KNS - Limited Partnership Deck Flashcards
2 - What is a limited partnership (an LP)?
A limited partnership is a partnership with at least one general partner (and this general partner is treated just like partners in a general partnership) and at least one limited partner (limited partners are treated differently). Because it is a partnership, general partnership principles typically apply unless displaced by limited partnership specific provisions.
3 - How do you form a limited partnership?
A limited partnership is formed by filing a certificate of limited partnership with the secretary of state.
4 - A limited partnership is formed by filing a certificate of limited partnership with the secretary of state.
What information is required in the certificate?
The information required in the certificate is minimal. It includes 1. the name of the LP, 2. The name and address of the agent for service of process, and 3. the name and address of each general partner.
NOTE THAT IF YOU FAIL TO FILE YOUR LP, you are just a general partnership.
5 - What must the name of the LP contain?
The name of the LP must contain the phrase “limited partnership” or the abbreviation L.P. or LP. (The policy here is to alert the public to the limited liability nature of the business).
6 While this certificate is filed with the secretary of state, as said, the info in it is minimal. Most of the real detail on the operation and governance in an LP is typically found where?
In a partnership agreement. It can be written, oral, or implied. As in a general partnership, the agreement can displace almost all of the statutory provisions.
7 Who manages the LP?
The LP is managed by the GENERAL PARTNERS. Each general partner has equal rights in the management and conduct of the LP’s activities. The vote of a majority of the general partners is necessary for ordinary business activities.
8 - Do the limited partners have management rights?
Generally the limited partners do not have management rights unless the partnership agreement grants them rights.
9 - limited partners do not typically have management rights, however, are there situations where their vote is necessary to do something?
Yes - unless otherwise agreed, the vote of all the partners, limited and general, is necessary for certain extraordinary
9 - limited partners do not typically have management rights, however, are there situations where their vote is necessary to do something?
Yes - unless otherwise agreed, the vote of all the partners, limited and general, is necessary for certain extraordinary activities, including an amendment of the partnership agreement, the admission of a new general or limited partner, and the sale of all or substantially all of the LP’s property (if such sale is outside the ordinary course of the LP’s activities.)
10 - how are distributions from the LP given?
Unless otherwise agreed, distributions from an LP are made on the basis of the partners’ contributions (I.e. in proportion to the value of each partners’ contribution).
11 - What liability do general partners have under an LP?
Under an LP, general partners are liable for the obligations of the LP, just as they are in a general partnership.
12 - What liability do limited partners have under an LP?
A limited partner is not personally liable for an obligation of the LP solely by reason of being a limited partner. Limited partners have LIMITED LIABILITY, meaning they can ONLY LOSE the value of their investments.
13 - Chef Tom forms a LP to run a bistro. Padma invests $50k as a limited partner. The bistro flops, all of its assets, including Padma’s 50k, are gone. IS Padma liable for the LP’s debts?
No - a limited partner has no liability for the LP’s obligations. The limited partner’s investment, however, can be lost.
14 - is a limited partner liable for their own torts?
A limited partner (as well as a general partner) is always liable for her own torts. The limited liability shield of any business organization does not protect a person from liability for her own torts).
15 - What fiduciary duty does a general partner owe in an LP?
A general partner owes the LP and the other partners (limited and general) the same fiduciary duties of loyalty and care that general partners owe in a general partnership.
