Free e book on limited liability partnership - 2005

- AUROBINDO SAXENA

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PREFACE

This book aims to cogitate the raison d'être, which beget the evolution of the limited
liability partnership (LLP) form of business structure. It discusses the LLP Statutes in
United States of America, Channel Island of Jersey, United Kingdom, Canada, Dubai
International Financial Centre, Singapore and Australia. It further draws a
comparison of the limited liability partnership laws prevalent in these places and
identifies the best practices, which with apposite adaptations can be made a part of a
similar legislation in India.

It is felt that the concept of Limited Liability Partnerships can be better understood in
the light of the laws already in place in other countries. The book being a first edition
aims to develop a scalable framework for future research work in the area.

METHODOLOGY

This book adopts a desk research method, which involves Internet research,
literature review and analysis, and correspondence with the relevant authorities in
the places studied.

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ACKNOWLEDGEMENTS

I would like to acknowledge the valuable contributions made by a number of people
who helped me in the development and refinement of this text. First I would like to
thank Prof. Prem Sikka, Professor of Accounting, Department of Accounting, Finance
and Management, University of Essex, United Kingdom for his guidance on the
subject. Second I would like to thank James J. Tucker III, A ssociate Professor of
Accounting and Taxation, Widener University, United States of America.

My heartiest thanks also goes to Mr. Angelo Veljanovski, Lecturer, School of Law,
Victoria University of Technology, Australia, whose work on limited liability
partnership inspired me to write this book. I would also like to thank David Forde
from the Companies Office Information Service, New Zealand for replying to my
queries.

Special thanks go to Ms. Toh Wee San, Senior Assistant Registrar ACRA, Singapore
who gave my queries a patient listening and guided me in understanding the most
technical issues of the subject.

Aurobindo Saxena

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CONTENTS

S. No. Particulars Page No.
1. Chapter 1: Introduction 5
2. Chapter 2: Limited liability partnership laws in the 49
United States of America
Channel Island of Jersey
United Kingdom
5. Chapter 5: Limited liability partnership laws in 441
Canada
6. Chapter 6: Limited liability partnership laws in Dubai 456
International Financial Centre
Singapore
Australia
9. Chapter 9: Analysis 685
10. References 718
11. Internet Support 720

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CHAPTER 1: INTRODUCTION

1.0 INTRODUCTION
The inclination to collaborate to accomplish certain commercial objectives has a long
history. The commercial magnetism of such collaborations and a need to govern their
business ultimately led to the codification of corporate and partnership laws.

Corporations and Partnerships have been a primary form of business structure for a
long time now. For more than a century, partnership law has offered an all-
embracing and lucid alternative to corporate law. Although, the two bodies of law
have much in common, historically they differed sharply on the role of the contract
and private ordering in structuring the firm.

Partnership law encourages private ordering through bargaining by providing a set of
statutory default norms that, with only a few exceptions, yield to agreements
negotiated by partners. In contrast, corporate law historically has provided a
mandatory framework for firm structure highly resistant to shareholders’ attempts to
define their relationships through bargaining1 . Proponents of private ordering within
firms prefer the freedoms of partnership law to the mandates of corporate law, and
over time they have enjoyed success in extending the bargaining model from
partnership law to corporate law.

However, the inherent limitations of both these forms of businesses have made them
unsuitable for certain businesses and ultimately hybrid forms of business structures
such as limited partnerships, limited liability partnership, limited liability limited
partnerships etc. evolved.

1.1 GENESIS AND DEVELOPMENT OF PARTNERSHIP LAWS
Partnership laws around the world have evolved over a period of time in consonance
with the changing business requirements. Broadly, the partnership laws can be
classified in three generations 2 viz. General Partnership Laws (First Generation),
Limited Partnership Laws (Second Generation) and Limited Liability Partnership Laws
(Third Generation).

1.1.0 First Generation
The UK Partnership Act, 1890 is an archetypal example of first generation of
partnership laws. A general partnership firm is not a separate legal entity. A partner
is considered as the agent of the firm and of other partners for the purpose of the
business of the firm. Further, every partner is liable, jointly and severally with all the
other partners, for all acts of the firm done while he is a partner. Where, by the
wrongful act or omission of a partner acting in the ordinary course of the business of
a firm, or with the authority of his partners, loss or injury is caused to any third
party, or any penalty is incurred, the firm is liable therefore to the same extent as
the partner.

General partnership is regarded by the public as the type of business structure
providing the optimal protection to members of the public, because partners are not

1
Robert W. Hillman, The Bargain in the Firm: Partnership Law, Corporate Law, and Private Ordering
Within Closely -Held Business Associations.
2
This concept has been developed by Aurobindo Saxena.

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protected by limited liability and the claimants can always go after the personal
assets of each partner to meet his or her claim. 3

However, the characteristic of "unlimited liability" ensures that the partners maintain
a direct interest in the affairs of the partnership and conduct of its partners,
especially in small practices where the partners are likely to work in the same
location. For large practices, they may have offices in several places, and thus
partners may not be able to keep track of all aspects and transactions of the
partnership. Nonetheless, under a general partnership, partners still have to share
the liabilities for the negligence of those partners whom they may barely know or
meet.4

The advantage of this structure is that its business affairs are entirely private. A
partnership agreement is also a private confidential document providing the flexibility
in which the partners can determine how the internal structure and relationship
between partners and between partners and the partnership are governed.5

1.1.1 Second Generation
The UK Limited Partnership Act, 1907 is an archetypal example of second generation
of partnership laws. A limited partnership is different from a general partnership to
the extent that it classifies the partners into two classes: a general partner and a
limited partner. Limited partnerships must have at least one general and one limited
partner. The essence of a limited partnership is that it bestows on the partnership
the benefit of limited liability to a certain extent. In a limited partnership, the liability
of the limited partner is limited to the amount of his contribution. He is like an
investor and usually does not take part in the management or day-to-day running of
the firm.

However, if a limited partner takes part in the management, he can be held liable for
all debts and obligations of the firm incurred while he so takes part in the
management, as though he were a general partner. As against this, the general
partner is responsible for the management of the firm and has unlimited liability.
Further, limited partnerships do not specifically deal with the issue of joint and
several liabilities. Partners can still be held liable for the wrongful acts or omissions
of their fellow partners. For tax purposes, a limited partnership is not considered as a
taxable entity and its income and capital transactions flow through to the partners.
Limited Partnerships are increasingly being used for private equity and fund
investment businesses.

1.1.2 Third Generation
The UK Limited Liability Partnership Act, 2000 is an archetypal example of third
generation of partnership laws. A limited liability partnership (LLP) is an alternative
corporate business vehic le that not only provides the benefits of limited liability but
also allows its partners the flexibility of organizing their internal structure as a
general partnership. The limited liability partnership is a separate legal entity and,
while the LLP itself will be liable for the full extent of its assets, the liability of the
partners will be limited. In LLP, each partner is the agent of the LLP but not of other
partners.

3
Kitty LAM, Limited Liability Partnership and Liability Capping Legislation for the Practice of Law in
Selected Places.
4
Ibid.
5
Ibid.

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1.2 GLOBAL SCENARIO
The limited liability partnership structure has gained importance in the last one and a
half decade and is now available in United States of America, Channel Island of
Jersey, United Kingdom, Canada, Dubai International Financial Centre, Singapore
and Australia.

The push for the creation of limited liability partners hip grew from several factors,
such as general increase in the incidence of litigation for professional’s negligence
and the size of claims; the risk to a partner's personal assets, when the claim
exceeds the sum of the assets and insurance cover of the partnership; the growth in
the size of partnerships; increase in specialization among partners and the coming
together of different professions within a partnership.

There are also concerns about the shifting of the business structure of a firm from a
general partnership to an LLP, albeit there is no empirical data supporting them. One
of the concerns is about the impact upon the culture of a law firm. For instance, the
practice of law in high-risk areas often yields high rewards commensurate with the
increased risk of liability. Partners in a general partnership usually share both the
risk and risk-related gains with their fellow partners. If a shift to an LLP causes a
member/partner to shoulder a higher risk of liability than others, he or she may
demand a larger share of the rewards. Similarly, the risk of some members/partners
may increase where the legislation provides that members/partners of LLPs have to
be liable for the acts of those under their direct supervision; in particular, if some
members/partners have to supervise less experienced staff.6

Some consider that shifting from the general partnership status to the LLP status
may result in less incentive for members/partners to monitor and control the quality
of work by other members/partners of the firm, as they are no longer liable for the
acts of their fellow members/partners. The breakdown of internal procedures at
Arthur Andersen, the accounting firm operating as an LLP, in connection with the
collapse of the Enron Corporation, is often quoted as an example of such
disincentive.7

However, the level of protection that an LLP affords partners of a LLP is an important
factor in why LLP is fast becoming the preferred structure for major professional
services firms.

1.3 INDIAN SCENARIO
In India, businesses mainly operate as companies, sole proprietorships and
partnerships. Each of these business structures has its own advantages and
shortcomings and is subject to different regulatory and tax regimes. The idea that
there should be the opportunity in India to organize as an LLP emerged out of the
Report of the Naresh Chandra Committee on Regulation of Private Companies and
Partnership and Report of the Dr. J. J. Irani Expert Committee on Company Law.

Acting on the recommendations of the reports of these committees the Ministry of
Company Affairs on November 2, 2005 released a concept paper on limited liability
partnership (See Annexure 1), which will be kept open for public comments till
December 31, 2005. The concept paper comprises of sixteen chapters and five

6
Johnson, J. (1995).
7
Hamilton, Robert W. and Macey, Jonathan R. (2003).

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schedules. A closer look into the provisions of the paper reveal that it is based on the
Singapore LLP Act, 2005, UK LLP Act, 2000, Companies Act, 1956 and certain LLP
statutes prevalent in US like the Delaware Code.

1.4 ISSUES FOR CONSIDERATION
It is anticipated that the paper will provoke critical examination by all chambers of
commerce, business organizations, professional bodies, academicians and persons
connected with corporate sector.

However, some of the important issues that need in-depth analysis, debate,
discussion and deliberations are as under:
1. Whether LLP form of business structure should be made available to
Professionals only?
2. Whether LLP Agreement should be made mandatory to be filed with the
Registrar?
3. What contents of the LLP agreement should be filed with the Registrar?
4. Whether foreign individuals should be allowed to be a partner or not?
5. Whether LLPs should be allowed to have one general partner with unlimited
liability or not?
6. Whether manager should be a partner of LLP or not?
7. Whether LLP should have a limit on the number of partners it can have?
8. What should be the extent of liability of a partner?
9. How should the LLPs be taxed?
10. What should be the disclosure requirements for an LLP?
11. What should be the procedure for existing firms, private companies and
unlisted public companies to convert to LLP?
12. How should the Act deal with foreign LLPs?
13. What should be the procedure for the merger, amalgamation and demerger of
LLPs?
14. What should be the procedure for the winding up and dissolution of LLPs?
15. What provisions of the Companies Act, 1956 should be applicable to LLPs?
16. What other legislations, rules, regulations and procedures need to be
amended for facilitating a smooth entry of LLPs?
17. What all provisions should form part of the default provisions?
18. What can be the various forms of contribution?
19. Whether a partner can bring his share of contribution in installments?
20. For how long an LLP should be allowed to carry on business with less than two
partners?
21. Should the audit of financial records be made mandatory for all LLPs?
22. Should LLPs be required to file an annual report with the Registrar?
23. What should be the period of claw back?
24. What should be the disqualifications of a partner and manager?
25. Who should regulate and administer the LLPs?

1.5 CONCLUSION
Following international trends, predominantly those in the United States of America,
United Kingdom, Jersey, Canada, Dubai International Financial Centre, Australia and
Singapore, India has recently undertaken the introduction of Limited Liability
Partnership (LLP) structure. This structure is recognized as the “world’s best
practice” structure, designed to not only attract venture capital from offshore
institutional investors but also to retain domestic investment. Some of the
advantages of this form of business structure include low cost of incorporation,

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unlimited capacity, limited individual liability, flexible management structure, tax
benefits and less audit and filing requirements.

However, at the same time this form of business structure is susceptible to abuse as
well. Especially, after the Enron collapse, it is felt that limited liability has a degree of
correlation with professional lapses and malpractices. The OECD also identifies
limited liability partnership as being a corporate vehicle, which is vulnerable to
misuse, principally for the reason that it is less regulated than corporations.

The limited liability partnership form of business structure is keenly awaited in India.
However, such introduction will require amendments in several legislations and
Regulations for example the SEBI Regulations, Tax Laws, Banking Regulations, the
parent Acts of Statutory Bodies like ICSI, ICAI and ICWAI and their respective Rules
and Regulations etc. Therefore, an in-depth understanding of the concept is
inexorable.

The following chapters will discuss and analyse the limited liability partnership laws
around the world and attempt to find solutions to the issues under consideration
stated above.

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ANNEXURE 1

CONCEPT PAPER ON LIMITED LIABILITY PARTNERSHIPS

Chapter I
Preliminary

1. Short title, commencement and extent.

(1) This Act may be called the Limited Liability Partnerships Act, 2006.
(2) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
(3) It extends to the whole of India.

2. Definitions.

In this Act, unless the context otherwise requires,-

(1) "address" in relation to a partner of a limited liability partnership,
means-
(a) if an individual, his usual residential address, and
(b) if a body corporate , address of its registered office;
(2) “Appellate Tribunal” means the National Company Law Appellate
Tribunal constituted under the Companies Act, 1956;
(3) “body corporate” means a company as defined in section 3 of the
Companies Act, 1956 and includes:
(a) a limited liability partnership registered under this Act;
(b) a limited liability partnership incorporated outside India; and
(c) a company incorporated outside India
but does not include-
(i) a corporation sole;
(ii) a co-operative society registered under any law relating to co-
operative societies; and
(iii) any other body corporate (not being a company as defined above),
which the Central Government may, by notification in the Official
Gazette, specify in this behalf;
(4) "business" includes every trade, profession and occupation;
(5) “chartered accountant” means a chartered accountant as defined in
clause (b) of sub-section (1) of section 2 of the Chartered
Accountants Act, 1949 and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act;
(6) “company secretary” means a company secretary as defined in
clause (b) of sub-section (1) of section 2 of the Company
Secretaries Act, 1980 and who has obtained a certificate of practice
under sub-section (1) of section 6 of that Act;
(7) "court" means court as defined under the Companies Act, 1956;
(8) "economic rights" means the rights of the partner to a share of
the profits and losses of the partnership and to receive
distributions in accordance with the limited liability partnership
agreement;
(9) “financial year” means in relation to a limited liability partnership, the
period in respect of which any profit and loss account of the limited

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liability partnership is made up, and shall not be less than six months
but not exceed fifteen months.
(10) “foreign limited liability partnership" means a partnership that is
(a) formed, registered or incorporated outside India
which, after the commencement of this Act,
establishes a place of business within India; and
(b) formed, registered or incorporated outside India
which have, before the commencement of this Act,
established a place of business within India and
continue to have an established place of business
within India at the commencement of this Act; and
(c) which if incorporated in India, would be a limited
liability partnership within the meaning of this Act.
(11) "incorporation document" shall be construed in accordance with
section 8;
(12) "limited liability partnership" has the meaning given to it by
section 3;
(13) "limited liability partnership agreement" means any w ritten
agreement of the partners as to the affairs of a limited liability
partnership and the conduct of its business;
(14) “manager” in relation to a limited liability partnership, means any
person (whether or not a partner of the limited liability
partnership) who is concerned in or takes part in the management
of the limited liability partnership;
(15) "modification" shall include the making of additions and omissions;
(16) "name" in relation to a partner of a limited liability partnership,
means-
(a) if an individual, h is forename, middlename and surname, and
(b) if a body corporate, its registered name;
(17) "partner" in relation to a limited liability partnership, means any
person who has been admitted as a partner in the limited liability
partnership in accordance with the limited liability partnership
agreement;
(18) “register” means any register kept and maintained under this Act;
(19) "Registrar" means Registrar as defined in the
Companies Act, 1956;
(20) “Tribunal” means the National Company Law Tribunal constituted
under the Companies Act, 1956.

Chapter II
Applicability

3. Limited Liability Partnership.

(1) A limited liability partnership is a body corporate which is formed by
being incorporated under this Act and which has legal entity separate
from that of its partners.

(2) A limited liability partnership shall have perpetual succession.

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(3) Any change in the partners of a limited liability partnership shall not
affect the existence, rights or liabilities of the limited liability
partnership.

4. Non-applicability of partnership law.
Except as otherwise provided by this Act or any other enactment, the law
relating to partnerships shall not apply to a limited liability partnership.

5. Partners.
Any individual or body corporate may be a partner in a limited liability
partnership.

6. Minimum and Maximum Number of Partners.
(1) Every limited liability partnership shall have at least two partners.
(2) If at any time the number of partners of a limited liability partnership,
is reduced, below two, and the limited liability partnership carries on
business for more than six months while the number is so reduced, a
person who is a partner of the limited liability partnership during the
time that it so carries on business after those six months and is
cognizant of the fact that it is carrying on business with fewer than two
partners shall be liable jointly and severally with the limited liability
partnership for the obligations of the limited liability partnership
incurred during that period.
(3) A limited liability partnership has unlimited capacity.

7. Manager.
(1) Every limited liability partnership shall have a manager who is an
individual and is resident in India.

(2) For the purpose of sub-section (1), resident in India includes a person
who has been staying in India for a continuous period of not less than
twelve months immediately preceding the date of his appointment as a
manager and who has come to stay in India, -
(a) for taking up employment in India, or
(b) for carrying on a business or vocation in India.

(3) Every limited liability partnership shall within 30 days ensure that the
particulars of every person who acts as manager of the limited liability
partnership, his consent to act as such and any change of manager are
lodged with the Registrar in such ma nner and form as may be
prescribed.

(4) If the incorporation document specifies who is to be a manager -
(a) that person shall be the manager on incorporation, and
(b) if no manager is appointed, each partner resident in India shall
be deemed to be a manager.

(5) Every limited liability partnership shall appoint a person as manager
within sixty days from the date on which a person ceases to be a
manager.

(6) A manager shall be —

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(a) answerable for the doing of all acts, matters and things, as are
required to be done by the limited liability partnership; and
(b) personally liable to all penalties imposed on the limited liability
partnership for any contravention of those sections unless he
satisfies the Tribunal that he should not be so liable.

(7) If a limited liability partnership contravenes any sub-section of this
section, the limited liability partnership and every partner of the
limited liability partnership shall be punishable under the Act.

Chapter III
Incorporation

8. Incorporation Document.

(1) For a limited liability partnership to be incorporated-

(a) two or more persons associated for carrying on a lawful business
with a view to profit must have subscribed their names to an
incorporation document,

(b) there must have been delivered to the Registrar of the State in
which the registered office of the limited liability partnership is
to be situate, the incorporation document in a manner as may
be prescribed, and

(c) there must have been so delivered a statement in the prescribed
form, made by either an advocate, or a Company Secretary,
or, a Chartered Accountant, who is engaged in the formation of
the limited liability partnership and by anyone who subscribed
his name to the incorporation document, that all the
requirements of this Act and Regulations thereunder have been
complied with, in respect of incorporation and matters
precedent and incidental thereto.

(2) The incorporation document must-

(a) be in a form as may be prescribed,
(b) state the name of the limited liability partnership,
(c) state the proposed business of the limited liability partnership;
(d) state the address of the registered office of the limited liability
partnership,
(e) state the name and address of each of the persons who are to be
partners of the limited liability partnership on incorporation,
(f) state the name and address of the person (s) who is/are to be
manager (s) of the limited liability partnership on incorporation;
(g) be accompanied by the photographs of the persons who are to be
partners and manager(s) of the limited liability partnership.

(3) If a person makes a statement under sub-section (1)(c) which he-
(a) knows to be false, or
(b) does not believe to be true,
he shall be punishable under the Act.

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9. Incorporation by Registration.

(1) When the requirements imposed by clause (b) and (c) of sub-section (1)
of section 8 have been complied with, the Registrar shall retain the
incorporation document and, unless the requirement imposed by
clause (a) of that sub-section has not been complied with, he shall
within a period of 14 days-
(a) register the incorporation document, and
(b) give a certificate that the limited liability partnership is
incorporated by the name specified in the incorporation
document.

(2) The Registrar may accept the statement delivered under clause (c) of
sub-section (1) of section 8 as sufficient evidence that the requirement
imposed by clause (a) of that sub-section has been complied with.

(3) The certificate shall be signed by the Registrar and authenticated by his
official seal.

(4) The certificate is conclusive evidence that the requirements of sub-section
2 of section 8 are complied with and that the limited liability
partnership is incorporated by the name specified in the incorporation
document.

10. Registered Office.
(1) Every limited liability partnership shall have a registered office to
which all communications and notices may be addressed and where
they shall be received.

(2) A document may be served on a limited liability partnership or a
partner or manager thereof by sending it by post under a certificate of
posting or by registered post or by any other mode, which may be
prescribed, or by leaving at its registered office.

(3) A limited liability partnership may change the address of its registered
office by lodging with the Registrar notice of such change in such
manner and form as may be prescribed and any such change shall
take effect only upon such lodgment.

(4) A person guilty of an offence under sub-section (3) shall be punishable
under the Act.

11. Powers.
A limited liability partnership shall, by its name have the power of-
(a) suing and being sued;
(b) acquiring, owning, holding and developing or disposing of
property, both movable and immovable;
(c) having a common seal; and
(d) doing and suffering such other acts and things as bodies
corporate may lawfully do and suffer.

12. Names of limited liability partnerships.

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(1) Every limited liability partnership shall have either the words “limited
liability partnership” or the acronym “LLP” as the last words of its
name.

(2) No limited liability partnership shall be registered by a name which, in
the opinion of the Central Government is -
(a) undesirable;
(b) identical or too nearly resembles to that of any other limited
liability partnership or body corporate or to a registered trade
mark, or a trade mark which is subject of an application for
registration, of any other person under the Trade Marks Act,
1999.

(3) A person may apply in the prescribed manner to the Registrar for the
reservation of a name set out in the application as —
(a) the name of a proposed limited liability partnership; or
(b) the name to which a limited liability partnership proposes to
change its name.

(4) Upon receipt of an application under sub-section (3) and on payment
of the prescribed fee, the Registrar may, if he is satisfied that the
name to be reserved is not one which may be rejected on any ground
referred to in sub-section (2), reserve the name for a period of three
months from the date of intimation by the Registrar.

(5) Notwithstanding anything contained in this section, where the Central
Government is satisfied that a limited liability partnership has been
registered (whether through inadvertence or otherwise and whether
originally or by a change of name) under a name which —
(a) is a name referred to in sub-section (2); or
(b) so nearly resembles the name of any other limited liability
partnership or body corporate or other name as to be likely to
be mistaken for it, the Central Government may direct the
limited liability partnership to change its name, and the limited
liability partnership shall comply with the direction within three
months after the date of the direction or such longer period as
the Central Government may allow.

(6) Any person may apply, in a manner as may be prescribed, to the
Registrar to give a direction to any limited liability partnership, on a
ground referred to in sub-section (5), to change its name.

(7) The Registrar shall not consider any application under sub-section (6)
to give a direction to a limited liability partnership on the ground
referred to in sub-section (5) (b) unless the Registrar receives the
application within twelve months from the date of registration of the
limited liability partnership under that name.

(8) Any limited liability partnership which fails to comply with a direction
given under sub-section (5) shall be punishable under the Act.

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(9) Any limited liability partnership may change its name by lodging with
the Registrar notice of such change in such manner and form as may
be prescribed.

13. Publication of name and limited liability.
(1) Every limited liability partnership shall ensure that its invoices and
official correspondence bear the following:
(a) the name and registration number of the limited liability
partnership; and
(b) a statement that it is registered with limited liability.

(2) Any limited liability partnership which contravenes sub-section (1)
shall be punishable under the Act.

Chapter IV
Partnership

14. Partner.

(1) On the incorporation of a limited liability partnership its partners are
the persons who subscribed their names to the incorporation
document.

(2) Any other person may become a partner of a limited liability
partnership by and in accordance with an agreement with the existing
partners.

15. Relationship of Partners.

(1) Except as far as otherwise provided by this Act or any other enactment,
the mutual rights and duties of the partners of a limited liability
partnership, and the mutual rights and duties of a limited liability
partnership and its partners, shall be governed by agreement
between the partners, or between the limited liability partnership and
its partners.

(2) The contents as may be prescribed in Regulations and form part of
limited liability partnership agreement and any changes made therein
shall be filed with the Registrar in the manner and form as may be
prescribed.

(3) An agreement in writing made before the incorporation of a limited
liability partnership between the persons who subscribe their names to
the incorporation document may impose obligations on the limited
liability partnership as a pre-incorporation agreement, provided such
agreement is ratified by all the partners after the incorporation of the
limited liability partnership.

(4) In the absence of agreement as to any matter, the mutual rights and
duties of the partners and the mutual rights and duties of the limited
liability partnership and the partners shall be determined by any
provision relating to that matter as is set out in the First Schedule.

16

16. Cessation of partnership interest.

(1) A person may cease to be a partner of a limited liability partnership in
accordance with an agreement with the other partners or, in the absence of
agreement with the other partners as to cessation of being a partner, by
giving 30 days notice to the other partners of his intention to resign as
partner.

(2) A person may also cease to be a partner of a limited liability partnership by
his death or by dissolution of the limited liability partnership firm.

(3) Where a person has ceased to be a partner of a limited liability
partnership, the former partner is to be regarded (in relation to any
person dealing with the limited liability partnership) as still being a
partner of the limited liability partnership unless-

(a) the person has notice that the former partner has ceased to be
a partner of the limited liability partnership, or
(b) notice that the former partner has ceased to be a partner of the
limited liability partnership has been delivered to the Registrar.

(4) A partner's disassociation from the limited liability partnership does not by
itself discharge the partner from any obligation to the limited liability
partnership or to the other partners which he incurred while being a partner.

(5) Where a partner of a limited liability partnership ceases to be a partner,
unless otherwise provided in the limited liability partnership agreement, the
former partner or a person entitled to his share in consequence of the death
or insolvency of the former partner, shall be entitled to receive from the
limited liability partnership an amount —
(a) equal to the former partner’s capital contribution to the limited
liability partnership and his right to share in the accumulated
profits of the limited liability partnership after the deduction of
losses of the limited liability partnership; and
(b) determined as at the date the former partner ceased to be a
partner.

(6) For the avoidance of doubt, a former partner or a person entitled to his
share in consequence of the death or insolvency of the former partner
shall not interfere in the management of the limited liability
partnership.

17. Registration of changes in partners.

(1) A limited liability partnership must ensure that-
(a) where a person becomes or ceases to be a partner, notice is
delivered to the Registrar within 30 days, and
(b) where there is any change in the name or address of a partner,
notice is delivered to the Registrar within 30 days.

(2) A notice delivered under sub-section (1)-
(a) shall be in a form as may be prescribed, and

17

(b) shall be signed by the manager of the limited liability
partnership and authenticated in a manner as may be
prescribed, and,
(c) if it relates to admission of partner, shall contain a statement
by the incoming partner that he consents to becoming a
partner, signed by him and authenticated in a manner as may
be prescribed.

(3) If a limited liability partnership fails to comply with sub-section (1),
the manager shall be punishable under the Act.

(4) Any person who ceases to be a partner of a limited liability partnership
may himself lodge with the Registrar the statement referred to in sub-
section (2) if he has reasonable cause to believe that the limited
liability partnership will not lodge the statement with the Registrar.

Chapter V
Extent and Limitation of Liability

18. Partner as agent.

Every partner of a limited liability partnership is the agent of the limited
liability partnership, but not of other partners.

19. Extent of liability of the limited liability partnership.

(1) A limited liability partnership is not bound by anything done by a partner
in dealing with a person if-

(a) the partner in fact has no authority to act for the limited liability
partnership in doing a particular act, and
(b) the person knows that he has no authority or does not know or
believe him to be a partner of the limited liability partnership.

(2) The limited liability partnership is liable if a partner of a limited liability
partnership is liable to any person as a result of a wrongful act or
omission on his part in the course of the business of the limited
liability partnership or with its authority.

(3) An obligation of the limited liability partnership whether arising in
contract or otherwise, is solely the obligation of the limited liability
partnership.

(4) The liabilities of the limited liability partnership shall be met out of the
property of the limited liability partnership.

20 Extent of liability of a partner.

(1) A partner is not personally liable, directly or indirectly for an obligation
referred to in sub-section (3) of section 19 solely by reason of being a
partner of the limited liability partnership.

