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Shanghai Business Setup

Shanghai Foreign Invested Partnership Enterprise (FIPE) Formation

Shanghai FIPE Formation Service

Hotline: 86-21-68877368 Email: hkcfm-shanghai@163.com

Shanghai Foreign Invested Partnership Enterprise (FIPE) Formation is also called Shanghai FIPE registration, Shanghai FIPE setup, or Shanghai FIPE incorporation. Shanghai FIPE formation is establishing 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 partnership in the People's Republic of China is a business entity governed by the Partnership Enterprise Law passed by order of the President of the People's Republic of China to authorize and govern partnership enterprises. The term FIPE refers to general partnerships and limited partnerships which may be established within China by individuals, legal persons and other organizations. 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- Capital Contribution
A partner may contribute capital to the partnership to garner a share of the partnership's profits or losses. A capital contribution may include money, intellectual property right, land use right or other properties, or labor services at a valuation determined by agreement among the partners. If the partnership is a limited partnership, then the limited partners may not make capital contributions with labor services.

Shanghai FIPE Formation-Distribution
The default distribution scheme of profits or losses follows the proportion to capital contributions made by the partners. However, the distribution scheme may follow an informal negotiated agreement or abide by scheme adopted in the partnership agreement. If the proportions of capital contributions cannot be discerned, then the profits or losses will be distributed equally by the partners. The partnership agreement may not distribute all losses or all profits to just one or a group of partners within the partnership.

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)

Shanghai FIPE Formation-Terms and Termination
In China, terms of 15 to 30 years are typical for a PE. It is also possible to obtain extensions of the PE's duration.

Contact Us
If you have further queries, don’t hesitate to contact Tannet anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net , or calling Shanghai hotline at  86-021-68877368   021-31397142   021-58822399, or emailing to hkcfm-shanghai@163.com.




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