Limited partner (LP)
What is a limited partner?
Often called a ‘silent partner’, a limited partner is someone who invests in a business partnership to get a share of the profits but takes no active role in managing the firm and has no personal responsibility for its debts.
Where have you heard about limited partners?
Limited partnerships are pretty rare in the UK these days. In the US, they’re most common among film production companies and real estate investment projects. Private equity firm Blackstone, which has invested in the likes of Hilton and Merlin Entertainments, is a well-known example of a limited partnership.
What you need to know about limited partners.
A limited partnership must have at least one limited partner and one general partner, who is responsible for managing the business on a day-to-day basis.
When a limited partnership is first set up, a limited partner will contribute capital to the business. However, unlike a general partner, the limited partner doesn't have any control over business decisions. In return for forfeiting management power, a limited partner is only liable for the amount they invest, so their personal assets can’t be accessed by creditors if debt problems arise.
Find out more about limited partners.
Read our definition of general partner to learn more about the partners that make up a limited partnership.