Partnership Enterprise Law of the People's Republic of China (2006 Revision)

Partnership Enterprise Law of the People's Republic of China (2006 Revision) Order of the President of the People's Republic of China (No. 55) The Partnership Enterprise Law of the People's Republic of China was amended and adopted at the 23rd session of the Standing Committee of the 10th National People's Congress of the People's Republic of China on August 27, 2006. The amended Partnership Enterprise Law of the People's Republic of China is hereby promulgated and shall come into force as of June 1, 2007. President of the People's Republic of China Hu Jintao August 27, 2006. Partnership Enterprise Law of the People's Republic of China (Adopted at the 24th session of the Standing Committee of the 8th National People's Congress on February 23, 1997 and amended at the 23rd session of the Standing Committee of the 10th National People's Congress of the People's Republic of China on August 27, 2006) Contents Chapter I General Provisions Chapter II General Partnership Enterprises Section 1 Establishment of A Partnership Enterprise Section 2 Property of A Partnership Enterprise Section 3 Execution of Partnership Affairs Section 4 Relationship Between A Partnership Enterprise and Third Persons Section 5 Admission to and Withdrawal from A Partnership Section 6 Special General Partnership Enterprises Chapter III Limited Liability Partnership Enterprises Chapter IV Dissolution and Liquidation of Partnership Enterprises Chapter V Legal Liabilities Chapter VI Supplementary Provisions Chapter I General Provisions Article 1 This law is formulated for the purpose of regulating the acts of partnership enterprises, protecting the legitimate rights and interests of partnership enterprises as well as their partners and creditors, maintaining the social and economic order, and promoting the development of the socialist market economy. Article 2 The term "partnership enterprise" refers to the general partnership enterprises and limited liability partnership enterprises which are established within China by natural persons, legal persons and other organizations in accordance with the law. A general partnership enterprise may be formed by general partners. The partners shall bear unlimited joint and several liabilities for the debts of the partnership enterprise. If this Law has any special provisions on the way in which the general partners shall bear liabilities, these special provisions shall prevail. A limited liability partnership enterprise shall be formed by general partners and limited partners. The general partners shall bear unlimited joint and several liabilities for the debts of the limited liability partnership enterprise. The limited partners bear the liabilities for its debts to the extent of their capital contributions. Article 3 No wholly state-funded company, state-owned company, listed company, public-welfare-oriented public institution or social organization may become a general partner. Article 4 A partnership agreement shall be concluded in writing upon the consensus of all partners. Article 5 The principle of willingness, equality, fairness and good faith in the conclusion of a partnership agreement and in the establishment of a partnership enterprise. Article 6 For the production and business operation incomes and other incomes of a partnership enterprise, the partners shall pay their respective income tax in accordance with the relevant tax provisions of the state. Article 7 A partnership enterprise and its partners shall abide by the laws, administrative regulations, social morals, commercial morals and bear social liabilities. Article 8 The legitimate property, rights and interests of a partnership enterprise and its partners shall be protected by law. Article 9 To establish a partnership enterprise, the applicant shall submit to the enterprise registration organ a registration application, partnership agreement, identity certificates of the partners and other documents. If the business scope of a partnership enterprise contains any item which is subject to approval prior to registration under a law or administrative regulation, such business shall be subject to approval in accordance with the law and the approval document shall be submitted at the time of registration. Article 10 If the registration application materials submitted by an applicant are complete and conform to the statutory form and if the enterprise registration organ can finish the registration on the spot, the enterprise registration organ shall do so and shall issue to the applicant a business license. Except for the circumstance as mentioned in the preceding Paragraph, the enterprise registration organ shall, within 20 days after it accepts an application, decide whether or not to register. If it decides to register it, it shall issue to the applicant a business license. If it decides not to register it, it shall give a written reply to the applicant and make an explanation. Article 11 The date of issuance of business license of a partnership enterprise shall be the date of establishment of the partnership enterprise. Before a partnership enterprise obtains a business license, the partners shall not engage in the partnership business in the name of a partnership enterprise. Article 12 Where a partnership enterprise intends to establish a branch, it shall apply to the enterprise registration organ of the place where the to-be-established branch is located for registration so as to obtain a business license. Article 13 Where any of the partnership enterprise registration items is changed, the partners executing the partnership affairs shall, within 15 days after they make a decision of change or after the change occurs, apply to the enterprise registration organ for modifying the registration. Chapter II General partnership Enterprises Section 1 Establishment of A Partnership Enterprise Article 14 To establish a partnership enterprise, the following conditions shall be satisfied: (1)Having 2 or more partners. If the partners are natural persons, they shall have complete civil capacity; (2)Having a written partnership agreement; (3)Having capital contributions subscribed to or actually paid by the partners; (4)Having a name and a production and business operation place for the partnership enterprise; and (5)Other conditions as provided for by laws and administrative regulations. Article 15 The name of a partnership enterprise shall be indicated by the words "General partnership". Article 16 A partner may make capital contributions in money, in kind, or intellectual property right, land use right or other properties, or labor services. Where a partner intends to make capital contributions in kind, intellectual