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Limited Partnership (LP)
Practical Law Glossary Item 7-382-3586 (Approx. 3 pages)
Glossary
Limited Partnership (LP)
A form of partnership made up of one or more general partners with unlimited liability that manage the business and one or more limited partners with limited liability but typically no right to manage the business.
However, in states that have adopted a limited partnership statute similar to the Uniform Limited Partnership Act (ULPA 2001), limited partners benefit from a broader status-based limited liability shield that:
- Is similar to the shield enjoyed by corporate shareholders and limited liability partnership partners.
- Protects limited partners from being personally liable for the debts and obligations of the partnership solely for being or acting as a limited partner, even if they participate in the management and control of the limited partnership.
LPs are governed by their state of formation's limited partnership statutes. Venture capital funds are often established as limited partnerships.