We continue our discussion on Kakunin Kaisha, or "one yen companies", with a continuation of the article submitted by Andy Hunne (andy@sentinel-it.net).

The paperwork required to establish a Kakunin Kabushiki Kaisha (KKK) was relatively easy as it was done by my Judicial Scrivener, hired for the purpose. I told him what I wanted and he created it. I spent about 2 hours with the scrivener and have had maybe three phone calls in the past week with him to clarify a couple of minor issues, so the whole process has been very smooth and far less painless than I expected. He tells me the paperwork should be approved by Monday next week (3 weeks after I contacted him).

We need to note that for somebody that cannot speak and read Japanese (my reading level is not perfect but fairly good) the task of setting up a Kakunin Kaisha would be quite overwhelming, and a translator or interpreter of some capacity would definitely be required. There are probably lawyers and scriveners around that do speak English, but they appear to be few and far between - and I have been unable to locate any just from searching on the net.

Although the Kakunin Kaisha corporate vehicle was set up to make business operations more transparent, in fact you can operate this type of business as if you were a regular Kabushiki Kaisha or Yugen Kaisha (the normal forms of incorporated companies in Japan). There is no requirement to show the special status of your incorporation on your business cards, company stationary, etc.

One draw-back of the Kakunin Kaisha is that if you wanted to bring in other shareholders, you can't. Basically, until you meet the full capital requirements for a regular Kabushiki Kaisha or Yugen Kaisha, you are not allowed to issue shares or pay out dividends.

So what are the advantages of a Kakunin Kaisha? The obvious starting point is the low establishment costs for creating a company, compared to traditional entities. Here are some examples, the exact fees for which vary depending on whether you're setting up a Kakunin Kabushiki Kaisha (KKK) or Kakunin Yugen Kaisha (KYK):

･ Tax stamp for the articles of incorporation -> JPY40,000

･ Certification of the articles of incorporation by a public notary -> JPY50,000

･ Registration License tax for establishing a company -> JPY150,000 for KKK, JPY60,000 for KYK

･ Copies of company registration title and stamp registration certificates -> JPY1,000 and JPY500 yen each.

In addition you need to get a company seal made up, and allow for incidental expenses such as phone calls and transportation.

The total cost is around JPY250,000 yen, and on top of that you will need to pay a lawyer or Judicial Scrivener a fee to do all the paperwork for you. Such services are being advertised for around JPY80,000 to JPY350,000 - which is pretty darn cheap. Realistically you will need around JPY400,000 minimum to establish a KKK.

I have not really been able to find any information in English about Kakunin Kaisha, but there is plenty around on the web in Japanese. If you do a search you will come up with a list of lawyers and judicial scriveners offering assistance in setting up Kakunin Kaisha.

Lastly, an important note is that creating a KKK or KYK is really just putting off the inevitable, in terms of having to eventually pay in the full amount of capital. The law says that you must increase capital to proper Kabushiki Kaisha (JPY10m) or Yugen Kaisha (JPY3m) levels within 5 years, or else either wind up your operation or change your corporate structure to a sole-proprietorship or limited partnership.

More information (in Japanese) can be found at:

http://www.meti.go.jp/policy/mincap/

Ministry of Economy, Trade and Industry

As always, my contact details are simply:

terrie.lloyd@daijob.com

Looking forward to getting some enquiries...