Definition of limited partner
: a partner in a venture who has no management authority and whose liability is restricted to the amount of his or her investment — compare general partner
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Recent Examples of limited partner from the Web
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Caldwell is also a limited partner in the Houston Texans.
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The investment firm has set a $250 million minimum check size required for limited partners to participate in its global growth fund.
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In reality, the league wants its owners to hold a much larger stake, and also prefers a smaller number of limited partners than what its rules allow, according to industry experts.
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Term Sheet spoke with her about the early days of Floodgate, her bet on Lyft, and the expanding role of limited partners in tech.
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Rather mysteriously, the plaintiffs say a confidentiality agreement prevents Imagine from publicly disclosing the identities of Imagine's limited partners.
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One reason to believe the judgment of limited partners in Pittsburgh can't be trusted?
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The Levine family is a limited partner in the Panthers now, and could make a run at primary ownership, while Steelers minority owner Dave Tepper has show interest in the idea in the past.
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In contrast, Greycroft’s straight-shooter reputation has led its limited partner investors, including the Walt Disney Co. (dis, -1.02%) and Cambridge Associates, to reinvest year after year.
These example sentences are selected automatically from various online news sources to reflect current usage of the word 'limited partner.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
First Known Use of limited partner
1824
Financial Definition of LIMITED PARTNER
limited partner
What It Is
A limited partner is a member of a partnership who cannot incur debt or obligations on behalf of the partnership and is not personally liable for those debts or obligations. Limited partners contrast with general partners, who can incur debt or obligations on behalf of the partnership and are personally liable for those debts or obligations.
How It Works
In some partnerships, all the partners are general partners. That is, they are all liable for the debts and obligations of the business. In other partnerships, some of the partners are general partners and others are limited partners. In those cases (called limited partnerships, or LPs), one or a handful of general partners manage the day-to-day operations of the business and are personally liable for the business's debts. They act as the core management team for the business and are obligated to keep the limited partners informed about the condition and performance of the business.
Unlike general partners, limited partners have no daily management role, cannot encumber the business and are not personally liable for the business's debts. Instead, they receive a share of the firm's profits in exchange for their capital investments, and usually the worst that can happen is that the value of their investment falls to zero. (It is important to note that limited partners who take managerial roles could be considered general partners in the eyes of the law.) This limited liability is what often attracts investors to limited partnerships.
General partners, on the other hand, are personally liable for the actions of the business and the other general partners, even if those actions appear unreasonable, excessive or if they result in legal judgments against the business. General partners can lose far more than their initial investments.
Why It Matters
General partners bear the lion's share of the risk in a partnership. Limited partners are more like silent investors. General partners must make important decisions about the company, they must be able to trust each other's judgment, and they must be prepared to forfeit their personal assets in a worst-case scenario. These management and risk burdens are two reasons general partners usually receive management fees as well as a larger percentage of the partnership's profits above a certain level.
Partnerships are generally not taxable entities; rather, the income is passed in a pro rata fashion to the partners, who pay applicable federal, state and local income taxes.
Source: Investing Answers
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