Foreign-invested partnership regulations: radical reform or unmet expectations?
New rules on foreign-invested partnerships have raised hopes of a new investment vehicle for inbound business. But their effectiveness appears limited
Issue: February 2010
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foreign-invested partnerships
Measures for the Administration of the Establishment of Partnership Enterprises in China by Foreign Enterprises or Foreigners
PRC Partnership Enterprise Law
On November 25 2009, the State Council promulgated the Measures for the Administration of the Establishment of Partnership Enterprises in China by Foreign Enterprises or Foreigners (外国企业或者个人在中国境内设立合伙企业管理办法) (FIP Regulations) which will come into force on March 1 2010. Under the FIP Regulations, foreign investors should expect to be allowed to set up foreign-invested partnership enterprises (FIPs), which potentially offer intriguing prospects for structuring their investments in China. The FIP Regulations have been a long-anticipated development since the introduction of the amended PRC Partnership Enterprise Law (合伙企业法) in 2006, which contemplated foreign-invested partnerships for the first time.
The amended Partnership Enterprise Law allowed for the creation of limited liability partnerships (LLPs), a structure commonly adopted in developed jurisdictions for the setting up of professional service firms as well as private equity and venture capital funds. However, the Partnership Enterprise Law did not immediately set out the procedure for establishing FIPs, but...
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