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A limited partnership is a corporate form which extends limited liability to some but not all of the partners involved in the enterprise. In a conventional partnership, the partners are exposed to unlimited liability, meaning there is no clear separation between their own assets and those of the company, and all partners are wholly liable for any debts incurred by the company. In the worst case scenario, in which the company goes bankrupt, the partners may lose their own personal assets, such as their homes, to pay off the debts of the company.
In a limited partnership, there are two kinds of partners : general partners and limited partners. General partners are substantially equivalent to the partners in a conventional partnership. Their liability is unlimited. Limited partners enjoy limited liability, however. They may also face legal restrictions, limiting what they are allowed to do in the management of the firm. In some countries, they may also be required to disclose the nature of their limited partnership role in various ways when communicating with other people on behalf of the firm.
The limited partnership is a relatively unusual corporate form and not all countries permit the existence of companies of this nature.
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