The Pennsylvania Limited Partnership Act
A limited partnership is a business entity owned by two forms of partners. General partners run the business and are liable as individuals for the debts and liabilities of the partnership. Limited partners contribute capital to the business, but take no part in its management. Their liability for debts is limited to the amount of capital that they have invested. In Pennsylvania, the law relating to limited partnerships is set out in the Pennsylvania Uniform Limited Partnership Act, 15 Pa. Cons. Stat.
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Formation
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To form a limited partnership, prospective partners must file a certificate of limited partnership form with the Pennsylvania secretary of state. The form must set out the initial details of the partnership, including its name, registered office and details of each proposed partner. Section 8511 of the Limited Partnership Act provides that the limited partnership is effectively formed at the time of filing of the certificate of limited partnership, unless a later date is specified.
Name
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The name of a limited partnership must be distinguishable from that of any other business or corporation registered in Pennsylvania. The department of state has a database where prospective partners can search for existing names to avoid duplication. Section 8505 provides that the name of a limited partnership may contain the name of either a limited or a general partner. The name must be expressed in Roman letters or characters, or Roman or Arabic numerals.
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Limited Partners
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An individual may become a limited partner either on formation of the partnership, or at a later date by the consent of all partners. Section 8523 states that a limited partner is not liable for any debts, obligations or liabilities of the limited partnership, even if his own name is included in the partnership name. Limited partners have the right, according to Section 8525, to inspect all documents relating to the business and financial affairs of the partnership.
Profits and Losses
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Most limited partnerships have a formal partnership agreement that sets out the rights of each partners with regard to sharing profits and losses. If no such agreement exists, or if it is silent on this point, Section 8543 of the Limited Partnership Act provides that profits and losses should be allocated on the basis of the value of the contributions made by each partner. If each partner has contributed equally, the profits and losses must be shared equally.
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