Chapter 4

• ARTICLE 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. ARTICLE 1844.
• ARTICLE 1844. 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. A limited partnership is formed if there has been substantial compliance in good faith with the foregoing requirements
• Art. 1845. The contributions of a limited partner may be cash or property, but not services. Limited partners can only contribute money and property and cannot contribute services to the partnership to protect persons dealing with the firms with frauds.
• Art. 1846. The surname of a limited partner shall not appear in the partnership name unless: 1. It is also the surname of a general partner. 2. Prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared
• Art. 1846. A limited partner whose surname appears in a partnership name contrary to the provisions of the first paragraph is liable as a general partner to partnership creditors who extend credit to the partnership without actual knowledge that he is not a general partner.
• Limited partner’s surname is not included in the firm name provided these circumstances 1. If the surname of general partner is the same with limited partner’s 2. If the limited partner’s surname was included and was carried on the new partnership *If the limited partner’s surname was included in the firm name, he is liable as a general partner.
• Art. 1847. If the certificate contains a false statement, one who suffers loss by reliance on such statement may hold liable any party to the certificate who knew the statement to be false: 1. At the time he signed the certificate. 2. Subsequently, but within a sufficient time before the statement was relied upon to enable him to cancel or amend the certificate, or to file a petition for its cancellation or amendment as provided in article 1865.
• Liability for false statement in certificate requisites 1. He knew the statement to be false at the time he signed the certificate, or subsequently, but having sufficient time to cancel or amend it or file a petition for its cancellation or amendment, he failed to do so. 2. The person seeking to enforce liability has relied upon the false statement in transacting business with the partnership. 3. The person suffered loss as a result of reliance upon such false statement.
• ART. 1848. A limited partner shall become liable as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business.
• A limited partner is excluded from any active voice in the control of the affairs of the firm
• Limited partners may not perform any act of administration with respect to the interests of the partnership, not even in the capacity of agents of the managing partners
• ART. 1849. After the formation of a limited partnership, additional limited partners may be admitted upon filling an amendment to the original certificate in accordance with the requirements of Article 1865.
• The writing to amend a certificate 1. Shall conform to the requirements of Article 1844 as far as necessary to set forth clearly the change in the certificate which it is desired to make. 2. Be signed and sworn to by all members, and an amendment substituting a limited partner.
• ART. 1850. A general partner shall all have the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners. However, without the written consent or ratification of the specific act by all the limited partners,
• ART. 1850. a general partner or all of the general partners have no authority to: 1. Do any act in contravention of the certificate. 2. Do any act which would make it impossible to carry on the ordinary business of the partnership. 3. Confess a judgement against the partnership. 4. Possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose.
• ART. 1850. 5. Admit a person as a general partner. 6. Admit a person as a limited partner, unless the right so to do is given in the certificate. 7. Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right so to do is given in the certificate.
• Powers of general partner in limited partnership The general partner shall have all the right and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners
• ART. 1850. A general partner shall all have the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners.
• ART. 1850. However, without the written consent or ratification of the specific act by all the limited partners, a general partner or all of the general partners have no authority to: 1. Do any act in contravention of the certificate. 2. Do any act which would make it impossible to carry on the ordinary business of the partnership.
• ART. 1850.

  3. Confess a judgement against the partnership.

  4. Possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose.

  5. Admit a person as a general partner.

  6. Admit a person as a limited partner, unless the right so todo is given in the certificate.

  7. Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right so to do is given in the certificate
• The general partner shall have all the right and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners.
• ART. 1851. A limited partner shall have the same rights as a general partner to:

  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.
  3. Have dissolution and winding up by decree of court.
• ART. 1851. A limited partner shall have the right to receive a share of the profit or other compensation by way of income and to the return of his contribution as provided in Articles 1856 and 1857.
• Rights of limited partner


  It has lesser rights than a general partner. It may exercise rights similar to a general partner.
• ART. 1852. Without prejudice to the provisions of Article 1848, a person who has contributed to the capital of a business conducted by a person or partnership erroneously believing that he has become a limited partner in a limited partnership, is not, by reason of his exercise of the rights of a limited partner, a general partner with the person or in the partnership carrying on the business, or bound by the obligations of such person or partnership;
• ART. 1852. provided that on ascertaining the mistake he promptly renounces his interest in the profits of the business, or other compensation by way of income.
• Conditions for exemption from liability

  1. Prompt renunciation of interest and/ or income upon ascertaining the mistake.
  2. Non-inclusion of limited partner’s name in the firm name.
  3. Non-participation in the management of the business.
• ART. 1853. A person may be a general partner and a limited partner in the same partnership at the same time, provided that this fact shall be stated in the certificate provided for in Article 1844.
• A person who is a general, and also at the same time a limited partner, shall have all the rights and powers and be subject to all restrictions of a general partner; except that, in respect to his contribution, shall have the rights against the other members which he would have had if he were not also a general partner.
• ART. 1854. A limited partner also may loan money to and transact other business with the partnership and unless he is also a general partner, receive on account of resulting claims against the partnership, with general creditors, a pro rata share of the assets.
• ART. 1854. No limited partner shall in respect to any such claim: 1. Receive or hold as collateral security any partnership property. 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.
• ART. 1854. The receiving of collateral security, or a payment, conveyance, or release in violation of the foregoing provisions is a fraud on the creditors of the partnership.
• Loans and business transactions with limited partners

  A limited partner is allowed to loan money to the firm; transact other business with the partnership, and receive a pro rata share in the assets with general creditors.
• Limited partner not allowed to hold collateral security

  A limited partner may not receive partnership property as collateral security.
• ART. 1855. Where there are several limited partners the members may agree that one or more of the limited partners shall have a priority over other limited partners as to the return of their contributions, as to their compensation by way of income, or as to any other matter. If such an agreement is made it shall be states in the certificate, and in the absence of such a statement all the limited partners shall stand upon equal footing.