LPS (Limited Partnership)

An LPS, short for Limited Partnership for Investment, is one of the most common fund structures in Japan.
Investors (Limited Partners = LPs) bear liability only up to the amount of their contributions, while fund managers (General Partners = GPs) assume responsibility for managing and operating the fund.

Key Features

• Pass-through taxation
  → Avoids double taxation at the corporate level, with profits and losses attributed directly to investors.

• Flexible structure
  → Widely used for private equity (PE), venture capital (VC), infrastructure investments, and more.

• Investor protection and transparency
  → Clear distinction between the roles of GPs and LPs.

Advantages

• Tax efficiency

• Stronger alignment of interests between fund managers and investors.

• Compared to Cayman-domiciled funds, it allows for more cost-efficient fund formation and operation, with lower overall fund costs