Partnership Enterprise Law of the People's Republic of China (2006 Revision)
Presidential Decree 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 Hu Jintao
August 27, 2006
(Adopted at the 24th Meeting of the Standing Committee of the Eighth National People's Congress on February 23, 1997, and amended at the 23rd Meeting of the Standing Committee of the Tenth National People's Congress on August 27, 2006)
第一章 总 则
Chapter 1 General Provisions
Article 1. This Law is formulated for the purposes of standardising the conduct of partnership enterprises, protecting the legal rights and interests of partnership enterprises and their partners and creditors, safeguarding social and economic order and promoting the development of socialist market economy.
Article 2. Partnership enterprises referred to in this Law shall mean general partnership enterprises and limited partnership enterprises established in China by natural persons, legal persons and other organisations in accordance with this Law.
A general partnership enterprise consists of general partners, who are jointly and severally liable for the debts of the partnership enterprise. Where this Law has specifically provided for the form in which general partners undertake the liability, such provisions shall prevail.
A limited partnership enterprise consists of both general partners and limited partners, whereby the general partners shall be jointly and severally liable without limit for the debts of the partnership enterprise, and the limited partners shall be liable for the debts of the partnership enterprise to the extent of their respective capital contribution.
Article 3 Wholly state-owned companies, state-owned enterprises, listed companies, public welfare institutions and social organizations shall not become general partners.
Article 4 A partnership agreement shall be lawfully concluded, in written form, on the basis of agreement reached by all the partners through consultation.
Article 5 The conclusion of the partnership agreement and establishment of the partnership enterprise shall follow the principles of voluntariness, equality, fairness, honesty and credibility.
Article 6 Partners of partnership enterprises shall separately pay income tax on the production and business income and other income in accordance with the relevant tax provisions of the State.
Article 7 A partnership enterprise and its partners shall observe laws and administrative regulations, social and business ethics and undertake social responsibilities.
Article 8 The property and lawful rights and interests of a partnership enterprise and its partners are protected by law.
Article 9 When applying for the establishment of a partnership enterprise, documents such as an application for registration, a partnership agreement and identity certificates of the partners shall be submitted to the enterprise registration authority.
Where the scope of business of a partnership enterprise includes projects which require approval pursuant to the provisions of laws and administrative regulations prior to registration, approval for such business activities shall be obtained pursuant to the law and the approval document shall be submitted at the time of registration.
Article 10 Where the application materials for registration submitted by an applicant are complete, satisfy the statutory format, and the enterprise registration authorities are able to process registration on-the-spot, the application shall be processed on-the-spot and a business licence shall be issued.
Except what is mentioned above, the registration authority shall take the decision of accepting or refusing registrations within 20 days starting from the date of receipt of the application documents. Those that are processed for registration will be granted a business license for partnership enterprise and those that are rejected will be provided with reasons in writing.
Article 11 The date of issuance of the business license to a partnership enterprise shall be the date of its establishment.
Before the partnership enterprise obtains the business license, no partner therein shall engage in partnership business in the name of the enterprise.
Article 12 If a partnership enterprise wishes to set up a branch, it shall apply for registration to the enterprise registration authority of the place where the branch is to be located and shall have to obtain a business license.
Article 13 Where change to a matter of the partnership in the register arises, the partner in charge of conducting partnership affairs shall apply for a change to the register at the enterprise registration authorities within 15 days from the date of the decision for change or the occurrence of the change event.
Chapter 2 General Partnership Enterprises
Section 1 Establishment of Partnership Enterprises
Article 14 To establish a partnership enterprise, the following conditions shall be met:
(I) having two or more partners. If a partner is a natural person, he shall have full capacity for civil conduct;
(II) Having a written partnership agreement;
(III) having capital subscribed for or actually contributed by partners;
(IV) having a name for the partnership enterprise and premises for production and business operations; and
(V) Other conditions prescribed by laws and administrative regulations.
Article 15 The name of a partnership enterprise shall include the words "general partnership".
Article 16 A partner may make capital contributions in cash, in kind, with intellectual property, land use rights, or other property rights, or with labor service.
