WHAT IS LIMITED PARTNERSHIP?

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Published — March 17, 2021 

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.

Aside from Limited Partnership, read also: Close Corporation

• Limited partnership is one formed by two or more persons having as members one or more general partners and one or more limited partners

• Limited partners are not bound by the obligations of the partnership

• The contributions of a limited partner may be cash or property, but not services

May a partner in a partnership opt not to contribute his services?

The law says:

Yes.

This is in the case of a limited partnership wherein the contributions of a limited partner may be cash or property, but not his services. A limited partnership is one formed by two or more persons having as members one or more general partners and one or more limited partners. The limited partners as such are not bound by the obligations of the partnership.

In desiring to form a limited partnership, two or more persons shall:

1. Sign and swear to a certificate, which shall state –

1. The name of the partnership, adding the word “Limited”
2. The character of the business;
3. The location of the principal place of business;
4. The name and place of residence of each member, general and limited partners being respectively designated;
5. The term for which the partnership to exist;
6. The amount of cash and a description of and the agreed value of the other property contributed by each limited partner;
7. The additional contributions, if any, to be made by each limited partner and the times at which or events on the happening of which they shall be made;
8. The time, if agreed upon, when the contribution of each limited partner shall be returned;
9. The share of the profits or the other compensation by way of income which each limited partner shall receive by reason of his contribution;
10. The right, if given, of a limited partner to substitute an assignee as contributor in his place, and the terms and conditions of the substitution;
11. The right, if given, to admit additional limited partners;
12. The right, if given, of one or more of the limited partners to priority over other limited partners, as to contributions or as to compensation by way of income, and the nature of such priority;
13. The right, if given, of the remaining general partner or partners to continue business on the death, retirement, civil interdiction, insanity or insolvency of a general partner; and
14. The right, if given, of a limited partner to demand and receive property other than cash in return for his contribution.

2. File for record the certificate in the Office of the Securities and Exchange Commission.

After the formation of the limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate.

May the surname of a limited partner appear in the partnership name?

The law says:

The surname of a limited partner shall not appear in the partnership name unless:

1. It is also the surname of a general partner, or
2. Prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared.

A limited partner whose surname appears in a partnership name which is not in accord with the enumeration above is liable as a general partner to partnership creditors who extend credit to the partnership without actual knowledge that he is not a general partner.

What is a general partnership or who is a general partner? A related article will be posted in a few days.

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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

All rights reserved.

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