Addressing Compliance Challenges in Contract Management Ahead of the 2026 Reform Law

As the implementation of the new Small Business Subcontracting Improvement Act (取適法) approaches on January 1, 2026, Japanese companies are increasingly recognizing the need for effective contract management. A recent survey conducted by Japan Purple Co., Ltd., targeting 342 professionals aged 25–59 in management roles such as finance, accounting, and legal affairs, unveiled some disconcerting statistics regarding contract management practices in the country.

The Survey Overview

The survey, conducted over December 29 and 30, 2025, aimed at understanding the current state and challenges of contract management amid tightening regulations. The results paint a bleak picture of the readiness of companies in adapting to new legal requirements concerning contracts.

Key Findings

1. Resistance to Digital Transformation
Approximately 90% of respondents remain tethered to paper-based contract management systems. Data shows that 55.9% manage contracts using both paper and digital methods, while 33.9% rely solely on paper. This indicates a significant cultural reliance on physical documents, making it increasingly difficult to efficiently manage and locate contracts.

Around 73.7% of individuals reported delays when identifying contract locations, with 25.7% stating this occurs frequently and 48% occasionally. This not only slows down business operations but also exacerbates compliance risks associated with missed deadlines and contract renewals.

2. Frequent Contract Renewal Oversights
Over 43.9% of respondents admitted to having experienced contract renewal lapses, signaling a critical area of concern for corporate governance. Furthermore, 66.1% recognized a reliance on individual knowledge rather than established processes for contract management.

Such reliance raises ramifications including lost opportunities and unnecessary costs, signaling a dire need for systematic approaches in contract oversight.

3. Limited Understanding of Legal Implications
Only 11.4% of respondents reported they could immediately identify contracts requiring urgent attention due to upcoming changes in legislation. Coupled with those who have partial knowledge (44.4%), less than 60% demonstrate adequate awareness of their contractual obligations following legal amendments. A staggering 38.6% of respondents admitted to having no clear management process for these changes, exposing a significant gap in compliance readiness.

This underscores the fact that contract management extends beyond administrative tasks; it increasingly affects compliance and risk management. Furthermore, the need for an integrated approach that aligns legal updates with contract management is emerging as an essential objective for modern businesses.

4. Recognition of the Necessity for DX in Contract Management
Notably, 81.3% of respondents acknowledged the importance of digital transformation (DX) in contract management. While 33.9% believe it is critical and 47.4% find it somewhat necessary, there remains a gap between this recognition and actual implementation.

Many companies are aware of the benefits, such as simplified management, timely alerts for renewals, and improved document searching. However, almost 40% still struggle with visualizing contract data effectively.

Conclusion

As the January 2026 deadline looms, the results of this survey highlight significant challenges in contract management amidst a landscape of evolving regulations. The finding that only 10% of individuals are adequately prepared for necessary legal adjustments raises alarms regarding compliance risks.

Market demand for transparent contract management processes is gaining traction, evident from the general consensus on the need for DX. Japan Purple, through its innovative contract management service, ConPass, aims to streamline contract oversight and efficiency. Notably, the new ConPass AI Assistant (β version), set to launch on January 20, 2026, offers integrated solutions for analyzing complex business documents, identifying risks, and facilitating informed decision-making.

This is an essential step toward converting traditional contracts into valuable management assets, thus reducing risks associated with outdated practices. With heightened awareness among organizations, the focus will inevitably shift towards comprehensive management systems that interlink legislative changes to contract oversight.

About Japan Purple Co., Ltd.

- Location: 5F, New Roppongi Building, 7-15-7 Roppongi, Minato-ku, Tokyo, 106-0032, Japan
- Founded: 1972
- Capital: 10 million JPY
- Employee Count: 132 (as of May 2025)

For more information, please visit ConPass website.