KK, GK, Branch or Rep Office: Choose by Hiring and Exit

Most comparisons of entity types for Japan are spreadsheets of setup fees, and the fees are the smallest number on the page. JETRO, Japan's trade and investment agency, estimates registration costs of about $1,570 for a kabushiki kaisha and about $628 for a branch office. The choice that actually costs money shows up twice later: when you hire your first people, and on the day you leave.

What separates the four forms?

Whether there is a separate legal person in Japan. JETRO's guide lays out the four forms clearly.

A representative office needs no registration. It can do preparatory and supplemental work only: market research, information gathering, purchasing, publicity. It cannot sell. It ordinarily cannot open a bank account or lease property in its own name.

A branch office must be registered but has no legal personality of its own. It is part of the foreign company, and the foreign company is ultimately liable for its debts. It can open accounts and lease property in its own name.

A subsidiary is a separate Japanese company, usually a kabushiki kaisha (KK) or a godo kaisha (GK, a limited liability company). Both give the parent limited liability. A GK leaves more of its governance to its articles and does not have to publish its financial results. A KK must publish its balance sheet after each annual shareholders' meeting (Companies Act Art. 440).

Notice the line about selling. A salesperson placed in a representative office has a job the office is not allowed to do.

Candidates can see the form

They see it on the contract, where the employer's name is written.

Staff of a branch are employed by the foreign company itself. In a labor dispute, the other side is your head office. That is not bad for the employee. For headquarters, it means Japanese employment risk arrives with nothing in between.

The head of a GK is a "representative member" (daihyo shain), not a "representative director." Some candidates from large Japanese companies hear "godo kaisha" and wonder whether the company is small or about to leave. GKs are common enough among foreign subsidiaries now that I would guess the worry is milder than it once was. That is my judgment, and I have no survey of candidates to back it. Explain the choice in the interview before they ask.

There is also equity. A GK has no shares, so the Japan entity cannot issue stock. Foreign companies usually grant equity in the parent anyway, so this matters less than it sounds. What matters is the leaver terms, which I wrote about in Giving equity to Japan staff? Write the exit terms first.

How the form connects to visas

The two visas foreign companies use most look at different things.

Intra-company Transferee looks at the move between offices. The Immigration Services Agency defines it as an employee of a foreign office of an organization with a head office, branch or other office in Japan, transferred for a set period to the Japanese office to do work within the Engineer/Specialist in Humanities/International Services range. A branch or a subsidiary can receive them. The person needs at least a year of continuous service at the overseas office. Running the business is outside its scope.

Business Manager looks at the Japanese business itself. Since October 2025 it requires ¥30 million in capital and at least one full-time employee who is Japanese or holds a status such as permanent resident. Details are in Japan's Business Manager Visa: ¥30 Million, One Local Hire. A representative office that cannot sell is a weak base for it.

The four forms look alike on setup day. They differ on hiring day and on exit day

Four ways for a foreign company to operate in Japan, compared on hiring, visas and exit. JETRO, Types of operation in Japan and Closure of branch offices or subsidiary companies (2026); Immigration Services Agency. As of November 2026

Kabushiki kaisha (KK)

Hiring: the form candidates know best. Visas: supports both transferee and business manager. Exit: dissolution and liquidation, creditor claim period of at least 2 months

Godo kaisha (GK)

Hiring: expect to explain why a GK. Visas: as a KK. Exit: as a KK, at least 2 months; court-supervised special liquidation if net assets are negative

Branch office

Hiring: the employer is the head office itself. Visas: supports transferees. Exit: creditor objection period of at least 1 month, but the head office owns the debts

Representative office

Hiring: research and liaison staff only, no sales. Visas: a weak base for business manager. Exit: no registration, the lightest process

A branch is the fastest to close. The price is that Japan's risk runs straight to headquarters.

Exit costs are set the day you choose

This is the row most comparison sheets leave out.

A branch closes fast. JETRO says creditors must get at least one month to object, and the common practice is to register the resignation of all representatives in Japan. Once all of them have resigned, the branch is closed. The certificate comes about two weeks after the application. The speed has a cost you already know: the branch's debts were always the head office's debts.

A subsidiary takes longer. Shareholders resolve to dissolve and appoint a liquidator, the dissolution is registered, the tax office is notified, and creditors are called individually and in the official gazette. They get at least two months. Only then can the shareholders approve the end of the liquidation and register it. If net assets are negative, the company cannot finish on its own and moves to a special liquidation supervised by the court. In exchange, the parent's liability stops at its investment.

One more point people miss. A branch cannot be converted into a subsidiary. JETRO says you close the branch and set up the subsidiary in parallel, moving assets by contribution in kind. "Start with a branch, upgrade later" means booking one closing and one opening in advance, with your employees transferring in between.

The registration steps are rarely the hard part of leaving. How people leave and how contracts end are harder, as I wrote in Closing a Japan entity: the paperwork is the easy part.

What I would pick

For research and customer visits, a representative office is enough. Keep sales out of it.

To sign customers, hire people and stay, I lean toward a subsidiary. KK or GK depends on hiring. If you want people from large Japanese companies or sell to big customers in traditional industries, a KK saves you one explanation. If the team is mostly international and the business runs closely with headquarters, as software companies often do, a GK is lighter. Both have limited liability and similar exit procedures.

A branch fits when headquarters means to carry Japan's risk and profit itself from the start, say a manufacturer's technical service base with few staff and contracts signed by the parent. If you expect to move to a subsidiary within two or three years, I don't see a reason to start as a branch.

Add two columns to the spreadsheet. Whose name goes on the first employee's contract. Who signs the dissolution resolution on the last day.

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