Pg 46 Flashcards
How does it work for limited partners in a limited partnership?
They are not liable for debts or partnership obligations beyond the capital contribution they made at the beginning.
Can a limited partner’s limited liability be lost at any point?
Yes, if he participates in the control of the business. Limited partners cannot be part of the managing partnership
Who has priority with regard to a limited partnership for paying out debts?
- creditors first
– limited partners
– general partners
Do limited partners have the ability to bind a partnership?
No
If a limited partner withdraws from a limited partnership, does that result in dissolution?
No, it just requires amendment of the partnership agreement.
If a limited partner wants to withdraw his capital from a firm, what does he have to do?
Give six months notice unless the partnership agreement says otherwise
What is the difference between the UPA and the RUPA with regard to limited partners and exercising control?
– UPA: a limited partner doesn’t become liable as a general partner unless he exercises rights and powers like a general partner would and takes control of the business
– RUPA: eliminated the control rule, so limited partners are not personally liable for obligations of the partnership even if they participate in management and control of the partnership
Do limited partners have fiduciary duties?
Generally no, unless there is some special circumstance such as an inequity from weakness, age, business intelligence, etc.
When does a fiduciary duty arise?
When a person’s status or role creates a significant power.
How do you dissolve a limited partnership?
– based on what is specified in the certificate
– when certain events occur in the partnership agreement
– on the written consent of all partners
– when the general partner withdraws
– on judicial decree of dissolution
Does a limited partnership dissolve if one general partner withdraws but another one remains?
Generally no.
Does limited partnership have pass-through taxation?
Yes
What is a limited liability partnership?
This allows limited partners to be involved in managing the partnership, and always has at least one general partner. It requires official paperwork to be filed with the Secretary of State, individual partners are liable for the debts of the partnership but not personally for misconduct or negligence of other partners.
If three people go into business together and agree that all of them will manage the day-to-day operations and make decisions by a majority vote, and that their liabilities will be limited to their investment, what kind of business organization is that?
Probably a limited liability partnership
What is a limited liability limited partnership?
This has a general partner and a limited partner but gives liability protection for the general partner so that he is not personally liable for debts of the partnership, only for debts that he caused from his negligence or misconduct. Also the limited partner can become a general partner without losing limited liability. This requires a state filing and allows the limited partner to participate in management.
