top of page
Search

Commanditarians

Writer: Priyesh ModiPriyesh Modi

Many South African private equity funds are structured as en commandite partnerships, which are governed by common law and established through a partnership agreement, which should be reduced to writing.


One significant advantage of this partnership structure is that limited partners, known as commanditarians, are only liable for the partnership's debts up to the extent of their investment commitment (as long as they meet the requirements under common law for an en commandite partnership).


On the other hand, the managing partner, also referred to as the general partner or disclosed partner, assumes unlimited liability for the partnership's debts.


Having said that, it is important to carefully review the general partner's powers, particularly any powers of attorney granted to them, and to establish clear limitations on the general partner's ability to expose the limited partners to liability beyond their investment commitment.


All contracts for the en commandite partnership should be concluded by the general partner alone.


Also, financiers will invariably, when it is disclosed to them in confidence (as it should be), ask for suretyships from en commandite partners and each of those suretyships should be limited as to amount and period of liability and their obligations as en commandite partners should be limited accordingly.


 
 

Recent Posts

See All

Pledge

In South Africa, security over financial instruments is typically established through a pledge, cession in security, or a combination of...

Delegation of Authority

Directors often delegate certain functions and tasks to company employees or rely on the advice of experts. However, under South African...

Suretyships and Guarantees

In South Africa, banking and finance transactions often involve suretyships and guarantees. A guarantor's obligation depends on what the...

Advaya Consulting B-BBEE Level 1 Contrib

© 2024 Advaya Consulting

Services

Corporate & Commercial Law
Popia Compliance
Mergers & Acquisitions
Corporate Governance
Joint Ventures
Compliance & Regulatory
Private Equity
Public-Private Partnerships
Broad-Based Black Empowerment
Employment Law

Bradenham Hall - North Block

7 Mellis Road

Rivonia

Johannesburg

Tel: +27 (11) 807-9380

Advaya Consulting LinkedIn profile
bottom of page