Limited Partnership Part 1
Art. 1843 – Limited Partnership
Characteristics:
a.
formed by compliance with the statutory requirements;
b.
one or more general partners control the business and are personally liable to creditors
c.
one or more limited partners contribute to the capital and share in the profits but do not
participate in the management of the business and are not personally liable for partnership
obligations beyond the amount of their capital contributions;
d.
the ;limited partners may ask for the return of their capital contributions under the conditions
prescribed by law; and
e.
the partnership debts are paid out of common fund and the individual properties of the general
partners
Limited Partnership
one formed by two or more persons under the provisions of Art. 1844, having as members one
ore more general partners and one or more limited partners. The limited partners as such shall not
be bound by the obligations of the partnership
Art. 1844 – Requirements for the Formation of Limited Partnership
Presumption of General Partnership
a partnership transacting business is prima facie, a general partnership and those who seek to
avail themselves of the protection of the laws prevailing the creation of limited partnership must
show due compliance with such laws
Requisites:
a.
b.
signing under oath of the required certificate;
filing for record of the certificate in the SEC
Effect of non-fulfillment of the requirements
then it is not considered a limited partnership but a general partnership
Effect of only aggregate contribution is stated
the law says that the contribution of each limited partner must be stated. Therefore, if the
aggregate sum given by two or more limited partners is given, the law has not been complied with.
Effect of omitting the term “limited” in the firm name
the law requires the firm name to have the word “limited.” If such is violated, the name cannot be
considered the firm name of the limited partnership.
Art. 1845 – Limited Partner’s Contribution
Rule:
a.
b.
a limited partner is not allowed to contribute industry or services alone
an industrial partner can become a general partner in a limited partnership
Art. 1846 – Effect where surname of limited partner appears in partnership name
-
the limited partner violating this article is liable, as a general rule, to partnership creditors without,
however, the rights of a general partner. Of course, such limited partner shall not be liable as a
general partner with respect to third persons with actual knowledge that he is only a limited partner.
Art. 1848 – Liability of limited partner for participating in management of p[partnership
-
a limited partner is liable as a general partner for the firm’s obligations if he takes part or interfere
in the management of the firm’s business.
The following do not constitute taking part in the control of the business:
a.
mere dealing with a customer;
b.
mere consultation on one occasion with the general partners
Acts constituting interference in the management
a.
selection of who will be managing partners;
b.
supervision over a superintendent of the business of the firm
note: participation in the control of the business makes the limited partners liable as a general partner
without getting the latter’s rights
Art. 1849 – Admission of additional limited partners
-
even after a limited partnership has already been formed, the firm may still admit new limited
partners, provided there is a proper amendment to the certificate
failure to amend the certificate does not necessarily mean the dissolution of the limited partnership
Art. 1850 – Rights, powers and liabilities of a general partner
a.
b.
c.
right of control/unlimited personal liability
acts of administration/acts of strict dominion
other limitations:
no power to bind the limited partners beyond the latter’s investment
no power to act for the firm beyond the purpose and scope of the partnership
no authority to change the nature of the business without the consent of the limited partners
·
Under the acts enumerated (under Art. 1850), the general partners (even if unanimous) must still
get the written consent of all the limited partners.
If a general partner in a limited partnership goes abroad, his capacity to bind the firm is governed
by the law of the place where the limited partnership was formed.
·
Art. 1851 – Rights of a limited partner
Rights, in general, of a limited partner
as members of the firm, the limited partner, in order to protect his interest in the firm, has the same
right to compel the partners to account as a general partner has
Rights of a limited partner
a.
a limited partner necessarily has lesser rights than a general partner (as enumerated in Art.
1851)
b.
however, he has also the right to have dissolution and winding up by decree of court; he
cannot, however, bind the firm by a contract