Limited partnerships

Question 1

Limited partnership

Answer 1

1. partnership with at least one general partner and one limited partner
   i. general partner: run the business, liable for debts
   ii. limited partners: limited management rights, limited liability for debts (passive)
2. linkage: apply general partnership rules unless there is a specific provision otherwise

Question 2

LP formation

Answer 2

1. file certificate of limited partnership with secretary of state
   i. name of limited partnership (must contain “limited partnership” or “LP”)
   ii. name and address of agent for service of process
   iii. name and address of each general partner
2. note: failure to file a certificate makes the partnership a general partnership

Question 3

Limited Partnership agreement

Answer 3

1. can be written, oral, or implied
2. contains detail on the operation and governance of the limited partnership
3. can displace almost all of the statutory provisions.

Question 4

Limited partnership management

Answer 4

1. limited partnership is managed by general partners
   i. general partner has equal rights in managing LP’s activities
   ii. majority vote of general partners is necessary for ordinary business activities
   a. limited partners have no ordinary management rights unless otherwise agreed
2. the vote of all partners (general and limited) is required for extraordinary activities, unless otherwise agreed, including:
   i. amendment of the partnership agreement
   ii. admission of a new general or limited partner
   iii. sale of all or substantially all of the LP’s property

Question 5

Limited partnership Financial rights

Answer 5

1. distributions split in proportion to the value of each partner’s contribution, unless otherwise agreed

Question 6

Limited partnership liability

Answer 6

1. general partners are liable for obligations of the partnership (like in general partnership)
2. limited partners have limited vicarious liability
   i. limited partners are only vicariously liable up to the value of their investments
   ii. limited partners are not personally liable for any obligation of the LP solely by reason of being a limited partner
   iii. as always, however, a partner remains personally liable for their own wrongful acts

Question 7

Limited partnership fiduciary duties

Answer 7

1. general partners owe the LP and other partners the same fiduciary as partners owe in a general partnership (care, loyalty, disclosure)
2. limited partners do owe no fiduciary duties to the LP or any other partner solely by reason of being a limited partner