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