Limited Partnerships

1
Limited Partnerships

• Business Organizations I
• PAR 201
• Mike Brigner, J.D.

2
Resources

• Text Chapter 4 ( see pp. 107-112 for more
  sources)
• R.C. Chapter 1782 www.state.oh.us/ohio/ohiolaws.h
  tm
• Forms for complying with state law Ohio
  Secretary of State website www.state.oh.us/sos

3
Why Try a Limited Partnership?

• Limited partners do not have unlimited personal
  liability
• Liability is no more than whats invested
• Taxation is the same as in a general partnership

4
Limited Partnership Definitions

• Unlike a general partnership, a limited PS is
  strictly a creature of statute
• Failure to comply with state law failure to
  form a limited PS as intended
• Ohio law Ohio Revised Code Chapter 1782
• Ohio definitions R.C. 1782.01

5
Ohio Definitions R.C. 1782.01

• (H) A Limited PS is formed by 2 or more persons
• 1 or more general partners
• 1 or more limited partners
• (M) Person very broadly defined
• (C) LPS is not a separate entity for tax purposes

6
The Characters

• General Partner Very similar to any partner in a
  general partnership
• Unlimited liability
• Usually the manger

7
The Characters

• Limited partner R.C. 1782.19
• Limited liability
• No right to participate in management (can lose
  limited liability status!)
• Really just an INVESTOR

8
Advantages of Ltd Partnership

• Creates good incentive for capital investment
• Limited liability for limited partner
• Hidden status for limited partner
• Easy transfer of partnership interests
• Continuity of business existence

9
Disadvantages of Ltd Partnership

• Lack of control for limited partner
• Unlimited liability for general partner
• More formalities and expenses of organizing and
  managing

10
Formation of an LPS

• Must file with SOS a Certificate of Limited
  Partnership, per R.C. 1782.08
• Form identifies all general partners
• But not limited partners
• Name of LPS must include words "Limited
  Partnership", "L.P.", "Limited", or "Ltd.
• Must be signed by all General Partners

11
Agent for Service of Process

• Form must identify name and address of an agent
  for service of process in Ohio
• Must be a natural person, resident of Ohio, or a
  corporation doing business in Ohio
• R.C. 1782.04

12
Principal Office

• Must keep separate lists of all General Partners
  and Limited Partners
• The LPS Certificate
• All tax returns
• Per R.C. 1782.05

13
Changes in Limited PS

• R.C. 1782.09 Must amend certificate if
• A General Partner is admitted or withdrawn
• A change in statutory agent, principal office, or
  name of LPS
• R.C. 1782.431-432 Mergers consolidations
• R.C. 1782.46-47 Dissolution, when
• Agreement
• Judicial dissolution

14
Winding Up of Affairs

• Creditors get paid first
• Ps get paid debts owed to them
• Ps get return of contributions to LPS
• Ps get proportional share of balance

15
Limited Partnerships

• Concluded Thank you
• Mike Brigner, J.D.