Limited partners get liability limited to their investment in exchange for not participating in management. Under the Texas Business Organizations Code and similar laws, LPs generally may vote on matters the agreement reserves to them, serve on an advisory committee, consult with and advise the GP, and receive information, without being treated as managers. Exact safe harbors vary by state; ask your attorney.
Generally fine
- Voting on matters the LPA gives to LPs
- Serving on an LP advisory committee
- Asking questions; reviewing reports and books per the LPA
- Offering an opinion when the GP asks
Generally avoid
- Signing contracts or negotiating for the fund or its properties
- Directing property managers, tenants or contractors
- Holding yourself out as a manager or GP
- Handling fund money
Related
Your journey
More on this stage: Deep Dive: Votes, Consents and Amendments · Deep Dive: Estate Planning for LP Interests