Part 2: Fiduciary Duties to Shareholders, Partners, and Members
23 What duties are owed in a limited partnership?
General partners owe the other partners fiduciary duties. Limited partners do not owe the same duty.
General partners owe fiduciary duties to other general partners, the firm, and the limited partners; limited partners who do not exercise control do not owe fiduciary duties.
Thus, for example, a limited partner is free to invest in competing businesses, because they do not owe a duty of loyalty to the limited partnership!
Exercises
- To form a limited partnership, paperwork must be filed with a state government. This is the same for each business entity that enjoys limited liability. Why do you think this requirement exists?