Limited Liability Partnerships Flashcards
Limited Liability Partnership
Partnership, partners limited liability, not subject to personal liability for all the debts and obligations of the partnership.
File statement of qualification. INdicate that it’s an LLP “LLP or limited liability partnership.”
Partner not liabile for obligations of LLP unless engages in misconduct or someone he supervises engages in misconduct.
Foreign LLPs to file in state. If don’t file, LLP can’t bring suit in MD and face fines/criminal sanctions for not properly registering. (NOT holding meeting, keeping bank accounts; or engaging in isolated business transactions)
Limited Partnerships
Have at least one designated person as limited partner and one general partner.
Limited partner NOT LIABILE while general partner is
File certificate, signed by all general partners, include essential information: name of limited partnership, designation that it’s a limited partnership, instate address, statement about business of the limited partnership, the name and address of the limited partnerships in-state agent for service of process.
LP exists upon filing certificate, unless specified date. If not filed, someoen that thinks he is a limited partner will be liable to 3rd parties who transact business with purported LP if 34d party actually believes, good faith, that person was actual partner at time of transaction or purported limited partner mistakenly listed certifate had not been filed.
If person mistakenly listed as general partner in certificate, even when actually limited partner, partner can still be exposed to liability if a 3rd party had actual belief that partner was a general partner, or partner knew about the mistake.
Limited Partners
become limited partner through permitted assignment of partner’s interest if partnership agreement permist all partners consent.
Voting rights of limited partner defined by partnership agreement.
Limited partner not personally liable for obligations of limited partnership unless limited partner participate in control of the LP business. (NOT being an agent for partnership, engage consulting, acting as surety, approving/disapproving amendment to partnership agreement, or limited voting rights)
Limited partners can’t withdraw from the limited partnership unless gives 6 minths prior written notice of withdrawal.
General Partners
To become, need consent of all general partners, majority of interests of limtied partners.
General partner is personally liable to same extent as a general parner in general partnership would.
Can withdraw by giving written notice at any time, other events to case partner to cease include (assignment partnership interests, general partner removed, general partner financial difficulty, dies, general partner incompetence, termination of entity’s status if business entity, general parter files petition to reorganize, liquidate dissolve, partner files pleading admitting or failing to contest allegtions against, if trustee appointed for liquidation.
Whether or not a party is a general or limited partner any promise to contribue to the LP is an enfoceable obligation.s
If partner obligated to perform services but unable due to death or disability, partner or his agent may have to pay the value of servicees to LP.
Profits and losses allocated based on each partner’s contribution unless agree diferenetly.
distributions are allocated based upon how partners share in profits, unless different agreement. No right to receive distributions unless agreement states otherwise.
Limited partner’s interst may be assinged in whoe or part but assignemtn only transfers right to receive distribtuions.
Termination
Limited partnership terminate after dissolves and its affairs are wound up.
Dissolution: occurrence of some event specified in agreeement, agreement of all partners, withdrawal of general partner (when no other general partner) or decree of judicial dissolution based upon determination that it is not longer reasonably practicable to carry on business.
Winding Up: general partners responsibiloty long as general partner not wrongfully dissovled LP. Assets distributed to third party creditors and partners that are creditors then partners and former partners who are entitled to distributions that have accrued then partners for the return of partner contribution and then partners in the proportion that distributions are shared.
Limited Partner’s Derivative Action
Limited partner may bring a derivative action on behalf of the limited partnership.
Derivative action brought in the name of/ on behalf of particular entityt.
To bring, limited partner must make demand and must have been refused or limitd partner must show that demands would have been futilre and must have standing to bring action. Must have been partner at time of wrong doing and at the time of bringin action unles spartners’ status terminated by operation of law or the partnership agreement.
Limited partner does not get judgment in a derivaive action; instead, recovery goest ot he limited partnership. Limited partner may get reasonable expense including attorney fees.
Foreign Limited Partnership
Limited partnership out of state file in MD if conducting busines sin state.
Contract not impacted by failrue to file as foreign LP but foreign limited partnership can’t bring sutie and may face fines and sanctions for filure to file.
Limited Partnerhips actions not considered conduct business when egnaged in meetings, keeping in state bank accounts, involvement in isolated transactions, actions or pleading involvement, conducting businesss related to proeprty.
