JAPAN Law and Practice Contributed by: Junichi Ueda, Etsuko Hara, Nobuto Shirane, Takahiro Hayase, Yutaka Shimoo and Miki Goto, Anderson Mori & Tomotsune
or a fine that will be calculated based on the total value of the investment. However, where the investor is a corporation, a sentence of imprisonment is not applied. The authorities also have the power to order the investor to perform all acts necessary to undo an illegal investment, including disposing of any capital the investor acquired as a result of the illegal invest - ment. 2.3 Commitments Required From Foreign Investors There are no typical conditions. However, as previ - ously mentioned in 2.2 Procedure to Obtain Approval and Sanctions for Non-Compliance , if an investor is required to provide prior notification, the authorities may recommend a modification or cancellation of the investment and – should the investor reject the recom - mendation – the authorities can issue a legally binding order for the investment to be modified or suspended. 2.4 Right to Appeal An affected investor can challenge a decision of the authority that negatively affects or suspends the investment to the higher authorities or in court. The challenge to the higher authorities can be made within three months of the date on which the investor becomes aware of the decision of the authorities and within one year of the date on which the decision of the authorities is made. The challenge in the court can be made to the district court within six months of the date on which the investor becomes aware of the decision of the authorities and within one year of the date on which the decision of the authorities is made. 3. Corporate Vehicles 3.1 Most Common Forms of Legal Entity The most common types of corporate vehicles in Japan are the stock company ( kabushiki kaisha ) and the membership company ( mochibun kaisha ). A stock company is the vehicle that is typically used. In a stock company, the liability of shareholders is limited to the value of their shares and there is generally no assumption of additional liability by the shareholders to creditors of the stock company.
In order to establish a stock company, there is no specified minimum amount of share capital or a mini - mum number of shareholders. There is also generally no limitation on the purposes for which a stock com - pany can be established to the extent it is commercial, and a stock company can be established for more than one purpose. As for membership companies, there are three types in Japan: • the general partnership company ( gomei kaisha ); • the limited partnership company ( goshi kaisha ); and • the limited liability company ( godo kaisha ). The general partnership company and the limited partnership company are less commonly used. The most common membership company is the limited liability company. In the case of a limited liability company, the liabil - ity of the members of the company is limited in the same way as a stock company. The main difference between a limited liability company and a stock com - pany is that, in the case of a limited liability company, only members of the company can hold positions of management – whereas the management of a stock company is not exclusive to members of the company. 3.2 Incorporation Process The main steps involved in the incorporation of a stock company are: • preparation of the articles of incorporation and the certification of the articles by a notary public; • determination of the share issuance, share sub - scription and shareholders at the point of incorpo - ration; • determination of the appointment of key organs such as the directors; and • registration of the stock company for incorporation with the relevant authorities. There are two ways in which share subscription can be done when incorporating a stock company. The party or parties incorporating the stock company may subscribe to all the shares at the time of incorporation, or they may only partially subscribe to the shares, with
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