Commercial Code

A silent partnership agreement becomes effective by virtue of a first party promising to make a contribution to a second party's business, and the second party promising to distribute profits arising from its business to the first party.

A silent partner's contribution is part of the assets of the proprietor.

A silent partner may only make money and other assets the subject matter of the contribution.

A silent partner may not be engaged in executive management of the proprietor's business and may not act as the proprietor's representative.

A silent partner holds no rights against or obligations towards a third party in connection with the actions of the proprietor.

If a silent partner permits the use of their own surname or full name in the trade name of the proprietor or permits the use of its own trade name as the trade name of the proprietor, the partner is liable, jointly and severally with the proprietor, for any obligations arising once the name is in use.

If a contribution decreases due to a loss, a silent partner may not claim a dividend of profits until after compensating for the loss.

At the end of the business year, during the business hours of the proprietor, a silent partner may make the following requests and check on the state of the proprietor's business and assets:

if the proprietor's balance sheet is prepared in the form of a paper document, a request to inspect or copy that document;

if the proprietor's balance sheet is prepared in the form of an electronic or magnetic record (meaning a record used in computerized data processing as provided for by the Ministry of Justice Order, which is created in electronic form, magnetic form, or any other form that cannot be perceived by the human senses), a request to inspect or copy something that has been made to show the information recorded in the electronic or magnetic record, in the manner that the Ministry of Justice Order prescribes.

If there are material grounds for a silent partner to do so, the partner may check on the state of the business and assets of the proprietor at any time, with the permission of the court.

A case in which a person seeks the permission referred to in the preceding paragraph is subject to the jurisdiction of the district court having jurisdiction over the locality of the proprietor's place of business (or its domicile, if it has no place of business).

If a silent partnership agreement does not specify the duration of the silent partnership or if it provides that the silent partnership is to continue to exist for the life of either party, either party may cancel the agreement at the end of a business year; provided, however, that the party cancelling the agreement must give six months' advance notice.

Regardless of whether or not the duration of a silent partnership is specified, either party may cancel the silent partnership agreement at any time, if there is a compelling reason to do so.

Other than in cases as referred to in the preceding Article, a silent partnership agreement ends as a result of the following circumstances:

the successful completion of the business that is the objective of the silent partnership, or the impossibility of its successful completion;

the proprietor's or silent partner's becoming subject to an order commencing bankruptcy proceedings.

Once a silent partnership agreement has ended, the proprietor must return the value of the contribution to the silent partner; provided, however, that if the contribution has decreased due to a loss, it is sufficient for the proprietor to return the remaining value.