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How to incorporate Ippan shadan hojin ( 一般社団法人 = general incorporated association) in Japan

In this page, I will explain how to incorporate Ippan shadan hojin ( general incorporated association = いっぱんしゃだんほうじん ) in Japan.
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If you want to make legal entity for the purpose of below, you can incorporate Ippan shadan hojin.
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” The object of this Ippan shadan hojin shall be to promote friendly relations and to enhance mutual understanding between Japan and Britain through cultural exchange between the two countries.  ”
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By establishing stock company or limited liability company, you can engage in non profit activity.
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However, if you establish Ippan shadan hojin and engage in non profit activity, your association can appeal  your intention of non profit.
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Moreover, if your association can satisfy some requirements, your association does not need to pay corporate tax and corporate inhabitant tax.
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In the case of Ippan shadan hojin, main purpose of establishment is to engage in non profit activity.
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In this page, non profit activity means that your association does not divide surplus among members.
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And this ” members ” corresponds with shareholders of stock company.
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” Member  ” will be translated into ” 会員 = kaiin “.
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However, the word “kaiin” is tricky word.
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For example, if you want to rent DVD in Tsutaya, you need to become Kaiin of Tsutaya.
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And when you become kaiin of Tsutaya, you can obtain right to rent DVD from Tsutaya.
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And your right will be translated as ” membership “.
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However, in the case of general incorporate association, Kaiin is a kind of incorporator, shareholder.
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Your Ippan shadan hojin can sell merchandise and earn profit and pay salary to employee of association and directors.
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And Ippan shadan hojin is assembly of persons.
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So, at the time of incorporation, you need to prepare at least two members.
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However after incorporation of Ippan shadan hoijn, even if the number of member is only one, you can sustain your association.
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Process to incorporate Ippan shadan hojin ( General Incorporated Association  )

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Basically, process to incorporate Ippan shadan hojin ( general incorporated association ) is similar to that of stock company ( = kabushiki kaisha = 株式会社 ) or limited liability company ( = Godo kaisha = 合同会社).
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At first, you need to make articles of incorporation ( teikan= 定款 ).
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In this paper, you need to clarify matters below.

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1  Name of Ippan shadanef hojin
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2  Address of Ippan shadan hojin
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You can determine your apartment as address of your association.

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Purpose of Ippan shadan hojin
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4  Name and address of director ( You need to prepare at least 1 director. ) and auditor ( Kanji = 監事. You can establish Ippan shadan hojin without auditor ).

5  Matters related to membership
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For example, distinguish of regular member or special member and membership fee.
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6  Organization of your association.
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( You can incorporate Ippan shadan Hojin without board of directors. In that case, members can determine important matters to operate your association by general meeting = shain sokai = 社員総会 )
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7  Business year of organization

etc….

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You need to determine matter to be indicated in articles of incorporation.
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So, you read through articles of incorporation below and if you have found any matters to be modified or deleted, you can do it.
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This is sample of articles of incorporation of Ippan shadan hojin.
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Articles of Incorporation of Incorporated general association Yamada ( Ippan shadan hojin Yamada = 一般社団法人 山田 )
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Chapter I – General Provisions
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(Name) Article 1
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The organization shall be named Ippan shadan hojin Yamada and the name in English shall be General Incorporated association Yamada.
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(Principal Office) Article 2
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Ippan shadan hojin Yamada shall have its principal office in Chuo-ku, Tokyo.

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Chapter II – Objectives and Business Activities

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(Objectives) Article 3
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The objectives of Ippan shadan hojin Yamada shall be to contribute to the self-sustained development of the Japanese economy.
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Even in the case of Ippan shadan hojin, it can engage in profit making activity.
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Here I will provide example of purpose = objectives of other Ippan shadan hojin.
( Or you can skip this matter )

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Objectives of  “Ippan Shadan Hojin Nichiei Kyokai” or “ The Japan-British Society”.
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“Article 3 (Object of the Society)

 The object of the Society shall be to promote friendly relations and to enhance mutual understanding between Japan and Britain through cultural exchange between the two countries.

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Article 4 (Activities of the Society)

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1. To achieve the object stipulated in the preceding article, the Society shall conduct the following activities:
(1) To provide information on the political, economic and cultural scenes in Japan and Britain and to hold seminars and forums on related studies and researches.
(2) To promote and support grass-roots exchange programs between Japan and Britain through events held by cooperation between the peoples of the two nations, and to organise and hold receptions and gatherings of goodwill and friendship.
(3) To publish a monthly newsletter and other publications.
(4) To conduct other activities deemed necessary to achieve the object of the Society.
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2. For the purposes of Paragraph 1. above, the Society may conduct its activities both in Japan and abroad.


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Objectives of  “Ippan Shadan  Hojin The India Club ”.