Where capital contribution by a partner in the form of in-kind, intellectual property, land use rights or any other form of property rights requires valuation, all the partners may determine valuation through negotiation or appoint a statutory valuation organisation to conduct valuation.
Where capital contribution is in the form of labour services, valuation shall be determined by all the partners through negotiation and stated in the partnership agreement.
Article 17. Partners shall perform capital contribution obligations in accordance with the method, amount and period of capital contribution stipulated in the partnership agreement.
Where capital contribution is made in non-monetary properties, the formalities for transfer of property rights required to be completed pursuant to the provisions of laws and administrative regulations shall be completed pursuant to the law.
Article 18 A partnership agreement shall clearly state:
1. the name of the partnership enterprise and the location of its principal premises for business;
(II) the purpose and business scope of the partnership enterprise;
(III) the names and domiciles of the partners;
(IV) the forms, amounts and terms of capital contributions of the partners;
(V) Distribution of profits and losses;
(VI) the conduct of partnership affairs;
(VII) entering into and retiring from the partnership;
(VIII) settlement of disputes;
(IX) dissolution and liquidation of the partnership enterprise; and
10. Liability for breach of contract.
Article 19 The partnership agreement shall take effect upon signing and affixation of seal by all the partners. . A partner shall enjoy rights and shall fulfil obligations under the partnership agreement.
Unless the partnership agreement stipulates otherwise, any revision or supplementation to the partnership agreement shall require the unanimous consent of all the partners.
Matters not specified or not clearly specified in the partnership agreement shall be decided by the partners through consultation; where consultation fails, the matters shall be handled in accordance with the provisions of this Law and other relevant laws and administrative regulations.
Section 2 Property of a Partnership Enterprise
Article 20 Capital contributions by the partners, profits and any other property lawfully obtained in the name of the partnership enterprise shall be the property of the partnership enterprise.
Article 21. Unless this Law stipulates otherwise, a partner must not request for the division of partnership enterprise property prior to the liquidation of the partnership enterprise.
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 a bona fide third party.
Article 22. Unless the partnership agreement stipulates otherwise, the transfer of a partner's share in property of the partnership enterprise to another party other than a partner whether in full or in part must have the unanimous 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 23 Where a partner is to transfer its/his/her share of property in the partnership enterprise to a person other than a partner, other partners shall have the preemptive right of purchase under the same conditions, unless otherwise specified by the partnership agreement.
Article 24 Where a person other than a partner lawfully obtains the assigned share of property of a partner in the partnership enterprise, he shall, upon amendment of the partnership agreement, become a partner in the partnership enterprise, and enjoy the rights and perform the obligations in accordance with this Law and the amended partnership agreement.
Article 25 Where a partner puts his share of property in the partnership enterprise in pledge, he shall obtain the consent of all the other partners; without the consent of all the other partners, his act shall be null and void, and if losses are caused to the bona fide third party, the doer shall be liable for compensation according to law.
Section 3 Executive Managing Partner
Article 26. Partners shall have equal rights in the conduct of partnership affairs.
Pursuant to the provisions of the partnership agreement or upon the decision of all the partners, one or more partners may be entrusted to represent the partnership enterprise to conduct partnership affairs.
Where a legal person or other organisation acts as a partner, its appointed representative shall conduct the partnership affairs.
Article 27. Where one or more partners are entrusted to conduct partnership affairs pursuant to the provisions of the second paragraph of Article 26, other partners shall no longer conduct partnership affairs.
The partners who do not execute the partnership affairs shall have the right to supervise the execution by the executive partner (s) of the partnership affairs.
Article 28 Where partnership affairs are executed by one or more partners, they shall regularly report to the other partners the execution of partnership affairs conducted thereby, and the operation and financial status of the partnership enterprise, the income from their execution of partnership affairs shall belong to the partnership enterprise, and the expenses and losses thereof shall be borne by the partnership enterprise.
For the purpose of understanding the operation and financial status of the partnership enterprise, partners shall have the right to consult the accounting books and other financial data of the partnership enterprise.