18

(2) Sub-section (3) of section 19 and sub-section (1) of this section shall
not affect the personal liability of a partner for his own wrongful act or
omission, but a partner shall not be personally liable for the wrongful
act or omission of any other partner of the limited liability partnership.

21. Unlimited liability in case of fraud.

(1) In the event of an act carried out by a limited liability partnership, or
any of its partners, with intent to defraud creditors of the limited
liability partnership or any other person, or for any fraudulent
purpose, the liability of the parties shall be unlimited for all or any of
the debts or other liabilities of the limited liability partnership.

(2) Where any business is carried on with such intent or for such purpose
as mentioned in sub-section (1), every person who was knowingly a
party to the carrying on of the business in the manner aforesaid shall
be punishable under the Act.

22. Liability for personal acts.

A partner shall have unlimited liability for his or her personal acts which are
not done for and on behalf of the limited liability partnership, and were
committed in his or her personal capacity.

Chapter VI
Duties and Standards of Conduct

23. Duties of Partners.

A partner shall discharge his duties to the limited liability partnership and the
other partners under this Act or under the partnership agreement and
exercise any right consistent with the obligation of good faith.

24. Gene ral Standards of Partner's Conduct.

(1) The fiduciary duties that a partner has to the limited liability
partnership and the other partners are the duties of loyalty and due
care as specified under sub-section (2) and (3).

(2) A partner's duty of loyalty to the limited liability partnership shall
include:
(a) to account to the limited liability partnership and hold as
trustee for it any property, profit, or benefit derived by the
partner in the conduct and winding up of the limited liability
partnership's activities or derived from a use by the partner
of limited liability partnership property, including the
appropriation of a limited liability partnership opportunity;
(b) to refrain from competing with the limited liability partnership
in the conduct or winding up of the limited liability
partnership's activities; and

19

(c) refrain from dealing with the limited liability partnership in the
conduct or winding up of the limited liability partnership's
activities as or on behalf of a party having an interest adverse
to the limited liability partnership.

(3) A partner’s duty of due care to the limited liability partnership and
the other partners in the conduct and winding up of the limited
liability partnership's activities is to refrain from engaging in grossly
negligent or reckless conduct and from contravening any of the
provisions of this Act and any other law for the time being in force.

Chapter VII
Contributions

25. Form of Contribution.
A contribution of a partner may consist of tangible or intangible property or
other benefit to the limited liability partnership, including money, services
performed, promissory notes, other agreements to contribute cash or
property, and contracts for services performed or to be performed.

26. Liability for Contribution.

(1) A partner's obligation to contribute money or other property or other
benefit or to perform services for a limited liability partnership shall be
as per the partnership agreement.

(2) A creditor of a limited liability partnership, which extends credit or
otherwise acts in reliance on an obligation described in that agreement,
without notice of any compromise under t h i s sub-section, may enforce
the original obligation against such partner.

Chapter VIII
Financial Disclosures

27. Maintenance of records.

(1) The limited liability partnership shall maintain proper books of accounts
relating to its affair for each year of its existence on accrual basis and
according to the double entry system of accounting, and shall maintain the
same at its registered office for a period as may be prescribed.

(2) If default is made in complying with sub-section (1), the manager shall be
punishable under the Act.

28. Annual declaration of solvency.
(1) Every limited liability partnership shall lodge with the Registrar a
declaration by its manager that in his opinion, the limited liability
partnership either —
(a) appears as at that date to be able to pay its debts as they
become due in the normal course of business; or
(b) does not appear as at that date to be able to pay its debts as
they become due in the normal course of business.

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(2) The declaration referred to in sub-section (1) shall be lodged not later
than 15 months after the registration of the limited liability partnership
and subsequently once in every financial year at intervals of not more
than 15 months.

(3) Notwithstanding sub-section (2), the Registrar may, on application by
a limited liability partnership and if he thinks fit, grant an extension of
time for the lodging of the declaration referred to in sub-section (1).

(4) If a limited liability partnership fails to lodge the declaration referred to
in sub-section (1) within the time or extended time referred to in sub-
sections (2) and (3), the manager shall be punishable under the Act.

(5) A manager who makes a declaration referred to in sub-section (1) (a)
without having reasonable grounds for his opinion, shall be punishable
under the Act; and

(6) Any person who, in connection with a declaration made under this
section, makes a statement or furnishes information (whether directly
or indirectly) to a manager that is false or misleading in a material
particular, when he knows or ought reasonably to have known that the
statement or information is false or misleading in a material particular,
shall be punishable under the Act .

(7) If an offence under this section is committed with an intent to defraud
creditors of the limited liability partnership or for a fraudulent purpose,
the offender shall be punishable under the Act .

29. Power of Registrar to obtain further information.
(1) In order to obtain such information as the Registrar may consider
necessary for the purposes of carrying out the provisions of this Act,
the Registrar may —
(a) require any present or former partner or manager of a limited
liability partnership to answer any question in writing which the
Registrar may consider necessary to ask for the purposes
specified in this sub-section; or
(b) summon that person to appear before him or an inspector or
any other public officer whom the Registrar may designate to
answer any such question orally.

(2) The Registrar may further require the person referred to in sub-section
(1) to make such further declaration or supply such further particulars
as the Registrar may require.

(3) Any person who, without lawful excuse, fails to comply with any
summons or requisition of the Registrar under this section shall be

30. Penalty for providing false information to the Registrar.

Any person who makes any statement or furnishes any information to the
Registrar under the provisions of this Act which is false in any material

21

particular or by reason of the omission of any material particular and which
he either knows or has reason to believe is false, shall be punishable under
the Act.

31. Composition of offences.
(1) The Central Government may, compound any offence under this Act
which is prescribed as a compoundable offence by collecting from a
person reasonably suspected of having committed the offence a sum
which may extend to the amount of the maximum fine that is
prescribed for the offence, or a sum prescribed under the Act,
whichever is lower.

(2) The Central Government may make regulations to prescribe the
offences which may be compounded.

32. Destruction of old records.

The Registrar may destroy any document lodged, filed or registered with the
Registrar and which has been microfilmed or converted to electronic form if in
his opinion it is no longer necessary or desirable to retain the document.

33. Enforcement of duty to make returns.

(1) If any person is in default in complying with —
(a) any provision of this Act or of any other law which requires the
lodging or filing in any manner with the Registrar of any return,
account or other document or the giving of notice to him of any
matter; or
(b) any request of the Registrar to amend or complete and resubmit
any document or to submit a fresh document, and fails to make
good the default within 14 days after the service on the person of
a notice requiring it to be done, Tribunal may, on application by
the Registrar, make an order directing that person or (if that
person is a corporation) any officer of the body corporate to
make good the default within such time as is specified in the
order.

(2) Any such order may provide that all the costs of and incidental to the
application shall be borne by that person or by any officer of the body
corporate who is responsible for the default if that person is a body
corporate.

(3) Nothing in this section shall limit the operation of any other provision
of this Act or any written law imposing penalties (in respect of any
default referred to in this section) on that person or an officer of a
body corporate if that person is a body corporate.

34. Keeping of limited liability partnership records.

(1) A limited liability partnership shall take reasonable precautions to maintain
the records it is required to maintain under sub-section (1) of section 27
in such a manner so as to
(a) prevent loss or destruction thereof;

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(b) prevent falsification of entries;
(c) facilitate detection and correction of inaccuracies.

(2) If a default is made in complying with sub-section (1), the manager shall be

Chapter IX
Taxation

35. Income Tax and Capital Gains.

(1) For the purposes of taxation, any activity carried on by a limited
liability partnership with a view to profit shall be treated as carried
on in partnership by its partners (and not by the limited liability
partnership as such) and, accordingly, the property of the limited
liability partnership shall be treated for those purposes as property of
the partners.

(2) Where a limited liability partnership carries on a trade or business with
a view to profit-
(a) assets held by the limited liability partnership shall be
treated for the purposes of tax in respect of capital gains
as held by its partners; and
(b) any dealings by the limited liability partnership shall be
treated for those purposes as dealings by its partners in
partnership (and not by the limited liability partnership as
such), in respect of capital gains accruing to the partners
of the limited liability partnership on the disposal of any of
its assets shall be assessed and charged on them
separately.

Chapter X
Assignment and Transfer of Partnership Rights

36. Partner's transferable interest.

A partner's economic rights in the limited liability partnership are freely
transferable in accordance with section 37. Non-economic rights of a partner
are not transferable unless specified by the limited liability partnership
agreement.

37. Transfer of partner's transferable interest.

A transfer in whole or in part of a partner's transferable interest is permissible
and does not by itself cause the partner's disassociation or a dissolution and
winding up of the limited liability partnership's activities and does not entitle
the assignee to participate in the management or conduct of the limited
liability partnership's activities, nor access information concerning the
limited liability partnership's transactions.

Chapter XI
Investigation

23

38. Investigation of the affairs of a limited liability partnership.
(1) The Central Government may appoint one or more inspectors to
investigate the affairs of an LLP and to report on them in such manner
as it may direct.

(2) The appointment shall be made if, Tribunal, either suo moto, or on an
application received from not less than one fifth partners of LLP, by
order, declares that the affairs of LLP ought to be investigated;

(3) The appointment may be made:-

(a) on the basis of the report of the Registrar to the effect that the
affairs of LLP ought to be investigated;

(b) on the application (alongwith supporting evidence and security
amount as may be prescribed) of not less than one fifth of
total number of partners of LLP;

(c) if LLP, by a resolution passed, declares that the affairs of the
LLP ought to be investigated; and

(d) if in the opinion of the Central Government/Tribunal, there are
circumstances suggesting

(i) that the business of the limited liability
partnership is being conducted with an intent
to defraud its creditors, partners or any other
persons, or otherwise for a fraudulent or
unlawful purpose, or in a manner oppressive or
unfairly prejudicial to some or any of its
partners, or that the limited liability
partnership was formed for any fraudulent or
unlawful purpose;
(ii) that the partners of LLP have been guilty of
fraud, misfeasance or other misconduct
towards the limited liability partnership or
towards any of its partners; or
(iii) that the partners of the limited liability
partnership have not been given all the
information with respect to its affairs which
they might reasonably expect, including
information relating to the remuneration
payable to a manager of the limited liability
partnership.

39. Application by partners to be supported by evidence and power to
call for security.

An application by partners of the limited liability partnership shall be
supported by such evidence as the Tribunal may require for the purpose
of showing that the applicants have good reason for requiring the
investigation; and the Central Government may, before appointing an

24

inspector, require the applicants to give security, for such amount as may
be prescribed, for payment of the costs of the investigation.

40. Firm, body corporate or association not to be appointed as
inspector.

No firm, body corporate or other association shall be appointed as an
inspector.

41. Power of inspectors to carry investigation into affairs of related
entities, etc.
(1) If an inspector appointed by the Central Government to investigate
the affairs of the limited liability partnership thinks it necessary for
the purposes of his investigation to investigate also the affairs of
an entity which has been associated in the past or is presently
associated with the limited liability partnership or any present or
former partner or manager of the limited liability partnership, the
inspector shall have the power to do so and shall report on the
affairs of the other entity or partner or manager, so far as he
thinks that the results of his investigation thereof are relevant to
the investigation of the affairs of the limited liability partnership.

(2) In the case of any entity or partner or manager referred to in sub-
section (1), the inspector shall not exercise his power of
investigating into, and reporting on, its or his affairs without first
having obtained the prior approval of the Central Government
thereto:

Provided that before according approval under this sub-section,
the Central Government shall give the entity or partner or
manager a reasonable opportunity to show cause why such
approval should not be accorded.

42. Production of documents and evidence.
(1) It shall be the duty of the manager and partners of the limited
liability partnership, -
(a) to preserve and to produce to an inspector or any person
authorised by him in this behalf with the previous approval
of the Central Government, all books and papers of, or
relating to, the limited liability partnership or, as the case
may be, or of relating to the other entity, which are in their
custody or power; and
(b) otherwise to give to the inspector all assistance in
connection with the investigation which they are reasonably
able to give.

(2) The inspector may, with the previous approval of the Central
Government, require any entity other than an entity referred to in
sub-section (1) to furnish such information to, or produce such
books and papers before, him or any person authorised by him in
this behalf with the previous approval of that Government as he
may consider necessary if the furnishing of such information or the

25

production of such books and papers is relevant or necessary for
the purposes of his investigation.

(3) The inspector may keep in his custody any books and papers
produced under sub-section (1) or sub-section (2) for six months
and thereafter shall return the same to the limited liability
partnership, other entity or individual by whom or on whose behalf
the books and papers are produced:

Provided that the inspector may call for the books and papers if
they are needed again:

Provided further that if certified copies of the books and papers
produced under sub-section (2) are furnished to the inspector, he
shall return those books and papers to the entity or person
concerned.

(4) An inspector may examine on oath
(a) any of the persons referred to in sub-section (1) ; and
(b) with the previous approval of the Central Government, any
other person, in relation to the affairs of the LLP, as the
case may be ; and may administer an oath accordingly and
for that purpose may require any of those persons to
appear before him personally.

(5) If any person fails without reasonable cause or refuses
(a) to produce to an inspector or any person authorised by him
in this behalf with the previous approval of the Central
Government any book or p aper which it is his duty under
sub-section (1) or sub-section (2) to produce ; or
(b) to furnish any information which it is his duty under sub-
section (2) to furnish ; or
(c) to appear before the inspector personally when required to
do so under sub-section (4) or to answer any question
which is put to him by the inspector in pursuance of that
sub-section ; or
(d) to sign the notes of any examination,

he shall be punishable under the Act.

(6) Notes of any examination under sub-section (4) shall be taken
down in writing and shall be read over to or by, and signed by, the
person examined, and may thereafter be used in evidence against
him.

43. Seizure of documents by inspector.
(1) Where in the course of investigation, the inspector has reasonable
gro und to believe that the books and papers of, or relating to,
limited liability partnership or other entity or partner or manager
of such limited liability partnership may be destroyed, mutilated,
altered, falsified or secreted, the inspector may make an
application to the Magistrate of First Class or, as the case may be,

26

the Metropolitan Magistrate, having jurisdiction for an order for the
seizure of such books and papers.

(2) After considering the application and hearing the inspector, if
necessary, the Magistrate may by order authorise the inspector
(a) to enter, with such assistance, as may be required, the place
or places where such books and papers are kept ;
(b) to search that place or those places in the manner specified in
the order ; and
(c) to s eize books and papers he considers necessary for the
purposes of his investigation.

(3) The inspector shall keep in his custody the books and papers
seized under this section for such period not later than the
conclusion of the investigation as he considers necessary and
thereafter shall return the same to the concerned entity or person
from whose custody or power they were seized and inform the
Magistrate of such return:

Provided that the inspector may, before returning such books and
papers as aforesaid, place identification marks on them or any part
thereof.

(4) Save as otherwise provided in this section, every search or seizure
made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1898, relating to
searches or seizures made under that Code.

44. Inspectors' report.
(1) The inspectors may, and if so directed by the Central Government
shall, make interim reports to that Government, and on the
conclusion of the investigation, shall make a final report to the
Central Government. Any such report shall be written or printed,
as the Central Government may direct.

(2) The Central Government
(a) shall forward a copy of any report (other than an interim
report) made by the inspectors to the limited liability partnership
at its registered office, and also to any other entity or person dealt
with or related to the report;
(b) may, if it thinks fit, furnish a copy thereof, on request and on
payment of the prescribed fee, to any person or entity related to
or affected by the report;
(c) may also cause the report to be published.

45. Prosecution.

If, from the report it appears to the Central Government that any person
in relation to the limited liability partnership or in relation to any other
entity whose affairs have been investigated, been guilty of any offence for
which he is liable, the Central Government may, after taking such legal
advice as it thinks fit, prosecute such person(s) for the offence; and it
shall be the duty of all partners, manager and other employees and

27

agents of the limited liability partnership or other entity, as the case may
be, to give the Central Government all assistance in connection with the
prosecution which they are reasonably able to give.

46. Application for winding up of limited liability partnership or other
entity.

If any such limited liability partnership or other entity is liable to be
wound up under this Act or any other legislation for the time being in
force, and it appears to the Central Government from any such report as
aforesaid that it is expedient to do so by reason of any such
circumstances as are referred to in sub-clause (i) or (ii) of clause (d) of
sub-section (3) of section 38, the Central Government may, unless the
limited liability partnership or entity is already being wound up by the
Tribunal cause to be presented to the Tribunal by any person authorised
by the Central Government in this behalf, a petition for the winding up of
the limited liability partnership or entity on the ground that it is just and
equitable that it should be wound up.

47. Proceedings for recovery of damages or property.

(1) If from any such report as aforesaid, it appears to the Central
Government that proceedings ought, in the public interest, to be
brought by the limited liability partnership or any entity whose
affairs have been investigated,
(a) for the recovery of damages in respect of any fraud,
misfeasance or other misconduct in connection with the promotion
or formation, or the management of the affairs, of such limited
liability partnership or such other entity; or
(b) for the recovery of any property of such limited liability or such
other entity, which has been misapplied or wrongfully retained;
the Central Government may itself bring proceedings for that
purpose in the name of such limited liability partnership or such
other entity.

(2) The Central Government shall indemnify such limited liability
partnership or such other entity against any costs or expenses
incurred by it in, or in connection with, any proceedings brought
by virtue of sub-section (1).

48. Expenses of investigation.

(1) The expenses of and incidental to an investigation by an inspector
appointed by the Central Government under this Act shall be
defrayed in the first instance by the Central Government; but the
following persons shall, to the extent mentioned below, be liable to
reimburse the Central Government in respect of such expenses:
(a) any person who is convicted on a prosecution, or who is
ordered to pay damages or restore any property in
proceedings brought by virtue of section 47, may, in the
same proceedings, be ordered to pay the said expenses to
such extent as may be specified by the Tribunal convicting

28

such person, or ordering him to pay such damages or
restore such property, as the case may be;
(b) any entity in whose name proceedings are brought as
aforesaid shall be liable, to the extent of the amount or
value of any sums or property recovered by it as a result of
the proceedings ; and
(c) unless, as a result of the investigation, a prosecution is
instituted in pursuance of section 45,
(i) any entity, a partner or manager or any other
person dealt with by the report of the inspector shall
be liable to reimburse the Central Government in
respect of the whole of the expenses, unless and
except in so far as, the Central Government
otherwise directs; and
(ii) the applicants for the investigation, where the
inspector was appointed in pursuance of the
provisions of sub-section (2) of section 38, shall be
liable to such extent, if any, as the Central
Government may direct.

(2) Any amount for which a limited liability partnership or other entity
is liable by virtue of clause (b) of sub-section (1) shall be a first
charge on the sums or property mentioned in that clause.
(3) The amount of expenses in respect of which any limited liability
partnership, entity, a partner or manager or any other person is
liable under sub-clause (i) of clause (c) of sub-section (1) to
reimburse the Central Government shall be recoverable as an
arrear of land revenue.

(4) For the purposes of this section, any costs or expenses incurred by
the Central Government or in connection with proceedings brought
by virtue of section 47 (including expenses incurred by virtue of
sub-section (2) thereof) shall be treated as expenses of the
investigation giving rise to the proceedings.

49. Inspectors' report to be evidence.
A copy of any report of any inspector or inspectors appointed under this
Act, authenticated in such manner, if any, as may be prescribed, shall be
admissible in any legal proceeding as evidence of the opinion of the
inspector or inspectors in relation to any matter contained in the report.

Chapter XII
Conversion to Limited Liability Partnership

50. Conversion from firm to limited liability partnership.
The provisions of the Second Schedule shall apply to the conversion from
firm to a limited liability partnership.

51. Conversion from private company to limited liability partnership.
The provisions of the Third Schedule shall apply to the conversion from
private company and unlisted public company to a limited liability
partnership.

29

52. Conversion from unlisted public company to limited liability
partnership.
The provisions of the Fourth Schedule shall apply to the conversion from
unlisted public company to a limited liability partnership.

Chapter XIII
Foreign Limited Liability Partnership

53. Foreign Limited Liability Partnership.
Regulations shall make provision regarding a foreign limited liability
partnership.

Chapter XIV
Amalgamation, Merger and Demerger of Limited Liability Partnerships

54. Amalgamation, Merger and Demerger of Limited Liability
Partnerships.
Regulations shall make provision about the amalgamation, merger and
demerger of limited liability partnerships.

Chapter XV
Winding Up and Dissolution

55. Winding Up and Dissolution.

(1) The winding up of a limited liability partnership may be either
voluntary or by the Tribunal.

(2) Regulations shall make provision about the winding up and dissolution
of limited liability partnerships.

(2) Regulations may make other provisions about the winding up and
dissolution of limited liability partnerships, and provision about the
winding up and dissolution of foreign limited liability partnerships.

Chapter XVI
Miscellaneous

56. Business Transactions of Partner with Partnership.

A partner may lend money to and transact other business with the limited
liability partnership and has the same rights and obligations with respect to
the loan or other transactions as a person who is not a partner.

57. Application of Company Law etc.

The Central Government may direct that any of the provisions of the
Companies Act, 1956 or any other enactment as may be prescribed: -

(a) shall apply to any limited liability partnership; or
(b) shall apply to any limited liability partnership with such
exception, modification and adaptation as may be prescribed.

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58. Electronic filing service.

(1) The Registrar may require any document to be lodged under this Act
to be filed electronically with the Registrar using the service provided
by the Registrar whereby documents under this Act may be filed with
or submitted to the Registrar electronically.

(2) Where any document is required to be filed with or submitted to the
Registrar electronically by any person using the service referred to in
sub-section (1), the Registrar may allow the document to be filed or
submitted by a prescribed person on behalf of the first-mentioned
person, subject to such conditions as may be imposed from time to
time by the Registrar on the prescribed person.

(3) Where the Registrar provides a service whereby documents required
under this Act may be filed electronically with the Registrar, the
Registrar and its officers or employees shall not be liable for any loss
or damage suffered by any person by reason of any error or omission
of whatever nature or however caused appearing in any document
obtained by any person under the service, if the error or omission —
(a) is made in good faith and in the ordinary course of the discharge of
the duties of such officers or employees; or
(b) has occurred or arisen as a result of any defect or breakdown in
the service or in any of the equipment used for the service.

(4) A copy of or an extract from any document electronically filed with or
submitted to the Registrar using the service referred to in sub-section
(1) which is supplied or issued by the Registrar and certified through
digital signature to be a true copy of or extract from such document
shall, in any proceedings, be admissible in evidence as of equal validity
with the original document.

(5) Any information supplied by the Registrar that is certified by the
Registrar through digital signature to be a true extract from any
document filed or lodged with or submitted to the Registrar using the
service referred to in sub-section (1) shall, in any proceedings, be
admissible in evidence and be presumed, unless evidence to the
contrary is adduced, to be a true extract from such document.

(6) Sub-sections (4) and (5) shall have effect notwithstanding the
provisions of any other written law.

59. Penalty.

Penalty for the violation of various provisions of this Act shall be as specified
in the Fifth Schedule.

60. Application of other laws not barred.

The provisions of this Act shall be in addition to, and not in derogation of, the
provisions of any other law for the time being in force.

31

61. Power to make Regulations.

(1) The Central Government may, by notification, make regulations consistent
with this Act in order to carry out the purposes of the Act.

(2) Every regulation made under this Act shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is in session, for
a total period of thirty days which may be comprised in one session or in
two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the regulation, or both
Houses agree that the regulation should not be made, the regulation shall
thereafter have effect only in such modified form or be of no effect, as the
case may be; so, however that any such modification shall be without
prejudice to the validity of anything previously done under that
regulation.

62. Power to remove difficulties.

(1) If any difficulty arises in giving effect to the provisions of this Act,
the Central Government may, by order published in the Official
Gazette, make such provisions, not inconsistent with the provisions of
this Act as may appear to it to be necessary for removing the difficulty.

(2) Every order made under this section shall be laid, as soon as may be after
it is made, before each House of Parliament.

63. Power of Registrar to strike defunct limited liability partnership off
register.
(1) Where the R egistrar has reasonable cause to believe that a limited liability
partnership is not carrying on business or in operation, he shall write a letter
to the limited liability partnership inquiring whether the limited liability
partnership is carrying on business or in operation.
(2) If the Registrar does not within one month of sending the letter receive any
answer thereto, he shall, within fourteen days after the expiry of the month,
send to the limited liability partnership by post a registered letter referring to
the first letter, and stating that no answer thereto has been received and
that, if an answer is not received to the second letter within one month from
the date thereof, a notice will be published in the Official Gazette with a view
to striking the name of the limited liability partnership off the register.
(3) If the Registrar either receives an answer from the limited liability partnership
to the effect that it is not carrying on business or in operation, or does not
within one month after sending the second letter receive any answer, he may
publish in the Official Gazette, and send to the limited liability partnership by
registered post, a notice that, at the expiration of three months from the date
of that notice, the name of the limited liability partnership mentioned therein
will, unless cause is shown to the contrary, be struck off the register and the
limited liability partnership will be dissolved.
(4) If, in any case where a limited liability partnership is being wound-up, the
Registrar has reasonable cause to believe either that no liquidator is acting, or
that the affairs of the limited liability partnership have been completely

32

wound-up, and any returns required to be made by the liquidator have not
been made for a period of six consecutive months, the Registrar shall publish
in the Official Gazette and send to the limited liability partnership or the
liquidator, if any, a like notice as is provided in sub-section (3).
(5) At the expiry of the time mentioned in the notice referred to in sub-section
(3) or (4), the Registrar may, unless cause to the contrary is previously
shown by the limited liability partnership, strike its name off the register, and
shall publish notice thereof in the Official Gazette; and on the publication in
the Official Gazette of this notice, the limited liability partnership shall stand
dissolved.
(6) If a limited liability partnership, or any partner, manager or creditor thereof,
feels aggrieved by the limited liability partnership having been struck off the
register, the Tribunal, on an application made by the limited liability
partnership, partner, manager or creditor before the expiry of twenty years
from the publication in the Official Gazette of the notice aforesaid, may, if
satisfied that the limited liability partnership was, at the time of the striking
off, carrying on business or in operation or otherwise that it is just that the
limited liability partnership be restored to the register, order the name of the
limited liability partnership to be restored to the register; and the Tribunal
may, by the order, give such directions and make such provisions as seem
just for placing the limited liability partnership and all other persons in the
same position as nearly as may be as if the name of the limited liability
partnership had not been struck off.
(7) Upon a certified copy of the order under sub-section (6) being delivered to
the Registrar for registration, the limited liability partnership shall be deemed
to have continued in existence as if its name had not been struck off.

64. Offences by limited liability partnerships.

Where an offence under this Act committed by a limited liability partnership is
proved —
(a) to have been committed with the consent or connivance of a
partner(s) or manager of the limited liability partnership; or
(b) to be attributable to any neglect on the part of the partner(s) or
manager of that limited liability partnership, the partner(s) or manager
of the limited liability partnership (as the case may be) as well as that
limited liability partnership shall be guilty of the offence and shall be
liable to be proceeded against and punished accordingly.

65. Jurisdiction of the Tribunal.

Notwithstanding any provision to the contrary in any Act for the time being in
force, the Tribunal shall have jurisdiction to try any offence under this Act and
shall have power to impose the penalty or punishment in respect of the
offence.

66. General penalties.

Any person guilty of an offence under this Act for which no penalty is
expressly provided shall be liable to a fine which may extend to a sum as may
be prescribed under the Act.

33

FIRST SCHEDULE – DEFAULT PROVISIONS FOR LIMITED LIABILITY
PARTNERSHIPS

1. The mutual rights and duties of the partners and the mutual rights and duties
of the limited liability partnership and the partners shall be determined,
subject to the terms of any limited liability partnership agreement, by the
provisions in this Schedule.
2. All the partners of a limited liability partnership are entitled to share equally
in the capital, profits and losses of the limited liability partnership.
3. The limited liability partnership must indemnify each partner in respect of
payments made and personal liabilities incurred by him —
(a) in the ordinary and proper conduct of the business of the limited liability
partnership; or
(b) in or about anything necessarily done for the preservation of the business
or property of the limited liability partnership.
4. Every partner may take part in the management of the limited liability
partnership.
5. No partner shall be entitled to remuneration for acting in the business or
management of the limited liability partnership.
6. No person may be introduced as a partner without the consent of all existing
partners.
7. Any matter or issue relating to the limited liability partnership shall be
decided by resolution passed by a majority in number of the partners, and for
this purpose, each partner shall have one vote. However, no change may be
made in the nature of business of the limited liability partnership without the
consent of all the members.
8. Each partner shall render true accounts and full information of all things
affecting the limited liability partnership to any partner or his legal
representatives.
9. If a partner, without the consent of the limited liability partnership, carries on
any business of the same nature as and competing with the limited liability
partnership, he must account for and pay over to the limited liability
partnership all profits made by him in that business.
10. Every partner must account to the limited liability partnership for any benefit
derived by him without the consent of the limited liability partnership from
any transaction concerning the limited liability partnership, or from any use
by him of the property, name or any business connection of the limited
liability partnership.
11. No majority of the partners can expel any partner unless a power to do so has
been conferred by express agreement between the partners.

