Introduction

When you establish your “Hojin(法人)” in Japan, you can choose a way mainly from 4 types, the stock company(Kabushiki Kaisha=株式会社), the limited liability company(Godo Kaisha=合同会社), the general incorporated association (Ippan Shadan Hojin=一般 社団 法人) and Non-Profit Organization corporation(NPO Hojin=NPO法人). In this article, you can learn about the last one, Non-Profit Organization corporation(NPO Hojin=NPO法人), especially for the characteristics, advantages & disadvantages, and also how to establish.

Characteristics

NPO Hojin is one of NPOs, especially for the organization which incorporates based on the law called “Act on Promotion of Specified Non-profit Activities”.  The most biggest characteristic of this corporation is that the purpose of the project is not for profit, but for social contributions. In addition, there are a lot of characteristics like below.

  • CANNOT impose unreasonable conditions on the acquisition or loss of member qualifications
  • need above 10 members including more than 3 directors(Riji=理事) and 1 auditor(Kanji=監事) as the officers(Yakuin=役員)
  • Among the officers, the percentage of the people who get rewards must be under ⅓ 
  • The main purpose of the activity must NOT be related to religious or political things.
  • must NOT recommend, support or oppose any candidate or political party.
  • ・must NOT be a gangster, and have no relationship with a kind of that group.

Additionally, the activity of NPO Hojin must be included as “ Non-profit activity of 20 fields(20分野の特定非営利活動) “ like below.

  1. The activity to promote health, medical or welfare services
  2. The activity to promote social education
  3. The activity to promote town planning
  4. The activity to promote sightseeing
  5. The activity to activate the rural community for agriculture, forestry and fisheries, or mountainous area
  6. The activity to promote academy, culture, art or sports
  7. The activity to protect the environment
  8. The activity to rescue the disaster
  9. The activity to protect local safety
  10. The activity to protect the human right and make the world peace
  11. The activity to cooperate internationally
  12. The activity to encourage the society where every human can participate equally regardless of  gender.
  13. The activity to raise children soundly
  14. The activity to promote the growth of information society
  15. The activity to promote the growth of scientific technology
  16. The activity to promote economic growth
  17. The activity to develop one’s vocational ability or encourage to find the job opportunities
  18. The activity to protect the consumers
  19. The activity to contact or help the activity related to No.1~18 above
  20. The activity based on regulations by prefectures or designated cities as the activity related to No.1~18 above

If we compare the characteristics of NPO Hojin with that of Ippan Shadan Hojin(ISH), we can sum up like following table.


NPO HojinIppan Shadan Hojin(ISH)
Time to establish4~6 months2~3weeks
Number of members needed to etablishAt least 10At least 2
Number of officers needed to establishAt least 3 directors(Riji=理事) and 1 auditor(Kanji=監事)1 directer
The cost to establish0About 110,000 yen
The contents of activityShould be included as Non-profit activity of 20 fieldsAnything is okay
Obligation to report to officesYesNo
Disclosure of InformationNeededNot needed
Subsidy(Hojyokin=補助金)You can getYou can get, but the amount is less than NPO Hojin
Support programThere are manyAlmost nothing

Advantages & Disadvantages

In this section, you can learn 3 advantages and disadvantages of NPO Hojin.

Advantage 1 – Easy to get social trust

As the subject becomes an organization, you can contract, rent a business office or purchase goods in the name of NPO Hojin, which means your credit improves in transactions. In addition, you can have an account named NPO Hojin and do not need to change the name every time the representative changes.

Advantage 2 – More possibilities to join the large-scale project as the part of society

These days the government gradually tends to ask or cooperate with NPO more and more when carrying out public works. Therefore you can have more possibilities to join that kind of work if you are a member of NPO Hojin in Japan.

Advantage 3 – Beneficial in terms of taxes

Compared with other styles of organization, NPO Hojin has an advantage on taxes. In general, the incorporated foundation(Zaidan Hojin=財団法人), the incorporated association(Shadan Hojin=社団法人)cannot be exempt from corporate tax(Hojin zei=法人税), but if your NPO Hojin does NOT make a profit, you can be exempt thanks to the regulation.

Disadvantage 1 – Need the detailed paperwork

NPO Hojin must submit the designated documents every years, and accounting has to be based on official bookkeeping(boki=簿記). Then the organization needs a member who has knowledge on accounting to  continue the community.

Disadvantage 2 – Obligation to conduct tax returns

If the organization becomes NPO Hojin, the tax office recognizes the NPO Hojin as the taxpayer. Which means you have to conduct tax returns at the tax office. However the activity of your NPO Hojin is NOT related to making a profit, you can be exempt from the tax.(※Advantage 3)

Disadvantage 3 – Must provide the disclosure of information

Every years NPO Hojin has to submit some documents such as activity reports(jigyo hokokusyo=事業報告書) and income statement(shueki keisansyo=収益計算書) to appropriate offices.(※Disadvantage 1) Those documents are released to the public and anyone can look over.

Procedure

When you incorporate NPO Hojin, you don’t cost money, but it has at least 4 months to conduct all the process. The process can be divided mainly in 3 parts.

1 Submit the documents to appropriate offices.

The documents are following things.

  • articles of association(teikan= 定款)
  • list of officers which includes whether each officer get rewards or not
  • a copy of the officer’s appointment letter and written oath
  • the document which includes officer’s address and above 10 members’ address
  • the document which says the purpose of NPO Hojin
  • a copy of agenda which is about the decision of incorporation
  • the plan of activity for 2 years
  • the plan of activity budget for 2 years

2 Wait for the certification by the offices

The offices look through and check the above documents for 1 month. You sometimes need to correct according to the result of check. Within 3 months, you get the result of the certification.

3 Registration

If you get the certification, you need to register the incorporation of NPO Hojin within 2 weeks. After that, you have to submit the designated documents such as the certificate of registration and property list to the appropriate offices.

Attention : the process is NOT finished only when you get the certification of incorporation from the offices. If you leave the process for 6 months after certificated, the certification is sometimes canceled.

Conclusion

In conclusion, there are many ways to incorporate your organization, but NPO Hojin is the best way if you have the purpose to contribute to the society, some members following you and there is not so much money now. Of course there are some disadvantages for NPO Hojin compared with other ways, so please judge and decide which is the best way for you.

SUGEE Magazine is sharing the articles about other types of incorporation and some good contents which help you when you want to start your business in Japan. Please check this website and we hope you can find useful information.

Notes for the readers:

Please use this article only as a reference, not as a legal guideline. Therefore, sugee.jp will take no responsibility or liability, so far as legally possible, for any consequences of your actions. This article was written on 21 May 2020.

Reference

[1] NPO法人のメリット・デメリットは?| NPOを元気にする課題解決ノウハウバンク(2020) Retrieved 18 May 2020 from https://shimin-sector.jp/knowhow/3rd_9.php?eid=00005

[2] 法人の種類・特徴まとめ | 本当に株式会社でいい?設立する前に知っておくべき法人の種類 | 創業手帳(2020) Retrieved 18 May 2020 from https://sogyotecho.jp/corporation-type/?sp=more

[3] 【保存版】はじめてのNPO法人設立 | メリット、設立費用、期間、条件は?(2020) Retrieved 19 May 2020 from https://sogyotecho.jp/npo-corporation/?sp=more

[4]NPO法人と一般社団法人の違いとは?どちらが向いてるの? | oneteam(2020) Retrieved 21 May 2020 from https://o-team.co.jp/contents/difference-between-incorporated-non-profit-organization-and-general-incorporated-association