| Limited Partnership |
Article Index for Limited |
Articles about Limited Partnership |
Website Links For Limited |
Information AboutLimited Partnership |
| CATEGORIES ABOUT LIMITED PARTNERSHIP | |
| business law | |
| types of companies | |
| legal entities | |
|
A limited partnership is a form of Partnership similar to a General Partnership , except that in addition to one or more ''general partners'' (GPs), there are one or more ''limited partners'' (LPs). DISCUSSION The general partners The GPs are, in all major respects, in the same legal position as partners in a conventional firm, i.e. they have management control, share the profits of the firm in predefined proportions, and have Joint And Several Liability for the Debt s of the partnership. As in a general partnership, the GPs have apparent authority as Agents of the firm to bind all the other partners in Contract s with third parties. The GPs pay the LPs the equivalent of a dividend on their investment. The nature and extent of this payment will usually be defined in the partnership agreement. The limited partners Like Shareholder s in a Corporation , the LPs have Limited Liability , i.e. they are only liable on debts incurred by the firm to the extent of their registered investment, and they have no management authority. When the partnership is being constituted or the composition of the firm is changing, LPs are generally required to file documents with the relevant State registration office. LPs must also explicitly disclose their LP status when dealing with other parties, so that such parties are on notice that the individual negotiating with them carries limited liability. It is customary that the notepaper, other documentation, and electronic materials issued to the public by the firm will carry a clear statement identifying the legal nature of the firm and listing the partners separately as general and limited. Hence, unlike the GPs, the LPs do not have inherent agency authority to bind the firm unless they are subsequently ''held out'' as agents and so create an agency by Estoppel or acts of ratification by the firm create ostensible authority. The limited liability enjoyed by LPs is contingent upon their refraining from taking any active role in the management of the firm. If LPs do assume a management role, they become GPs, and thus lose their limited liability protection and acquire the status of an agent. THE LIMITED PARTNERSHIP IN THE U.S. In the United States , the LP organization is most common in the Film Industry or in types of businesses that focus on a single or limited-term project. They are also useful in " Labor - Capital " partnerships, where one or more financial backers prefer to contribute money or resources while the other partner performs the actual work. In such situations, liability is the driving concern behind the choice of LP status. The LP is also attractive to firms wishing to provide shares to many individuals without the additional tax liability of a corporation. Private Equity companies almost exclusively use a combination of general and limited partners for their investment funds. Well-known limited partnerships include Carnegie Steel Company , Bloomberg L.P. and CNN . In most states, an LP can elect to become a Limited Liability Limited Partnership (or LLLP). In this arrangement, every partner is liable only for the business debts of the company, and not for acts of Malpractice or other wrongdoing done by the other partners in the course of the partnership's business. See the Revised Uniform Partnership Act (RUPA) which was finalised by the National Conference of Commissioners on Uniform State Laws in 1994. THE LIMITED PARTNERSHIP IN THE UK In the United Kingdom , the Limited Liability Partnership Act 2000 introduced LLPs into the legal system as a response to the fears of large professional partnerships as to their exposure to substantial claims for professional negligence. In substance, they are closer to Companies registered under the Companies Act 1985 than partnerships, for example, in the preparation and audit of the annual accounts and the application of the Company Directors Disqualification Act 1986. There is considerable debate as to whether the Limited Partnerships Act 1907 should be updated so that it acquires the status of a Legal Entity . The problem is that, in Europe , some states allow limited partnerships to have a separate legal personality and others do not. If UK law was amended so that limited partnerships automatically acquired such a personality, this might prejudice its ability to trade and its exposure to Taxation in some European states. Hence, the Law Commission in Report No. 283 {Link without Title} proposes that separate personality be at the option of those creating a limited partnership. |
|
|