34

SECOND SCHEDULE - CONVERSION FROM FIRM TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) A firm may convert to a limited liability partnership by complying with
the requirements as to the conversion set out in this Schedule.

(2) Upon such conversion, the partners of the firm shall be bound by the
provisions of this schedule that are applicable to them.

(3) The Central Government may, by order published in the Gazette,
amend, add to or vary the provisions of this Schedule.

(4) In this paragraph, “convert”, in relation to a firm converting to a
limited liability partnership, means a transfer of the property, assets,
interests, rights, privileges, liabilities, obligations and the undertaking
of the firm to the limited liability partnership in accordance with the
provisions of this Schedule.

2. Eligibility for conversion.

A firm may apply to convert to a limited liability partnership in accordance
with this Schedule if and only if the partners of the limited liability partnership
to which the firm is to be converted, comprises all the partners of the firm
and no one else.

3. Statements to be lodged.

A firm may apply to convert to a limited liability partnership by lodging with
the Registrar —
(a) a statement by all of its partners in such medium and form as the
Registrar may prescribe containing the following particulars:
(i) the name and registration number (if applicable) of the firm; and
(ii) the date on which the firm was registered under the Partnership Act,
1932 or any written law (if applicable); and
(b) incorporation document and statement referred to in section 8.

4. Registration of conversion.

On receiving the documents referred to in paragraph 3, the Registrar shall
subject to the provisions of this Act, register the documents and issue a
certificate of registration in such form as the Registrar may determine stating
that the limited liability partnership is, on and from the date specified in the
certificate, registered under this Act.

5. Registrar may refuse to register.

(1) Nothing in this Schedule shall be construed to require the Registrar to
register any limited liability partnership if he is not satisfied with the
particulars or other information furnished under the provisions of this
Act.

35

(2) The Registrar may, in any particular case, require the documents
referred to in paragraph 3 to be verified in such manner as the Registrar
considers fit.

6. Effect of registration.

On and from the date of registration specified in the certificate of registration
issued under paragraph 4
(a) there shall be a limited liability partnership by the name specified in the
certificate of registration registered under this Act;
(b) all movable and immovable property vested in the firm, all assets,
interests, rights, privileges, liabilities, obligations relating to the firm and
the whole of the undertaking of the firm shall be transferred to and shall
vest in the limited liability partnership without further assurance, act or
deed; and
(c) the firm shall be deemed to be dissolved and if earlier registered under
the Partnership Act, 1932 removed from the records maintained under
that Act.

7. Registration in relation to property.

If any property to which paragraph 6 ( applies is registered with any
b)
authority, the limited liability partnership shall as soon as practicable after the
date of registration, take all necessary steps as required by the relevant
authority to notify the authority of the conversion and of the particulars of the
limited liability partnership in such medium and form as the authority may
prescribe.

8. Pending proceedings.

All proceedings by or against the firm which are pending on the date of
registration may be continued, completed and enforced by or against the

9. Continuance of conviction, ruling, order or judgment.

Any conviction, ruling, order or judgment in favour of or against the firm may
be enforced by or against the limited liability partnership.

10. Existing agreements.

Every agreement to which the firm was a party immediately before the date
of registration, whether or not of such nature that the rights and liabilities
thereunder could be assigned, shall have effect as from that day as if —
(a) the limited liability partnership were a party to such an agreement instead
of the firm; and
(b) for any reference to the firm, there were substituted in respect of
anything to be done on or after the date of registration a reference to the

36

11. Existing contracts, etc.
All deeds, contracts, schemes, bonds, agreements, applications, instruments
and arrangements subsisting immediately before the date of registration
relating to the firm or to which the firm is a party, shall continue in force on
and after that date as if they relate to the limited liability partnership and
shall be enforceable by or against the limited liability partnership as if the
limited liability partnership were named therein or were a party thereto
instead of the firm.

12. Continuance of employment.
Every contract of employment to which paragraph 10 or 11 applies shall
continue in force on or after the date of registration as if the limited liability
partnership were the employer thereunder instead of the firm.

13. Existing appointment, authority or power.
(1) Every appointment of the firm in any role or capacity which is in force
immediately before the date of registration shall take effect and
operate from that date as if the limited liability partnership were
appointed.
(2) Any authority or power conferred on the firm which is in force
immediately before the date of registration shall take effect and
operate from that date as if it were conferred on the limited liability
partnership.

14. Application of paragraphs 6 to 13.
Paragraphs 6 to 13 shall not apply to any approval, permit or licence issued
under any written law to the firm which is in force immediately before the
date of registration of the limited liability partnership.

15. Partner liable for liabilities and obligations of firm before conversion.

(1) Notwithstanding paragraphs 6 to 13, every partner of a firm that has
converted to a limited liability partnership shall continue to be
personally liable (jointly and severally with the limited liability
partnership) for the liabilities and obligations of the firm which were
incurred prior to the conversion or which arose from any contract
entered into prior to the conversion.

(2) If any such partner discharges any liability or obligation referred to in
sub-paragraph (1), he shall be entitled (subject to any agreement with
the limited liability partnership to the contrary) to be fully indemnified
by the limited liability partnership in respect of such liability or
obligation.

16. Notice of conversion in correspondence.

(1) The limited liability partnership shall ensure that for a period of 12
months commencing not later than 14 days after the date of
registration, every official correspondence of the limited liability
partnership bears the following:
(a) a statement that it was, as from the date of registration, converted
from a firm to a limited liability partnership; and

37

(b) the name and registration number (if applicable) of the firm from
which it was converted.

(2) Any limited liability partnership which contravenes sub-paragraph (1)

38

THIRD SCHEDULE

CONVERSION FROM PRIVATE COMPANY TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) In this Schedule —
(a) "company" means a private company as defined under Section 3
(1) (iii) of the Companies Act, 1956;
(b) "convert" in relation to a private company converting to a limited
liability partnership, means a transfer of the property, assets,
interests, rights, privileges, liabilities, obligations and the
undertaking of the private company to the limited liability
partnership in accordance with this Schedule.

(2) A private company may convert to a limited liability partnership by
complying with the requirements as to the conversion set out in this
Schedule.

(3) Upon such conversion, the private company, its shareholders, the
limited liability partnership to which the private company has
converted and the partners of that limited liability partnership shall be
bound by the provisions of this Schedule that are applicable to them.


A company may apply to convert to a limited liability partnership in
accordance with this Schedule if and only if —
(a) there is no security interest in its assets subsisting or in force at the time
of application; and
(b) the partners of the limited liability partnership to which it converts
comprises all the shareholders of the company and no one else.

A company may apply to convert to a limited liability partnership by lodging
with the Registrar —
(a) a statement by all its shareholders in such medium and form as the
(i) the name and registration number of the company; and
(ii) the date on which the company was incorporated under the
Companies Act, 1956; and

On receiving the documents referred to in paragra ph 3, the Registrar shall
subject to the provisions of this Act, register the documents and issue a

39

5. Registrar may refuse to Register.
Act.

considers fit.

On and from the date of registration specified in the notice of registration
issued under paragraph 4 —
(a) there shall be a limited liability partnership by the name specified in the
certificate of registration registered under this Act;
(b) all movable and immovable property vested in the company, all assets,
interests, rights, privileges, liabilities, obligations relating to the
company and the whole of the undertaking of the company shall be
transferred to and shall vest in the limited liability partners hip without
further assurance, act or deed; and
(c) the company shall be deemed to be dissolved and removed from the
records of the Registrar of Companies.

If any property to which paragraph 6 ( b) applies is registered with any
limited liability partnership in such medium and form as the authority may
determine.

All proceedings by or against the company which are pending on the date of

Any conviction, ruling, order or judgment in favour of or against the company
may be enforced by or against the limited liability partnership.

Every agreement to which the company was a party immediately before the
date of registration, whether or not of such nature that the rights and
liabilities thereunder could be assigned, shall have effect as from that day as
if —
(a) the limited liability partnership were a party to such an agreement instead
of the company; and
(b) for any reference to the company, there were substituted in respect of
anything to be done on or after the date of registration a reference to
the limited liability partnership.

40

relating to the company or to which the company is a party shall continue in
force on and after that date as if they relate to the limited liability partnership
and shall be enforceable by or against the limited liability partnership as if the
instead of the company.

partnership were the employer thereunder instead of the company.

(1) Every appointment of the company in any role or capacity which is in
force immediately before the date of registration shall take effect and
appointed.
(2) Any authority or power conferred on the company which is in force
immediately before the date of registration shall take effect and operate
from that date as if it were conferred on the limited liability partnership.

under any written law to the company which is in force immediately before
the date of registration of the limited liability partnership.

from a company to a limited liability partnership; and
(b) the name and registration number of the company from which it was
converted.


41

FOURTH SCHEDULE

CONVERSION FROM UNLISTED PUBLIC COMPANY TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) In this Schedule —
(a) "company" means an unlisted public company;
(b) "convert" in relation to a company converting to a limited liability
partnership, means a transfer of the property, assets, interests,
rights, privileges, liabilities, obligations and the undertaking of the
company to the limited liability partnership in accordance with this
Schedule;
(c) “listed company” means a listed company as defined in the SEBI
(Disclosure & Investor Protection) Guidelines, 2000.
(d) “unlisted public company”, means a company which is not a listed
company.

(2) A company may convert to a limited liability partnership by complying
with the requirements as to the conversion set out in this Schedule.

(3) Upon such conversion, the company, its shareholders, the limited
liability partnership to which the company has converted and the
partners of that limited liability partnership shall be bound by the
provisions of this Schedule that are applicable to them.


A company may apply to convert to a limited liability partnership in
accordance with this Schedule if and only if —
(a) there is no security interest in its assets subsisting or in force at the time
of application; and
(b) the partners of the limited liability partnership to which it converts
comprises all the shareholders of the company and no one else.

A company may apply to convert to a limited liability partnership by lodging
with the Registrar —
(a) a statement by all its shareholders in such medium and form as the
(i) the name and registration number of the company; and
(ii) the date on which the company was incorporated under the
Companies Act, 1956; and

On receiving the documents referred to in paragraph 3, the Registrar shall
subject to the provisions of t his Act, register the documents and issue a

42


5. Registrar may refuse to Register.
Act.

considers fit.

On and from the date of registration specified in the notice of registration
issued under paragraph 4 —
(a) there shall be a limited liability partnership by the name specified in
the certificate of registration registered under this Act;
(b) all movable and immovable property vested in the company, all
assets, i terests, rights, privileges, liabilities, obligations relating to
n
the company and the whole of the undertaking of the company shall
be transferred to and shall vest in the limited liability partnership
without further assurance, act or deed; and
(c) the company shall be deemed to be dissolved and removed from the
records of the Registrar of Companies.

If any property to which paragraph 6 ( applies is registered with any
b)
limited liability partnership in such medium and form a the authority may
s
determine.

All proceedings by or against the company which are pending on the date of

Any conviction, ruling, order or judgment in favour of or against the company
may be enforced by or against the limited liability partnership.

Every agreement to which the company was a party immediately before the
date of registration, whether or not of such nature that the rights and
liabilities thereunder could be assigned, shall have effect as from that day as
if —
(a) the limited liability partnership were a party to such an agreement
instead of the company; and
(b) for any reference to the company, there were substituted in respect of
anything to be done on or after the date of registration a reference to

43

relating to the company or to which the company is a party shall continue in
force on and after that date as if they relate to the limited liability partnership
and shall be enforceable by or against the limited liability partnership as if the
instead of the company.

partnership were the employer thereunder instead of the company.

(1) Every appointment of the company in any role or capacity which is in
force immediately before the date of registration shall take effect and
appointed.
(2) Any authority or power conferred on the company which is in force
immediately before the date of registration shall take effect and operate
from that date as if it were conferred on the limited liability partnership.

under any written law to the company which is in force immediately before
the date of registration of the limited liability partnership.

from a company to a limited liability partnership; and
(b) the name and registration number of the company from which it
was converted.


44

FIFTH SCHEDULE
PENALTIES

Section General nature of Penalty Daily default
offence fine (where
applicable)

7 (1) Non-compliance with the Fine which may Which may
provision relating to extend to Rupees extend to
appointment of Manager Five Lakh subject to Rupees Five
a minimum of Hundred
Rupees Ten subject to a
Thousand. minimum of
Rupees fifty.

provision relating to filing extend to Rupees extend to
of particulars, consent One Lakh subject to Rupees Five
and change of manager. a minimum of Hundred
Rupees Fifty.

8 (3) Making false statement Imprisonment for a
relating to incorporation term which may
extend to two years
and also with a fine
which may extend
to Rupees Five Lakh
subject to a
minimum of Rupees
Ten Thousand.

provisions relating change extend to Rupees extend to
of registered office Twenty Five Rupees Five
Thousand subject to Hundred
a minimum of subject to a
Rupees Two minimum of
Thousand. Rupees Fifty.

direction of the Central extend to Rupees extend to
Government for change of Five Lakh subject to Rupees Five
name a minimum of Hundred
Rupees fifty.

provision relating to extend to Rupees extend to

45

publication of name and Twenty Five Rupees Five
limited liability Thousand subject to Hundred

provisions relating to extend to Rupees extend to
registration of changes in Twenty Five Rupees Five
partners Thousand subject to Hundred

21 (2) Carrying on business with Imprisonment for a Which may
fraudulent purposes term which may extend to
extend to two years Rupees Five
and also with fine Hundred
which may extend subject to a
to Rupees Five Lakh minimum of
subject to a Rupees fifty.
minimum of Rupees
Fifty Thousand.

27 (3) Failure to maintain Fine which may
records extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.

28 (4) Failure to lodge the Fine which may Which may
declaration of solvency extend to Rupees extend to
One Lakh subject to Rupees Five
a minimum of Hundred
Rupees fifty.

28 (5) Making declaration Fine which may
without reasonable extend to Rupees
grounds Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.

28 (6) Furnishing false or Fine which may
misleading information to extend to Rupees
the manager One Lakh subject to
a minimum of

46

Rupees Ten
Thousand.

28 (7) Declaration made with an Fine which may
intent to defraud creditors extend to Rupees
Five Lakh subject to
a minimum of
Rupees Fifty
Thousand.

29 (3) Failure to comply with any Fine which may Which may
summons or requisition of extend to Rupees extend to
the Registrar Twenty Five Rupees Five
Thousand subject to Hundred
Thousand. Rupees fifty.

30 Providing false Fine which may
information to the extend to Rupees
Registrar One Lakh subject to
a minimum of
Rupees Ten
Thousand.

31 Composition of offence

34 (2) Failure to take reasonable Fine which may
precautions to maintain extend to Rupees
the records Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.

42 (5) Non-Compliance of Fine which may Which may
production of documents Twenty Five Rupees Five
and evidence Thousand subject to Hundred
Thousand. Rupees fifty.

66 General Penalties Rupees Five Lakhs. Rupees One
Thousand.

Second
Schedule

Para 16 Non-Compliance with Fine which may Which may

47

notice of conversion in One Lakh subject to Rupees Five
correspondence a minimum of Hundred
Rupees fifty.

Third
Schedule

Rupees fifty.

Fourth
Schedule

Rupees fifty.

LLP REGULATIONS.

48

CHAPTER 2: LIMITED LIABILITY PARTNERSHIP LAWS IN THE UNITED
STATES OF AMERICA

2.0 Introduction
A limited liability partnership in United States of America is considered as a special
type of partnership that requires a special filing with the State where the partners
operate. This partnership form offers all partners the right to participate in the
management and the operation of a partnership without subjecting themselves to
unlimited personal liability, as is the case in general partnerships 8 . However, if the
special laws governing it are not precisely followed, they can be held as general
partnership in a court of law. Moreover, f the partners want, the old partnership
i
agreement can continue to govern the newly formed LLP. A partnership, especially a
limited liability partnership, transacting business in any state other than the state of
domicile is required to register with the Secretary of the foreign state as a foreign
partnership9 .

The idea for the LLP has been credited to “a twenty-odd person law firm from
Lubbock,” Texas1 0 . Their idea, which led to the enactment of the first LLP statute in
Texas in 1991, was a reaction to the legal fallout from an economic calamity. The
LLP was a direct outgrowth of the collapse of real estate and energy prices in the late
1980s, and the concomitant disaster that befell Texas’s banks and savings and loan
associations. Texas led the nation in bank and savings and loans failures during the
1980s 1 1 .

The US Federal Deposit Insurance Corporation (“FDIC”), having made huge payouts
to depositors, did its best to recover some of its losses from those who were (or
might arguably be) legally responsible for the losses. Of course, directors and
officers of the failed financial institutions were pursued, but their personal assets
were dwarfed by the size of the losses. Naturally, the FDIC looked in all directions for
defendants who could provide more meaningful compensation for its losses, and its
gaze fell on accountants and lawyers who had provided professional services to the
failed institutions. Large accounting firms and law firms that had a relationship with
the failed institutions were particularly inviting targets because, not only would they
have liability insurance, but the personal wealth of their many partners would be
available to help satisfy any judgment.

If the FDIC could show that one member of a professional firm was guilty of wrongful
conduct in their professional relationship with a failed financial institution, all
members of the firm would be personally liable. This gave the FDIC considerable
leverage in its negotiations with firms and their insurers where there was substantial
evidence that one or more members of the firm had fallen short in discharging their
professional duties or were parties to outright fraud.

The enactment of Texas legislation allowed members of certain professions who were
carrying on business as ordinary partnerships to register as LLPs. Once a firm was

8
Margaret Bartschi, Foundations of Business Organizations for Paralegals, p. 3.
9
Angela Schneeman, The Laws of Corporations, and other Business Organizations, p. 42.
10
Hamilton 1995 at 1073.
11
Hamilton 1995 at 1069.

49

registered as an LLP, each partner was shielded from personal liability claims against
the firm arising from any future malpractice of other members of the firm.

The “Texas m odel” for LLP legislation has two key characteristics. Firstly, its liability
shield only covers is professional malpractice claims. Secondly, the liability shield
does not protect a professional for personal malpractice, that is, where they are
personally involved in the wrongful conduct or have direct supervisory responsibility
over those who are personally involved in the wrongful conduct.

After Texas passed its LLP legislation, most other states quickly followed and today
all 51 states have passed laws that permit the formation of an LLP 1 2 . The following
table provides a birds’ eye view of the Statutes that contain provisions dealing with
the ‘Limited Liability Partnerships’ in various US States.

S. No. Name of the State Statute
1 Alabama Title 10 - Corporations, Partnerships and
Associations of the Code of Alabama 1975.
2 Alaska Title 32 – Partnership of the Alaska Statutes
2004.
3 Arizona Title 29 – Partnership of the Arizona Revised
Statutes.
4 Arkansas Chapter 42 - Uniform Partnership Act of the
Arkansas Code.
5 California Article 10 (Sec. 16951-16962) of Chapter 5
(Uniform Partnership Act of 1994) of the
California Corporations Code.
6 Colorado Title 7 - Corporations and Associations of the
Colorado Revised Statutes.
7 Connecticut Title 34 of the Connecticut General Statutes.
8 Delaware Chapter XV - Delaware Revised Uniform
Partnership Act of Title 6 on Commerce and
Trade of the Delaware Code.
9 District of Columbia Subchapter X - Limited Liability Partnership of
Chapter 1 - Uniform partnerships of Division V -
Local Business Affairs of Title 33 – Partnerships
of the District of Columbia Code 2001.
10 Florida Part II - Revised Uniform Partnership Act of
Chapter 620 – Partnership Laws of Title 36 of the
Florida Statutes 2005.
11 Georgia Chapter 14 - Georgia Business Corporation Code
of the Georgia Code.
12 Hawaii Part IV - Uniform Partnership Act of Chapter 25 –
Partnerships of the Hawaii Revised Statutes.
13 Idaho Part 10 - Limited Liability Partnership of Chapter
3 - Uniform Partnership Act of Title 53 –
Partnership of the Idaho statutes.
14 Illinois Uniform Partnership Act, Chapter 805 - Business
Organizations of the Illinois Compiled Statutes.

12
See Alan R. Bromberg & Larry E. Ribstein, Bromberg & Ribstein On Limited Liability Partnerships, The
Revised Uniform Partnership Act, And The Uniform Limited Partnership Act (2001) 15 (Aspen 2003)
(hereinafter Bromberg & Ribstein “Limited Liability”). Some states, including New York, California, Nevada
and Oregon, only offer LLP status to professional firms.

50

15 Indiana Chapter 1 - Uniform Partnership Act of Article 4 –
Partnerships of Title 23 - Business and Other
Associations of the Indiana Code.
16 Iowa Chapter 486A - Uniform Partnership Act of Article
10 - Limited Liability Partnership of Subtitle 1 –
Partnerships of Title XII - Business Entities of the
IOWA Code 2005.
17 Kansas Article 10 - Limited Liability Partnership of
Chapter 56a - Kansas Uniform Partnership Act of
the Kansas Statutes.
18 Kentucky Chapter 362 of the Kentucky Revised Statutes.

19 Louisiana Title 9 - Civil code-ancillaries (RS 9:3431) of the
Louisia na Revised Statutes.
20 Maine Chapter 15: Limited Liability Partnerships of Title
31: Partnerships and Associations of the Maine
Revised Statutes.
21 Maryland Title 9A - Maryland Revised Uniform Partnership
Act of the Maryland Code.
22 Massachusetts Chapter 108A of the General Laws of
Massachusetts.
23 Michigan Chapter 449 – Partnerships of the Michigan
Compiled Laws.
24 Minnesota Chapter 323A: Uniform Partnership Act of 1994
of the Minnesota Statutes.
25 Mississippi Chapter 12: Partnerships of Title 79
Corporations, Associations, And Partnerships of
the Mississippi Code.
26 Missouri Chapter 358 - Uniform Partnership Law of the
Missouri Revised Statutes.
27 Montana Chapter 10: Partnerships in General of Title 35:
Corporations, Partners hips, and Associations of
Montana Code.
28 Nebraska Chapter 67: Partnerships of the Nebraska
Statutes.
29 Nevada Chapter 87: Partnerships (Uniform Act) of
Nevada Revised Statues.
30 New Hampshire Chapter 304-A: Uniform Partnership Act of Title
XXVIII: Partnerships of New Hampshire Revised
Statutes.
31 New Jersey Title 42: Partnerships and Partnership
Associations of the New Jersey Statute.
32 New Mexico Article 1A: Uniform Partnerships of Chapter 54:
Partnerships of New Mexico Statutes.
33 New York Article 8-B: Registered limited liability
partnerships of Chapter 39 - Partnership Law of
the New York Consolidated Laws.
34 North Carolina Chapter 59: Partnership of North Carolina
General Statutes.
35 North Dakota Chapter 45-22: Limited Liability Partnerships of
Title 45: Partnerships of the North Dakota
Century Code

51

36 Ohio Chapter 1775: Uniform Partnership Law of Title
XVII: Corporations – Partnerships of Ohio
Revised Code.
37 Oklahoma Title 54: Partnership of the Oklahoma Statutes.

38 Oregon Title 7: Corporations And Partnerships of Chapter
67: Partnerships; Limited Liability Partnerships of
the Oregon Revised Statutes.
39 Pennsylvania Chapter 82: Registered Limited Liability
Partnerships of Title 15: Corporations and
Unincorporated Associations of Pennsylvania
Consolidated Statutes.
40 Rhode Island Chapter 7-12 of the General Laws of Rhode
Island.
41 South Carolina Chapter 41: Uniform Partnership Act of Title 33:
Corporations, Partnerships and Associations of
South Carolina Code of Laws.
42 South Dakota Chapter 48-7A: Uniform Partnership Act of Title
48: Partnerships of South Dakota Codified Laws.
43 Tennessee Chapter 1: Revised Uniform Partnership Act of
Title 61: Partnerships of the Tennessee Code.
44 Texas Title 4 – Partnerships of Chapter 152 - General
Partnerships and Chapter 153 – Limited
Partnerships of Business Organizations Code of
the Texas Statutes.
45 Utah Chapter 1: General and Limited Liability
Partnerships of Title 48: Partnership of Utah
Code.
46 Vermont Chapter 22: Partnerships of Title 11:
Corporations, Partnerships and Associations of
The Vermont Statutes.
47 Virginia Chapter 2.2: Virginia Uniform Partnership Act of
Title 50: Partnerships of the Code of Virginia.
48 Washington Chapter 25.05: Revised Uniform Partnership Act
of Title 25: Partnerships of the Revised Code Of
Washington.
49 West Virginia Chapter 47B: Uniform Partnership Act of the
West Virginia Code.
50 Wisconsin Chapter 70 of the Wisconsin Statutes 2005.
51 Wyoming Chapter 21: Uniform Partnership Act Of Title 17
Corporations, Partnerships And Associations of
Wyoming Statutes.

In US, there are three broad categories of protection that are afforded by a particular
LLP legislation:
(i) The protection (less than full shield) is provided against the tortuous acts
of other partners of the LLP.
(ii) The protection (less than full shield) is provided against acts whether
arising in tort or in contract.
(iii) The protection (full shield) is provided for any debt chargeable to the
partnership, whether arising in tort, contract, or otherwise.

52

The following table 1 3 provides a bird’s eye view of the liability shield provided by
various US LLP statutes.

Name of the State Full Shield or Less
Alabama Full Shield
Alaska Full Shield
Arizona Full Shield
Arkansas Full Shield
California Full Shield
Colorado Full Shield
Connecticut Full Shield
Delaware Full Shield
District of Columbia Full Shield
Florida Full Shield
Georgia Full Shield
Hawaii Full Shield
Idaho Full Shield
Illinois Full Shie ld
Indiana Full Shield
Iowa Full Shield
Kansas Full Shield
Kentucky Less than full shield
Louisiana Less than full shield
Maine Less than full shield
Full Shield
Maryland
Massachusetts Full Shield
Michigan Less than full shield
Minnesota Full Shield
Mississippi Full Shield
Missouri Full Shield
Montana Full Shield
Nebraska Full Shield
Nevada Full Shield
New Hampshire Full Shield
New Jersey Full Shield
New Mexico Full Shield
New York Full Shield
North Carolina Less than full shield
North Dakota Full Shield
Ohio Less than full shield
Oklahoma Full Shield
Oregon Full Shield
Pennsylvania 1 4 Less than full shield

13
Limit Practice Liability by Sandra K. Miller and James J. Tucker III.
14
The Pennsylvania legislature has introduced a proposal to extend a full shield to LLPs engaged in
accounting, law and medicine. Senate bill 392 (2005 PA SB 392) can be found online in the Pennsylvania
General Assembly Electronic Bill Room. Go to www.legis.state.pa.us/index.cfm, type S392 in the search
box and click on Go.

53

Rhode Island Full Shield
South Carolina Less than full shield
South Dakota Full Shield
Tennessee Less than full shield
Texas Full Shield
Utah Less than full shield
Vermont Full Shield
Virginia Full Shield
Washington Full Shield
West Virginia Less than full shield
Wisconsin Less than full shield
Wyoming Full Shield

2.1 LLP LAW IN NEW YORK
As earlier stated, Chapter 39 of the Partnership Law of the New York Consolidated
Laws (See Annexure 1) contain provisions relating to limited liability partnerships.
A partner can be an individual, a general partnership, an LLP, or a corporation. Each
partner has to be a licensed professional or a licensed professional firm (either
domestic or foreign), including an LLP, a professional service LLC or a professional
service corporation. An important feature of the New York law is that it restricts the
use of the limited liability partnership structure to professionals only.

Unlike general and limited partnerships, an LLP is characterized by limited personal
liability to all partners, making it an attractive alternative for professionals.
Specifically, partners of an LLP are not liable for debts and liabilities of the LLP or
those of other partners, arising in tort, contract, or otherwise solely by reason of
being a partner. Instead, the partners are liable only for their wrongful and negligent
acts, as well as any wrongful or negligent acts of an employee under that particular
partner’s direct supervision or control while rendering professional services on behalf
of the LLP.