Article 29 Where partners execute partnership affairs separately, any of them may raise an objection to the affairs executed by any other partner. In that event, the management of the affairs in question shall be suspended. Where a dispute arises, the decision shall be made in accordance with the provisions of Article 30 of this Law.
Where a partner authorized to conduct partnership affairs fails to conduct partnership affairs in accordance with the partnership agreement reached or a decision made by all the partners, the other partners may decide to cancel the authorization.
Article 30 Partners shall make resolutions on the relevant matters of the partnership enterprise by voting according to the partnership agreement. Where the partnership agreement fails to provide or where the provision is unclear, each partner shall have one vote and a resolution shall be passed by a simple majority.
Where this Law provides for other means of voting in respect of the partnership enterprise, such other provisions shall prevail.
Article 31 Unless otherwise specified by the partnership agreement, the following matters of a partnership enterprise shall be subject to unanimous consent by all the partners:
1. changing the name of the partnership enterprise;
2. any change in the business scope or principal place of business of the partnership enterprise;
3. disposal of any real property of the partnership enterprise;
(IV) transferring or disposing of intellectual property rights or other property rights of the partnership enterprise;
(V) provision of guaranty for another in the name of the partnership enterprise;
(VI) appointing persons other than the partners to act as managerial executives in the partnership enterprise.
Article 32 No partner may, by himself or through cooperation with another, engage in business in competition with the partnership enterprise in which he is a partner.
No partner may conduct business transactions with the partnership enterprise in which he is a partner, unless otherwise provided for in the partnership agreement or all the partners so consent.
Partners shall not engage in activities which harm the interests of the partnership enterprise.
Article 33 The profits and losses of a partnership enterprise shall be distributed according to the stipulations of the partnership agreement; if there are no such stipulations or the stipulations are not clear, it shall be decided by the partners through consultation; if the consultation fails, it shall be distributed according to the proportion of the actual investment; if the proportion of the investment cannot be determined, it shall be shared equally by the partners.
A partnership agreement may not stipulate that all the profits be distributed to part of the partners or all the losses be borne by part of the partners.
Article 34 According to the covenants of the partnership agreement or through the decision of all the partners, a partner may increase or decrease its capital contribution to the partnership enterprise.
Article 35 The appointed management personnel in the partnership enterprise shall perform their duties within the scope authorized by the partnership enterprise.
Where a manager appointed by a partnership enterprise causes losses by performing his duties beyond the scope of power authorized by the enterprise, or by intentional action or through gross negligence in the course of performing his duties, he shall be liable for compensation according to law.
Article 36 A partnership enterprise shall establish financial and accounting systems for the enterprise in accordance with the provisions of laws and administrative regulations.
Section 4 Relationship of a Partnership Enterprise to a Third Party
Article 37 Any restriction imposed by a partnership enterprise on a partner with respect to the execution of partnership affairs or the representation of the rights on behalf of the partnership enterprise in dealing with other parties may not be asserted as a defense against a bona fide third party.
Article 38 A partnership enterprise shall first pay off its debts with all of its property.
Article 39. Where a partnership enterprise is unable to repay debts which are due, the partners shall bear unlimited liability jointly and severally.
Article 40 A partner who has paid more than its/his/her share of the losses specified in Paragraph 1 of Article 33 of this Law as a result of joint and several liability shall be entitled to recourse against other partners.
Article 41 Where a partner has incurred debts unrelated to the partnership enterprise, the relevant creditors may not set off their debts due to the partnership enterprise with their claims, nor may they exercise the partner's rights in the partnership enterprise by subrogation.
Article 42 Where a partner's own property is not sufficient to pay off his debts not connected with the partnership enterprise, he may use the proceeds distributed to him by the partnership enterprise to clear off his debts; the creditor, on his part, may, according to law, apply to a People's Court for execution of the partner's share of property in the partnership enterprise for the purpose.
In case of enforcement by the People's Court of a partner's share of property by the People's Court, a notice shall be given to all the partners, and the other partners shall have the preemptive right for purchase thereof; where the other partners fail to purchase them and do not agree to transfer the share of property to others, settlement shall be made for his withdrawal from partnership according to the provision of Article 51 of this Law, or for reduction of his corresponding share of property.
