Die japanische LLP im gesellschaftsrechtlichen Kontext

Abstract

As elsewhere, law and practice in Japan differentiate between two kinds of business entities with respect to joint undertakings by several individuals: incorporated and unincorporated entities. As for incorporated entities, there are five different types of companies that are regulated under the Companies Act of 2005 and that are juridical persons. Unincorporated entities are the business partnerships. Today, Japanese law knows five important kinds of business-oriented partnerships. Unlike companies, partnerships are not juridical persons. The limited liability partnership, the LLP (yūgen sekinin jigyō kumi’ai), was introduced in 2005 as a new form of business entity. Its statutory basis is the Limited Liability Partnership Act.

When the LLP was introduced in 2005 it met with high expectations. The publicly articulated demand for this business form and its appealing functional combination of being exempt from corporate taxation while at the same time providing for limited liability of its members seemed like a recipe for success. Ten years later, however, it is clear that these expectations have not materialized. The roughly 5,500 LLPs set up since 2005 are dwarfed by the 75,000 LLCs established since 2006. Moreover, both these numbers are overshadowed by the 500,000 stock corporations founded during the same period, even if one takes into account that a part of these newly formed stock corporations are former limited companies.

The common understanding is that the unpopularity of the LLP is caused by the overly restrictive (mandatory) regulations of the LLP Act governing the management of an LLP. Its partners do not only have the right but also the obligation to manage the partnership’s businesses. This duty may not be fully delegated to other partners and, accordingly, a partner cannot confine his engagement in the LLP to a purely financial contribution. Furthermore, as a rule, the consent of all partners is required for fundamental management decisions concerning the purchase or sale of important assets as well as the obtaining of significant loans. The rationale behind these restrictions seems to be the legislature’s concern to deter the use of an LLP for the purposes of tax avoidance or risk-shifting to the detriment of the partnership’s creditors. It should also be noted that the LLP Act does not allow for the use of the legal form of an LLP as a business entity for the conduct of most of the independent professions. This restriction stands in contrast to the practice in the UK or in Germany where law firms and others are generally allowed to make broad use of the legal form of an LLP or a partnership with limited professional liability (PartGmbB) respectively, and actually do so in order to limit their individuals’ exposure to liability claims.

Japan followed an international trend when introducing the LLP in 2005. The reception of the LLP as a legal transplant (mainly) from the U.S. is another example for the ongoing re-orientation of Japan’s corporate and partnership laws away from its traditionally close ties to German law towards American law.