º¬Ðß²ÝÉçÇø

THIS IS the 150th column of Lexicon. At the last milestone, the 100th column celebrated by introducing Chinese legal pioneers in common law jurisdictions and discussing their lives and achievements (see China Business Law Journal, volume 11, issue 1: Chinese legal pioneers).

This new milestone is celebrated by discussing the number 150, and how numbers have had an impact on human relationships and the law.

History and popular culture

Like the numbers 50 and 100, the number 150 is celebrated in many countries as a significant milestone. First, it is considered to be a significant anniversary from a historical perspective.

For example, 2024 was celebrated as the 150th anniversary of the birth of the English composer, Gustav Holst, who wrote the orchestral suite The Planets.

This famous piece of music drew its inspiration from the planets of the solar system and the belief of astrologers that the planets had a direct influence on human affairs and human relationships.

In China, an interesting coincidence is that when the Terracotta Army was discovered by local farmers in 1974 outside Xi¡¯an, the three pits contained 150 cavalry horses, in addition to about 8,000 soldiers and 130 chariots with 520 horses.

Dunbar¡¯s number

In the early 1990s, a British anthropologist at Oxford University, Professor Robin Dunbar, published research concerning the relationship between brain size and human group sizes. Drawing on research into non-human primates such as chimpanzees, Dunbar argued that humans can only maintain cohesive and stable relationships in groups of about 150. The implication is that formal laws, rules and norms are required to maintain the cohesion and stability of larger groups.

Dunbar supported his theory with evidence that included the average size of farming communities, professional armies and business organisations.

Since Dunbar¡¯s research was published, his theory has been applied to a broad range of contexts relevant to law and corporate governance. For example, the theory has been applied to guide community policing and law enforcement.

In addition, companies have applied the theory to structure their departments and team sizes. More recently, the theory has been discussed in relation to decentralised organisations such as blockchain-based organisations (for a discussion of decentralised autonomous organisations, see China Business Law Journal, volume 12, issue 9: Decentralised autonomous organisations).

Partnerships

The number 20 has had an impact on the development of the law governing partnerships. As this column previously noted (see China Business Law Journal, volume 4, issue 6: Partnership), the English term ¡°partnership¡± traces its roots to the Latin verb partiri, meaning ¡°to share¡± or ¡°to divide up¡±. It subsequently found its way into the English word ¡°partner¡±, meaning somebody who is united or associated with another person, either in the context of a business relationship or a personal relationship.

In this sense, it has the same meaning as the Chinese word hehuo [ºÏ»ï], which is formed from the character he [ºÏ], meaning ¡°to combine¡± or ¡°to unite¡± and the word huo [»ï], meaning ¡°companion¡±.

In both England and China, the concept of a partnership has a long history. In England, its origins can be traced back to the 16th century, when banking and commercial partnerships were introduced by merchants from Italy.

The concept claims an even older heritage in China. Although the Chinese term hehuo is a relatively modern one, scholars have traced the origins of partnership back to the Warring States Period [475 BC to 221 BC] and its mature development to the Song Dynasty [AD 960 to 1279].

In England, the law previously limited the number of partners in a partnership to 20. This restriction can be traced back to 1856, when the Joint Stock Companies Act was enacted. Section IV of this act provided as follows:

Not more than 20 persons shall, after the third day of November 1856, carry on in partnership any trade or business having gain for its object, unless they are registered as a company under this act¡­

The limit of 20 partners was based on various reasons, including the inconvenience of suing all partners in any proceedings involving a claim against the partnership. The requirement to sue each partner subsequently ended in 1873, when the law was amended to allow parties to sue a partnership in the name of the firm.

It was also said that a partnership involving the unlimited liability of partners depends on a high level of trust and confidence between the partners, and that such trust and confidence is difficult to achieve in a partnership of more than 20 partners.

From early on, however, the law recognised that professional firms, including law and accounting firms, would be exempted from this limit.

This exemption appears to be counter-intuitive, particularly given the need for a high level of trust and confidence in professional firms.

In England, the limit was removed in 2002, with the result that there is now no maximum limit on the number of partners in a partnership.

In Hong Kong, the Partnership Ordinance (cap. 38) previously limited the number of partners in a partnership to 20. Once again, however, the law exempted certain professional firms, such as law and accounting firms. The limit in Hong Kong was removed in 2007.

In Australia, the limit still exists under section 115 of the Corporations Act 2001, which provides as follows:

Restrictions on size of partnerships and associations

1. 1. A person must not participate in the formation of a partnership or association that:
      1. has as an object gain for itself or for any of its members; and
      2. has more than 20 members;
         unless the partnership or association is incorporated or formed under an Australian law.
   2. The regulations may specify a higher number that is higher than the number specified in paragraph (1)(b) for the purposes of the application of that paragraph to a particular kind of partnership or association.

Similar to the traditional position in England and Hong Kong, Australia has issued regulations to specify a higher number for professional firms as follows:

It is interesting to note that concerns about conflicts of interest in accounting firms have in recent times triggered calls in Australia for the partner limit in them to be reduced from 1,000 to 400, on the basis that this would ensure a ¡°more operable form of joint and severable liability¡±.

Lexicon

The question of what reaching the 150 milestone means for this column is one that should best be answered by its readers. However, this columnist hopes that Lexicon will continue to be of interest and is sincerely grateful to both its readers and publisher for their unwavering support over the past 15 years.