China's Partnership Law revised in 2006 established a special general partnership system. The application of limited liability to general partnership enterprises is a major breakthrough in the traditional liability of partners and a major development of the limited liability system, which breaks through the traditional application conditions that limited liability is only applicable to legal persons. Its legitimacy is based on the balance between fair value and efficiency value. However, the limited liability in special general partnership weakens the protection of creditors and needs the cooperation of alternative compensation mechanism. The alternative compensation mechanism of limited liability in China's special general partnership needs to be further improved in types, coverage and specific system design. Keywords: special general partnership; Potential compensation mechanism of limited liability; Occupational Insurance: Practice Risk Fund I. Core Innovation of Special General Partnership: Innovation of Responsibility Form One of the highlights of China's Partnership Law revised in 2006 is the establishment of a special general partnership system. Article 57 of China's new Partnership Enterprise Law stipulates: "If a partner or several partners cause partnership debts due to intentional or gross negligence in their practice activities, they shall bear unlimited liability or unlimited joint liability, and other partners shall take their debts in the partnership enterprise property as their own. All partners shall bear unlimited joint and several liability for the debts of the partnership and other debts caused by the partnership in its practice activities without intentional or gross negligence. " As can be seen from the above provisions, the special general partnership is "special" because the liability form of partners is different from that of general partnership. The responsibility of the latter partner is unlimited joint liability, while the responsibility of the former partner is a mixture of limited liability and unlimited joint liability. As a general partnership, its partners can enjoy limited liability under certain conditions. The application of limited liability in general partnership enterprises is a major breakthrough in the traditional partner liability and a major development of the limited liability system, which will certainly have a far-reaching impact on the limited liability system. The liability form of special general partnership is a brand-new liability form, which brings us many new propositions, such as what is the basis of its legitimacy? What significant development has it made to the limited liability system? Can it balance the interests of investors and creditors and how? This paper intends to discuss the new limited liability system of special general partnership in China, so as to facilitate its smooth implementation in China and effectively realize its expected system value. II. Justification Analysis of Limited Liability of Special General Partnership (I) Reasons for the emergence of Special General Partnership China's special general partnership originated from the LimitedLiabilityPartnership in the United States, which is mainly applicable to professional service organizations that provide paid services to customers with specialized knowledge and skills. Limited liability partnership is a brand-new enterprise form that appeared in the United States in the 1990s. The limited liability partnership legislation was first promulgated in 199 1 in Texas, and then other states followed suit, setting off a wave of limited liability partnership legislation in the United States. By the beginning of 1998, all states except Vermont had passed the legislation of limited liability partnership. 1996, on the basis of comprehensive legislative experience of limited partnership in various states, the National Committee for Uniform State Law of the United States made major amendments to the new uniform partnership law of 1994, adding limited partnership and non-state limited partnership as articles 10 and10/to provide it to all states. But California, Nevada and Oregon, like New York, only allow professional partnerships to become limited partnerships. It refers to a partnership in which the partners are liable for the debts of the partnership caused by the intentional or serious excesses of other partners, only to the extent of their share of the property in the partnership. It is actually a variant of general partnership, but it has greatly changed and developed the traditional partnership system. The direct cause of limited liability partnership is a series of lawsuits in the United States in the 1980s, which fully exposed the disadvantages of the simple and unlimited joint liability system of the traditional general partnership law, and the reform of the liability form of the partnership system was put on the agenda. In the United States, there are a kind of financial institutions called "thriftassociations" and "savingsandloanassociations", whose main business is limited to absorbing ordinary deposits and providing low-profit loans to depositors for the purpose of buying houses. In the 1960s and 1970s, when the law allowed floating market interest rates, these financial institutions could not benefit from housing loans at all. To this end, many of them turn to high-risk or even speculative businesses. Finally, many financial institutions declared bankruptcy because many loans could not be closed. During the bankruptcy proceedings, it was found that such financial institutions had serious irregularities in their business activities, and the accounting firms and law firms that provided accounting and legal services for them were held accountable for their serious dereliction of duty. Because these accounting firms and law firms are all partnership organizations, when the partnership property is insufficient to repay debts, all partners will be sentenced to joint and several liability, including those innocent partners who have not participated in such activities. This is obviously unfair and makes the partners feel insecure in the partnership. It is the lawsuit