Overview of Subcontract Act Amendment Taking Effect January 2026
The Small and Medium Enterprise Agency announced the implementation of briefing sessions themed "From Subcontract Act to Transaction Optimization Act" regarding amendments to the Subcontract Act that will take effect in January 2026 (Reiwa 8). This amendment represents a major institutional reform, with the official name changing from the "Act Against Delay in Payment of Subcontract Proceeds, Etc." to the "Transaction Optimization Promotion Act." This revision marks a significant policy shift aimed at further promoting the optimization of subcontract transactions and improving the transaction environment for small and medium enterprises. The amendment will expand the scope of regulation and strengthen enforcement mechanisms.
Key Changes and Expanded Regulatory Scope
The revised legislation significantly expands the regulatory framework beyond traditional subcontract relationships to cover a broader range of business transactions. The new Transaction Optimization Promotion Act will apply to transactions between companies of different sizes, regardless of whether they fit the traditional subcontract model. This expansion addresses modern business practices where the boundaries between prime contractors and subcontractors have become increasingly blurred, ensuring fair transaction practices across various business relationships.
Enhanced Protection Measures and Compliance Requirements
The amendment introduces strengthened protection measures for smaller businesses in transaction relationships, including stricter payment terms, enhanced transparency requirements, and improved dispute resolution mechanisms. Companies will face more rigorous compliance obligations, including detailed documentation requirements for transaction terms, regular reporting on payment practices, and enhanced due diligence in supplier relationships. The legislation also establishes clearer penalties for violations and provides additional enforcement tools for regulatory authorities.
Industry Impact and Implementation Support
The briefing sessions are designed to help businesses understand and prepare for the significant changes that will take effect in January 2026. The Small and Medium Enterprise Agency recognizes that successful implementation requires comprehensive industry education and support. The sessions will cover practical compliance guidance, implementation timelines, and available resources to assist businesses in adapting to the new regulatory framework. This proactive approach aims to ensure smooth transition and effective enforcement while minimizing disruption to business operations.