A Study On Investment System Of Limited Partnership In Our Country

The limited partnership system was introduced into the Partnership EnterpriseLaw that implemented on June1,2007in China. Although legislative workersconducted lots of legislative inspection and verification on the system before theintroduction, and strove to make the law perfect and understandable after theenactment, it is still a “new thing” for legal system in China because of Chinese legaltheory has no systematic study on it. The community awareness of the “limitedpartnership” is not high, thus it inevitably has an impact on the application andpromotion of the system. Before the amendment of Partnership Enterprise Law ofthe People’s Republic of China (hereinafter referred to as Partnership EnterpriseLaw), some local regulations, such as Measures for Administration to LimitedPartnership in Beijing, Provisional Measures for Administration to the LimitedPartnership in Hangzhou, etc., also give the limited partnership a legitimate form.After the modification of Partnership Enterprise Law in2006, the limitedpartnership system became substantial and legislative, which fills the deficiency ofcompany system and partnership enterprise, and enriches the corporate form oforganization and improves the socialist legal system in China. Although PartnershipEnterprise Law has been modified, there are still a lot of problems which have nodetailed provisions including the down payment proportion of investment system oflimited partnership in limited partner, the time of payment in investment, falsecapital contribution and capita flight. While, financial contribution is the main sourceof the property of partnership enterprise. If the capital contribution of limited partneris not in place, it will have a direct and profound impact on the business operation ofenterprises and interests of creditors. This article describes existing problems,reasons, solutions and proposals of legislation perfection on the investment system inpractice of our limited partnership from three parts. Through specific examples andintroducing and analyzing the problems of the investment system in practice oflimited partnership in Part One, the separating part between the investment systemand practice in legislation and introduced the imperfect reality about the investmentsystem in legislation is found. Part One firstly describes the legislative status on the investment system of our limited partnership and the issues facing in practice, thenillustrates by the following key points, such as the legislative status on theinvestment system of our limited partnership and the issues facing in practice whichrefers to the provisions on shareholders’ capital contribution, the form ofshareholders’ capital contribution, the contribution obligation, means of contributinginvestment and the capital verification requirements according to the Company Act.Based on the relevant provisions of Partnership Enterprise Law, the issues ofPartnership Enterprise Law in practice combining with specific cases are analyzedand summarized in this thesis, and the positive significance of the limitedpartnership system is also concluded. Part two is the focus of this article. It analyzesthe defects of the investment system of limited partnership comprehensively anddeeply and makes an all-round “diagnosis” on the “crux” of problems. Due toregional differences, the provisions of contributors’ conditions of limited partnershipare different in our country. Means of contributing investment and pay time limithave no mandatory provisions. Because of there are no mandatory provisions oncontributive down payment ratio, limited partner in a limited partnership plays therole of the contributor, the contribution obligation is a fundamental obligation oflimited partner, as well as a basis of obtaining allocation of profits for the limitedpartner. The non-limited mandatory provisions of payment in investment mean thatPartnership Enterprise Law has no mandatory provisions on the initial investmentratio as well as the duration of the payment in investment. However, it is assigned tothe partnership agreement which is not conducive to protect the interests of creditor.The financial contribution of the limited partner embodies capital credit andcontribution timely and in place is the basis to protect the creditors’ interests. Thescope of non-monetary contribution and the verification of non-monetarycontribution are also covered. According to the provisions of Partnership EnterpriseLaw, partner who contributes with the entity, intellectual property, use of land orother property rights and needs the appraisal and assessment can be determined byall partners through consultations or valuated by statutory appraisal agencycommissioned by all partners. The transfer problem of share capital included howlimited partner transfer their share of property in the limited partnership companiesand repayment problems involving partnership’s debts. Others includes protection problems of creditors in the investment phase, limited partners who disqualified topay the amount of contribution, how to protect their interests and the blank ofprovided by false capital contribution and capital flight. Part Three puts forward anumber of recommendations for perfecting the investment system of limitedpartnership, analyzes the feasible proposals according to integration of theory withpractice more comprehensively and systematically and proposes solutions to thoseproblems. For example, several suggestions improving our investment system oflimited partnership, investment main body should be clear, the eligibility of nationalstaff should be restricted as a partner and the capacity of the partner is lack. Theexceptions of the main qualifications of limited partner, such as limited partner is aspecial partner of a partnership enterprise, the main body of the limited partner of thepartnership enterprise should be made some restrictions. So the author recommendsthat the main body identity of limited partner of the limited partnership in ourcountry should be limited. It also refers to the subject qualification of partnershipissues of legal person. Means of contributing investment and pay time limit shouldbe clear including the down payment ratio of financial contribution and time limit ofpaid in investment. Explore the feasibility of labor service contribution. Clarify thescope of the non-monetary contribution. From a global perspective, the property andrights used for contributing are constantly expanding and non-monetary contributionhas been generally recognized. Confirm the legitimacy of the equity contribution andthe legitimacy of debt financing with transferable debt incomes as the capitalcontribution form, prospecting and mining rights as ways of investment, forestownership and forest land use rights as the feasibility of investment. Suggest theunequal issues on the paid-in and subscribed capital contribution. In addition, itinvolves the problems of protecting other partners and creditors and to refine thecreditor. The issues of channels for relief against the partnership agreement havemade a more detailed discussion.