NASAA Series 66 Uniform Combined State Law ExaminationClient Investment Recommendations and StrategiesHard
A client is considering investing in a limited partnership (LP). They are interested in participating in the management and operations of the business, as well as being subject to unlimited liability for the partnership's debts. Which type of partner would this client be?
- AAssignee
- BGeneral Partner
- CLimited Partner
- DSilent Partner
Show answer & explanationAnswer & explanation
Correct answer: B. General Partner
A General Partner in a limited partnership actively manages the business and assumes unlimited personal liability for the partnership's debts and obligations. This aligns with the client's interest in participating in management and accepting unlimited liability.
Why the other options are wrong
- A. An Assignee is someone who receives a partner's economic rights but not the full rights of a partner (e.g., voting or management), nor typically the active management role described.
- C. A Limited Partner has limited liability (up to their investment) and does not participate in management.
- D. A Silent Partner typically contributes capital but does not participate in management, and their liability may be limited depending on the partnership structure.
General Partner (LP)
In a limited partnership, the individual or entity responsible for managing the business and bearing unlimited personal liability for its debts.
- Actively involved in day-to-day operations and management decisions.
- Assumes full personal liability for partnership obligations.
- Typically compensated through management fees and a share of profits.
Memory trick: General Partner: Gets General Control and General Liability.