This article is attempts to study drastic changes of the corporate laws in Japan for the small and medium enterprise. We have acknowledged that the frequent changes in the corporate law over a short period of time are the inevitable results of the current economic environment and the fact that the corporate law is the basic law providing the organizational structure of companies, the financing methods and so on. Confronted with a dynamic and increasingly competitive global economy. Since 1981, the Commercial Code has been substantially revised, and then new corporate law has been achievement. These revisions of the commercial code undeniably show a tendency to bring into Japan the shareholder-oriented corporate governance which is practiced in the U.S. In this sense, the 1990s were the decade when American standards were seen as global standards, and Japanese corporate managers felt a psychological pressure not to lag behind the “global standard” in any aspect of management, not only in the field of corporate governance practices. Japanese law on corporations, which were radically revised and reorganized into the new Corporate Law enacted in June 2005, will take effect around May 2006. With the change, limited liability companies will be abolished and absorbed into joint-stock corporations. In conjunction with this change, the flexibility of corporate organizational structure will be increased. A new Japanese form of limited liability company will be created. To make it easier to establish a company, requirements such as minimum capital and the need for a financial institution to issue a “capital custody certificate” to show that a company's capital has been fully remitted, will be abolished. Another law that will come into effect will be the law concerning shareholder's contracts in August 2005, which will provide a Japanese form of limited liability partnership as a new organizational vehicle for doing business.

This article is attempts to study drastic changes of the corporate laws in Japan for the small and medium enterprise. We have acknowledged that the frequent changes in the corporate law over a short period of time are the inevitable results of the current economic environment and the fact that the corporate law is the basic law providing the organizational structure of companies, the financing methods and so on. Confronted with a dynamic and increasingly competitive global economy. Since 1981, the Commercial Code has been substantially revised, and then new corporate law has been achievement. These revisions of the commercial code undeniably show a tendency to bring into Japan the shareholder-oriented corporate governance which is practiced in the U.S. In this sense, the 1990s were the decade when American standards were seen as global standards, and Japanese corporate managers felt a psychological pressure not to lag behind the “global standard” in any aspect of management, not only in the field of corporate governance practices. Japanese law on corporations, which were radically revised and reorganized into the new Corporate Law enacted in June 2005, will take effect around May 2006. With the change, limited liability companies will be abolished and absorbed into joint-stock corporations. In conjunction with this change, the flexibility of corporate organizational structure will be increased. A new Japanese form of limited liability company will be created. To make it easier to establish a company, requirements such as minimum capital and the need for a financial institution to issue a “capital custody certificate” to show that a company's capital has been fully remitted, will be abolished. Another law that will come into effect will be the law concerning shareholder's contracts in August 2005, which will provide a Japanese form of limited liability partnership as a new organizational vehicle for doing business.

small and medium enterprise, the new Corporate Law in Japan, limited liability partnership, limited liability company, different classes of stock