On May 1, 2006, a new type of Japanese legal entity named the Godo Kaisha (GK) was born. Although it is commonly referred to as the "Japanese LLC," a GK differs from a US LLC in several important respects.
Taxable Entity In Japan
The GK is taxed like a corporation in Japan, and therefore is not a disregarded entity for Japanese tax purposes, unlike the disregarded entity tax status of an LLC in the US. Tax practitioners do believe, however, that the IRS will allow taxpayers to "check the box" for GKs and therefore a GK can be a disregarded entity for US tax purposes.
Partnership Governance Concepts Apply
The creators of the GK wanted to discourage use of the GK to avoid the mandatory governance and other formalities of a Japanese kabushiki kaisha (KK) corporation. The Japanese Ministry of Justice has explicitly stated in its outline of the new Company Law (Law No. 86 of 2005) that it intends Japanese partnership concepts to apply to GK governance rather than KK corporate
