Limited Partnerships
A limited partnership
consists of one or more general partners who manage the business of a
partnership and one or more limited partners who contribute capital (money or
other property) to a partnership but do not participate in its management.
Generally, limited partners are not liable for the debts and obligations of the
partnership beyond their contributions, to the registered capital. The liability
of the general partner is the same as the liability of partners in a general
partnership. For an investor, therefore, being a limited partner is similar to
have an investment in a corporation.
Limited partners share
the profits or other compensation by way of income in proportion to their
partnership contributions. However, no such income or other distribution can be
made if it would reduce the assets of the limited partnership to an amount
insufficient to discharge its liabilities to persons who are not partners.
While the limited
partners cannot manage the business, they may examine the state and progress of
the partnership business and advise on its management. A limited partner may
also act as a contractor for, or an employee of, the limited partnership.
Company Law No.31/1990
generally sets out the rights, powers, and obligations of limited partners. For
example, a limited partner may be held liable as a general partner if the
limited partnership legislation is not strictly complied with; when a limited
partner participates in the management of the partnership's business without
having been mandated to that effect by company's representatives, by means of a
special power-off attorney, registered with the trade register, or allows his or
her name to be used in the name of the limited partnership.
A limited partnership
is a practical form of organization for a pooled investment where the investors
would not normally participate in the control of the investment. Investors are
limited partners while the general partner provides the professional management
of the investment. In this way, investors share the profits but, as limited
partners, their financial risk is limited to the capital they have contributed.
A limited partnership
must use in its name the words "limited partnership" (Societate
in comandita simpla, S.C.S).
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WQC 2003
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