Rafine Higashi Ginza 209, 4-4-14, Tsukiji, Chuo-ku, Tokyo
Outline of New COMPANY LAW
No new YK any more, former YK all to be incorporated into KK
|Under the new Company Law,
new Yugen Kaisha (YK) can not be established any more. The current existing YKs
are remained as YK keeping its name of YK.
However, it is legally regarded as a New Kabushiki Kaisha (KK) under the new
Company Law. Those Yks are called
TOKUREI YK, or Exceptional YK.
Then, what kind of actions
can the owners of YK take now? The
owners of YK are having two options. One is to continue as an Exceptional YK
keeping the name of YK on his companyfs name, and the other choice is to shift
to KK by changing the companyfs name to KK.
The latter choice is a BIG GOOD NEWS for those YK owners who were
wishing to change their YK to KK, but could not do it because of the annoying
procedures such as an increase of equity, etc. The typical YK, like gone director, 3Mil.yen capital and Net Asset less
than 10Mil.yenh, now can legally shift to a KK only by conducting the
procedure of Change of Company Name. (As a formality, a registration of
YK dissolution and a registration of KK establishment are required. But
the shift is defined legally as a Change of Company Name under the regulation
affiliated to the New Company Law.
New KK can be established with 1 yen capital. The Minimum Capital Clause
There was a legal
restriction of minimum capital amount of \3 Mil. for YK and \10 Mil. for
KK. Regarding the KAKUNIN KAISHA (so
called 1yen company), the minimum was removed, but additional capital increase
is legally requested within 5 years after the start.
Under the New Company Law, a complete KK can be
established with an initial capital of 1-yen without any additional requirement
in the future. You will not have to increase the amount of capital later.
Big differences between Open Company and Closed
New Company Law stipulates a big difference between a company which has a
clause of Restriction of Stock Ownership Transfer on its Corporate Article
(TEIKAN), stating like gAn approval of the company (or Directors Board) shall
be required to transfer the ownership of this companyfs Stock.h and a company
which does not have this clause. The former company is called gClosed Companyh
or HIKOUKAI KAISHA, and the latter is called gOpen Companyh or KOUKAI
KAISHA. On this HP, the following
descriptions are mainly for the gClosed Companyh which has a Restriction of
Stock Ownership Transfer clause.
(Note) So far, the word gOpen Companyh or KOUKAI
KAISHA was used to refer to a company whose stocks are listed on the commercial
Stock market. The new Company Law, however, defines gOpen Companyh or KOUKAI
KAISHA as is mentioned above
|4. KK with one Director, no Auditor is now OK. (Closed Company)
|Under the new Company Law, a companyfs internal
organization can be designed freely by owner(s). If the company is Closed
Company, a minimum legal requirement is just to assign one Director, and Auditor
is not mandatory to have any more. (Three directors and one auditor were the
minimum legal requirement before.)
Consequently, things become very close to the former YK law for the
Office term extended to 10 years for Directors (Closed Company)
It is now possible for a Closed Company to
extend the office term of Director and Auditor up to 10years by stipulating it
in its Corporate Article or TEIKAN. (The assignment of Auditor is now
alternative, not mandatory, for a Closed Company.)
Under the former Commerce Act, the office terms were 2years for Director and
4years for Auditor in KK, which required periodical registrations every 2 or 4
years for a Director/Auditor renewal.
By this change, the workload of
Director/Auditorfs office term renewal which was a legal requirement is now
drastically reduced, and moreover the risk of forgetting the registration is
now gone. (Forgetting the renewal registration is subject to a legal penalty.) In addition, the cost of Register fee can be
The office terms, however, shall remain 2
years (director) and 4 years (auditor) unless the extension is stipulated on
the Companyfs Corporate Article or TEIKAN.
|6. The Restriction of Similar Trade Name (Company
former law, gA survey of Similar Trade Nameh was legally required before one
can decide his new Companyfs name to register. The reason was due to the clause
in the Commerce Act called gRestriction of Similar Trade Nameh, which
prohibited any trade name to be registered when there is another company
already registered with the similar trade name for the same business purpose
within the same area. The registration of the new company was never accepted
when there was a similar trade name company in the area.
this regulation is abolished under the New Company law. One can now register a
new company with his favorite company name freely without worrying about other
companies trade names.
only restriction remaining is that one can not register a new company with a
Similar Trade Name on the exactly same address.
further more, a registration of new company using a Similar Trade Name which
has a purpose to damage any existing company shall not be allowed either.
|7.hCertificate of Initial Capital
Deposith no more required.
Just gEvidence of Balanceh will be OK !!
establish a new company, a hCertificate of Initial Capital Deposith was needed in
the support document package to a Register office. The gCertificate of Initial
Capital Deposith was issued from Bank, or Credit Association where the intiator
deposited the initial capital of the company.
matter of fact, this process often became the most annoying part for new
business starters. Generally the Banks are reluctant to accept new comerfs
initial capital deposit.
used to be many cases that the Bank would not accept the deposit saying there
is no prior transactions, etc.
Especially, for foreigners living in Japan, finding a bank was often the
most difficult part of the company establishment process.
the new company laws, this hCertificate of Initial Capital Deposith is no more
required. In stead, just attaching an
evidence of bank account balance will be OK.
Accordingly, it is no more required to visit banks asking to accept the
initial deposit from now.
|8. Accounting Councilor or KAIKEI SANYO
|There is now no legal requirement to put an auditor under the New Company
law, although it was a mandatory to assign one auditor at least in KK beforehand.
with this change, an Accounting Counsilor or KAIKEI SANYO can be assigned by a
stipulation on the Corporate Article or TEIKAN. The mission of this newly born title
is to prepare companyfs financial report together with the directors and
Executive Officers. Only licensed Accountant, CPU or their judicial person can
be selected to this position.
more details for this new position, we may need more time before we can make
a further comment.