Reforming Limited Partnership
A limited partnership acts as a partnership but with the inclusion of some legal aspects to the relationship between partners. In a limited liability company, one partner acts as the general partner while the others act as limited partners. The general partner is held liable for all the business debts while the other partners cannot be held liable to the debts of the partnership. The limited partners do not act in managerial positions like the general partner and have limited decision making capacities. In recent years, many business people opt not to form limited liability partnerships and instead form companies in order to avoid being the risk takers for the business (M’Culloch 2). Various actions can be taken to make limited liability partnerships more appealing nonetheless. Through legal measures, it is possible to transform limited partnerships into more profitable partnerships.
The first step in the reformation process would be legal transformation of the limited partnership into a limited liability company. A limited liability company provides the partners with sufficient protection for personal property. One form of protection involves the general protection accorded to general partners against crimes committed by other members of the partnership. In addition to this, the partners are all held liable to their obligations to the partnership. Although the general partners still take control of the partnership’s management, they are exempted from liability arising from the actions of other members.
Alternatively, the limited partnership can be converted into limited liability limited partnership. This gives the general member greater protection for their personal properties than in both of the two previous types of partnerships. In this case, the partnership protects the partner’s properties from the risk associated with the business fully (Miller and Hollowell 392).
M’Culloch, John. Considerations on partnerships with limited liability. London: Longman, brown, green and Longmans, 1856. Print.
Miller, Roger and Hollowell, William. Cengage advantage books: business Law: Text & Exercises. Mason, Ohio: South-Western Cengage Learning, 2011. Print.
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