Which partnership type includes members who contribute capital but do not manage day-to-day running?

Which partnership type includes members who contribute capital but do not manage day-to-day running?

• A. Online business
• B. Partnership
• C. Limited partnership
• D. Mutual organisation

Answer: (C)

In partnerships, some members take on day-to-day management while others provide capital but stay out of operations. A limited partnership specifically has two types of partners: general partners who run the business and have liability for its debts, and limited partners who contribute capital but do not participate in daily management and usually have liability limited to their investment. The description in the question fits the passive-investor role of limited partners, so the correct type is a limited partnership. The other options don’t describe this arrangement: a standard partnership typically involves all partners in management and shared liability; a general online business isn’t a defined partnership type; a mutual organisation (cooperative) is owned and controlled by members who participate in management.

In partnerships, some members take on day-to-day management while others provide capital but stay out of operations. A limited partnership specifically has two types of partners: general partners who run the business and have liability for its debts, and limited partners who contribute capital but do not participate in daily management and usually have liability limited to their investment. The description in the question fits the passive-investor role of limited partners, so the correct type is a limited partnership. The other options don’t describe this arrangement: a standard partnership typically involves all partners in management and shared liability; a general online business isn’t a defined partnership type; a mutual organisation (cooperative) is owned and controlled by members who participate in management.