What Is a Master Limited Partnership?

Limited partnership refers to a business organization that allows more investors to assume limited liability on the basis that more than one partner has unlimited liability. The trust system can be traced back to ancient Roman society. As a trust-based way of entrusting others to manage property, although the trust system has the advantages of "independence of the trust property and a clear legal relationship", the venture capital funds of almost all countries in the world have not chosen a trust system. The reason why the limited partnership can achieve such rapid development in the US venture capital industry is mainly because the limited partnership itself is not an obligor for income tax.

Limited partnership

Limited partnerships apply to venture capital

It is known that investment activities, especially venture capital, require two things: one is to have funds; the other is to have investment management talents who can "

(I) The need for high-risk investment

1. The main legal organization forms of venture capital in the United States and Japan

Modern society is an era of knowledge economy, and the pillar industry of knowledge economy is high-tech industry. Abroad, with high technology

In the United States, a limited partnership is a more widely adopted form of business organization, and its concept first appeared in a law in New York State in 1822. Generally speaking, a limited partnership can engage in any business that a general partnership can engage in, unless it is expressly provided in statutory law. The United States Uniform State Law Commission passed the Uniform Limited Partnership Act in 1916 and has now been adopted by most states. In general legal requirements, it generally includes: the name, nature, address, partner name and

The domestic debate on the organization model of venture capital has a long history, and many scholars have called for a limited partnership system in China, believing that the limited partnership system is conducive to the development of the venture capital industry. However, limited partnerships

If the family business starts in the form of a limited partnership system, the author believes that it has the following practical significance through analysis: 1. The limited partnership system is conducive to solving the problem of financing difficulties for family businesses. The most important constraint at the beginning of a family business is the difficulty of financing Most family business financing is accomplished with the help of family members and their generalized members (relatives and friends). This kind of financing method has narrow channels and limited financing volume. It is because such a family company's entrepreneurial road is often extremely rugged. The limited partnership system can make up for this deficiency to the greatest extent. In theory, the business owner (general partner) can only contribute 1%, and 99% of the funds are absorbed from the society (limited partners). In this way, business owners can get enough funds for entrepreneurial development (of course, they also need the approval of the other party), and when the company distributes profits after profit, different investment beneficiaries only need to pay personal income tax according to the distribution share, without the double taxation in the corporate system The problem.

2. The limited partnership system guarantees the dominance of the family business owner to the greatest extent while financing. Although the limited partners contribute a large part of the capital, they do not directly participate in the business operation; to put it another way, they cannot interfere with the normal operations of ordinary partners. This ensures that the family business does not lose its dominance while receiving the necessary funds for business development.

3.The most important point is that the limited partnership can fundamentally improve the governance structure of the family business.

(1) The financing of the enterprise comes from the input of the limited partners. Although the limited partners do not directly interfere with the business activities of the enterprise, they have the right to have a comprehensive understanding of the overall business activities of the enterprise in order to protect their legitimate rights and interests from being infringed. This puts business owners under supervision and restraint. In turn, business owners are also obliged to report their operating status to the limited partners. This, to a certain extent, restricts business owners from making excessive independent decisions on business operations. Reduced the possibility of decision making errors caused by arbitrary actions. Through the role of responsibility and pressure, it prevents the family members from seeking personal gain through blood relationship or nepotism, which would damage the business efficiency of the enterprise. This comprehensively broke through the shortcomings of high centralization of family businesses, excessive management scope, unclear positions, and randomness.

(2) For the benefit of both parties, the limited partners and business owners will establish a reasonable employment system for the purpose of business operations, and introduce and select qualified personnel from inside and outside the company to enrich the company's position. This is exactly the weakness of family businesses in the past. Scientific and democratic operation and management, and various rules and regulations have really been established under external supervision and restraint. This makes it possible for family businesses to establish a true corporate governance structure. In summary, the limited partnership system not only promotes the advantages of family business owners, but also overcomes the disadvantages of the family business governance system that is not conducive to external financing. Therefore, limited partnership is a sublimation of the general family system. It can be said that limited partnership is a kind of institutional innovation that combines the advantages of both the company system and the family system.