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Article 4. (Corporate Objects)
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The Company shall engage in the business of enhancing the understanding
of overseas politics, economies, cultures and other related matters for the
purpose of facilitating India Japan and international interchanges with
local residents and the business related to the management and operation
of facilities used for India Japan and international interchanges.
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Article 5. (Business)
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For the purpose of achieving the corporate objects described in the preceding Article, the Company shall engage in the following business activities:
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(1) To open seminars of various kinds.
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(2) To support the cultural businesses to be conducted
by local public organizations,etc.
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(3) To manage and operate The India Club Inc Building.
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(4) To engage in any other business activities as required for achieving the Company’s corporate objects.
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Objectives of  “ Ippan Shadan Hojin, Nihon Igaku Kyoiku Hyoka Kiko = Japan Accreditation Council for Medical Education (Abbrev. “JACME”)
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(Purpose) Article 3.
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The Japan Accreditation Council for Medical Education (JACME) exists to strengthen and advance medical education, and to contribute to health, health care, welfare, public health and global health, by assuring the quality of medical education in Japan from an international standpoint.
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To accomplish this mission, the organization is designed to carry out a dispassionate and proper evaluation of medical education programs in Japan, on the basis of the schools’ founding principles and the World Federation for Medical Education (WFME) Global Standards for Quality Improvement.
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(Business)
Article 4.
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This Association carries out the following business in order to achieve the purposes stated in the preceding Article:
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(1) Establishment and revision of medical education program evaluation standards.
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(2) Evaluation of medical education programs.
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(3) Instruction for enhancement and improvement of medical education programs.
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(4) Research for enhancement and improvement of medical education programs.
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(5) Publication of journals, academic books, etc. on medical education programs.
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(6) Collaboration with related organizations in Japan and overseas as well as collection of information on medical education evaluation in foreign countries.
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(7) Any other business necessary to achieve the purpose of this Association.
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Objectives of  “ Yokohama International Tennis Community “.

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(Objectives)
Article 3
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YITC is located in Yamate Park, which was designated as the cultural assets, “Scenic 
Spot” and authorized as “Industrial Heritage of Modernization”.
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YITC is obliged to perform business to maintain and manage the cultural assets, including    tennis courts (clay courts) and the surrounding environments and to transfer the same to the next generation.
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YITC shall promote culture related to tennis and international mutual understanding.     
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YITC shall contribute to nurture juveniles physically and mentally sound through tennis.      .

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(Businesses)
Article 4
. YITC shall perform the following business in order to realize the objectives provided i
n the foregoing Article.
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(1) Business to maintain Clay courts as cultural assets, Attached facilities, Surrounding     
environments and to transfer the same to the next generation.     
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(2) Business to study, collect, manage historical materials in relation to tennis and publicize
the results.     
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(3) Business to promote tennis culture.      .

(4) Business to organize tournaments, study, train and nurture supporters of tennis culture.      .

(5) Business to contribute to international mutual understanding through tennis.      .

(6) Business to support the handicapped.

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Now, let’s get back to Ippan shadan hojin Yamada
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(Business Activities) Article 4
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Ippan shadan hojin Yamada shall converse and cooperate with the Japanese Government and engage in the following business activities both in Japan and abroad in order to achieve the objectives stated in the previous article.

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(1) Conducting surveys and studies with regard to issues in such fields as the economy, industry, society, environment, science and technology, labor and management, etc.

(2) Engaging in other business activities considered necessary to achieve the objectives of Ippan shadan hojin Yamada.
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Chapter III – Membership (Ippan shadan hojin Yamada Members) Article 5
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Membership of Ippan shadan hojin Yamada shall consist of Regular Members, who will be treated as members as provided for in the Act on General Incorporated Associations and General Incorporated Foundations (Act No. 48, 2006) (hereinafter referred to as the “Corporations Act”).
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As for voting right of members ( In the case of Ippan shadan hojin without public interest authorization )
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In the case of Ippan shadan hojin, each member has equal voting right basically.
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Even if you have paid necessary costs to incorporate, sustain the association, other members have equal voting right as same as you.
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However, if you stipulate in articles of incorporation, you can determine other treatment.
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For example, depending on cotribution to association or amount of membership fee, some member have more voting right than other members.
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Article  〇  (  Voting right of members  ) 
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Each regular members shall have three voting rights and each special members have one voting right in  General Meeting of members.

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( If there is such kind of stipulation in articles of incorporation, your association can not become Koeki hojin. )
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On the other hand, you can not eliminate voting right of some members completely.

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Because, shadan hojin is assembly of members.
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(Regular Members) Article 6

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1. Regular Members shall consist of two categories, corporate membership and group membership.

2. Entities eligible for corporate membership shall be registered corporations or similar organizations engaged in economic activities.

3. Entities eligible for group membership shall be national groups representing a specific industry, regional business groups, and other similar organizations.

