Difference between general and limited partnership.

Entrepreneurial activity in the Russian Federation can be carried out by citizens forming partnerships. They are of two main types - full and limited. What is the specificity of each of them?

What is a general partnership?

Under a general partnership means an institution that was created in accordance with an agreement concluded between partners:

• in order to jointly carry out entrepreneurial activities on behalf of the relevant organization;
• provided that the obligations of the establishment are secured by the property of the partners.

A person can be a member of only one organization of the corresponding type. A general partnership is formed by the signing of a memorandum of association by the partners. This document fixes:

• the size and structure of the contributed capital;
• the size and procedure for adjusting the shares of each of the partners;
• the size, structure and procedure for investing contributions in the partnership;
• liability of participants for non-fulfillment of obligations on investment of deposits.

Business in the form of a full partnership is conducted collectively. Sometimes in the constituent documents the mechanism for making decisions by a majority vote is fixed. Each of the comrades, one way or another, has the right to participate in the discussion of relevant issues, as well as to conduct business on behalf of the established organization (unless otherwise provided by the contract). However, before concluding transactions, the partner will have to obtain consent to enter into legal relations from other members of the association or have a power of attorney confirming the necessary powers.

Each of the partners who established an organization of the type in question is obliged:

• to take part in the development of the business in accordance with the conditions specified in the memorandum of association;
• to invest at least half of the established share of the contribution to the capital of the organization by the time it is registered, the rest of the funds - to transfer to the partnership within the time frame specified by the agreement;
• to coordinate with colleagues the conclusion of transactions on their own behalf or in the interests of other persons who are similar to those that form the subject of commercial activities of the partnership.

If a member of the association violates any of the above rules, then his partners will have the right to claim damages from him. If they arise as a result of an uncoordinated transaction with the participation of other persons, then the partners may demand compensation for losses at the expense of the funds received by the partner in the framework of the relevant transaction. They are considered forms of business, through the establishment of which entrepreneurs can, based on trusting relationships with investors, attract additional investment without significant risks.

Comparison

The main difference between a general partnership and a limited partnership is that the first organization does not provide for the participation of investors or limited partners: all founders or new members of the partnership are fully responsible for the results in business. In turn, in a limited partnership there are investors who are responsible for the company's losses only up to the amount invested.

Otherwise, the legal nature of both types of organizations in question is the same. They have the same status in relationships with partners. The general partners who are part of a limited partnership have the same rights and obligations as if the corresponding association did not imply the participation of limited partners in business.

Having considered the difference between a general partnership and a limited partnership, we will fix the conclusions in the table.

Table