LEGAL ENTITIES

1. Variety of legal entities

(1) Companies and legal entities that are not companies

There are many varieties of private legal entity organization. Private legal entities can be divided into two categories: companies and entities that are not companies.

Company includes 4 types of printed: Public limited company (Kabushiki Gaisha), Limited liability company (Godo Gaisha), Limited partnership (Goshi Gaisha), General partnership (Gomei Gaisha).

Legal entities that are not companies include many types of entities. Some typical examples are general incorporated association (Ippan Shadan Hojin), incorporated association of public interest (Koeki Shadan Hojin), specified non-profit organization (NPO Hojin), etc. The Japanese word "Hojin" means legal entity.

(2) The difference between a company and a legal entity that is not a company

A for-profit entity is a company. A non-profit entity is an entity that is not a company. This is the basic difference between companies and other legal entities. A for-profit entity refers to an entity for the purpose of distributing profits to its investors. An investor is a person who constitutes the entity, for example, in the case of the public limited company (Kabushiki Gaisha), the shareholder falls under this. On the contrary, a non-profit entity cannot distribute profits to its investors. However, a non-profit entity can earn profits and pay salaries to employees and managers. However, even if surplus profits are obtained, they cannot be distributed among investors. In other words, non-corporate legal entities are also free to seek profits and can pay salaries to members, but there is a restriction that surplus profits cannot be distributed to members.

2. Description of each legal entity

I explain some of the typical forms of entities among the many forms of legal entities: public limited companies, limited liability companies, general incorporated associations and specified non-profit organizations. Public limited companies and limited liability companies are companies. General incorporated associations and specified non-profit organizations are not companies.

(1) The public limited company (Kabushiki Gaisha)

This is the most popular legal entity and is used most frequently.

The public limited company is established by having money invested by the shareholders to invest money. Of course, it is also possible for the founder himself to invest and become a shareholder. The person who made the investment is responsible only to the extent of the investment. That is, the person may lose the investment amount, but has no more obligation to pay. However, when a company borrows money, it often asks an executive to be a joint guarantor, and if an executive becomes a joint guarantor, the responsibility is unlimited, and all the company's debts are also the responsibility of the joint guarantor.

The joint stock company is an appropriate form of business when it needs to prepare a large amount of capital or when it needs to obtain investment from others in the future because joint stock companies are free to obtain capital from people who are not managers.

(2) Limited liability company (Godo Gaisha)

In the limited liability company, the owner and the company's management need to agree. On the other hand, the important character of a public limited company is the separation of ownership and management. This is the biggest difference between the limited liability company and the public limited company. In a limited liability company, only the people who manage the company give investment. It is an appropriate form of business when it does not need investment from other people.

Compared to public limited companies, limited liability companies have greater management flexibility, lower operating costs and lower constitution costs. However, it has disadvantages, such as being less known and less reliable than a public limited company, limited access to financing and significant management problems in the event of conflicts between members.

Both limited liability companies and public limited companies may be incorporated with a minimum capital of one yen and with one member.

(3) General incorporated association (Ippan Shadan Hojin)

It is the most basic form of non-profit corporation. There are no restrictions on the type of business that can be carried out. Two members are needed to create an establishment, but only one manager is needed.

The authentication of the Articles of Incorporation (It is called "Teikan" in Japanese.) is necessary in the notary office, but there is no strict examination by the competent authority, and it can be established quickly because it only requires the registration procedure. In addition, even after its establishment, it will not be obliged to inform the competent authority or be supervised by an administrative authority.

Taking into account the time and effort required for the establishment procedure, the number of people required, it can be said that a general incorporated association is easier than a specified non-profit organization.

(4) Specified non-profit organization (NPO Hojin)

Specified non-profit organizations must conduct business within the scope of the specific non-profit businesses stipulated by law for the benefit of an unspecified number of people. However, almost all business fields are covered. Therefore, one may think that the difference between the business that can carry out a general incorporated partnership and the business that can carry out a specified non-profit organization is not so great.

At least 10 members are needed to establish.

The creation of a specified non-profit organization requires certification from an administrative body. After its creation, it remains subject to the supervision of the administrative body. It is also required to disclose information to citizens and other interested parties. While the general incorporated association takes one to two weeks to establish, the specified non-profit organization takes several months.

Specified non-profit organizations have the advantage of obtaining preferential tax treatment. Normal general incorporated partnerships do not benefit from tax advantages.

3. What is NGO?

There is the word "NGO (in Japanese "NGO")". What is an NGO: an NGO is not a form of legal entity. NGO stands for Non-Governmental Organization. It is a private non-governmental organization that addresses social issues such as environmental problems and poverty problems. The word NGO came to be used to distinguish between government organizations and private organizations. In other words, an organization created for the public benefit, but not organized by the government. In particular, organizations that are active abroad are often called NGOs. Many NGOs become legal entities and many of them become legal entities in the form of a general incorporated association or specified non-profit organization.

4. Summary

If you want to create an organization, the form you should take depends on the purpose and content of the business. There are several differences, such as the method of establishment, the tax system, the regulations, etc., so it is a good idea to consult with an expert.