Tokumei kumiai (組), literally “anonymous partnerships,” is a Japanese bilateral treaty subject to Japan`s Code of Commerce, Article 535 and subsequent. In many ways, they are similar to common law limited partnerships. In a tokumei kumiai agreement, “anonymous (or silent) partners” (組員, tokumei kumiai`in) invest in a company run by a manager (営, eigy-sha).  Tokumei Kumiai is an agreement under Article 535 of the Japanese Code of Commerce, i.e. the investor (TK Investor) promises to contribute to an economic operator (operator of TK) and that the trader promises to distribute the profits of his business (TK Distribution) to the investor. By law, the company itself does not have legal personality. All assets of the partnership are owned by the manager; However, anonymous partners are entitled to a share of the company`s profits, as stipulated in the partnership agreement. Anonymous partners are only limitedly responsible for the company`s debt, provided they are anonymous. If an anonymous partner authorizes the use of its name in the manager`s name or in the name of the partnership, the anonymous partner loses its limited liability.  Tokumei kumiai are often used for investment funds.
A structure known as the “Dutch TK” was once popular with foreign investors in Japan, as it was possible to recognize Japan`s income through an anonymous Dutch partner in a kummeiiai tokumei without paying Japanese income or withholding tax under the 1970 tax treaty. This loophole was created in August 2010 by a new tax treaty providing for a 20% withholding tax on distributions via these structures.  More recently, it has become popular to use a Tokumei kumiai with a Kaisha Godo to keep a loyal beneficial interest in real estate known as the “TK/GK scheme”.  Distribution to an individual or entity subject to Japan is subject to the Japanese withholding tax of 20.42% (including tax). In general, Japan`s tax treaties will not reduce the taxation of the distribution of TK to non-residents or be tax-exempt (although some tax treaties may still be tax-exempt). If the TK operator were to become insolvent, the attorney`s right to distribution under the TK contract would be considered a right to bankruptcy and would classify all obligations owed by the TK operator to a secondary ranking rank. The BKK will distribute to Edwards YK or any other person designated by Edwards YK in writing the initial contribution of Tokumei Kumiai Capital (as defined in the TK agreement) in cash of USD 23,200,000,000 on the Batsuunk date, under the terms of TK`s termination contract.