Section 5 Admission and Withdrawal
Article 43 Unless the partnership agreement stipulates otherwise, the admission of a new partner to the partnership is subject to the unanimous consent of all the partners, and a written partnership admission agreement shall be concluded according to law.
When concluding the agreement for entering into the partnership, the existing partners shall make true disclosure to the new partner of the state of operation and financial status of the partnership enterprise.
Article 44 The new partner shall enjoy the same rights and bear the same liabilities as the original partners. Where the partnership agreement provides otherwise, such provisions shall prevail.
The new partner shall bear unlimited joint and several liability for the debts incurred by the partnership enterprise prior to his/her admission.
Article 45 Where the partnership agreement stipulates the partnership term, a partner may withdraw from the partnership under any of the following circumstances during the existence of the partnership enterprise:
1. The cause for withdrawal stipulated in the partnership agreement arises;
2. All the partners have unanimously agreed on it;
(III) A cause has occurred which renders it difficult for the partner to continue the participation in the partnership enterprise; or
(IV) Other partners seriously violate the partnership agreement in terms of their obligations.
Article 46 Where the partnership agreement does not prescribe the partnership period, a partner may withdraw from partnership provided that his withdrawal will not adversely affect the management of the partnership enterprise's affairs, however, he shall notify the other partners 30 days in advance.
Article 47 Where a partner withdraws from the partnership in violation of Articles 45 and 46 of this Law, he shall compensate the partnership enterprise for the losses thus caused.
Article 48 A partner shall naturally withdraw from a partnership under any of the following circumstances:
1. The partner who is a natural person is deceased or is announced as deceased by force of law;
(II) Loss of solvency;
(III) the business license of the legal person or other organization acting as a partner is revoked or the legal person or other organization is ordered to close down or is canceled, or is declared bankrupt;
(IV) The partner has lost the relevant qualifications as required by laws or the partnership agreement; or
(V) All the shares of property of the partner in the partnership enterprise have been enforced by the People's Court.
Where a partner is deemed by the law to have no capacity or limited capacity for civil conduct, he/she may be converted to a limited partner upon unanimous consent by other partners, and the general partnership enterprise shall be converted to a limited partnership enterprise pursuant to the law. Without unanimous consent by the other Partners, the Partner with no civil capacity or limited civil capacity shall withdraw from the Firm.
The actual occurrence date of a withdrawal shall be the effective date of such withdrawal.
Article 49 A partner may be expelled under any of the following circumstances by a resolution unanimously adopted by the other partners:
1. Where it fails to fulfill its obligation to make capital contributions;
(II) He causes losses to the partnership enterprise intentionally or through gross negligence; and
(III) Where he commits misconduct in executing partnership affairs; or
(IV) Any cause specified in the partnership agreement arises.
The partner to be expelled shall be notified in writing of the resolution on expulsion. The expulsion takes effect on the day the person in question receives the notification and he retires from the partnership thereupon.
Where a partner who is removed objects to the resolution for removal, he may file for legal proceedings with the People's Court within 30 days from receipt of the notice for removal.
Article 50 Where a partner is deceased or is announced as deceased by force of law, the successor enjoying the lawful right to inheritance of the partner's share of property in the partnership enterprise shall, in accordance with the covenants of the partnership agreement or with the consent of all the partners, acquire the status of a partner in the said enterprise from the day of succession.
In any of the following cases, the partnership enterprise shall return to the heir (s) of the partner the share of property of the inherited partner:
1. the successor is unwilling to become a partner;
(II) The heir has not acquired the relevant qualifications necessary for a partner according to the provisions of laws or the covenants of the partnership agreement;
(III) Other circumstances whereby the partner may not become a partner as stipulated by the partnership agreement.
Where the successor to the deceased partner has no capacity or limited capacity for civil conduct, the successor may become a limited partner upon unanimous consent of all the partners, and the general partnership enterprise shall be converted to a limited partnership enterprise pursuant to the law. In case no unanimous consent is obtained from all the partners, the partnership enterprise shall return the share of property of the inherited partner to the successor.
