LIMITED PARTNERSHIPS

General Partners: Liability

A general partner is personally liable for all of partnership's obligations.

Limited Partners: Liability

A limited partner is generally liable for partnership obligations only to the amount of his investment in the partnership.

Definition

A limited partnership differs from a general partnership in that liability of a limited partner is restricted to the capital that she contributed to the partnership.

Rights and Obligations

A limited partnership has general and limited partners.

Formation

A limited partnership is formed by filing a certificate of formation with the secretary of state, and the name of the limited partnership must include "limited partnership," "L.P.," or "Ltd."

General Partners: Liability: (new partner liability)

A person admitted into an existing LP is not personally liable for any partnership obligation incurred before her admission as a partner, but any capital she invests in the LP can be used to satisfy existing obligations.

General Partners: Management

General partners have all of the rights and duties of a partner in a general partnership.

General Partners: Fiduciary Duties

General partners have duties of care and loyalty to the LP.

General Partners: Fiduciary Duties: (interested partner transaction)

If a general partner enters into a transaction with the LP, then the partner has a duty to disclose the material facts to the limited partners to allow them to vote on whether to accept the transaction.

Limited Partners: Liability: [exception]

If a limited partner has taken part in control of an LP such that an innocent third party believes that the partner is a general partner, then the limited partner may be liable to that third party.

Limited Liability Limited Partnership (LLLP)

In an LLLP, the general partners are afforded limited liability for the limited partnership's debts and obligations.

Limited Partners: Right to Information

Limited partners may make reasonable requests for information about partnership business, including a request to review tax returns.

Limited Partners: Management

Limited partners generally have no role in the day-to-day operations of an LP. Their rights are similar to a corporate shareholder, including a right to vote on extraordinary business as provided in the partnership agreement.