Limited Partnership 1907 Act
A Limited Partnership consists of:
- one or more persons called general partners who are liable for all debts and obligations of the firm; and
- one or more persons called limited partners, who contribute a sum or sums of money as capital, or property valued at a stated amount.
An individual or a legal body (for example a company) may be a partner in a limited partnership either as a general or as a limited partner. A person cannot be both a general and a limited partner at the same time.
Limited partners are not liable for the debts and obligations of the firm beyond the amount contributed. They may not draw out or receive back any part of their contribution to the partnership during its lifetime, nor may they take part in the management of the business, nor do they have power to bind the firm. If they do take part in the management, they become liable for all the debts and obligations of the firm up to the amount drawn out, received back or incurred, as the case may be.
Regardless of the above, until the partnership is registered - it will be regarded as a general partnership with both the general and limited partners equally responsible for any debts and obligations incurred.
In the event of the dissolution of a limited partnership the general partners must wind up its affairs unless the court orders otherwise. Unless agreed otherwise, a limited partner is not entitled to dissolve the partnerships by notice. The death or bankruptcy of a limited partner is not a ground for dissolution nor if the limited partner becomes of unsound mind.
If you would like advice about setting up a partnership or in relation to any issues you have within your partnership, Ashby Cohen can help you. We are specialists in partnership law, and our years of experience as lawyers make us uniquely qualified to assist you with any partnership queries you may have. Please contact us for an initial free consultation.