In order to protect the business secrets of partnership enterprises, Article 32 of the Partnership Enterprise Law of People's Republic of China (PRC) stipulates that partners are prohibited from competing. So, how does the law specifically prohibit partners from operating? What does it mean? Below, Xiaobian provides you with the content and meaning of the non-competition clause of the Partnership Enterprise Law, hoping to help you.
I. Provisions on prohibition of business strife in the Partnership Enterprise Law
Article 32 of the Law of People's Republic of China (PRC) on Partnership Enterprises: Partners shall not engage in business competing with this partnership enterprise alone or in cooperation with others.
Unless otherwise agreed in the partnership agreement or unanimously agreed by all partners, partners may not conduct transactions with the partnership enterprise.
Partners shall not engage in activities that harm the interests of the partnership.
Second, the meaning of non-competition in the partnership enterprise law
This clause is about prohibiting partners from competing, prohibiting and restricting transactions with the enterprise.
A partner is a party who participates in the investment and operation of a partnership. The law does not restrict him from engaging in other investment or profit-making activities other than partnership investment, such as setting up a sole proprietorship enterprise and participating in company investment. He can even set up a partnership other than a partnership. However, this article stipulates three restrictions: first, it is not allowed to engage in business that is competitive with the enterprise; Second, it is not allowed to trade with the enterprise without authorization; Third, it is not allowed to engage in activities that harm the interests of enterprises.
There is a competitive relationship between the business engaged by partners and the partnership, which means that the partners of the partnership engage in the same or similar business outside the partnership and have a competitive relationship with them. Partners are familiar with the operation of the partnership, including internal information such as management knowledge, management methods and sources of raw materials. If they are allowed to compete with the partnership, the operation of the partnership will be in an unfavorable competitive position and their interests will be harmed. This kind of competition violates the principle of fairness and is explicitly prohibited by this article.
The transaction between a partner and the enterprise refers to the situation in which a partner decides to trade with an enterprise represented by other enterprises or individuals in his own name by taking advantage of his position in the execution of partnership affairs. This transaction is actually a related party transaction. Related party transactions have both advantages and disadvantages for partnership enterprises. If the executive partner transfers the profits that should belong to the partnership to his own enterprise through this transaction, it will harm the interests of the partnership and other partners. Therefore, according to the provisions of this article, without the agreement of the partnership agreement or the unanimous consent of all partners, partners may not conduct transactions with the partnership enterprise.
According to the provisions of the third paragraph of this article, partners shall not engage in activities that harm the interests of the partnership. This is a basic principle that partners must follow. The provisions in the first two paragraphs of this article, whether prohibiting partners from competing in the same industry or restricting transactions with this partnership, are aimed at safeguarding the common interests of all partners and making them work together to run the partnership well. There are various acts that harm the interests of the partnership, not just the acts listed in the first two paragraphs of this article. In order to put an end to and prevent acts that harm the interests of the partnership and safeguard the legitimate rights and interests of the partnership and all partners, this law stipulates that partners shall not engage in activities that harm the interests of the partnership, especially shall not use their relationship with the partnership to harm the interests of the partnership.
The above is the content and meaning of the provisions on non-competition in the partnership enterprise law. Its purpose is to protect the business secrets of enterprises. The time of non-competition is not limited to the duration of labor relations, but also includes observing non-competition within a certain period after the end of labor relations. During the labor relationship, you can't work part-time in the business competition unit at the same time, and you can't engage in the business that competes with your unit for a certain period of time after the labor relationship ends. You can consult a lawyer for more relevant knowledge.