China Business Setup/China Company Registration
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Foreign Invested Partnership Enterprise (FIPE) becomes more and more popular among young entrepreneurs with their new start ups in China as it requires no registered capital but the FIPE still could hire people, collect payments, issue invoices, apply for work & residence in China freely. It's not a surprise that most people you meet in China may not know anything about FIPE as it's relative new and government is not promoting on this. Simply speaking, the foreign invested partnership enterprise (FIPE) is a unlimited liability business entity without minimum requirements on registered capital.
I. Major Types of Partnership Enterprise
Below are the two major types of partnership enterprise, namely:
(1) General Partnerships
If a business is going to be owned by more than one owner, the simplest business form to create and operate is a general partnership. Virtually, anyone can be a partner. A partner can be an individual, a partnership, a limited liability company, a corporation or a trust.
(2) Limited Partnerships
A limited partnership is a partnership with two classes of partners: general partners and limited partners. The general partners operate the business and are personally liable for all obligations of the partnership. The limited partners don’t have any control over the business, other than to determine who will manage it.
II. Conditions of FIPE Formation in China
The minimum number of partners should be 2, there's no requirements on the nationality of a Partner, thus it can be all foreign investors to form a FIPE or foreign and Chinese partners mixed FIPE. A partnership requires a written agreement between the partners.This written agreement must be submitted to the State Administration of Industrial & Commerce along with the certified passport copy of the partners (if applicable). Should it be a general partnership enterprise (GPE) or limited partnership enterprise (LPE) then that shall be mentioned in its name. A LPE may not have less than 2 partners where one of them is a general partner nor may it have more than 50 partners.
III. Advantages of Partnership Enterprise
The advantages of establishing a FIPE , compared with other types of enterprises, include, but not limited to:
1. No requirements on minimum registered capital;
Less procedures comparing with WFOE or JV;
2. Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
3. Foreign enterprise or individual is allowed to establish a partnership enterprise with Chinese individual (While Chinese individual is not allowed to have Joint Venture company with foreign investor);
4. The profit distribution of a FIPE could follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement (While for LLC, profit distributions is according to the percentage of investment of shareholders).
Contact Us
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website english.tannet-group.com, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143422, or emailing to tannet-solution@hotmail.com. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020,Dongmen Rd South, Luohu , Shenzhen, China.
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