Client Case Studies: Japan

US-based clients set up Tokyo gaming technology base
Background
Our client Mr Cepeda is based in California, and has been involved in developing computer game technologies since his graduation from university in Los Angeles in 1998. During his degree, Mr Cepeda spent two years studying Computer Science as an exchange student in Tokyo, Japan, where he developed an interest in the Japanese gaming sector, as well as a useful working knowledge of the Japanese language. His interest in Japan was rekindled in 2004, when Mr Cepeda had the opportunity to work with a Japanese colleague in California, Mr Sakamoto, as part of a team to develop a new game, which was released in early 2006. At the end of the project, the two colleagues decided to explore the possibility of setting up a gaming company in Japan on their own.

Engagement Planning
In June 2006, Mr Cepeda sent Healy Consultants an e-mail via our website, and we replied immediately with a cost comparison for setting up different Japanese entities (including an LLC and joint stock company, the two most likely structures of interest to Mr Cepeda). Starting a business in Japan is challenging, with several steps involved and high levels of bureaucracy. It is also costly, with high legal fees. In addition, all documents are in Japanese (luckily both clients knew Japanese), and due diligence supplied by our clients would have to be translated into Japanese, adding time and expense to the engagement. 

These challenges were highlighted to Mr Cepeda and Mr Sakamoto during a conference call with Aidan Healy, managing director of Healy Consultants, who also outlined the legal, accounting and tax implications of setting up Japanese corporate structures. Following the conversation, it became clear that a Japanese limited liability company (also known as a Godo Kaisha) would be the most appropriate structure for the client, since it required a minimal number of shareholders and directors, and has fewer obligations. And although a Godo Kaisha requires a Japanese resident representative, our clients would be able to fulfill that role since they were planning to relocate to Japan. With the engagement costs and corporate structure agreed, Mr Cepeda and Mr Sakamoto (as the two shareholders and directors) each signed our Client Engagement Letter, and supplied our requested due diligence by courier from the US. They also arranged to settle our engagement fees by telegraphic transfer. In return, Healy Consultants sent our clients a detailed engagement project plan for the Japanese entity, indicating incorporation procedures and likely timeframe, to avoid any misunderstandings.

Company Incorporation
The incorporation of the Godo Kaisha began by Healy Consultants submitting a name approval application to the Legal Affairs Bureau of the Ministry of Justice, based on the name given to us by our client. Name approval was granted within two days, allowing us to move to the next stage quickly by preparing the company’s Articles of Incorporation, which were couriered to the US for our clients’ signature and return to us. This was achieved in 10 days. The next step for Healy Consultants was to arrange to have the three seals required for a Japanese company (representative seal, the everyday use seal and the company name seal) made at a seal shop. An application for a seal certificate was then made to the Tokyo Ward office, which also issued the certificate.  

Healy Consultants then visited the Legal Affairs Bureau to submit the Articles of Incorporation and shareholders/directors due diligence, the seal certificate, pay the  95,000 Yen (US$800) notarisation and fiscal stamps fees, as well as the and 100,000 Yen (US$860) company registration fee. In addition, a Godo Kaisha is legally required to rent a physical office in Japan, and to submit a lease agreement at this stage of incorporation. Since our clients had yet to organise office accommodation in Japan, Healy Consultants agreed to provide a lease agreement to fulfill this requirement, and submitted it along with the aforementioned documents. After 14 working days the Legal Affairs Bureau approved the company’s registration in writing, and this was forwarded to our clients for their reference. The next process was to approach the District Tax Office in Tokyo to file notice of the new company’s registration and file the notification of the start of business.

Corporate Banking
With the company now a fully legal entity, the next step was to open a corporate bank account to allow the business to start invoicing clients and start receiving and making payments. With this in mind, Healy Consultants prepared an account application to HSBC in Tokyo. Although Healy Consultants is one of the few corporate service providers able to open a corporate bank account without the signatories needing to visit the bank in person, both Mr Cepeda and Mr Sakamoto were in Tokyo (looking for suitable office accommodation, also with the assistance of Healy Consultants) at this stage of the engagement and were therefore available to sign the bank account application forms, along with a business plan which had been prepared by Healy Consultants and translated into Japanese. The business plan contained details such as the company’s activities (and its products and services), information on the shareholders and directors, a brief market analysis and some financial projections.

Healy Consultants submitted the complete account application pack, and accompanied our clients to the bank for a brief interview, where they explained why they required an account at HSBC in Japan. Within two weeks, Healy Consultants received approval for the Japanese corporate bank account. Over the course of the following two weeks we received (in sealed, separate envelopes) Internet banking and ATM card PIN numbers, which we kept safely for our clients’ collection.

Other Services
As mentioned previously, Healy Consultants also assisted our clients to find an executive leased office premises in downtown Tokyo, using the services of a realty agent specialising in corporate real estate.  Our clients spent a full day viewing premises according to their specifications and budget, and once they had decided on a suitable office the agent liaised with the landlord to prepare a lease agreement. The draft lease agreement was sent to our clients, who were happy enough with the terms and conditions to sign it where required.   

Approximately 10 weeks after contacting Healy Consultants, Mr Cepeda and Mr Sakamoto had a fully operational company and headquarters in Tokyo, and were grateful that we were able to minimise any inconvenience to them during the process. Healy Consultants continues to provide support services to our clients since incorporation, registering the company for value added tax (VAT) at the Japan Tax Bureau in Tokyo, and, in September 2007 preparing and submitting a tax return to the Tax Bureau on behalf of the company.  

Healy Consultants sets up Yokohoma-based Godo Kaisha
Background
Our Client is a Yokohama-based information technology (IT) company providing specialist networking services to some of the leading keiretsus in Tokyo and Yokohama.

For foreign investors, incorporating a company in Japan is challenging, not least because of the country's complex company law and tax system, in addition to the fact that all documentation is in Japanese.

Company Incorporation
By communicating effectively with our Client and with the appropriate bodies in Japan, Healy Consultants was able to complete the formation for a Godo Kaisha (limited liability company) in a timely and efficient manner, and also provided a range of post-incorporation support services. Areas of support for our client in Japan included:

1. Healy Consultants registered the Godo Kaisha with the Legal Affairs Bureau of the Ministry of Justice in Tokyo.

2. Healy Consultants assisted our Client to open a corporate bank account with Standard Chartered Bank in Chiyoda-Ku, Tokyo.

3. Healy Consultants registered the company for consumption tax (VAT) at the Japan Tax Bureau in Yokohama.

4. Healy Consultants assisted our Client to prepare corporate income tax returns to the Japan Tax Bureau, accompanied by financial statements.

Contact Us
For more information on Japan corporate services, contact email@healyconsultants.com or telephone us at (+65) 6735 0120.

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