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Understanding Limited Partnerships in the Philippines

A limited partnership is formed by two or more persons, with one or more acting as general partners who are fully liable, and one or more acting as limited partners who are not liable beyond their contributions. To form one, parties must file a certificate with the SEC stating details like the business, locations, partners' names and roles, contributions, profit shares, and partnership duration. Limited partners have rights like inspecting books and receiving information. They are prohibited from receiving partnership property if assets are insufficient. A limited partner could become liable as a general partner by participating in control of the business.

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John Elbert Falsis
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42 views2 pages

Understanding Limited Partnerships in the Philippines

A limited partnership is formed by two or more persons, with one or more acting as general partners who are fully liable, and one or more acting as limited partners who are not liable beyond their contributions. To form one, parties must file a certificate with the SEC stating details like the business, locations, partners' names and roles, contributions, profit shares, and partnership duration. Limited partners have rights like inspecting books and receiving information. They are prohibited from receiving partnership property if assets are insufficient. A limited partner could become liable as a general partner by participating in control of the business.

Uploaded by

John Elbert Falsis
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

01

What is a limited partnership?

Art. 1843. A limited partnership is one formed by two or more persons under the provisions of the
following article, having as members one or more general partners and one or more limited partners.
The limited partners as such shall not be bound by the obligations of the partnership.

02
How is it formed? (Art. 1844, Civil Code of the Philippines)

Two or more persons desiring to form a limited partnership shall:

(1) Sign and swear to a certificate, which shall state –

(a) The name of the partnership, adding thereto the word “Limited”;

(b) The character of the business;

(c) The location of the principal place of business;

(d) The name and place of residence of each member, general and limited partners being respectively
designated;

(e) The term for which the partnership is to exist;

(f) The amount of cash and a description of and the agreed value of the other property contributed by
each limited partner;

(g) The additional contributions, if any, to be made by each limited partner and the times at which or
events on the happening of which they shall be made;

(h) The time, if agreed upon, when the contribution of each limited partner is to be returned;

(i) The share of the profits or the other compensation by way of income which each limited partner shall
receive by reason of his contribution;

(j) The right, if given, of a limited partner to substitute an assignee as contributor in his place, and the
terms and conditions of the substitution;

(k) The right, if given, of the partners to admit additional limited partners;

(l) The right, if given, of one or more of the limited partners to priority over other limited partners, as to
contributions or as to compensation by way of income, and the nature of such priority;

(m) The right, if given, of the remaining general partner or partners to continue the business on the
death, retirement, civil interdiction, insanity or insolvency of a general partner; and
(n) The right, if given, of a limited partner to demand and receive property other than cash in return for
his contribution.
(2) File for record the certificate in the Office of the Securities and Exchange Commission.

03
Rights of a Limited Partner: (Article 1851, Civil Code)

(1) Have the partnership books kept at the principal place of business of the partnership, and at a
reasonable hour to inspect and copy any of them;

(2) Have on demand true and full information of all things affecting the partnership, and a formal
account of partnership affairs whenever circumstances render it just and reasonable; and

(3) Have dissolution and winding up by decree of court.

04
Prohibited Acts: (Art. 1854, Civil Code)

(1) Receive or hold as collateral security and partnership property, or

(2) Receive from a general partner or the partnership any payment, conveyance, or release from liability
if at the time the assets of the partnership are not sufficient to discharge partnership liabilities to
persons not claiming as general or limited partners.

05
Other Information:
1. A limited partner may become liable as a general partner if he takes part in the control of the
business. (Art. 1848)
2. The surname of a limited partner shall not appear in the partnership name. (Art. 1846)
3. A person may be a general partner and a limited partner in the same partnership at the same time.
(Art. 1853)
4. A limited partner’s interest is assignable. (Art. 1859)

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