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What is limited liability partnership (LLP) in China and how to reach a partnership agreement

A limited liability partnership (LLP) is different from a general partnership or a limited partnership. An LLP differs from general partnership because all partners in an LLP are shielded from wrongful acts or negligence of other partners.

An LLP combines characteristics of partnerships and corporations. As in a corporation, all partners in an LLP have limited liability, from errors, omissions, negligence, incompetence, or malpractice committed by other partners or by employees. Of course, any partners involved in wrongful or negligence acts are still personally liable, but other partners are protected from liability for those acts.


In an LLP, all partners have the same general management responsibilities. Because an LLP is a partnership, the flexibility of management in an LLP is not the same as with a limited liability company.

Many professionals form LLPs, because they are protected to some degree from being involved in a malpractice suit against another partner. Most states allow all professionals to form LLP's; a few states limit the ability to form an LLP to accountants and attorneys.

Common Misspellings: Don't confuse an LLP with a limited partnership or a limited liability company.
What Should be Included in a Partnership Agreement?
A partnership agreement sets out all the terms and conditions agreed to by the partners. In this document, every possible contingency is included. Here is a list of questions to be asked when preparing a partnership agreement.

A partnership agreement should include the following information:

  • Name of the Partnership
  • Name the partnership is doing business as (if different)
  • Term (lenth) of the partnership
  • Purpose of the partnership (also might include partners’ goals)
  • Contributions of each partner, in cash, deferred contributions (installments), property (including
  • intellectual property), and service.
  • What happens if a partner fails to make initial contribution
  • Additional future contributions
  • How profits and losses are distributed (equal, unequal, percentages, etc.)
  • Draws
  • to partners (how determined, limitations, when may draw)
  • Retention of profits for business needs
  • Salaries of partners
  • Management powers and duties, including skills contributed, hours of work
  • How decisions are made
  • Financial matters, including periodic accountings, as requested by a partner
  • Power to borrow money on behalf of partnership
  • Power to authorize expenses, signatures required
  • Meetings
  • Maintenance of records
  • Partner time off, including leaves of absence, vacations, sick leaves
  • Outside business activities (permitted, restricted)
  • Ownership of business assets
  • Transfer of a partner’s interest
  • Sale of partner interest to partnership
  • Buy-sell agreement (specific buy-out methods)
  • Continuity of partnership business when a partner leaves, dies, is terminated
  • Non-competition clause
  • Expulsion of a partner from the partnership
  • Mediation and arbitration
  • Amending partnership agreement (procedure
  • Admitting new partners
  • Adherence to state law
  • Severability
  • Goal

  • Fees

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China Lawyer BLog AuthorPeter Zhu, an experienced China attorney licensed to practice law for more than ten years, the author of this China Lawyer blog, welcomes any enquiry or consultation related to Chinese law.