This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
The articles of incorporation (定款, teikan) are the document that sets out a company's basic rules, such as its purpose and its trade name. For a kabushiki kaisha (株式会社, joint-stock company) the articles have no effect until a notary certifies them[e-Gov, Companies Act art. 30]. The certification fee comes in three steps according to the amount of stated capital — 30,000 yen, 40,000 yen or 50,000 yen — and only small companies that meet the conditions pay 15,000 yen. The other large item is stamp duty: 40,000 yen on paper, zero on electronic data. Stamp duty falls on "documents", and an electromagnetic record is not a document. A godo kaisha (合同会社, limited liability company) needs no certification at all. This article sorts out what goes in the articles, what they cost, and what you pay when you change them later.
The short answer: what the articles of incorporation cost
| What you pay | Kabushiki kaisha (paper) | Kabushiki kaisha (electronic) | Godo kaisha (electronic) |
|---|---|---|---|
| Notarial certification of the articles | 30,000-50,000 yen | 30,000-50,000 yen | Not required (0 yen) |
| Stamp duty (Document No. 6) | 40,000 yen | 0 yen | 0 yen |
| Registration and licence tax on incorporation | From 150,000 yen | From 150,000 yen | From 60,000 yen |
| Rough total | From 220,000 yen | From 180,000 yen | From 60,000 yen |
Sources: Ordinance on Notary Fees art. 35[e-Gov], NTA No.7141[NTA], NTA No.7191[NTA]. The totals are the minimum amounts added up by this site.
The registration and licence tax is "7/1,000 of the stated capital", and where that comes to less than 150,000 yen for a kabushiki kaisha or 60,000 yen for a godo kaisha you pay that minimum[NTA No.7191]. The whole cost of setting up is covered in the cost of setting up a company, and the order of the procedures and their deadlines in the steps of setting up a company and the filing deadlines.
What the articles are: the company's constitution
The articles set out the root rules: what the company does, what it is called, and where its head office is. In a kabushiki kaisha the incorporators (発起人, hokkinin) draw them up and all of them sign or affix their name and seal[e-Gov, Companies Act art. 26]. And the articles have no effect until a notary certifies them[e-Gov, Companies Act art. 30]. The notary must be one attached to the Legal Affairs Bureau or District Legal Affairs Bureau with jurisdiction over the head office[Ministry of Justice].
"The articles of incorporation of a godo kaisha do not need to be certified by a notary."[Ministry of Justice]
That one line saves a godo kaisha 30,000 to 50,000 yen. The differences between the two forms are set out in a godo kaisha compared with a kabushiki kaisha.
Three kinds of content go into the articles
The Ministry of Justice describes "three kinds: mandatory items, conditionally effective items and optional items"[Ministry of Justice].
| Kind | What it means | What happens if you leave it out |
|---|---|---|
| Mandatory items (絶対的記載事項) | The five items you must write (Companies Act art. 27) | The articles themselves are void |
| Conditionally effective items (相対的記載事項) | Matters that take effect only if written in (arts. 28 and 29) | Only that provision cannot be used |
| Optional items (任意的記載事項) | Anything you like, so long as it does not breach the law | No problem if left out |
The five items you must write
These are the five that Companies Act art. 27 says "shall be stated or recorded"[e-Gov, Companies Act art. 27].
- Purpose — the business you will carry on. Including business you plan to start later saves a registration of change.
- Trade name — the company's name. It must contain the words for kabushiki kaisha.
- Location of the head office — down to the municipality is enough. Writing the street number means a move within the same city needs a change to the articles.
- The value, or minimum value, of the property to be contributed on incorporation — the basis of the stated capital.
- The name and address of each incorporator — the people who put in the money and start the company.
The amount of stated capital decides which step of the certification fee applies[e-Gov, Ordinance on Notary Fees art. 35], and at 10 million yen or more the consumption tax exemption does not apply even in the first year[NTA No.6531].
Article 28 provides that four matters — contributions in kind, property to be taken over after incorporation, the incorporators' remuneration and the costs of incorporation — take no effect unless they are written in[e-Gov, Companies Act art. 28]. If you are contributing a car or machinery in kind, this cannot be forgotten.
