Viewpoint... A preliminary analysis of the dissolution path of the partnership.

Published:

2022-08-01

The relevant legal provisions of the dissolution of the 1. partnership. Article 85 of the the People's Republic of China Partnership Law shall be dissolved under any of the following circumstances: (1) upon the expiration of the partnership period, the partners decide not to operate any more; (II) the reasons for dissolution stipulated in the partnership agreement appear; All partners of the (III) decide to dissolve; (IV) partners have not had a quorum for 30 days; (V) the partnership purpose stipulated in the partnership agreement has been realized or cannot be realized; the (VI) is revoked its business license, ordered to close down or revoked according to law; (VII) other reasons stipulated by laws and administrative regulations. Litigants in a 2. partnership dissolution action With reference to Article 4 of the Judicial Interpretation II of the Company Law, the plaintiff who initiated the dissolution of the partnership shall be a partner of the partnership, the defendant shall be the partnership, and the other partners shall participate in the litigation as the third party in the case. 3. the statutory circumstances of the dissolution of the partnership. The dissolution of the partnership in the case of the dissolution of the partnership in the (I) of the partnership agreement. The first (II) of the legal situation of dissolving the partnership (IV) the (V) situation summarizes the cases and opinions of local courts. The reason for dissolution stipulated in the partnership agreement appears. What is required is that the partnership agreement signed by all partners clearly stipulates the dissolution of the partnership enterprise. However, if the dissolution stipulated in the partnership enterprise occurs during the operation of the partnership enterprise, the dissolution of the partnership enterprise is applied. In the absence of an express agreement on the dissolution of the partnership, the purpose of dissolving the partnership cannot be achieved simply by dissolving the partnership agreement. [(2019) Supreme Court Min Shen No. 5588] The Supreme People's Court held that the key to whether Jushan Company's application for retrial in this case can be supported lies in whether it can withdraw from the partnership enterprise by exercising the legal right of rescission stipulated in the fourth paragraph of Article 94 of the Contract Law and rescind the Partnership Agreement. The essence of the claim in this case is to make itself withdraw from the partnership and recover its capital contribution. However, Jushan Company became a limited partner of Le Yu Chuang Investment by way of partnership, and then 12 partners, including Jushan Company, jointly signed the "first restated and revised Partnership Agreement" (the restatement and revision of the partnership agreement on May 19, 2015, hereinafter referred to as the "Partnership Agreement") on May 26, 2015, and revised the "Partnership Agreement" on the 19th of the same month. The Partnership Agreement is not an entry agreement for Giant Sequoia. The acquisition of partner status by Giant Sequoia is based on the consent of the other original partners and the partnership agreement, rather than the Partnership Agreement signed after the partnership. Therefore, even if the Partnership Agreement is dissolved, it cannot deny the fact that it has previously joined the Le Yu Venture Partnership by signing an agreement and obtained the status of a partner. On this basis, the court of first instance found that after the company entered the partnership, whether it could withdraw from the partnership should of course be judged by the Partnership Law rather than the Contract Law. And if the company is allowed to withdraw from the partnership without the special provisions of the Partnership Law on withdrawal and dissolution, it may harm the rights and interests of other partners, partnerships and partnership creditors. Accordingly, the court of first instance rejected the claim of Jushan Company in this case, which has the corresponding factual and legal basis. The original court also held that if Jushan Company believes that its legitimate rights and interests have been infringed, it should be resolved through other legal channels. The retrial applicant Jushan Company's request to revoke the original judgment lacks grounds, and this court will not support it. Usually at the stage when the partners sign the partnership agreement to form the partnership, most partners do not fully foresee the contradictions in the course of the partnership's operation, so there are few cases in which the partnership agreement expressly provides for the dissolution of the partnership. In this regard, most partners usually choose to dissolve the limited partnership through the provisions of Article 85, paragraph (V), of the Partnership Law or after the removal of the general partner because the partnership does not have a general partner, in accordance with Article 85, paragraph (IV), of the Partnership Law. A limited partnership with one GP and more than two LP (II) shall be dissolved after the resolution to remove GP according to law is made because the partnership has no general partner and does not meet the number of requirements stipulated in the partnership law. The number of partners stipulated in Article 85 of the Partnership Law no longer has a quorum of 30 days. It