COMMANDITE Meaning and
Definition
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Commandite (also known as commandite partnership or limited partnership) is a legal business structure in which two types of partners exist: general partners and limited partners. These partners come together to form a business entity with the goal of conducting a commercial activity.
A commandite works by combining the financial resources and expertise of both general and limited partners. General partners have unlimited liability and participate in the day-to-day operations and management of the business, as well as sharing the profits and losses. They are accountable for the business’s debts and obligations.
On the other hand, limited partners contribute capital to the business but have limited liability, meaning they are not personally responsible for any debts beyond their financial contribution. However, they do not play an active role in managing the business. Limited partners share in the profits and losses, but their involvement usually ends with their financial contribution.
Commandite partnerships are often formed to attract investors who want to financially back a specific venture but wish to avoid direct involvement in its operations. This structure allows entrepreneurs to gain access to additional funding while retaining the expertise and guidance of experienced general partners. Commandite partnerships are commonly used in industries such as real estate, venture capital, and private equity, where significant capital investments are required for growth and development.
Common Misspellings for COMMANDITE
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