CreditHub: Japan

APAC Factsheet - Switzerland

Business Structure

Type Main Points Details Key Takeaways
Stock Company (Kabushiki Kaisha)
  • Capital as low as ¥1
  • Board of directors required
  • Statutory auditor or committees

A kabushiki gaisha may be started with capital as low as ¥1. Under present law, a K.K. must have a board of directors, consisting of at least three individuals. Under the new Company Law, public and other non-close K.K.s may either have a statutory auditor, or a nominating committee, auditing committee and compensation committee structure similar to that of American public corporations. Close K.K.s may also have a single person serving as director and statutory auditor, regardless of capital or liabilities. Generally, the power to bring actions against the directors on the corporation's behalf is granted to the statutory auditor.

Flexible structure with minimal capital requirements, but requires a board of directors and statutory auditor.
Limited Liability Company (Godo Kaisha)
  • Introduced in 2006
  • Formed by articles of incorporation

Gōdō gaisha was introduced in 2006 by the Companies Act which is formed by articles of incorporation signed between its member investors. Each member provides capital contribution. Credit and promises to perform services are not valid consideration for an ownership interest in a GK.

Simple formation process, but capital contributions must be in cash or property.
General Partnership Company (Gomei Kaisha)
  • Joint and several liability
  • Unlimited liability

In a Gomei Kaisha, all partners are jointly and severally liable for any liability incurred by the partnership. The partners' liability is unlimited and not separate from the business itself.

Simple structure but comes with unlimited personal liability for partners.

Data Sources

Topic Main Points Details Key Takeaways
Corporate Information
  • Ministry of Economy, Trade and Industry

Corporate and economic information is available at the Ministry of Economy, Trade and Industry: www.meti.go.jp. Registration Required.

Use the Ministry of Economy, Trade and Industry website for comprehensive corporate information.
Credit Checks
  • Ministry of Economy, Trade and Industry
  • Private reporting agencies

You can obtain information on the financial state of affairs for companies and industry at the Ministry of Economy, Trade and Industry. There are also numerous private reporting agencies offering credit checks.

Combine data from the Ministry of Economy, Trade and Industry with private reports for comprehensive financial information.
Judgment Search
  • Credit reports
  • Online services

Normally you find this information in a credit report. Credit reports are offered as a service online.

Utilize online credit report services to check for existing judgments against businesses.

Contracting

Topic Main Points Details Key Takeaways
Required Documents
  • Copies of the contract(s)
  • Copy invoices and full statement of account

As a minimum, it is advisable to have at least the following available:

  • Copies of the contract(s)
  • Copy invoices and a full statement of account (including payments and credit notes that have been allocated against the outstanding invoices).

Ensure you have all necessary documents to support your claim in court.
Retention of Title
  • Valid and enforceable
  • Security against default or insolvency

Retention of title clauses are valid and enforceable in Japan under the freedom of contract principle. Retention of title allows the seller to retain ownership over the goods supplied until certain contractually defined conditions are met, therefore providing the seller with a form of security against the buyer's default or insolvency. Where the seller sells certain goods listed in the Instalment Sales Act (such as books, clothes and furniture), the seller is presumed to retain title to the goods until payment.

Consider including retention of title clauses in contracts to protect against buyer's default or insolvency.

Pre-Litigation

Topic Main Points Details Key Takeaways
Letter before action
  • Not mandatory
  • Good practice

A warning notice to the debtor is not mandatory before filing any enforcement claims. Good practice dictates that a notice should still be given which contains:

  • Creditor name and overview of the claim
  • The total amount of the claim, including penalties (interest)
  • Payment method required
  • A warning that the claim will be enforced through the enforcement authority in case the claim is not settled by the required date
  • Information on how to dispute the claim

If this measure has been taken and the payment still has not been made after a notice period, the creditor may file for enforcement.

Always send a comprehensive warning notice before initiating legal proceedings.
Interest and Collection Costs
  • Statutory interest rate: 6%
  • Parties can agree otherwise

The statutory interest rate for commercial transactions is 6% with parties able to agree otherwise as per signed contracts. If such interest rate is deemed contrary to public order and morals, etc, the statutory interest rate will apply.

Be aware of the statutory interest rate and ensure any agreed rate is enforceable.

