LP Basics: 

A Limited Partnership (LP) is a type of partnership. 

A Partnership is an arrangement between individuals or entities, pursuant to a formal or informal agreement (typically the Limited Partnership Agreement). It is a legal form that serves as an alternative to corporate, cellular or unincorporated structures.  

Limited Partnerships is a type of partnership that is typically used for investment or structuring purposes, as a wealth container, separate to and to be distinguished from General Partnerships and Limited Liability Partnerships (LLPs).

Partnership Variants: 

Limited Partnerships are established as a legal form, across the major international financial centres, including: 

  • United Kingdom: Private Fund Limited Partnership
  • Cayman Islands: Exempted Limited Partnership
  • Luxembourg: Special Limited Partnership

GPs & LPs: 

In the standard LP structure, there tends to be two core classes of partners: 

  • General Partner (GPs): The General Partner(s) serve in the operational and governance-related roles of the Partnership. The GPs are liable for the debts of the Partnership. In the case of fund structured as Limited Partnerships, whilst the GP operates the Fund, it may delegate the investment management function to an Investment Manager. 
  • Limited Partner (LPs): Investors in a Limited Partnership would be Limited Partners, playing a purely passive role without involvement in the day-to-day operations of the partnership. 

Different jurisdictions may have bespoke legislation augmenting the way partnerships are formed or operated, and therefore partnerships may have additional formalities than as specified here. 

Stakeholders in a Partnership: 

In addition to the two core classes of partnerships in a Limited Partnership, LPs may most likely have additional stakeholders, including: 

  • Investment Manager: Carrying out the portfolio management or investment advisory function, on a delegated basis from the General Partner. 
  • Carried Interest Vehicle/Partner: In certain jurisdictions, for tax optimisation reasons, a tax passthrough entity (such as a Scottish Limited Partnership or a Delaware Limited Liability Company) is used to receive Carried Interest. 
  • Special Purpose Vehicles (SPVs): Holding the Partnership's assets. 


Whilst a Limited Partnership is principally used to serve as the fund entity for closed-ended funds, in certain cases, it may be used to hold one or more assets on a purely-passive basis (akin to a SPV). 

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