LIMITED PARTNERSHIP

A limited partnership is a partnership which has one or 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. 1843) except up to the extent of their contribution.

 CHARACTERISTICS:
 There must be at least one partner with unlimited liability. The liability of the remaining
partners is limited to their capitals in the firm. Thus, a limited partnership consists of
two types of partners, general partner and limited partner.
 The limited partner cannot take part in the management of the firm. He/she has no
implied authority to represent and bind the firm. However, he/she is allowed in inspect
the books of accounts of the firm.
 The limited partner cannot assign his share to an outsider without the consent of the
general partner.
 The limited partner cannot withdraw any part of his capital.
 A limited partnership must be registered to the Securities and Exchange Commission
(SEC). (Art. 1844)
 ADVANTAGES:
 It enables people to invest in a business without assuming unlimited risk and without
devoting much time and attention in the management of business.
 It is more stable than general partnership because it is not dissolve by insolvency,
retirement, incapacity or death of a limited partner.
 DISADVANTAGES:
 The general partner may misuse his power to exploit the limited partners.
 A limited partnership may enjoy a little credit standing as the liabilities of some partners
are limited.