To form an LLP, an eligible partnership must file a ‘Certificate of Registration’ with
the Department of State. The name of the limited liability partnership must indicate
the fact that it is a limited liability partnership. After registering, a notice of its
registration should be published in two newspapers in the county where the principal
office of the LLP is located once a week for six consecutive weeks. An affidavit of
publication must then be filed with the Department of State. Thereafter, every five
years the LLP must file a Status Statement containing the following information with
the Department of the State to maintain its LLP status:
(a) the name of the LLP;
(b) the address of the principal office of the LLP; and
(c) a statement that it is eligible to register as an LLP.

In the event the LLP fails to comply with these requirements, it will be unable to
maintain any action or special proceeding in New York. Moreover, the LLP will not be
able to represent that it is duly organized and in good standing, potentially
jeopardizing credit applications and contractual relations. In comparison to the other
partnership forms, the costs to form an LLP are typically greater. The more extensive
filing and publication requirements, coupled with the drafting of a partnership
agreement results in the higher costs1 5 .

15
Michael K de Chiara, Michael S Zetlin, New York Construction Law, p. 21

54

The NY Partnership Law 1 6 provides that an LLP, other than those authorized to
practice law, must be under the supervision of the Regents1 7 of the University of the
State of New York 1 8 . These LLPs are subject to disciplinary proceedings and penalties
in the same manner and to the same extent as are provided with respect to
individuals and their licenses relating to the applicable profession. The Board of
Regents, which oversees the State Education Department and its Office of the
Professions (OP), licenses individuals in 44 professions defined in the Education Law
and takes final action on all professional disciplinary matters. OP investigates and
prosecutes professional misconduct in all professions except law and medicine 1 9 .

The Appellate Division of the New York State Supreme Court regulates and
disciplines lawyers i NY.2 0 It has ultimate authority over lawyers' conduct in its
n
jurisdiction, and may impose discipline ranging from public censure to suspension of
the license to practice or even the permanent loss of the license if the charges are
sustained. All lawyers practising through LLPs or otherwise are expected to follow the
rules of ethics, known as the Code of Professional Responsibility, which have been
adopted by the Appellate Division.

The NY Partnership Law does not impose any financial disclosure requirement on
LLPs and does not require LLPs to keep or disclose any accounting records. Further,
the Law does not provide that the capital withdrawn by partners of an LLP while the
business is or is about to become insolvent may be clawed back in the event of
insolvency. However, in New York all LLPs that derive any income from the State of
New York are required to file an annual return and pay an annual fee based on the
number of partners 2 1 .

A LLP is treated as a partnership for tax purposes and income, gains, and losses of
the LLP flow through the LLP without taxation and are reported on the personal
income tax returns of the partners 2 2 .

A LLP may be dissolved if any partner turns bankrupt.2 3 A court does not have the
authority to disqualify a certain partner of an LLP, but it may order the dissolution of
an LLP if, on application by any partner, the court is satisfied that2 4 :
(a) a partner has been declared incompetent in any judicial proceeding or is
shown to be of unsound mind; or
(b) a partner becomes in any other way incapable of performing his or her part of
the partnership contract; or
(c) a partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business; or

16
Section 121-1500(m) of the NY Partnership Law
17
Established by the NY State Legislature, the Regents of the University of the State of New York are
responsible for the general supervision of all educational activities within the State, presiding over the
University and the New York State Education Department.
18
The University of the State of New York is a broad term encompassing all the institutions, both public
and private, offering education in the State.
19
A registered LLP authorized to practice medicine is subject to the pre-hearing procedures and hearing
procedures as are provided with respect to individual physicians and their licenses in the public health law.
20
Complaints against attorneys are directed to the Appellate Division's Attorney Grievance and
Disciplinary Committee in the county where the attorneys' offices are located.
21
See N.Y. Tax Law § 658 (c) (requiring payment of an annual fee of $50 per partner, with a minimum fee
of $325 and a maximum fee of $10,000)
22
See IRS Tax Form 8832.
23
Section 62 of the NY Partnership Law
24
Section 63 of the NY Partnership Law

55

(d) a partner willfully or persistently commits a breach of the partnership
agreement, or otherwise so conducts himself or herself in matters relating to
the partnership business that it is not reasonably practicable to carry on the
business in partnership with him or her. 2 5

2.2 LLP LAW IN DELAWARE
As already stated, c hapter XV on Delaware Revised Uniform Partnership Act of Title 6
on Commerce and Trade of the Delaware Code contain provisions relating to limited
liability partnerships (See Annexure 2).

The Delaware Code unlike the New York laws does not restrict the u of limited
se
liability partnership structure to professionals only. The LLP structure is open to all
businesses. An LLP is for all purposes a general partnership. However, by converting
to an LLP, the partners of a Delaware general partnership are able to limit their
liability.

Section 15-1001 of the Act states that an LLP can be formed by filing of a ‘statement
of qualification’ and by providing such other information as may be prescribed. The
Statement of Qualification must contain the name of the partnership, which must
include as the last words or letters of its name "Limited Liability Partnership," "L.L.P."
or "LLP", the address of the registered office and the name and address of the
registered agent for service of process, the number of partners, a statement that the
partnership elects to be a limited liability partnership and a specific, certain future
effective date or time if the Statement of Qualification if it is not to be effective upon
filing.

The Act provides that the contribution of a partner may be in cash, property or
services rendered, or a promissory note or other obligation to contribute cash or
property or to perform services. Further, a partner is obligated to the partnership to
perform any promise to contribute cash or property or to perform services. However,
if the partner is unable to perform any promise because of death, disability or any
other reason, the partner is obligated at the option of the partnership to contribute
cash equal to that portion of the value of the contribution that has not been made.
Most US states including New York, Texas and Florida have similar provisions.

The rights and duties of the partners are defined by the partnership agreement. The
partnership agreement may provide for classes or groups of partners having such
relative rights, powers and duties as the partnership agreement may provide, and
may make provision for the future creation in the manner provided in the partnership
agreement of additional classes or groups of partners having such relative rights,
powers and duties as may from time to time be established, including rights, powers
and duties senior to existing classes and groups of partners.

The partnership agreement may grant to all or certain identified partners or a
specified class or group of the partners the right to vote separately or with all or any
class or group of the partners on any matter. Voting by partners may be on a per
capita, number, financial interest, class, group or any other basis.

Further, a partnership agreement may set forth provisions relating to notice of the
time, place or purpose of any meeting at which any matter is to be voted on by any

25
The court may also decree a dissolution if the business of the partnership can only be carried on at a
loss or other circumstances render a dissolution equitable.

56

partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by proxy,
or any other matter with respect to the exercise of any such right to vote. Similar
provisions are there in other LLP Statutes in US.

The Act allows for a great amount of flexibility to modify the default provisions in a
partnership agreement. The partners, in the partnership agreement, may also modify
certain duties of partners to the partnership and other partners. Such flexibility
allows for partners in the partnership agreement to, among other things, specifically
address management of the partnership, distributions, voting rights and
indemnification, in order to appropriately reflect the intentions of the partners.

A limited liability partnership generally provides a full shield to its partners. An
obligation of a partnership incurred while the partnership is a LLP, whether arising in
contract, tort or otherwise, is solely the obligation of the partnership. A partner is not
personally liable, directly or indirectly, by way of indemnification, contribution,
assessme nt or otherwise, for such an obligation solely by reason of being or so
acting as partner. However, a partner may agree to be personally liable, directly or
indirectly, by way of indemnification, contribution, assessment or otherwise, for any
or all of the obligations of the partnership.

Sections 15-502 and 15-503 of the Act provide that a partnership interest is personal
property and that only a partner’s economic interest may be transferred. The
transferee only has the right to receive distributions but cannot participate in
management or inspect the LLP’s books or records.

The Act does not impose any financial disclosure requirement. While the LLP is
required to file an Annual Report, the required information relates only to non-
financial items, such as the name, address and number of partners of the LLP. An
LLP is not required to make any filing, or amend a previous filing, due solely to
changes in the number of partners of the partnership2 6 . The annual report must be
filed by June 1 of each year following the calendar year in which a statement of
qualification filed by a partnership becomes effective or a foreign partnership
becomes authorized to transact business in the State of Delaware.

The taxation of LLPs is very interesting, which regards LLPs primarily as partnerships
instead of treating them as companies.

In Delaware, a corporation or general partnership can easily convert to an LLP by
filing a certificate of conversion with the Secretary of State2 7 . The terms and
conditions on which a partnership becomes limited liability partnership must be
approved by the vote necessary to amend the partnership agreement except, in the
case of a partnership agreement that expressly considers obligations to contribute to
the partnership, the vote necessary to amend those provisions. However, partner in
a general partnership cannot avoid his liability by simply converting the general
partnership to an LLP.

Further, withdrawals (excluding compensation for benefits or payments made in the
ordinary course of business pursuant to a bona fide retirement or benefits program)
made by the partners of the LLP during three years prior to the commencement of

26
Scott E. Waxman and Eric N. Feldman, Delaware Limited Liability Partnerships
27
Section 15-1001, Delaware Revised Uniform Partnership Act

57

winding up are subject to clawback. However, this is subject to the condition that the
member knew or had reasonable grounds to believe that the LLP was, or would be
unable to pay its debts at the time of withdrawal2 8 .

28
Section 15-309(b) of the Delaware Code.

58

ANNEXURE 1

CHAPTER 39: PARTNERSHIP LAW OF THE NEW YORK CONSOLIDATED
LAWS 29

ARTICLE 1.
SHORT TITLE; DEFINITIONS; CONSTRUCTION.

Section 1. Short title.
2. General definitions.
3. Interpretation of knowledge and notice.
4. Rules of construction.
5. Rules for cases not provided for in this chapter.

Section 1. Short title.
This chapter shall be known as the "partnership law."

S 2. General definitions.
As used in this chapter "court" includes every court and judge having jurisdiction in
the case;

"Business" includes every trade, occupation, or profession;

"Person" includes individuals, partnerships, corporations, and other associations;

"Bankrupt" includes bankrupt under the federal bankruptcy act or insolvent under
any state insolvent act;

"Conveyance" includes every assignment, lease, mortgage, or encumbrance;

"Real property" includes land and any interest or estate in land.

"Foreign professional service corporation" has the meaning given to it in subdivision
(d) of section fifteen hundred twenty-five of the business corporation law.

"Foreign professional service limited liability company" has the meaning given to it in
subdivision (a) of section thirteen hundred one of the limited liability company law.

"Foreign limited liability partnership" means (i) any partnership without limited
partners operating under an agreement governed by the laws of any jurisdiction,
other than this state, each of whose partners is a professional authorized by law to
render a professional service within this state and who is or has been engaged in the
practice of such profession in such partnership or a predecessor entity, or will
engage in the practice of such profession in the foreign limited liability partnership
within thirty days of the date of the effectiveness of the notice provided for in
subdivision (a) of section 121-1502 of this chapter or each of whose partners is a
professional, at least one of whom is authorized by law to render a professional
service within this state and who is or has been engaged in the practice of such
profession in such partnership or a predecessor entity, or will engage in the practice
of such profession in the foreign limited liability partnership within thirty days of the
date of the effectiveness of the notice provided for in subdivision (a) of section 121-

29
http://public.leginfo.state.ny.us/menugetf.cgi

59

1502 of this chapter, (ii) any partnership without limited partners operating under an
agreement governed by the laws of any jurisdiction, other than this state, authorized
by, or holding a license, certificate, registration or permit issued by the licensing
authority pursuant to, the education law to render a professional service within this
stat e, which renders or intends to render professional services within this state and
which is denominated as a registered limited liability partnership or limited liability
partnership under such laws, regardless of any difference between such laws and the
laws of this state, or (iii) a foreign related limited liability partnership; except that all
partners of a foreign limited liability partnership that provides health, professional
engineering, land surveying, architectural and/or landscape architectural services in
this state shall be licensed in this state.

"Licensing authority" means the regents of the university of the state of New York or
the state education department, as the case may be, in the case of all professions
licensed under title eight of the education law, and the appropriate appellate division
of the supreme court in the case of the profession of law.

"New York registered foreign limited liability partnership" means a foreign limited
liability partnership which has filed a notice pursuant to subdivision (a) of section
121-1502 of this chapter that has not been withdrawn or revoked and which
complies with subdivision (1) of section 121-1502 of this chapter.

"Profession" includes any practice as an attorney and counsellor-at-law or as a
licensed physician, and those professions designated in title eight of the education
law.

"Professional" means an individual duly authorized to practice a profession, a
professional service corporation, a professional service limited liability company, a
foreign professional service limited liability company, a registered limited liability
partnership, a foreign limited liability partnership, a foreign professional service
corporation or a professional partnership.

"Professional partnership" means (1) a partnership without limited partners each of
whose partners is a professional authorized by law to render a professional service
within this state, (2) a partnership without limited partners each of whose partners is
a professional, at least one of whom is authorized by law to render a professional
service within this state or (3) a partnership without limited partners authorized by,
or holding a license, certificate, registration or permit issued by the licensing
authority pursuant to the education law to render a professional service within this
state; except that all partners of a professional partnership that provides medical
services in this state must be licensed pursuant to article 131 of the education law to
practice medicine in this state and all partners of a professional partnership that
provides dental services in this state must be licensed pursuant to article 133 of the
education law to practice dentistry in this state; and further except that all partners
of a professional partnership that provides professional engineering, land surveying,
architectural and/or landscape architectural services in this state must be licensed
pursuant to article 145, article 147 and/or article 148 of the education law to practice
one or more of such professions in this state.

"Professional service" means any type of service to the public that may be lawfully
rendered by a member of a profession within the purview of his or her profession.

60

"Professional service corporation" means (i) a corporation organized under article
fifteen of the business corporation law and (ii) any other corporation organized under
the business corporation law or any predecessor statute, which is authorized by, or
holds a license, certificate, registration or permit issued by, the licensing authority
pursuant to the education law to render professional services within this state.

"Professional service limited liability company" means a limited liability company
organized under article twelve of the limited liability company law.

"Registered limited liability partnership" means a partnership without limited
partners operating under an agreement governed by the laws of this state,
registered under section 121-1500 of this chapter and complying with section 121-
1501 of this chapter.

"Foreign related limited liability partnership" means a partnership without limited
partners operating under an agreement governed by the laws of any jurisdiction,
other than this state, which (i) is denominated as a limited liability partnership or
registered limited liability partnership under such laws, (ii) is not a foreign limited
liability partnership under clause (i) or (ii) of the paragraph defining foreign limited
liability partnership in this section, (iii) is affiliated with a professional service limited
liability company, foreign professional service limited liability company, professional
service corporation, foreign professional service corporation, registered limited
liability partnership that is a professional partnership under this section or a foreign
limited liability partnership under clause (i) or (ii) of the paragraph defining foreign
limited liability partnership in this section, and (iv) renders services related or
complementary to the professional services rendered by, or provides services or
facilities to, such professional service limited liability company, foreign professional
service limited liability company, professional service corporation, foreign
professional service corporation, registered limited liability partnership or foreign
limited lability partnership. For purposes of this paragraph, such a partnership is
i
affiliated with a professional service limited liability company, foreign professional
limited liability partnership if (1) at least a majority of partners in one partnership
are partners in the other partnership, (2) at least a majority of the partners in each
partnership also are partners, hold interests or are members in a limited liability
company or other business entity, and each partnership renders services pursuant to
an agreement with such limited liability company or other business entity, or (3) the
partnerships or the partnership and such professional service limited liability
company, such foreign professional service limited liability company, such
professional service corporation, or such foreign professional service corporation are
affiliates within the meaning of paragraph (a) of section nine hundred twelve of the
business corporation law.

"Related limited liability partnership" means a partnership without limited partners
operating under an agreement governed by the laws of this state, which (i) is not a
professional partnership under this section, (ii) is affiliated with a professional service
limited liability company, foreign professional service limited liability company,
professional service corporation, foreign professional service corporation, registered
limited liability partnership that is a professional partnership under this section or a
foreign limited liability partnership under clause (i) or (ii) of the paragraph defining
foreign limited liability partnership in this section, and (iii) renders services related or
complementary to the professional services rendered by, or provides services or

61

facilities to, such professional service limited liability company, foreign professional
limited liability partnership. For purposes of this paragraph, such a partnership is
affiliated with a professional service limited liability company, foreign professional
limited liability partnership if (1) at least a majority of partners in one partnership
are partners in the other partnership, (2) at least a majority of the partners in each
partnership also are partners, hold interests or are members in a limited liability
company or other business entity, and each partnership renders services pursuant to
an agreement with such limited liability company or other business entity, or (3) the
partnerships or the partnership and such professional service limited liability
company, such foreign professional service limited liability company, such
professional service corporation, or such foreign professional service corporation are
affiliates within the meaning of paragraph (a) of section nine hundred twelve of the
business corporation law.

S 3. Interpretation of knowledge and notice.
1. A person has "knowledge" of a fact within the meaning of this chapter not only
when he has actual knowledge thereof, but also when he has knowledge of such
other facts as in the circumstances shows bad faith.
2. A person has "notice" of a fact within the meaning of this chapter when the person
who claims the benefit of the notice:
(a) States the fact to such person, or
(b) Delivers through the mail, or by other means of communication, a written
statement of the fact to such person or to a proper person at his place of business or
residence.

S 4. Rules of construction.
1. The rule that statutes in derogation of the common law are to be strictly construed
shall have no application to this chapter.
2. The law of estoppel shall apply under this chapter.
3. The law of agency shall apply under this chapter.
4. This chapter shall be so interpreted and construed as to effect its general purpose
to make uniform the law of those states which enact it.
5. This chapter shall not be construed so as to impair the obligations of any contract
existing when the chapter goes into effect, nor to affect any action or proceedings
begun or right accrued before this chapter takes effect.

S 5. Rules for cases not provided for in this chapter. In any case not provided for in
this chapter the rules of law and equity, including the law merchant, shall govern.

ARTICLE 2.
NATURE OF A PARTNERSHIP.

Section 10. Partnership defined.
11. Rules for determining the existence of a partnership.
12. Partnership property.

S 10. Partnership defined.

62

1. A partnership is an association of two or more persons to carry on as co-owners a
business for profit and includes for all purposes of the laws of this state, a registered
2. But any association formed under any other statute of this state, or any statute
adopted by authority, other than the authority of this state, is not a partnership
under this chapter, unless such association would have been a partnership in this
state prior to the adoption of this chapter; but this chapter shall apply to limited
partnerships
except in so far as the statutes relating to such partnerships are inconsistent
herewith.

S 11. Rules for determining the existence of a partnership.
In determining whether a partnership exists, these rules shall apply:
1. Except as provided by section twenty-seven persons who are not partners as to
each other are not partners as to third persons.
2. Joint tenancy, tenancy in common, tenancy by the entireties, joint property,
common property, or part ownership does not of itself establish a partnership,
whether such co-owners do or do not share any profits made by the use of the
property.
3. The sharing of gross returns does not of itself establish a partnership, whether or
not the persons sharing them have a joint or common right or interest in any
property from which the returns are derived.
4. The receipt by a person of a share of the profits of a business is prima facie
evidence that he is a partner in the business, but no such inference shall be drawn if
such profits were received in payment:
(a) As a debt by installments or otherwise,
(b) As wages of an employee or rent to a landlord,
(c) As an annuity to a surviving spouse or representative of a deceased partner,
(d) As interest on a loan, though the amount of payment vary with the profits of the
business,
(e) As the consideration for the sale of the good-will of a business or other property
by installments or otherwise.

S 12. Partnership property.
1. All property originally brought into the partnership stock or subsequently acquired,
by purchase or otherwise, on account of the partnership is partnership property.
2. Unless the contrary intention appears, property acquired with partnership funds is
partnership property.
3. Any estate in real property may be acquired in the partnership name. Title so
acquired can be conveyed only in the partnership name.
4. A conveyance to a partnership in the partnership name, though without words of
inheritance, passes the entire estate of the grantor unless a contrary intent appears.

ARTICLE 3.
RELATIONS OF PARTNERS TO PERSONS DEALING WITH THE PARTNERSHIP.

Section 20. Partner agent of partnership as to partnership business.
21. Conveyance of real property of the partnership.
22. Partnership bound by admission of partner.
23. Partnership charged with knowledge of or notice to partner.
24. Partnership bound by partner’s wrongful act.
25. Partnership bound by partner’s breach of trust.
26. Nature of partner’s liability.

63

27. Partner by estoppel.
28. Liability of incoming partner.

S 20. Partner agent of partnership as to partnership business.
1. Every partner is an agent of the partnership for the purpose of its business, and
the act of every partner, including the execution in the partnership name of any
instrument, for apparently carrying on in the usual way the business of the
partnership of which he is a member binds the partnership, unless the partner so
acting has in fact no authority to act for the partnership in the particular matter, and
the person with
whom he is dealing has knowledge of the fact that he has no such authority.
2. An act of a partner which is not apparently for the carrying on of the business of
the partnership in the usual way does not bind the partnership unless authorized by
the other partners.
3. Unless authorized by the other partners or unless they have abandoned the
business, one or more but less than all the partners have no authority to:
(a) Assign the partnership property in trust for creditors or on the assignee’s promise
to pay the debts of the partnership.
(b) Dispose of the good-will of the business.
(c) Do any other act which would make it impossible to carry on the ordinary
business of the partnership.
(d) Confess a judgm ent.
(e) Submit a partnership claim or liability to arbitration or reference.
4. No act of a partner in contravention of a restriction on his authority shall bind the
partnership to persons having knowledge of the restriction.

S 21. Conveyance of real property of the partnership.
1. Where title to real property is in the partnership name, any partner may convey
title to such property by a conveyance executed in the partnership name; but the
partnership may recover such property unless the partner’s act binds the partnership
under the provisions of subdivision one of section twenty, or unless such property
has been conveyed by the grantee or a person claiming through such grantee to a
holder for value without
knowledge that the partner, in making the conveyance, has exceeded his authority.
2. Where title to real property is in the name of the partnership, a conveyance
executed by a partner, in his own name, passes the equitable interest of the
partnership, provided the act is one within the authority of the partner under the
provisions of subdivision one of section twenty.
3. Where title to real property is in the name of one or more but not all the partners,
and the record does not disclose the right of the partnership, the partners in whose
name the title stands may convey title to such property, but the partnership may
recover such property if the partners ’ act does not bind the partnership under the
provisions of subdivision one of section twenty, unless the purchaser or his assignee
is a holder for value, without knowledge.
4. Where the title to real property is in the name of one or more or all the partners,
or in a third person in trust for the partnership, a conveyance executed by a partner
in the partnership name, or in his own name, passes the equitable interest of the
partnership, provided the act is one within the authority of the partner under the
provisions of
subdivision one of section twenty.
5. Where the title to real property is in the names of all the partners a conveyance
executed by all the partners passes all their rights in such property.

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S 22. Partnership bound by admission of partner.
An admission or representation made by any partner concerning partnership affairs
within the scope of his authority as conferred by this chapter is evidence against the
partnership.

S 23. Partnership charged with knowledge of or notice to partner.
Notice to any partner of any matter relating to partnership affairs, and the
knowledge of the partner acting in the particular matter, acquired while a partner or
then present to his mind, and the knowledge of any other partner who reasonably
could and should have communicated it to the acting partner, operate as notice to or
knowledge of the partnership, except in the case of a fraud on the partnership
committed by or with the consent of that partner.

S 24. Partnership bound by partner’s wrongful act.
Where, by any wrongful act or omission of any partner acting in the ordinary course
of the business of the partnership, or with the authority of his copartners, loss or
injury is caused to any person, not being a partner in the partnership, or any penalty
is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting
to act.

S 25. Partnership bound by partner’s breach o f trust.
The partnership is bound to make good the loss:
1. Where one partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it; and
2. Where the partnership in the course of its business receives money or property of
a third person and the money or property so received is misapplied by any partner
while it is in the custody of the partnership.

S 26. Nature of partner’s liability.
(a) Except as provided in subdivision (b) of this section, all partners are liable:
1. Jointly and severally for everything chargeable to the partnership under sections
twenty-four and twenty-five.
2. Jointly for all other debts and obligations of the partnership; but any partner may
enter into a separate obligation to perform a partnership contract.
(b) Except as provided by subdivisions (c) and (d) of this section, no partner of a
partnership which is a registered limited liability partnership is liable or accountable,
directly or indirectly (including by way of indemnification, contribution or otherwise),
for any debts, obligations or liabilities of, or chargeable to, the registered limited
liability partnership or each other, whether arising in tort, contract or otherwise,
which are incurred, created or assumed by such partnership while such partnership is
a registered limited liability partnership, solely by reason of being such a partner or
acting (or omitting to act) in such capacity or rendering professional services or
otherwise participating (as an employee, consultant, contractor or otherwise) in the
conduct of the other business or activities of the registered limited liability
partnership.
(c) Notwithstanding the provisions of subdivision (b) of this section,
(i) each partner, employee or agent of a partnership which is a registered limited
liability partnership shall be personally and fully liable and accountable for any
negligent or wrongful act or misconduct committed by him or her or by any person
under his or her direct supervision and control while re ndering professional services
on behalf of such registered limited liability partnership and (ii) each shareholder,
director, officer, member, manager, partner, employee and agent of a professional

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service corporation, foreign professional service corporation, professional service
limited liability company, foreign professional service limited liability company,
registered limited liability partnership, foreign limited liability partnership or
professional partnership that is a partner, employee or agent of a partnership which
is a registered limited liability partnership shall be personally and fully liable and
accountable for any negligent or wrongful act or misconduct committed by him or
her or by any person under his or her direct supervision and control while rendering
professional services in his or her capacity as a partner, employee or agent of such
registered limited liability partnership. The relationship of a professional to a
registered limited liability partnership with which such professional is associated,
whether as a partner, employee or agent, shall not modify or diminish the
jurisdiction over such professional of the licensing authority and in the case of an
attorney and counsellor-at-law or a professional service corporation, professional
service limited liability company, foreign professional service limited liability
company, registered limited liability partnership, foreign limited liability partnership,
foreign professional service corporation or professional partnership, engaged in the
practice of law, the other courts of this state.
(d) Notwithstanding the provisions of subdivision (b) of this section, all or specified
partners of a partnership which is a registered limited liability partnership may be
liable in their capacity as partners for all or specified debts, obligations or liabilities of
a registered limited liability partnership to the extent at least a majority of the
partners shall have agreed unless otherwise provided in any agreement between the
partners. Any such agreement may be modified or revoked to the extent at least a
majority of the partners shall have agreed, unless otherwise provided in any
agreement between the partners; provided, however, that (i) any such modification
or revocation shall not affect the liability of a partner for any debts, obligations or
liabilities of a registered limited liability partnership incurred, created or assumed by
such registered limited liability partnership prior to such modification or revocation
and (ii) a partner shall be liable for debts, obligations and liabilities of the registered
limited liability partnership incurred, created or assumed after such modification or
revocation only in accordance with this article and, if such agreement is further
modified, such agreement as so further modified but only to the extent not
inconsistent with subdivision (c) of this section. Nothing in this section shall in any
way affect or impair the ability of a partner to act as a guarantor or surety for,
provide collateral for or otherwise be liable for, the debts, obligations or liabilities of
a registered limited liability partnership.
(e) Subdivision (b) of this section shall not affect the liability of a registered limited
liability partnership out of partnership assets for partnership debts, obligations and
liabilities.
(f) Neither the withdrawal or revocation of a registered limited liability partnership
pursuant to subdivision (f) or (g), respectively, of section 121-1500 of this chapter
nor the dissolution, winding up or termination of a registered limited liability
partnership shall affect the applicability of the provisions of subdivision (b) of this
section for any debt, obligation or liability incurred, created or assumed while the
partnership was a registered limited liability partnership.

S 27. Partner by estoppel.
1. When a person, by words spoken or written or by conduct, represents himself, or
consents to another representing him to any one, as a partner in an existing
partnership or with one or more persons not actual partners, he is liable to any such
person to whom such representation has been made, who has, on the faith of such
representation, given credit to the actual or apparent partnership, and if he has
made such representation or consented to its being made in a public ma nner he is

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liable to such person, whether the representation has or has not been made or
communicated to such person so giving credit by or with the knowledge of the
apparent partner making the representation or consenting to its being made.
(a) When a partnership liability results, he is liable as though he were an actual
member of the partnership.
(b) When no partnership liability results, he is liable jointly with the other persons, if
any, so consenting to the contract or representation as to incur liability, otherwise
separately.
2. When a person has been thus represented to be a partner in an existing
partnership, or with one or more persons not actual partners, he is an agent of the
persons consenting to such representation to bind them to the same extent and in
the same manner as though he were a partner in fact, with respect to persons who
rely upon the
representation. Where all the members of the existing partnership consent to the
representation, a partnership act or obligation results; but in all other cases it is the
joint act or obligation of the person acting and the persons consenting to the
representation.

