A
partnership
in the
People's Republic of China
is a
business entity
governed by the Partnership Enterprise Law
[1]
passed by the
Standing Committee of the National People's Congress
to authorize and govern
partnership enterprises
. A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested.
History
[
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]
From 1368 to 1911, partnerships with distributive shares were the principal form of a business entity that
investors
ran
coal mines
.
[2]
In the modern era, most enterprises were partnerships in the form of
general partnerships
levying
unlimited liability
on the partners.
[3]
In 1933, 41% of
factories
were run by partnerships and 20% were
sole proprietorships
.
[4]
After the end of the 1950s
centralization of the economy
caused the partnership form to vanish for nearly 30 years.
[5]
In the 1980s partnerships returned with different names to avoid the sensitive label of
private ownership
.
[6]
On 1 June 2007, the Partnership Enterprise Law came into force and established partnerships as a legal business entity.
[7]
Partnership enterprise
[
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]
The term partnership enterprise refers to general partnerships and
limited partnerships
which may be established within China by
natural persons
,
legal persons
and other organizations.
[8]
A state-funded company,
state-owned company
,
listed company
, public welfare-oriented public institution or
social organization
may not become a
general partner
of a limited partnership.
[9]
General partnership
[
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]
A
general partnership
(普通合?) may be formed by general partners who bear unlimited
joint and several liability
for the
debts
of the partnership.
[8]
the general partners share unlimited liabilities for the debt of the partnership.
Limited partnership
[
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]
A
limited partnership
(有限合?) is formed by a combination of
general partners
and
limited partners
where the
limited partners
bear the liabilities for the partnership's debts to the extent of their
capital contributions
.
[8]
Special general partnership
[
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]
A special general partnership (特殊普通合?) resembles a general partnership except that it must be a professional service institution offering services requiring professional knowledge and special skills. The structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners.
[10]
It is intended as the preferred form of organization for law and accounting firms.
[11]
Establishment
[
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]
A partnership requires a written agreement between the partners.
[12]
This written agreement must be submitted to the business registration government body along with the identity of the partners.
[13]
A partnership must abide by the following requirements:
- Have 2 or more partners
- Have a written partnership agreement;
- Have capital contributions subscribed to or actually paid by the partners;
- Have a name and a place of business for the partnership enterprise; and
- Abide by any other conditions as provided for the law;
Should it be a general partnership or limited partnership then that shall be in its name.
[14]
A limited partnership may not have less than 2 partners where one of them is a general partner nor may it have more than fifty partners.
[15]
Liabilities
[
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]
A partnership must pay all its debts with property contributed to the partnership by the partners.
[16]
If the partnership is a general partnership then the partners bear joint and several liability.
[17]
A limited partner may not conclude partnership operations nor may such a partner represent the partnership to
3rd parties
.
[18]
Capital contributions
[
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]
A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses.
[19]
A capital contribution may include
money
,
intellectual property
right,
land use
right or other properties, or
labor
services at a valuation determined by agreement among the partners.
[20]
If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.
[21]
Distributions
[
edit
]
The default distribution scheme of profits or losses follows the proportion to capital contributions made by the partners.
[22]
However, the distribution scheme may follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement.
[23]
If the proportions of capital contributions cannot be discerned, then the profits or losses will be distributed equally by the partners.
[24]
The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.
[25]
Taxation
[
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]
The partners shall pay tax on their respective share of the partnership income.
[26]
Procedures
[
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]
The required documents and procedures of partnership enterprise in China
[27]
References
[
edit
]
- ^
"Order of the President of the People's Republic of China"
(PDF)
. Archived from
the original
(PDF)
on 10 September 2008.
- ^
Fang Liufang; Xia Yuantao; Sang Binxue; Danian Zhang, Law and Contemporary Problems, Vol. 52, No. 3, The Emerging Framework of Chinese Civil Law: [Part 2]. (Summer, 1989), pp. 43-67, 44.
- ^
Fang Liufang; Xia Yuantao; Sang Binxue; Danian Zhang Law and Contemporary Problems, Vol. 52, No. 3, The Emerging Framework of Chinese Civil Law: [Part 2]. (Summer, 1989), pp. 43-67, 46.
- ^
Fang Liufang; Xia Yuantao; Sang Binxue; Danian Zhang Law and Contemporary Problems, Vol. 52, No. 3, The Emerging Framework of Chinese Civil Law: [Part 2]. (Summer, 1989), pp. 43-67, 46.
- ^
Fang Liufang; Xia Yuantao; Sang Binxue; Danian Zhang
Law and Contemporary Problems, Vol. 52, No. 3, The Emerging Framework of Chinese Civil Law: [Part 2]. (Summer, 1989), pp. 43-67, 47.
- ^
Fang Liufang; Xia Yuantao; Sang Binxue; Danian Zhang, Law and Contemporary Problems, Vol. 52, No. 3, The Emerging Framework of Chinese Civil Law: [Part 2]. (Summer, 1989), pp. 43-67, 47.
- ^
Partnership Enterprise Law
Archived
2008-09-10 at the
Wayback Machine
- ^
a
b
c
Partnership Enterprise Law, Chapter 1, article2
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter 1, article 3
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter II, section 6, article 55
Archived
2008-09-10 at the
Wayback Machine
- ^
"Limited Liability Partnership in China - A Long Way Forward"
.
ResearchGate
. Retrieved
2022-04-07
.
- ^
Partnership Enterprise Law,Chapter 1, article 4
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter 1, article 9
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter II, section 1, article 14
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter III, article 61
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter II, section 4, article 38
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter II, section 4, article 39
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter III, article 68
Archived
2008-09-10 at the
Wayback Machine
- ^
"Law of the People's Republic of China on Partnerships"
.
english.www.gov.cn
. Retrieved
2022-04-07
.
- ^
Partnership Enterprise Law,Chapter II, section 1, article 16
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law, Chapter III, article 64
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter II, section 3, article 33
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter II, section 3, article 33
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter II, section 3, article 33
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter II, section 3, article 33
Archived
2008-09-10 at the
Wayback Machine
- ^
Partnership Enterprise Law,Chapter 1, article 6
Archived
2008-09-10 at the
Wayback Machine
- ^
"China FIPE: Partnership Enterprise Formation: Shanghai | Beijing | Shenzhen | Hangzhou"
.
www.pathtochina.com
. Retrieved
2022-04-07
.
See also
[
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]