Flashcards in OTHER UNINCORPORATED BUSINESS FORMS Deck (35)
Define limited partnership
A partnership with at least one general partner and at least one limited partner. Because it is a partnership, general partnership principles typically apply unless displaced by LP-specific provisions.
How do you forma limited partnership?
Must file a certificate of limited partnership with the secretary of state.
What is required in the certificate to form a limited partnership?
The information required in the certificate is minimal. It includes, among other items: (1) the name of the LP; (2) the name and address of the agent for service of process; and (3) the name and address of each general partner.
What happens if you fail to file the certificate to create the limited partnership?
(If you fail to file, you are just a general partnership.)
What must the name of the limited partnership contain?
The name of the LP must contain the phrase “limited partnership” or the abbreviation “L.P.” or “LP.” (The policy here is to alert the public to the limited liability nature of the business.)
What is in the partnership agreement? What can be displaced in it?
The real detail on the operation and governance of a LP is typically found in a partnership agreement. It can be written, oral, or implied. As in a general partnership, the agreement can displace almost all of the statutory provisions.
Who manages the LP?
The general partners
Does each general have a eual right in the management and conduct of the LP's activities?
How much of the vote is necessary for ordinary business activities?
The vote of a majority of the general partners is necessary for ordinary business activities.
Do limited partners have management rights?
Limited partners usually have no management rights unless the partnership agreement grants them rights.
What vote is needed for an LP's extraordinary activity?
unless otherwise agreed, the vote of all partners (general and limited) is necessary for certain extraordinary activities
What do extraordinary activities include for an LP?
including an amendment of the partnership agreement, the admission of a new general or limited partner, and the sale of all or substantially all of the LP’s property (if such sale is outside the ordinary course of the LP’s activities).
How are profits and losses distributed in an LP?
Unless otherwise agreed, distributions from a LP are made on the basis of the partners’ contributions (i.e., in proportion to the value of each partner’s contribution).
Who has liability for the LP?
1. General partners are liable for the obligations
of the LP, just as they are in a general partnership.
2 A limited partner is not personally liable for an obligation of the LP solely by reason of being a
limited partner. Limited partners have limited liability, meaning that they can only lose the value of their investments.
Chef Tom forms a LP to run a bistro. Padma invests $50,000 as a limited partner. The bistro flops; all of its assets, including Padma’a $50,000, are gone. Is Padma liable for the LP’s debts?
No. A limited partner has no liability for the LP's obligations, you can only lose the amount of your investment.
Does an LP shield a limited partner from their own torts?
The limited liability shield of any business organization does not protect a person from liability
for her own torts.
What fiduciary duties to LP partners owe each other?
A general partner owes the LP and the other partners the same fiduciary duties of loyalty and care that general partners owe in a general
partnership. A limited partner does not have any fiduciary duty to the LP or to any other partner solely by reason of being a limited partner.
What is the definition of an LLP? Limited Liability Partnership
An LLP is typically a general partnership where all of the partners have limited liability. In general, you apply general partnership rules to LLPs, with the exception of the material below.
What do you need to file to form a LLP?
Must file a “statement of qualification” with the secretary of state
What needs to be in a statement of qualification?
The required minimal information includes (1) the
name and address of the partnership; (2) a statement that the partnership elects to be an LLP; and (3) a deferred effective date, if any. The partnership becomes an LLP at the time of the filing of the statement or on the date specified in the
statement. (There is no LLP unless this statement is filed.)
What must be in an LLP's name?
The name of a registered limited liability partnership must end with the words “Registered Limited Liability Partnership” or “Limited Liability Partnership” or one of the abbreviations “L.L.P.,” “LLP,” “R.L.L.P.,” or “RLLP.”
What is the liability in a LLP?
A partner in an LLP is not personally liable (directly,
indirectly, or by way of contribution) for the obligations of the LLP, whether arising in tort, contract, or otherwise. As always, however, a partner remains personally liable for her own wrongful acts.
Define an LLC
A hybrid between a corporation and a partnership in which the owners (called “members”) have limited liability as well as the benefits of partnership tax treatment. This is not a corporation, nor is it a partnership. It is its own business form.
What must you file for an LLC?
Must file “Articles of organization” with the secretary of state.
What is required in the Articles of organization?
(1) the name of the LLC; (2) the address of the LLC’s registered office; and (3) the name of its registered agent.
What must be in the name?
The LLC’s name must include an indication that it is an LLC. In general, the name should contain the words “limited liability company” or the abbreviation “LLC” or “L.L.C.”
What is the most important document in an LLC? What can the operating agreement do?
The operating agreement. The operating agreement
can displace almost all of the statutory provisions.
Who manages the LLC
Management of the LLC is presumed to be by all of the members.
Other management arrangements can be made for an LLC (e.g., management by only some of the members or by outside managers), but they must be specified in the articles. If management is by the members what vote is required?
1. a majority vote is required to approve most
(ii) each member is an agent of the LLC (i.e., the LLC may be bound by the acts of any member).