Limited Partnerships

Question 1

An LP is:

Answer 1

It is unlike a general partnership, as the partners work altogether, whereas limited partnerships have different powers.

Question 2

A General Partner:

Answer 2

Manages partnership
Give special partner a rendering of account
Concentrates on running a business

Question 3

A Special/Limited Partner

Answer 3

Supplies the capital
Have a say in the rending of account
Do not manage
Example: someone invests because they believe in your business, become a special partner, as they only supply capital (invest), and don’t manage.

Question 4

Common Name

Answer 4

Formed under (L.P.)
Has to be stated in the end of your name, need people to know that you are a partnership
2189 and 2197

Question 5

Registration of name

Answer 5

2189 para 2

2191-2193 is for registration

Question 6

Advantages of a LP

Answer 6

• A silent partner is liable up to the amount of money he invested. Never responsible for more
• Income is not taxable; Not incorporated, whatever money you make is seen as a business income.
• LP can generate other silent partners (investors) Both general and special partners can do this to find other investors
• Expected return (a form of dividends or capital losses) Provide tax benefits
• Liquidity: resale of securities, If they’re not happy, they can buy back the shares if some parties aren’t happy with the sale.
• The risk depends on a partnership’s activities. Your limited partners do not have a say to management, can’t say that what they’re doing is wrong. Invest= sit back and wait.