Art.165
There must be at least seven promoters to incorporate a K.K. A corporation
can be one of the incorporators, if the incorporation of the new corporation
is in the scope of the purposes of the corporation. Also, the articles of
incorporation must be written in Japanese.
Art.166
Articles of incorporation must include the following:
1) The objective of the corporation;
2) trade name;
3) total number of shares authorized to be issued;
4) the value of each share, if the shares have par value;
5) deleted;
6) total number of shares authorized to be issued at the time of incorporation,
and the numbers of shares having par value and shares without par value;
7) deleted;
8) place of the principal office;
9) method the company is to give public notice;
10) name and address of each promoter.
(Please see Attached 1)
(2)
Price of a share of par-value stock shall not be less than 50,000 yen.
(3)
At least one-fourth of the total number of shares authorized by the company
must be issued at the time of incorporation.
(4)
Public notice of the companyıs incorporation shall be given via Official
Gazette or daily newspaper.
Art.167
The articles of incorporation shall not take effect unless signed by a notary
public.
Art.168
The following does not become effective unless stated in the articles of
incorporation:
1) to 3) deleted;
4) Special consideration received by a promoter and his name;
5) name of persons contributing in kind, the property to be contributed,
the value of the property, whether shares to be given therefor have or do
not have par value, and together with their classes and their number;
6) assets that has been stipulated to be taken after the coming into existence
of the company, and its value and transferor;
7) expenses incurred for incorporation which are to be incurred by the company,
and renumeration which is to be received by the promoters.
(2)
Contributions in kind (contributions other than money) can only be made
by promoters.
Art.168-2
Unless otherwise provided for in the articles of incorporation, the following
matters as to the shares to be issued at the time of incorporation shall
be decided by consent of all promoters.
1) the class and number of shares to be issued;
2) price of shares to be issued;
3) proceeds from issuing shares not to be included in the stated capital.
Art.168-3
Price of a share of stock without par-value shall not be less than 50,000
yen.
Art.168-4
Amount of capital shall not be less than 10,000,000 yens.
Art.169
Each promoter must purchase at least one share, and that transaction must
be evidenced in writing.
Art.170
In cases where the promoters have taken all of the shares issued at the
time of incorporation, the promoters shall without delay make the payments
in full for the shares and appoint directors and auditors.
Art.172
A shareholder contributing in kind shall deliver the property on the delivery
date; however, registration and acts required to create or transfer rights
as against 3rd parties may be effected after the company is incorporated.
Art.173
The directors, immediately after they take office, shall immediately apply
to the court for an appointment of an audit inspector.
(2)
This requirement can be exempted if:
1) the gross value of contribution in kind is no more than one-fifth of
the capital and no more than 5,000,000 yens;
2) in cases of contribution in kind using marketable negotiable instruments
or securities, when the price determined in the articles of incorporation
is not more than the market; or
3) in cases of contribution in kind using real estate, when an attorney
givers proof of appraisal value given by real estate appraiser.
(3)
When the property under Article 168 paragraph 1 item (5) or (6) is a real
estate and is certified by an attorney or for the real estate itself in
the same case as that described in the preceding paragraph, appraisal by
a real estate appraiser must be executed.
(4)
After hearing the report of the inspector, the court may amend any of the
particulars mentioned in Article 168 paragraph, if it deems them to be improper,
and the court must notify each of the promoters of the amendment.
(5)
A promoter who disapproves of the amendment mentioned in the preceding paragraph
may rescind his acceptance of the shares; in such case, however, the incorporation
procedure of the company may be continued after amending the articles of
incorporation.
(6)
If no promoter has rescinded his acceptance of the shares within two weeks
after the notice mentioned in preceding paragraph, the articles of incorporation
shall be deemed to have been altered in accordance with the notification.
Art.173-2
The directors and auditors must investigate the certificate of attorney
mentioned in the former part of paragraph 3 of the preceding Article and
the following particulars:
1) whether the value stipulated in the Articles of Incorporation in paragraph
2 of the preceding Article is appropriate or not for the property under
the said paragraph;
2) whether the total shares issued at the time of incorporation are subscribed
to or not;
3) whether the payment for subscription and contributions in kind for the
shares under the preceding item has been made or not.
Art.174
Promoters shall invite subscriptions where the promoters do not take all
the shares to be issued at the time of incorporation.
Art.175
A person intending to subscribe for shares shall state in the application
form the number of shares for which he wishes to subscribe, his address,
and his signature.
(2)
The application form shall be prepared by the promoters, and shall contain
the following:
1) date on which the articles of incorporation have been attested and the
name of the notary public who attested them;
2) particulars mentioned in Article 166 paragraph 1;
3) provisions regarding the period of duration or reasons for dissolution
of the company, if any;
4) the partiulars and the numbers of each class of shares, if multiple classes
of shares are issued;
4-2) provisions stipulating that the transfer of shares be approved by the
board of directors, if any;
5) provisions as to the distribution of interest priorto the commencement
of business, if determined;
6) provisions as to the retirement of shares out of which profits are to
be distributed to shareholders, if determined;
7) particulars mentioned in Article 168 paragraph 1;
8) particulars mentioned in Article 168-2;
9) whether shares taken by promoters are with par value or without par value,
their class, number, and price of such shares;
10) bank or trust company which is receive payment;
11) statement that a subscription of shares may be rescinded in an event
the constituent general meeting is not adjourned by a specified date;
12) name, address, and place of business of the transfer agent and/or the
registrar, if determined;
(3)
A person who intends to subscribe for shares shall also state in the application
form, in addition to the particulars in paragraph 1,the following:
1) whether the shares to be taken by him have par value or no par value,
if both shares are issued;
2) class of shares to be taken by him, if classes are issued;
3) issue-price for the shares to be taken by him if shares are without par
value or if shares having par value are issued above par value.
