What Is a Contract Unit?

A contract company is a share holding company that consists only of members of a limited liability company.

Contract company

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A contract company is a share holding company that consists only of members of a limited liability company.

Contract companies, like Renhe Co., Ltd. and Capital Co.

(1) Changes to the articles of association ^[1]

In this meeting on April 27, 2006, the Japanese Senate passed the "Legislative Agreement on Limited Liability Partnership Contracts" proposed by the Ministry of Economy, Trade and Industry to the National Assembly and announced it on May 6, the same year. So, what are the similarities and differences between Japanese contract companies and limited liability partnerships? ^[1]

(1) The liability of a member or partner is the same in both forms, and both have limited liability.

(2) In dealing with the internal relations of a company or partner, the provisions of the partnership apply.

(3) According to different laws, the contract company is based on the "Company Law" and the limited liability business partnership (LLP) is based on the "Japan Limited Liability Business Partnership Contract Law".

(4) There is a difference as to whether there is a legal personality. The contract company has a legal personality, but the limited liability business partnership does not have a legal personality.

(5) There is also a slight difference in business execution. The contract company may not necessarily require all members to perform business. However, a limited liability business partnership must involve all partners in the business.

(6) When one member is formed, the contract company can continue to exist, but the limited liability business partnership cannot continue to exist.

(7) The direction of organizational change is different. The contract company and the joint-stock company may mutually change the organizational form according to the procedures, but the limited liability business partnership may not mutually change the organizational form with companies such as the joint-stock company.

(8) Enterprises have different requirements in mergers and divisions. The contract company and the company may conduct divisions, mergers, etc., but the limited liability business partnership may not conduct divisions, mergers, etc. with the company.

(9) It is different in the taxation object. The taxation of contract companies is not the direct taxation of members, but the taxation of limited liability business partnerships is the taxation of partners.