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Making Ippan shadan hojin, Process and Tax of Japan

Making Ippan shadan hojin, Process and Tax of Japan

Process of making of Ippan shadan hojin and Articles of incorporation

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Articles of incorporation is necessary
Appointment of director is necessary
Registration tax
Necessary documents
Preparation of balance sheet
Koeki Hojin
Ippan shadan Hojin and tax merit

In the case of Ippan shadan hojin, contribution of capital is not required.

You do not need to invest to incorporate Ippan shadan hojin.
(In the case of LLC, you need to invest some money to incorporate it)

When you have decide some items (Name, address, objectives, directors of Ippan shadan hojin), you can make draft of articles of incorporation (Teikan) and ask notary public ( Koshonin ) to notarize it.

Notary public (Koshonin) in Japan can not notarize articles of incorporation written in foreign language.

So, if you (  incorporators =  founders. At least two persons ) can not understand Japanese language, you will make articles of incorporation by foreign language and power of attorney to Shiho shoshi lawyer ( =judicial scrivener ).

Then, Shiho shoshi lawyer ( =judicial scrivener ) can make necessary documents and file registration of incorporation of Ippan shadan hojin.

In the case of Godo kaisha ( limited liability company ), such notarization is not required, but in the case of Ippan shadan hojin, notarization process is necessary.

So, you need to pay fee for notary public and it will cost about 52,000 yen.

Once notarization process is completed, you need to appoint officer ( Yakuin ) at the time of incorporation.

Process for Appointment of director to incorporate Ippan shadan hojin

And you can appoint representative director ( daihyo riji. Who corresponds to representative director of stock company ).

And you also can determine other matters to operate your association.

Then, you make necessary documents and file registration of incorporation of Ippan shadan hojin.

At the time you file registration of incorporation of Ippan shadan hojin, registration tax of 60,000 yen is required.

You can submit application form to register your Ippan shadan hojin to legal affairs bureau ( Homukyoku ) that has jurisdiction over location of head office.

Necessary documents to registration process of incorporation of Ippan shadan hojin in Japan

There are several necessary documents though, when you order me, I will prepare all documents in Japanese and English language.

1   Articles of incorporation notarized by notary public.
( Even if there are articles of incorporation written in English language, it is just for reference purpose )

2  Minutes where directors, representative director and auditors are elected by members.
  ( In the case directors and auditors are appointed in articles of incorporation,  this minutes are not necessary )

3  Minutes where address of head office of Ippan shadan hojin is determined.
 ( In the case address of head office of Ippan shadan hojin is determined in articles of incorporation,  this minutes are not necessary )

4  Acceptance of appointment of director, representative director and auditor.
When a person is appointed as director, representative director, auditor, she needs to affix her seal on this paper to prove her acceptance.

On this paper, director and representative director need to affix their registered personal seal (  Jitsuin )

If directors do not have legal address in Japan, they can write their signature on the paper.

5  Certificate of seal impression of director ( Inkan shomeisho ).

In the case your association appoints auditor ( You can incorporate Ippan shadan hojin without auditor ), his certificate of residence is necessary.

6  Application for registration of association seal ( Inkan todokedesho ) .

You need to prepare association seal to be registered with legal affairs bureau.
If you order me, I will ask seal manufacturer to make it.
It will cost about 2,000 yen.

7  Application form for issuance of seal card.
With this card, you can obtain certificate of association seal.

So, at the time of incorporation, you can submit legal affairs bureau to issue this card.

Even if your association is Ippan shadan hojin without public interest authorization, your association can not divide residual property ( in the case of dissolution of your association ) among members.

But you (director) can receive salary from your Ippan shadan hojin.

Necessary process after incorporation of General Incorporated Association.

When you have incorporated Ippan shadan hojin, you need to make balanced sheet.

And you need to submit notification of establishment of your association to tax office, prefectural office, city hall.

In this process, you need to submit certified copy of commercial register.

As for incorporation of Koeki Hojin ( Public interest incorporated association  )

In order to incorporate Koeki hojin ( こうえきほうじん ), at first you need to incorporate general incorporated association and obtain authorization from relevant authority, named public interest authorization ( =  koeki nintei ).
If you have intention to obtain this authorization,  it may be better to know requirements to obtain it.

In order to obtain koeki nintei ( 公益認定 ), objectives of your association should be public interest activity.

For example,
Activity to promote science and technology etc.

Authority that has jurisdiction over your Koseki hojin.

In the case, your Ippan shadan hojin engages in activity in more than one prefecture, your Ippan shadan hojin needs to obtain authority from cabinet office ( Naikaku fu ).

If your association acts only in one prefecture, your association needs to obtain authorization from prefectural office.

And in order to obtain Koeki nintei  ( 公益認定 ), you ( Incorporator ) need to appoint at least 3 directors ( riji ) and one auditor ( Kanji ).
( Herein after referred to “officers” )
( I repeat that ” if you do not have intention to become Koeki Hojin, you can put up  with one director and 2 members. “)

Your association can not stipulate any requirements to participate in members.

If your association needs to stipulate any requirements, reasonable reason is required.

When your association collects fees from members, the amount of fee should be determined in general meeting of members.

Each member should have equal voting right.

In the election of director and auditor ( Kanji ), regulation related to relatives and same group should be enacted.