(Special Members) Article 7

Special Members shall be organizations and groups, etc. which do not fall under the provisions of either paragraph 2 or paragraph 3 of the previous article and which have been specially approved by the Representative Director.

(Admission) Article 8

1. Entities wishing to join Ippan shadan hojin Yamada shall apply to join in accordance with the procedures prescribed by the Board of Directors and may join when the Representative Director has given approval pursuant to the provisions of the Board of Directors.

2. Regular Members and Special Members shall register one representative (hereinafter referred to as the “Member Representative”) with the Director General when joining Ippan shadan hojin Yamada.
3. A new Member Representative shall be registered with the Director General whenever there is a change in a Member Representative.
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(Enrollment and Membership Fees) Article 9

1. Members are obliged to pay enrollment and membership fees in accordance with the criteria determined at a General Meeting.

2. Ippan shadan hojin Yamada may collect special membership fees, etc. to allocate to expenses for special activities in accordance with that determined by the Board of Directors.
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(Withdrawal) Article 10

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.1. Members may withdraw at any time by completing the procedures prescribed by the Board of Directors.

( Or you can stipulate ” Members can withdraw if he / she has obtained approval of representative director “.

However, even if this sentence is enacted, if there is an avoidable reason, member can withdraw without approval of representative director.)

2. In the event that a Member loses membership eligibility in accordance with the provisions of the previous paragraph, unpaid membership fees for that business year must be paid and enrollment fees and membership fees already paid shall not be refunded.

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(Expulsion) Article 11

1. In the event that any of the following applies to a Member, that Member may be expelled based on the voting rights of two thirds or more of a majority of all Members.

(1) When a Member violates these Articles of Incorporation or other rules
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(2) When a Member commits an act that damages the reputation or is contrary to the objectives of Ippan shadan hojin Yamada
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(3) When there are any other appropriate grounds for expelling a Member

2. In the event that a Member is to be expelled in accordance with the previous paragraph, the said Member shall be notified one week prior to a General Meeting
and said Member must be given the opportunity to defend him/herself at the General Meeting.

( Unless notice is given to the said member, expulsion cannot be asserted against the him/her )

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(Loss of Membership Qualification = taisha = 退社 ) Article 12

1. In addition to the preceding two articles, when any of the following applies to a Member, said Member shall lose membership qualification.

(1) When a Member has not fulfilled their duty to pay enrollment and membership fees prescribed in Article 9 Paragraph 1 for two years

(2) When all Members have given their consent

(3) When said Member has gone bankrupt or dissolved.

(4) When said member ( if he/she is human ) has died.
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( Reason of Statutory Withdrawal = Hotei taisha riyu = 法定退社理由 )
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In the case members falls under items below, they shall withdraw the association.

(i) The occurrence of reasons provided for in the articles of incorporation;

(ii) The agreement of all members;

(iii) Death or dissolution;

(iv) Expulsion ( Jomei ).
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So, even if your association does not stipulate these reasons, if a member falls under matters above, he/she shall leave association.

2. In the event that a Member loses their membership qualification in accordance with the previous article or the previous paragraph, enrollment and membership fees already been paid shall not be refunded.

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Chapter IV – General Meetings

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.(Composition) Article 13

1. General Meetings shall be composed of all Members.

2. General Meetings provided for in the previous paragraph shall be general meetings of Members as provided for under the Corporations Act.

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.(Authority) Article 14

General Meetings shall decide matters stated below.

(1) Expulsion of Members

(2) Election and dismissal of Directors, Auditor(s) and the Accounting Auditor

(3) Changes to the Articles of Incorporation

(4) Dissolution and disposal of remaining property

(5) Approval of business policies

(6) Approval of budget for revenue and expenditure

(7) Criteria for assigning enrollment fees and membership fees

(8) Appointment and removal of the Representative Director and other Officers stated in Article 23 Paragraph 3

(9) Other matters prescribed in laws and regulations and these Articles of
Incorporation as being matters to be deliberated and decided at General Meetings.

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(Convening) Article 15

Regular General Meetings shall be held within three months of the end of each business year. In addition, Extraordinary General Meetings shall be held as necessary.

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(Convoking) Article 16

1. Unless otherwise provided for in laws and regulations, General Meetings shall be called by the Representative Director pursuant to a resolution of the Board of Directors.

2. Members with the voting rights of at least one-fifth of the voting rights of all Members may request the convocation of a General Meeting to the Representative Director, indicating the objective of the General Meeting and reasons for convocation.

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(Chair) Article 17

The Representative Director or a person designated by the Representative Director shall act as the chair of General Meetings.

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(Voting Rights) Article 18

Each Member shall be entitled to one vote on each General Meeting resolution.

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(Exercising of Voting Rights in Writing or Other Methods) Article 19

1. Members unable to attend General Meetings may vote in writing or electromagnetic form or delegate the exercising of their voting rights with regard to matters they have been notified of in advance.

