limited partnership

Limited Liability Limited Partnership (LLLP).

A. The LLLP and LP are identical, except that general partners have limited liability (i.e., they are not personally liable for the LLLP's debts due to being a general partner). All other provisions of RULPA apply to the LLLP and the LP in exactly the same way. B. *LLLP Election. An LP becomes an LLLP by simply saying so in its certificate of LP.

certificate of LP

An LP is formed when a certificate of LP is filed with the Department of State. Unlike a general partnership, an LP cannot be formed informally. 1. *Signed by All General Partners. All general partners (NOT limited partners) must sign the certificate of LP.

annual report

An LP must file an annual report that states: 1. its name and address; 2. the name and address of its registered agent and registered office; and 3. the name and business address of each general partner; and 4. its Federal Employer Identification number.

Required info at designated office

An LP must maintain at its designated office the following information: 1. Partners' Names and Addresses. The name and address of each partner (general and limited); 2. Copies of Certificates. A copy of the certificate of LP (including any amendments) and any certificate of conversion or merger; and 3. Three Years Information. The LP's tax returns, financial statements, and annual reports for the last three years.

Transferable Interest

Only economic rights can be transferred (whether a general partner or limited partner).

Profits, Losses, and Distributions

Partners (general and limited) share profits, losses, and distributions based on the value of their contributions. 1. *No Right to Distributions Before Dissolution. By default, partners have no right to distributions before the dissolution and winding up of the LP, unless the LP decides (i.e., the general partners decide) to make an interim distribution. 2. *Distribution in Kind. By default, partners have no right to demand distributions in any form other than cash.

Mandatory certificate Information

The certificate of LP must contain: a) The name of the LP ; b) Name and business address of each general partner (NOT limited partner); c) Address of designated office; d) Name, street address, and written acceptance of its initial registered agent.

Name of LP

a) **Identifier. The LP's name must identify its status as an LP. The name must contain one of the following: (1) "Limited partnership"; (2) The term "limited"; (3) Abbreviation "L.P." or "Ltd.", or "LP". b) **Name of Partner is OK. The name of the LP may contain the name of any partner (general or limited). c) "Distinguishable From" Standard. The LP's name must be distinguishable from other entities filed with the Department of State. The distinguishable from standard is more lenient than a "deceptively similar" standard.

LP duration

By default, an LP has a perpetual duration subject to dissolution by partner consent (old rule, duration had to be specified in the certificate of LP).

general partners liability

**Joint and Several Liability. General partners are jointly and severally liable for the LP's debts (just like partners of a general partnership). a) EXCEPTION: Limited liability limited Partnership (LLLP) (discussed below). 2. *Dual Capacity. A person may be both a general partner and a limited partner at the same time.

Dissociation as General Partner

*Same rules as a general partnership, except— a) *No "At Will" LPs. A general partner in an LP cannot rightfully dissociate by express will before the LP's termination. b) Expulsion. A general partner can be expelled by the vote of all the other general partners and all of the limited partners if it's unlawful to carry on with the general partner or the general partner has transferred his transferable interest. c) No Buy Out. By default, general partners are not bought out. Instead, they are treated like transferees (e.g., right to profits and losses, and distributions) and have no rights of a general partner (e.g., no management rights). d) *After Dissociation Generally Not Liable. Same as RUPA (not liable for debts incurred after dissociation), except the general partner is liable for up to 2 years (instead of 1 year in RUPA) to a creditor who reasonably believes the general partner is still a general partner.

Limited partnership defintions

--A limited partnership (LP) is a partnership of two or more persons with at least one general partner and one limited partner. 1. *General Partners. As a rule of thumb, general partners in an LP have the same powers, rights, duties, and exposure to liability as partners in a general partnership. 2. *Limited Partners. As a rule of thumb, limited partners are passive investors who have limited liability exposure, do not participate in management, and are not agents.

