A yūgen gaisha or yūgen kaisha (Jp. 有限会社, lit. "limited company," abbreviated in English as Y.K. or by wasei-eigo

Wasei-eigo

are Japanese pseudo-Anglicisms: English constructions not used in the English-speaking world or by native English speakers, but that appear in Japanese. This should not be confused for foreign words gairaigo, which generally refer to words from European languages, especially American English...

 Co., Ltd.) is a form of business organization in Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

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Yūgen gaisha are based on the German

Germany

Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

 GmbH and were implemented in Japan in the Limited Company Act (有限会社法) of 1940. Companies Act, implemented on May 1, 2006, replaced the yūgen gaisha with a new form of company called gōdō gaisha, based upon the American limited liability company

Limited liability company

A limited liability company is a flexible form of enterprise that blends elements of partnership and corporate structures. It is a legal form of company that provides limited liability to its owners in the vast majority of United States jurisdictions...

. Following the implementation, no new YKs were allowed in Japan, but pre-existing YKs were allowed to continue their operations as kabushiki gaisha under special rules.

Whether the term is pronounced as yūgen gaisha or yūgen kaisha is up to the local dialect or the company's preference when it is part of the company's name. While it is pronounced yūgen gaisha in standard Japanese, the alphabetic abbreviation is always Y.K. by standard.

Structure

As of 2005, a Y.K. can have up to 50 investors, called . The members were required to provide at least ¥3 million in capital contributions, with each valued at no less than ¥50,000. The minimum capital amount was much more permissive than the ¥10 million minimum for a kabushiki gaisha. A Y.K. was also not required to issue certificates for investment units, whereas stock certificates were required for a K.K.

Unlike a K.K., a Y.K. does not need to have a board of directors or statutory auditors: the minimum requirement is one .

Because of its simplified structure and relatively lax incorporation requirements, the Y.K. form is associated with small businesses. However, some larger companies have used the form: ExxonMobil

ExxonMobil

Exxon Mobil Corporation or ExxonMobil, is an American multinational oil and gas corporation. It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil. Its headquarters are in Irving, Texas...

's principal Japanese subsidiary, for instance, is a Y.K. with paid-in capital of ¥50 billion (US$420 million).http://d.hatena.ne.jp/Legal-Office/20061018/1161193754 In addition to simplified corporate governance

Corporate governance

Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...

, a Y.K. receives some tax benefits under foreign laws such as the U.S. Internal Revenue Code

Internal Revenue Code

The Internal Revenue Code is the domestic portion of Federal statutory tax law in the United States, published in various volumes of the United States Statutes at Large, and separately as Title 26 of the United States Code...

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