A limited partnership is a business entity that has at least two members, of which at least one is fully and jointly liable for the company’s obligations (general partner), and at least one is liable only to the extent of their unpaid or uninvested contribution (limited partner). It is a company that has mixed characteristics of a general partnership (GP) and a limited liability company (LLC).
Essentially, the general partner has obligations similar to those of a partner in a general partnership (which is why the provisions of the Companies Act applicable to partners in a general partnership apply to them), while the limited partner has obligations typical for a member of a limited liability company. The general partners and limited partners participate in the distribution of profits and covering the company’s losses in proportion to their shares in the company, unless otherwise specified in the founding act.
General partners are members of the limited partnership who manage the company and represent it, and these actions are not undertaken by limited partners. In the case of extraordinary management activities, the limited partner may oppose taking such an action, in which case the general partner cannot proceed with it.
General partners are jointly and unlimitedly liable for the company’s obligations. Limited partners are not liable for the company’s obligations if they have fully paid the contributions they assumed. An exception to this rule exists when the name of the limited partner, with their consent, is included in the business name of the limited partnership.
A limited partnership is established by a founding agreement, which, in addition to the mandatory elements prescribed by law, must also specify which member is a general partner and which is a limited partner.
A limited partnership must always have at least one limited partner and at least one general partner. If the company loses all of its general partners or all of its limited partners, it can decide to change its legal form. If the company does not follow the above-described procedure, or if it does not adopt a decision to change its legal form or does not admit a new general partner or limited partner within the legally prescribed period, the conditions for initiating a forced liquidation procedure and removing the company from the business registry will be met.