Partnership (China)
Encyclopedia
A partnership in the People's Republic of China
is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China 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.
s ran coal mines.
In the modern era, most enterprises were partnerships in the form of general partnership
s levying unlimited liability on the partners. In 1933, 41% of factories were run by partnerships and 20% were sole proprietorship
s. After the end of the 1950s centralization of the economy
caused the partnership form to vanish for nearly 30 years. In the 1980s partnerships returned with different names to avoid the sensitive label of private ownership.
On 1 June 2007, the Partnership Enterprise Law came into force and established partnerships as a legal business entity.
s which may be established within China by natural person
s, legal persons and other organizations. 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.
(普通合伙) may be formed by general partners who bear unlimited joint and several liability
for the debts of the partnership. the general partners share unlimited liabilities for the debt of the partnership.
(有限合伙) 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.
A partnership must abide by the following requirements:
Should it be a general partnership or limited partnership then that shall be in its name.
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.
If the partnership is a general partnership then the partners bear joint and several liability.
A limited partner may not conclude partnership operations nor may such a partner represent the partnership to 3rd parties.
, intellectual property
right, land use
right or other properties, or labor services at a valuation determined by agreement among the partners.
If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.
The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China to authorize and govern partnership enterprises
Partnership
A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace...
. 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
From 1368 to 1911, partnerships with distributive shares were the principal form of a business entity that investorInvestor
An investor is a party that makes an investment into one or more categories of assets --- equity, debt securities, real estate, currency, commodity, derivatives such as put and call options, etc...
s ran coal mines.
In the modern era, most enterprises were partnerships in the form of general partnership
General partnership
In the commercial and legal parlance of most countries, a general partnership or simply a partnership, refers to an association of persons or an unincorporated company with the following major features:...
s levying unlimited liability on the partners. In 1933, 41% of factories were run by partnerships and 20% were sole proprietorship
Sole proprietorship
A sole proprietorship, also known as the sole trader or simply a proprietorship, is a type of business entity that is owned and run by one individual and in which there is no legal distinction between the owner and the business. The owner receives all profits and has unlimited responsibility for...
s. After the end of the 1950s centralization of the economy
Great Leap Forward
The Great Leap Forward of the People's Republic of China was an economic and social campaign of the Communist Party of China , reflected in planning decisions from 1958 to 1961, which aimed to use China's vast population to rapidly transform the country from an agrarian economy into a modern...
caused the partnership form to vanish for nearly 30 years. In the 1980s partnerships returned with different names to avoid the sensitive label of private ownership.
On 1 June 2007, the Partnership Enterprise Law came into force and established partnerships as a legal business entity.
Partnership enterprise
The term partnership enterprise refers to general partnerships and limited partnershipLimited partnership
A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners , there are one or more limited partners . It is a partnership in which only one partner is required to be a general partner.The GPs are, in all major respects,...
s which may be established within China by natural person
Natural person
Variously, in jurisprudence, a natural person is a human being, as opposed to an artificial, legal or juristic person, i.e., an organization that the law treats for some purposes as if it were a person distinct from its members or owner...
s, legal persons and other organizations. A state-funded company, state-owned company, listed company, public welfare-oriented public institution or social organization may not become a general partner
General partner
General partner is a legal term used to describe a person who joins with at least one other person to form a business. A general partner has responsibility for the actions of the business, can legally bind the business and is personally liable for all the business's debts and obligations.General...
of a limited partnership.
General partnership
A general partnershipGeneral partnership
In the commercial and legal parlance of most countries, a general partnership or simply a partnership, refers to an association of persons or an unincorporated company with the following major features:...
(普通合伙) may be formed by general partners who bear unlimited joint and several liability
Joint and several liability
Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be:* jointly liable, or* severally liable, or* jointly and severally liable.-Joint liability:...
for the debts of the partnership. the general partners share unlimited liabilities for the debt of the partnership.
Limited partnership
A limited partnershipLimited partnership
A limited partnership is a form of partnership similar to a general partnership, except that in addition to one or more general partners , there are one or more limited partners . It is a partnership in which only one partner is required to be a general partner.The GPs are, in all major respects,...
(有限合伙) 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.
Special general partnership
A special general partnership (特殊普通合伙) 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. It is intended as the preferred form of organization for law and accounting firms.Establishment
A partnership requires a written agreement between the partners. This written agreement must be submitted to the business registration government body along with the identity of the partners.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.
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.
Liabilities
A partnership must pay all its debts with property contributed to the partnership by the partners.If the partnership is a general partnership then the partners bear joint and several liability.
A limited partner may not conclude partnership operations nor may such a partner represent the partnership to 3rd parties.
Capital contributions
A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses. A capital contribution may include moneyMoney
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
, intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
right, land use
Land use
Land use is the human use of land. Land use involves the management and modification of natural environment or wilderness into built environment such as fields, pastures, and settlements. It has also been defined as "the arrangements, activities and inputs people undertake in a certain land cover...
right or other properties, or labor services at a valuation determined by agreement among the partners.
If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.
Distributions
The default distribution scheme of profits or losses follows the proportion to capital contributions made by the partners. However, the distribution scheme may follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement. If the proportions of capital contributions cannot be discerned, then the profits or losses will be distributed equally by the partners.The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.