Law of China on Partnerships Ⅳ　

Chapter V

　　Legal Liability

　　Article 93 Where a partnership, in violation of the provisions of this Law, obtains its registration by submitting falsified documents or resorting to other fraudulent means, it shall be ordered by the enterprise registration authority to make rectification and be fined not less than RMB 5,000 yuan but not more than 50,000 yuan; if the circumstances are serious, the registration of the partnership shall be revoked and it shall, in addition, be fined not less than 50,000 yuan but not more than 200,000 yuan.

　　Article 94 Where a partnership, in violation of the provisions of this Law, fails to include in its name such words as “general partnership” ,“specialized general partnership” or “limited liability partnership”, it shall be ordered by the enterprise registration authority to make rectification within a time limit and be fined not less than 2,000 yuan but not more than 10,000 yuan.

　　Article 95 Where an entity, in violation of the provisions of this Law, engages in partnership business in the name of a partnership or its branch without obtaining a business license, it shall be ordered by the enterprise registration authority to discontinue the business activities and be fined not less than 5,000 yuan but not more than 50,000 yuan.

　　Where a partnership fails to go through the procedures for altering its registration according to law when the registered items are altered, it shall be ordered by the enterprise registration authority to have the alterations registered within a time limit; if it fails to do so before the expiration of the prescribed time limit, it shall be fined not less than 2,000 yuan but not more than 20,000 yuan.

　　Where the managing partner of a partnership fails to apply on time for registering the alterations made by the partnership in its registered items, he shall be liable for the losses thus caused to the partnership, the other partners or a bona fide third party.

　　Article 96 Where a partner, when managing partnership affairs, or an employee of a partnership, by taking advantage of his position, takes into his own possession the interests that should go to the partnership or takes illegal possession of the property of the partnership by other means, he shall return such interests or property to the partnership; where he causes losses to the partnership or the other partners, he shall be liable for the losses according to law.

　　Article 97 Where a partner, without authorization, disposes of the affairs which may be managed by a partner only with the consent of all the partners as provided for in this Law or in the partnership agreement and thus causes losses to the partnership or the other partners, he shall be liable for the losses according to law.

　　Article 98 Where a partner who does not have the power to manage partnership affairs manages the affairs without authorization and thus causes losses to the partnership or the other partners, he shall be liable for the losses according to law.

　　Article 99 Where a partner, in violation of the provisions of this Law or of the partnership agreement, engages in business in competition with the partnership in which he is a partner or conduct business transactions with the said partnership, the income derived therefrom shall belong to the partnership; if he causes losses to the partnership or the other partners, he shall be liable for the losses according to law.

　　Article 100 Where a liquidator fails to submit a liquidation report to the enterprise registration authority according to the provisions of this Law, or conceals important facts or omits major information in the liquidation report submitted, he shall be ordered by the enterprise registration authority to make rectification. The expenses and losses thus entailed shall be borne by the liquidator.

　　Article 101 Where a liquidator, in managing the affairs of liquidation, obtains unlawful incomes or takes illegal possession of the property of the partnership, he shall return such incomes or property to the partnership; if he causes losses to the partnership or the other partners, he shall be liable for the losses according to law.

　　Article 102 Where a liquidator, in violation of the provisions of this Law, conceals or transfers the property of a partnership, or makes false records in the statement of assets and liabilities or the inventory of property, or distributes the partnership's property before clearing off the debts, thus harming the interests of creditors, he shall be liable for compensation according to law.

　　Article 103 Where a partner violates the partnership agreement, he shall bear the liability for breach of agreement according law.

　　Where a dispute arises among the partners over the execution of the partnership agreement, the partners may settle it through consultation or mediation. If they are unwilling to do so or if consultation or mediation proves unsuccessful, they may apply to an arbitration agency for arbitration in accordance with the arbitration clause contained in the partnership agreement or a written arbitration agreement concluded afterwards. If no arbitration clause is contained in the partnership agreement and no written arbitration agreement is concluded afterwards, they may bring a lawsuit in a people's court.

　　Article 104 Where, in violation of the provisions of this Law, a staff member of an administrative department concerned abuses his power, engages in malpractices for selfish ends, receives or accepts bribes or infringes the lawful rights and interests of a partnership, he shall be given an administrative sanction according to law.

　　Article 105 Where a violation of the provisions of this Law constitutes a crime, criminal liability shall be investigated according to law.

　　Article 106 A person who violates the provisions of this Law and should bear civil liability for compensation and pay a fine or penalty and whose property is insufficient to pay the compensation and the fine or penalty at the same time, he shall bear civil liability for compensation first.

　　Chapter VI

　　Supplementary Provisions

　　Article 107 Where a specialized service entity which is not an enterprise adopts the system of partnership according to relevant laws, the provisions of this Law governing the liability to be borne by the partners of a specialized general partnership may be applied to the partners of such entity.

　　Article 108 The measures for administration of partnerships established within the territory of China by foreign enterprises or individuals shall be formulated by the State Council.

　　Article 109 This Law shall go into effect as of June 1, 2007.