Agōdō gaisha(Hợp đồng hội xã),orgōdō kaisha,abbreviatedGK,is a type ofbusiness organizationin theCompanies Act of Japanmodeled after the Americanlimited liability company(LLC), hence its nickname as the "Japanese LLC"(Nhật Bản bản LLC,Nihon-ban LLC).It is a type ofmochibun kaisha(corporationhaving a simplified internal structure like that of apartnership) distinguished by offeringlimited liabilityfor all investors.
Background
editGōdō gaisha was newly introduced by theCompanies Act,which became effective on May 1, 2006, replacingyūgen gaisha.
Basic structure
editA GK is formed by articles of incorporation(Định khoản,teikan)signed between its investors, called members(Xã viên,shain).Each member may provide a capital contribution in the form of money or property. Credit and promises to perform services are not valid considerations for an ownership interest in a GK.
Following ratification of the agreement, the GK's articles of incorporation and corporate seal must be registered with the Legal Affairs Bureau(Pháp vụ cục,hōmukyoku).Once the bureau processes the registration, the company may open a bank account, seal contracts, and engage in other activities as alegal entity.
The members may, either in the agreement or pursuant to the agreement, choose one or more executive manager(Nghiệp vụ chấp hành xã viên,gyōmu shikkō shain)from among their ranks. This executive manager can be either an individual or a corporation; however, corporate executive managers must appoint at least one functional manager(Chức vụ người chấp hành,shokumu shikkō sha)to perform the actual management duties.
The legal duties of GK managers are very similar to the legal duties of KK directors. GK members may sue managers in the same way that KK shareholders may sue directors on the company's behalf.
A GK may be converted to a KK with the unanimous consent of all of its members.
Distinguishing characteristics
editThe following distinguish godo gaisha fromkabushiki gaisha:
- All members must consent to the amendment of the articles of incorporation unless the articles of incorporation provide otherwise. (In a KK, only a supermajority of shareholders is required.)
- All members must consent to any transfer of ownership unless the articles of incorporation provide otherwise. (In a KK, the transfer of shares is unlimited by default.)
- All members are representatives of the company by default unless managers have been appointed. (In a KK, only theRepresentative Directorrepresents the company.)
- Major business decisions (such as large asset sales or winding up of the company) may be made informally. (In a KK, resolutions of shareholder and board meetings are often required for such decisions).
- Members may invest any type of asset in exchange for their interest. (In a KK, non-cash contributions require an appraisal supervised by a court.)
- Because KKs traditionally required a larger capital and procedural investment, GKs did not initially have the same level of prestige. That has changed with many large foreign companies, includingApple,Google,ExxonMobil,AmazonandWalmart(throughSeiyu), opting for GKs in Japan.
Taxation
editGKs are taxed as corporations under Japanese law: the company's profits are taxed at corporate tax rates, and dividends are taxed at individual tax rates.
In late 2005, following the passage of the Companies Act, theMinistry of Economy, Trade, and Industrypressed theMinistry of Financeto treat GKs as "pass-through entities" in which only company profits would be taxed. However, the Ministry of Finance refused to allow such treatment. As a result, many new companies are expected to use the more prestigious KK business form rather than the GK business form, especially given the looser regulation of KKs under the new law. The only limited liability business which receives pass-through tax treatment in Japan is thelimited liability partnership.
UnderUnited Statestax law, gōdō gaisha are not classified as corporations, and are therefore eligible to make anentity classification election:a single-member GK may be treated as an extension of its member and a multi-member GK may follow the tax rules forpartnerships.
