What are the rights, obligations and limitations of a general partner?

1. Rights of general partners?

Pursuant to Clause 1, Article 181 of the 2020 Enterprise Law, the rights of general partners are stipulated as follows:

- Participate in meetings, discuss and vote on company issues; each general partner has one vote or another number of votes as prescribed in the Company Charter;

- Conduct business in the company's lines of business on behalf of the company; negotiate and sign contracts, transactions or covenants with terms that the general partner considers most beneficial to the company;

- Use the company's assets to conduct business in the company's business lines; in case of advancing one's own money to conduct business for the company, one has the right to request the company to refund both the principal and interest at the market interest rate on the principal amount advanced;

- Request the company to compensate for damages from business activities within the scope of assigned duties if such damages occur not due to the personal fault of that member;

- Request the company and other general partners to provide information on the company's business situation; inspect the company's assets, accounting books and other documents when necessary;

- Receive profits in proportion to capital contribution or according to agreement stipulated in the Company Charter;

- When the company is dissolved or bankrupt, the remaining assets will be divided in proportion to the capital contribution to the company if the Company Charter does not stipulate another ratio;

- In case a general partner dies, the member's heir shall receive the value of the assets in the company after deducting the debts and other financial obligations under the responsibility of that member. The heir may become a general partner if approved by the Board of Members;

- Other rights as prescribed by this Law and the Company Charter.

2. Restrictions on the rights of general partners

- Pursuant to Article 180 of the Enterprise Law 2020, general partners will have their rights restricted as follows:

- A general partner may not own a private enterprise; may not be a general partner of another general partnership unless agreed by the remaining general partners.

- A general partner is not allowed to conduct business in the same line of business as the company on his/her own behalf or on behalf of another person for personal gain or to serve the interests of another organization or individual.

- A general partner may not transfer part or all of his/her capital contribution in the company to another organization or individual without the approval of the remaining general partners.

3. Obligations of general partners

Pursuant to Clause 2, Article 181 of the 2020 Enterprise Law, the obligations of general partners are stipulated as follows:

- Conduct business management and operations honestly, carefully and to the best of our ability to ensure maximum legitimate benefits for the company;

- Conduct management and business activities in accordance with the provisions of law, the Company Charter and resolutions and decisions of the Board of Members; if violating the provisions in this point, causing damage to the company, it must be responsible for compensating for the damage;

- Do not use company assets for personal gain or to serve the interests of other organizations or individuals;

- Return to the company the money and assets received and compensate for damages caused to the company in the case of receiving money or other assets from the company's business activities in the name of the company, in the name of an individual or in the name of another person without submitting them to the company;

- Jointly responsible for paying off the remaining debts of the company if the company's assets are not sufficient to cover the company's debts;

- Bear the loss corresponding to the capital contribution to the company or according to the agreement stipulated in the Company Charter in case the company's business suffers a loss;

- Periodically report honestly and accurately in writing on the situation and results of one's business to the company every month; provide information on one's situation and results of business to members upon request;

Other obligations as prescribed by this Law and the Company Charter.

Above is our consulting content about your questions about partnerships.