Limited partnerships are a little-known, but very attractive form of business. A limited partnership combines both general partners and limited partners. The difference between a limited partnership and a general partnership is that limited partners avail themselves of limited liability. General partners, however, do remain liable. Because limited partners are protected by limited liability, they are more likely to be attracted to be brought in as business partners. This is true even if the limited partner participates in control of the limited partnership.
However, there are instances where a limited partner is still liable. This is a very technical and easily avoidable situation. This situation emerges when the limited partnership certificate has not been properly filed with the state. Again, this is an extremely technical exception. Therefore, a limited partnership cannot overestimate the significance of the limited partnership certificate. The logic behind this exception is that without a limited partnership certificate, the limited partnership is nothing more than a general partnership, which retains traditional liability. If there is no certificate, all partners are jointly and severally liable. If the certificate is valid, only the general partners are jointly and severally liable. There must be a written agreement including the value of each partner’s contribution, when contributions will be made, and the events causing dissolution.
Aside from limited liability, limited partners retain many of the same characteristics as general partners. Unless otherwise provided, losses and distributions are allocated on the value of capital contributions. The certificate that must be filed with the Department of State contains untold importance. Whether you have already filed such a certificate, or wish to explore whether or not a limited partnership is the right business form for your company, having the right legal team in your corner can ensure the limited partnership is run smoothly. Call the Trembly Law Firm at (305) 431-5678 today to schedule your consultation.