S 28. Liability of incoming partner.
A person admitted as a partner into an existing partnership is liable for all the
obligations of the partnership arising before his admission as though he had been a
partner when such obligations were incurred, except that his liability shall be
satisfied only out of partnership property.

ARTICLE 4.
RELATIONS OF PARTNERS TO ONE ANOTHER.

Section 40. Ru les determining rights and duties of partners.
41. Partnership books.
42. Duty of partners to render information.
43. Partner accountable as a fiduciary.
44. Right to an account.
45. Continuation of partnership beyond fixed term.

S 40. Rules determining rights and duties of partners.
The rights and duties of the partners in relation to the partnership shall be
determined, subject to any agreement between them, by the following rules:
1. Each partner shall be repaid his contributions, whether by way of capital or
advances to the partnership property and share equally in the profits and surplus
remaining after all liabilities, including those to partners, are satisfied; and except as
provided in subdivision (b) of section twenty-six of this chapter, each partner must
contribute toward the losses, whether of capital or otherwise, sustained by the
partnership according to his share in the profits.
2. Except as provided in subdivision (b) of section twenty-six of this chapter, the
partnership must indemnify every partner in respect of payments made and personal
liabilities reasonably incurred by him in the ordinary and proper conduct of its
business, or for the preservation of its business or property.
3. A partner, who in aid of the partnership makes any payment or advance beyond
the amount of capital which he agreed to contribute, shall be paid interest from the
date of the payment or advance.
4. A partner shall receive interest on the capital contributed by him only from the
date when repayment should be made.

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5. All partners have equal rights in the management and conduct of the partnership
business.
6. No partner is entitled to remuneration for acting in the partnership business,
except that a surviving partner is entitled to reasonable compensation for his
services in winding up the partnership affairs.
7. No person can become a member of a partnership without the consent of all the
partners.
8. Any difference arising as to ordinary matters connected with the partnership
business may be decided by a majority of the partners; but no act in contravention
of any agreement between the partners may be done rightfully without the consent
of all the partners.

S 41. Partnership books.
The partnership books shall be kept, subject to any agreement between the
partners, at the principal place of business of the partnership, and every partner
shall at all times have access to and may inspect and copy any of them.

S 42. Duty of partners to render information.
Partners shall render on demand true and full information of all things affecting the
partnership to any partner or the legal representative of any deceased partner or
partner under legal disability.

S 43. Partner accountable as a fiduciary.
1. Every partner must account to the partnership for any benefit, and hold as trustee
for it any profits derived by him without the consent of the other partners from any
transaction connected with the formation, conduct, or liquidation of the partnership
or from any use by him of its property.
2. This section applies also to the representatives of a deceased partner engaged in
the liquidation of the affairs of the partnership as the personal representatives of the
last surviving partner.

S 44. Right to an account.
Any partner shall have the right to a formal account as to partnership affairs:
1. If he is wrongfully excluded from the partnership business or possession of its
property by his copartners,
2. If the right exists under the terms of any agreement,
3. As provided by section forty-three,
4. Whenever other circumstances render it just and reasonable.

S 45. Continuation of partnership beyond fixed term.
1. When a partnership for a fixed term or particular undertaking is continued after
the termination of such term or particular undertaking without any express
agreement, the rights and duties of the partners remain the same as they were at
such termination, so far as is consistent with a partnership at will.
2. A continuation of the business by the partners or such of them as habitually acted
therein during the term, without any settlement or liquidation of the partnership
affairs, is prima facie evidence of a continuation of the partnership.

ARTICLE 5.
PROPERTY RIGHTS OF A PARTNER.

Section 50. Extent of property rights of a partner.
51. Nature of a partner’s right in specific partnership

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property.
52. Nature of partner’s interest in the partnership.
53. Assignment of partner’s interest.
54. Partner’s interest subject to c harging order.

S 50. Extent of property rights of a partner.
The property rights of a partner are (a) his rights in specific partnership property, (b)
his interest in the partnership, and (c) his right to participate in the management.

S 51. Nature of a partner’s right in specific partnership property.
1. A partner is co-owner with his partners of specific partnership property holding as
a tenant in partnership.
2. The incidents of this tenancy are such that:
(a) A partner, subject to the provisions of this chapter and to any agreement
between the partners, has an equal right with his partners to possess specific
partnership property for partnership purposes; but he has no right to possess such
property for any other purpose without the consent of his partners.
(b) A partner’s right in specific partnership property is not assignable except in
connection with the assignment of the rights of all the partners in the same property.
(c) A partner’s right in specific partnership property is not subject to attac hment or
execution, except on a claim against the partnership. When partnership property is
attached for a partnership debt the partners, or any of them, or the representatives
of a deceased partner, cannot claim any right under the homestead or exemption
laws.
(d) On the death of a partner his right in specific partnership property vests in the
surviving partner or partners, except where the deceased was the last surviving
partner, when his right in such property vests in his legal representative. Such
surviving partner or partners, or the legal representative of the last surviving
partner, has no right
to possess the partnership property for any but a partnership purpose.
(e) A partner’s right in specific partnership property is not subject to dower, curtesy,
or allowances to surviving spouses, heirs, or next of kin.

S 52. Nature of partner’s interest in the partnership.
A partners interest in the partnership is his share of the profits and surplus and the
same is personal property.

S 53. Assignment of partner’s interest.
1. A conveyance by a partner of his interest in the partnership does not of itself
dissolve the partnership, nor, as against the other partners in the absence of
agreement, entitle the assignee, during the continuance of the partnership, to
interfere in the management or administration of the partnership business or affairs,
or to require any information or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in accordance with
his contract the profits to which the assigning partner would otherwise be entitled.
2. In case of a dissolution of the partnership, the assignee is entitled to receive his
assignor’s interest and may require an account from the date only of the last account
agreed to by all the partners.

S 54. Partner’s interest subject to charging order.
1. On due application to a competent court by any judgment creditor of a partner,
the court which entered the judgment, order, or decree, or any other court, may

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charge the interest of the debtor partner with payment of the unsatisfied amount of
such judgment debt with interest thereon. Upon
such application or upon the granting of an order attaching the interest of the debtor
partner before judgment, the court may then or later appoint a receiver of his share
of the profits, and of any other money due or to fall due to him in respect of the
partnership, and make all other orders, directions, accounts and inquiries which the
debtor partner might have made, or which the circumstances of the case may
require.
2. The interest charged may be redeemed at any time before foreclosure, or in case
of a sale being directed by the court may be purchased without thereby causing a
dissolution:
(a) With separate property, by any one or more of the partners, or
(b) With partnership property, by any one or more of the partners with the consent
of all the partners whose interests are not so charged or sold.
3. Nothing in this act shall be held to deprive a partner of his right, if any, under the
exemption laws, as regards his interest in the partnership.

ARTICLE 6.
DISSOLUTION AND WINDING UP.

Section 60. Dissolution defined.
61. Partnership not terminated by dissolution.
62. Causes of dissolution.
63. Dissolution by decree of court.
64. General effect of dissolution on authority of partner.
65. Right of partner to contribution from copartners after
dissolution.
66. Power of partner to bind partnership to third persons
after dissolution.
67. Effect of dissolution on partner’s existing liability.
68. Right to wind up.
69. Rights of partners to application of partnership property.
70. Rights where partnership is dissolved for fraud, or
misrepresentation.
71. Rules for distribution.
71-a. Payment of wages by receivers.
72. Liability of persons continuing the business in certain
cases.
73. Rights of retiring or estate of deceased partner when the
business is continued.
74. Accrual of actions.
75. Continuance of partnership business during action for
accounting.

S 60. Dissolution defined.
The dissolution of a partnership is the change in the relation of the partners caused
by any partner ceasing to be associated in the carrying on as distinguished from the
winding up of the business.

S 61. Partnership not terminated by dissolution.
On dissolution the partnership is not terminated, but continues until the winding up
of partnership affairs is completed.

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S 62. Causes of dissolution.
Dissolution is caused:
1. Without violation of the agreement between the partners,
(a) By the termination of the definite term or particular undertaking specified in the
agreement,
(b) By the express will of any partner when no definite term or particular
undertaking is specified,
(c) By the express will of all the partners who have not assigned their interests or
suffered them to be charged for their separate debts, either before or after the
termination of any specified term or particular undertaking,
(d) By the expulsion of any partner from the business bona fide in accordance with
such a power conferred by the agreement between the partners;
2. In contravention of the agreement between the partners, where the circumstances
do not permit a dissolution under any other provision of this section, by the express
will of any partner at any time;
3. By any event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in partnership;
4. By the death of any partner;
5. By the bankruptcy of any partner or the partnership;
6. By decree of court under section sixty-three.

S 63. Dissolution by decree of court.
The court shall decree a dissolution.
1. On application by or for a partner whenever:
(a) A partner has been declared incompetent in any judicial proceeding or is shown
to be of unsound mind,
(b) A partner becomes in any other way incapable of performing his part of the
partnership contract,
(c) A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business,
(d) A partner wilfully or persistently commits a breach of the partnership agreement,
or otherwise so conducts himself in matters relating to the partnership business that
it is not reasonably practicable to carry on the business in partnership with him,
(e) The business of the partnership can only be carried on at a loss,
(f) Other circumstances render a dissolution equitable;

2. On the application of the purchaser of a partner’s interest under sections fifty-
three or fifty-four:
(a) After the termination of the specified term or particular undertaking,
(b) At any time if the partnership was a partnership at will when the interest was
assigned or when the charging order was issued.

S 64. General effect of dissolution on authority of partner.
Except so far as may be necessary to wind up partnership affairs or to complete
transactions begun but not then finished, dissolution terminates all authority of any
partner to act for the partnership,
1. With respect to the partners:
(a) When the dissolution is not by the act, bankruptcy or death of a partner; or
(b) When the dissolution is by such act, bankruptcy or death of a partner, in cases
where section sixty-five so requires.
2. With respect to persons not partners, as declared in section sixty-six.

S 65. Right of partner to contribution from copartners after dissolution.

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Where the dissolution is caused by the act, death or bankruptcy of a partner, each
partner is liable to his copartners for his share of any liability created by any partner
acting for the
partnership as if the partnership had not been dissolved unless
1. The dissolution being by act of any partner, the partner acting for the partnership
had knowledge of the dissolution,
2. The dissolution being by the death or bankruptcy of a partner, the partner acting
for the partnership had knowledge or notice of the death or bankruptcy, or
3. The liability is for a debt, obligation or liability for which the partner is not liable as
provided in subdivision (b) of section twenty-six of this chapter.

S 66. Power of partner to bind part nership to third persons after dissolution.
(1) After dissolution a partner can bind the partnership except as provided in
subdivision three
(a) By any act appropriate for winding up partnership affairs or completing
transactions unfinished at dissolution;
(b) By any transaction which would bind the partnership if dissolution had not taken
place, provided the other party to the transaction
(I) Had extended credit to the partnership prior to dissolution and had no knowledge
or notice of the dissolution; or
(II) Though he had not so extended credit, had nevertheless known of the
partnership prior to the dissolution, and, having no knowledge or notice of
dissolution, the fact of dissolution had not been advertised in a newspaper of general
circulation in the place (or in each place if more than one) at which the partnership
business was regularly carried on.
2. The liability of a partner under subdivision one, paragraph (b), shall be satisfied
out of partnership assets alone when such partner had been prior to dissolution
(a) Unknown as a partner to the person with whom the contract is made; and
(b) So far unknown and inactive in partnership affairs that the business reputation of
the partnership could not be said to have been in any degree due to his connection
with it.
3. The partnership is in no case bound by any act of a partner after dissolution
(a) Where the partnership is dissolved because it is unlawful to carry on the
business, unless the act is appropriate for winding up partnership affairs; or
(b) Where the partner has become bankrupt; or
(c) Where the partner has no authority to wind up partnership affairs, except by a
transaction with one who
(I) Had extended credit to the partnership prior to dissolution and had no knowledge
or notice of his want of authority; or
(II) Had not extended credit to the partnership prior to dissolution, and, having no
knowledge or notice of his want of authority, the fact of his want of authority has not
been advertised in the manner provided for advertising the fact of dissolution in
subdivision one, paragraph (b), clause (II).
4. Nothing in this section shall affect the liability under section twenty-seven of any
person who after dissolution represents himself or consents to another representing
him as a partner in a partnership engaged in carrying on business.

S 67. Effect of dissolution on partner’s existing liability.
1. The dissolution of the partnership does not of itself discharge the existing liability
of any partner.
2. A partner is discharged from any existing liability upon dissolution of the
partnership by an agreement to that effect between himself, the partnership creditor

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and the person or partnership continuing the business; and such agreement may be
inferred from the
course of dealing between the creditor having knowledge of the dissolution and the
person or partnership continuing the business.
3. Where a person agrees to assume the existing obligations of a dissolved
partnership, the partners whose obligations have been assumed shall be discharged
from any liability to any creditor of the partnership who, knowing of the agreement,
consents to a material alteration in the nature or time of payment of such
obligations.
4. The individual property of a deceased partner shall be liable for those obligations
of the partnership incurred while he was a partner and for which he was liable under
section twenty-six of this chapter but subject to the prior payment of his separate
debts.

S 68. Right to wind up.
Unless otherwise agreed the partners who have not wrongfully dissolved the
partnership or the legal representative of the last surviving partner, not bankrupt,
has the right to wind up the partnership affairs; provided, however, that any partner,
his legal representative, or his assignee, upon cause shown, may obtain winding up
by the court.

S 69. Rights of partners to application of partnership property
1. When dissolution is caused in any way, except in contravention of the partnership
agreement, each partner, as against his copartners and all persons claiming through
them in respect of their interest in the partnership, unless otherwise agreed, may
have the partnership property
applied to discharge its liabilities, and the surplus applied to pay in cash the net
amount owing to the respective partners. But if dissolution is caused by expulsion of
a partner, bona fide under the partnership agreement, and if the expelled partner is
discharged from all partnership liabilities, either by payment or agreement under
section sixty-seven, subdivision two, he shall receive in cash only the net amount
due him from the partnership.
2. When dissolution is caused in contravention of the partnership agreement the
rights of the partners shall be as follows:
(a) Each partner who has not caused dissolution wrongfully shall have,
(I) All the rights specified in subdivision one of this section, and
(II) The right, as against each partner who has caused the dissolution wrongfully, to
damages for breach of the agreement.
(b) The partners who have not caused the dissolution wrongfully, if they all desire to
continue the business in the same name, either by themselves or jointly with others,
may do so, during the agreed term for the partnership and for that purpose may
possess the partnership property, provided they secure the payment by bond
approved by the court, or pay to any partner who has caused the dissolution
wrongfully, the value of his interest in the partnership at the dissolution, less any
damages recoverable under clause (II) of paragraph (a) of subdivision two of this
section, and in like manner indemnify him against all present or future partnership
liabilities.
(c) A partner who has caused the dissolution wrongfully shall have:
(I) If the business is not continued under the provisions of paragraph (b) of
subdivision two o this section all the rights of a partner under subdivision (1),
f
subject to clause (II) of paragraph (a) of subdivision two, of this section.
(II) If the business is continued under paragraph (b) of subdivision two of this
section the right as against his copartners and all claiming through them in respect

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of their interest in the partnership, to have the value of his interest in the
partnership, less any damages caused to his copartners by the dissolution,
ascertained and paid to him in cash, or the payment secured by bond approved by
the court, and to be released
from all existing liabilities of the partnership; but in ascertaining the value of the
partner’s interest the value of the good-will of the business shall not be considered.

S 70. Rights where partnership is dissolved for fraud, or misrepresentation.
Where a partnership contract is rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the party entitled to rescind is,
without prejudice to any other right, entitled,
(a) To a lien on, or right of retention of, the surplus of the partnership property after
satisfying the partnership liabilities to third persons for any sum of money paid by
him for the purchase of an interest in the partnership and for any capital or advances
contributed by him; and
(b) To stand, after all liabilities to third persons have been satisfied, in the place of
the creditors of the partnership for any payments made by him in respect of the
partnership liabilities; and
(c) To be indemnified by the person guilty of the fraud or making the representation
against all debts and liabilities of the partnership.

S 71. Rules for distribution.
In settling accounts between the partners after dissolution, the following rules shall
be observed, subject to any agreement to the contrary:
(a) The assets of the partnership are:
I. The partnership property,
II. The contributions of the partners specified in paragraph (d) of this subdivision.
(b) The liabilities of the partnership shall rank in order of payment, as follows:
I. Those owing to creditors other than partners,
II. Those owing to partners other than for capital and profits,
III. Those owing to partners in respect of capital,
IV. Those owing to partners in respect of profits.
(c) The assets shall be applied in the order of their declaration in clause (a) of this
paragraph to the satisfaction of the liabilities.
(d) Except as provided in subdivision (b) of section twenty-six of this section: (1)
partners shall contribute, as provided by section forty, subdivision one, the amount
necessary to satisfy the liabilities; and (2) if any, but not all, of the partners are
insolvent, or, not being subject to process, refuse to contribute, the other partners
shall contribute their share of the liabilities, and, in the relative proportions in which
they share the profits, the additional amount necessary to pay the liabilities.
(e) An assignee for the benefit of creditors or any person appointed by the court
shall have the right to enforce the contributions specified in paragraph (d) of this
subdivision.
(f) Any partner or his legal representative shall have the right to enforce the
contributions specified in paragraph (d) of this subdivision, to the extent of the
amount which he has paid in excess of his share of the liability.
(g) The individual property of a deceased partner shall be liable for the contributions
specified in paragraph (d) of this subdivision.
(h) When partnership property and the individual properties of the partners are in
the possession of a court for distribution, partnership creditors shall have priority on
partnership property and separate creditors on individual property, saving the rights
of lien or secured creditors as heretofore.

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(i) Where a partner has become bankrupt or his estate is insolvent the claims against
his separate property shall rank in the following order:
I. Those owing to separate creditors,
II. Those owing to partnership creditors,
III. Those owing to partners by way of contribution.

S 71-a. Payment of wages by receivers.
Upon the appointment of a receiver of a partnership the wages of the employees of
such partnership shall be preferred to every other debt or claim.

S 72. Liability of persons continuing the business in certain cases.
1. When any new partner is admitted into an existing partnership, or when any
partner retires and assigns (or the representative of the deceased partner assigns)
his rights in partnership property to two or more of the partners, or to one or more
of the partners and one or more third persons, if the business is continued without
liquidation of the partnership affairs, creditors of the first or dissolved partnership
are also creditors of the partnership so continuing the business.
2. When all but one partner retire and assign (or the representative of a deceased
partner assigns) their rights in partnership property to the remaining partner, who
continues the business without liquidation of partnership affairs, either alone or with
others, creditors of the dissolved partnership are also creditors of the person or
partnership so continuing the business.
3. When any partner retires or dies and the business of the dissolved partnership is
continued as set forth in subdivisions one and two of this section, with the consent of
the retired partners or the representative of the deceased partner, but without any
assignment of his right in partnership property, rights of creditors of the dissolved
partnership and of the creditors of the person or partnership continuing the business
shall be as if such assignment had been made.
4. When all the partners or their representatives assign their rights in partnership
property to one or more third persons who promise to pay the debts and who
continue the business of the dissolved partnership, creditors of the dissolved
partnership are also creditors of the person or partnership continuing the business.
5. When any partner wrongfully causes a dissolution and the remaining partners
continue the business under the provisions of section sixty-nine, paragraph (b) of
subdivision two, either alone or with others, and without liquidation of the
partnership affairs, creditors of the dissolved partnership are also creditors of the
person or partnership continuing the business.
6. When a partner is expelled and the remaining partners continue the business
either alone or with others, without liquidation of the partnership affairs, creditors of
the dissolved partnership are also creditors of the person or partnership continuing
the business.
7. The liability of a third person becoming a partner in the partnership continuing the
business under this section to the creditors of the dissolved partnership shall be
satisfied out of partnership property only.
8. When the business of a partnership after dissolution is continued under any
conditions set forth in this section the creditors of the dissolved partnership, as
against the separate creditors of the retiring or deceased partner or the
representative of the deceased partner, have a prior right to any claim of the retired
partner or the representative of the deceased partner against the person or
partnership continuing the business, on account of the retired or deceased partner’s
interest in the dissolved partnership or on account of any consideration promised
for such interest or for his right in partnership property.

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9. Nothing in this section shall be held to modify any right of creditors to set aside
any assignment on the ground of fraud.
10. The use by the person or partnership continuing the business of the partnership
name, or the name of a deceased partner as part thereof, shall not of itself make the
individual property of the deceased partner liable for any debts contracted by such
person or partnership.

S 73. Rights of retiring or estate of deceased partner when the business is
continued.
When any partner retires or dies, and the business is continued under any of the
conditions set forth in section seventy-two, subdivisions one, two, three, five and six,
or section sixty-nine, paragraph (b) of subdivision two, without any settlement of
accounts as between him or his estate and the person or partnership continuing the
business, unless otherwise agreed, he or his legal representative as against such
persons or partnership may have the value of his interest at the date of dissolution
ascertained, and shall receive as an ordinary creditor an amount equal to the value
of his interest in the dissolved partnership with interest, or, at his option or at the
option of his legal representative, in lieu of interest, the profits attributable to the
use of his right in the property of the dissolved partnership; provided that the
creditors of the dissolved partnership as against the separate creditors, or the
representative of the retired or deceased partner, shall have priority on any claim
arising under this section, as provided by section seventy-two, subdivision eight of
this chapter.

S 74. Accrual of actions.
The right to an account of his interest shall accrue to any partner, or his legal
representative, as against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dissolution, in the
absence of agreement to the contrary.

S 75. Continuance of partnership business during action for accounting.
In an action brought to dissolve a partnership, or for an accounting between
partners, or affecting the continued prosecution of the business, the court may, in its
discretion, by order, authorize the partnership business to be continued, during the
pendency of the action by one or more of the partners, upon their executing and
filing with the clerk an undertaking, in such a sum and with such sureties as the
order prescribes, to the effect that they will obey all orders of the court, in the
action, and perform all things which the judgment therein requires them to perform.
The court may impose such other conditions as it deems proper, and it may in its
discretion at any time thereafter require a new undertaking to be given. The court
may also ascertain the value of the partnership property, and of the interest of the
respective partners by a reference or otherwise, and may direct an accounting
between any of the partners; and the judgment may make such provision for the
payment to the retiring partners, for their interest, and with respect to the rights of
creditors, the title to the partnership property, and otherwise, as justice requires,
with or without the appointment of a receiver, or a sale of the partnership property.

ARTICLE 7.
BUSINESS AND PARTNERSHIP NAMES.

Section 80. When partnership or business name may be continued.
81. Certificate to be filed.
82. Fictitious firm names prohibited.

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S 80. When partnership or business name may be continued. The use of a
partnership or a business name may be continued in either of the following cases:
1. Where the business of any firm or partnership in this state, having business
relations with foreign countries or which has transacted business in this state or in
any other state or territory of the United States continues to be conducted by some
or any of the partners, their or any of their assignees, appointees or successors in
interest.
2. Where any partnership shall hereafter be formed under the laws of this state it
may use the firm or corporate name of any general or limited partnership or of any
corporation, domestic or foreign, which may theretofore have carried on its business
within this state, where said general or limited partnership or corporation has
discontinued or shall be about to discontinue its business within the state, and where
a majority of the partners, general or special, in either of such last mentioned
copartnerships or of the survivors thereof shall be members of the new
copartnership, or where a majority of the members of such copartnership theretofore
existing or of the surviving members thereof, or where stockholders holding a
majority of the stock of such corporation shall consent in writing to the use of such
firm or corporate name by such new copartnership; or
3. Where any resident of this state dies, who at the time of his death and for at least
five years immediately prior thereto, conducted and carried on in his sole name, any
business in this state, or who at the time of his death, so conducted and carried on
any business having relation with other states or foreign countries, the right to use
the name of such person, for the purpose of continuing and carrying on such
business, shall survive and pass and be disposed of and accounted for as a part of
the personal estate of such deceased person, and such business may be continued
and carried on under such name by any person who comes into the legal possession
thereof.

S 81. Certificate to be filed.
Whenever a partnership or business name continues to be used as provided by
section eighty, the person or persons using such name shall sign and acknowledge or
swear to a certificate, declaring the person or persons intending to deal under such
name, with their respective places of residence, and file the same in the clerk’s office
of the county where the principal place of business is located, and cause a copy of
such certificate to be published once in each week for four consecutive weeks in a
newspaper of the city or town in which such principal place of business is located, or
if none be published in such city or town, in the newspaper nearest thereto. A county
clerk with whom any such certificate is filed, shall keep a register in which shall be
entered in alphabetical order the name of every such partnership and of the partners
thereof, and every such business name of a deceased person and the names of the
person filing certificates therefor.

S 82. Fictitious firm names prohibited.
No person shall hereafter transact business in the name of a partner not interested
in his firm, and when the designation "and company," or "and Co." is used, it shall
represent an actual partner; but a violation of this section shall not be a defense in
an action or proceeding brought by an assignee for the benefit of creditors or by a
receiver of the property of or by an executor or administrator of a person who has
violated the same.

ARTICLE 8.
LIMITED PARTNERSHIPS.

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Section 90. Limited partnership defined.
91. Formation.
92. Business which may be carried on.
93. Character of limited partner’s contribution.
94. Name not to contain surname of limited partner;
exceptions.
95. Liability for false statements in certificate.
96. Limited partner not liable to creditors.
97. Admission of additional limited partners.
98. Rights, powers and liabilities of a general partner.
99. Rights of a limited partner.
100. Status of person erroneously believing himself a limited
partner.
101. One person both general and limited partner.
102. Loans and other business transactions with limited
partner.
103. Relation of limited partners inter se.
104. Compensation of limited partner.
105. Withdrawal or reduction of limited partner’s
contribution.
106. Liability of limited partner to partnership.
107. Nature of interest in partnership.
108. Assignment of interest.
109. Effect of retirement, death or insanity of a general
partner.
110. Death of limited partner.
111. Rights of creditors of limited partner.
112. Distribution of assets.
113. Certificate cancelled or amended.
114. Requirements for amendment or cancellation.
115. Parties to actions.
115-a. Limited partners’ derivative action brought in the right
of a limited partnership to procure a judgment in its
favor.
115-b. Security for expenses in limited partners ’ derivative
action brought in the right of the limited partnership
to procure a judgment in its favor.
115-c. Indemnification of general partner in actions in the
right of a limited partnership to procure a judgment in
its favor.
116. Short title.
117. Rules of construction.
118. Rules for cases not covered.
119. Existing limited partnerships.

S 90. Limited partnership defined.
A limited partnership is a partnership formed by two or more persons under the
provisions of section ninety-one, having as members one or more general partners
and one or more limited partners. The limited partners as such shall not be bound by
the obligations of the partnership.

S 91. Formation.
(1) Two or more persons desiring to form a limited partnership shall

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(a) Sign and acknowledge or swear to a certificate, which shall state.
I. The name of the partnership.
II. The character of the business.
III. The location of the principal place of business.
IV. The name and place of residence of each member; general and limited partners
being respectively designated.
V. The term for which the partnership is to exist.
VI. The amount of cash and a description of and the agreed value of the other
property contributed by each limited partner.
VII. The additional contributions, if any, agreed to be made by each limited partner
and the times at which or events on the happening of which they shall be made.
VIII. The time, if agreed upon, when the contribution of each limited partner is to be
returned.
IX. The share of the profits or the other compensation by way of income which each
limited partner shall receive by reason of his contribution.
X. The right, if given, of a limited partner to substitute an assignee as contributor in
his place, and the terms and conditions of the substitution.
XI. The right, if given, of the partners to admit additional limited partners.
XII. The right, if given, of one or more of the limited partners to priority over other
limited partners, as to contributions or as to compensation by way of income, and
the nature of such priority.
XIII. The right, if given, of the remaining general partner or partners to continue the
business on the death, retirement or insanity of a general partner, and
XIV. The right, if given, of a limited partner to demand and receive property other
than cash in return for his contribution.
(b) File the certificate in the office of the county clerk of the county in which the
principal office of such partnership is located. Immediately after the filing of the
certificate, a copy of the same or a notice containing the substance thereof, shall be
published once in each week for six successive weeks, in two newspapers of the
county in which such original certificate is filed, to be designated by the county clerk,
one of which newspapers shall be a newspaper published in the city or town in which
the principal place of business is intended to be located, if a newspaper be published
therein; or, if no newspaper is published therein, in the newspaper nearest thereto,
and proof of such publication by the affidavit of the printer or publisher of each of
such newspapers must be filed with the original certificate.
(2) If there has been substantial compliance in good faith with the requirements of
paragraph (a) of subdivision one of this section, a limited partnership is formed and
may commence the transaction of business as such upon the filing of its certificate
as required by paragraph (b) of subdivision one of this section and the effectuation
of the first of the six successive weekly publications required by said paragraph (b);
provided, however, that the continued existence of a limited partnership as such
shall be conditioned upon completion of the publication requirement contained in said
paragraph (b).