Article 51 Where a partner withdraws from a partnership, the other partners shall settle accounts with him in light of the property status of the partnership enterprise at the time of his withdrawal, and return his property shares. Where a withdrawing partner is liable for compensation for losses incurred by the partnership enterprise, the corresponding compensation shall be deducted.
Where there are affairs of the partnership enterprise still outstanding at the time of retiring, the accounts shall be settled after such affairs are finished.
Article 52 The method for returning a retiring partner's share of property in the partnership enterprise shall be specified in the partnership agreement or determined by all the partners. It may be returned in cash or in kind.
Article 53 A withdrawing partner shall be jointly and severally liable for all the debts of the partnership enterprise incurred prior his/her withdrawal.
Article 54 Where the property of a partnership enterprise is less than its debts at the time when a partner retires, the retiring partner shall share the losses in accordance with the provisions of the first paragraph of Article 33 of this Law.
Section 6 Special General Partnership
Article 55 The professional service institutions that provide clients with expertise and special skills may be established as special general partnership enterprises.
A special general partnership enterprise means a general partnership enterprise that bears the liability according to the provisions of Article 57 of this Law.
. The provisions of this Section shall apply to special general partnership enterprises. Where there are no provisions in this Section, the provisions of Sections 1 to 5 of this Chapter shall apply.
Article 56. The words "special general partnership" must be included in the name of a special general partnership enterprise.
Article 57. Where debts are incurred by the partnership enterprise as a result of one or more partners having acted intentionally or negligently in the course of providing professional services, the partner (s) shall bear unlimited liability or unlimited liability jointly and severally, and the other partners shall be liable to the extent of their respective share to property in the partnership enterprise.
All partners shall be jointly and severally liable for the debts of the partnership enterprises caused by any partner not intentionally or due to gross negligence during the practice of businesses and other debts of the partnership enterprise.
Article 58. A partner who has intentionally or negligently caused the partnership enterprise to incur debts in the course of providing professional services shall, pursuant to the provisions in the partnership agreement, be liable to compensate the partnership enterprise for any loss suffered, after he has discharged his liability with the partnership enterprise assets.
Article 59. A special general partnership enterprise shall establish a professional risk fund and take up professional liability insurance.
The practice risk fund shall be used for the repayment of debts incurred in the course of providing professional services by partners. A separate account shall be opened to manage the practice risk fund. The specific administrative measures shall be formulated by the State Council.
Chapter 3 Limited Partnership Enterprise
Article 60. The provisions of this Chapter shall apply to limited partnership enterprises and their partners; where this Chapter does not provide, the provisions of Sections 1 to 5 of Chapter 2 on general partnership enterprises and partners shall apply.
Article 61. Unless laws stipulate otherwise, a limited partnership enterprise shall consist of two to fifty partners.
A limited partnership enterprise shall have at least one general partner.
Article 62. The words "limited partnership" must be included in the name of a limited partnership enterprise.
Article 63 In addition to the items specified in Article 18 hereof, the partnership agreement shall specify the following matters:
1. the names and domiciles of the general partners and limited partners;
2. Conditions and procedures for selection of the executive partners;
(III) Limits of authority of executive partners and methods for handling breach of contract;
(IV) conditions for removal and procedures for replacement of the executive partner;
(V) conditions, procedures and relevant liabilities for admission and withdrawal of limited partners;
(VI) procedures for change between limited partners and general partners.
Article 64 Limited partners may make capital contributions in cash, in kind, with intellectual property, land use rights, or other property rights.
Limited partners shall not contribute capital in the form of labour services.
Article 65. A limited partner shall make capital contribution in full according to the schedule stipulated in the partnership agreement; a failure to make capital contribution in full according to the schedule shall result in supplementary payment obligation and breach of contract by the other partners.
Article 66 The registration items of a limited partnership enterprise shall indicate the names of and the amounts of capital contribution by the limited partners.
Article 67. The partnership affairs of a limited partnership enterprise shall be conducted by general partners. The partners who conduct partnership affairs may require that the remuneration for conducting partnership affairs and the collection thereof shall be stipulated in the partnership agreement.
