What is Limited Partnership and its Features
The partnership has multiple types for partnership structure. A limited partnership is one of them. In this kind of agreement two types of partners participate one is the general partner and second having limited liability. As you know in partnership at least two partners are required. Both are the owner of business but one is playing one’s role as Active partner and second, having limited liability is as a sleeping partner.
The partner having limited liability can not make business decisions or you can say cannot participate in management by law. However, he can inspect the books of accounts, assets and can ask for routine work of business, about operation, growth etc. They are just like a shareholder, whose profit and loss as per share. They can not involve in management decisions, In that case of one General partner, he plays as one man show just like as in sole proprietorship.
Characteristics of Limited Partnership
- Type of partners
- No of Partners
- Registration
- Books of Accounts
- Extension of Partners
- Decision Makers
- Agent
- Transfer of ownership
- Dissolution of Partnership
- Borrowing / Credit Facility
Advantages of Limited Partnership
- Confident Management
- Less Fraud Threat
- Limited Liability
- Business Secrets and ideas
- Stable finance
- Word “limited”
Disadvantages of Limited Partnership
- Lack of Lender Trust
- No Democracy
- No use of creative minds.
- Registration Compulsory
- Agent of Partnership