The general partners (GPs) are, in all major respects, in the same legal position as partners in a conventional firm: they have management control, share the right to use partnership property, share the profits of the firm in predefined proportions, and have joint and several liability for the debts of the partnership.
This means that the limited partners have no management authority, and (unless they obligate themselves by a separate contract such as a guarantee) are not liable for the debts of the partnership.
The societates publicanorum, which arose in Rome in the third century BC, may have arguably been the earliest form of limited partnership.
In medieval Italy, a business organization known as the commenda appeared in the 10th century that was generally used for financing maritime trade.
[7] Moreover, Mongol elites formed trade partnerships with merchants from Italian cities, including Marco Polo's family.
[8] Colbert's Ordinance (1673) and the Napoleonic Code (1807) reinforced the limited partnership concept under European law.
In the United States, limited partnerships became widely available in the early 19th century, although a number of legal restrictions at the time made them unpopular for business ventures.
The investment of the partners with limited liability (Kommanditisten) is the stock of the company (Grundkapital) and divided into shares.
The KGaA is a traditional type of very large family businesses (that are partly publicly traded) in Germany; the consumer products giant Henkel, pharmaceutical company Merck and media conglomerate Bertelsmann are prominent examples.
Instead, they are simply partnerships of persons, some of whom enjoy limited liability as a result of compliance with statutory requirements.
[12] LPFs were introduced in 2020 and are intended to provide a domestic Hong Kong vehicle for private equity funds.
Special partnerships are considered obsolete as they do not provide the appropriate structure preferred by foreign venture capital investors.
There were concerns that automatically making partnerships separate legal entities would restrict their ability to trade in some European countries and also expose them to different tax regimes than expected.
[16] The order relaxed the rules applying to private fund partnerships in order to remove some uncertainty in the application of the law, reduce administrative costs, and help ensure "that the UK remains an attractive and competitive location for private investment funds in comparison to other jurisdictions".
They are also useful in "labor-capital" partnerships, where one or more financial backers prefer to contribute money or resources while the other partner performs the actual work.
The limited partnership is also attractive to firms wishing to provide shares to many individuals without the additional tax liability of a corporation.
However, Section 303 of the Revised Uniform Limited Partnership Act (if adopted by a state legislature) eliminates the so-called "control rule" with respect to personal liability for entity obligations and brings limited partners into parity with LLC members, LLP partners and corporate shareholders.