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.

LP duty diagram

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

  1. 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?

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Business Ethics: 100 Questions Copyright © by Jeff Lingwall is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License, except where otherwise noted.