After the Partnership Act 1890 and well before the Limited liability Partnership Act 2000 an attempt was made by the Limited Partnerships Act 1907 to create partnerships with limited liability.
A limited partnership consists of one or more general partners, who are liable for all the liabilities of the firm, and one or more limited partners, who contribute a set sum to the capital of the Limited Partnership and are not liable for liabilities of the firm beyond their capital contribution. A Limited Partners can be people or limited companies. A Limited Partnerships must be registered at Companies House.
Limited Partners are protected so long as they do not take an active role in running the partnership and are therefore useful for people wanting to invest in a firm as a sleeping partner.
A Limited Partnership does not have legal status; that it is cannot contract on its own behalf.
Limited Partnerships are not often used as they have limitations but are sometimes used within complex structures where a limit in liability is required and an LLP or limited company is not suitable.
Limited Partnerships are often used in specialist situations; for example by private equity and venture capital funds. The limited partnership structure gives tax transparency as the investors are treated as investing directly in the venture but also gives them the protection of limited liability.
Ar Ralli we have experience of setting up and administering Limited Partnerships in property transactions and for collective investment schemes.
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