2. Members who have exercised their voting rights in accordance with the provisions of the previous paragraph shall be deemed to have attended the General Meeting.

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(Resolutions)Article 20

1. Unless otherwise provided for in laws and regulations or these Articles of Incorporation, resolutions taken by General Meetings shall be made by Members with a majority of the voting rights of all Members present and by a majority of the voting rights of said Members present.

2. Notwithstanding the provisions of the previous paragraph, the following resolutions shall be made by a majority of all members and at least two-thirds of the voting rights of all Members.

(1) Expulsion of Members

(2) Dismissal of Auditors

(3) Amendments to the Articles of Incorporation

(4) Dissolution

(5) Other matters prescribed in laws and regulations

3. Resolutions provided for in paragraph 1 must be taken for each candidate when deliberating and deciding proposals involving the election of Directors and Auditors (hereinafter referred to as “Officer Election Proposals”). In the event that the total number of candidates for Director or Auditor exceeds the quorum prescribed in Article 22, candidates shall be elected from among the candidates who received a majority of favorable votes until the quorum of slots is filled in the order of the candidates with most votes.

4. Notwithstanding the provisions of the previous paragraph, in the event that as a result of exercising voting rights in writing or other methods prescribed in the previous article, a majority of favorable votes regarding an Officer Election Proposal has been obtained prior to a General Meeting, and in the event that at the General Meeting, Members present consult on resolutions on Officer Election Proposal collectively, and do not object, then Officer Election Proposals may be decided collectively.

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(Minutes) Article 21

1. Minutes shall be prepared with respect to the business of General Meetings in accordance with that which is prescribed in laws and regulations.

2. The Chair and one Director present shall affix their name and seal to the minutes provided for in the previous paragraph.
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FYI.

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The general incorporated association needs to prepare a registry (hereinafter referred to as a “member registry = shain meibo “) of members that indicates the names and addresses of members.
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And the general incorporated association needs to keep its member registry at its principal office.
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And Members may make request for inspection or scanned copy.
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So, once a person becomes a member of Ippan shadan hojin, he/she can know address and name of other members.
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Moreover, in the case of Koeki shadan hojin, persons other than members of the association can request for inspection and scanned copy of member registry.
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( The association can conceal address of members. )
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Chapter V – Officers and the Accounting Auditor

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(Establishment of Officers and the Accounting Auditor) Article 22

1. Ippan shadan hojin Yamada shall retain the following Officers.

(1) Directors – A minimum of 1 and maximum of 7

( Even if your articles of incorporation does not stipulates this sentence, you need to appoint at least one director. )

(2) Auditors – A maximum of 2

( If your articles of incorporation does not stipulates this sentence, you can not appoint auditor = kanji = 監事. )

2. Ippan shadan hojin Yamada shall retain an Accounting Auditor.

( If your articles of incorporation does not stipulates this sentence, you can not appoint Accounting Auditor = kaikei kansa nin = 会計監査人  )

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.(Election of Officers and the Accounting Auditor) Article 23

1. Directors shall be elected by a resolution of a General Meeting from amongst the Member Representatives or similar persons, or persons who have experience and knowledge of the administrative functions of Ippan shadan hojin Yamada; provided, however, that no more than one third of the total number of Ippan shadan hojin Yamada Directors (current total) shall be constituted by one Director and his or her relatives or a person with other special relations.

( This stipulation is not obligatory to incorporate Ippan shadan hojin. However, in order to become Ippan shadan hojin with Koeki nintei, it is obligatory )

2. Auditors and the Accounting Auditor shall be elected by a resolution of a General Meeting.

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.(Duties and Authority of the Directors) Article 24

1. Directors shall make up the Board of Directors and shall execute their duties in accordance with the provisions prescribed in laws and regulations and these Articles of Incorporation.


( In order to make up the board of directors = rijikai = 理事会, your association needs to prepare at least three directors and auditor = kanji = 監事. )

In the case of joint stock company, rijikai = 理事会 is named Torishimari yaku kai = 取締役会, then kanji = 監事 is named 監査役 = kansa yaku ).

2. Representative Directors shall represent Ippan shadan hojin Yamada and shall perform their duties in accordance with the provisions prescribed in laws and regulations and these Articles of Incorporation.

( You can incorporate Ippan shadan hojin without appointing representative director = Rijicho = 理事長.

In the case the number of director is one, she is registered as Representative director as well as director.)

3. Representative Directors and Ippan shadan hojin Yamada’s Executive Directors must report on the state of execution of their duties to the Board of Directors at least twice each business year at intervals exceeding four months.

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.(Duties of the Auditors) Article 25

1. Auditors shall audit the performance of Director’s duties and shall prepare audit reports in accordance with the provisions prescribed in laws and regulations.

