Sleeping Partner Does Not Have Ownership Over Partnership Assets


June 16, 2006

According to a ruling handed down by the Administrative Court on April 6, a sleeping partner is not really a partner but someone who has a contractual relationship with the "real" partner of the business, under which the sleeping partner (also called silent partner) has a contractual claim based on the results of operation of the partnership business, but he or she cannot be entitled to profits of the partnership business as of right of a partner but a contractual claim. Moreover, the partnership business is that of the "ostensible" partner who has held out as a partner. Under Taiwan law, a person may become a sleeping partner to a partner in a partnership business and the ostensible partner will be legal owner of the money or assets invested by the sleeping partner. The liability of the sleeping partner is limited to the amount of his investment and will not participate in the running of the partnership business.