Litigation

Topic Main Points Details Key Takeaways
Limitation Period Ten years for major claims Ten years from when the right becomes exercisable (20 years if the claim is for personal injury or wrongful death in breach of contract) Act within the appropriate timeframe to preserve your right to legal action.
Five years from knowledge Five years from when the right holder knows that the right has become exercisable
ADR Arbitration, mediation, conciliation ADR methods in Japan include arbitration, mediation, conciliation and, broadly, negotiation. The ADR providers include courts, and administrative and civil organisations. Consider including arbitration clauses in contracts. Be aware of the limited use of ADR for large commercial disputes.
ADR Law enacted in 2004 The Law on the Promotion of the Use of Alternative Dispute Resolution (ADR Law) was enacted in 2004 and became effective on 1 April 2007. This law aims to ensure fair and efficient ADR mechanisms by limiting ADR providers to only those who are certified by the government.
Arbitration Law The new Arbitration Law, which is based on the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law) and which was passed to encourage arbitration, became effective in 2004. As a result, arbitration has become more popular, particularly in relation to large international commercial disputes. However, in practice, arbitration is still uncommon.
Other ADR methods Other methods of ADR are not frequently used to settle large commercial disputes in Japan. Court-annexed mediation, which is mandatory as a first instance for family disputes and certain rent disputes, is rarely used successfully for large commercial disputes. This is partly because court-annexed mediation is generally considered inappropriate for complex business transactions or IP disputes.
Court Proceedings District Court for large disputes Large commercial disputes are usually brought in the District Court. Cases where the amount of a claim is JPY 1.4 million or less can be brought in the Summary Court. Appeals from the District Court are brought before the relevant High Court depending on the territory. There are eight High Courts in Japan. The Supreme Court is the court of last resort. Understand the court process and be prepared for a judge-driven procedure with less emphasis on precedent.
Written complaint required A claim is started by submitting a complaint to the court. After submission, the complaint is subject to review for compliance with formalities and, if necessary, amended. The complaint normally contains substantive argument and is filed with evidence.
No online filing There is not an option to commence proceedings online in Japan currently. A written complaint must be hand-delivered to the court.
Court serves complaint The court serves the complaint on the defendant by a special type of mail service (tokubetsusotatsu). The claimant or its agent cannot personally serve the complaint on the defendant.
Defendant's response The defendant must submit an answer in response to the complaint within a period set by the court in a notice of summons to the first hearing date and demand for an answer, which is served together with the complaint. The deadline is usually set about one week before the first hearing date, which is usually about four to six weeks from the service of the complaint.
Public hearings The hearing is open to the public. The parties submit briefs and produce evidence. If the defendant does not appear in court at the first hearing date, and does not submit an answer, the defendant is considered to have admitted the allegations in the complaint.
Preparatory proceedings The court has preparatory proceedings to clarify and ascertain material issues and evidence. These issues are generally identified through several exchanges of briefs and evidence, followed by court hearings. The proceedings are generally closed to the public. It will be possible for proceedings to be held via a web meeting system after 2020.
Settlement attempts Once the issues in the case are well understood, one of the judges in the case often attempts to mediate a settlement between the parties. In practice, the parties often settle the dispute before a judgment is given. Consider settlement as a viable option to resolve disputes before a judgment is given.
Appeals process After judgment is given, a dissatisfied party in the court of first instance (normally the District Court) can appeal to a higher court (normally the High Court) within two weeks of the receipt of the judgment. Understand the appeals process and be prepared to act within the specified timeframe.
Time Frame Maximum period of two years The Law on Expedition of Court Proceedings 2003 sets a maximum period of two years as a target for completion of the first instance court proceedings. Be prepared for potentially lengthy court proceedings, lasting up to two years or more.
Court Costs Each party pays own attorneys' fees Each party must pay its own attorneys' fees, and the unsuccessful party is generally not liable to pay the successful party's attorneys' fees. Consider potential costs when deciding to pursue legal action. Be prepared for high court fees, but understand that a significant portion of costs may be recoverable if successful.
Unsuccessful party pays other litigation costs The unsuccessful party is liable to pay other litigation costs, such as stamp (filing) fees, postage and witnesses' travel expenses, unless the successful party delayed, or conducted unnecessary activities in, the proceedings.

Enforcement of Court Judgments

Topic Main Points Details Key Takeaways
Enforcement Options Attachment and sale of moveable assets A party can enforce a local court's judgment by submitting to the execution court or the marshal (shikkokan) both an original of the judgment and a certificate of enforceability (shikkobun) that is issued by a court clerk of the judgment court. The marshal handles the enforcement of judgments. Be aware of the various enforcement options available, including attachment and sale of assets, bankruptcy proceedings, and imprisonment (in exceptional circumstances).
Attachment of debtor's income sources
Attachment and sale of immoveable assets
Bankruptcy proceedings
Imprisonment of defaulting debtor (exceptional circumstances)
Foreign Judgment Recognition Jurisdiction of foreign court The foreign court had jurisdiction over the case based on Japanese law or a treaty to which Japan is a party. Ensure all requirements are met for foreign judgment recognition and enforcement in Japan.
Due process The process was duly served on the unsuccessful party, or the unsuccessful party voluntarily answered the complaint.
Public policy compatibility The foreign judgment and the foreign court proceedings are not incompatible with public policy in Japan.
Reciprocity The foreign country recognizes a similar judgment rendered in Japan.

