Limited partnership

A limited partnership can be established by at least one ordinary and one limited partner. The number of limited partners can be great since they do not take part in decision making. Both natural and juridical persons can act as ordinary and limited partners. The status of the ordinary partners is similar to that in an unlimited partnership.

There is no obligation for them to invest in the company anything more than their work force. Limited partners, instead, are in the position of investors, and are liable for the company only to the amount of their investments provided that they have not in any other way taken the liability for the company's debts. When the partnership is established, the limited partners invest to the partnership in the form of money or apport property the amount of which is not restricted by any laws. On the other hand, the investment has to be meaningful to the company, which means that a very small fiscal commitment is in practice not acceptable. In the case of bankruptcy the limited partners will only lose their investment to the company.

A limited partner can work for the company - even as the executive manager - and have the responsibilities brought by the administrative authority he or she is entitled to in this position. The death of a limited partner does not lead into annulling the partnership. In this case, the law on partnerships is applied.

A limited partnership is typically a family-owned company in which the administrative authority and decision making lies in most cases with one partner, the general partner. In a family-owned partnership the role of the linited partner is often to stay in the background and, when necessary, to assist with one's work force. This type of company is best suited for small companies in the service branch in which the aim is to gain flexible administration and it is possible to make withdrawals from the company without paying a salary. In case the partnership has got several general partners, the mutual trust becomes essential, just as is the case with unlimited partnerships.

In a limited partnership, the limited partner will first be paid interest on the amount invested at the beginning of the fiscal period. The remaining part of the profit will then be divided in equal shares between the general partners.

Overview Forms of Company | Single-member company | Unlimited partnership | Limited company | Cooperative | Society