In modern enterprise management, equity incentive is one of the most important means for enterprises to attract and retain talents. Indirect equity incentive can not only motivate employees, but also isolate legal risks such as unstable equity structure, taking into account the needs of both management and law, which is a mainstream model in equity incentive practice. As for the equity incentive of indirect shareholding, the incentive party usually sets up the incentive platform first, and then implements the equity incentive plan through the incentive platform. Generally, there are two types of equity incentive platform: company and partnership. What is the difference between the two types of incentive platforms: corporate and partnership? Is the type of company used in determining the type of equity incentive platform? Or is it a partnership type? Many motivators are confused about this issue, and there are even many metaphysical cognitive misunderstandings. Jiao Hanwei, lawyer of Shanghai Guolinghouse Law Firm, will discuss the form of equity incentive platform enterprises in combination with practical experience for operators' reference.

There are many forms of enterprises in our country, such as companies, partnerships, individual industrial and commercial enterprises, and sole proprietorship enterprises. As for the equity incentive platform, it mainly involves two forms: company and partnership. What is a company? A company is an enterprise legal person whose shareholders are established in the form of capital contribution in accordance with the provisions of the Company Law, and are liable to the company within the limit of the amount of capital contribution or shares subscribed by them, and the company is liable to the debts of the company with all its independent legal property. The company has an independent legal personality and operates in accordance with the Company Law and the articles of Association. What is a partnership? A partnership enterprise refers to a for-profit organization in which partners enter into a partnership agreement according to the Partnership Enterprise Law, jointly contribute capital, jointly operate, share benefits and share risks. There are two types of partnership, general partnership and limited partnership. A partnership does not have the status of an independent legal person and operates in accordance with the Partnership Law and the partnership agreement. What are the specific differences between the two?

1. In terms of investment method, partnership investment is more flexible. Partners in a partnership may contribute capital in currency, in kind, in intellectual property, in the use of land or in other property rights, or in the use of labor services. The shareholders of a company can only make capital contribution in currency, or make capital contribution in physical goods, intellectual property rights, land use rights and other non-monetary property that can be valued in currency and transferred according to law, and the shareholders of a limited company can not make capital contribution by labor. The non-monetary contribution of the partnership can be negotiated, but the shareholder contribution of the company can not be negotiated.

2. In terms of the composition of investors, partnerships are more flexible. A partner of a partnership may be either a general partner who bears unlimited joint and several liability for the debts of the partnership, or a limited partner whose liability is limited by the amount of capital contribution he has subscribed to. The shareholders of the company are the shareholders who are liable to the company within the limit of the amount of capital they have subscribed or the shares they have subscribed for.

3. In terms of operational flexibility, partnerships are more flexible. Based on the partnership agreement, the partnership enterprise has more qualitative characteristics, and most matters such as decision-making and execution can be agreed upon by agreement. In practice, most partners do not participate in the operation of the business, but entrust or authorize the managing partner to be responsible for the operation of the partnership. On the basis of the company's articles of association, the company must set up a statutory governance structure of the shareholders (large) meeting, the board of directors (executive director) and the board of supervisors (supervisor), which has more legal characteristics and is effective only when the matters that can be clearly agreed upon by law are separately agreed, and the shareholders have less autonomy and strict operation.

4. As far as tax burden is concerned, partnership enterprises have certain preferential tax policies. Take income tax as an example. According to the current tax policy, partnerships do not need to pay corporate income tax. As a transparent tax entity, partnerships can pay income tax in the name of their partners. In this way, the partnership can avoid the problem of avoiding double taxation in certain circumstances. The company shall pay corporate income tax on its taxable income.

5, in terms of company operation, the company is more standardized and efficient. The Company Law stipulates a set of complete and mandatory corporate governance structure and governance system. The shareholders' (large) meeting, the board of directors (executive directors) and the board of supervisors (board) are the governance institutions that the company must establish. The Company Law also specifies the functions and powers and operation system of the above three committees, which makes corporate governance more transparent, more efficient and more socially trustworthy. Relatively speaking, the partners of the partnership are not highly involved in the operation of the enterprise, and the governance institutions are loose. In practice, major matters such as decision-making and execution of the enterprise are basically decided by the managing partners, and the transparency of corporate governance is not high. At the same time, the company as a legal person has an independent life; The company and the shareholders only bear limited liability, and the risk is small; The company's ownership and management power are easily separated, so that the company's operation and management functions can be held by professionals in various aspects, and the management efficiency is higher. It is also because of the above advantages of the company in operation that most enterprises adopt the form of companies in practice.

6. In terms of capital operation, the company has a large operating space. The company has an independent legal personality, the property of the company and the property of the shareholders are strictly separated, the property of the company has integrity and independence, and has a strict and standardized financial and accounting management system. At the same time, the company has a complete governance structure and higher transparency of operation. In practice, the type of company is more convenient to carry out debt financing, equity financing, enterprise listing and other capital operations, while the partnership is usually difficult to carry out the above capital operations.

As mentioned above, corporations and partnerships, as two of the more common forms of business, have their own advantages and disadvantages. In terms of operating flexibility and tax cost, partnership has advantages. Business practice Small and medium-sized enterprises adopt more types of partnership enterprises. In terms of the standardization of corporate governance and the feasibility of capital operation, the type of company is superior. Because of this, the vast majority of enterprises adopt the company type in business practice. In terms of equity incentive platform, is it the type of company? Or is it a partnership type? It is necessary to encourage parties to make comprehensive consideration from the aspects of platform operation positioning, capital operation planning, tax burden cost and so on. If the equity incentive platform is positioned for pure equity incentive purposes, no other substantive business is carried out in the later stage, and there is no capital operation plan, the equity incentive platform should choose the type of partnership enterprise, because the partnership enterprise management is flexible and the tax burden is low. If the positioning of the equity incentive platform is not only the purpose of equity incentive, but also to carry out other substantive business, or there is a plan to carry out capital operation, the equity incentive platform should choose the type of company, because the corporate form can better meet the above needs. In short, there is no good difference between the form of company and the form of partnership, and the type of incentive used in the practice of equity incentive depends on the positioning of the incentive platform and the business needs of the incentive.