S 92. Business which may be carried on.
A limited partnership may carry on any business which a partnership without limited
partners may carry on.

S 93. Character of limited partner’s contribution.
The contributions of a limited partner may be cash or other property, but not
services.

S 94. Name not to contain surname of limited partner; exceptions.

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(1) The surname of a limited partner shall not appear in the partnership
name, unless (a) It is also the surname of a general partner, or (b) Prior to the time
when the limited partner became such the business had been carried on under a
name in which his surname appeared.
(2) A limited partner whose name appears in a partnership name contrary to the
provisions of subdivision one of this section is liable as a general partner to
partnership creditors who extend credit to the partnership without actual knowledge
that he is not a general partner.

S 95. Liability for false statements in certificate.
If the certificate contains a false statement, one who suffers loss by reliance on such
statement may hold liable any party to the certificate who knew the statement to be
false
(a) At the time he signed the certificate, or
(b) Subsequently, but within a sufficient time before the statement
was relied upon to enable him to cancel or amend the certificate, or to file a petition
for its cancellation or amendment as provided in section one hundred and fourteen of
this article.

S 96. Limited partner not liable to creditors.
A limited partner shall not become liable as a general partner unless, in addition to
the exercise o his rights and powers as a limited partner, he takes part in the
f
control of the business; and the exercise of the rights and powers granted by
subdivision three of section ninety-nine of this chapter shall not constitute taking
part in the control of the business. The commencement of or other participation by a
limited partner in an action brought pursuant to section one hundred fifteen-a of this
article shall not be deemed to be a taking part in the control of the business within
the meaning of this section.

S 97. Admission of additional limited partners.
After the formation of a limited partnership, additional limited partners may be
admitted upon filing an amendment to the original certificate in accordance with the
requirements of section one hundred and fourteen.

S 98. Rights, powers and liabilities of a general partner.
(1) A general partner shall have all the rights and powers and be subject to all the
restrictions and liabilities of a partner in a partnership without limited partners,
except that without the written consent or ratification of the specific act by all the
limited partners, a general partner or all of the general partners have no authority to
(a) Do any act in contravention of the certificate.
(b) Do any act which would make it impossible to carry on the ordinary business of
the partnership.
(c) Confess a judgment against the partnership.
(d) Possess partnership property, or assign their rights in specific partnership
property, for other than a partnership purpose.
(e) Admit a person as a general partner.
(f) Admit a person as a limited partner, unless the right so to do is given in the
certificate.
(g) Continue the business with partnership property on the death, retirement or
insanity of a general partner, unless the right so to do is given in the certificate.

S 99. Rights of a limited partner.
(1) A limited partner shall have the same rights as a general partner to

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(a) Have the partnership books kept at the principal place of business of the
partnership, and at all times to inspect and copy any of them.
(b) Have on demand true and full information of all things affecting the partnership,
and a formal account of partnership affairs whenever circumstances render it just
and reasonable, and
(c) Have dissolution and winding up by decree of court.
(2) A limited partner shall have the right to receive a share of the profits or other
compensation by way of income, and to the return of his contribution as provided in
sections one hundred and four and one hundred and five of this article.
(3) When the limited partnership is qualified as an investment company under the
Investment Company Act of 1940, the limited partner shall have the right to vote:
(a) in the election of directors or trustees of the investment company; (b) to approve
or terminate investment advisory or underwriting contracts; (c) for approval of
auditors; and (d) any other matters that the Investment Company Act of 1940
requires to be approved by the holders of beneficial interests in the investment
company.

S 100. Status of person erroneously believing himself a limited partner.
A person who has contributed to the capital of a business conducted by a person or
partnership erroneously believing that he has become a limited partner in a limited
partnership is not, by reason of his exercise of the rights of a limited partner, a
general partner with the person or in the partnership carrying on the business, or
bound by the obligations of such person or partnership; provided that on
ascertaining the mistake he promptly renounces his interest in the profits of the
business, or other compensation by way of income.

S 101. One person both general and limited partner.
(1) A person may be a general partner and a limited partner in the same partnership
at the same time.
(2) A person who is a general, and also at the same time a limited partner, shall
have all the rights and powers and be subject to all the restrictions of a general
partner; except that, in respect to his contributions, he shall have the rights against
the other members which he would have had if he were not also a general partner.

S 102. Loans and other business transactions with limited partner.
(1) A limited partner also may loan money to and transact other business with the
partnership, and, unless he is also a general partner, receive on account of resulting
claims against the partnership, with general creditors, a pro rata share of the assets.
No limited partner shall in respect to any such claim
(a) Receive or hold as collateral security any partnership property,
or,
(b) Receive from a general partner or the partnership any payment, conveyance or
release from liability, if at the time the assets of the partnership are not sufficient to
discharge partnership liabilities to persons not claiming as general or limited
partners.
(2) The receiving of collateral security, or a payment, conveyance or release in
violation of the provisions of subdivision one is a fraud on the creditors of the
partnership.

S 103. Relation of limited partners inter se.
Where there are several limited partners the members may agree that one or more
of the limited partners shall have a priority over other limited partners as to the
return of their contributions, as to their compensation by way of income, or as to any

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other matter. If such an agreement is made it shall be stated in the certificate, and
in the absence of such a statement all the limited partners shall stand upon equal
footing.

S 104. Compensation of limited partner.
A limited partner may receive from the partnership the share of the profits or the
compensation by way of income stipulated for in the certificate; provided, that after
such payment is made, whether from the property of the partnership or that of a
general partner, the partnership assets are in excess of all liabilities of the
partnership except liabilities to limited partners on account of their contributions and
to general partners.

S 105. Withdrawal or reduction of limited partner’s contribution.
(1) A limited partner shall not receive from a general partner or out of partnership
property any part of his contribution until
(a) All liabilities of the partnership, except liabilities to general partners and to
limited partners on account of their contributions, have been paid or there remains
property of the partnership sufficient to pay them.
(b) The consent of all members is had, unless the return of the contribution may be
rightfully demanded under the provisions of subdivision two, and
(c) The certificate is cancelled or so amended as to set forth the withdrawal or
reduction.
(2) Subject to the provisions of subdivision one, a limited partner may rightfully
demand the return of his contribution
(a) On the dissolution of a partnership, or,
(b) When the date specified in the certificate for its return has arrived, or,
(c) After he has given six months’ notice in writing to all other members, if no time is
specified in the certificate either for the return of the contribution or for the
dissolution of the partnership.
(3) In the absence of any statement in the certificate to the contrary or the consent
of all members, a limited partner, irrespective of the nature of his contribution, has
only the right to demand and receive cash in return for his contribution.
(4) A limited partner may have the partnership dissolved and its affairs wound up
when
(a) He rightfully but unsuccessfully demands the return of his contribution, or,
(b) The other liabilities of the partnership have not been paid, or the partnership
property is insufficient for their payment and the limited partner would otherwise be
entitled to the return of his contribution.

S 106. Liability of limited partner to partnership.
(1) A limited partner is liable to the partnership
(a) For the difference between his contribution as actually made and that st ated in
the certificate as having been made, and
(b) For any unpaid contributions which he agreed in the certificate to make in the
future at the time and on the conditions stated in the certificate.
(2) A limited partner holds as trustee for the partnership
(a) Specific property stated in the certificate as contributed by him, but which was
not contributed or which has been wrongfully returned, and
(b) Money or other property wrongfully paid or conveyed to him on account of his
contribution.
(3) The liabilities of a limited partner as set forth in this section can be waived or
compromised only by the consent of all members; but a waiver or compromise shall
not affect the right of a creditor of a partnership, who extended credit or whose claim

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arose after the filing and before a cancellation or amendment of the certificate, to
enforce such liabilities.
(4) When a contributor has rightfully received the return in whole or in part of the
capital of his contribution, he is nevertheless liable to the partnership for any sum,
not in excess of such return with interest, necessary to discharge its liabilities to all
creditors who extended credit or whose claims arose before such return.

S 107. Nature of interest in partnership.
A limited partner’s interest in the partnership is personal property.

S 108. Assignment of interest.
(1) A limited partner’s interest is assignable.
(2) A substituted limited partner is a person admitted to all the rights of a limited
partner who has died or has assigned his interest in a partnership.
(3) An assignee, who does not become a substituted limited partner, has no right to
require any information or account of the partnership transactions or to inspect the
partnership books; he is only entitled to receive the share of the profits or other
compensation by way of income, or the return of his contribution, to which his
assignor would otherwise be entitled.
(4) An assignee shall have the right to become a substituted limited partner if all the
members, except the assignor, consent thereto or if the assignor, being thereunto
empowered by the certificate, gives the assignee that right.
(5) An assignee becomes a substituted limited partner when the certificate is
appropriately amended in accordance with section one hundred and fourteen of this
article.
(6) The substituted limited partner has all the rights and powers, and is subject to all
the restrictions and liabilities of his assignor, except those liabilities of which he was
ignorant at the time he became a limited partner and which could not be ascertained
from the certificate.
(7) The substitution of the assignee as a limited partner does not release the
assignor from liability to the partnership under sections ninety-five and one hundred
and six.

S 109. Effect of retirement, death or insanity of a general partner.
The retirement, death or insanity of a general partner dissolves the partnership,
unless the business is continued by the remaining general partners
(a) Under a right so to do stated in the certificate, or,
(b) With the consent of all members.

S 110. Death of limited partner.
(1) On the death of a limited partner his executor or administrator shall have all the
rights of a limited partner for the purpose of settling his estate, and such power as
the deceased had to constitute his assignee a substituted limited partner.
(2) The estate of a deceased limited partner shall be liable for all his liabilities as a
limited partner.

S 111. Rights of creditors of limited partner.
(1) On due application to a court of competent jurisdiction by any judgment creditor
o f a limited partner, the court may charge the interest of the indebted limited
partner with payment of the unsatisfied amount of the judgment debt; and may
appoint a receiver, and make all other orders, directions, and inquiries which the
circumstances of the case may require.

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(2) The interest may be redeemed with the separate property of any general partner,
but may not be redeemed with partnership property.
(3) The remedies conferred by subdivision one of this section shall not be deemed
exclusive of others which may exist.
(4) Nothing in this act shall be held to deprive a limited partner of his statutory
exemption.

S 112. Distribution of assets.
(1) In settling accounts after dissolution the liabilities of the partnership shall be
entitled to payment in the following order:
(a) Those to creditors, in the order of priority as provided by law, except those to
limited partners on account of their contributions, and to general partners.
(b) Those to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions.
(c) Those to limited partners in respect to the capital of their contributions.
(d) Those to general partners other than for capital and profits.
(e) Those to general partners in respect to profits.
(f) Those to general partners in respect to capital.
(2) Subject to any statement in the certificate or to subsequent agreement, limited
partners share in the partnership assets in respect to their claims for capital, and in
respect to their claims for profits or for compensation by way of income on their
contributions respectively, in proportion to the respective amounts of such claims.

S 113. Certificate cancelled or amended.
(1) the certificate shall be cancelled when the partnership is dissolved or all limited
partners cease to be such.
(2) A certificate shall be amended when
(a) There is a change in the name of the partnership or in the amount or character of
the contribution of any limited partner,
(b) A person is substituted as a limited partner,
(c) An additional limited partner is admitted,
(d) A person is admitted as a general partner,
(e) A general partner retires, dies or becomes mentally ill, and the business is
continued under section one hundred and nine,
(f) There is a change in the character of the business of the partnership, or a change
in the location of the principal place of business,
(g) There is a false or erroneous statement in the certificate,
(h) There is a change in the time as stated in the certificate for the dissolution of the
partnership or for the return of a contribution,
(i) A time is fixed for the dissolution of the partnership, or the return of a
contribution, no time having been specified in the certificate, or,
(j) The members desire to make a change in any other statement in the certificate in
order that it shall accurately represent the agreement between them.

S 114. Requirements for amendment or cancellation.
(1) The writing to amend a certificate shall
(a) Conform to the requirements of subdivision one-a of section ninety-one of this
article, as far as necessary to set forth clearly the change in the certificate which it is
desired to make, and
(b) Be signed and acknowledged or sworn to by all members, except that a writing
making a change in the statement of the place of residence of any member shall be
signed and acknowledged by such member only. An amendment substituting a
limited partner or adding a limited or general partner shall be signed also by the

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member to be substituted or added, and when a limited partner is to be substituted,
the amendment shall also be signed by the assigning limited partner.
(2) The writing to cancel a certificate shall be signed by all members.
(3) A person desiring the cancellation or amendment of a certificate, if any person
designated in subdivisions one and two of this section as a person who must execute
the writing refuses to do so, may petition the supreme court to direct a cancellation
or amendment thereof.
(4) If the court finds that the petitioner has a right to have the writing executed by a
person who refuses to do so, it shall order the county clerk of the county where the
certificate is filed to file the cancellation or amendment of the certificate; and where
the certificate is to be amended, the court shall also cause to be filed in said office
a certified copy of its decree setting forth the amendment.
(5) A certificate is amended or cancelled when there is filed in the office of the
county clerk where the certificate is filed.
(a) A writing in accordance with the provisions of subdivisions one and two of this
section, or,
(b) A certified copy of the order of the court in accordance with the provisions of
subdivision four thereof
Provided, however, that in the case of an amendment made where there is a change
to another county of the location of the principal place of business, a certificate is not
amended until a certified copy of the certificate and certified copies of all writings or
certified copies of orders amending the certificate are also filed in the office of the
county clerk of the county to which the location of the principal place of business is
changed.
(6) After the certificate is duly amended in accordance with this section, the
amended certificate shall thereafter be for all purposes the certificate provided for by
this article, and when the certificate has been amended by reason of a change to
another county of the location of the principal place of business, the county in which
a certified copy of the amended certificate was last filed shall thereafter be deemed
to be the county where the certificate is filed.

S 115. Parties to actions.
A contributor, unless he is a general partner, is not a proper party to proceedings by
or against a partnership, except where the object is to enforce a limited partner’s
right against or liability to the partnership, and except in cases provided for in
section one hundred fifteen-a of this article.

S 115-a. Limited partners’ derivative action brought in the right of a limited
partnership to procure a judgment in its favor.
1. An action may be brought in the right of a limited partnership to procure a
judgment in its favor, by a limited partner, additional limited partner, or substituted
limited partner.
2. In any such action, it shall be made to appear that at least one plaintiff is such a
limited partner, additional limited partner or substituted limited partner at the time
of bringing the action, and that he was such at the time of the transaction of which
he complains, or that his status as substituted limited partner devolved upon him by
operation of law or pursuant to the terms of the certificate of limited partnership or
written partnership agreement in effect at the time of the transaction of which he
complains.
3. In any such action, the complaint shall set forth with particularity the efforts of
the plaintiff to secure the initiation of such action by the general partner or partners,
or the reasons for not making such effort.

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4. Such action shall not be discontinued, compromised or settled, without the
approval of the court having jurisdiction of the action. If the court shall determine
that the interests of the limited partners, additional limited partners or substituted
limited partners, will be substantially affected by such discontinuance, compromise
or settlement, the court, in its discretion, may direct that notice, by publication or
otherwise, shall be given to the limited, additional or substituted limited partners
whose interests it determines will be so affected; if notice is so directed to be given,
the court may determine which one or more of the parties to the action shall bear
the expense of giving the same, in such amount as the court shall determine and
find to be reasonable in the circumstances, and the amount of such expense shall be
awarded as special costs of the action and recoverable in the same manner as
statutory taxable costs.
5. If the action on behalf of the limited partnership was successful, in whole or in
part, or if anything was received by the plaintiff or plaintiffs or a claimant or
claimants as a result of a judgment, compromise or settlement of an action or claim,
the court may award the plaintiff or plaintiffs, claimant or claimants, reasonable
expenses, including reasonable attorneys’ fees, and shall direct him or them to
account to the partnership for the remainder of the proceeds so received by him or
them. This paragraph shall not apply to any judgment rendered for the benefit of
injured limited, additional or substituted limited partners only and limited to a
recovery of the loss or damage sustained by them.

S 115-b. Security for expenses in limited partners ’ derivative action brought
in the right of the limited partnership to procure a judgment in its favor.
In any action specified in section one hundred fifteen-a of this article, unless the
contributions of or allocable to plaintiff or plaintiffs to partnership property amount to
five percent or more of the contributions of all limited partners, in their status as
limited partners, or such contributions of or allocable to such plaintiff or plaintiffs
have a fair value in excess of fifty thousand dollars, the limited partnership in whose
right such action is brought shall be entitled at any stage of the proceedings before
final judgment to require the plaintiff or plaintiffs to give security for the reasonable
expenses, including attorneys’ fees, which may be incurred by it in connection with
such action and by the other parties defendant in connection therewith for which the
limited partnership may become liable under this article under any contract or
otherwise under law, to which the limited partnership shall have recourse in such
amount as the court having jurisdiction of such action shall determine upon the
termination of such action. The amount of such security may thereafter from time to
time be increased or decreased in the discretion of the court having jurisdiction of
such action upon showing that the security provided has or may become inadequate
or excessive.

S 115-c. Indemnification of general partner in actions in the right of a
limited partnership to procure a judgment in its favor.
1. No provision made to indemnify general partners for the defense of any action
brought pursuant to section one hundred fifteen-a of this article, whether contained
in the articles of limited partnership, agreement or otherwise, nor any award of
indemnification by a court, shall be valid unless consistent with this section.
2. A limited partnership may indemnify any general partner, made a party to an
action in the right of a limited partnership to procure a judgment in its favor by
reason of the fact that he, his testator or intestate was a general partner in the
limited partnership, against the reasonable expenses, including attorneys’ fees,
actually and necessarily incurred by him in connection with the defense of such
action, or in connection with an appeal therein, except in relation to matters as to

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which such general partner is adjudged to have breached his duty to the limited
partnership.
3. The indemnification authorized under subdivision two of this section shall in no
case include
(a) amounts paid in settling or otherwise disposing of a threatened action, or
pending action with or without court approval, or
(b) expenses incurred in defending a threatened action, or pending action which is
settled or otherwise disposed of without court approval.
4. A general partner who has been wholly successful on the merits or otherwise in
the defense of an action of the character described in subdivision two of this section
shall be entitled to indemnification as authorized in subdivisions two and three of this
section.
5. Except as provided in subdivision four of this section, any indemnification under
subdivision two, unless ordered by a court unde r subdivision six, shall be made by
the limited partnership only if authorized in the specific case
(a) by a majority of all the general partners, excluding any partners who are parties
to such action, upon a finding that the general partner to be indemnified has met the
standard of conduct set forth in subdivision two, or,
(b) if a majority of general partners who are not parties to such action is not
obtainable with due diligence by the general partner or partners, upon the opinion of
independent legal counsel that indemnification is proper in the circumstances
because the standard of conduct set forth in subdivision two has been met by the
general partner to be indemnified.
6. (a) Notwithstanding the failure of the limited partnership to provide
indemnif ication, and despite any contrary determination by the general partners,
indemnification shall be awarded by a court to the extent authorized under
subdivisions two and four of this section.

Application therefor may be made, in every case, either
(i) in the action in which the expenses were incurred or other amounts were paid, or
(ii) to the supreme court in a separate proceeding, in which case the application shall
set forth the disposition of any previous application made to any court for the same
relief and also reasonable cause for the failure to make application for such relief in
the action in which the expenses were incurred or other amounts were paid.
(b) The application shall be made in such manner and form as may be required by
the applicable rules of court or, in the absence thereof, by direction of a court to
which it is made. Such application shall be on notice to the limited partnership, given
through a general partner, if any, other than the general partner making the
application. The court may also direct that notice be given at the expense of the
limited partnership, to the limited partners and such other persons as it may
designate in such manner as it may require. When there is no general partner other
than those making the application, notice shall be given, as herein provided, to the
limited partners.
(c) When indemnification is sought by judicial action, the court may allow a general
partner such reasonable expenses, including attorneys’ fees, during the pendency of
the litigation as are necessary in connection with his defense therein, if the court
shall find that the defendant has by his pleadings or during the course of the
litigation raised genuine issues of fact or law.
7. Expenses incurred in defending an action of the character described in subdivision
two of this section may be paid voluntarily by the limited partnership in advance of
the final disposition of such action if authorized under subdivision five of this section.
8. All expenses incurred in defending an action which are allowed by the court under
subdivisions six or seven of this section shall be repaid in case the general partner

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receiving such advancement or allowance is ultimately found, under the procedure
set forth in this section, not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so advanced by the general
partnership or allowed by the court exceed the indemnification to which he is
entitled.
9. No indemnification, advancement or allowance shall be made under this section in
any circumstance where it appears
(a) that indemnification would be inconsistent with a provision of the certificate of
limited partnership, agreement, partnership resolution or other proper partnership
action, in effect at the time of accrual of the alleged cause of action asserted in the
threatened or pending action in which the expenses were incurred or other amounts
were paid, which prohibits or otherwise limits indemnification; or
(b) if there has been a settlement approved by the court, that the indemnification
would be inconsistent with any condition with respect to indemnification expressly
imposed by the court in approving the settlement.

S 116. Short title.
This article shall be known and may be cited as the uniform limited partnership act.

S 117. Rules of construction.
(1) The rule that statutes in derogation of the common law are to be strictly
construed shall have no application to this article.
(2) This article shall be so interpreted and construed as to effect its general purpose.
(3) This article shall not be so construed as to impair the obligations of any contract
existing when this article takes effect, nor to affect any action or proceeding begun
or right accrued before this article takes effect.

S 118. Rules for cases not covered.
In any case not provided for in this article the rules of law and equity, including the
law merchant, shall govern.

S 119. Existing limited partnerships.
(1) A limited partnership formed under any statute of this state prior to the adoption
of this article may become a limited partnership under this article by complying with
the provisions of section ninety-one, provided the certificate sets forth
(a) The amount of the original contribution of each limited partner, and the time
when the contribution was made, and
(b) That the property of the partnership exceeds the amount sufficient to discharge
its liabilities to persons not claiming as general or limited partners by an amount
greater than the sum of the contributions of its limited partners.
(2) The provisions of this article, or the repeal of article eight of this chapter, shall
not affect or impair any act done or right accrued, acquired or established by a
limited partnership formed under any statute of this state prior to its adoption, until
or unless it becomes a limited partnership in accordance with the provisions of this
article, and the same may be conducted in the same manner and to the same extent
as if this article had not been passed.

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ARTICLE 8-A
REVISED LIMITED PARTNERSHIP ACT

Section 121-101. Definitions.
121-102. Partnership name.
121-103. Reservation of partnership name.
121-104. Statutory designation of secretary of state as agent
for service of process.
121-104-A. Resignation for receipt of process.
121-105. Registered agent.
121-106. Records.
121-107. Nature of business.
121-108. Business transactions of partner with the
partnership.
121-109. Service of process on limited partnerships.
121-110. The partnership agreement.
121-201. Certificate of limited partnership.
121-202. Amendment of the certificate of limited partnership.
121-202-A. Certificate of change.
121-203. Cancellation of certificate.
121-204. Execution of certificates.
121-205. Execution, amendment or cancellation by judicial
act.
121-206. Filing with the department of state.
121-207. Liability for false statement in certificate.
121-208. Restated certificate of limited partnership.
121-301. Admission of limited partners.
121-302. Classes and voting by limited partners.
121-303. Liability to third parties.
121-304. Person erroneously believing himself a limited
partner.
121-401. Admission of additional general partners.
121-402. Events of withdrawal of a general partner.
121-403. General powers and liabilities.
121-404. Contributions by a general partner.
121-405. Classes and voting by general partners.
121-501. Form of contribution.
121-502. Liability for contributions.
121-503. Sharing of profits and losses.
121-504. Sharing of distributions.
121-601. Interim distributions.
121-602. Withdrawal of a general partner.
121-603. Withdrawal of a limited partner.
121-604. Right to distribution upon withdrawal.
121-605. Distribution in kind.
121-606. Right to distribution.
121-607. Limitations on distribution.
121-701. Nature of partnership interest.
121-702. Assignment of partnership interest.
121-703. Rights of creditor.
121-704. Right of assignee to become limited partner.
121-705. Liability upon assignment.
121-706. Power of estate of deceased or incompetent partner.

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121-801. Nonjudicial dissolution.
121-802. Judicial dissolution.
121-803. Winding up.
121-804. Distribution of assets.
121-901. Law governing.
121-902. Application for authority, contents.
121-903. Certificate of amendment.
121-903-A. Certificate of change.
121-904. Application for authority; effect.
121-905. Surrender of certificate of authority.
121-906. Termination of existence.
121-907. Doing business without certificate of authority.
121-908. Violations.
121-1001. Parties to actions.
121-1002. Limited partners ’ derivative action.
121-1003. Security for expenses.
121-1004. Indemnification of general partner.
121-1101. Merger and consolidation of limited partnerships.
121-1102. Procedure for merger or consolidation.
121-1103. Certificate of merger or consolidation; contents.
121-1104. Effect of merger or consolidation.
121-1105. Payment for interest of dissenting limited partners.
121-1106. Mergers and consolidations involving other business
entities.
121-1201. Existing limited partnership.
121-1202. Adoption by previously formed limited partnerships.
121-1300. Fees.

S 121-101. Definitions.
As used in this article, unless the context otherwise requires:
(a) "Certificate of limited partnership" means the certificate referred to in section
121-201 of this article, and the certificate as amended.
(b) "Contribution" means any cash, property, services rendered, or a promissory
note or other binding obligation to contribute cash or property or to render services,
which a partner contributes to a limited partnership in his capacity as a partner.
(c) "Distribution" means the transfer of property by a limited partnership to one or
more of its partners in his capacity as a partner.
(d) "Event of withdrawal of a general partner" means an event that causes a person
to cease to be a general partner as provided in section 121-402 of this article.
(e) "Foreign limited partnership" means a partnership formed under the laws of any
jurisdiction, including any foreign country, other than the laws of this state and
having as partners one or more general partners and one or more limited partners.
(f) "General partner" means a person who has been admitted to a limited partnership
as a general partner in accordance with the partnership agreement and, if required
by the law of the jurisdiction under which the limited partnership or foreign limited
partnership, as the case may be, is organized, is so named in the certificate of
limited partnership or similar instrument.
(g) "Limited partner" means a person who has been admitted to a limited
partnership as a limited partner in accordance with the partnership agreement or as
otherwise provided by the law of the jurisdiction under which the limited partnership
or foreign limited partnership, as the case may be, is organized.
(h) "Limited partnership" and "domestic limited partnership" mean, unless the
context otherwise requires, a partnership (i) formed by two or more persons

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pursuant to this article or which complies with subdivision (a) of section 121-1202 of
this article and (ii) having one or more general partners and one or more limited
partners.
(i) "Majority in interest of the limited partners" and "two-thirds in interest of the
limited partners" mean limited partners whose aggregate share of the current profits
of the partnership constitute more than one-half or two-thirds, respectively, of the
aggregate shares of all limited partners.
(j) "Office of limited partnership" means the office of the location of which is stated
in the certificate of limited partnership of a domestic limited partnership, or in the
application for authority of a foreign limited partnership or any amendment thereof.
Such office need not be a place where business activities are conducted by such
limited partnership.
(j-1) "Other business entity" means any person other than a natural person, general
partnership (including any registered limited liability partnership or registered foreign
limited liability partnership) or domestic limited partnership.
(k) "Partner" means a limited or general partner.
(l) "Partnership agreement" means any written agreement of the partners as to the
affairs of a limited partnership and the conduct of its business.
(m) "Partnership interest" means a partner’s share of the profits and losses of a
limited partnership and right to receive distributions.
(n) "Person" means a natural person, partnership, limited partnership (domestic or
foreign), limited liability company (domestic or foreign), trust, estate, cust odian,
nominee, association, corporation or any other individual or entity in its own or any
representative capacity.
(o) "Process" means judicial process and all orders, demands, notices or other
papers required or permitted by law to be personally served on a limited partnership
(domestic or foreign), for the purpose of acquiring jurisdiction of such limited
partnership in any action or proceeding, civil or criminal, whether judicial,
administrative, arbitrative or otherwise, in this state or in the federal courts sitting
in or for this state.
(p) "State" means a state, territory, or possession of the United States, the District
of Columbia, or the Commonwealth of Puerto Rico.

