Commendam or limited partnership Flashcards
how is liability determined for partnership in commendam?
hinges on contribution. a commendam partner must agree to make a contribution, but it can be cash, any type of property, or performance of non managerial services. Not personally liable for partnership debts.
what is a partnership in commendam?
partnership with one or more limited partners who have limited powers, rights, and liability and one or more general partners.
what liability protection is afforded to partners in commendam in a partnership in commendam?
not personally liable for partnership debts if requirements for proper formation and operation of partnership are followed. and the partner does not do anything that causes him to lose limited liability (not allow his name to be used in the operation, suggesting he is a general partner; must not take part in management or control of partnership)
what are the form requirements for a partnership in commendam?
must be in writing
must be filed with Secretary of State
name must clearly reflect that it is a limited or commendam partnership
must not suggest any commendam partner is general partner
must describe contribution of each commendam partner, and its value or how it is valued
if any of these is not met, commendam partners are liable to third parties in same way as general partners
what are the requirements of forming a partnership in commendam?
partners must draft a written partnership agreement and file with the office of Secretary of State. It must specify a name for the partnership that includes indication of its status as a partnership in commendam and that it not include the name of any partners in commendam (unless that is also the name of a general partner) and (2) describe the contribution that each partner in commendam was making to the partnership in exchange for his interest. (anything of value other than managerial services)
when is a partner in commendam liable as a general partner?
- permits name to be used in business dealings of partnership
- participates in management or admin of partnership
- conducts business with third parties on behalf of the partnership
EXCEPT: - consulting with and advising partners on business matters of partnership
- acting as surety
- approving or disapproving amendments to agreement
- voting on important matter
does a partner in commendam have authority of general partner to bind partnership in dealings with third parties?
NO
Identify at least two activities that could cause a limited partner in a partnership in commendam to be held personally liable as a general partner
- permits name to be used in business dealings of partnership
- participates in management or administration
- conducts business with the third parties on behalf of partnership
what is a limited liability partnership?
a previously existing ordinary or commendam partnership that has, within the prior year, filed an application to become an RLLP with and paid fee to, secretary of states office
it protects partners from personal liability for debts and obligations of partnership caused by another partner or representative of partnership
Identify the steps to form an LLP
- file an application with Secretary of State
Must include: - name of partnership
- address of principal office
- number of partners
- brief statement of business in which partnership engages
- signed by majority in interest (not majority of partners)
- pay 100.00 fee
- effective for one year from date of registration filing or until withdrawn, must renew or reverts to former partnership status
what protections are accorded for foreign llps?
same protections afforded by home state (full faith and credit clause)
what type of liability can be limited through use of a registered liability limited partnership?
a partner in an RLLP is not personally liable for any tort liability that the RLLP incurs as a result of the tortious conduct of another partner or an agent of the RLLP
what can an existing general partnership do to reduce certain individual liability of tis partners?
an existing general partnership may partially limit the personal liability of its partners for the debts of the partnership by forming a registered limited liability partnership. They must file with the office of Secretary of State an application to become LLP, which is valid for one year, executed by a majority in interest of partners stating the name of the partnership, address of principal office, number of partners, and brief statement of the business in which the partnership engages. Once formed, the partners are not individually liable for the liabilities and obligations of the partnership arising from the tortious conduct in course of partnership business committed by another partner or representative of partnership.
what are consequences of LLP if reduced to single partner?
as in any partnership, where all but one of the partners withdraws, it ceases to be a partnership and automatically becomes sole proprietership.