2. Auditors may, at any time, request business reports from Directors and employees and investigate the state of Ippan shadan hojin Yamada’s operations and finances.

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(Duties of the Accounting Auditor) Article 26

1. The Accounting Auditor shall audit Ippan shadan hojin Yamada’s balance sheet and statements of net increases and decreases in assets and supplementary schedules, and shall prepare an accounting audit report.

2. The Accounting Auditor may, at any time, review or copy accounting books or documents relating to accounting books and electronic records thereof, or may request reports relating to accounts from Directors and employees.

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(Term of Office of Officers and the Accounting Auditor) Article 27

1. The term of office of Officers shall continue until the conclusion of the Regular General Meeting for the last business year which ends within two years from the time of their election; provided, however, that re-election shall not be precluded.

( Term of office of director is at longest 2 years. So, Ippan shadan hojin needs to elect directors every 2 years. 

Even if same person is re-elected as director, it needs to file registration of appointment of directors.

And it costs registration tax of 10,000 yen and fee for judicial scrivener. It will be about 30,000 yen. )

2. The term of office of Officers elected to fill a vacancy shall be until the expiration of the term of office of their predecessor.

( If your association does not enact this article, it needs to hold several general meeting of members to elect officers  )

3. In the event that there is a vacancy in number of Directors or Auditors prescribed in each item of Article 22 Paragraph 1, Directors or Auditors who have retired due to the expiration of their term of office or resignation shall continue to have the rights and obligations of a Director or Auditor until a newly elected Director or Auditor assumes office.

( Even if your association can not find next officer, it can dismiss current officers. )

4. The term of office of the Accounting Auditor shall continue until the conclusion of the Regular General Meeting for the last business year which ends within four years from the time of their election.
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If articles of incorporation of does not stipulate, the term of office of the Auditor ends at the conclusion of the Regular General Meeting for the last business year which ends within four years from the time of their election.
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Articles of incorporation can stipulates that the term of office of the Auditor ends at the conclusion of the Regular General Meeting for the last business year which ends within two years from the time of their election.
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Without stipulation in articles of incorporation, you can not shorten the term of office of auditor from four years to three or two years.
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In the case of stock company, term of directors can continue at most 10 years from election.
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However, in the case of Ippan shadan Hojin, you need to elect directors   every two years and every four years as for auditor. ( re – election is acceptable).
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Even if your association appoint same directors, registration of change of directors are still required and registration tax of 10,000  yen and fee for Shihoshoshi lawyer is required ( It may be 30,000 yen ).
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(Dismissal of Officers and the Accounting Auditor) Article 28

1. Officers and the Accounting Auditor may be dismissed in accordance with a resolution of a General Meeting.

2. In the event that any of the following applies to the Accounting Auditor, Auditors may dismiss the Accounting Auditor with the consent of all Auditors. In such case, Auditors shall report the dismissal of said Accounting Auditor and the grounds for dismissal at the first General Meeting convened after dismissal.

(1) When the Accounting Auditor has violated their duties or neglected their duties

(2) When the Accounting Auditor has engaged in misconduct inappropriate for an Accounting Auditor

(3) When the Accounting Auditor has difficulty in, or is unable to cope with the execution of their duties due to mental or physical disability

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(Remuneration and Compensation) Article 29

1. Officers shall be unremunerated; provided, however, that Officers other than part-time Directors may be paid remuneration and compensation as consideration for the execution of their duties.

( Even in the case of Ippan shadan hojin or NPO, directors and employees can receive salary.  

So, if they can sustain their living by this remuneration, they may be able to obtain necessary status of residence in Japan.
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Directors can become employee of hojin at the same time.
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In that case, the director can receive salary based on status of employee.
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Auditor cannot possess status of employee.)
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2. The total amount of remuneration and compensation for full-time Directors shall be fixed at a General Meeting and payment shall be pursuant to provisions of the Board of Directors.

( This means that general meeting of members determines total amount of remuneration for all of directors.  

Then board of directors ( excluding auditor ) determine specific amount for each directors. )
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3. The total amount of remuneration and compensation. for Auditors shall be fixed at a General Meeting and payment shall be in accordance with that which has been determined through consultation by Auditors.
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( This means that general meeting of members determines total amount of remuneration for all of directors.  

Then board of directors can not determine specific amount for each auditors.

If board of directors can determine this matter, too, auditor will hesitate to point out directors unreasonable performance. )

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4. Remuneration and compensation for the Accounting Auditor shall be determined by the Board of Directors having obtained consent from the majority of Auditors.
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(Exemption from Liability) Article 30
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1. In the event that Officers’ indemnity liability applies to requirements prescribed in laws and regulations, Ippan shadan hojin Yamada may exempt Officers from their indemnity liability, by a resolution of the Board of Directors, to the extent of the amount obtained by subtracting the sum of the minimum liability amount prescribed in laws and regulations from the amount for which he or she is liable.