Article 68. A limited partner shall not conduct partnership affairs or represent the limited partnership enterprise in external dealings.
The following acts of a limited partner shall not be deemed as conduct of partnership affairs:
1. participation in the decision on the admission and withdrawal of general partners;
(II) proposals on the operation and management of the enterprises;
(III) participation in selection of the accounting firm that undertakes the auditing business of the limited partnership enterprise;
(IV) obtaining the audited financial and accounting reports of the limited partnership enterprise;
(V) inspecting the financial data including the financial and accounting books of the limited partnership enterprise concerning self interests;
(VI) to claim rights or bring lawsuits to the responsible partners when the interests in the limited partnership enterprise are encroached upon;
(VII) Urging the executive partner to exercise its rights or sue in its own name for the benefit of the enterprise when it fails to exercise its rights; or
(VIII) Providing guarantee to the enterprise in accordance with the law.
Article 69. Unless the partnership agreement stipulates otherwise, a limited partnership enterprise must not distribute all profits to only some partners.
Article 70. Unless the partnership agreement stipulates otherwise, a limited partner of a limited partnership enterprise may enter into transactions with the enterprise.
Article 71. Unless the partnership agreement stipulates otherwise, a limited partner of a limited partnership enterprise may engage in businesses that compete with the enterprise on his own or in cooperation with others.
Article 72. Unless the partnership agreement stipulates otherwise, a limited partner may pledge his share to property in the limited partnership enterprise.
Article 73 Any limited partner may transfer its/his/her share of property in the limited partnership enterprise to any person other than the partners thereof in accordance with the covenants of the partnership agreement, but shall notify other partners 30 days in advance.
Article 74. Where the personal property of a limited partner is insufficient to repay his debts which are unrelated to the partnership enterprise, the partner may use his share to gains distributed by the limited partnership enterprise for repayment; creditors may also apply to the People's Court to enforce repayment by the partner using his share to property in the limited partnership enterprise.
Where the People's Court enforces a limited partner's share to property, all the partners shall be notified. Under the same conditions, other partners shall have the preemptive right.
Article 75. A limited partnership enterprise with remaining limited partners shall be dissolved; a limited partnership enterprise with remaining general partners shall be converted to a general partnership enterprise.
Article 76 Where a third party has reason to believe that a limited partner is a general partner and enters into transaction with such limited partner, such limited partner shall bear the same liability as a general partner in such transaction.
Where a limited partner enters into transactions with others in the name of the limited partnership enterprise without authorisation and causes the limited partnership enterprise or other partners to suffer losses, the limited partner shall bear compensation liability.
Article 77. A newly admitted limited partner shall be liable for debts incurred by the limited partnership enterprise prior to his admission up to the amount of capital contribution subscribed.
Article 78 A limited partner shall naturally withdraw from the partnership under any of the circumstances set forth in Items 1 and 3-5, Paragraph 1 of Article 48 of this Law.
Article 79. Where a natural person acting as a limited partner loses its/his/her capacity for civil conduct during the period of existence of the limited partnership enterprise, other partners shall not demand the withdrawal of the limited partner.
Article 80 When a natural person acting as a limited partner is deceased or is announced as deceased by force of law or a legal person and other organization acting as a limited partner is terminated, his/her heir or successor to rights may by force of law acquire the qualification of the limited partner in the limited partnership enterprise.
Article 81 Where a limited partner withdraws from a limited partnership, he shall be liable for the debts of the limited partnership enterprise occurred due to reasons before he withdraws from the limited partnership enterprise with the property collected by him at the time of his withdrawal.
Article 82. Unless the partnership agreement stipulates otherwise, the conversion of a general partner to a limited partner or vice versa shall require the unanimous consent of all the partners.
Article 83. A limited partner who is converted to a general partner shall bear unlimited liability jointly and severally, for debts incurred by the limited partnership enterprise during which he was a limited partner.
Article 84. A general partner who is converted to a limited partner shall bear unlimited liability jointly and severally, for debts incurred by the partnership enterprise during which he was a general partner.
