Reading types of partherships

Several types of partnerships are common in the modern economy. They are unlimited partnerships (or general partnerships in America), limited partnership and master limited partnership. They have common features as well as differences.

Unlimited Partnership.

The main feature of unlimited partnerships is equal and collective responsibility for the property for all members of the partnership. In other words, creditors can be paid either at the expense of the partnership’s property or private property of the members. Besides, the agreement can not provide for the exception of property liability of any of the members before a third party. The property of the unlimited partnership is a joint property of its members.

The profit obtained is distributed proportionately to the share of participation in the property of the partnership. Concession of the share of participation can be made only with the consent of the members. The number of the members of the partnership is not limited.

The unlimited partnership can be disbanded either in case of insolvency or resignation of one of its members or by resolution of all participants. Unlimited partnerships are not subject to public report.

Limited Partnership.

The limited partnership is a contractual union of entrepreneurs participating only by way of contributions without taking direct part in the management (investors); and those who, apart from contributing, carry out direct management of the partnership and are fully liable by the partnership’s obligations with their own property (full members).

It takes at least one full member and one investor to form a limited partnership. The limited partnership is to be registered just like any unlimited partnership.

The name of the partnership includes the names of one or two full members; the including of the name of the investor into the firm’s name makes the investor equally and jointly liable by the partnership’s obligations.

Master Limited Partnership.

Master limited partnerships carry out business on the basis of a Charter and are to be registered. One or more full members and shareholders as investors make a partnership. Shares can either be sold to or distributed among the investors or quoted on the stock exchange. Full members run the partnership and are liable by the partnership’s obligations. The shareholders run the risk of devaluation of their shares. A legal person can act as a full member. Thus a master limited partnership bears characteristics both of a limited partnership and a public limited company.

The advantage of a master limited partnership is in getting additional income through an issue of securities and their subsequent sale on the securities’ market. Dividends are tax exempt, so the investors are mainly attracted by a tax regime of master limited partnerships which pay only income tax.

Comprehensive check

I. After you have read the text, can you say that you have a clear idea of partnership types? Discuss the points you didn’t understand.

II. Answer the following questions.

1. What is the main feature of an unlimited partnership?

2. In what way is the profit distributed in the unlimited partnership?

3. In what case can the unlimited partnership be disbanded?

4. What is a limited partnership?

5. How many people does it take to form a limited partnership?

6. What are the peculiarities of the name of the limited partnership firm?

7. What is the advantage of a master limited partnership?

8. Which feature is attractive for investors in master limited partnerships?

III. State to what type of partnership the following features can be referred.

additional income through an issue of securities

equal and collective responsibility for the property

proportionate distribution of profit

the presence of two types of entrepreneurs – investor and full members

the necessity to be registered

full members can run partnership

dividends are tax exempt

IV. Translate into English.

1. Деятельность товариществ в Великобритании регулируется законом.

2. Когда товарищество зарегистрированo Регистратором, выдается свидетельство о регистрации.

3. Владельцы полного товарищества несут ответственность по долгам и участвуют в распределении прибыли.

4. Владельцы ограниченных товариществ делают ограниченные инвестиции и несут ограниченную ответственность.

5. Инвесторы товариществ с ограниченной ответственностью мало интересуются вопросами управления.

6. Акционеры подвергаются риску обесценивания акций и потери своих вкладов.

7. Наиболее привлекательная черта акционерно-коммандитных товариществ – это возможность получения дополнительных доходов за счет выпуска ценных бумаг.

8. Инвесторы акционерно-коммандитных товариществ платят только подоходный налог, а их дивиденды не облагаются налогом.

9. Все типы товариществ подлежат регистрации.