History
The societates publicanorum which arose in Rome in the 3rd century BC may have arguably been the earliest form of limited partnership. During the heyday of the Roman Empire they were roughly equivalent to today's corporations: some had many investors, and interests were publicly tradable. However, they required at least one (and often several) partners with unlimited liability.
According to Jairus Banaji, the Qirad and Mudaraba institutions in Islamic law and economic jurisprudence were more similar to the modern limited partnership. These were developed in the medieval Islamic world, when Islamic economics flourished and when early trading companies, big businesses, contracts, bills of exchange and long-distance international trade were established.
In medieval Italy, a business organization known as the commenda appeared in the 10th century that was generally used for financing maritime trade. In a commenda, the traveling trader of the ship had unlimited liability, but his investment partners on land were shielded. A commenda was not a common form for a long-term business venture as most long-term businesses were still expected to be secured against the assets of their individual proprietors. As an institution, the commenda is very similar to the qirad but whether the qirad transformed into the commenda, or the two institutions evolved independently cannot be stated with certainty.
Colbert's Ordinance of 1673 and the Napoleonic Code of 1807 reinforced the limited partnership concept in European law. In the United States, limited partnerships became widely available in the early 19th century, although a number of legal restrictions at the time made them unpopular for business ventures. Britain enacted its first limited partnership statute in 1907.
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