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2. In the event that indemnity liability provided for in the previous paragraph applies to requirements prescribed in laws and regulations, Ippan shadan hojin Yamada may, by a resolution of the Board of Directors, conclude an agreement with the Accounting Auditor which limits indemnity liability; provided, however, that the limitation of liability pursuant to such agreement shall be the minimum liability amount prescribed in Article 113 Paragraph 1 of the Corporations Act.

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Chapter VI – Board of Directors

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(Composition) Article 31

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1. Ippan shadan hojin Yamada shall retain a Board of Directors.

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2. The Board of Directors shall be composed of all Directors.

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.( When your Ippan shadan hojin forms board of directors, it needs to appoint representative director and auditor ).

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(Authority) Article 32

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The Board of Directors shall conduct the following duties.

(1) Decide the execution of Ippan shadan hojin Yamada’s operations

(2) Supervise the execution of duties by Directors

(3) Decide the disposal and acceptance of assignment of important assets

(4) Decide borrowing of significant amounts

(5) Decide the election and dismissal of important employees

(6) Decide the establishment, changes or abolition of subordinate offices and other important organizations

(7) Decide the development of systems to ensure the properness of Ippan shadan hojin Yamada’s operations

(8) Decide the revision or abolition of the Charter of Corporate Behavior and development of systems to ensure Members comply with the Charter of Corporate Behavior

(9) Other matters prescribed in laws and regulations or these Articles of
Incorporation as matters for resolution by the Board of Directors

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.(Convocation)Article 33

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1. The Representative Director shall call meetings of the Board of Directors and act as chair.

2. In the event that the position of Representative Director is vacant or the Representative Director is unable to carry out his or her duties, another Director shall call a meeting of the Board of Directors and the Director who called the meeting shall act as chair.

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(Resolutions ) Article 34

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1. Resolutions taken by the Board of Directors shall be made by a majority of Directors, excluding Directors with a special interest in the resolution, being present and by a majority of the voting rights of said Directors present.
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( In the case, Director A wants to sell his real estate to this association, he is regarded as ” director with a special interest.

This kind of transaction is called ”  RIEKI SOHAN TORIHIKI  = 利益相反取引 “

So, director A can not exercise his voting right.

And even if director A is representative director, he can not act as chair.

Moreover, when judicial scrivener files registration of ownership transfer from director A to this association, he needs to provide minutes of board directors.

Directors excluding director A need to affix their registered seal on this minutes, as far as registration process is concerned. )

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2. Notwithstanding the provisions of the previous paragraph, resolutions of the Board of Directors shall be deemed to have been made when the requirements prescribed in laws and regulations have been fulfilled.

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(Minutes) Article 35

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1. Minutes shall be prepared with respect to the proceedings of meetings of the Board of Directors in accordance with the provisions prescribed in laws and regulations.

2. The Representative Directors and Auditors present shall affix their name and seal to the minutes provided for in the previous paragraph.

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Chapter VII –Assets and Accounting

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(Business Year) Article 36

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The business year of Ippan shadan hojin Yamada shall commence on January  1 each year and end of December 31 of the  year.

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( In the case, you incorporate legal entity today 17th November, if you stipulate as above, your association comes to end of business year soon  )

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(Revenue and Expenditure Budget) Article 37

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1. Ippan shadan hojin Yamada’s written budget for revenue and expenditure shall be prepared by the Representative Director prior to the commencement of each business year and must be approved by a General Meeting.

2. Notwithstanding the provisions of the previous paragraph, the budget from the date of commencement of that business year until the date of the Regular General Meeting may be executed in accordance with a resolution by the Board of Directors. The budget for this term shall be included in the written budget for revenue and expenditure provided for in the previous paragraph and approved by a General Meeting.

3. The documents provided for in paragraph 1 shall be kept at the principal office until the end of said business year and shall be made available for public inspection.

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(Business Reports and Settlement of Accounts) Article 38

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.1. The Representative Director shall prepare the following documents regarding Ippan shadan hojin Yamada’s business reports and settlement of accounts after the end of each business year, and reports must be made at a Regular General Meeting, having obtained approval from the Board of Directors, after such documents have been audited by the Auditors and the documents provided for in items 3 to 5 have been audited by the Accounting Auditor.

(1) Business reports
(2) Supplementary schedules to business reports
(3) Balance sheet
(4) Statements of net increases and decreases in assets
(5) Supplementary schedules to balance sheet and statements of net increases and decreases in assets

2. In the event that the documents provided for in items 3 to 5 of the previous paragraph do not fall under requirements prescribed in Article 48 of the Ordinance for Enforcement of the Act on General Incorporated Associations and General Incorporated Foundations, approval must be obtained at a Regular General Meeting in substitute for reporting to a Regular General Meeting as provided for in the previous paragraph.
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3. In addition to documents reported in accordance with the provisions of paragraph 1 or approved in accordance with the provisions of the previous paragraph, the following documents shall be kept at the principal office for five years.

