Godo Kaisha vs Kabushiki Kaisha: Company Types in Japan

When starting a business in Japan, entrepreneurs often find themselves facing a critical decision: whether to establish their company as a Kabushiki Kaisha (KK) or a Godo Kaisha (GK). 

Both are types of corporations in Japan and come with their own set of advantages and limitations. 

Understanding the differences between these two types of business entities is crucial for achieving long-term success.

A Kabushiki Kaisha, or KK, is a joint-stock corporation that allows for public trading of shares. This option typically appeals to medium or large-sized companies that are raising capital to expand their operations. 

On the other hand, a Godo Kaisha, or GK, is a limited liability company, often referred to as a Japanese LLC due to its similarity to American LLCs. Unlike KKs, GKs cannot be publicly traded, making them a more familiar choice for small and medium-sized enterprises.

To break it down:

• A KK—think big corporations wanting public trading.

• GKs—don't go into publicly-traded territory.

• The decision between using KK or GK comes down to things like whether you want people buying and selling your shares in the stock market and how massive your operation is.

We'll get into all the details you ought to know right here.

Godo kaisha vs kabushiki kaisha: Which one should you choose?

Choose a Godo Kaisha (GK) if:

• You are a solo founder, freelancer, or small team

• You do not plan to raise venture capital or issue shares

• You want faster setup, lower costs, and simpler governance

• You prefer direct control over company management

• You are testing the Japanese market or launching a lean operation

GK structures are commonly chosen by startups, consultants, and foreign founders who prioritize flexibility and speed over formality.

Choose a Kabushiki Kaisha (KK) if:

• You plan to raise capital, issue equity, or bring in investors

• You want maximum credibility with Japanese corporations, banks, or enterprise clients

• You expect long-term growth, M&A activity, or a future IPO

• You plan to hire at scale in Japan

• You want a structure that Japanese stakeholders instantly recognize

KKs are often preferred by venture-backed startups, established foreign companies, and businesses planning deep integration into the Japanese market.

Quick takeaway

• GK = flexibility, speed, lower cost, founder control

• KK = fundraising, credibility, scalability, long-term growth

Many companies start as a GK and later convert to a KK once they begin fundraising or expanding in Japan.

What is a Kabushiki Kaisha?

So a Kabushiki Kaisha (株式会社), or KK for short, is like Japan's version of a "stock company" or "joint-stock company." It follows the rules set by the Companies Act. In English, we'd probably call it something like a "stock corporation." 

The structure of a Kabushiki Kaisha is similar to that of an American C Corporation. One of the primary features of a KK is its ability to issue stocks in the form of shares, which can be distributed to shareholders, allowing the company to raise capital more easily and provides a potential exit strategy for investors, as they can sell their shares in the market.

Setting up a Kabushiki Kaisha requires a more complex process and a higher initial investment than establishing a Godo Kaisha. Additionally, KK companies must deal with more strict regulations and governance requirements. For instance, KK companies are required to have a board of directors and statutory auditors, and they must hold annual shareholders' meetings.

Despite the additional administrative and regulatory burden, a Kabushiki Kaisha is generally considered to carry more credibility and prestige in the eyes of Japanese customers, employees, and business partners, as it has been the standard form of business organization in Japan for over a century.

Examples of US/International KK companies in Japan

• Disney—ウォルト・ディズニー・ジャパン株式会社

• Kearney—A.T. カーニー株式会社

• Shell—RSエナジー株式会社

• Coca Cola—コカ・コーラ ボトラーズジャパン株式会社

• Nestle—ネスレ日本株式会社

• Godiva—ゴディバ ジャパン株式会社

• Gap—ギャップジャパン株式会社

• Zara—株式会社ITXジャパン

• Adidas—アディダスジャパン株式会社

What is a Godo Gaisha?

A Godo Gaisha (合同会社), also known as Godo Kaisha or Goudo Kaisha or GK, is a type of business organization in Japan. Unlike a Kabushiki Kaisha (KK), a GK cannot be publicly traded, making it friendly for small and medium-sized enterprises (SMEs).

In a GK, owners, known as partners, share in the profits and losses of the business and have limited liability according to their respective contributions. This type of business organization is similar to the Limited Liability Company (LLC) in the United States.

The process of setting up a Godo Gaisha involves registration with the Legal Affairs Bureau and obtaining a company seal, among other requirements. An advantage of choosing this structure is the lower starting capital requirement, which can be as low as one yen.

If you're a small business owner or a solopreneur and you're thinking about setting up a business in Japan, look no further than the Godo Kaisha. It's perfect for small to medium businesses because it protects your personal assets with limited liability and gives you lots of control over how you run things.

Plus, you’ll be in great company. Check out the examples of brand names that have registered in Japan as a GK. 

 Examples of US/International GK companies in Japan

• Hewlett Packard Enterprise—日本ヒューレット・パッカード合同会社

• Deloitte—デロイト トーマツ コンサルティング合同会社

• Amazon Japan—アマゾンジャパン合同会社

• Apple Japan—Apple Japan合同会社

• P&G Japan—P&Gジャパン合同会社

• Google—グーグル合同会社

Comparison: Godo kaisha vs. kabushiki kaisha

Let's compare and contrast KK and GK to see where the major differences are visible. 