S 121-102. Partnership name.
The name of each limited partnership as set forth in its certificate of limited
partnership:
(a) (1) shall contain without abbreviation the words "Limited Partnership" or the
abbreviation "L.P.";
(2) shall be such as to distinguish it from the name of (i) any limited partnership as
defined in subdivision (h) of section 121-101 of this article, or (ii) any foreign limited
partnership authorized to do business as a foreign limited partnership in this state;
(3)(A) may not contain the following phrases or any abbreviation or derivative
thereof:
board of trade state trooper
chamber of commerce tenant relocation
community renewal urban development
state police urban relocation
(B) may not contain the following words, or any abbreviation or derivative thereof:
acceptance indemnity
annuity insurance
assurance investment
bank lawyer
benefit loan

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bond mortgage
casualty savings
doctor surety
endowment title
fidelity trust
finance underwriter
guaranty

unless the approval of the superintendent of banks or the superintendent of
insurance, as appropriate, is attached to the certificate of limited partnership; or
unless the word "doctor" or "lawyer" or an abbreviation or derivative thereof is
used in a context which clearly denotes a purpose other than the practice of law or
medicine.
(C) shall not, unless the approval of the state department of social services is
attached to the certificate of limited partnership or application for authority or
amendment thereof, contain the word "blind" or "handicapped". Such approval shall
be granted by the state department of social services if in its opinion the word
"blind" or "handicapped" as used in the limited partnership name proposed will not
tend to mislead or confuse the public into believing that the limited partnership is
organized for charitable or nonprofit purposes related to the blind or the
handicapped.
(D) shall not, unless the approval of the attorney general is attached to the
certificate of limited partnership or application for authority or amendment thereof,
contain the word "exchange" or any abbreviation or derivative thereof. Such
approval shall not be granted by the attorney general if in his or her opinion the use
of the word "exchange" in the proposed limited partnership name would falsely imply
that the limited partnership conducts its business at a place where trade is carried on
in securities or commodities by brokers, dealers or merchants.
(b) shall, unless the limited partnership or foreign limited partnership shall have
complied with the provisions of section one hundred thirty of the general business
law be the name used by the limited partnership in its conduct of business.
(c) notwithstanding paragraphs one and two of subdivision (a) of this section, a
limited partnership organized under the laws of this state prior to the effective date
of this article which shall file a certificate under section 121-1202 of this article
within one year of the effective date of this article may file under its name as
provided in its certificate of limited partnership on the effective date of this article
and thereafter may continue to use such name and a f oreign limited partnership
which has been authorized to do business in this state prior to the effective date of
this article may continue to use the name under which it has heretofore done
business in this state.

S 121-103. Reservation of partnership name.
(a) Subject to section 121-102 of this article, the exclusive right to the use of a
name may be reserved by:
(1) Any person intending to organize a domestic limited partnership under this
article;
(2) Any domestic limited partnership or any foreign limited partnership authorized to
do business in this state intending to change its name;
(3) Any foreign limited partnership intending to apply for authority to do business in
this state and to adopt that name; and
(4) Any person intending to organize a foreign limited partnership and intending to
have it apply for authority to do business in this state.

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(b) A fictitious name for use pursuant to section 121-902 of this article may be
reserved by:
(1) Any foreign limited partnership intending to apply for authority to do business in
this state pursuant to subdivision (a) of section 121-902 of this article.
(2) Any authorized foreign limited partnership intending to change its fictitious name
under which it does business in this state.
(3) Any authorized foreign limited partnership which has changed its name in its
jurisdiction, such new name not being available in this state.
(c) Application to reserve a limited partnership name shall be delivered to the
department of state. It shall set forth the name and address of the applicant, the
name to be reserved, and a statement of the basis for the application under
subdivision (a) or (b) of this section. The secretary of state may require that there
be included in the application a statement as to the nature of the b usiness to be
conducted by the limited partnership. If the name is available for limited partnership
use, the department of state shall reserve the name for the use of the applicant for a
period of sixty days and issue a certificate of reservation. The restrictions and
qualifications set forth in section 121-102 of this article are not waived by the
issuance of a certificate of reservation. The certificate of reservation shall include
the name of the applicant, the name reserved, and the date of reservation. The
certificate of reservation (or in lieu thereof an affidavit by the applicant or by his or
her agent or attorney that the certificate of reservation has been lost or destroyed)
shall accompany the certificate of limited partnership or the application for authority
when either is delivered to the department of state.
(d) The secretary of state may extend the reservation for additional periods of not
more than sixty days each, upon the written request of the applicant or his or her
attorney or agent delivered to the department of state, to be filed before expiration
of the reservation period then in effect. Such request shall have attached to it the
certificate of reservation of name. No more than two such extensions shall be
granted.

S 121-104. Statutory designation of secretary of state as agent for service
of process.
(a) The secretary of state shall be the agent for every domestic limited partnership
which has filed with the secretary of state a certificate making such designation and
every foreign limited partnership upon whom process may be served pursuant to this
article.
(b) No domestic or foreign limited partnership may be organized or authorized to do
business in this state under this article unless in its certificate of limited partnership
or application for authority it designates the secretary of state as such agent.
(c) Any designated post office address to which the secretary of state shall mail a
copy of process served upon him as agent of a domestic limited partnership or
foreign limited partnership shall continue until the filing of a certificate under this
article directing the mailing to a different post office address.
(d) The change authorized by subdivision (c) of this section may be accomplished by
filing a certificate pursuant to this chapter, which shall be executed by a general
partner.

S 121-104-A. Resignation for receipt of process.
(a) The party (or his/her legal representative) whose post office address has been
supplied by a domestic limited partnership or foreign limited partnership as its
address for process may resign. A certificate entitled "Certificate of Resignation for
Receipt of Process under Section 121-104-A of the Revised Limited Partnership Act"

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shall be signed by such party and delivered to the department of state. It shall set
forth:
(1) the name of the limited partnership and the date that its articles of organization
or application for authority was filed by the department of state.
(2) that the address of the party has been designated by the limited partnership as
the post office address to which the secretary of state shall mail a copy of any
process served on the secretary of state as agent for such limited partnership, and
that such party wishes to resign.
(3) that sixty days prior to the filing of the certificate of resignation with the
department of state the party has sent a copy of the certificate of resignation for
receipt of process by registered or certified mail to the address of the registered
agent of the designated limited partnership, if other than the party filing the
certificate of resignation, for receipt of process, or if the resigning limited partnership
has no registered agent, then to the last address of the designated limited
partnership, known to the party, specifying the address to which the copy was sent.
If there is no registered agent and no known address of the designating limited
partnership the party shall attach an affidavit to the certificate stating that a diligent
but unsuccessful search was made by the party to locate the limited partnership,
specifying what efforts were made.
(4) that the designated limited partnership is required to deliver to the department
of state a certificate of amendment or change providing for the designation by the
limited partnership of a new address and that upon its failure to file such certificate,
its authority to do business in this state shall be suspended.
(b) Upon the failure of the designating limited partnership to file a certificate of
amendment or change providing for the designation by the limited partnership of the
new address after the filing of a certificate of resignation for receipt of process with
the secretary of state, its authority to do business in this state shall be suspended.
(c) The filing by the department of state of a certificate of amendment or change
providing for a new address by a designating limited partnership shall annul the
suspension and its authority to do business in this state shall be restored and
continued as if no suspension had occured.
(d) The resignation for receipt of process shall become effective upon the filing by
the department of state of a certificate of resignation for receipt of process.
(e)(1) In any case in which a limited partnership suspended pursuant to this section
would be subject to the personal or other jurisdiction of the courts of this state under
article three of the civil practice law and rules, process against such limited
partnership may be served upon the secretary of state as its agent pursuant to this
section. Such process may be issued in any court in this state having jurisdiction of
the subject matter.
(2) Service of such process upon the secretary of state shall be made by personally
delivering to and leaving with him or his deputy, or with any person authorized by
the secretary of state to receive such service, at the office of the department of state
in the city of Albany, a copy of such process together with the statutory fee, which
fee shall be a taxable disbursement. Such service shall be sufficient if notice thereof
and a copy of the process are:
(i) delivered personally within or without this state to such limited partnership by a
person and in a manner authorized to serve process by law of the jurisdiction in
which service is made, or
(ii) sent by or on behalf of the plaintiff to such limited partnership by registered or
certified mail with return receipt requested to the last address of such limited
partnership known to the plaintiff.
(3)(i) Where service of a copy of process was effected by personal service, proof of
service shall be by affidavit of compliance with this section filed, together with the

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process, within thirty days after such service, with the clerk of the court in which the
action or special proceeding is pending. Service of process shall be complete ten
days after such papers are filed with the clerk of the court.
(ii) Where service of a copy of process was effected by mailing in accordance with
this section, proof of service shall be by affidavit of compliance with this section filed,
together with the process, within thirty days after receipt of the return receipt signed
by the limited partnership, or other official proof of delivery or of the original
envelope mailed. If a copy of the process is mailed in accordance with this section,
there shall be filed with the affidavit of compliance either the return receipt signed by
such limited partnership, or other official proof of delivery, if acceptance was refused
by it, the original envelope with a notation by the postal authorities that acceptance
was refused. If acceptance was refused a copy of the notice and process together
with notice of the mailing by registered or certified mail and refusal to accept shall be
promptly sent to such limited partnership at the same address by ordinary mail and
the affidavit of compliance shall so state. Service of process shall be complete ten
days after such papers are filed with the clerk of the court. The refusal to accept
delivery of the registered or certified mail or to sign the return receipt shall not affect
the validity of the service and such limited partnership refusing to accept such
registered or certified mail shall be charged with knowledge of the contents thereof.
(4) Service made as provided in this section without the state shall have the same
force as personal service made within this state.
(5) Nothing in this section shall affect the right to service process in any other
manner permitted by law.

S 121-105. Registered agent.
(a) In addition to the designation of the secretary of state, each limited partnership
or authorized foreign limited partnership may designate a registered agent upon
whom process against the limited partnership may be served. The agent must be (i)
a natural person who is a resident of this state or has a business address in this
stat e, or (ii) a domestic corporation or a foreign corporation authorized to do
(c) The registered agent of a limited partnership may resign as such agent. The
registered agent shall file a certificate with the department of state entitled,
"Certificate of resignation of registered agent of...(name of designating limited
partnership) under subdivision (c) of section 121-105 of the Revised Limited
Partnership Act" which shall be executed by such registered agent. It shall set forth:
(1) The name of the limited partnership, and if it has been changed, the name under
which it was organized. A foreign limited partnership must set forth its name and the
fictitious name the foreign limited partnership has agreed to use in this state
pursuant to section 121-902 of this article.
(2) The date the certificate of limited partnership or certificate of application for
authority of the limited partnership was filed by the department of state.
(3) That he resigns as registered agent for the limited partnership.
(4) That he has sent a copy of the certificate of resignation by registered mail to the
limited partnership at the post office address on file in the department of state
specified for the mailing of process or if such address is the address of the registered
agent, then to the office of the designating limited partnership and the jurisdiction of
its organization.
(d) The designation of a registered agent shall terminate thirty days after the filing
by the department of state of the certificate of resignation. A certificate designating a
new registered agent may be delivered to the department of state by the limited
partnership within the thirty days or thereafter.

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S 121-106. Records.
(a) Each domestic limited partnership shall maintain the following records, which
may, but need not, be maintained in this state:
(1) a current list of the full name and last known mailing address of each partner set
forth in alphabetical order together with the contribution and the share in profits and
losses of each partner or information from which such share can be readily derived;
(2) a copy of the certificate of limited partnership and all amendments thereto,
together with executed copies of any powers of attorney pursuant to which any
certificate or amendment has been executed;
(3) a copy of the partnership agreement, any amendments thereto and any amended
and restated partnership agreements; and
(4) a copy of the limited partnership’s federal, state, and local income tax or
information returns and reports, if any, for the three most recent fiscal years.
(b) Any partner may, subject to reasonable standards as may be set forth in the
partnership agreement or otherwise established by the general partners, inspect and
copy at his own expense for any purpose reasonably related to the partner’s interest
as a partner the records referred to in subdivision (a) of this section, any financial
statements maintained by the limited partnership for the three most recent fiscal
years and other information regarding the affairs of the limited partnership as is just
and reasonable.

S 121-107. Nature of business.
A limited partnership may carry on any business that a partnership without limited
partners may carry on except as prohibited by law.

S 121-108. Business transactions of partner with the partnership.
Except as may be provided in the partnership agreement, a partner may lend money
to, borrow money from, act as a guarantor or surety for, provide collateral for the
obligations of, and transact other business with the limited partnership, and, subject
to other applicable law, has the same rights and obligations with respect thereto as a
person who is not a partner.

S 121-109. Service of process on limited partnerships.
(a) Service of process on the secretary of state as agent of a domestic or authorized
foreign limited partnership shall be made as follows:
(1) By personally delivering to and leaving with him or his deputy, or with any
person authorized by the secretary of state to receive such service, at the office of
the department of state in the city of Albany, duplicate copies of such process
together with the statutory fee, which fee shall be a taxable disbursement.
(2) The service on the limited partnership is complete when the secretary of state is
so served.
(3) The secretary of state shall promptly send one of such copies by certified mail,
return receipt requested, addressed to the limited partnership at the post office
address, on file in the department of state, specified for that purpose.
(b) In any case in which a non-domiciliary would be subject to the personal or other
jurisdiction of the courts of this state under article three of the civil practice law and
rules, a foreign limited partnership not authorized to do business in this state is
subject to a like jurisdiction. In any such case, process against such foreign limited
partnership may be served upon the secretary of state as its agent. Such process
may issue in any court in this state having jurisdiction of the subject matter. Service
of process upon the secretary of state shall be made by personally delivering to and
leaving with him or his deputy, or with any person authorized by the secretary of
state to receive such service, at the office of the department of state in the city of

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Albany, a copy of such process together with the statutory fee, which fee shall be a
taxable disbursement. Such service shall be sufficient if notice thereof and a copy of
the process are:
(1) Delivered personally without this state to such foreign limited partnership by a
person and in the manner authorized to serve process by law of the jurisdiction in
which service is made, or
(2) Sent by or on behalf of the plaintiff to such foreign limited partnership by
registered mail with return receipt requested, at the post office address specified for
the purpose of mailing process, on file in the department of state, or with any official
or body performing the equivalent function, in the jurisdiction of its creation, or if no
such address is specified, to its registered or other office there specified, or if no
such office is specified, to the last address of such foreign limited partnership known
to the plaintiff.
(3) Where service of a copy of process was effected by personal service, proof of
service shall be by affidavit of compliance with this section filed, together with the
process, within thirty days after such service with the clerk of the court in which the
(4) Where service of a copy of process was effected by mailing in accordance with
this section proof of service shall be by affidavit of compliance with this section filed,
by the foreign limited partnership, or other official proof of delivery or of the original
envelope mailed. If a copy of the process is mailed in accordance with this section,
such foreign limited partnership or other official proof of delivery or, if acceptance
was refused by it, the original envelope with a notation by the postal authorities that
acceptance was refused. If acceptance was refused a copy of the notice and process
together with notice of the mailing by registered mail and refusal to accept shall be
promptly sent to such foreign limited partnership at the same address by ordinary
mail and the affidavit of compliance shall so state. Service of process shall be
complete ten days after such papers are filed with the clerk of the court. The refusal
to accept delivery of the registered mail or to sign the return receipt shall not affect
the validity of the service and such foreign limited partnership refusing to accept
such registered mail shall be charged with knowledge of the contents thereof.
(5) Service made as provided in this section shall have the same force as personal
service made within this state.
(c) The secretary of state shall keep a record of all process served upon him under
this section and shall record therein the date of such service and his action with
reference thereto.
(d) Nothing contained in this section shall limit or affect the right to serve any
process required or permitted by law to be served upon the limited partnership in
any other manner now or hereafter permitted by law or applicable rules of
procedure.

S 121-110. The partnership agreement.
(a) The partnership agreement shall be signed by all general partners, in person or
by attorneys in fact, and may, but need not, be signed by the limited partners.
(b) A limited partnership shall have a written partnership agreement. Except as
provided in sections 121-702 and 121-705 of this article, no person shall have any
rights, or be subject to the liabilities, of a general partner who has not signed the
partnership agreement in person or by attorney in fact.
(c) The partnership agreement of a limited partnership may be amended from time
to time as provided therein; provided, however, that, except as may be provided

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otherwise in the partnership agreement, without the written consent of each partner
adversely affected thereby, no amendment of the partnership agreement shall be
made which (i) increases the obligatio ns of any limited partner to make
contributions, (ii) alters the allocation for tax purposes of any items of income, gain,
loss, deduction or credit, (iii) alters the manner of computing the distributions of any
partner, (iv) alters, except as provided in subdivision (a) of section 121-302 of this
article, the voting or other rights of any limited partner, (v) allows the obligation of a
partner to make a contribution to be compromised by consent of fewer than all
partners or (vi) alters the procedures for amendment of the partnership agreement.

S 121-201. Certificate of limited partnership.
(a) In order to form a limited partnership the general partners shall execute a
partnership agreement, and a certificate of limited partnership shall be executed in
accordance with section 121-204 of this article. The certificate, entitled "Certificate of
limited partnership of........................ (name of limited partnership) under section
121-201 of the Revised Limited Partnership Act," shall be filed with the department
of state in accordance with section 121-206 of this article and shall set forth:
(1) the name of the limited partnership;
(2) the county within this state, in which the office of the limited partnership is to be
located;
(3) a designation of the secretary of state as agent of the limited partnership upon
whom process against it may be served and the post office address within or without
this state to which the secretary of state shall mail a copy of any process against it
served upon him;
(4) if the limited partnership is to have a registered agent, his name and address
within this state and a statement that the registered agent is to be the agent of the
limited partnership upon whom process against it may be served;
(5) the name and the business or residence street address of each general partner;
(6) the latest date upon which the limited partnership is to dissolve; and
(7) any other matters the general partners determine to include therein.
(b) A limited partnership is formed at the time of the filing of the initial certificate of
limited partnership with the department of state or at any later time not to exceed
sixty days from the date of filing specified in the certificate of limited partnership.
The filing of the certificate shall, in the absence of actual fraud, be conclusive
evidence of the formation of the limited partnership as of the time of filing or
effective date if later, except in an action or special proceeding brought by the
attorney general.
(c) Within one hundred twenty days after the filing of the initial certificate, a copy of
the same or a notice containing the substance thereof shall be published once in
each week for six successive weeks, in two newspapers of the county in which the
office of the limited partnership is located, to be designated by the county clerk, one
of which newspapers shall be a newspaper published in the city or town in which the
principal place of business is intended to be located, if a newspaper be published
therein; or, if no newspaper is published therein, in the newspaper nearest thereto,
and proof of such publication by the affidavit of the printer or publisher of each of
such newspapers must be filed with the department of state. The notice shall
include:
(1) the name of the limited partnership; (2) the date of filing of the certificate of
limited partnership with the secretary of state; (3) the county within this state, in
which the office of the limited partnership is to be located; (4) a statement that the
secretary of state has been designated as agent of the limited partnership upon
whom process against it may be served and the post office address within or without
this state to which the secretary of state shall mail a copy of any process against it

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served upon him or her; (5) if the limited partnership is to have a registered agent,
his or her name and address within this state and a statement that the registered
agent is to be the agent of the limited partnership upon whom process against it may
be served; (6) a statement that the names and the b usiness or residence street
address of each general partner is available from the secretary of state; (7) the
latest date upon which the limited partnership is to dissolve; and (8) the character or
purpose of the business of such partnership. Failure to cause such notice to be
published or to file such proof within one hundred twenty days of the filing of the
certificate shall prohibit the limited partnership from maintaining any action or
special proceeding in this state unless and until such limited partnership causes such
notice to be published and files such proof of publication. The failure of a limited
partnership to cause such notice to be published or to file proof of publication shall
not impair the validity of any contract or act of the limited partnership or the right of
any other party to the contract to maintain any action or special proceeding thereon,
and shall not prevent the limited partnership from defending any action or special
proceeding in this state.

S 121-202. Amendment of the certificate of limited partnership.
(a) A certificate of limited partnership is amended by filing with the department of
state a certificate of amendment thereto entitled "Certificate of amendment of the
certificate of limited partnership of... (name of limited partnership) under section
121-202 of the Revised Limited Partnership Act," and executed in accordance with
section 121-204 of this article. The certificate of amendment shall set forth:
(1) The name of the limited partnership and, if it has been changed, the name under
which it was formed;
(2) The date of filing its certificate of limited partnership;
(3) Each amendment effected thereby, setting forth the subject matter of each
provision of the certificate of limited partnership which is to be amended or
eliminated and the full text of the provision or provisions, if any, which are to be
substituted or added; and
(4) If the amendment reflects the admission or withdrawal of one or more general
partners, the name and business or residence street address of such general partner
or partners and the date or dates of admission or withdrawal.
(b) No later than ninety days after the happening of any of the following events, an
amendment to a certificate of limited partnership reflecting the occurrence of the
event or events shall be filed by a general partner:
(1) the admission of a general partner;
(2) the withdrawal of a general partner;
(3) the continuation of the partnership under section 121-801 of this article after an
event of withdrawal of a general partner; or
(4) a change in the name of the limited partnership, or a change in the post office
address to which the secretary of state shall mail a copy of any process against the
limited partnership served on him, or a change in the name or address of the
registered agent, if such change is made other than pursuant to section 121-104 or
121-105 of this article.
(c) A general partner who becomes aware that any statement in a certificate of
limited partnership was false in any material respect when made or that a matter
described has changed, making the certificate inaccurate in any material respect,
shall amend the certificate within ninety days of becoming aware of such fact.
(d) A certificate of limited partnership may be amended at any time for any other
proper purpose which the general partners may determine.
(e) Unless otherwise provided in this article, a certificate of amendment shall be
effective at the time of its filing with the department of state.

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S 121-202-A. Certificate of change.
(a) A certificate of limited partnership may be changed by filing with the department
of state a certificate of change entitled "Certificate of Change of ..... (name of limited
partnership) under Section 121-202-A of the Revised Limited Partnership Act" and
shall be signed and delivered to the department of state. A certificate of change may
(i) specify or change the location of the limited partnership’s office; (ii) specify or
change the post office address to which the secretary of state shall mail a copy of
process against the limited partnership served upon him; and (iii) make, revoke or
change the designation of a registered agent, or to specify or change the address of
its registered agent. It shall set forth:
(1) the name of the limited partnership, and if it has been changed, the name under
(2) the date its certificate of limited partnership was filed by the department of
state; and
(3) each change effected thereby.
(b) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a limited partnership
served upon him or the address of the registered agent, provided such address being
changed is the address of a person, partnership or corporation whose address, as
agent, is the address to be changed or who has been designated as registered agent
for such limited partnership shall be signed and delivered to the department of state
by such agent. The certificate of change shall set forth the statements required
under subdivision (a) of this section; that a notice of the proposed change was
mailed to the domestic limited partnership by the party signing the certificate not
less than thirty days prior to the date of delivery to the department of state and that
such domestic limited partnership has not objected thereto; and that the party
signing the certificate is the agent of such limited partnership to whose address the
secretary of state is required to mail copies of process or the registered agent, if
such be the case. A certificate signed and delivered under this subdivision shall not
be deemed to effect a change of location of the office of the limited partnership in
whose behalf such certificate is filed.

S 121-203. Cancellation of certificate.
(a) Within ninety days following the dissolution and the commencement of winding
up of the limited partnership, or at any other time there are no limited partners, a
certificate of cancellation shall be filed with the department of state entitled,
"Certificate of cancellation of... (name of limited partnership) under section 121-203
of the Revised Limited Partnership Act" and executed in accordance with section 121-
204 of this article. The certificate of cancellation shall set forth:
(1) the name of the limited partnership; and if it has been changed, the name under
(2) the date of filing of its certificate of limited partnership and each subsequent
amendment thereto;
(3) the event giving rise to the filing of the certificate; and
(4) any other information the persons filing the certificate determine.
(b) The cancellation of the certificate of limited partnership is effective at the time of
the filing of the certificate of cancellation.
(c) The cancellation of the certificate of limited partnership shall not affect the
liability of the limited partners during the period of winding up and termination of the
partnership.

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S 121-204. Execution of certificates.
(a) Each certificate required by this article to be filed with the department of state
shall be executed in the following manner:
(1) an initial certificate of limited partnership must be signed by all general partners
named therein;
(2) a certificate of amendment must be signed by at least one general partner and
by each other general partner designated in the certificate of amendment as a new
general partner;
(3) a certificate of cancellation must be signed by all general partners or, if there is
no general partner, unless otherwise provided in the partnership agreement, by a
majority in interest of the limited partners; and
(4) all other certificates must be signed by at least one general partner.
(b) Any person may sign any certificate by an attorney in fact. Powers of attorney
relating to the signing of a certificate by an attorney in fact need not be filed with the
department of state nor provided as evidence of authority by the person filing, but
must be retained among the records of the partnership.
(c) Each certificate must be signed.
(d) Each certificate must include the name and capacity of each signer.

S 121-205. Execution, amendment or cancellation by judicial act.
(a) If a person required by section 121-204 of this article to execute a certificate fails
or refuses to do so, any partner, and any permitted assignee of a partnership
interest, who is adversely affected by the failure or refusal may petition the supreme
court in the judicial district in which the office of the limited partnership is located to
direct the execution of the certificate. If the court finds that the certificate should be
executed and that such person has failed or refused to execute the certificate, it shall
order such person to file an appropriate certificate.
(b) If a person contractually obligated to execute as a limited partner a partnership
agreement of an existing partnership, or any amendment thereto, fails or refuses to
do so, any partner, and any assignee of a partnership interest, who is adversely
affected by the failure or refusal may petition the supreme court in the judicial
district referred to in subdivision (a) of this section to direct the execution of the
partnership agreement or amendment. If the court finds that such person has
breached a contractual obligation binding upon him to execute the agreement or
amendment, it shall enter an order granting appropriate relief.

S 121-206. Filing with the department of state.
A signed certificate of limited partnership and any signed certificates of amendment
or other certificates filed pursuant to this article or of any judicial decree of
amendment or cancellation shall be delivered to the department of state. If the
instrument which is delivered to the department of state for filing complies as to
form with the requirements of law and the filing fee required by any statute of this
state in connection therewith has been paid, the instrument shall be filed and
indexed by the department of state.

S 121-207. Liability for false statement in certificate.
(a) If any certificate of limited partnership, certificate of amendment, or other
certificate filed pursuant to this article contains a materially false statement, one who
suffers loss by reasonable reliance on the statement may recover damages for the
loss from:
(1) any person who executes the certificate, or causes another to execute it on his
behalf, and knew, and any general partner who knew of the filing of such certificate
and who knew or should have known with the exercise of reasonable care and

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diligence, the statement to be false in any material respect at the time the certificate
was executed; and
(2) any general partner who thereafter knows of the filing of such certificate and who
knows or should have known with the exercise of reasonable care and diligence that
any arrangement or other fact described in the certificate has changed, making the
statement false in any material respect, if that general partner had ninety days to
amend or cancel the certificate, or to file a petition for its amendment or cancellation
before the statement was relied upon.
(b) No person shall have any liability for failing to cause the amendment or
cancellation of a certificate to be filed or failing to file a petition for its amendment or
cancellation, if the certificate or petition is filed within ninety days of the time when
that person knew or should have known that the statement in the certificate was
false in any material respect.

S 121-208. Restated certificate of limited partnership.
(a) A limited partnership may restate in a single certificate the text of its certificate
of limited partnership, without making any amendment thereby. Alternatively, a
limited partnership may restate in a single certificate the text of its certificate of
limited partnership and as amended thereby to effect any one or more of the
amendments authorized by this article.
(b) If the restated certificate of limited partnership merely restates and integrates
but does not amend or further amend the certificate of limited partnership, it shall be
executed by a general partner. If the restated certificate also amends or further
amends the certificate of limited partnership, it shall be executed in accordance with
section 121-204 of this article.
(c) The restated certificate shall be filed with the department of state in accordance
with section 121-206 of this article and shall set forth:
(1) the name of the limited partnership and, if it has been changed, the name under
(2) the date of filing of its certificate of limited partnership;
(3) if the restated certificate restates the text of the certificate of limited partnership
without making any amendments, then a statement that the text of the certificate of
limited partnership is thereby restated without amendment to read as therein set
forth in full; or
(4) if the restated certificate restates the text of the certificate of limited partnership,
and is amended thereby, then a statement that the certificate of limited partnership
is amended to effect one or more of the amendments authorized by this article,
specifying each such amendment and that the text of the certificate of limited
partnership is thereby restated as amended to read as therein set forth in full.
(d) Any amendments effected in connection with the restatement of the certificate of
limited partnership shall be subject to any other provision of this article which would
apply if a separate certificate of amendment were filed to effect such amendment.

