The Control Test of Investor Laibility in Limited Partnerships

  • Robert D. Flannigan


Limited liability for investors is a major attraction of the limited partnership. The retention of this limited liability depends on the extent of the rights and powers exercised by the limited partners. Limited liability is lost if the limited partners exercise control over the enterprise in which they have invested. Unfortunately, the determination of what activities amount to "control" has proved to be a very difficult matter. Guidelines have not been established and much uncertainty exists.