Limited partnership refers to a partnership enterprise composed of more than one general partner and more than one limited partner. In essence, it is a kind of enterprise form between partnership and limited liability company, that is, it is a special form of partnership, not a company. As the name implies, the general partner bears unlimited liability, and the limited partner bears limited liability limited to the amount of capital contribution.
The benefits of limited partnership are self-evident. In addition to corporate income tax, shareholders of traditional limited liability companies also need to pay personal income tax, that is, double tax. Limited partnership enterprises only need to pay individual income tax of partners, and do not need to pay enterprise income tax. The cost of enterprises is greatly reduced.
The company system requires the same shares and rights. Generally speaking, whoever contributes the most will listen to him, and everything will be voted by the shareholders' meeting. However, in investment companies such as venture capital institutions, the greatest contribution does not mean that the enterprise management ability is very strong, and many investors just want to obtain investment income. As for how to manage the company, it needs professionals to operate. The limited partnership system is GP (general partner) +LP (limited partner), and the enterprise management right and capital contribution right are separated, which is very independent.
General partner = 1% capital+unlimited joint liability+enterprise management right, limited partner =99% capital+limited liability+partnership agreement profit distribution. Moreover, limited partners can achieve large-scale financing crowdfunding under the condition of limited liability, which is more flexible than limited liability companies in the face of capital withdrawal and liquidation. Even in the IPO stage, the information disclosure obligation of limited partnership is much looser than that of listed companies of joint stock limited companies.
So is partnership entrepreneurship only suitable for investment companies such as venture capital institutions? No, no, no. The essence of a limited partnership enterprise is that the general partner can (only) subscribe for capital contribution by labor or capital, and the limited partner can subscribe for capital contribution by land use right, cash, intellectual property rights and fixed assets. Entrepreneurial companies set up limited partnerships, and the benefits are also considerable.
For example, when designing employee options, a startup company should first set up another limited partnership, with the founder as the general partner, and then find a co-founder as the limited partner, and then let this limited partnership invest in the main body of the startup company and become a shareholder of the company, so that employees' shares can be reserved in advance. When employees exercise their due rights, they can acquire the shares of the limited partnership by way of share conversion or capital increase, that is, indirectly hold the shares of the main company.
The advantage of this is that although the founder's shares have been diluted, the voting right and decision-making power are still on him (because he is a general partner), and the option employees, as limited partners, can only enjoy ownership and dividend rights, but have no voting rights. Let more founding members enjoy ownership and dividend rights, which can greatly mobilize the enthusiasm of employees without losing their voting rights, which can be described as killing two birds with one stone. On the contrary, if it is a company system with the same shares and the same rights, the rights of the founders will be weakened.
Finally, the rights and obligations of general partners and limited partners are summarized:
Rights of the general partner: 1. Operational control. The general partner has complete management and control rights in the limited partnership, and any external legal documents related to the operation of the enterprise must be audited by the general partner; 2. Annual management fee. The general partner is entitled to a management fee of 1. 5%~3% of the total partnership fund of the limited partnership enterprise is used to pay the daily expenses of the enterprise operation; 3. Profit sharing. When the general partner's total investment is about 1%, he can get about 20% investment income.
Obligations of the general partner: 1. Minimum contribution of the fund 1%, * * * sharing risks; 2. Joint liability of fiduciary duty and partnership debt. The general partner shall restrain his behavior and shall not abuse power for personal gain; 3. In terms of information disclosure, the general partner shall regularly provide financial statements and annual development reports to the partners; 4. Abide by the limited partnership agreement, and shall not violate the terms agreed in the partnership agreement and put an end to opportunistic behavior.
Rights of limited partners: 1. Limited participation in corporate affairs. Although limited partners cannot participate in daily operations, they still have the right to propose and vote; 2. The right to know the operating conditions of enterprises. The general partner must hold a general meeting of partners every year, and the meeting must report the operating conditions of the enterprise; 3. The right to obtain investment income. Limited partners can generally get 80% investment income and have priority in profit distribution; 4. The right to transfer the partnership interests. The rights and interests of a limited partner can only be transferred and cannot be withdrawn.
The obligation of the limited partner is mainly to fulfill the contribution to the partnership fund in accordance with the agreement. The capital contribution can be paid in one lump sum or in installments. The initial investment is generally 25%-33% of the total capital, and the remaining investment is paid in installments within the time limit agreed in the agreement, or according to the actual investment progress and performance of the fund.
Therefore, limited partnership enterprises are very flexible in both system and law, which is incomparable to corporate enterprises.
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