10.1.16: Control Issues

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Abstract

The typical PIV is managed by the GPGP, but some investors are not content with a passive role. With increasing frequency, investors want some voice in the partnership's affairs. In the past, a stiff arm has been applied by managers to investors seeking a stronger voice, a play on the lurking fear-a legitimate fear, to be sure-that the investors can be exposed to liability as general partners if they insist on powers that might encroach on the U.L.P.A. prohibitions against their taking part in the "control or management" of the partnership.[1] Thus, the conventional wisdom has been that limited partners enjoyed limited liability as a tradeoff, in consideration of their agreement to eschew a role in control and management. As the pioneering partnerships were being organized in the 1960s and early 1970s, counsel were sensitive to the danger of losing limited liability as the powers...