(4)
Promoters shall, at the time of issuing the application form, issue a written
statement of the place where the bank or trust company mentioned in paragraph
2 item (10), provided that this shall not apply if it is stated in the application
form.
Art.176
A person who has subscribed for shares shall incur obligation to pay for
the shares allotted to him by the promoter.
Art.177
The promoters shall require, soon after all the shares have been allotted,
payment in full for the issued shares.
(2) Payment mentioned in the preceding paragraph shall be made at the place
as mentioned in Article 175 paragraph 3 or the application form.
Art.178
Permission of the court is required for changing the bank or trust company
mentioned in paragraph 1 of Article 177.
Art.179
In cases where a person fails to make the payment in accordance with Art.177,
the promoters may fix a date and give at least a two-weeks notice, afterwhich
his non-payment may result in his rights being forfeited.
(2)
In cases where such person does not meet his obligation to pay even after
the two-week notice provided in Art.179, the promoters may again invite
further subscriptions for the shares which were forfeited.
(3)
The two previous provisions shall not preclude any claim for damages against
the person who did not meet his obligation to pay.
Art.180 Constituent General Meetings
The promoters shall, soon after payments are made in accordance with Article
177, convene a general constituent meeting.
Art.181 Investigation by Inspector
The promoters shall, when the particulars mentioned in Article 168 Paragraph
1 have been determined by the articles of incorporation, apply to the Court
for the appointment of an inspector to investigate those matters.
Art.182 Duty to Report by Promoter
The promoters shall report at the constituent general meeting the matters
relating to incorporation.
Art.183 Appointment of Officers
Officers shall be appointed at the constituent general meeting.
Art.184
The directors and officers shall investigate and report the particulars
mentioned in Art.173-2.
Art.185 Amendments at the Constituent General Meeting
If it is determined at the constituent general meeting that the particulars
mentioned in Art.168 are improper, it may be altered.
Art.188 Registration of Incorporation.
Registration of the incorporation of a K.K. shall be effected within two
weeks of the date when the procedure mentioned in Art.173 or Art.173-2 has
been completed in cases when the romoters have taken all of the shares to
be issued at the time of incorporation, but where the promoters have not
taken all of the shares to be issued at the time of incorporation within
two weeks of the date when the constituent general meeting has been terminated
or from the date when the procedure mentioned in Art.185 or Art.187-4 has
been completed.
Art.189
A bank or trust company which has dealt with the business of receiving payment
shall, on the application of the promoters or directors, certify as to the
safe custody of the money paid for the shares.
Art.190
The transfer of any right arising from the taking of shares shall not be
effective as against the company.
Art.191
After the coming into existence of the company, no person who has taken
shares may assert the nullity of his subscription by reason of mistake or
non-compliance with any of the requirements relating to the application
form for shares, nor may rescind his subscription on the ground of fraud
or duress. The same shall apply in cases where he has been present and has
exervied his right at the constituent general meeting.
Art.192
If there are shares issued at the time of incorporation of the company which
have not been taken after the coming into existence of the company, the
promoters and the directors at the time of coming into existence of the
company shall be deemed to have taken such shares jointly. The same shall
also apply in cases where a subscription for shares has been rescinded.
(2)
If there are shares at the time of incorporation of the company upon which
payment or transfer of investment in kind has not been made, the promoters
and the directors at the time of coming into existence of the company shall
be jointly and severally liable to indemnify the nonpayment to the company.
Art.193 Promotersı liability
If promoters were negligent in performing duties related to the incorporation
of the company, they shall be jointly and severally liable to the company.
(2)
If promoters are guilty of intentional wrongdoing or gross negligence, they
shall be jointly and severally liable to third parties.
Art.194 Promotersı liability if company does not come into existence.
If the company does not come into existence, the promoters shall be jointly
and severally liable for duties related to the incorporation of the company.
(2)
In cases mentioned in the preceding paragraph, any expenses incurred relating
to the incorporation shall be defrayed by the promoters.
Art.195 Joint and several liability among directors, auditors, and promoters.
In cases where the directors and auditors are liable as provided under Article
184 paragraphs 1 or 2, the promoters are jointly and severally liable with
the directors and auditors.
Art.198
A person, who is not a promoter but has consented to having his name on
the prospectus, solicitation materials, or any other document, shall incur
the same liability as that of a promoter.
Promotive Incorporation
When all the stocks issued by the corporation are accepted by the promoters
themselves, it is called promotive incorporation. Even when a subscriptive
incorporation is intended, it is a promotive incorporation if the remaining
stocks were not issued to other people end up with the promoters, and steps
for promotive incorporation must be followed. Steps for promotive incorporation
do not differ much from steps for subscriptive incorporation, but its contents
are simplified. A rough flowthrough of the steps follow:
1) acceptance of shares by the promoters must be evidenced in writing;
2) the type and number of shares accepted by the promoters must be consistent
with what the Articles of Incorporation provides or must be approved by
all of the promoters (in a promotive incorporatioin, the portions are usually
determined in the Articles of Incorporation);
3) if there are shares not accepted by the promoters, the promotive incorporation
can be changed into a subscriptive incorporation so that promoters can solicit
the acceptance by non-promoters;
4) the director must ask the court for an appointment of an auditor;
5) to inspect the validity of share transfers, the promoters must yield
to the auditor appointed by the court; also the auditor must approve any
amendments made to the articles of incorporation.
6) as soon as the managing director registers the company, the Kabushiki
Kaisha is established.