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(1) Audit reports

(2) Accounting audit reports

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(Distribution of Surplus) Article39

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.Ippan shadan hojin Yamada may not distribute surplus.

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( In the case of Ippan shadan hojin, members can not receive dividends.

However, if members are employees of the association, they can receive salary ).
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Chapter Ⅷ  – Amendments to the Articles of Incorporation, Dissolution, etc.

(Amendments to the Articles of Incorporation) Article 40

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These Articles of Incorporation may be amended at a General Meeting with the approval of a majority of all Members and at least two-thirds of the voting rights of all Members.

(  This is called Tokubetsu ketsugi. 

Tokubetsu is ” special ” and ketsugi is ” resolution “

Assumed that there are 3 members in this association.
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Member A has 10 voting right. Member B has 1 voting right. Member C has 1 voting right.

In order to change articles of incorporation, at least 2 members should be present at the general meeting.

And without A’s approval, articles of incorporation can not be changed. )

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(Dissolution) Article 41

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.Ippan shadan hojin Yamada shall dissolve in the event of making a decision at a General Meeting with the approval of a majority of all Members and at least two-thirds of the voting rights of all Members, or in accordance with other circumstances provided for in laws and regulations.

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(Disposal of Remaining Property) Article 42

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.In the event that Ippan shadan hojin Yamada 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.
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( In the case of Ippan shadan hojin, members can not receive remaining property of the association.

If a member contributed her real estate to the association to incorporate the association and the association has it at the time of dissolution, the association can not return the property to her ).

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Chapter Ⅸ – Method of Public Notice

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.(Method of Public Notice) Article 43

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1. Ippan shadan hojin Yamada’s public notices shall be given in the official gazette.
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The public notification of the Company shall be posted at the Company’s
principal office, in a place conspicuous to the public.
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(In the case of stock company, this method is not acceptable. )
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Ippan shadan hojin needs to publicize result of financial statement every year.
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In the case it is publicized in website, it needs to continue for five years and in the case of notice board at least  for one year.
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As for corporate tax ( hojin zei ) and business tax ( Jigyo zei ) of Ippan shadan hojin

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In the case Ippan shadan hojin engages in activity that can produce profit, corporate tax and business tax ( Jigyozei ) is levied.
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Even if the income is brought by donation or membership fee, all income is included in taxable income.
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( In the case of non profit general incorporated association = hi eiri ippan shadan hojin = 非営利一般社団法人, solely income generated by profit making business is levied.  So,  donation and membership fee is not levied corporate tax)

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In order to become non profit general incorporated association = hi eiri ippan shadan hojin = 非営利一般社団法人, your association needs to prepare at least 3 directors.
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In order to become general incorporated association with public interest authorization ( this authorization is called ” koeki nintei = 公益認定 ” ), your association needs to prepare at least 3 directors and at least one auditor and board of directors.
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On the other hand, even if it does not make any profit, corporate inhabitant tax ( Hojin jumin zei ) is levied.
( It is at least 70,000 yen per a year ).
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However depending on city hall,  your association can ask for decrease of it.
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In the case of Ippan shadan hojin, contribution of capital is not required.
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When you have made articles of incorporation, you need to ask notary public ( Koshonin ) to notarize it.
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Notary public in Japan can not notarize articles of incorporation written in foreign language.
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So, if you (  incorporator =  founder ) can not understand Japanese language, you will make articles of incorporation by foreign language and power of attorney to Shiho shoshi lawyer ( =judicial scrivener ).
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Then, Shiho shoshi lawyer ( =judicial scrivener ) can make necessary documents and file registration of incorporation.
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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.
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So, you need to pay fee for notary public and it will cost about 51,000 yen.
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Once notarization process is completed, you need to appoint officer ( Yakuin ) at incorporation.
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And you can appoint representative director ( daihyo riji. Who corresponds to representative director of stock company ).

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And you also can determine other matters to operate your association.
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Then, you make necessary documents and file registration of incorporation of Ippan shadan hojin.
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At the time you file registration of incorporation of Ippan shadan hojin, registration tax of 60,000 yen is required.
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You can submit application form to register your Ippan shadan hojin to legal affairs bureau ( Homukyoku ) that has jurisdiction over location of head office.
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Necessary documents to file registration of incorporation of Ippan shadan hojin.

