In Scotland the partnership (legally known as a firm) is a legal
personality distinct from the persons composing it.
According to the Partnership Act 1890:
"In Scotland, a firm is a legal person distinct from
the partners of whom it is composed, but an individual partner may
be charged on a decree or diligence directed against the firm and
on payment of the debts is entitled to relief pro rata from the
firm and its other members."
A Scottish limited partnership must consist of:
one or more persons known as general
partners, who are responsible for the management decisions and for
all debts and obligations of the Partnership;
one or more persons known as limited
partners, who do not participate in the decision making of the
Partnership and who cannot be held liable for the debts and
obligations of the Partnership beyond the value of their capital
It is recommended (although not legally required) that a private
written partnership agreement is concluded between the general and
The Partnership should keep records of its financial
transactions, although such accounts are not required to be
publicly submitted to the Companies House.
Please note that a Scottish Limited Partnership has :
no shareholders (but partners)
no named company secretary.
In the Partnership Act it is stated that "as with an
ordinary partnership a limited partnership is "tax
transparent" This is one of the main attractions for its use
in the venture capital industry, and in property
investment." Indeed, Limited Partnerships are transparent
for tax purposes on income and gains, meaning that taxes are
payable at the member level only.
What are the advantages of a Scottish Limited Partnership (in
comparison to other UK partnerships)?
The Scottish Limited Partnership, in contrast to the rest of the
UK, has a legal personality, distinct from than of its partners.
This means that a Scottish Limited Partnership can own assets in
its own name and conclude contracts on its own behalf. Moreover, it
can be a party in court proceedings (either as an Applicant or a
Respondent) as a separated legal entity.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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