The certification fee is 30,000 to 50,000 yen. The conditions for 15,000 yen
| Stated capital written in the articles | Certification fee |
|---|---|
| Less than 1 million yen | 30,000 yen (15,000 yen if all three conditions below are met) |
| 1 million yen or more but less than 3 million yen | 40,000 yen |
| Anything else (3 million yen or more) | 50,000 yen |
- Every incorporator named in the articles is a natural person, and there are no more than three of them
- The articles state or record that the incorporators subscribe for all of the shares issued at incorporation
- There is no provision establishing a board of directors
Source: Ordinance on Notary Fees art. 35 item 1 (a) to (c)[e-Gov]
If you are starting small on your own, keeping the stated capital under 1 million yen often satisfies all three, and the fee is halved. But a small stated capital also changes how customers and banks see you. This is not a decision to make over 15,000 yen alone.
A certified copy costs 250 yen a page, and you need copies for the registration and for opening a bank account[e-Gov, Ordinance on Notary Fees art. 40(2)].
Paper articles carry 40,000 yen of stamp duty. Why electronic articles cost nothing
The articles are a Document No. 6 for stamp duty purposes, and the duty is 40,000 yen[NTA No.7141]. What is taxed is "the original of the articles drawn up at incorporation", and a godo kaisha pays the same 40,000 yen if it uses paper. In a kabushiki kaisha, copies "other than the one retained by the notary" are exempt, so the stamp goes on one original only.
"What stamp duty is charged on are the documents listed in the column of document names in the table of taxable items, and an electromagnetic record is not included in 'documents'."[NTA Q&A]
The Companies Act likewise allows the articles to be drawn up as an electromagnetic record[e-Gov, Companies Act art. 26(2)]. Print them and they are a taxable document; leave them as data and they are outside the charge. The content is identical, yet 40,000 yen turns on it, because stamp duty is an old tax built around paper. The full table of amounts is in the list of revenue stamp amounts.
A kabushiki kaisha with 500,000 yen of capital, one incorporator and no board of directors (this site's calculation)
- Paper: certification 15,000 yen + stamp duty 40,000 yen + registration and licence tax 150,000 yen = 205,000 yen
- Electronic: certification 15,000 yen + stamp duty 0 yen + registration and licence tax 150,000 yen = 165,000 yen
- The difference is 40,000 yen (certified copies and professional fees are not included)
Note: the calculation above applies the amounts in Ordinance on Notary Fees art. 35 and NTA No.7141 and No.7191, as worked out by this site.
Forgetting the stamp on paper articles means a non-payment penalty tax of three times the duty (1.1 times if you report it yourself)[NTA No.7131]. A missing 40,000 yen stamp can become 120,000 yen.
How to produce electronic articles, and why the 40,000 yen is not all yours
Electronic articles are made by attaching to the data a measure in place of a signature or name and seal, that is, an electronic signature[e-Gov, Companies Act art. 26(2)]. A godo kaisha may also draw up its articles as an electromagnetic record[e-Gov, Companies Act art. 575(2)].
- Settle the content. Besides the five items, put in the business year and the method of public notice.
- Attach the electronic signature. Each incorporator needs an electronic certificate.
- Have a notary certify it. This step exists only for a kabushiki kaisha; a godo kaisha skips it[Ministry of Justice].
- Apply for the registration of incorporation. File the articles with the Legal Affairs Bureau.
Electronic articles suit you if
- You have an electronic certificate and a card reader
- You are leaving the incorporation to a professional
- You will be setting up more companies
Paper is fine if
- You have neither a certificate nor a reader
- You are setting up one company by yourself
- A deadline is close and there is no time to prepare
Building the set-up from scratch costs money for the certificate and the hardware, so the 40,000 yen does not all stay in your pocket.
Choosing the business year, the method of public notice and share transfer restrictions
Business year
The closing date is up to you, but the period covered by a set of financial statements cannot exceed one year[e-Gov, Ordinance on Company Accounting art. 59(2)]. Choosing a closing month far from the date of incorporation makes the first business year longer. With stated capital under 10 million yen the first and second years are in principle exempt from consumption tax, so a longer first year means a longer exemption. Registering as a qualified invoice issuer, however, removes the exemption[NTA No.6531]. If your customers are all taxable businesses, there is little left in this trick.
Method of public notice
The articles may choose one of three: the Official Gazette, a daily newspaper, or electronic public notice[e-Gov, Companies Act art. 939]. Say nothing and it is the Official Gazette (art. 939(4)). To give notice on your own website, provide for that in the articles.
