When to Set-up Capital in Japan

September 18, 2019

Question:

When incorporating a stock company in Japan, when should we set-up the capital?

Answer:

Capital must be fully paid after the preparation of the articles of incorporate or from the date in which the incorporator determines the amount to be contributed during incorporation.

Explanation:

The incorporator must pay the entire sum or deliver all properties other than monies relating to the incorporator’s contribution fully in money or in kind immediately the time after the subscription for shares issued at incorporation. (Companies Act, Article 34 (1).)

Source: Japanese Law Translation Database System
https://www.japaneselawtranslation.go.jp/

Regarding the need for the incorporator(s) to pay the full amount of the shares issued at incorporation, the incorporator(s) must pay this amount immediately following the subscription of shares. Once the incorporator(s) has (have) be subscribed the shares for the company that will be incorporated, the incorporator(s) need to pay in entire sum related to their individual contribution(s) on the date that the articles of incorporation established the necessary amounts for payment; or a date which all incorporators have consented to.

The reason for why the payment is done after the subscription for issued shares, it is for the Legal Affairs Bureau to be able to clearly judge whether the money that was paid was for the company’s capital. Otherwise, if the payment was made prior to the finalization of what the capital amount for the company was, the purpose of payment cannot be judged as that for the company’s capital or for another purpose.

In addition, if the date of capital contribution is after the date when the articles of incorporation is decided, or after the date when all incorporators how much each incorporator must contribute, even if the said date falls on a date prior to the notarization of the articles of incorporation, the company registration application is still accepted.