to investigate the personal responsibility of the partners of such accounting firms and law firms in the late 1980s that became the direct cause of the birth of a new type of partnership-limited liability partnership. (II) Justification Analysis of Limited Liability of Special General Partnership —— Unlimited joint liability between partners whose fair value equals efficiency value is the most remarkable feature of general partnership, and the essence of Article 57 of the new Partnership Enterprise Law of our country is to limit the liability of partners without fault and allow them to bear limited liability under certain circumstances. This is a major adjustment to the traditional partner responsibility distribution system. This adjustment makes the distribution of responsibilities among partners more fair and reasonable. Because the scale of modern partnership is very large, and because of the unique business execution mode of partnership-any partner can perform partnership business on behalf of the partnership, and each partner's business meaning is relatively independent, so any partner may bear unlimited joint and several liability for the actions of many unsuspecting partners. Especially when the partner's behavior is out of freedom or gross negligence, this form of responsibility is particularly unreasonable. The traditional unconditional unlimited joint liability makes the partners in a very uneasy position, which directly inhibits the development of the partnership. It is actually the embodiment of one's own responsibility to let the partners who have made major mistakes in their practice bear unlimited responsibility for their actions, while other partners bear limited responsibility for them. Its essence is the application of the principle of autonomy of will and fairness in the commercial field, which is undoubtedly more fair and reasonable and helpful to promote the development of investment and professional service institutions. The limited liability system in limited liability partnership embodies the balance between the fair value and the efficiency value of limited liability. For a long time, in the commercial field, the important basis of the legitimacy of limited liability is regarded as efficiency value, which is the performance that efficiency is superior to fairness: in order to encourage investment, when the debtor is insolvent, he can only bear limited liability to creditors within the scope of investment, which is unfair to creditors. However, the limited liability system in the limited liability partnership is completely the application of the principle of fairness: the investors who are at fault are allowed to bear unlimited liability for their actions, and other investors who are not at fault are exempted from unlimited liability. The principle of fault itself comes from the principle of fairness. Therefore, perhaps we can say that in the early days of the limited liability system, we paid more attention to its efficiency value, and today, with the full development of limited liability, we also began to pay attention to the highest value of law-the balance between fair value and efficiency value. It goes without saying that the limited liability system is scientific and progressive. The development of limited liability embodies the process of gradually limiting people's liability, and limiting uncertain liability to a foreseeable range is a humanistic concern for market players, which can mobilize the enthusiasm of investors to the maximum extent and promote economic development. 3. The limited liability of special general partnership breaks through the application conditions of traditional limited liability (1). The application of traditional limited liability is based on the premise that the enterprise has the legal person qualification, which has been generally recognized by all countries. Although the legal person system came into being in the Roman law period, its development benefited from the wide application of the corporate legal person system in modern commercial fields. Modern companies can only play a better role under the limited liability mechanism, so the limited liability system is closely linked with the legal person system. In other words, only legal person investors can enjoy limited liability and become a necessary condition for undertaking limited liability. At present, except for a few countries such as France, most countries in the world can enjoy limited liability only if they have legal personality, which is a common practice. In China, the idea that only legal persons can bear limited liability has been deeply rooted in China's legal circles since Article 37 of General Principles of Civil Law [1][2][3] stipulated that legal persons should be able to bear civil liability independently, and the promulgation of Company Law [1994]. The mainstream view that only the investor of a legal person can bear limited liability has been formed, and it is reflected in the laws of various cities: whether it is the Company Law, the Law on Industrial Enterprises Owned by the Whole People, the Law on Enterprises Owned by the Collective or the Law on Enterprises with Foreign Investment, it is stipulated that an enterprise as a legal person shall bear civil liability independently with the property it is authorized by the state to operate or own. Only under the premise that the legal person bears the responsibility independently can the investor bear the limited liability. (2) The application of limited liability of special general partnership is not based on the premise of legal person. Judging from the applicable conditions of special general partnership limited liability, it breaks the applicable conditions of traditional limited liability on the premise that the enterprise has legal personality. A special general partnership does not have the qualification of a legal person, and the condition for its investors to bear limited liability is that they are not at fault for the practice of other investors. Limited liability is separated from legal person qualification. In recent years, few mathematicians have come to the conclusion that limited liability