Limited partnership - Essay Example

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This is unlike the general partnership that has only general partners. The liability of the limited partners is limited to the amount that they contribute to…
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s Limited Partnership A limited partnership is a form of partnership created by statute that comprises of bothgeneral and limited partners. This is unlike the general partnership that has only general partners. The liability of the limited partners is limited to the amount that they contribute to the formation of the business. They are more of investors that partners in the business. They are also not involved in the management of the business.
The general partner on the other has an active role to play in the running and management of the business. These partners have a right to use the property of the partnership, and also to share profits and losses of the partnership in the proportions defined.
One partner may be both a general and limited partner. When this is the case, all the rights and responsibilities that apply to a general partner also apply to him. However, the contribution that such a partner gives is protected in law just like that of any other limited partner.
The limited partner only has interest in the property of the business. Should such a partner participate in the management of the business, they may risk losing their status as a limited partner, and thereby be liable for any debts in the company. Participating in the management of the business does not include any advice that such a partner gives to a general partner on matters that pertain to the business.
The limited partner has an entitlement to inspect the records of the partnership at a reasonable time. They are also entitled in law to any piece of information regarding the partnership. Due to the fact that the limited partners are not allowed to participate in the running of the business, the general partners owe them a fiduciary duty.
Work Cited
Schneeman, Angela. The Law of Corporations and Other Business Organizations. 6th ed. Clifton Park, NY: Delmar Cengage Learning, 2013. Print. Read More
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