LLPs Flashcards
What is a limited liability partnership?
It is a general partnership that has elected to become and continue as an LLP.
When a GP registers as an LLP, all the partners gain protection from liability for obligations of the PS and of other partners resulting from omissions, negligence, wrongful acts, misconduct, or malpractice, although they remain liable for their own negligence and the negligence of those they supervise.
How is an LLP formed?
The name of the LLP must contain the appropriate abbreviation.
A PS must file a statement of qualification with the secretary of state executed by one or more partners and including the name of the PS, the address of its principal office, the name and address of an agent for service of process, a statement that the PS elects to be a LLP, and a deferred effective date, if any.
The terms and conditions on which a PS becomes an LLP must be approved by the vote necessary to amend the PS agreement, except in the case of a PS agreement that expressly considers obligations to contribute to the PS, then by the vote necessary to amend those provisions.
If a PS renders professional services, it may register as an LLP subject to the laws and regulations governing the provision of professional services and such other terms and conditions imposed by its governing professional licensing authority.
What are the rights, duties and obligations of partners in an LLP?
They are the same duties as in a GP.
Adding a new partner to an LLP requires the unanimous consent of the existing partners, unless otherwise agreed.
Partners can contribute service or land in exchange for a LLP interest.
Unless otherwise agreed, partners share equally in profits and management.
What liabilities do partners in an LLP have?
A partner in an LLP is not liable, directly or indirectly for ran obligation, whether arising in contract, tort, or otherwise, solely by reason of being or so acting as partner.
An LLP must ensure that it can meet its obligations for any liability taken on by providing security on any claims against it. Although stated separately for acts, errors, or omissions arising from the practice of accountancy, law, or architecture, an LLP must doe one or more of the following:
- provide insurance;
- maintain an escrow account or similar interests as security for payment of liabilities;
- have each partner guarantee payments; or
- confirm that the LLP’s net worth is above a specified amount.
Oklahoma requires an LLP to provide security for the payment of claims against, equally or exceeding $500,000 , which may be met by insurance policy or a specifically designated and segregated account for the payment of claims.
This failure makes the partners jointly liable for the LLPs obligations.
What distributions are there in an LLP?
An LLP may not make a distribution if, after the distribution, it would not be able to pay its debts, or if the LLP’s total assets would be less than the sum of its total liabilities and the amount the LLP would need if it were dissolved to satisfy superior rights of certain partners.
What happens if an LLP is dissolved?
If an LLP is dissolved and its business is continued by some of its partners in a new partnership under the same name, then the new PS will succeed to the dissolved PS’s registration to become an LLP, and the dissolved PS will be deemed to be registered as an LLP until the winding up of its affairs is completed.
