Limited Partnership

Question 1

LP - Gral - Rules / Partners

Answer 1

• At least 1 Gral partner with fiduciary duties, ltd partners restricted liability and mgmt
• Can be corp, person or other entity
• Under ULPA (2001) or RULPA (1976)

Question 2

LP - Formation Requirements

Answer 2

Filing of LP certificate to secretary of state

• failure: as gral psx

Question 3

LP - Formal reqs

Answer 3

1) ID office address for records
2) Appoint registered agent for service of process
3) LP certificate submission to secretary of state (include name/address of all partners)
4) Annual reporting

Question 4

LP- Records kept in office

Answer 4

1) ID contribution of every partner
2) Financial statement of entity
3) Agent appointed for service of process
4) Tax return from the last 3 years

Question 5

LP - Name

Answer 5

• Contain “LP”
• ULPA: can include name of partners

Question 6

LP - Effect of failure to file Certificate with secretary of state (2)

Answer 6

1) LP turns into grl psx

AND

2) no cut off point of joint and several liability for limited partners

Question 7

LP Partner’s liaiblity - Gral

Answer 7

1) Gral partner: jointly and several liability
2) Limited partner: only to amomunt of capital contribution

Question 8

LP partners liability -management/name

Answer 8

1) Gral partner: manager - joint-several liable
2) Ltd partner:
- RULPA: cant be manager or use name - fail to comply: liable to third party who thought he was grla partner
- ULPA: more liberal: Ok to be involved in mgmt - not personally liable to 3rd party (“liability shield”)

Question 9

LP - Partners Liaiblity - RULPA - “Safe harbor”

Answer 9

• For ltd partners
• Not considered to be “in control” (hence no personal liaiblity), when acting as consultant, contractor, agent OR as employee, officer, director of entity as gral partner OR by bringing derivative action OR by proposing approval of debt, change of nature of business, admission or removal of partner

Question 10

LP - Partner’s liability - For approved fx

Answer 10

1) RULPA: Ltd partner personally liable if is gral partner OR participates in “control of business”

+

“safe harbor”: ltd not conisder as participant in control when with certain involvement

2) ULPA: very liberal - ltd partner not personally liable even if nominally participates in mgmt and control

Question 11

LLP - Partner’s liability to 3rd parties - Gral Rule

Answer 11

Limited partners very restriced liability (up to amount of capital contribution)

Question 12

LP - Exception to restricted exposure of ltd partners to 3rd party liability

Answer 12

1) Use of name in trade name + lack of knowledge of third party he is not gral partner
2) Hold out himself as gral partner (estoppel)

Question 13

LP- Partner rights (i.e) (6)

Answer 13

• Rights to profit distribution
• Dissenter rights (for ltd partner)
• Present derivative action
• Vote
• Receive financial statement, inspect records (under ULPA possible limitations)
• Full disclosure of all material info by ltd partner when his consent is required

Question 14

LP - Gral rule on distribution of loss/profits

Answer 14

Pro rata to capital contribution according to LP certificate

Question 15

LP - Dissenter partner rights

Answer 15

• Similar with gral psx in relation to merger
• Right to fair value of interest

Question 16

LP - Gral partner duties (2)

Answer 16

1) Fiduciary duty (no self dealing or profit from secret transaction with LP)
2) Authority to present derivative action (if refusal ltd partner entitled)

Question 17

LP - Change of gral partner - Reqs (2)

Answer 17

1) Written consent from all partners

+

2) Ammend LP certificate

Question 18

LP - New ltd partner Rules

Answer 18

• Gral rule: Ltd partner can sell/assign interests in LP without dissolution unless agreed otherwise
• New ltd partner might require approval by gral partner if established so by LP agreement

Question 19

LP - Partner’s Bankruptcy Rules

Answer 19

• If gral partner: partner must withdraw or be dissociated + possible charge order by individual ccreditor for extent of interest in LP
• If ltd partner: No effect in LP existence

Question 20

LP - Dissolution - (3)

Answer 20

1) Any partner can demand decree of dissolution
2) Last gral partner dies/withdraws (cure w/appointment in 90 days)
3) ULPA - any last partner withdraws (cure w/appointment in 90 days)