Limited Partnership: A New Business Vehicle in People's Republic of China

Abstract

In June 2007, the National People’s Congress (NPC) of the People’s Republic of China (PRC) revised the Partnership Enterprise Law (PEL) so as to introduce a new business vehicle - the limited partnership. Prior to the revision of this particular statute, the general partnership was the only partnership vehicle allowed under PRC law. One of the major reasons cited by the NPC for adopting the limited partnership is to encourage the investment of capital in high-technology enterprises and to facilitate the development of the venture capital market. In recent years, a number of jurisdictions such as Australia, New Zealand and Singapore introduced limited partnership legislation or adjusted their limited partnership regimes in order to encourage the growth of venture capital investments. The introduction of limited partnership in PRC is thus in line with current international practice. The objective of this article is to examine the key elements of PRC’s new business structure with a view to analysing the potential problems that may not have been adequately addressed by the PEL as compared, where appropriate, to the counterpart limited partnerships in the other jurisdictions.

Keywords: Limited Partnership, Partnership Enterprise Law, China