Law of the People's Republic of China on Partnership Enterprises

Law of the People's Republic of China on Partnership Enterprises

Adopted at the 24th Meeting of the Standing Committee of the Eighth National People's Congress on February 23, 1997 and promulgated by Order of the President [1997] No.82

Contents
Chapter I General Provisions
Chapter II Establishment of a Partnership Enterprise
Chapter III Property of a Partnership Enterprise
Chapter IV Management of the Affairs of a Partnership Enterprise
Chapter V Relationship of a Partnership Enterprise to a Third Party
Chapter VI Entering into and Retiring from a Partnership
Chapter VII Dissolution and Liquidation of a Partnership Enterprise
Chapter VIII Legal Liability
Chapter IX Supplementary Provisions

Chapter I General Provisions
　
Article 1 This Law is enacted in order to standardize the behaviours of partnership enterprises, to protect the lawful rights and interests of partnership enterprises and the partners therein, to maintain the socio-economic order, and to promote the development of the socialist market economy.
　
Article 2 The term "partnership enterprise" as used in this Law means a profit-making organization, which is established within the territory of China according to this Law, and all the partners in which conclude a partnership agreement, make joint capital contributions, conduct business jointly, share incomes and risks and bear unlimited joint and several liabilities for debts of the partnership enterprise.
　
Article 3 A partnership agreement shall be lawfully concluded, in written form, on the basis of agreement reached by all the partners through consultation.
　
Article 4 The principles of free will, equality, fairness and good faith shall be observed in concluding a partnership agreement and establishing a partnership enterprise.
　
Article 5 The words "limited" and "limited liability" shall not be used in the name of a partnership enterprise.
　
Article 6 In business operations, a partnership enterprise must abide by laws and administrative rules and regulations and observe professional ethics.
　
Article 7 The property and lawful rights and interests of a partnership enterprise and the partners therein shall be protected by law.

Chapter II Establishment of a Partnership Enterprise
　
Article 8 To establish a partnership enterprise, the following conditions shall be met:
1. having two or more partners who shall each bear unlimited liabilities according to law;
2. having a written partnership agreement;
3. having capital actually contributed by all the partners;
4. having a name for the partnership enterprise; and
5. having premises for business and the necessary conditions for joint operations.
　
Article 9 A partner shall be a person who has full capacity for civil acts.
　
Article 10 A person who is prohibited by laws or administrative rules and regulations to engage in profit-making activities shall not become a partner in a partnership enterprise.
　
Article 11 A partner may make capital contributions in cash or in kind, or in the form of land-use right, intellectual property rights or other property rights; the contributions mentioned above shall be the lawful property or property rights of the partner.
Where an assessment is needed for a non-monetary contribution, it may be determined by all the partners through consultation, or it may be conducted by a statutory assessment institution authorized by all the partners.
Subject to agreement reached by all the partners through consultation, a partner may make capital contributions in the form of labour service, and the method of assessment shall be determined by all the partners through consultation.
　
Article 12 A partner shall fulfil the obligation of capital contribution in accordance with the mode, amount and time limit for contribution as specified in the partnership agreement.
The capital actually contributed by each partner according to the partnership agreement shall be his capital contribution to the partnership enterprise.
　
Article 13 In a partnership agreement, the following particulars shall be specified:
1. the name of the partnership enterprise and the location of its principal premises for business;
2. the objectives of partnership and the scope of business of the partnership enterprise;
3. the names and domiciles of the partners;
4. the mode, amount and time limit for capital contributions of the partners;
5. the way of distributing profits and sharing losses;
6. the management of the affairs of the partnership enterprise;
7. the entering into and retiring from the partnership;
8. the dissolution and liquidation of the partnership enterprise; and
9. the liability for breech of agreement.
The operation period of the partnership enterprise and the way of resolving disputes among the partners therein may be specified in the partnership agreement;
　
Article 14 A partnership agreement shall become effective after all the partners have signed or affixed their seals to it. A partner shall enjoy rights and undertake liabilities in accordance with the partnership agreement.
Subject to agreement reached by all the partners through consultation, the partnership agreement may be amended or supplemented.
　
Article 15 Where anyone applies for registration of a partnership enterprise, he shall submit to the enterprise registration authority such documents as an application for registration, the partnership agreement and identity papers of the partners.
Where examination and approval by relevant departments are needed as prescribed by laws or administrative rules and regulations, documents of approval shall be submitted at the time when application is made for registration of establishment of the enterprise.
　
Article 16 The enterprise registration authority shall, within 30 days from the date of receiving the documents of application for registration, decide whether to make the registration or not. Where the conditions prescribed by this Law are satisfied, the registration shall be made and a business license issued; otherwise, the registration shall not be made and a written reply stating the reasons shall be given.
　
Article 17 The date of issuance of the business license to a partnership enterprise shall be the date of establishment of the enterprise.
Before the partnership enterprise obtains the business license, no partner therein shall engage in business activities in the name of the enterprise.
　
Article 18 If a partnership enterprise wishes to set up a branch, it shall apply for registration to the enterprise registration authority in the place where the branch is to be located and shall have to obtain a business license.

Chapter III Property of a Partnership Enterprise
　
Article 19 During the period of existence of a partnership enterprise, the capital contributions of all the partners and all the incomes obtained in the name of the enterprise are the property of the partnership enterprise.
The property of a partnership enterprise shall be jointly managed and used by all the partners therein in accordance with this Law.
　
Article 20 Prior to liquidation of a partnership enterprise, no partner may request to divide the property of the partnership enterprise, unless otherwise provided for in this Law.
If, prior to liquidation of a partnership enterprise, a partner privately transfers or disposes of the property of the partnership enterprise, the enterprise shall not set it up against an ignorant bona fide third party.
　
Article 21 If, during the period of existence of a partnership enterprise, a partner wishes to assign all or part of his shares of the enterprise property to anyone other than the partners therein, he shall have to obtain consent of all the other partners.
If a partner wishes to assign all or part of his shares of the enterprise property to another partner, he shall notify the rest of the partners.
　
Article 22 Where a partner lawfully assigns his shares of the enterprise property, the other partners shall, under the same conditions, enjoy priority in obtaining the assignment.
　
Article 23 Where, with consent of all the partners, anyone other than the partners lawfully obtains the assigned shares of property of the partnership enterprise, he shall, upon amendment of the partnership agreement, become a partner in the partnership enterprise, and enjoy the rights and undertake the liabilities in accordance with the amended partnership agreement.
　
Article 24 Where a partner wishes to put his shares of property in a partnership enterprise to pledge, he shall have to obtain consent of all the other partners.
Where a partner, without consent of all the other partners, puts his shares of property in a partnership enterprise to pledge, the pledge shall be invalid, or his act shall be regarded as retirement from the partnership; if his act causes any losses to any other partner, he shall be liable for compensation according to law.

Chapter IV Management of the Affairs of a Partnership Enterprise
　
Article 25 All partners shall enjoy equal right in the management of the affairs of a partnership enterprise.
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