China's top legislature, the Standing Committee of the National People's Congress (NPC), deliberated Tuesday on an amendment to the Partnership Law, that would provide for limited liability partnerships that would give a boost to venture capital and accounting firms.

The amendments would add clauses on limited partnerships and limited liability partnerships. The law originally dealt only with partnerships and required all partners to assume unlimited liability for corporate debt.

A lack of limited partnerships has hindered the development of China's venture capital businesses, said Yan Yixun, vice-director of the NPC Finance and Economy Committee.

Since the promulgation of the Partnership Law in 1997, 121,000 business partnerships had been set up by the end of 2003.

According to international practice, however, venture capital firms generally assume only limited liability as they are often hands-off investors in small and medium-sized business with growth potential.

Intermediary service organizations such as accounting firms assume liability only for the service they provide and for faults found in their work.

The amendments to the law will put domestic accounting firms on an even playing field with foreign competitors, said Yan.

The draft amendment also requires limited liability partnership businesses to use a proportion of their revenue to set up a risk fund to offset operational debt.

Source: Xinhua