Limited partnerships allow equity capital to be raised without having to involve a new general partner.
Limited partnerships (Art. 594-619 of the Swiss Code of Obligations) play only a minor role in the Swiss economy. This legal structure allows equity capital to be raised without having to involve a new general partner.
To set up a limited partnership, two or more natural persons are required. A limited partnership is created by virtue of a partnership agreement entered into between the parties. It is compulsory to register the partnership on the trade register.
At least one of the partners - the full or active partner - is liable for the obligations entered into, to the extent of their private assets. The other partners - the sponsors or backers - are only liable for a certain amount (the amount of their sponsorship) and are not subject to proceedings in the event of bankruptcy.
However, they cannot be responsible for managing the company. Moreover, they have only limited rights of control and are entitled to different shares in the profits and losses than the full partners.
Limited partnerships are often chosen if a sole proprietorship, or a general partnership, now requires more equity capital but the management prefers not to involve any additional general partners.
For more details about limited partnerships and how they operate, please see: