Sleeping and inactive Limited Partner

A Sleeping Partner is not a legal concept. It is often used to describe a partner who:
• invests in the business
• does not take an active part in the running of the partnership business
• receives a share of the partnership profit

Inactive Limited Partners are not like general partnerships. General partnerships are where all partners are jointly liable for all the partnership debts. A limited partnership has two types of partner:
• general partners who are liable for the debts and obligations of the limited partnership
• Limited Partners whose liability is limited to the extent of their investments

Limited Partners must not take any part in the management of the partnership business (to preserve their limited liability).