 Kabushiki kaisha vs godo kaisha comparison table

a. Governing laws

Godo Kaisha (GK) and Kabushiki Gaisha (KK) are two types of legal entities in Japan. The GK is governed by the Companies Act while the KK is subject to both the Financial Instruments and Exchange Act and the Companies Act. The regulations for a GK are generally less strict compared to a KK, making it easier to set up and manage a GK.

b. Ownership structure

KKs has a clear distinction between ownership (shareholders) and management (directors), while GK investors are considered partners who help run the company. KKs are usually larger and more established, while GKs are often smaller and more flexible.

c. Management

The management control in a KK is usually centralized, with a board of directors overseeing the company's operations and making decisions. In contrast, the management control in a GK is more decentralized and can be customized to better suit the needs of the business. Each member of a GK can participate in the management of the company, giving them more direct influence over the operations.

d. Liability

In a KK, shareholders only have to worry about debts up to what they've put in through their shares. So basically, their liability is limited by how much they invested.

Now, if we flip over to a GK—same deal but a slightly different nuance. Each member also gets this safety net of limited liability based on their contributions rather than share numbers. So again, no one's out here owing more than what they’ve chipped into the company.

e. Tax implications

KKs and GKs are treated differently for tax purposes. KKs are subject to corporate tax, and their shareholders may face double taxation due to dividend tax. GKs, too, are taxed at corporate tax rates, and partners must pay individual tax on dividends.

A tip from WeConnect, a service specializing in global compliance strategies: It's worth noting that if an American corporation owns the GK entirely, it can choose to designate the GK as a "disregarded entity" for international tax purposes. This designation allows the GK to be treated as a US branch for the purposes of US tax. This is not an option for the KK.

Thus, depending on ownership, a GK can be more tax-efficient for some businesses, but the final decision will depend on the individual circumstances of each company.

👉 Learn more about startups and Japan's tax laws here.

Can you change from a Godo Kaisha to a Kabushiki Kaisha later?

Yes. Many companies in Japan intentionally start as a Godo Kaisha and later convert to a Kabushiki Kaisha as their business grows.

This is a common strategy for foreign founders, startups, and international companies entering the Japanese market.

Why companies start as a GK

A Godo Kaisha is often chosen in the early stages because it offers:

• Faster and less expensive setup

• Simpler governance and decision-making

• Greater flexibility for founder-led operations

• Lower administrative overhead during market entry

For businesses validating demand or operating lean, a GK minimizes friction.

Why companies later convert to a KK

As a company matures, converting to a Kabushiki Kaisha becomes attractive when:

• External investors or venture capital are involved

• Equity issuance or stock options are required

• Enterprise clients expect a KK structure

• Long-term expansion or M&A is planned

• Hiring and scaling in Japan accelerates

A KK provides a structure that aligns better with growth, fundraising, and institutional expectations.

Is conversion from GK to KK difficult?

Conversion is legally possible and commonly done, but it involves:

• Formal restructuring procedures

• Updated registration and corporate documents

• Coordination with legal and tax professionals

Because of this, many founders opt to start with a GK for speed, knowing they can convert to a KK when the business reaches the next stage.

Strategic takeaway

• GK is ideal for entry and early-stage operations

• KK is ideal for scale, capital, and long-term positioning

Choosing a GK does not limit future growth—it often enables it.

Frequently asked questions

What is the difference between Kabushiki Kaisha and Godo Kaisha?

While both are types of corporations in Japan, Kabushiki Kaisha (KK) and Godo Kaisha (GK) differ in their structure. KK are more traditional corporate entities with shareholders, can be publicly traded, and are more suitable for larger companies. Compared to GK which are better suited for small and medium sized enterprises.

What is a Godo Kaisha?

A Godo Kaisha, also known as GK is a type of business similar to LLC in America or Ltd in the UK, where members have limited liability and can directly manage the company.

What is the meaning of Kabushiki Kaisha?

Kabushiki Kaisha, also known as KK, can be translated as a joint-stock company. It is a type of corporation in Japan where ownership is divided into shares held by shareholders.

Who are the members of Godo Kaisha?

A Godo Kaisha (GK) is made up of individuals who own and manage the company, sharing both the profits and responsibilities of the business.

Can a foreigner be a representative director of a KK or a member of a GK?

Yes. A foreigner can be a representative director of a KK or a managing member of a GK. There is no nationality requirement under Japanese law, though you may need to meet separate immigration or visa requirements depending on your situation.

Do you need to choose between GK and KK before starting your business?

Yes. You need to select an entity type at incorporation, but this decision is not permanent. Many founders start with a GK and later convert to a KK as the needs of their business change. The best choice depends on your business model, growth plans, and long-term strategy.

Wrapping it up

While KK has always been a well-established option, especially for medium to large-sized businesses, GK is becoming increasingly attractive for small and medium-sized enterprises due to its simplicity and flexibility.

John Cross is a Canadian Expat living in Japan. "I ended up at Mailmate after I forgot to pay my electricity bill once and they turned off the electricity in my apartment. They probably sent a warning in the mail but I don't think I would have recognized it."