Person Erroneously Believing Self to be Limited Partner

--A person who erroneously, but in good faith, believes himself to be limited partner is not liable for the LP's debts if, on ascertaining the mistake, the person 1. causes a correction to the certificate of LP; or 2. files a statement of withdrawal with the Department of State. a) Third Party Reliance. However, such person is liable to a third party who contracts with LP (1) before the correction or statement of withdrawal is filed, (2) believing in good faith that such person is a general partner.

dissolution of an LP

--An LP dissolves as specified in the partnership agreement or upon consent of all general partners and all limited partners. It may also dissolve in the following two instances: 1. *Dissociation of General Partner. Upon a general partner's dissociation, the LP dissolves if: a) at least one general partner remains and all remaining partners (general and limited) consent to dissolution; or b) no general partner remains and 90 days have passed without the limited partners consenting to admit a general partner. 2. *Dissociation of Last Limited Partner. An LP dissolves if no limited partner remains and 90 days have passed without the admission of at least one limited partner.

Approval Rights of Limited Partners

--Limited partners have approval rights in the following cases: a) *Amendment of Partnership Agreement. By default, all general and all limited partners must approve an amendment to the partnership agreement. b) *Admission of New Partners. By default, all general and all limited partners must approve the admission of a new general or limited partner. c) *Dissolution of the LP. By default, an LP dissolves upon vote of all general partners and all limited partners. d) *Merger or Conversion. An LP may convert to or merge with another entity (e.g., corporation, limited liability company). The conversion or merger requires— (1) General Partners Unanimous. The unanimous consent of the general partners; and (2) Majority in Interest of Limited Partners. The consent of limited partners owning a majority of the rights to receive distributions as limited partners.

Management and Control

1. **General Partners. Same rule as general partnerships (i.e., equal management rights, ordinary matters decided by majority vote). 2. **Limited Partners. Limited partners have no management rights.

limited partners liability

1. **Limited to Contribution. Limited partners are not personally liable for the LP's debts, but they lose their contribution if the LP goes bust. 2. **Use of Limited Partner's Name in LP's Name (Irrelevant). The name of a limited partner can be used in the LP's name without exposing the limited partner to liability (under old law, limited partner would be liable). 3. **Exercise of Management or Control (Irrelevant). Limited partners have no personal liability even if they participate in management and control (under old law, they would be liable).

Contributions

1. *Form of Contribution. A partner's contribution may consist of tangible or intangible property, including money, services performed, promissory notes, other agreements to contribute cash or property, and contracts for services to be performed. 2. *Liability for Contribution. A partner's promise to contribute must be in writing and signed.

duties

1. *General Partners. Same rule as general partnerships (e.g., duty of care, duty of loyalty, and duty of good faith and fair dealing). 2. **Limited Partners. Limited partners owe no duty of care and no duty of loyalty. They only owe a duty of good faith and fair dealing.

Authority to Bind Partnership

1. *General Partners. Same rule as general partnerships (i.e., general partners are agents with authority to bind the LP to acts that appear to carry on the ordinary course of business). 2. **Limited Partners (Not Agents, No Authority). Limited partners are not agents and do not have the right or power to act for or bind the LP.

Right to Information

1. General Partner's Right to Information. General partners' inspection rights are similar to those of partners in a general partnership. 2. *Limited Partner's Right to Information. a) Required Information. A limited partner has the right to inspect and copy all required information. (1) upon 10 days' demand; and (2) for any purpose. b) Other Information. To obtain other information (e.g., state of affairs, financial records), the limited partner must show a purpose reasonably related to his interest as a limited partner and describe information sought with particularity. Upon 10 days' demand, the LP must give access to the information or give a reason for declining to do so (e.g., the limited partner's purpose is improper).

Dissociation as Limited Partner

A limited partner can dissociate by express will (I quit!), an event specified in the partnership agreement, or expulsion, or death. Unlike general partners, the bankruptcy or incapacity of a limited partner does not cause dissociation. a) *No Right to Dissociate. By default, limited partners have the power but not the right to dissociate before the limited partnership's termination (i.e., it is wrongful in all cases, except for death). b) *No Right to Buy Out. By default, a wrongfully dissociated limited partner becomes merely a transferee (rights to profits and losses, and distributions) and has no rights of a limited partner (e.g., no inspection rights, no voting rights).

Other Issues Involving LPs

A. *Derivative Suits. B. *Unlawful Distributions. C. *Notice of Dissolution to Known and Unknown Creditors. all same as corps