By Paul McKenzie and Fraser Mendel, Morrison & Foerster LLP
The Partnership Enterprise Law, originally promulgated on February 23, 1997, was amended on August 27 2006 by the Standing Committee of the National People's Congress (NPC). The amended Partnership Enterprise Law (the Revised Partnership Law), will come into effect on June 1 2007.
The Partnership Enterprise Law attracted limited attention when promulgated in 1997 due to its inflexibility - only natural persons could be partners, the partnership was taxed as an enterprise and the partners themselves were taxed on their income, a partnership enterprise did not enjoy limited liability, and the implications of the bankruptcy of a partnership were unclear. The Revised Partnership Law addresses these problems, and also provides several additional advantages. Under the revised law, a range of legal entities are eligible to be partners, a degree of limited liability can be achieved, and there are clear rules for...
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