Hapmyeong Hoesa (합명회사) is an unlimited liability Korean corporation resembling a partnership of general partners. It’s rarely used in modern practice.
Minimum Capital
No minimum required (partners typically contribute agreed amounts). Given unlimited liability, capital is less formal; partners often invest what is needed for the business.
Ownership & Structure
Requires at least 2 partners (members). All members are general partners with joint and several unlimited liability for the debts of the business. There is no upper limit on partners, but practically these are small partnerships due to the risk involved. No shares or transferable stock – partnership interests can change only if partners join/leave by agreement.
Nationality
No explicit restriction, but foreign investors almost never use this form due to unlimited liability. It’s possible for foreigners to be partners, but they would not get the benefit of limited liability or easy exit.
Management & Representative
All partners can bind the company (unless otherwise agreed). Typically, one or more partners are designated as managing partners (and can act as representatives). Again, no residency rule by law, but having a local partner is typical if this form were used. No board or auditor – it's partnership style management.
Taxation: Corporate entity
Despite partnership flavor, under Korean law it’s treated as a corporate entity (not a pass-through). It files corporate tax returns and pays CIT on its profits. Partners then are taxed if they receive distributions (dividends or profit shares), which is a bit unusual as it effectively double-taxes partner profits (one reason these are rare for new businesses). However, because partners have unlimited liability, they may in practice just pay tax individually on shares of income if not formally treating the entity as separate. Korean tax law treats any entity where all members have unlimited liability as a corporation for tax if it has legal personality, so likely a Hapmyeong Hoesa is taxed as a corporation, not a disregarded entity.
Note: A Hapja Johap / 합자회사 – a type of investment partnership – can be more pass-through, but that’s a different vehicle under 2012 law, not the Hapmyeong Hoesa under discussion. Also do not confuse with Hapja Hoesa, which is different corporate form.
Reporting
Similar requirements to corporations to register the entity and any changes. Not subject to external audit (since almost always small/private). Accounting standards might be simpler, but to the tax office, you’d file corporate returns. No public listing or bond issuance possible.
Ease of Setup
Legally straightforward (partnership agreement and registration in court). But due to unlimited liability, it’s seldom chosen. Typically, one might see Hapmyeong Hoesa among law firms or very small family businesses where liability is shared.
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Foreign Ownership
Not restricted, but foreign investor seldom would want unlimited liability or the complexity of explaining this form to overseas stakeholders. If a foreign entity wanted partnership-like operations, they might consider a Hapja Johap (limited partnership association) introduced in 2012, which can have pass-through tax treatment in some cases (though even that is uncommon).
Liability
Unlimited (for all partners). If the company’s assets can’t cover debts, creditors can go after partners’ personal assets without limit. Each partner is also jointly and severally liable – meaning one partner could be on the hook for all debts if the others have no assets. This high risk makes this form nearly obsolete for most business uses.
Hapmyeong Hoesa (General Partnership Company) is rarely used, given that all members face unlimited liability. It offers no clear advantage for foreign investors – limited liability entities are overwhelmingly preferred. It might be of academic interest or used in niche scenarios (perhaps local family businesses or professional firms), but it’s generally not a viable choice for foreign entrants seeking limited liability.