is not the inevitable connotation of legal person system by analyzing the evolution history of legal person system. Indeed, the main function of a legal person is to shape the group subject qualification similar to that of an individual, which is not necessarily related to the responsibility form of its members. This can be seen from the development history of limited liability. For example, Kangmengda (Limited Partnership) does not have legal person status, but some of its investors bear limited liability. Another example is a chartered joint-stock company, which has legal personality in the early stage, but its members still bear unlimited liability. Another example is the later limited liability partnership, which does not have the legal person qualification, but it does not affect the limited liability of some of its members. Limited liability is actually the limited liability of investors, limited to investors' investment. Therefore, as long as the property invested by the investor is distinguished from other property of the investor, there will be a basis for undertaking limited liability. In this way, whether it is a company with legal personality or a partnership enterprise without legal personality, its investors may bear limited liability (whether they can finally enjoy limited liability depends on the agreement between investors and the agreement between investors and creditors). Only when all investors of the enterprise enjoy limited liability can the enterprise bear the responsibility independently. Therefore, it is the independence of the investor's responsibility that leads to the independence of the enterprise's responsibility, not the other way around: the enterprise has legal personality (independent liability) and the investor enjoys limited liability (independent liability). From the material basis of limited liability, investors' investment independence means that they have the material basis of limited liability. Four. Defects and perfection of the special limited liability system of general partnership (I) The application of special limited liability of general partnership needs the cooperation of alternative compensation system. General partnership is an ancient system with simple conditions and procedures, no minimum capital requirements, and contractual management within the enterprise. The cornerstone for general partnership enterprises to enjoy these loose capital systems and management models lies in the unlimited joint and several liability between partners. Any partner representing the partnership, regardless of whether he is at fault or not, shall bear unlimited joint liability for the debts incurred by the partnership. Unlimited joint liability between partners is the credit source of partnership enterprises. In the special general partnership, the partners are exempted from unlimited joint liability for the debts of the partnership enterprise caused by intentional or gross negligence of other partners in their practice activities, and only bear limited liability to the extent of capital contribution, thus reducing the liability burden of the partners. Within the partners, this responsibility distribution is indeed more reasonable and fair, but in the external relationship of the partnership, the problem is the imbalance of rights and obligations between the partnership and creditors. Any change in the original partnership system means that while maintaining the advantages of the original system of general partnership, the status of partnership creditors has undergone major changes. Except for the partners with intentional or gross negligence, other partners no longer bear unlimited joint liability to creditors, which greatly weakens the protection of creditor's rights and directly reduces the protection of partnership creditors, which obviously lacks legitimacy for creditors. The way to find a balance for the unbalanced interests of investors and creditors is to establish alternative compensation resources. It can be seen that the special liability form of general partnership is a major breakthrough to the traditional partner liability form and a brand-new liability form. Whether it can be effectively implemented depends largely on whether the alternative compensation mechanism of partnership enterprises is effectively established. Article 59 of China's "Partnership Enterprise Law" stipulates that "a special general partnership enterprise shall set up a practice risk fund to handle occupational insurance. ..... "Except as otherwise provided by the the State Council authorized by the occupational risk fund, the occupational insurance considers that it has been stipulated in the Insurance Law, and it is no longer stipulated. In fact, occupational insurance, as one of the important alternative compensation mechanisms for limited liability in special general partnership, has certain particularity, and its background, nature and burden function are quite different from those of ordinary professional liability insurance, which needs further study and clarification before it can be implemented correctly. However, the specific system design of practicing venture capital fund is still blank. (B) defects of general partnership 1 special alternative compensation system. The coverage of occupational insurance cannot cover the scope of application of limited liability. The risk covered by liability insurance is the liability for damages that the insured should bear to the third party according to law, which is generally tort liability. Although the liability risk caused by the contract is very important, its scope is limited. The most important liability risk is caused by tort. Therefore, the insurer's liability is based on the insured's tort civil liability, and the insurer's liability principle is also based on the imputation principle of the insured's tort liability. There are two principles of imputation of civil tort liability: one is the principle of fault liability. In other words, the basis of the infringer's tort liability is fault, including intention or negligence. Simply put, if the actor causes damage to others, he is not liable for compensation. If