Welcome to the SmallBusiness.com WIKI
The free sourcebook of small business knowledge from SmallBusiness.com
Currently with 29,735 entries and growing.

WIKI Welcome Page
Local | Glossaries | How-to's | Guides | Start-up | Links | Technology | All Hubs
About · Help Hub · Register to Edit · Editing Help
Twitter: @smallbusiness | Facebook | Pinterest | Google+

SmallBusiness-com-logo.jpeg

In addition to the information found on the SmallBusiness.com/WIKI,
you may find more information and help on a topic
by clicking over to SmallBusiness.com and searching there.


Note | Editorial privileges have been turned off temporarily.
You can still use the Wiki but cannot edit existing posts or add new posts.
You can e-mail us at info@smallbusiness.com.


Limited partnership

SmallBusiness.com: The free small business resource
Jump to: navigation, search

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).

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 debts 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 contracts 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 shareholders 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.

Source

Wiki25.jpg
This entry includes content from the following Wikipedia article: Limited Partnership

See Also

SB glossary new.jpg
This term or phrase is currently an entry in The SmallBusiness.com Business Glossary WIKI. Please help expand this entry into a more detailed description.