Cabinet Approves Limited Partnership Bill

        The Executive Yuan approved a draft Limited Partnership Act (proposed by the Ministry of Economic Affairs, or MOEA) on June 27 with the aim of promoting industrial development and strengthening Taiwan ’s national competitiveness. The Act will give enterprises the choice of adopting the limited partnership form of organization, thus adding flexibility to company operations.

        The MOEA notes that at the present time, commercial organizations in Taiwan are limited to companies with the status of a corporation, as well as sole proprietorships and partnerships without such status. The lack of corporate status causes operational difficulties for partnerships, and indirectly weakens their competitiveness. The introduction of limited partnerships with corporate status will give those who are purely investors and those who actively engage in operations the opportunity to engage jointly in commercial activities with each bearing his or her own separate responsibilities.

        The draft Act contains the following key points:

1.          Limited partnerships will be formed for the purpose of making a profit and will have the status of a corporate entity. They will have at least one partner with unlimited responsibility, and at least one partner with limited responsibility. The partner with unlimited responsibility will be the executor of business for the limited partnership, and will naturally be the partnership’s responsible person.

2.          A limited partnership should be legally registered; otherwise, it is not allowed to conduct business or engage in legal behavior in the name of a limited partnership.

3.          A limited partnership should clearly use the words “legal partnership” to facilitate the public’s distinguishing of its organizational form and understanding of its trading counterpart.

4.          Methods of investment by partners in a limited partnership should be clearly stated in accordance with the positioning of their roles and the differences in their responsibilities; and, to determine the amounts of their investment, applications to establish a limited partnership and to register a change in total capital should be inspected and signed by a CPA. The capital put up by a partner will not, in principle, be retrievable.

5.          Partners with unlimited responsibility should select one person from among themselves to serve as the limited partnership’s representative in its business dealings. Partners with limited responsibility are purely investors and may not participate in the conduct of the partnership’s business, nor do they have any right as external representative.

Back to News Page