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LLPs – What are they?

What is a limited partnership?

A limited partnership (LP) is a business registered under the Limited Partnership Act 1907. A LP consists of:

• one or more persons called general partners (GPs), who are liable for all the debts and obligations of the firm; and
• one or more persons called limited partners, who contribute a sum or sums of money as capital, or property valued at a stated amount. Limited partners are not liable for the debts and obligations of the firm beyond the amount contributed.

Generally, an individual or a legal body such as a company may be a partner in a LP, either as a GP or as a limited partner. A person cannot be both a general and a limited partner at the same time. The GP is the agent of the LP and its other partners as well as the manager of the LP’s business and assets.

The LP business model is generally used as an investment vehicle for venture capital and private equity investment funds, where the GP will manage and invest the sums contributed by the limited partners (investors).

Although an LP is not a separate legal entity, an LP must be registered at Companies House. Until your partnership is registered it will be regarded as a general partnership with all partners equally responsible for any debts and obligations incurred.

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