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Monday, April 16, 2012

General Overview of a Limited Partnerships - LP - Lawyer Thomas P Finley

Limited Partnership Formation, Forming, Form, Limited Partnerships- Lawyer Thomas P Finley

Definition and General Overview of a Limited Partnership – LP – Ltd.
A Texas limited partnership consists of one or more general partners and one or more limited partners. The general partner or general partners will have control of the day to day operational and control of the limited partnership and any other matters allowed the general partner as set forth in the Limited Partnership Agreement.  Although the limited partnership agreement is not filed for public record, the limited partnership must file a certificate of formation with the Texas Secretary of State. Pursuant to Section 402.001 of the Texas Business Organizations Code (TBOC), the TBOC governs the formation of all new domestic limited partnerships as of January 1, 2006.

A Texas limited partnership is an entity formally created under Texas law where the limited partners can receive liability protection. The limited partners can only receive liability protection by filing a Certificate of Formation of Limited Partnership with the State of Texas pursuant to Section 3.001 of the TBOC.   It is recommended that all limited partnerships have a limited partnership agreement. Limited partnership agreements are drafted to clearly define the rights and responsibilities of the general partner in addition to the matters upon which the limited partners will have control or a vote regarding the operations of the limited partnership.  Active management of the limited partnership is the responsibility of the general partner and limited partners should not participate in active management of the partnership.  A general partner in a limited partnership has the same liability as a partner in the ordinary partnership but a limited partner, as the term indicates, may not be liable to third parties beyond the amount of his or her stake in the limited partnership unless he or she exercises substantially the same powers as those of a general partner by participating in the management and control of the partnership. This makes the purchase of a limited partnership attractive for an individual looking to invest in a business without either participating actively in management or risking liability beyond the initial investment.   However, a limited partner but can be employed by the partnership. In consideration of the non-participatory financial capitalization of the limited partners the general partner accepts liability and responsibility for the partnership.  As a general rule, it is advisable that the general partner be a corporation, limited liability company (LLC), or another limited partnership because the general partner is ultimately liable for all the debts and obligations of the limited partnership. Limited partners invest in the limited partnership without risk of liability beyond their initial contribution as set forth in the limited partnership agreement.  Contact Business Lawyer Thomas P. Finley for assistance in forming your Limited Partnership. 

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