The Limited Partnership Agreement for a North Dakota LP

For an LLC the internal governing document is the operating agreement; for a limited partnership, the equivalent is the limited partnership agreement. It is the private contract among the partners that defines how the partnership is owned, managed, and wound down. North Dakota does not require you to file it with the Secretary of State, and you shouldn't — it stays private, with only the Certificate of Limited Partnership on the public record.

Do not confuse the two documents. The Certificate is a short public filing that names the partnership, its registered agent, and its general partners. The limited partnership agreement is a detailed private contract that governs the real relationship between the general partner or partners who manage and the limited partners who invest. When there's a dispute about money, control, or exits, it's the agreement — not the Certificate — that decides the outcome.

Why an LP especially needs a strong agreement

A limited partnership rests on a distinction the agreement has to maintain: general partners manage and are personally liable, limited partners invest and are shielded. Without a written agreement, North Dakota's statutory default rules fill every gap, and those defaults may not match what the partners intended — on profit splits, on control, on what happens when someone wants out. Worse, a fuzzy agreement can blur the management line and put a limited partner's liability protection at risk. The agreement is where you nail all of this down.

The agreement should record exactly what each partner contributed to get the partnership going and what, if anything, they may be required to contribute later.

What to specify

• Initial contributions. What each partner put in — cash, property, or services — and the agreed value of non-cash contributions
• Ownership or interest percentages resulting from those contributions
• Future capital calls. Whether partners can be required to contribute more later, on what terms, and what happens if a partner can't or won't meet a call
• Consequences of default. Dilution, loans, or other remedies if a partner fails to contribute what they promised

For limited partners, contributions are usually the extent of their financial exposure — they can lose what they put in, but their liability generally stops there. Recording contributions precisely protects everyone: it fixes each partner's stake and each partner's downside.

How money moves is the part partners care about most, and it's where vague agreements cause the worst fights.

Allocation of profit and loss

Profits and losses are allocated among the partners as the agreement specifies. This does not have to match contribution percentages — many partnerships give the general partner a management-weighted share, or give limited partners a priority return before the general partner participates. Whatever the arrangement, spell it out, because the allocations drive each partner's Schedule K-1 and their personal tax bill.

Distributions

Allocation and distribution aren't the same thing. Profit can be allocated to a partner for tax purposes without cash actually being paid out. The agreement should say:

• When distributions are made — on a schedule, at the general partner's discretion, or on defined triggers
• In what priority — for example, returning limited partners' capital first, then a preferred return, then a split of the remainder
• How reserves are handled before cash is distributed

A clear distribution waterfall is essential in any LP with passive investors, because it tells them exactly when and how they get paid.

This is the section that protects the structure itself. The whole premise of a limited partnership is that general partners manage and limited partners don't — and the agreement has to enforce that line, because crossing it can strip a limited partner of their liability shield.

General partner authority

• Day-to-day management. What the general partner can decide and do alone — hiring, spending, contracting, operations
• Duties and standard of conduct. The general partner's obligations to the partnership and the limited partners
• Compensation. Any management fee or carried interest the general partner receives
• Limits. Major actions — selling the business, admitting new partners, amending the agreement, taking on large debt — that require limited-partner consent

Limited partner rights without management

• Information rights. Access to financial statements, tax information, and records
• Voting on defined major matters, kept narrow enough not to constitute management
• The safe harbor. A clear statement that limited partners do not participate in day-to-day control, protecting their status

Draw this line carefully and have an attorney review it. The liability protection that makes the LP attractive to investors depends on getting it right.

A partnership changes over time, and the agreement should anticipate those changes rather than leave them to a fight later.

Bringing partners in and letting them out

• Admission of new partners. How a new general or limited partner is added, and what consent is required
• Withdrawal. What happens when a partner wants to leave — notice, buyout terms, and valuation of their interest
• Death, incapacity, or bankruptcy of a partner, especially a general partner, and how the partnership continues if it does

Transferring an interest

Limited partners often want liquidity and general partners often want control over who's involved. The agreement should set transfer restrictions — rights of first refusal, approval requirements, and any limits on assigning an interest — so a partner can't hand their stake to an outsider the others didn't agree to.

Dissolution and winding up

The agreement should specify the events that trigger dissolution, the consent required to dissolve voluntarily, and the order in which assets are distributed on wind-up — creditors first, then partners according to the agreed priority. Having this in writing turns a stressful ending into a procedure everyone already agreed to.

A limited partnership agreement is not a form to fill in casually. It is the document that governs real money and real liability, and the general/limited distinction it maintains is what gives the entity its legal shape. This is genuinely legal drafting.

Have an attorney draft or review the agreement, especially the management-line provisions and the distribution waterfall, and have a CPA weigh in on how allocations affect each partner's taxes. Get every partner to sign before the partnership takes on money or does business, and keep the signed agreement with the partnership's permanent records. When partners, contributions, or profit arrangements change, amend the agreement so it keeps matching reality. We handle the state filings that create and maintain the partnership; the agreement itself is where you and your advisors define how it actually runs.