are corporations in most countries. In contrast to many other countries, however, Japan also levies double taxes on close corporations (yugen gaisha and gōdō gaisha). This makes taxation a minor issue when deciding how to structure a business in Japan. As all publicly traded companies follow the K.K. structure, smaller businesses often choose to incorporate as a K.K. simply to appear more prestigious. In addition to income taxes, K.K.s must also pay registration taxes to the national government and may be subject to local taxes. Derivative litigation Generally, the power to bring actions against the directors on the corporation's behalf is granted to the statutory auditor. Historically, derivative suits by shareholders were rare in Japan. Shareholders have been permitted to sue on the corporation's behalf since the postwar Americanization of the Commercial Code; however, this power was severely limited by the nature of court costs in Japan. Because the cost to file a civil action is proportional to the amount of damages being claimed, shareholders rarely had the motivation to sue on the company's behalf. In 1993, the Commercial Code was amended to reduce the filing fee for all shareholder derivative suits to ¥8,200 per claim. This led to a rise in the number of derivative suits heard by Japanese courts, from 31 pending cases in 1992 to 286 in 1999, and to a number of very high-profile shareholder actions, such as those against Daiwa Bank and Nomura Securities See also Gōdō gaisha Gōmei gaisha Gōshi gaisha Yūgen gaisha Footnotes External links "Difference between Corporate Governance Practices in Japan and in U.S." – Nomura Group Types of business entity Japanese business law Japanese business terms