Hapja Hoesa (합자회사) combines general and limited partners. Treated as a corporate entity for tax. Also like Hapmyeong Hoesa rarely seen in modern commerce.
Minimum Capital
No set minimum. Partners agree contributions. Typically, general partners might contribute less capital (providing management), and limited partners contribute more (providing funding).
Ownership Structure
Requires at least 1 general partner (unlimited liability) and 1 limited partner (limited liability). The mix can be more – e.g., multiple unlimited partners and multiple limited partners. General partners run the business and carry full liability; limited partners are passive investors with liability limited to their invested amount. No share certificates – partnership interests defined in the partnership agreement.
Nationality
No restriction in law, but foreign investors would only consider being limited partners in such a form (to enjoy limited liability). A foreign company likely would not come in as a general partner unless absolutely necessary, because that exposes the foreign parent to unlimited liability in Korea. In practice, foreign investors use corporate subsidiaries rather than being a partner in a Hapja Hoesa.
Management & Representation
Only general partner(s) can represent and bind the company. Limited partners cannot participate in management decisions (or they risk losing their limited liability shield). Usually, one general partner is designated as the managing partner for day-to-day operations. No board, etc. – partnership style governance.
Taxation
Treated as a corporate entity for tax (like Hapmyeong). It will pay CIT on profits. Limited partners get dividends that could be taxed (with WHT for foreign ones). If structured carefully, some Hapja Hoesa might be treated as transparent (like an investment fund vehicle under special laws), but under the Commercial Act, a Hapja Hoesa is a legal person, hence taxed as a company. There might be some unique tax angles if, for instance, all limited partners are foreign and they try to claim treaty benefits directly – but ordinarily, it's the entity being taxed, not a pass-through.
Reporting
Similar to other corporations: register at court, file any changes (like partner changes). Not subject to standard external audit mandates unless it somehow falls into large entity criteria (which is unlikely because large firms wouldn't adopt this form).
Ease of Setup
Legally not hard, but finding parties willing to be general vs. limited partners can be an issue. Since it’s unconventional for typical businesses, one might need strong legal advice to use it properly. It’s not the common route for a foreign investor to establish presence.
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Foreign Ownership
A foreigner could be a limited partner providing capital while a Korean partner is the general partner running the show. This might occur in scenarios where regulations require a local to be in control or for some investment structuring. However, a safer approach for foreigners is usually a corporate JV (Chusik or Yuhan Hoesa) with shareholder agreements, rather than a Hapja Hoesa.
Liability
General partners – unlimited liability (like Hapmyeong). Limited partners – limited to their contribution. This dual structure is its hallmark. Creditors will first pursue the company, then any shortfall can be claimed from general partners' personal assets. Limited partners’ personal assets are safe beyond what they invested, as long as they do not take part in management.
Hapja Hoesa offers a mix of limited and unlimited liability – a structure largely superseded by modern LLCs and stock companies. It’s seldom recommended to foreign investors; it might be seen in specialized investment projects or older enterprises. For almost all cases, foreign businesses prefer Chusik or Yuhan Hoesa over Hapja Hoesa, because those provide limited liability without needing a general partner.
