, literally "anonymous partnerships," are a Japanese bilateral contract governed by the Commercial Code of Japan, Article 535 ''et seq''.Japanese Commercial Code, article 535
/ref> In English, they are often called TK or silent partnerships. In many respects they are similar to

common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...

limited partnerships. In a tokumei kumiai arrangement, invest in a venture operated by a . By law, the partnership itself has no

legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural person ...

. Any assets of the partnership are the property of the manager; however, the anonymous partners have a right to a share of any profits from the venture, as provided in the partnership agreement. Anonymous partners have

limited liability Limited liability is a legal status in which a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a corporation, company or partnership. If a company that provides limited liability to it ...

for the partnership's debts, on the condition that they are anonymous. If an anonymous partner allows their name to be used in the name of the manager or in the name of the partnership, the anonymous partner loses their limited liability. Tokumei kumiai are often used for investment funds. A structure known as the "Dutch TK" was once popular among foreign investors in Japan, as it was possible to recognize income from Japan through a Dutch anonymous partner in a tokumei kumiai without paying Japanese income or withholding taxes under the tax treaty of 1970. This loophole was closed by a new tax treaty in August 2010, which imposes a 20% withholding tax on distributions through such structures. More recently, it has become popular to use a tokumei kumiai together with a

godo kaisha Godo may refer to several places: *Several places in Boulkiemdé Province, Burkina Faso: ** Godo, Nanoro ** Godo, Pella * Gōdo, Gifu is a town located in Gifu, Japan. , the town had an estimated population of 19,361 and a population den ...

to hold a

trust Trust often refers to: * Trust (social science), confidence in or dependence on a person or quality It may also refer to: Business and law * Trust law, a body of law under which one person holds property for the benefit of another * Trust (bus ...

beneficial interest A beneficial interest is the right that a person has arising from a contract to which they are not a party, or a trust. For example, if A makes a contract with B that A will pay C a certain sum of money, B has the legal interest in the contract, an ...

in real estate using what is known as a "TK/GK scheme."

References

{{DEFAULTSORT:Tokumei Kumiai Japanese business terms Japanese business law Partnerships

See also

References