Chapter 21: Limited Partnerships and Limited Liability Partnerships

defective formation

(1) certificate is not properly filed; (2) defects in filed certificate; (3) some other requirement not met. limited partners can avoid accidental general partnership by (1) filing proper certificate; (2) withdrawing from participation. Really? This was a section in the book? Eff this class.

liquidation order

(1) creditors and (2) partner with respect to unpaid distributions, capital contributions, and the remainder of the proceeds

certificate of limited partnership

a document that two or more persons must execute and sign that makes a limited partnership legal and binding: name; character of business; business contact info; partner contact info; dissolution date; contribution amounts

foreign limited partnership

a partnership in all states other than the one in which it was formed. must get permission to do business via certificate of registration.

domestic limited partnership

a partnership in the state in which it was formed

limited partner duties

be an agent, employee, contractor, consultant, advisor or surety; approve amendment to partnership agreement; vote on dissolution, asset decisions, new and abnormal debt, change in business nature, removal of general partner

limited liability LP (LLLP)

general partners do not have personal liability. fairly new organization.

control rule

if permissible in the partnership agreement, limited partners can direct the affairs of the business

limited partner liability

liable only up to the amount of their capital contribution

participation in management

limited partners do not run business, make contracts, etc.; limited partners who do participate thusly are considered general partners and are personally liable to persons who believed them to be a general partner

right to information

limited partners get to know as much as general partners; must keep: copy of certificate of partnership; partner contact info; partnership agreements; fed, state, local tax returns; 3 most recent financial statements

master limited partnership

limited partnership interests that are liquid and can be sold in securities exchanges as "units" and pay their investors from profits

name of limited partnership

may not include surname of limited partner unless (1) shared with general partner or (2) was already called by that name, otherwise limited partner become liable as general partner. name must include "limited partnership"

amendment to certificate of limited partnership

must be filed w/in 30 days of change in capital contributions, admission of new partner, withdrawal of partner, judicial dissolution of partnership

dissolution of LP

must file certificate of cancellation and wind up assets, caused by: end of specified life of LP; agreement of all partners; withdrawal of general partner; judicial decision

admission of a new partner

new partners permitted only upon written consent of all partners

share of profits and losses

partnership agreement can dictate, otherwise the size of capital contributions determines profit/loss cuts

limited partnership agreement

sets forth the rights and duties of the partners; terms and conditions regarding partnership; so on, beyond the terms in the certificate.

quarterly required distributions

similar to interest payments on bonds at an amount state in the investment contract; avoid double taxation of dividends

personal guarantee

sometimes the LP can't get a loan so a limited partner has to personally guarantee it to the bank

limited partnership

two types of partners: general (manager, personally liable) and limited (investor, not personally liable). must have at least one of each

general partner liability

unlimited personal liability