A partnership suits owners who manage the business together and want a simpler structure than a company, with fewer formal requirements and no share capital to administer. It is common for small trading, service and professional businesses run by a few people who know and trust one another. There are three forms, and they differ mainly in liability:
- Ordinary partnership: if unregistered, it is not a separate legal entity and the partners are liable without limit. A registered ordinary partnership becomes a juristic person, but its partners remain liable without limit for its debts.
- Limited partnership: at least one managing partner with unlimited liability, and at least one limited partner liable only up to the capital committed. It must be registered; until then it is treated as an ordinary partnership and every partner is exposed.
- Limited partner’s role: a limited partner may give opinions and advice and may vote on appointing or removing managers, but taking part in management brings unlimited liability. A limited partner must contribute money or property, not labor.
- Foreign Business Act: a partnership is treated as foreign if a foreigner is the managing partner or foreigners hold half or more of the capital. In that case the restrictions on foreign business apply to it in the same way as to a foreign company.