is usually applicable to a limited partnership with one GP and two or more LP when GP intentionally or grossly negligently causes losses to the partnership or executes partnership affairs due to improper acts during the period when GP is the managing partner. After unanimously deciding to remove GP from the name, the partnership has no general partner, dissolution of a partnership if the quorum conditions under the Partnership Act are not met. See Case (2018) Guangdong 0391 Minchu No. 255 "In accordance with the relevant provisions of China's Partnership Law, a limited partnership shall have at least one general partner, and if the limited partnership has only limited partners, it shall be dissolved. In this case, if the defendant is removed, the third party has only one partner and is a limited partner, which will result in the third party not having the legal requirements for the establishment and survival of the partnership, losing the legal characteristics of" partnership ", and may trigger the legal consequences of the dissolution of the third party. The Court believes that Article 85 of the Partnership Law stipulates that if the partners have not had a quorum for 30 days, the partnership shall be dissolved. In a partnership with only two partners, the partners of the partnership do not have a quorum after one partner is removed, and the legal characteristics of" partnership "are lost. The partnership is in a temporary illegal existence state, which may not only exist legally due to the addition of new partners, but also may be dissolved because the partners do not have a quorum to reach the legal period, so the partnership is not necessarily dissolved, dissolution depends on the presence or absence of a new partner, in this case the new partner is the new general partner. According to basic law, how the legal effect is only a reference factor for judging civil legal acts or civil adjudication acts is usually not a key factor in determining whether civil legal acts or civil adjudication acts should be made. Therefore, the proper exercise of the partner's right to remove the name, even if it may cause the partnership to temporarily lose the legal characteristics of" partnership ", or even lead to the dissolution of the partnership, can not be a legitimate cause to block the exercise of the right. The legal effects produced by the de-listing have corresponding relief treatment paths and do not affect the legal exercise of the right to de-listing." Article 49 If a partner has any of the following circumstances, he may be removed by resolution with the unanimous consent of the other partners: (1) Failure to perform the obligation of capital contribution; (II) cause damage to the partnership due to intentional or gross negligence Losses; improper behavior of the (III) in the execution of partnership affairs; (IV) the reasons agreed upon in the partnership agreement occur. The resolution to remove the partner shall be notified in writing to the removed person. The date on which the removed celebrity receives the notice of removal, the removal takes effect and the removed celebrity withdraws from the partnership. If the removed celebrity disagrees with the resolution of delisting, he may, within 30 days from the date of receiving the notice of delisting, bring a suit in a people's court. In the case of delisting under Article 49, paragraph (I) provides that the partners have not fulfilled their capital contribution obligations in full, and if the partners have partially fulfilled their capital contribution obligations, the provision cannot be applied to require the delisting of the partners, the specific reasons are not repeated herein. The second (II) is common in cases where the executive partner disposes of the property of the partnership without a unanimous resolution of the partners, such as the unauthorized release of the security of another person's claim to the partnership without a unanimous resolution of the partners or the provision of security without a unanimous resolution of the partners. In the (III) case, it is common to have the assets of the partnership transferred or diverted for other purposes by the executive partner. Dissolution of a partnership (III) the purpose of the partnership agreed upon in the partnership agreement has been achieved or cannot be achieved. Although the law allows judicial intervention in the deadlock of the company or partnership, the court is generally modest and cautious about the application of the judicial dissolution system. According to the reasons of the court's judgment, the court usually considers the following factors when deciding whether to judicially dissolve the partnership: the number of partners and the number of partners applying for judicial dissolution, the size of the share of partners applying for judicial dissolution, and whether the partnership has initiated foreign investment, whether the partnership is still in normal operation, whether the partnership still has foreign investment projects that have not been withdrawn, etc. See the following case: Not supporting the case Jiangsu Higher People's Court (2016) Su Minshen No. 5202 "After examination, the court found that Qu Wenshan's retrial request could not be established. Reason: 1. The mutual delisting between Qu Wenshan and Wei Mingwen has come into effect and the judgment is invalid. 