On August 19, 2009, Administrative Measures on the Establishment of Partnership Enterprises by Foreign Enterprises or Individuals ( 外国企业和个人在中国境内设立合伙企业管理办法, “FIP Measures” ) was issued by the State Council, which will be effective on March 1, 2010.
The key issues concerning the Measures
According to the FIP Measures foreign individuals or enterprises are allowed to establish a partnership with either foreign investors or Chinese individuals or enterprises. The FIP Measures also apply to individuals or enterprises from Hong Kong, Macao and Taiwan. Under the new rules, foreign individuals or enterprises can join to existing Chinese and Foreign partnerships as new partners.
Under the Partnership Law, partners are permitted to make capital contributions to the partnership in cash, in kind, by labor, by intellectual property, by land use rights or by other property rights. The FIP Measures regulates that the monetary contributions by foreign partners to the partnership must be convertible currencies or lawfully earned RMB. However, it is not stated in the FIP Measures whether foreign partners may also make capital contributions in the same way as their Chinese partners. There are also no requirements about the minimum capital contributions, the minimum ratio for monetary contribution and the time limit for contributions in the FIP Measures.
The FIP Measures authorizes the State Administration of Industry and Commerce (“SAIC”) and its local counterparts rule the establishment, amendment registration and termination of FIPs without approval by the Ministry of Commerce (“MOFCOM”).However, aside from the documents required by Measures of the People’s Republic of China for the Registration of Partnership Enterprises, a written proof of compliance with foreign investment policies is required to be submitted at the time of registration. Foreign individuals and enterprises should refer to the Foreign Investment Guidance Catalog before registering the partnership. If the partnership business is in an industry subject to government approval, such approval should be obtained by the partnership.
The Measures also provide on assignment an agent or representative for registration of the partnership at the local administrative department for Industry and Commerce.