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Shanghai Corporate Formation (FIPE)

Updated:2018-1-4 16:48:39    Source:www.tannet-group.comViews:155

Shanghai corporate formation (FIPE) refers to foreign invested partnership enterprise registration in Shanghai. The term FIPE refers to general partnerships and limited partnerships which may be established within China by individuals, legal persons and other organizations.

FIPE is an unlimited liability business entity without minimum requirements on registered capital. A partnership is a type of business entity in which partners share with each other the profits or losses of the business undertaking in which all have invested. A state-funded company, state-owned company, listed company, public welfare-oriented public institution or social organization may not become a general partner of a limited partnership.

Shanghai FIPE Formation - Different Types of FIPE
Following are different types of Shanghai FIPE. Commonly,
1. General Partnership Enterprise (GPE)
A general partnership enterprise may be formed by general partners who bear unlimited joint and several liability for the debts of the partnership. The general partners share unlimited liabilities for the debt of the partnership.

2. Limited Partnership enterprise (LPE)
A limited partnership enterprise is formed by a combination of general partners and limited partners where the limited partners bear the liabilities for the partnership's debts to the extent of their capital contributions.

3. Special General Partnership enterprise (SGP)
A special general partnership enterprise resembles a general partnership except that it must be a professional service institution offering services requiring professional knowledge and special skills. The structure shields co-partners from liabilities due to the willful misconduct or gross negligence of one partner or a group of partners. It is very similar to limited liability partnership in Europe and America.

Shanghai FIPE Formation - Advantages of FIPE
The advantages of establishing a FIPE, compared with other types of enterprises, include, but not limited to:
1. No corporate income tax for partnership enterprise;
2. No requirements on minimum registered capital;
3. Less procedures comparing with Wholly Foreign Owned Enterprise or Joint Venture;
4. Capability of converting RMB profits to US dollars for remittance to its parent company outside of China;
5. Foreign Enterprise or Individual is allowed to establish a Partnership Enterprise with Chinese individual (While Chinese individual is not allowed to have Joint Venture with foreign investor);
6. The profit distribution of a PE could follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement (While for LLC, profit distributions is according the portage of investment of shareholders).

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