property right, land use right and other properties, of which the price should be assessed, the price may be determined by all partners through negotiation or may assessed by the a statutory assessment institution entrusted by all partners. Where a partner makes capital contributions by labor services, the assessment method shall be determined by all partners and shall be stated in a partnership agreement. Article 17 A partner shall perform the capital contribution obligation according to the way and amount of capital contribution and the time limit for payment as stipulated in the partnership agreement. For the capital contributions in non-monetary properties for which the formalities for the transfer of property right shall be gone through under any law or administrative regulation, the partner shall go through the said formalities. Article 18 A partnership agreement shall state the following matters: (1) The name and address of the main business operation place of a partnership enterprise; (2) The purpose and business scope of partnership; (3)The name and domicile of each partner; (4)The ways and amount of capital contribution by partners and the time limit for payment; (5)The profit distribution and loss sharing; (6)The execution of the partnership affairs; (7)The admission to and withdrawal from partnership; (8)The settlement of disputes; (9)The dissolution and liquidation of the partnership enterprise; and (10)The liabilities for breach of contract. Article 19 A partnership agreement shall enter into force after all partners affix their signatures or seals to it. The partners shall enjoy their rights and perform their duties according to the partnership agreement. The revision or supplement of an agreement shall be subject to the unanimous consent of all partners, unless it is otherwise stipulated in the partnership agreement. For any matter which is not stipulated or not expressly stipulated in the partnership agreement, it may be decided by the partners through negotiation. For failure of negotiation, it may be handled in accordance with this Law, other laws and administrative regulations. Section 2 Property of A Partnership Enterprise Article 20 All the capital contributions made by partners, the proceeds and other properties acquired in the name of a partnership shall be the properties of the partnership enterprise. Article 21 Prior to the liquidation of a partnership enterprise, no partner may request for dividing the properties of the partnership enterprise, unless it is otherwise provided for in this Law. If the partners privately transfer or dispose of the properties of a partnership enterprise prior to liquidation, the partnership enterprise shall not challenge any bona fide third party. Article 22 Unless it is otherwise provided for in the partnership agreement, when a partner assigns its entire or partial share of properties of a partnership enterprise, it (he) shall acquire the unanimous consent of all other partners. In the case of assignment of a partner's entire or partial share of properties of a partnership enterprise to another partner, the other partners shall be informed of this assignment. Article 23 Where a partner intends to assign its (his) entire or partial share of properties of a partnership enterprise to a non-partner, the other partners have a preemptive right under the same conditions, unless it is otherwise stipulated in the partnership agreement. Article 24 Where a non-partner accepts a partner's share of properties of a partnership enterprise in accordance with the law, it (he) becomes a partner of the partnership enterprise as soon as the partnership agreement is revised and shall enjoy the rights and perform the obligations in accordance with this Law and the post-revision partnership agreement. Article 25 Where a partner puts its share of properties of the partnership enterprise in pledge, it shall acquire the unanimous consent of other partners. Without unanimous consent of other partners, its (his) act shall be invalidated. If such an act results in any loss to the bona fide third party, the act doer shall be liable for compensation. Section 3 Execution of Partnership Affairs Article 26 The partners enjoy equal rights to the execution of partnership affairs. According to the stipulations of the partnership agreement or upon decision of all partners, one or several partners may be authorized to execute the partnership affairs on behalf of the partnership enterprise. Where a legal person partner or any other organization partner executes the partnership affairs, the representative whom it authorizes shall execute the partnership affairs. Article 27 Where one or several partners are entrusted to execute the partnership affairs in accordance with Paragraph 2 of Article 26 of this Law, the other partners no longer execute the partnership affairs. The partners who do not execute the partnership affairs shall have the right to supervise the execution of the partnership affairs. Article 28 Where one or several partners execute partnership affairs, they shall regularly report to the other partners about the execution of the relevant affairs, the business operations and financial status of the partnership enterprise. The proceeds derived from the execution of partnership affairs shall attribute to the partnership enterprise and the expenses and losses incurred from it shall be paid by the partnership enterprise. In order to know the business operations and financial status of the partnership enterprise, the partners have the right to consult the account books and other financial materials of the partnership enterprise. Article 29 If each partner may separately execute the partnership affairs, the partners executing the partners may raise objections to the affairs executed by other partners. When raising objections, the execution of such affairs shall be suspended. If any dispute arises, a decision shall be made in accordance with Article 30 of this Law. Where a partner which is entrusted to execute the partnership affairs fails to execute the partnership affairs according to the partnership agreement or decision of all partners, the other partners may decide to revoke the entrustment. Article 30 The partners shall make a resolutions on the relevant matters of the partnership enterprise and shall handle them according to the voting method as stipulated in the partnership agreement. If it is not stipulated or not expressly stipulated in the partnership agreement, the voting method of "one partner, one vote" and "pass upon more than half of the votes of all partners" shall be adopted. It this Law provides otherwise for the voting method of a partnership enterprise, this Law shall prevail. Article 31 Unless it i......