Limited Partnership (Ortakëri e Kufizuar) in Kosovo

Limited Partnership (Ortakëri e Kufizuar)In Kosovo, a Limited Partnership is a business structure formed by one or more general partners (with unlimited liability) and one or more limited partners (with liability limited to their capital contribution). This type of partnership offers both management flexibility and low-risk options for investors while conducting commercial activities.

1. Key Features

• Two Types of Partners:

  • General Partners: Fully liable for the partnership’s debts and obligations and responsible for managing the business.

  • Limited Partners: Liable only to the extent of their capital contribution and generally do not participate in management.

• Legal Status: The partnership does not have separate legal personality.

• Liability: General partners have unlimited liability, while limited partners have limited liability.

2. Advantages

• Capital Infusion: Limited partners can provide additional capital to the business.

• Management Flexibility: General partners manage the business, while limited partners remain passive investors.

• Investor Appeal: Offers a low-risk investment model for limited partners.

3. Disadvantages

• Unlimited Liability: General partners' personal assets are at risk for business debts.

• Management Restrictions: Limited partners cannot participate in management, which may create challenges in decision-making.

• Unequal Authority: General partners bear most of the management responsibility, leading to potential imbalance in workload.

4. Establishment Process

A. Required Documents

1. Partnership Agreement:

   • Must be prepared in writing and signed by all partners.

   • Should detail the roles, rights, obligations of general and limited partners, profit and loss sharing, and conditions for dissolution.

2. Identification Documents:

   • Valid identification documents for all partners.

3. Proof of Address:

   • The partnership address must be supported by documentation (e.g., lease agreement or deed).

B. Application Process

1. Name Registration:

   • A name must be chosen for the partnership and include the term "Ortakëri e Kufizuar."

   • The name must be registered with the Kosovo Business Registration Agency (ARBK).

2. Submission of Application:

   • The required documents should be submitted to ARBK either in person or through electronic systems.

3. Registration Fees:

   • Applicable registration fees must be paid.

C. Unique Business Identification Number (BIN)

• Upon successful registration, the partnership is assigned a Unique Business Identification Number (BIN).

5. Operation and Management

A. Management

• General partners are responsible for daily operations and decision-making.

• Limited partners are only involved as investors and do not participate in management.

B. Profit and Loss Sharing

• Profits and losses are shared according to the ratios specified in the partnership agreement.

• If not specified in the agreement, limited partners' liability is restricted to their capital contribution.

C. Debts and Obligations

• General partners may have to use personal assets to cover partnership debts.

• Limited partners are only at risk for the amount of their capital investment.

6. Legal Basis

• Article 64: Nature of Limited Partnerships.

• Article 65: Partnership Agreement.

• Article 68: Responsibilities of Limited Partners.

• Article 71: Profit and Loss Sharing.

• These provisions are regulated under the Kosovo Law on Business Organizations (Law No. 06/L-016).

7. Post-Establishment Obligations

A. Tax Registration

• The partnership must register with the Kosovo Tax Administration.

• Taxation is based on the income declarations of both general and limited partners.

B. Updates and Notifications

• Any changes to the partnership address or structure must be reported to ARBK.

C. Partnership Dissolution

• If the partnership is dissolved, it must be reported to ARBK in accordance with the partnership agreement.

8. Example Scenario

Two entrepreneurs looking to establish a food distribution company might choose a Limited Partnership structure. The general partner is responsible for operations and management, while the limited partner contributes financial investment and bears low risk.

Conclusion

A Limited Partnership is a business model where general partners take on active management and unlimited liability, while limited partners act as passive investors with reduced risk. It is a suitable structure for ventures aiming to attract investors and increase financing while maintaining operational flexibility.