8/10/2019 Notes on Ltd Partnership

1/2

LIMITED PARTNERSHIP

One formed by two or more persons having members one or more general partners and one or more

limited partners; the limited partners are not personally liable for partnership debts.

A partner may be a general partner AND a limited partner in the same partnership at the same time,

providedthat this fact shall be stated in the certificate or articles of partnership.

CHARACTERISTICS OF A LIMITED PARTNERSHIP:

1.

One or more general partners control the business and are personally liable for creditors

2.

One or more limited partners contribute to the capital and share in the profits but DO NOT:

-

Participate in the management of the business

-

Are not personally liable for the partnership obligations beyond their capital

contribution.

-

Limited partners can contribute cash or property, but not services.

3.

The surname of a limited partner shall not appear in the Partnership name unless: it is also the

name of a general partner, or, prior to the time when the limited partner became such, the

business had been carried on under a name in which his surname appeared.

ESSENTIAL REQUIREMENTS FOR THE FORMATION

1.

Certificate or Articles of Limited Partnership containing the matters indicated in Article 1844,

which must be signed and sworn;

2.

And these must be filed for record at the Securities and Exchange Commission (SEC);

IMPORTANT DISTINCTIONS

LIMITED PARTNERSHIP GENERAL PARTNERSHIP

Right to Participatein the Management

of the Partnership

Limited Partner has no share in themanagement and renders himself

liable to partnership creditors as a

general partner if the limited partner

takes part in the control of the

business.

General Partners have an equal right ofmanagement of the business (when the

management of the business has not been

agreed upon)

Extent of Liability Limited Partners liability extends

only to his capital contribution

General partner is personally liable for

partnership obligations

Firm Name Must be followed by the word

LIMITED (Ltd.)

No such requirement

Proper party to

proceedings by or

against the

partnership

Limited partner is not a proper party

to proceedings by or against thepartnership, UNLESS:

He is also a general partner, or

Where the object of a proceeding is

to enforce the rights of the Limited

Partner right or against a liability to

the Partnership

General Partner is the proper party to

proceedings by or against the partnership

Prohibition to

Engage in Another

Business

No such prohibition in the case of a

limited partner who is considered as

a mere contributor or investor in thepartnership

General Partner is prohibited from engaging

in the same business as that of the

partnership.

Contribution Limited Partner must contribute cash

or property but not services.

Contribution is money, property or industry.

Creation Substantial compliance in good faith

with the requirements set forth by

law

As a general rule, may be constituted in any

form.

8/10/2019 Notes on Ltd Partnership

2/2

Transferability of

Interest

Limited partnersinterest is freely

assignable, with assignee acquiring

all the rights of a limited partner

subject to certain qualifications

General partners interest in the partnership

may not be assigned as to make the

assignee a new partner without the consent

of the other partners.

Inclusion of the

Partners Name in

the Firm Name

General Rule: name must not be

included in the firm name

Name may appear in the Firm Name.

Members of the

Partnership

Composed of one or more general

partners and one or more limited

partners

Composed of general partners only.

Effect of Retirement,

Death, Insanity or

Insolvency

Does not dissolve the partnership for

his executor or administrator shall

have the rights of a limited partner

for the purpose of selling his estate.

These causes dissolves the partnership.