimum of YEN 150,000 Only companies quoted in the stock-exchange have to publish their accounts
Yugan Kaisha (YK) is a Private Limited Company. Maximum 50 shareholders. YEN 3 million Liability is limited to the amount contributed by each partner. YEN 60,000 Only companies quoted in the stock-exchange have to publish their accounts
Gomei Kaisha is a General
Minimum 2 partners. No minimum capital. Liability is unlimited. YEN 60,000 Only companies quoted in the stock-exchange have to publish their accounts
Goshi Kaisha is a Limited Partnership. No minimum. 2 types of partners: active partners and sleeping partners. No minimum capital. Active partners have an unlimited liability. Sleeping partners have a limited liability depending on the amount contributed. YEN 60,000 Only companies quoted in the stock-exchange have to publish their accounts

Registration and licensing procedures
Status must be drawn up in Japanese and guaranteed in a deed drawn up by a solicitor. Otherwise, the investor has to carry out the notification required by the Law on exchange controls with the Bank of Japan.

Legal framework
The Laws regulating foreign investments in Japan are the following:
- Foreign Exchange and Foreign Trade Control Law (December 1st 1949) revised in April 1991 and 1998
- The Statement on Openness of Japan's Foreign Direct investment Policy of June 1990.
- The Import and Inward Investment Promotion Law, coming into force in June 1992 and which application has been extended, on April the 1st of 1995, up to 2005.

Foreign exchange control
Currency exchange controls have been liberalised since April 1998. Consequently, free conversion of currencies is carried out as well as the right to transfer profits and capital at an applicable ruling exchange rate.

Regulations concerning equity investment
A majority holding interest in the capital of a local company is legal. However, the Finance Ministry must be informed as well as the other competent Ministries, according to the expected activities. Beforehand, The Bank of Japan must receive notice to this operation.  

Foreign Direct Investment inflows in Japan

FDI inflows 2003 2004 2005 World rank (*)
FDI inflows (USD million) 6 324 7 816 2 775 131/141
Source : UNCTAD - World Investment Report
Note : (*) World Rank = UNCTAD Inward FDI Performance Index. It is a measure of the extend to which a host country receives inward FDI relative to its economic size. It is calculated as a ratio of the country's share in global FDI inflows to its share in global GDP.


Last modified in 2006 - ongoing update
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