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1   Articles of incorporation notarized by notary public.
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( Even if there are articles of incorporation written in English language, it is just for reference purpose )
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2  Minutes where directors, representative director and auditors are elected by members.
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   ( In the case directors and auditors are appointed in articles of incorporation,  this minutes is not necessary )
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3  Minutes where address of head office of Ippan shadan hojin is determined.
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  ( In the case address of head office of Ippan shadan hojin is determined in articles of incorporation,  this minutes is not necessary )
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4  Acceptance of appointment of director, representative director and auditor.
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When a person is appointed as director, representative director, auditor, she needs to affix her seal on this paper to prove her acceptance.
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On this paper, director and representative director need to affix their registered personal seal (  Jitsuin )

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5  Certificate of seal impression of director ( Inkan shomeisho ).
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In the case your association appoints auditor ( You can incorporate Ippan shadan hojin without auditor ), his certificate of residence is necessary.
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Application for registration of association seal ( Inkan todokedesho ) .
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You need to prepare association seal to be registered with legal affairs bureau.
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If you order me, I will ask seal manufacturer to make it.
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It will cost about 2,000 yen.
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Application form for issuance of seal card.
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With this card, you can obtain certificate of association seal.
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So, at the time of incorporation, you can submit legal affairs bureau to issue this card.
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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.
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Necessary process after incorporation of General Incorporated Association.

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When you have incorporated Ippan shadan hojin, you need to make balanced sheet.
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And you need to submit notification of establishment of your association to tax office, prefectural office, city hall.
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In this process, you need to submit certified copy of commercial register.
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As for incorporation of Koeki Hojin ( Public interest incorporated association  )
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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 ).
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If you have intention to obtain this authorization,  it may be better to know requirements to obtain it.
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In order to obtain koeki nintei ( 公益認定 ), objectives of your association should be public interest activity.
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For example,
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Activity to promote science and technology etc.
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Authority that has jurisdiction over your Koseki hojin.
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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 ).
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If your association acts only in one prefecture, your association needs to obtain authorization from prefectural office.
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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 ).
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( Herein after referred to “officers” )
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( I repeat that ” if you do not have intention to become Koeki Hojin, you can put up  with one director and 2 members. “)
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Your association can not stipulate any requirements to participate in members.
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If your association needs to stipulate any requirements, reasonable reason is required.
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When your association collects fees from members, the amount of fee should be determined in general meeting of members.
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Each member should have equal voting right.
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In the election of director and auditor ( Kanji ), regulation related to relatives and same group should be enacted.
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You and your spouse and relatives within the third degree of kinship may not account for more than one-third of all officers.
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Director 1 Director 2 Director 3 Director 4 Director 5 Director 6
You Your husband a person he is not your relative a person he is not your relative a person he is not your relative a person he is not your relative Acceptable

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Director 1 Director 2 Director 3 Director 4 Director 5
You Your husband a person he is not your relative a person he is not your relative a person he is not your relative Not Acceptable

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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.
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In order to obtain public interest authorization, auditor should be appointed from tax accountant or CPA or a person who has experience of accounting.
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.Your association can not divide surplus among members.
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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.
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Your association can not divide residual property ( in the case of dissolution of your association ) among members.
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It should be contributed to other public interest association that has similar objectives etc.
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Because, once your association has obtained Koeki nintei ( public interest authorization ), the association is not yours, but owned by public.
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As for Purely non profit general incorporated association = hi eiri gata ippan shadan hojin = 非営利型一般社団法人

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In the case your Ippan shadan hojin is purely 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.
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So, you hope to become this kind of association.
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There are two kinds of purely non profit general incorporated association.
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One is thoroughly non profit general incorporated association = 「非営利性が徹底された法人」.
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Another is association that engages in common profit of members = 「共益的活動を目的とする法人」
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1.Requirements of thoroughly non profit general incorporated association.
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(1) In the articles of incorporation, it is stipulated that the association does not divide surplus among members.
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(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.
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(3) The association has not performed any activity that is contrary to (1) and (2) and provide special profit to specific person or institution.
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(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.
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(5) The number of directors should be at least 3.

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.
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(3) The main objectives of association is not profit making activity.
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(4)In the articles of incorporation, it is stipulated that the association does not divide surplus to specific person or institution.
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(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.

(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.
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(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.
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However, in the case of general incorporated association, the number of directors should be at least 1
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However in order to become purely non profit general incorporated association, the number of directors should be at least 3.)

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” Special relations ” means as below.

ⅰ  Spouse of director
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ⅱ  Relative within 3 degree of kinship of director
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ⅲ   common-law husband or wife of director
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ⅳ  Employee of director
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ⅴ ⅰ~ⅳ Persons who lives depending on income from director.
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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.
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In order to be purely non profit Ippan shadan hojin, it does not need to obtain any permit from authority.
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If your association satisfies requirements, it can become automatically purely non profit Ippan shadan hojin.
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However, when your purely non profit Ippan shadan hojin has become Ippan shadan hojin ( other than purely non profit Ippan shadan hojin ), you need to submit notification paper with tax office and vice versa.linkedin

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