other unincorporated entities Flashcards
limited liability partnership (LLP)
characteristics
– one or more limited partners and one or more general partners
– limited partners are not personally liable for partnership obligations, they are liable only to pay their agreed contributions = a third party suing the p-ship cannot sue a limited partner personally
– GP are fully liable like partners in a general partnership
– creature of STATUTE = must file with VA corp commission
formation of LLP
(1) file a certif- icate of limited partnership with the State Corporation Commission (“S.C.C.”).
– signed by all GPS
– Lists name of LLP, address of LLP’s principal office, address of the LLP’s registered office, name of registered agent, and address of each GP
– must be amended within 30 days of info changes
(2) name must include LP or LLP or “limited partnership”
– to assume a fictitious name, you must filed cert. with SCC setting for the name and the assumed name etc.
powers and liability of general partners vs. limited partners in an LLP
GENERAL PARTNERS
(a) Contributions
- may make contributions to and share in the limited p-ship’s profits, losses, and distributions as both a limited and general partner
(b) voting
- agreement may grant to all or certain # of GPs the right to vote
(c) substantial managerial control and general liability
-
LIMITED PARTNERS
(a) contribution
– cash, property, or services
– promise to contribute must be in writing
(b) liability
- limited
– not liable for obligations of other partners or the partnership
(c) inclusion of a LP’s surname in the name is prohibited unless it is the name of a GP or existed prior
(d) typically does not participate in the control of the business
– BUT IF LP does participate in the control of the business, he will be liable as a GP if person with whom he is transacting believes he is a GP based on his conduct = cannot run the day to day affairs
– note that a LP does NOT participate merely by:
(1)being a contractor for an agent, employee, or GP
(2) consulting with and advising a GP
(3) attending GP meetings
(4) approving or dissapproving p-ship matters
(5) being a mere employee
(6) voting on extraordinary management matters
(e) p-ship agreement may allow LP to vote
(f) right to information – inspect and copy records etc.
(g) LP may be both a GP and LP
(h) an LP may withdraw only at the time or upon the happening of events specified in the agreement
what happens when a person erroneously, but in good faith, believes she is an LP
A person making a contribution to a partnership and erroneously, but in good faith, believing that they have become a limited partner is generally NOT liable as a general partner IF:
– upon learning of their mistake, they cause an appropriate certificate of limited partnership or certificate of amendment to be filed with the S.C.C.
OR
– or withdraw from the partnership by filing with the Commission a certificate of withdrawal.
BUT - Liable as a GP to a third party who transacts business with p-ship prior to the person filing an appropriate certificate or withdrawing IF:
(1) the person knew or should have known that no certificate or an incorrect certifi- cate had been filed,
and
(2) the third party believed in good faith that the person was a general partner and acted on that belief.
assignment of partnership’s interest
RULE = a partnership interest in a limited partnership is personal property and is assignable
rights and liabilities of assignee IN GENERAL =
(1) assignee receives, to the extent assigned, the assign- or’s distributions
(2) the assignee has no liability to the partnership for the assignor’s debts.
IF CERTIFICATE OF ASSIGNMENT ALLOWS, OR, if all nonassigninag partners CONSENT = assignee may become a substitute limited partner
– includes assignee of a GP
– new assignee is liable for the assignor’s unpaid contributions unless unknown by the assignee at the time they became a substitute limited partner
– old assignor retains liability in p-ship
CREDITOR NOTE:
On application of a judgment creditor, a court may charge the partnership interest of a partner with the unsatisfied debt of the partner. To the extent so charged, the judgment creditor has the rights of an assignee.
derivative actions
limited P may bring derivative action if GP refuse to bring an action
similar to corporate process - demand, adequately represent interest, be a partner at the time of the transaction of which they complain
Virginia’s version of LLP and requirements
registered limited liability partnership
LIABILITIES
– same as other LLPS except:
(1) NO partner, not even GP, is individually liable for debts, obligations, or liabilities shareable to the partnership
(2) a partner remains liable for their own wrongful acts or the wrongful acts of this under their direct supervision
FORMATION:
file with the state a statement of registration with the SCC
The name of the L.L.P. must contain the words “Registered Limited Liability Partnership” or “Limited Liability Partnership” or the abbre- viation “R.L.L.P.,” “L.L.P.,” “RLLP,” or “LLP.”
If the base partnership is a limited partnership, the name must either
(1) comply with these same requirements and with the naming requirements for a limited partner- ship; or
(2) include the words “Registered Limited Liability Limited Partnership” or “Limited Liability Limited Partnership,” or the abbrevi- ation “R.L.L.L.P.,” “L.L.L.P.,” “RLLLP,” or “LLLP.” Every L.L.P. must file an annual report with the S.C.C. or its registration will be revoked.
