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[ESTABLISHING A BUSINESS ENTITY IN CHINA]
b) Limited Partnership -
application documents such as a certificate certifying the legal operation of the foreign parent enterprise for at least two years, a bank reference letter, the constitutional documents of the foreign parent enterprise, the identity documents of the chief representative and the representative(s), a certificate of right to use premises, etc. After the application is approved, a certificate of registration will be issued to the RO evidencing its formal establishment. 2) Formation of a Company or a Partnership The formation of a foreign-invested company or partnership (each a foreign- invested entity, “ FIE ”) in China in general requires more complicated procedures and longer time frame than usually seen overseas. A majority of foreign investors choose to engage a lawyer to assist them through the process. Sometimes, foreign investors may also hire a registration agent to assist. As mentioned in the introductory paragraph, China currently administers a “national treatment plus negative list” regime on admission of foreign investment, whereby the business activities that a foreign investor intends to engage in China are divided into three categories: the “prohibited categories,” the “restricted categories,” and the “permitted categories.” The negative list lists all “prohibited categories” and “restricted categories,” and is updated by the relevant authorities from time to time. All other businesses which are not listed in the negative list are “permitted.” A foreign investor will not be allowed to engage in a business that is in the prohibited categories; but may be allowed to engage in a business that is in the restricted categories, provided
Limited or unlimited liability A limited partnership shall have at least one general partner and one limited partner. The liability of a limited partner to the creditors of the limited partnership is limited to the amount of its capital commitment, while the liability of the general partner is unlimited.
- Capital
commitment
and
contribution; governance The capital commitment and contribution by the partners, and the governance of a limited partnership are similar to those of a general partnership, as introduced in subsection a) above. Carryout of partnership affairs By and large, the affairs of a limited partnership shall be carried out only by the general partner. If a limited partner carries out the affairs of the limited partnership or externally represents the limited partnership, it may lose the limited liability protection and be exposed to unlimited liability together with the general partner.
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Formation 1) Formation of an RO
When establishing an RO, the applicant shall apply to the relevant AMR where the RO will be domiciled, and submit
ILN Corporate Group – Establishing a Business Entity Series
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