The increasingly popular alternative to a company structure, a few things to consider...
Everything feels simpler in a limited partnership and we can see why it’s popular with silent investors. They don’t have to worry about managing the business, or their name being on a public register and financially, there’s benefits of flow-through. On the other hand, great responsibility falls on the people managing these investor funds and that’s where good legal advice is valued.
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Discuss with Janey on what will be relevant for you so that she can prepare a limited partnership agreement specific for your business.
Purpose
- Private governance document for both the general partner and limited partners.
- Fit for business type.
Financials
- When the partnership needs capital, does it first seek it from its limited partners or a bank?
- What reporting is available?
- Valuation methods.
Pre-Emptive Rights
- What happens when limited partners come and go?
- How are units protected from dilution?
Major Decisions
- Does a limited partner have any say on how the partnership business operates?
Benefits
- Distribution policy.
- Flow through tax.
- Limited partner indemnities.
- Privacy from public records.