A limited partnership operates like a business and is organized and created subject to the laws of the state. The partnership agreement determines the organization of the partnership and whether the partners are limited, general, or managing partners. Limited partnerships are not corporations, so officers and directors are not required.
Limited partnership organization occurs under a limited partnership agreement, which names the limited and general partners. Each partner invests in the limited partnership, and the agreement outlines the responsibilities and capital requirements of each partner. Limited partnerships have legal and state requirements, such as partners having no involvement in management or they lose the benefits of limited partner status. Limited partners have limited liability regarding lawsuits and loss.
Even though a limited partnership is not required to have officers or directors, the partnership must register with the state. Most states allow online filing for registration, and require the names and addresses of the general and limited partners. This filing becomes public information that provides who the responsible parties are for the partnership. Instead of filing as officers or directors, the state filing identifies each individual as general, limited, or managing partner.
Video of the Day
Officers and Directors
Even though officers and directors are not required to set up a limited partnership, officer appointments can occur if the partnership determines a need. Some limited partnerships set up a board of directors with officers to assist in management and operations. This arrangement does not change the responsibility and liability of general partners, or the rights of limited partners.
There are many examples of the complicated nature of partnership agreements widely available (see Resources). Because limited partnerships are complicated legal entities, it is prudent to seek the advice of a lawyer experienced in partnership law. The lawyer will ensure that all state required filings are proper, and adherence to state and legal rules occurs to protect the rights of the partners.