Chapter 4 Dissolution and Liquidation of a Partnership Enterprise
Article 85 A partnership enterprise shall be dissolved in any of the following situations:
1. The partnership term has expired and the partners have decided to cease operation;
2. The cause for dissolution stipulated in the partnership agreement arises;
3. All the partners decide to dissolve;
4. The number of partners fails to meet the quorum for no less than thirty days;
(V) The partnership purpose prescribed by the partnership agreement has been accomplished, or is not capable of being accomplished;
(VI) The company's business license has been lawfully revoked, or the company has been ordered to close down or wound up;
(VII) any other reason stipulated by laws and administrative regulations.
Article 86 The dissolution of a partnership enterprise shall be liquidated by the liquidator.
All the partners shall act as the liquidator; upon consent by a simple majority of all the partners, one or more partners or an entrusted third party may be appointed to act as the liquidator within 15 days from the occurrence of the event which triggers dissolution of the partnership enterprise.
Where a liquidator has not been appointed within 15 days from the occurrence of the event which triggers dissolution of the partnership enterprise, the partners or other interested parties may apply to the People's Court for appointment of a liquidator.
Article 87 During liquidation, a liquidator shall manage the following affairs:
1. checking up on the property of the partnership enterprise and separately formulating a balance sheet and a detailed inventory of property;
(II) settling unfinished partnership affairs which are related to liquidation;
(III) To pay taxes overdue;
(IV) to clear claims and debts;
5. disposing of, after paying off the debts of the partnership enterprise, its remaining property; and
(VI) participating in lawsuits or arbitration activities on behalf of the partnership enterprise.
Article 88 The liquidator shall notify the creditors of the event of dissolution of the partnership enterprise within 10 days from the date of confirmation and publish a public announcement on the newspapers within 60 days. The creditors shall declare their claims to the liquidator within thirty days from the date of receipt of the notice, or within forty-five days from the date of the public announcement for those who have not received the notice.
When declaring their claims, the creditors shall explain the matters concerned and provide the certifying documents. The liquidator shall register the creditor's rights.
During the liquidation period, the partnership enterprise shall continue to exist, but it may not engage in business activities not related to liquidation.
Article 89 The remaining property of the property of the partnership enterprise after payment of the liquidation expenses and salaries of employees, social insurance premiums and statutory compensations and payment of taxes due and discharge of debts shall be distributed according to the provisions of Article 331. of this Law.
Article 90 Upon completion of liquidation, the liquidator shall prepare a liquidation report, which shall, after all the partners have signed and affixed their seals thereon, be submitted to the enterprise registration authority within 15 days for the purpose of applying for the registration of cancellation of the partnership enterprise.
Article 91 After a partnership enterprise is de-registered, the former general partner shall still be jointly and severally liable for the debts of the partnership enterprise incurred during the period of its existence.
Article 92 Where a partnership enterprise is unable to repay debts which are due, the creditors may apply to a People's Court for bankruptcy liquidation pursuant to the law, and may request that the general partners repay the debts.
Where a partnership enterprise is declared bankrupt pursuant to the law, the general partners shall continue to bear unlimited liability jointly and severally for the debts of the partnership enterprise.
Chapter 5 Legal Liabilities
Article 93 Where partnership enterprise registration is obtained through the submission of false documents or by any other fraudulent means in violation of the provisions of this Law, the enterprise registration authority shall order rectification and impose a fine of not less than 5,000 yuan and not more than 50,000 yuan. If the circumstances are serious, the enterprise registration shall be canceled and a fine of not less than 50,000 yuan and not more than 200,000 yuan shall be imposed.
Article 94. A partnership enterprise which violates the provisions of this Law by failing to include the words "general partnership", "special general partnership" or "limited partnership" in its name shall be ordered to make correction by the enterprise registration authorities and be subject to a fine ranging from RMB2,000 to RMB10,000.
Article 95. A person who violates the provisions of this Law by engaging in partnership business activities in the name of a partnership enterprise or a branch of a partnership enterprise without obtaining a business licence shall be ordered to stop such business activities by the enterprise registration authorities and be subject to a fine ranging from RMB5,000 to RMB50,000.
