Special General Partnership (SGP)
Special General Partnership Set-up
Looking to establish a company in China? Our expert guide covers steps, benefits, limitations, and costs.
Start Your China Special General Partnership Formation Today with ONE CLICK.
What is Special General Partnership?
A Special General Partnership (SGP) is a partnership model established under the Partnership Enterprise Law of the People’s Republic of China (2017 Revision).
It is similar to a general partnership but provides limited liability among partners in specific professional fields such as law, accounting, and consulting.
Each partner is personally liable only for their own negligence or misconduct, not for that of other partners — making it ideal for professional firms.
Limited cross-liability
Professional suitability
Flexible management
Low setup threshold
WFOE? Not Anymore!
With the implementation of the Foreign Investment Law of the PRC, all foreign-invested enterprises are now governed by the unified Partnership Enterprise Law, meaning that traditional structures such as WFOE (Wholly Foreign-Owned Enterprise) and JV (Joint Venture) have been integrated into the new framework:
A former WFOE is now legally a Limited Liability Company with 100% foreign ownership.
A former JV (equity or cooperative) is now either an LLC or JSC, depending on its shareholding structure.
Why Choose Special General Partnership?
This model combines the operational flexibility of a partnership with the liability protection typical of a company, designed for professional service providers.
Professional suitability
recognized structure for law, accounting, and consulting firms
Limited cross-liability
partners are responsible only for their own actions
Legal credibility
widely used and recognized by industry regulators
Flexible management
partners jointly manage the firm under internal rules
Low setup threshold
no minimum capital or strict equity ratio required
Tax transparency
pass-through taxation; profits taxed at partner level
Who Should Consider Special General Partnership?
A Special General Partnership is best for professionals and firms offering regulated or expert services where personal liability control is crucial.
Consulting Practices
Effective for business advisory, financial, or management consulting firms emphasizing expertise-based partnership.
Accounting Firms
Ideal for CPA firms seeking liability limitation for professional negligence cases.
Professional Alliances
Useful for cross-border or multi-office alliances operating under shared branding but independent partner liability.
Law Firms
The most common structure for Chinese law firms operating under local practice rules. Foreign law firms can only apply RO in China.
China Special General Partnership Registration Procedure
1. Preparation
- At least two qualified partners required
- Define capital contribution and management duties
- Prepare business name and address
2. Partnership Agreement
Set out rights, responsibilities, and liability scope among partners.
- Include liability limitations per Partnership Enterprise Law
- Define management, voting, and profit allocation rules
- Establish internal control and risk management mechanisms
3. Registration
Apply for registration with the AMR and relevant professional regulators.
- Submit application package
- Obtain Business License
- Register firm seals and tax account
4. Post-Registration Filings
Complete necessary filings to start practice legally.
- Register tax and social insurance
- Obtain professional practice certificate
- Set up accounting and compliance records
Timeline
Planning & Approval
Confirm professional qualification requirements and prepare partnership documentation.
- Estimated time: 1–2 weeks
Registration & Filing
Apply to the Administration for Market Regulation (AMR) for incorporation and industry-specific filings (if applicable).
- Estimated time: 2–3 weeks
Post-Registration Setup
Complete tax and professional body filings, and initiate operations, e.g. register for tax and social insurance.
- Estimated time: 2–3 weeks
Basic Documents required for SGP
1. Foundational Records
- Firm name approval notice
- Registered address certificate
- Partner qualification & ID copies
2. Governance Records
- Partnership Agreement (with liability clauses)
- Partner resolution or meeting minutes
- Designated managing partner appointment
3. Financial Records
- Tax registration certificate
- Bank account setup documents
- Accounting and practice compliance records
WHAT DO YOU GET
Business License
Proof of registration with AMR as a Special General Partnership.
Partnership Agreement
Defines liability scope, rights, and management structure.
Registered Partner List
Official record of qualified partners approved by regulators.
Professional Practice License
Authorization to operate in law, accounting, or consulting fields.
Tax Registration Certificate
Enables invoicing and compliance reporting.
Compliance Records
Post-registration filings and regulatory confirmation documents.
All-In-One SGP Entry Package
Our SGP Incorporation Package helps foreign investors establish a fully independent legal entity in China.
Under the 2023 Company Law, a SGP enables shareholding, capital raising, and long-term operations with transparent governance and full regulatory compliance.
SGP Registration
SGP registration securing your business certificate, registered address and bank accounts.
Tax & Accounting Compliance
China accounting system setup. Monthly, quarterly & yearly reporting. Corporate annual tax return.
Employer of Record
We take care of contracts, payroll, benefits, and HR administration.
SGP FAQs
What is a Special General Partnership in China?
A Special General Partnership (SGP) is a professional partnership in which partners are responsible only for their own negligence or misconduct, not for that of others.
What law regulates Special General Partnerships?
SGPs are established under the Partnership Enterprise Law of the PRC (2017 Revision) and regulated by the Administration for Market Regulation (AMR) and industry authorities such as the Ministry of Justice and Ministry of Finance.
How is an SGP different from a General Partnership?
In a general partnership, all partners share joint liability.
In a special general partnership, partners bear separate liability only for their own actions.
Who can establish a Special General Partnership in China?
SGPs are designed for qualified professionals — typically lawyers, accountants, and consultants — who operate in regulated industries.
Can foreigners participate in a Special General Partnership?
Yes. Foreign professionals or firms can participate, provided they meet qualification requirements and obtain necessary practice licenses or joint operation approvals.
What are the main advantages of an SGP?
- Limited cross-liability among partners
- Recognized by Chinese law for professional services
- Transparent pass-through taxation
- Simple setup and low cost
- Professional credibility with regulatory recognition
What are the disadvantages of an SGP?
- Only suitable for licensed professional fields
- Partners remain personally liable for their own negligence
- Not designed for capital-intensive or non-service industries
What industries commonly use SGPs?
SGPs are most common among law firms, accounting firms, and consulting agencies — organizations where professional judgment defines liability.
How many partners are required to form an SGP?
At least two partners with valid professional qualifications are required to establish an SGP in China.
What documents are required to register an SGP?
- Partnership Agreement with liability clauses
- Partner qualification and ID documents
- Registered address proof
- Industry approval (e.g., bar or CPA license)
Is a Special General Partnership a legal entity?
It is not a separate legal person, but enjoys independent accounting, taxation, and registration status under the AMR.
How are profits distributed in a Special General Partnership?
Profits are distributed according to the Partnership Agreement, typically based on partner performance or contribution rather than capital.
How is an SGP taxed in China?
An SGP uses pass-through taxation, meaning profits are taxed at the partner level — not at the enterprise level.
Can a Special General Partnership hire employees?
Yes, once tax and social insurance registration is completed, an SGP may legally employ staff and administrative personnel.
What is the difference between an SGP and an LLC?
- SGP: Designed for professional service firms; partners share control and liability is limited to their own actions.
- LLC: A corporate entity with shareholders, limited liability, and a more formal governance structure.