Insolvency

Topic Main Points Details Key Takeaways
Civil Rehabilitation Proceedings (Minji Saisei) Rehabilitate business operations Civil rehabilitation proceedings are intended to enable a debtor to rehabilitate its business operations or reconstruct its economic activities in accordance with a rehabilitation plan approved by a certain majority of its creditors. Consider civil rehabilitation for restructuring business operations with creditor approval.
Plan approved by creditors The distribution made to creditors must be no less than what they receive in the event of the debtor's bankruptcy. Based on the indicative procedure timelines published by the Tokyo District Court, plans of rehabilitation will be finalised and confirmed within five months from the date of filing.
Corporate Reorganisation Proceedings (Kaisha Kosei) Rehabilitate stock company Corporate reorganisation proceedings are intended to enable a stock company to rehabilitate its business operations in accordance with the reorganisation plan approved by a certain majority of its creditors. Use corporate reorganisation for large or complex cases requiring a structured plan.
More rigid than civil rehabilitation The claims of both secured and unsecured creditors are subject to the stay and are amended by the plan of reorganisation.
Longer timeline The court will finalise and confirm the plan of reorganisation within 12 months from the date of filing.
Bankruptcy Proceedings (Hasan) Winding-up of debtor Bankruptcy proceedings are proceedings for the winding-up of a debtor in financial difficulty. All the assets of the debtor will be sold, converted into cash, and then distributed to creditors, depending on the amount of their claims. Consider bankruptcy proceedings for winding-up and asset distribution.
Variable timeline Simple proceedings often conclude between three to six months after commencement. Complex cases may last more than a year.
Special Liquidation Proceedings (Tokubetsu Seisan) Winding-up with creditor cooperation Special liquidation proceedings are proceedings for the winding-up of a debtor in financial difficulty. Special liquidation is typically used when the debtor's shareholders are confident of obtaining creditors' cooperation in the liquidation process and wish to control such process without the involvement of a trustee. Use special liquidation for controlled winding-up with creditor cooperation.
Shorter timeline An agreement is usually confirmed by the court within five months of the issuance of the commencement order for special liquidation proceedings, although such period may be extended.

The information on this website is accurate to our knowledge as of January 2024.

The know-how stated is not intended to constitute a definitive or complete statement of the law, nor is it intended to constitute legal advice for any specific situation. We do not accept any responsibility for action taken as a result of information provided by on this website. It is your responsibility to take specific advice when dealing with specific situations. This website is intended as educational in nature and may not reflect all recent legal developments and may not apply to the facts and circumstances of individual transactions and cases.

Nothing on this website shall be construed or relied on as providing any legal representation, advice or opinion whatsoever on behalf of us or our staff.

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Currency Exchange Rate Chart
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Source: alphavantage.co

Using the Chart

Candlestick Series

Represents the daily opening, highest, lowest, and closing prices of a currency pair. This visual tool is pivotal for identifying price patterns and potential market directions, providing insights into market sentiment and possible price movements.

SMA (Simple Moving Average)

Calculates the average price over a selected number of periods, smoothing out price volatility. Commonly set at 14 days for short-term trend analysis, it helps identify the direction of the market momentum.

EMA (Exponential Moving Average)

This average places a greater emphasis on recent prices, thus responding more quickly to price changes than the SMA. A 14-day EMA is often used for reactive trend analysis, making it invaluable for dynamic trading strategies.

Bollinger Bands

Features a central SMA line with upper and lower bands that adapt based on price volatility. These bands widen during periods of high volatility and contract when the market is stable. This indicator is key for spotting the turning points in price movements by identifying overbought and oversold conditions.

RSI (Relative Strength Index)

A momentum oscillator that measures the speed and change of price movements on a scale from 0 to 100. It is particularly useful for identifying the conditions where an asset is potentially overbought (>70) or oversold (<30), often preceding reversals.

MACD (Moving Average Convergence Divergence)

Demonstrates the relationship between two moving averages, offering signals about the strength, direction, and momentum of the market. Its line crossings can signal potential buy or sell opportunities, aiding in decision-making on entry and exit points.

Stochastic Oscillator

Measures the current price relative to its price range over a specific period. Readings above 80 indicate a potential overbought situation (suggesting a sell), and readings below 20 indicate a potential oversold situation (suggesting a buy).

General Guidance

Utilise these indicators in conjunction with each other to gain a comprehensive understanding of market conditions, potential price movements, and to inform your trading decisions. Always consider the broader market context and other fundamental economic indicators to enhance the accuracy of your trading strategy.

Japan Economic Indicators
Source: worldbank.org
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