Advisory & Structuring

Limited Partnerships

We specialise in the creation and maintenance of limited liability vehicles

Altree Services works with clients for whom a limited partnership (LP) structure is appropriate. Due to the limited liability nature of limited partnerships, these vehicles serve useful when raising outside capital and segregating the legal interests of interested parties. When considering a LP, it is important to understand the following:

• An LP consists of two or more persons, with at least one general partner and one limited partner
• While a general partner in an LP has unlimited personal liability, a limited partner's liability is limited to the amount of his or her investment in the company
• LPs are creatures of statute since they must file appropriately with the relevant jurisdiction to form them
• A limited partner shall not be liable as a general partner unless he or she takes control of the business
• However, a limited partner is not considered to control the business if he or she is a member of the board of directors
• Because the general partner is exposed to unlimited personal liability, LP's sometimes are set up so that the general partner is a corporation or an LLC
• As in a general partnership, income can be allocated each year among the partners in a way that minimizes taxes
• If the limited partnership meets a minimum number of criteria related to limited liability, centralized management, duration, and transferability of ownership, it can enjoy the benefits of pass-through taxation; otherwise it will be taxed as a corporation