Alternative Unincorporated Business Organizations Flashcards
What is a LIMITED PARTNERSHIP and how is it formed?
DEFINITION: a partnership with at least one general partner and at least one limited party.
FORMATION: file a limited partnership with the state that includes names of a general partner
What is the liability and control of a limited partnership?
GENERAL PARTNERS: liable for a limited partnership obligations but have right to control the business
LIMITED PARTNERS: limited liability and there fore not liable for the debts and obligations of the limited partnership itself. May not control the business without giving up their limited liability status.
What is a REGISTERED LIMITATED LIABILITY PARTNERSHIP (RLLP) and how is it formed?
DEFINTION: general or limited partnership engaged in professional services
FORMATION: files a certificate of registration with the state labeled RLLP designating the profession to be practiced.
What are the liabilities of an RLLP?
No partner, not even general partners are liable for the debts and obligations of the business itself
What is a LIMITED LIABILITY COMPANY (LLC) and how is it formed?
DEFINTION: hybrid between corporation and partnership where the owners (“members”) have the same limited liability as shareholders in a corporation plus the benefits of partnership tax treatment
FORMATION: organizers (i) must file the articles of organization with the state and (ii) publish a summary of the articles once a week for at least six weeks in a row. Also, (iii) must adopt an operating agreement.
Control (LLC)
Owners may manage the business or delegate control to a team of managers
Definitional Feature (limitedness)
LLCs=limited liability + limited liquidity + limited life + limited tax
Limited Liquidity: full membership interest may not be transferred without consent of majority of membership interest or as provided in the operating agreement
Limited Life: company will dissolve upon a vote of a majority of the membership interest or as provided in the operating agreement