the victim wants to claim compensation from the injurer, he must prove that the injurer who caused his loss is subjectively at fault, otherwise, his claim for compensation will not be supported. In order to reduce the burden of proof of the victim, there is a special situation in fault liability, that is, fault presumption. It means that when the victim claims compensation from the injurer, the law applies the method of inversion of the burden of proof, exempting the victim from the burden of proof, and the injurer bears the burden of proof. If the offender cannot prove that he is not at fault, he is presumed to be at fault. The second is no-fault liability, also known as strict liability, that is, regardless of whether the actor is at fault or not, the actor should bear civil liability for the damage caused by his behavior. Unless it is the victim's intention or force majeure, the actor cannot be exempted. Because the principle of fault liability is the basic embodiment of the principle of fairness, the principle of fault liability, supplemented by the principle of no-fault liability, needs special legal provisions. According to the imputation principle of tort liability, in general commercial liability insurance, fault liability is generally applied to insurance liability, that is, the insurer only bears insurance liability for the damage caused by the subjective fault of the insured in the injury behavior, and does not bear compensation liability for the losses caused by the non-insured fault. However, due to the lucky characteristics of the insurance system and the highest requirement for the principle of good faith, almost all types of insurance take the "intentional" behavior of the insured as an exclusion liability. For example, the American insurance law stipulates that "general commercial liability insurance includes several consistent exclusions, for example, losses caused by intentional acts." Then, in fact, accurately speaking, the imputation principle of general commercial liability insurance is "negligence liability". "Negligent infringement constitutes the main basis of liability risk. ..... The characteristic of negligence is that, from the perspective of harm, the infringement on the rights of others is the result of carelessness or negligence, not intentional. " As far as the liability forms of several professional liability insurance currently carried out in China are concerned, such as medical liability insurance, lawyer liability insurance and accountant liability insurance, they are all located in "negligence" and do not include "intention". The nature and social function of compulsory liability insurance and non-compulsory liability insurance are different, which determines the great difference of their imputation principles. Compulsory insurance focuses on protecting the interests of the third party. When a third party encounters an accident, it is necessary to prove the fault of the infringer, which is obviously not conducive to protecting the third party. Based on this, in compulsory liability insurance, no matter whether the insured is at fault or not, the principle of no-fault liability, that is, the principle of strict liability, is adopted to bear the insurance liability to the third party. Such as product quality liability insurance and motor vehicle third party liability insurance. Moreover, generally speaking, the principle of liability for the infringement of these types of insurance itself is strict liability clearly stipulated by law. The non-compulsory nature of special general partnership liability insurance determines that its scope of protection cannot cover the scope of application of limited liability. In the special general partnership liability insurance, the condition for partners to enjoy limited liability is the intentional or gross negligence of other partners in their practice activities, which is not covered by the special general partnership liability insurance. In other words, the special general partnership liability insurance can only cover a part of the risks within the limited liability scope, that is, only "gross negligence" can get compensation from occupational insurance, which undoubtedly greatly weakens the function of the special general partnership liability insurance. 2. Creditors of special general partnership [1][2][3] enjoy very limited rights as a third party, and there is no compulsory insurance. In commercial liability insurance, liability insurance transfers the risks of the insured and focuses on protecting the interests of the insured. An insurance contract concluded on the basis of autonomy of will stipulates the rights and obligations between the applicant (insured) and the insurer. According to the relativity principle of the contract, after the insurance accident, the insurer can only directly compensate the insured, and the third party has no right to claim directly from the insurer. However, in compulsory insurance, due to its unique social function and value orientation, in order to protect the third party and break through the principle of relativity of contracts, compulsory insurance in many countries stipulates that the third party can directly recover from the insurer after the insurance accident. Moreover, "foreign legislation, such as compulsory insurance, even stipulates that insurers may not fight against third parties against the insured for other reasons (such as delaying the payment of insurance premiums or violating due obligations). ), and only after the third party is compensated can the subrogation right be exercised to claim compensation from the insured. " As a commercial liability insurance, the third party (creditor) of the special general partnership liability insurance obviously does not enjoy the right to compel the third party. After an insurance accident, you can't recover directly from the insurer, but only from the insured (partner). It is undoubtedly more difficult to get compensation from the partner than the insurance company. 3. Implement the risk fund system. In fact, in addition to having to buy occupational insurance, I also stipulated the system of practicing risk fund.