General Partnership - Separate Legal Personality

Separate Legal Personality

There has been considerable debate in most states as to whether a partnership should remain aggregate or be allowed to become a business entity with a separate continuing legal personality.

In the United States, section 201 of the Revised Uniform Partnership Act (RUPA) of 1994 provides that "A partnership is an entity distinct from its partners."

In England and Wales, a partnership does not have separate legal personality. Although the English & Welsh Law Commission in Report 283 proposed to amend the law to create separate personality for all general partnerships, the British government decided not to implement the proposals relating to general partnerships. The Limited Liability Partnerships Act 2000 confers separate personality on limited liability partnerships—separating them almost entirely from general partnerships and limited partnerships, despite the naming similarities. In Scotland partnerships do have some degree of legal personality.

While France, Luxembourg, Norway, the Czech Republic and Sweden also grant some degree of legal personality to business partnerships, other countries such as Belgium, Germany, Italy, Switzerland and Poland do not allow partnerships to acquire a separate legal personality, but permit partnerships the rights to sue and be sued, to hold property, and to postpone a creditor's lawsuit against the partners until he or she has exhausted all remedies against the partnership assets.

In December 2002 the Netherlands proposed to replace their general partnership, which does not have legal personality, with a public partnership which allows the partners to opt for legal personality.

Japanese law provides for Civil Code partnerships (組合, kumiai?), which have no legal personality, and Commercial Code partnership corporations (持分会社, mochibun kaisha?) which have full corporate personhood but otherwise function similarly to partnerships.

The two main consequences of allowing separate personality are that one partnership will be able to become a partner in another partnership in the same way that a registered company can, and a partnership will not be bound by the doctrine of ultra vires but will have unlimited legal capacity like any other natural person.