A general partnership (普通合伙) 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
A limited 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.[8]
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.[10] It is intended as the preferred form of organization for law and accounting firms.[11]
Establishment
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
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
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
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
The partners shall pay tax on their respective share of the partnership income.[26]
Procedures
The required documents and procedures of partnership enterprise in China[27]
^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.