The Limited Partnership: Freedom of Contract and Usability

Michael Kenneth Rasmussen & Henrik Terp Larsen

Student thesis: Master thesis


There are a few possibilities regarding the choice of company form, in cases were shareholders do not wish to be taxed personally, we have a limited selection of company forms, and the same goes for company forms, which is fiscally transparent in regarding to tax law. In this thesis we aim to make an in debt analysis of one form, the limited partnership, were we aim to describe and analyze the contractual freedom regarding this limited partnership. We also aim to analyze the minimum requirements regarding the general partners rights, that follows from LEV ยง 2, stk. 2, 2, pkt. and in the end, make a comparison between the limited partnership, a Limited Liability Company and a partnership, to see were the limited partnership has its advantages and or disadvantages. A limited partnership is a separate legal entity, but not a tax entity, it is organized with a minimum of two members: one limited partner, hens its name, and one general partner. The limited partner is indirectly and limitedly liable for the company. On the other hand, the general partner is directly, personally and unlimitedly liable for the company. The limited partnership is subject to a few provisions of the Law on Companies and Operators, but is mostly based on contractual relations and case law, we have analyzed a lot of case law, were most of the unwritten rules are, due to the fact, that we in Denmark do not have a material law regarding non-taxed entities. Our findings are, due to the lack of material law regarding non-taxed entities, which is a specific ruleset regarding the minimum requirements, which are not to be found. An estimation is therefore needed in most cases, and that the minimum requirements are to make up for the risk taken by the general partner and his investment in the company, in one case 5% of profits were accepted, and in another 1/161 part of profits were not accepted. In another case, 25% of liquidation fee/sale of assets were accepted as the economic rights, the administrative rights were mostly but not limited to, the rights not to infuse more cash or worktime into the company, and that, decisions of a specific magnitude or weirdness was not to be made without the general partners consent. In regards to whether or not the limited partnership had any advantages, were up to preferences of the shareholder and whether or not the shareholders worked at the company or not, due to the law number 682 of June 8th 2017, which added this condition for the full benefits concerning the tax law.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2019
Number of pages122
SupervisorsTroels Michael Lilja