Clearly recognize the limited partnership system.
Limited partnership is actually a form of enterprise with a long history. Europe was recognized as early as the Middle Ages. Almost all countries in the world recognize this form of enterprise. In China, the partnership enterprise law was considered when it was formulated in 1997, but it was eventually deleted due to various misunderstandings or doubts about the enterprise form.
The advantage of limited partnership is that it organically combines the limited liability of the company with the advantages of the partnership system, that is, it is simple to set up, flexible to operate, low in operating costs and exempt from enterprise-level income tax, so it is widely accepted by the society. Limited partnership was originally applied to small family businesses. However, in the United States after the 1960s, due to the high income tax, people were forced to look for various tax avoidance tools, and limited partnership became an ideal choice, which led to the emergence of a large number of limited partnership enterprises and gave this long-established enterprise form new vitality. Limited partnership is especially favored by venture capitalists and widely used in large-scale investment and development projects such as oil and real estate. The scale of limited partnership has also developed from the initial form of small enterprises to the legal form adopted by large enterprises with thousands of partners. Limited partnerships can even be publicly traded, which is called listed limited partnerships.
1997 although the partnership enterprise law does not recognize limited partnership, it is necessary for social and economic development. Especially in the field of developing high-tech venture capital, limited partnership is the most suitable and reasonable enterprise form. The situation in our society is that people who know technology and operation often lack funds, while those who don't know high technology but have a lot of wealth can't find suitable investment targets. Limited partnership is just a combination of the two. Due to this inherent social demand, as early as before the revision of the Partnership Enterprise Law, Beijing, Shenzhen, Hangzhou and other regions recognized the limited partnership system in the form of local regulations and put it into practice. However, the legitimacy of such local regulations is questionable. Therefore, when amending the Partnership Enterprise Law, it is necessary, timely and in line with the trend to explicitly recognize limited partnership as an enterprise form in the form of legislation, so as to make it a member of China's enterprise family.
The forms of limited liability partnership are introduced.
Limited liability partnership is a new type of general partnership, which was initiated in Texas more than ten years ago. Most people are not familiar with it at present. One of the most important characteristics of traditional general partnership is that the partners are jointly and severally liable for the debts of the partnership. The traditional form of partnership is usually adopted by so-called partnership organizations such as lawyers, accountants and doctors, because it needs to attract customers with its own personal credit. However, with the expansion of the economic scale of their clients, the scale of these professional service institutions has also expanded accordingly. Partners in large law firms and accounting firms are often unfamiliar with each other, so the risks faced by partners are much greater than traditional partnerships. As we all know, limited liability companies are usually managed by shareholders themselves, which is not essentially different from the management mode of partnership enterprises. However, even if they make mistakes and cause losses to the company, their responsibility is limited to their share of the company's property, and there is no need to worry about the recovery of personal property, because they enjoy the protection of limited liability. In contrast, it is unfair for partners in a partnership to bear joint liability because of their partnership status, even if they are not at fault. This extremely unfair phenomenon in the lawsuit of investigating the joint liability of innocent partners in Texas in the 1980s led to the birth of a new form of general partnership-limited liability partnership. Because the situation in the United States also exists in other countries, limited liability partnership has been rapidly promoted and developed in many other countries in just over ten years.
It is the China Institute of Certified Public Accountants that promotes the legislation of limited liability partnership in China. The situation in China is different from other countries, because more than 90% accounting firms in China do not adopt the partnership system, but adopt the form of limited liability companies. At that time, the legal form of limited liability company was adopted because their understanding of partnership was biased and they only considered the individual joint liability of partners and the limited liability of shareholders of the company, so they chose the form of limited liability company. In fact, limited liability companies are not suitable for the needs of accounting firms and have encountered insurmountable obstacles in practice. They want to change to partnership now, but they also face the same joint and several liability problem they faced twenty years ago, which puts them in a dilemma. Limited liability partnerships just meet their needs. At present, although law firms are not as urgent as accounting firms, with the increasing globalization of economy, China law firms will need limited liability partnerships sooner or later.
Generally speaking, the successful revision of the partnership enterprise law is the result of joint efforts of many parties, and the new partnership enterprise law is a law that keeps pace with the times. Undoubtedly, it will have a positive impact on China's economic development, further reform and opening up and integration with the international community.
Nevertheless, there are still some problems to be solved in the new Partnership Enterprise Law. For example, is the concept of non-enterprise partnership in the Partnership Enterprise Law an innovation or a legacy of the original system? For another example, the upper limit of 50 people in a limited partnership is suspected to run counter to its financing function. What is the theoretical and practical significance of this restriction? Is the limited liability partnership a newly established enterprise or can it be transformed from the original partnership? What procedures do I need to go through if I allow the conversion? What will happen if the limited liability partnership does not meet the statutory conditions? The current regulations are quite simple and need to be further improved in practice.