LLP And Reconstruction Of Partnership Legal System

There are three traditional forms of enterprises: proprietorship, partnershipand corporation. The form of corporation with the members ranging from two tothousands of persons together with internal divisions between the ownership andthe management has become a very important instrument to facilitate thesocialized mass-production, and become the first choice for many investors. Theform of proprietorship with the owner the same as the operator, has a very clearstructure between obligations and rights and is seldom utilized by the investors.Partnership is used to supplement the rest of space between the two forms ofenterprises mentioned above, as a residual form of enterprise. Such form, asestablished in accordance with the agreements between the partners, has a verylarge liberation as compared to the form of corporation, and should be a veryideal choice for the medium and small enterprises. However, the unlimited jointand several liability between the partners as the core feature of traditionalpartnership, has refrained the function of the partnership as a residual form ofenterprise. As the history has proved according to experiences of many countriesin the world that the economic prosperity of a country shall depend on theparticipation and growth of the medium and small enterprises as an veryimportant part of the national economic, the partnership as a form of enterpriseconducive and suitable to the medium and small enterprises is very important forthe present economic growth. The failure of the health operation of system ofpartnership will impair the quality of the national economic. As a matter of fact,the studies on the development of form of partnership are far from satisfactionamong the studies on the forms of enterprises.Since late last century, a new development for traditional partnership,LLP(limited Liability Partnership) has emerged in the United State and theUnited Kingdom with the conspicuous feature, namely, that limited liability isapplied to the partnership. Such new development has changed the mode ofrelationship between the internal and external of the traditional partnership, andits recognition and acknowledgement of partnership with the legal person haspaved a new road for the development of legal systems for partnership.As regards to this new development mentioned above, the author gives anintroduction of the reform of the relationship between the internal and externalof the partnership brought by LLP, analyze the theoretical basis behind suchreform and changes, delineate the path of the development of the legal system ofpartnership, and discusses the trend of such development and the probability tofulfill such trend by utilizing the legal interpretation method, economic analysis,history study and comparison study, so as to provide recommendations for theimprovement and reconstruction of Chinese legal system of partnership.