You and your spouse and relatives within the third degree of kinship may not account for more than one-third of all officers.

ippan shadan hojin director family member table

And even if you and other person named Taro is not relative, if you and Taro is director or employee of same association ( excluding public interest association ) or company, you and Taro can not assume director and / or auditor at the same time to obtain Koseki nintei.

In order to obtain public interest authorization, auditor should be appointed from tax accountant or CPA or a person who has experience of accounting.

Your association can not divide surplus among members.

Before commencement of fiscal year of your association, your association needs to make business plan, income and expenditure budget plan and acquire approval of board of directors.

Your association can not divide residual property ( in the case of dissolution of your association ) among members.

It should be contributed to other public interest association that has similar objectives etc.

Because, once your association has obtained Koeki nintei ( public interest authorization ), the association is not yours, but owned by public.

Pure non profit general incorporated association = hi eiri gata ippan shadan hojin = 非営利型一般社団法人 and Tax

In the case your Ippan shadan hojin is pure non profit general incorporated association = hi eiri gata ippan shadan hojin = 非営利型一般社団法人, corporate tax is not levied on the donation your association has received.

Moreover if business activity of the Pure non profit general incorporated association is specific activities, even if it makes profit, it does not need to pay Corporate tax.

For example, if you operate Programming school, Language school by name of Pure non profit general incorporated association, your association does not need to pay corporate tax.

If you try to operate programming school, but hope to become Hieiri-gata Ippan Shadan Hojin, you can stipulate other main purpose.

For instance.
Our Ippan Shadan Hojin aims to provide children opportunities to learn programming and enhance programming skill of children and promote the public interest.

If Ippan Shadan Hojin engages in business activities (ex. publishing of books etc), profit made by such activities are levied by tax office.

However if Hieiri-gata Ippan Shadan Hojin operates English language school or programming school and receive fee from students, profit generated by such activity is not levied by the government of Japan.

So, you may hope to become this kind of association.

There are two kinds of pure non profit general incorporated association.

One is thoroughly non profit general incorporated association = 「非営利性が徹底された法人」.
Another is association that engages in common profit of members = 「共益的活動を目的とする法人」

1.Requirements of thoroughly non profit general incorporated association.

(1) In the articles of incorporation, it is stipulated that the association does not divide surplus among members.
(But it can pay salary to its directors, employees)

(2) In the event that the association is dissolved, the remaining property shall be donated to juridical persons as stated in Article 5 Item (17) of the Act on Authorization of Public Interest Incorporated Associations and Public Interest Incorporated Foundation or the national government or local governments upon a decision of a General Meeting.
(However before dissolution of the association, all money will be paid to directors as a salary)

(3) The association has not performed any activity that is contrary to (1) and (2) and provide special profit to specific person or institution.

(4) As for director, no more than one third of the total number of Directors shall be constituted by one Director and his or her spouse or relatives or a person with other special relations.
So when you become director of the Ippan shadan hojin, your spouse will not assume director of your IppanShadanHojin..

(5) The number of directors should be at least 3.
(Statutory auditor is not required)

2. Requirements of association that engages in common profit of members = 「共益的活動を目的とする法人」

(1) The main objectives of the association should be related to mutual assist or communication among each members or common interest among members.

(2) In the articles of incorporation or rules authorized by articles of incorporation, it is stipulated that amount of membership fee should be determined by general meeting of members of committee.

(3) The main objectives of association is not profit making activity.

(4)In the articles of incorporation, it is stipulated that the association does not divide surplus to specific person or institution.

(5)In the event that the association is dissolved, the remaining property shall be donated to juridical persons as stated in Article 5 Item (17) of the Act on Authorization of Public Interest Incorporated Associations and Public Interest Incorporated Foundation or the national government or local governments upon a decision of a General Meeting.

(6)The association has not provided special profit to specific person or institution.
(Let’s assume you incorporate Ippan Shadan Hojin and it will make sales amount (“one million yen). Then it sends one million yen to your company (KK company). In this case the Ippan Shadan Hojin can not be Non-profit type Ippan Shadan Hojin.)

(7)As for director, no more than one third of the total number of Directors shall be constituted by one Director and his or her spouse or relatives or a person with other special relations.
(8) The number of directors should be at least 3.

( In the case of Zaidan hojin = Gegeral incorporate foundation, the number of directors should be at least 3.
However, in the case of general incorporated association, the number of directors should be at least 1.

However in order to become pure (consummate) non profit general incorporated association, the number of directors should be at least 3.)

” Special relations ” means as below.

ⅰ  Spouse of director

ⅱ  Relative within 3 degree of kinship of director

ⅲ   common-law husband or wife of director

ⅳ  Employee of director

ⅴ ⅰ~ⅳ Persons who lives depending on income from director.

ⅵ    Spouse or relative within 3 degree of kinship of persons of ⅲ~ⅴ who share same income and expense with persons of ⅲ~ⅴ.

In order to be pure non profit Ippan shadan hojin, it does not need to obtain any permit from authority.

If your association satisfies requirements, it can become automatically pure non profit Ippan shadan hojin.

However, when your pure non profit Ippan shadan hojin has become Ippan shadan hojin ( other than pure non profit Ippan shadan hojin ), you need to submit notification paper with tax office and vice versa.

Tax matters relating to donor

In the case you operate General Incorporated Association, your association may receive donation from a person. In that case depending on situation, donor can apply for Donation Deduction. As for details, you can refer to this page. “Donation Deduction of Japan” 

As for legal information relating to Ippan Shadan Hojin, you can refer to this page.
(Tenure of office of director etc.)

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