A limited partnership (LP) is a type of partnership that divides its partners into two classes. These two types of partners are general partners, who are in charge of the LP and liable for its actions; and limited partners, who are typically not involved in running the LP in exchange for not being held personally liable for the LP’s actions. If you want your company to be formed as an LP, then you will need to register your company as an LP with the Montana Secretary of State.
In order to establish an LP in the state of Montana, he first requirement you must satisfy is selecting a name for your LP that includes one of the following terms: “Limited Partnership,” “L.P.”, or “LP”. A registered agent who is capable or being served on behalf of the LP must also be selected and appointed. The business must also have at least one general partner in the LP who will manage the company. This is because all limited partners are prohibited under Montana law from having any significant involvement in the LP other than providing or contributing money.
You can file the required paperwork with the Montana Secretary of State either online or by mailing in the completed paperwork. To register a domestic LP, which is an LP established in Montana, you will need to fill out a Domestic Certificate of Limited Partnership.
This form requires that you provide the LP’s name, as well as the names and addresses of the registered agent and general partners. Also, all of the general partners must sign the form before it is sent in for approval.
A foreign LP is required to file an Application for Registration of Foreign Limited Partnership if it wishes to do business in the state of Montana. Otherwise, it will not be allowed to have its own registered agent or file a lawsuit in the state’s court system. An LP is considered to be foreign if it was initially formed in another state or country.
In order to fill out the required paperwork, the foreign LP has to state its name, a new name if the original name does not meet Montana’s name requirements, its mailing address, and other information such as where and when it was formed. You will be asked to provide the names and addresses of the registered agent, as well as the general partners.
One main benefits of limited partnerships in Montana is that they are not as subject to immediate dissolution like in normal business partnerships. Under limited partnership laws, the limited partners are allowed to withdraw from their role or resign as partner without resulting in a dissolution of the overall partnership.
This type of structure is made possible because the limited partners generally do not assume any lead roles in the company’s management. This can be a valuable feature that allows the business to make structural changes, without resulting in a full dissolving or termination of the entire business operation.
In other cases, the limited partners can sometimes be allowed to change their role if they start to take on more active functions in the management of the company. At this point, they will likely not be considered a limited partner anymore, but may function in a way that is more similar to a general partner. Again, this type of flexibility can be advantageous for the business in the long run.
There may also be some procedural aspects of Montana limited partnerships that are beneficial. For instance, unlike other states, Montana does not require LPs to file annual reports or pay annual fees. Also, Montana is one of the cheapest states in which to form a business. It only costs $20 to file the paperwork required to register an LP.
The state of Montana only allows for an LP’s certification, whether it is a Domestic Certificate of Limited Partnership or a Registration of Foreign Limited Partnership, to be valid for five years. An LP must file an Application for Renewal of Registration of Domestic or Foreign Limited Partnership within 90 days before its certification expires or ends.
Failing to file for a renewal before the expiration of an LP’s certification can have highly negative consequences; it will result in the LP’s certification being cancelled by the Montana Secretary of State, effectively dissolving the LP.
Lastly, while a limited partnership will typically not dissolve if a limited partner withdraws, retires, or passes away, these situations can still result in some legal conflicts or partnership disputes. These can sometimes depend specifically on what is stated in the partnership agreement regarding the termination of the limited partner role. So, it may be necessary to review the overall partnership agreement with an attorney; this will allow all parties to understand the consequences of a terminated role.
Forming an LP can be difficult, and you can only do so by satisfying several different requirements. Consulting with a local business lawyer in Montana can help you avoid any mistakes or confusion during the process. Your attorney can also represent you in court if there are legal conflicts or disputes to resolve.