Restrictions on share transfers
A provision requiring the company's approval before shares change hands can be put in the articles[e-Gov, Companies Act art. 107]. It stops shares reaching strangers, and small companies almost always include it. Applying it to all shares brings two further advantages.
- The articles may extend directors' terms of office to the conclusion of the annual shareholders meeting for the business year ending within ten years of appointment[Ministry of Justice, company registration]. The default is two years, so there are fewer registrations of change of officers.
- The rule that shares issued at incorporation must be at least one quarter of the total number of authorised shares does not apply[e-Gov, Companies Act art. 37(3)].
What it costs to change the articles
After incorporation the articles are changed by a resolution of the shareholders meeting[e-Gov, Companies Act art. 466]. It is a special resolution: shareholders holding a majority of the votes must attend and at least two thirds of the votes of those attending must be in favour[e-Gov, Companies Act art. 309(2)]. Rewriting the text itself is free; money is due when what you changed is a registered particular.
| What you change | Registration and licence tax |
|---|---|
| Trade name, purpose, total number of authorised shares and the like | 30,000 yen per application |
| Moving the head office | 30,000 yen per location |
| Change of director, representative director or company auditor | 30,000 yen per case (10,000 yen if stated capital is 100 million yen or less) |
| A change only to parts that are not registered particulars | 0 yen (no registration) |
Source: NTA No.7191, "Table of registration and licence tax rates"[NTA]
Changing the trade name and the purpose at the same time costs 30,000 yen if you put them in one application. File them separately and it is 30,000 yen twice. A head office move is "30,000 yen per location", so crossing into another bureau's jurisdiction counts as two. The amount turns on how you file, so check with the Legal Affairs Bureau before you move.
A godo kaisha pays the same registration and licence tax when a registered particular changes. Leaving a matter that should be registered unregistered can bring a non-penal fine of up to 1 million yen[Ministry of Justice, company registration].
Frequently asked questions
Do electronic articles also make the certification fee cheaper?
No. The certification fee depends on the amount of stated capital, and is the same on paper or electronically. What you save is the 40,000 yen of stamp duty. The fee is 15,000 yen only where the stated capital is under 1 million yen and all three conditions in the article are met.
Does a godo kaisha escape the stamp on paper articles?
No. Document No. 6 covers a godo kaisha's articles too, and a paper original needs 40,000 yen of stamps. Not needing certification and not owing stamp duty are separate questions; with electronic articles the duty is zero.
Should the head office be written down to the street number?
Companies Act art. 27 asks for the "location of the head office", and down to the municipality is enough. Writing the street number means that even a move within the same municipality needs a change to the articles. The registration itself does give the street number.
After changing the articles, do I need a notary again?
No. You change them by special resolution of the shareholders meeting, and if the change is a registered particular you apply to the Legal Affairs Bureau for a registration of change. The registration and licence tax is 30,000 yen per application.
Sources
- e-Gov, Companies Act — drawing up the articles, what they contain, certification and changes
- e-Gov, Ordinance on Notary Fees — the certification fee and the cost of certified copies
- e-Gov, Ordinance on Company Accounting — the period covered by financial statements
- NTA No.7141, Table of stamp duty amounts (Documents No. 5 to No. 20) — the 40,000 yen on Document No. 6 and the exempt items
- NTA Q&A, Stamp duty treatment of an electromagnetic record emailed to a business partner — an electromagnetic record is not a document
- NTA No.7191, Table of registration and licence tax rates — the tax on incorporation and on changes
- NTA No.7131, Where stamp duty has not been paid — the penalty of three times, or 1.1 times
- NTA No.6531, Starting a business or setting up a company — how stated capital of 10 million yen or more is treated
- Ministry of Justice, Procedures for establishing a kabushiki kaisha (incorporation by the incorporators) — the three kinds of content, and certification
- Ministry of Justice, Procedures for establishing a godo kaisha — no certification needed
- Ministry of Justice, Registration of companies and corporations — extending terms of office, and the non-penal fine
Note: this is general information. For your own case, ask a notary's office, the Legal Affairs Bureau, a judicial scrivener or a tax accountant. Amounts and rules change with legal amendments, so check the official sites for the latest position.
