14.3 - Limited Partnership & Limited Liability Partnerships Flashcards
What is a limited partnership & what must it consist of?
- Entity formed by two or more persons under state statute
- One or more general partners, one or more limited partners
Define a person according to the statute based on the Revised Uniform Limited Partnership Act or RULPA
- Natural person, partnership, limited partnership, trust, estate, association, or corporation
Define a “general partner”
Individual or entity who assumes:
- management of partnership and has full personal liability
- may be both general and limited partner with the rights & liabilities of each
Define a “limited partner”
- Investor who makes contribution in exchange for interest
- Not active in management
How is a limited partnership formed?
- Generally, must file with state
- Certification of registration grants limited liability
How are limited partnerships treated if certificate of registration is not filed with the state?
- As an ordinary business partnership if certificate is not filed
What must the registration certificate include prior to being filed with the state for a limited partnership?
HINT: 6 items
- Name of limited partnership
- Address of office or agent
- Name / address of each general partner
- Latest date for dissolution
- Other general matters
- Signatures of all general partners
How are profits and losses of a limited partnership allocated absent an agreement?
Shared on basis of FV of contributions
Identify the rights of a general partner in a limited partnership
- Unlimited liability
- Full management powers
- Share in both profits & losses
- Same rights & powers as a partner in general partnership
Identify the rights of a limited partner in a limited partnership
HINT: 9 rights
- Propose & vote on affairs not related to operations
- Withdrawal upon 6 months’ notice or per partnership agreement
- Do business with partnership
- Inspect and copy records
- Receive other partnership info
- File derivative action on behalf of partnership
- Assign partnership interest
- Apply for dissolution of partnership
- Obtain an accounting
Identify the liabilities incurred by a limited partner in a limited partnership
- May incure personal liability to the extent of capital contribution
Do limited partners have the right to participate in control of the business?
No
What must take place prior to a limited partnership being terminated?
it must be dissolved and wound up
Identify 4 examples of how a limited partnership can be dissolved
- Time / event in partnership agreement
- All partners agree in writing
- General partner dies and exceptions do not apply
- Court order