Where change to a matter of the partnership in the register arises, and the partnership fails to complete the formalities for change to the register pursuant to the provisions of this Law, an order to complete registration formalities within a stipulated period shall be made by the enterprise registration authorities; a fine ranging from RMB2,000 to RMB20,000 shall be imposed on partnerships which fail to complete registration formalities within the stipulated period.
In case of any change of the registered items of the partnership enterprise, the partner that handles the partnership affairs fails to apply for handling the alteration registration within the specified time shall compensate for the losses thereof to the partnership enterprise, other partners or bona fide third parties.
Article 96 Where a partner that conducts partnership affairs or an employee of the partnership enterprise takes advantage of his position to misappropriate the interests that should go to the partnership enterprise or encroach upon the property of the partnership enterprise by other means, such interests or property shall be returned to the partnership enterprise. If he causes losses to the partnership enterprise or other partners, he shall be liable for compensation according to law.
Article 97 Where a partner, without authorization, conducts partnership affairs which shall be subject to the unanimous consent of all the partners as provided for in this Law or the partnership agreement, and thus causes losses to the partnership enterprise or other partners, he shall be liable for compensation in accordance with law.
Article 98 Where a partner who does not have the power to conduct partnership affairs conducts partnership affairs without authorization, thus causing losses to the partnership enterprise or other partners, he shall be liable for compensation in accordance with law.
Article 99 Where a partner, in violation of the provisions of this Law or the covenants of the partnership agreement, engages in business in competition with the partnership enterprise in which he is a partner or conducts business transactions with the partnership enterprise in which he is a partner, the profits so derived shall be owned by the partnership enterprise; and if losses are caused to the partnership enterprise or to the other partners, he shall be liable for compensation in accordance with law.
Article 100. A liquidator who fails to submit a liquidation report to the enterprise registration authorities in accordance with the provisions of this Law or concealed important facts or made major omissions in the liquidation report shall be ordered by the enterprise registration authorities to make correction. Any expense or loss that arise therefrom shall be borne and compensated by the liquidator.
Article 101 In conducting liquidation matters, if a liquidator seeks illegal income or seizes the property of the partnership enterprise, he shall return such income or seized property to the partnership enterprise; if he causes losses to the partnership enterprise or the other partners, he shall be liable for compensation according to law.
Article 102 Where a liquidator, in violation of the provisions of this Law, conceals or transfers the property of the partnership enterprise, makes false entries in the balance sheet or the inventory of property, or distributes property before clearing off debts and thus damages the interests of the creditors, he shall be liable for compensation according to law.
Article 103 Where a partner violates the partnership agreement, he shall bear the liability for breach of agreement in accordance with law.
Where a dispute arises among the partners over the execution of the partnership agreement, the partners may settle it through consultation or mediation. Where the partners are unwilling to resolve the dispute through negotiation or mediation, or where negotiation or mediation is unsuccessful, the partners may apply to an arbitration organisation for arbitration in accordance with the arbitration clause stipulated in the partnership agreement or a written arbitration agreement concluded subsequently. Where no arbitration clause is specified in the partnership agreement and no written arbitration agreement is reached after the event, an action may be brought to the people's court.
Article 104 Personnel of the relevant administrative authorities who violate the provisions of this Law in abusing official powers, corruption, accepting bribes or harming the legitimate rights and interests of a partnership enterprise shall be subject to administrative punishment pursuant to the law.
Article 105 Where a violation of the provisions of this Law constitutes a criminal offence, criminal liability shall be pursued in accordance with the law.
Article 106 Persons who violate the provisions of this Law shall bear civil compensation liability and pay fines and penalties, where their properties are inadequate for both, civil compensation liability shall be borne first.
第六章 附 则
Chapter 6 Supplementary Provisions
Article 107 Where a non-enterprise professional service institution adopts the partnership system in accordance with the relevant laws, the form in which the partners thereof assume liabilities may apply the provisions of this Law on the liability assumed by the partners of a special general partnership enterprise.
Article 108 The administrative measures on establishment of partnership enterprises in China by foreign enterprises or individuals shall be stipulated by the State Council.
Article 109 This Law shall go into effect as of June 1, 2007.