Partnerships

Question 1

How are management rights apportioned in a partnership?

Answer 1

Each partner has equal management rights over a partnership, regardless of the amount of capital contribution or allocation of profits.

Question 2

Is it a violation of the duty of loyalty for a partner to make loans to the partnership?

Answer 2

No, it is not a violation.

Question 3

When does a limited partnership’s conversion to a partnership become effective?

Answer 3

Upon cancellation of the certificate of limited partnership.

Question 4

When a partnership is dissolved, how are the remaining assets distributed?

Answer 4

First to creditors, second, to each partner according to their amount of capital contributions, and third, an equal split of whatever remains.

Question 5

What happens if a limited liability partnership does not file their annual report?

Answer 5

The state may revoke the partnership’s “statement of qualification”, and their status changes from LLP to Simple Partnership.

Question 6

Can a partnership agreement allow certain types of activities that would violate the duty of loyalty to be valid anyway?

Answer 6

Yes, a partnership can allow even activities that would violate that duty to be valid.

Question 7

To form a partnership, what is required?

Answer 7

At least two people must intend to carry on a business for profit as co-owners.

(Payment of rent, among other things, is NOT enough to form a partnership).