Overview of Limited Partnership (LP) Registration
A Limited Partnership (LP) is a vehicle for doing business in Nigeria. It is a partnership consisting of a minimum of two partners, with at least one general partner and one limited partner. A LP does not have a separate legal entity from the partners, i.e. it cannot sue or be sued or own property in its own name.
The liabilities of a general partner are unlimited while the liabilities of a limited partner are limited (unless he takes part in the management of the partnership). An LP shall not consist of more than 20 persons. The name of an LP shall end with the word “Limited Partnership” or the abbreviation “LP”.
Limited partners act as “silent partners” making a capital investment much like passive shareholders in a publicly traded corporation but having no involvement in the management decisions of the business.
We will extend our support to register your partnership firm in Nigeria along with Documentation, Preparation, filing, and subsequent Follow-up with the CAC.
Features of Limited Partnership (LP)
Here are some of the salient features of Limited Partnership:
1
Formed on the Basis of an Agreement
Partnership firm comes into existence based on an agreement between two or more partners agreeing to undertake the business. The terms and conditions that govern such a partnership are outlined in a document known as the Partnership Deed.
2
Existence of a Business Activity
The Partnership form of business activity can be formed only on the basis of the existence of a business activity. The business can be anything and include any trade, industry or profession.
3
Profit and Loss
Partners are entitled to share the profits as well as bear the losses if any in the course of business.
4
Existence of an Agency Relation
All partners or any one partner acting on behalf of others can undertake partnership business. This means each partner is a principal in himself who can act in his own right. Further, he can also act on behalf of other partners by acting as their agent.
5
Unlimited Liability of the Partners
Each Partner is personally liable for all losses arising in the course of business. That is to say, their personal assets can be used to pay off the outstanding debts of the partnership firm.
6
Combined Management
Each partner is entitled to participate in the day to day operations of the business. However, it is not mandatory for each partner to participate in day-to-day operations of the business. But, partners running the business need to take consent of other partners for making the requisite decisions.
7
Duration of the Partnership Firm
The partnership Firm may continue as long as the partners wish to do so. However, as per law, the partnership can come to an end if any of the partners dies, retires or becomes insolvent. But, the remaining partners can continue doing business under the same name after sorting out the due share of the outgoing partner.
8
Joint Ownership
Each partner is a joint owner of the property of the firm and hence, in the eyes of law the firm and the partners are considered to be one and the same. Partnership has no separate existence apart from the partners composing it.
9
Utmost Good Faith
It means the trust and confidence of partners in each other. Each partner has to work in the best interest of the firm. He must strive to attain and maintain the good faith of his partners. The partner should not make any profit secretly and must disclose all the information which is directly or indirectly related to the business.
10
No Separate Individuality
A partnership form of organisation does not have separate entity from its partners. All the contracts and agreements are applicable to both i.e., partners as well as the firm.
11
Capital
Finances or the capital of the firm is contributed by the partners in the agreed proportions. Skillful persons may be taken into partnership without any contribution of capital.
Benefits of Limited Partnership (LP) Registration
The key benefits of a LP Registration are listed below:
Requirements for registering a Limited Partnership (LP) in Nigeria
You'll have to provide the following details upon Submission;
- The name of the limited partnership - 2 names (A name availability check will be conducted at the CAC and when one of the 2 proposed names is available, the name will be reserved).
- The general nature of the business of the Limited Partnership;
- The principal place of business of the Limited Partnership;
- The full name and address of each general partner;
- The full name and address of each limited partner;
- The term if any and commencement date of the Limited Partnership;
- A statement that the Partnership is Limited and description of every limited partner as such;
- The agreed contribution of each limited partner and whether such contribution has been paid or to be paid in cash or in another specified form.
Where the above requirements have been complied with, the CAC shall within 14 days of the submission of the application register the LP and issue a digital certificate of incorporation stating the name, date, and registration number of the LP.
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Frequently Asked Questions (FAQs)
You can find some of our most frequently asked questions below;
A Limited Partnership is a partnership consisting of a general partner, who manages the business and has unlimited personal liability for the debts and obligations of the Limited Partnership, and a limited partner, who has limited liability but cannot participate in management.
LP agreement is the mutual deal between all partners which decides the rights and duties of partners. In some firms, a partner can also modify the agreement if he wishes.
A Limited Partnership (LP) is a type of partnership that consists of at least one general partner and at least one limited partner. A Limited Liability Partnership (LLP) does not have a general partner, since every partner in an LLP is given the ability to take part in the management of the company.
In a limited partnership, the general partner is responsible for managing the company's day-to-day activities. The limited partner in a limited partnership does not participate in making managerial decisions for the business. The limited partner is more like a silent partner that has invested in the company. In a limited liability partnership, all partners of the company are allowed to make management decisions for the company.
A Limited Partnership can be formed by any business type, while LLPs can only be used by certain types of professions, such as accountants and architects. Every partner of an LLP must have the appropriate occupational license, which is not a requirement in a limited partnership. This requirement prevents an LLP from adding talented partners with business expertise, simply because they are not licensed professionals.
The Certificate of Incorporation (COI) in Nigeria is issued by the Corporate Affairs Commission (CAC). The Certificate acts as conclusive evidence of the formation of the LP.
A Limited Partnership offers protection from liability for the debts and obligations of the Limited Partnership to the limited partners. In a General Partnership, all of the partners are jointly and severally liable for the debts of the partnership.
It usually takes 3-14 business days for the Limited Liability Partnership (LLP) Registration in Nigeria.
Name Search: 6 - 24 hours from submission.
Grant of Certificate of Registration: 2 - 10 Days from filing.
Total time: Approximately 3 - 14 days.
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