Limited Partnership and Limited Liability Partnership

Question 0

Limited Partnership Formation

Answer 0

formed by two or more persons having one or more general partners and one or more limited partners

filing with sec of state cert of limited partnership signed by general partner

Question 1

General Partners in a Limited Partnership

Answer 1

treated in the exact same way that partners in a general partnership.

Subject to personal liability for the limited partnership’s debt

Question 2

RPLA

Answer 2

Revised Limited Partnership Act - governs limited partnerships
Applies to:
1. All domestic limited partnerships formed after july 1 1991.
2. all foreign limited partnerships regardless of when formed
3. All domestic limited partnerships formed prior to the effective date but elected to be governed by the act or later amended their certificates of limited partnership.
Where the RLPA is silent, NY Partnership Laws will fill any gaps.

Question 3

Limited Partners - LLP

Answer 3

no right to manage the partnership affairs not liable for the partnership obligations beyond the amount of their investment in the limited partnership.

If they do manage, they can be reclassified as general partners and have unlimited liability

Question 4

Formation

Answer 4

Filing with Sec of State
Certificate of Limited Partnership signed by general partners
Written limited partnership agreement signed by general partners
120 day publishing requirement - 6 weeks - 2 newspapers in the county where the partnership is located.
Limited partnership must contain conspicuous indication of its limited liability status by including “Limited Partnership” or “LP” in the business name.

Question 6

Limited Partners in General

Answer 6

Passive investor
Benefits liability shield
prevents personal liability for obligations of limited partnership.
Contribution may be in cash, property or services or such future obligation.
Will not be liable as a general partner unless he takes part in the control of the business

Question 6

Limited Partner whose name appears in the Partnership Name

Answer 6

Will be held liable as a general partner to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.

Question 7

What the Limited Partners Liability Shield will NOT protect from

Answer 7

1. Wrongful limited conduct of the LL partner
2. Unfulfilled contribution promises of LL partner
3. Distributions LL partner received in error
4. Mistaken belief that LL partner is actually a limited partner.

Question 8

Assignment of the LLP’s interests

Answer 8

Interest is assignable to 3rd parties
Assignment does not dissolve partnership
assignee not entitled to become or exercise rights or power of partner
Only entitles assignee to receive distributions and allocations of profits and losses.
Unless assignee becomes a limited partner, he has no liability as a partner solely as a result of the assignment.
Assignor ceases to be a partner upon assignment of all of his partnership interests.

Question 9

Rights of Limited Partner including right to demand return of contribution.

Answer 9

In General LLP has only the right to demand and receive cash in return for his contribution.

1. Right to receive share of profits or other compensation by way of income and has right to return of contribution where:
   a. Dissolution of the partnership
   b. When date specified in certificate for its return has arrived
   c. Upon withdrawal with 6 months written notice if no date specified

Question 10

When an Assignee of a LLP’s interests may become a LLP

Answer 10

1. Partnership agreement grants such authority to assign such rights and the assignor does so.
2. All partners consent in writing
3. To the extent the partnership agreement provides.

Question 11

Death or Incompetency of a LLP

Answer 11

Executor or administrator of estate will have all rights of a limited partner for purpose of settling estate.

Estate is liable for all liabilities of the deceased LLP

Question 12

Relationship among LLP’s

Answer 12

In the absence of some other agreement all LLP’s will stand on equal footing.
Agreement may state priority of some partners over others.
Limited Partners shall NOT receive any part of his contribution until:
1. all liabilities of partnership, except those to GP’s and LP’s on account of their contributions, have been paid or there is sufficient property to pay them.
2. consent of all members is given, unless return is rightfully demanded.
3. Certificate is cancelled or amended as to set forth the withdrawal or reduction.

Question 13

Events Causing Dissolution of an LP

Answer 13

1. Time provided in the certificate passed
2. Time or occurrence of a specific event specified in the partnership agreement.
3. Written consent of the all general partners and majority in interest of each class of limited partners.
4. Withdrawal of a General Partner
5. Judicial Dissolution

Question 14

Order for Settling Accounts of a LP

Answer 14

Creditors, including partners who are creditors
Partners, for distribution owed
Partners for return of contribution and partnership interests, in proportion partners share in distribution.

Question 15

Registered Limited Liability Partnership - Defined

Answer 15

A general partnership authorized by NY statute to adopt limited liability for general partners.

May only be elected by a general partnership whose members are professionals (attorneys or accountants) authorized to render professional services in NY

Partnership must include designation of LLP after partnership name to provide actual notice of limited liability status

To change from ordinary general partnership to LLP requires consent of partners in the same manner required for amendment to the partnership agreement

Question 16

Effect of a “Statement of Qualification” filed with Secretary of State for a Limited Liability Partnership

Answer 16

Provides constructive notice to all parties conducting business with the partnership that the general partners liability is limited to the assets of the general partnership and partners personal assets are shielded.

Question 17

Limited Liability Partnership Shield from Personal Liability

Answer 17

GP’s are shielded from personal liability for partnerships debts. Such debts are solely the obligation of the partnership.

Protects General Partners only from liability for another partners malfeasance or misfeasance, not the partner from personal liability for his own wrongdoing while acting on behalf of the partner.