2. According to the partnership agreement of the partnership involved in the case, the purpose of the partnership is to invigorate the market economy and facilitate the masses, and the operating period is long-term. Although Qu Wenshan, as a partner, has not participated in the operation of the fulcrum firm since January 2014, and there are disputes with Wei Mingwen, the fulcrum firm is still operating normally, so there is no situation where the partnership purpose cannot be realized. During the litigation of this case, Qu Wenshan said that he was not willing to continue the partnership operation, while Wei Mingwen said that he was willing to continue the partnership operation. Qu Wenshan and Wei Mingwen contributed 10% and 90% respectively to the fulcrum office. The partnership agreement of the partnership involved in the case also stated that the partnership could be dissolved under the condition that all the partners decided to dissolve. Accordingly, the second-instance judgment held that the dissolution of the fulcrum office is not the only way to solve the contradiction between Qu Wenshan and Wei Mingwen. Qu Wenshan can choose to withdraw from the partnership according to law, which does not affect his legitimate rights and interests, and can also make the fulcrum office continue to exist, which is legal and correct. 3. The post-divorce property dispute between Wei Mingwen and Han Kun is in litigation. Qu Wenshan claims to dissolve the fulcrum office on this ground, which lacks factual basis. 4. The fulcrum office stated that it had initiated administrative reconsideration on the punishment decision No. [2015]15 of the State Intellectual Property Office, and the business scope of the fulcrum office included other intellectual property agency affairs in addition to patent agency. Therefore, Qu Wenshan claimed to dissolve the fulcrum office on this ground, which lacked factual basis." The People's Court of Yinzhou District, Ningbo City, Zhejiang Province (2019) Zhejiang 0212 Minchu No. 17230 Court held that "the purpose of the partnership between the plaintiff and the third party is to undertake the management and operation of the established equity investment center for the partnership in accordance with the provisions of the Partnership Agreement, and the scope of business of the partnership is equity investment. Based on the debt performance determined by the effective judgment of the third party, the litigation of the plaintiff and the third party, the freezing of the equity of the third party in the defendant, the fact that the third party has been listed as a dishonest person to be executed, and the qualification of private equity fund manager has been canceled on May 3, 2016, the court believes that the defendant has been unable to continue to manage and operate in the field of equity investment. According to the available evidence, in fact, the defendant has not carried out business activities for about five years since its establishment. Moreover, the partnership pays attention to the human nature, but the plaintiff and the third person as two partners, the contradiction between the two sides is obvious, can not reach an agreement on the operation, can not achieve the purpose of the partnership. The defense opinions of the defendant and the third party on the liquidation of partnership affairs and the freezing of shares, except for further proof that the partners have lost the basis of the partnership and the purpose of the partnership can no longer be realized, are all liquidation issues at the time of the dissolution of the partnership. According to the provisions of Articles 35 and 36 of the Partnership Agreement and the provisions of Chapter 4 of the Partnership Law on liquidation, the defendant shall be liquidated when dissolved, and the creditors shall be notified and announced to declare their creditor's rights; after paying off debts, distributing property and liquidating according to regulations, the defendant may prepare a liquidation report by the liquidator, and submit the liquidation report to the enterprise registration authority within 15 days after being signed and sealed by all partners, apply for the cancellation of the partnership registration." Similar cases include Hangzhou Jianggan District People's Court (2019) Zhejiang 0104 Minchu No. 6 Civil Judgment and (2013) Zhejiang Taishang Zhongzi No. 580 Civil Judgment. Conclusion In addition to the way to withdraw from the partnership, partners can withdraw from the partnership through litigation to dissolve the partnership. This paper explores the way to dissolve the the People's Republic of China partnership through the analysis of the reasons for the dissolution of the partnership stipulated in Article 85 of the Limited Partnership Law. In addition, partners can also consider according to Article 45 of the the People's Republic of China Partnership Law "If the partnership period is agreed upon by agreement, during the existence of the partnership, A partner may withdraw from the partnership under any of the following circumstances: (1) the reason for withdrawal as agreed upon in the partnership agreement appears; the (II) is unanimously agreed upon by all the partners; the reason (III) it is difficult for the partners to continue to participate in the partnership occurs; (IV) the other partners have seriously violated their obligations under the partnership agreement." Choose the path to exit from the partnership through withdrawal litigation.

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