S 121-301. Admission of limited partners.
(a) A person becomes a limited partner on the later of:
(1) the effective date of the original certificate of limited partnership; or
(2) the date as of which the person becomes a limited partner pursuant to the
partnership agreement; provided, however, that if such date is not ascertainable, the
date stated in the records of the limited partnership.
(b) After the effective date of a limited partnership’s original certificate of limited
partnership, a person may be admitted as a limited partner:

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(1) in the case of a person acquiring a partnership interest directly from the limited
partnership, upon compliance with the partnership agreement or, if the partnership
agreement does not so provide, upon the written consent of all partners; and
(2) in the case of an assignee of a partnership interest of a partner who has the
power, as provided in section 121-704 of this article, to grant the assignee the right
to become a limited partner, upon the exercise of that power and compliance with
any conditions limiting the grant or exercise of the power.

S 121-302. Classes and voting by limited partners.
(a) A partnership agreement may provide for classes or groups of limited partners
having such relative rights and powers as the partnership agreement may provide,
and may make provision for the future creation in the manner provided in the
partnership agreement of additional classes of limited partners having such relative
rights and powers as may from time to time be established pursuant to the
partnership agreement including rights and duties senior to existing classes of
limited partners. The partnership agreement may grant to or withhold from all or one
or more classes of limited partners the right to vote, on a per capita, class or other
basis, upon any matter.
(b) A partnership agreement which grants a right to vote may set forth provisions
relating to notice of the time, place or purpose of any meeting at which any matter is
to be voted on by any limited partners, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy, or any other matter with respect to the exercise of any such
right to vote.

S 121-303. Liability to third parties.
(a) Except as provided in subdivision (d) of this section, a limited partner is not liable
for the contractual obligations and other liabilities of a limited partnership unless he
is also a general partner or, in addition to the exercise of his rights and powers as a
limited partner, he participates in the control of the business. However, if the limited
partner does participate in the control of the business, he is liable only to p ersons
who transact business with the limited partnership reasonably believing, based upon
the limited partner’s conduct, that the limited partner is a general partner.
(b) A limited partner does not participate in the control of the business within the
meaning of subdivision (a) of this section by virtue of doing one or more of the
following:
(1) being a contractor for or transacting business with, including being a contractor
for, or an agent or employee of the limited partnership or of a general partner or an
officer, director or shareholder of a corporate general partner, or a member,
manager or agent of a limited liability company that is a general partner of the
limited partnership, or a partner of a partnership that is a general partner of the
limited partnership, or a trustee, administrator, executor, custodian or other
fiduciary or beneficiary of an estate or trust which is a general partner, or a trustee,
officer, advisor, shareholder or beneficiary of a business trust which is a general
partner, or acting in such capacity;
(2) consulting with and advising or rendering professional services to a general
partner with respect to any matter, including the business of the limited partnership;
(3) acting as surety or endorser for the limited partnership, or guaranteeing or
providing security for or lending money to or assuming one or more debts of the
limited partnership;
(4) approving or disapproving an amendment to the partnership agreement, or
calling, requesting, or participating in any meeting of general and limited partners or
limited partners;

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(5) taking any action to bring, prosecute, or terminate any derivative action brought
in the right of the limited partnership;
(6) proposing, approving, disapproving, or voting on any one or more of the
following matters:
(A) the amendment of the partnership agreement or certificate of limited
partnership;
(B) the dissolution and winding up of the limited partnership;
(C) the sale, exchange, lease, mortgage, assignment, pledge, or other transfer of, or
granting of a security interest in, any asset or assets of the limited partnership;
(D) the merger or consolidation of the limited partnership or election to continue the
business of the limited partnership;
(E) the incurrence, renewal, refinancing or payment or other discharge of
indebtedness by the limited partnership;
(F) a change in the nature of the business;
(G) the admission or removal of a partner;
(H) a transaction or other matter involving an actual or potential conflict of interest;
(I) in respect of a limited partnership which is registered as an investment company
under an act of Congress entitled Investment Company Act of 1940, any matter
required by said Investment Company Act of 1940, or the rules and regulations
promulgated thereunder, to be approved by holders of beneficial interests in an
investment company;
(J) such other matters as are required for submission to limited partners by federal
or state securities laws or rules or regulations thereunder, or rules of self-regulatory
bodies governing the trading of limited partnership interests;
(K) the indemnification of any partner or other person; or
(L) such other matters as are stated in the partnership agreement to be subject to
approval, disapproval or vote by the limited partners;
(7) consulting with or advising, or being an officer, director, shareholder, partner,
member, manager, agent or employee of, or being a fiduciary for, any person in
which the limited partnership has an interest;
(8) winding up the limited partnership pursuant to section 121-803 of this article; or
(9) exercising any right or power permitted to limited partners under this article and
not specifically enumerated in this subdivision.
(c) The enumeration in subdivision (b) of this section does not mean that the
possession or exercise of any other powers by a limited partner constitutes
participation by him in the control of the business of the limited partnership.
(d) A limited partner who expressly consents in writing to his name being used in the
name of the limited partners hip is liable to creditors who extend credit to the limited
partnership without actual knowledge that the limited partner is not a general
partner.
(e) A limited partner does not participate in the control of the business within the
meaning of subdivision (a) of this section regardless of the nature, extent, scope,
number or frequency of the limited partner’s possessing or, regardless of whether or
not the limited partner has the rights or powers, exercising or attempting to exercise
one or more of the rights or powers or having or, regardless of whether or not the
limited partner has the rights or powers, acting or attempting to act in one or more
of the capacities which are permitted under this section.

S 121-304. Person erroneously believing himself a limited partner.
(a) Except as provided in subdivision (b) of this section, a person who makes a
contribution to a limited partnership and erroneously but in good faith believes that
he has become a limited partner in the limited partnership is not a genera l partner in

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the limited partnership and is not bound by its obligations by reason of making the
contribution, receiving distributions from the limited partnership or exercising any
rights of a limited partner, if, on ascertaining the mistake, he:
(1) causes an accurate certificate of limited partnership or a certificate of
amendment to be executed and filed; or
(2) withdraws from the partnership by executing and delivering to the limited
partnership a written notice declaring withdrawal under this section.
(b) A person who makes a contribution of the kind described in subdivision (a) of this
section is liable as a general partner to any third party who transacts business with
the limited partnership (i) before the person withdraws and an appropriate certificate
is filed to show withdrawal, or (ii) before an appropriate certificate is filed to show
that he is not a general partner, but in either case only if the third party reasonably
believed, based upon the limited partner’s conduct, that the limited partner was a
general partner and extended credit to the partnership in reasonable reliance on the
credit of such person.

S 121-401. Admission of additional general partners. After the effective date of the
original certificate of limited partnership, additional general partners may be
admitted as provided in the partnership agreement, or if the partnership agreement
does not provide for the admission of additional general partners, with the written
consent of all partners.

S 121-402. Events of withdrawal of a general partner.
A person ceases to be a general partner of a limited partnership upon the happening
of any of the following events:
(a) the general partner withdraws from the limited partnership as provided in section
121-602 of this article;
(b) the general partner ceases to be a general partner as provided in section 121-
702 of this article;
(c) the general partner is removed as a general partner as may be provided in the
partnership agreement;
(d) unless otherwise provided in the partnership agreement or approved by all
partners, the general partner (i) makes an assignment for the benefit of creditors,
(ii) is the subject of an order for relief under Title 11 of the United States Code, (iii)
files a petition or answer seeking for himself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, (iv) files an answer or other pleading, admitting or failing
to contest the material allegations of a petition filed against him in any proceeding of
this nature, or (v) seeks, consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of the general partner or of all or any substantial part of
his properties;
(e) unless otherwise provided in the partnership agreement or approved by all
partners, (i) if within one hundred twenty days after the commencement of any
proceeding against the general partner seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, the proceeding has not been dismissed or stayed, or
within ninety days after the expiration of any such stay, the proceeding has not been
dismissed, or (ii) if within ninety days after the appointment without his consent or
acquiescence of a trustee, receiver, or liquidator of the general partner or of all or
any substantial part of his properties, the appointment is not vacated or stayed, or
within ninety days after the expiration of any such stay, the appointment is not
vacated;

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(f) in the case of a general partner who is a natural person, (i) his death or (ii) the
entry of a judgment by a court of competent jurisdiction adjudicating him
incompetent to manage his person or his property;
(g) in the case of a general partner who is acting as a general partner by virtue of
being a trustee of a trust, the termination of the trust (but not merely the
substitution of a new trustee);
(h) in the case of a general partner that is a partnership, unless the partnership
agreement of such partnership provides for the right of any one or more of the
partners of such partnership to continue the business of such partnership and such
partnership is so continued, the dissolution and commencement of winding up of
such partnership;
(i) in the case of a general partner that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its charter;
(j) in the case of a general partner that is an estate, the distribution by the fiduciary
of the estate’s entire interest in the limited partnership; or
(k) in the case of a general partner that is a limited liability company, unless the
operating agreement of such limited liability company provides for the right of any
member of such limited liability company to continue the limited liability company
and such limited liability company is so continued, the dissolution and
commencement of winding up of such limited liability company.

S 121-403. General powers and liabilities.
(a) Except as provided in this article or in the partnership agreement, a general
partner of a limited partnership has the rights and powers and is subject to the
restrictions of a partner in a partnership without limited partners.
(b) Except as provided in this artic le, a general partner of a limited partnership has
the liabilities of a partner in a partnership without limited partners to persons other
than the limited partnership and the other partners.
(c) Except as provided in this article or in the partnership agreement, a general
partner of a limited partnership has the liabilities of a partner in a partnership
without limited partners to the limited partnership and to the other partners.

S 121-404. Contributions by a general partner.
A general partner of a limited partnership shall make contributions to the limited
partnership and share in the profits and losses of, and in distributions from, the
limited partnership as a general partner. A person who is a general partner also may
make contributions and share in profits, losses, and distributions as a limited
partner. A person who is both a general partner and a limited partner has the rights
and powers, and is subject to the restrictions and liabilities, of a general partner and,
except as provided in the partnership agreement, also has the rights and powers,
and is subject to the restrictions, of a limited partner to the extent of his
participation in the partnership as a limited partner.

S 121-405. Classes and voting by general partners.
(a) A partnership agreement may provide for classes or groups of general partners
having such relative rights and powers as the partnership agreement may provide,
and may make provision for the future creation in the manner provided in the
partnership agreement of additional classes of general partners having such relative
rights and powers as may from time to time be established pursuant to the
partnership agreement including rights and powers senior to existing classes of
general partners. The partnership agreement may grant t all or to one or more
o
classes of general partners the right to vote, on a per capita, class or other basis,
upon any matter.

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(b) A partnership agreement may set forth provisions relating to notice of the time,
place or purpose of any meeting at which any matter is to be voted on by any
general partners, waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting in person or by
proxy, or any other matter with respect to the exercise of any such right to vote.

S 121-501. Form of contribution.
The contribution of a partner may be in cash, property, or services rendered, or a
promissory note or other obligation to contribute cash or property or to render
services.

S 121-502. Liability for contributions.
(a) Except as provided in the partnership agreement, a partner is obligated to
perform any promise, to contribute cash or property or to perform services which is
otherwise enforceable in accordance with applicable law, even if he is unable to
perform because of death, disability or any other reason. Except as provided in the
partnership agreement, if a partner does not make any required contribution of
property or services, he is obligated at the option of the limited partnership to
contribute cash equal to that portion of the value, as stated in the partnership
records if so stated, of the contribution that has not been made. The foregoing
option shall be in addition to, and not in lieu of, any other rights, including the right
to specific performance, that the limited partnership may have against such partner
under the partnership agreement or applicable law.
(b) Unless otherwise provided in the partnership agreement and except as provided
in section 121-705 of this article, the obligation of a partner to make a contribution
or to return money or other property paid or distributed in violation of this article
may be compromised only by consent of all the partners. Notwithstanding the
compromise, a creditor of a limited partnership who extends credit in reliance on that
obligation may enforce the original obligation to the extent he reasonably relied on
such obligation.
(c) A partnership agreement may provide that the interest of any partner who fails to
make any required contribution shall b subject to specified consequences of such
e
failure. Such consequences may take the form of reducing or eliminating the
defaulting partner’s interest in the limited partnership, subordinating his partnership
interest to that of non-defaulting partners, a forced sale of his partnership interest,
the lending by other partners of the amount necessary to meet his commitment, a
fixing of the value of his partnership interest by appraisal or by formula and
redemption or sale of his partnership interest at such value, or other consequences.

S 121-503. Sharing of profits and losses.
The profits and losses of a limited partnership shall be allocated among the partners,
and among the classes of partners, in the manner provided in the partnership
agreement. If the p artnership agreement does not so provide, profits and losses
shall be allocated on the basis of the value, as stated in the records of the limited
partnership if so stated, of the contributions, but not including defaulted obligations
to make contributions, of each partner to the extent they have been received by or
promised to the limited partnership and have not been returned.

S 121-504. Sharing of distributions.
Distributions of cash or other assets of a limited partnership shall be allocated among
the partners, and among classes of partners, in the manner provided in the
partnership agreement which may, among other things, establish record dates for

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distributions. If the partnership agreement does not so provide, distributions shall
be allocated on the basis of the value, as stated in the records of the limited
partnership, if so stated, of the contributions, but not including defaulted obligations
to make contributions, of each partner to the extent they have been received by or
promised to the limited partnership and have not been returned.

S 121-601. Interim distributions.
Except as provided in this article, a partner is entitled to receive distributions from a
limited partnership before his withdrawal from the limited partnership and before the
dissolution and winding up thereof to the extent and at the times or upon the
happening of the events specified in the partnership agreement.

S 121-602. Withdrawal of a general partner.
A general partner may withdraw from a limited partnership at any time by giving
written notice to the other partners, but if the withdrawal violates the partnership
agreement, the limited partnership may recover from the withdrawing general
partner damages for breach of the partnership agreement, which may be determined
as set forth in the partnership agreement, and offset the damages against the
amount otherwise distributable to him.

S 121-603. Withdrawal of a limited partner.
(a) A limited partner may withdraw from a limited partnership at the time or upon
the happening of events specified in the partnership agreement and in accordance
with the partnership agreement. Notwithstanding anything to the contrary under
applicable law, unless a partnership agreement provides otherwise, a limited partner
may not withdraw from a limited partnership prior to the dissolution and winding up
of the limited partnership. Notwithstanding anything to the contrary under applicable
law, a partnership agreement may provide that a partnership interest may not be
assigned prior to the dissolution and winding up of the limited partnership.
(b) A limited partnership whose original certificate of limited partnership was filed
with the secretary of state and effective prior to the effective date of this subdivision
shall continue to be governed by this section as in effect on such date and shall not
be governed by this section, unless otherwise provided in the partnership
agreement.

S 121-604. Right to distribution upon withdrawal.
Except as provided in this article upon withdrawal any withdrawing partner is entitled
to receive any distribution to which he is entitled under the partnership agreement
and, if not otherwise provided in the partnership agreement, he is entitled to receive,
within a reasonable time after withdrawal, the fair value of his interest in the limited
partnership as of the date of withdrawal based upon his right to share in distributions
from the limited partnership.

S 121-605. Distribution in kind.
Except as provided in the partnership agreement, a partner, regardless of the nature
of his contribution, has no right to demand and receive any distribution from a
limited partnership in any form other than cash. Except as provided in the
partnership agreement, a partner may not be compelled to accept a distribution of
any asset in kind from a limited partnership to the extent that the percentage of the
asset distributed to him exceeds a percentage of that asset which is equal to the
percentage in which he shares in distributions from the limited partnership.

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S 121-606. Right to distribution.
Subject to sections 121-607 and 121-804 of this article, at the time a partner
becomes entitled to receive a distribution, he has the status of, and is entitled to all
remedies available to, a creditor of the limited partnership with respect to the
distribution.

S 121-607. Limitations on distribution.
(a) A limited partnership shall not make a distribution to a partner to the extent that,
at the time of the distribution, after giving effect to the distribution, all liabilities of
the limited partnership, other than liabilities to partners on account of their
partnership interests and liabilities for which recourse of creditors is limited to
specified property of the limited partnership, exceed the fair market value of the
assets of the limited partnership, except that the fair market value of property that
is subject to a liability for which the recourse of creditors is limited shall be included
in the assets of the limited partnership only to the extent that the fair value of that
property exceeds that liability.
(b) A limited partner who receives a distribution in violation of subdivision (a) of this
section, and who knew at the time of the distribution that the distribution violated
subdivision (a) of this section, shall be liable to the limited partnership for the
amount of the distribution. A limited partner who receives a distribution in violation
of subdivision (a) of this section, and who did not know at the time of the distribution
that the distribution violated subdivision (a) of this section, shall not be liable for the
amount of the distribution. Subject to subdivision (c) of this section, this subdivision
shall not affect any obligation or liability of a limited partner under a partnership
agreement or other applicable law for the amount of a distribution.
(c) Unless otherwise agreed, a limited partner who receives a wrongful distribution
from a limited partnership shall have no liability under this article or other applicable
law for the amount of the distribution after the expiration of three years from the
date of the distribution.

S 121-701. Nature of partnership interest.
An interest in a limited partnership is personal property and a partner has no interest
in specific partnership property.

S 121-702. Assignment of partnership interest.
(a) Except as provided in the partnership agreement,
(1) A partnership interest is assignable in whole or in part;
(2) An assignment of a partnership interest does not dissolve a limited partnership or
entitle the assignee to become or to exercise any rights or powers of a partner;
(3) The only effect of an assignment is to entitle the assignee to receive, to the
extent assigned, the distributions and allocations of profits and losses to which the
assignor would be entitled; and
(4) A partner ceases to be a partner and to have the power to exercise any rights or
powers of a partner upon assignment of all of his partnership interest. Unless
otherwise provided in the partnership agreement, the pledge of, or the granting of a
security interest, lien or other encumbrance in or against, any or all of the
partnership interest of a partner shall not cause the partner to cease to be a partner
or to have the power to exercise any rights or powers of a partner.
(b) The partnership agreement may provide that a limited partner’s interest may be
evidenced by a certificate issued by the partnership and may also provide for the
assignment or transfer of any of the interest represented by such a certificate. A
limited partner’s interest may be a certificated security or an uncertificated security
within the meaning of section 8--102 of the uniform commercial code if the

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requirements of section 8--103(c) are met, and if the requirements are not met shall
be deemed to be a general intangible.
(c) Unless otherwise provided in a partnership agreement and except to the extent
assumed by agreement, until an assignee of a partnership interest becomes a
partner, the assignee shall have no liability as a partner solely as a result of the
assignment.

S 121-703. Rights of creditor.
On application to a court of competent jurisdiction by any judgment creditor of a
partner, the court may charge the partnership interest of the partner with payment
of the unsatisfied amount of the judgment with interest. To the extent so charged,
the judgment creditor has only the rights of an assignee of the partnership interest.
This article does not deprive any partner of the benefit of any exemption laws
applicable to his partnership interest.

S 121-704. Right of assignee to become limited partner.
(a) An assignee of a partnership interest, including an assignee of a general partner,
may become a limited partner if (i) the assignor gives the assignee that right in
accordance with authority granted in the partnership agreement, or (ii) all partners
consent in writing, or (iii) to the extent that the partnership agreement so provides.
(b) An assignee who has become a limited partner has, to the extent assigned, the
rights and powers, and is subject to the restrictions and liabilities, of a limited
partner under the partnership agreement and this article. Notwithstanding the
foregoing, unless otherwise provided in the partnership agreement, an assignee who
becomes a limited partner is liable for the obligations of his assignor to make
contributions as provided in section 121-502 of this article, but shall not be liable for
the obligations of his assignor under sections 121-603 and 121-607 of this article.
However, the assignee is not obligated for liabilities, including the obligations of his
assignor to make contributions as provided in section 121-502 of this article,
unknown to the assignee at the time he becomes a limited partner.

S 121-705. Liability upon assignment.
(a) The assignor of a partnership interest is not released from any liability under this
article or the partnership agreement, except liabilities which arise after the
effectiveness of the assignment and are pursuant to section 121-207 of this article,
section 121-607 of this article or, in the event the assignee becomes a limited
partner, unless otherwise provided in the partnership agreement, section 121-502 of
this article.
(b) An assignee who becomes a limited partner is liable for the obligations to make
contributions and return distributions as provided for in this article, provided,
however, that the assignee is not obligated for liabilities unknown to the assignee at
the time he became a limited partner and which could not be ascertained from the
partnership agreement and provided, further, that the assignee is not obligated for
any accrued liabilities of the assignor at the time of assignment unless the assignee
specifically assumes such liabilities.

S 121-706. Power of estate of deceased or incompetent partner.
Subject to subdivision (f) of section 121-402 of this article, if a partner who is an
individual dies or a court of competent jurisdiction adjudges him to be incompetent
to manage his person or his property, the partner’s executor, administrator,
guardian, conservator or other legal representative may exercise all of the partner’s
rights for the purpose of settling his estate or administering his property, including
any power under the partnership agreement of an assignee to become a limited

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partner. If a partner is a corporation, trust, or other entity and is dissolved or
terminated, the powers of that partner may be exercised by its legal representative
or successor.

S 121-801. Nonjudicial dissolution.
A limited partnership is dissolved and its affairs shall be wound up upon the
happening of the first to occur of the following:
(a) at the time, if any, provided in the certificate of limited partnership;
(b) at the time or upon the happening of events specified in the partnership
agreement;
(c) subject to any requirement in the partnership agreement requiring approval by
any greater or lesser percentage of limited partners and general partners, upon the
written consent (1) of all of the general partners and (2) of a majority in interest of
each class of limited partners;
(d) an event of withdrawal of a general partner unless (1) at the time there is at
least one other general partner and the partnership agreement permits the business
of the limited partnership to be carried on by the remaining general partner and that
partner does so, or (2) unless the partnership agreement provides otherwise, if
within ninety days after the withdrawal of the last general partner, not less than a
majority in interest of the limited partners agree in writing to continue the business
of the limited partnership and to the appointment, effective as of the date of
withdrawal, of one or more additional general partners if necessary or desired; or
(e) entry of a decree of judicial dissolution under section 121-802 of this article.
(f) a limited partnership whose original certificate of limited partnership was filed
agreement.

S 121-802. Judicial dissolution.
On application by or for a partner, the supreme court in the judicial district in which
the office of the limited partnership is located may decree dissolution of a limited
partnership whenever it is not reasonably practicable to carry on the business in
conformity with the partnership agreement. A certified copy of the order of
dissolution shall be filed by the applicant with the department of state within thirty
days of its issuance.

S 121-803. Winding up.
(a) In the event of a dissolution of a limited partnership, except for a dissolution
pursuant to section 121-802 of this article, unless otherwise provided in the
partnership agreement, the general partners who have not wrongfully dissolved a
limited partnership or, if none, the limited partners, may wind up the limited
partnership’s affairs; upon cause shown, the supreme court in the judicial district in
which the office of the limited partnership is located may wind up the limited
partnership’s affairs upon application of any partner, his legal representative, or
assignee, and in connection therewith may appoint a receiver or liquidating trustee.
(b) Upon dissolution of a limited partnership, the persons winding up the limited
partnership’s affairs may, in the name of, and for and on behalf of, the limited
partnership prosecute and defend suits, whether civil, criminal or administrative,
settle and close the limited partnership’s business, dispose of and convey the limited
partnership’s property, discharge the limited partnership’s liabilities, and distribute to
the partners any remaining assets of the limited partnership, all without affecting the

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liability of limited partners including limited partners participating in the winding up
of the limited partnership’s affairs.

S 121-804. Distribution of assets.
Upon the winding up of a limited partnership, the assets shall be distributed as
follows:
(a) to creditors, including partners who are creditors, to the extent permitted by law,
in satisfaction of liabilities of the limited partnership, whether by payment or by
establishment of adequate reserves, other than liabilities for distributions to partners
under section 121-601 or 121-604 of this article;
(b) except as provided in the partnership agreement, to partners and former
partners in satisfaction of liabilities for distributions under section 121-601 or 121-
604 of this article; and
(c) except as provided in the partnership agreement, to partners first for the return
of their contributions, to the extent not previously returned, and secondly respecting
their partnership interests, in the proportions in which the partners share in
distributions in accordance with section 121-504 of this article.

S 121-901. Law governing.
Subject to the constitution of this state, the laws of the jurisdiction under which a
foreign limited partnership is organized govern its organization and internal affairs
and the liability of its limited partners.

S 121-902. Application for authority, contents.
(a) Before doing business in this state, a foreign limited partnership shall apply for
authority to do business in this state by submitting to the department of state (i) a
certificate of existence or, if no such certificate is issued by the jurisdiction of
organization, a certified copy of a restated certificate of limited partnership and all
subsequent amendments thereto or, if no restated certificate has been filed, a
certified copy of the certificate filed as its organizational basis and all amendments
thereto (if such certificate or certified copy is in a foreign language, a translation
thereof under oath of the translator shall be attached thereto) and (ii) an application
for authority as a foreign limited partnership entitled "Application for authority
of...(name of limited partnership) under Section 121-902 of the Revised Limited
Partnership Act," signed by a general partner and setting forth:
(1) the name of the foreign limited partnership and, if a foreign limited partnership’s
name is not acceptable for authorization pursuant to section 121-102 of this article,
the fictitious name under which it proposes to apply for authority and do business in
this state, which name shall be in compliance with section 121-102 of this article and
shall be used by the foreign limited partnership in all its dealings with the
department of state and in the conduct of its business in this state. (The provisions
of section one hundred thirty of the general business law shall not apply to any
fictitious name filed by a foreign limited partnership pursuant to this section, and a
filing under section one hundred thirty of the general business law shall not
constitute the adoption of a fictitious name.);
(2) the jurisdiction and date of its organization;
(3) the county within this state in which the office of the limited partnership is to be
located;
(4) a designation of the secretary of state as its agent upon whom process against it
may be served and the post office address within or without this state to which the
secretary of state shall mail a copy of any process against it served upon him;

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(5) if it is to have a registered agent, his name and address within the state and a
statement that the registered agent is to be its agent upon whom process may be
served;
(6) the address of the office required to be maintained in the jurisdiction of its
organization by the laws of that jurisdiction or, if not so required, of the principal
office of the foreign limited partnership;
(7) a list of the names and business or residence addresses of all general partners;
(8) a statement that the foreign limited partnership is in existence in the jurisdiction
of its organization at the time of the filing of such application; and
(9) the name and address of the authorized officer in its jurisdiction of its
organization where a copy of its certificate of limited partnership is filed and, if no
public filing of its certificate of limited partnership is required by the law of its
jurisdiction of organization, a statement that the limited partnership shall provide, on
request, a copy thereof with all amendments thereto (if such documents are in a
foreign language, a translation thereof under oath of the translator shall be attached
thereto), and the name and post office address of the person responsible for
providing such copies.
(b) Without excluding other activities which may not constitute doing business in this
state, a foreign limited partnership shall not be considered to be doing business in
this state for the purposes of this article, by reason of carrying on in this state any
one or more of the following activities:
(1) maintaining or defending any action or proceeding, whether judicial,
administrative, arbitrative or otherwise, or effecting settlement thereof or the
settlement of claims or disputes;
(2) holding meetings of its partners, general or limited;
(3) maintaining bank accounts; or
(4) maintaining offices or agencies only for the transfer, exchange and registration of
its partnership interests, or appointing and maintaining depositaries with relation to
its partnership interests.
(c) The specification in subdivision (b) of this section does not establish a standard
for activities which may subject a foreign limited partnership to service of process
under this article or any other statute of this state.
(d) Within one hundred twenty days after the filing of the application for authority, a
copy of the same or a notice containing the substance thereof shall be published
once in each week for six successive weeks, in two newspapers of the county within
this state in which the office of the limited partnership is located, to be designated by
the county clerk, one of which newspapers shall be a newspaper published in the city
or town in which the principal place of business is intended to be located, if a
newspaper be published therein; or, if no newspaper is published therein, in the
newspaper nearest thereto, and proof of such publication by the affidavit of the
printer or publisher of each of such newspapers must be filed with the department of
state. The notice shall include: (1) the name of the foreign limited partnership and
the fictitious name under which it applied for authority to do business in this state, if
any; (2) the date of filing of the application for authority with the secretary of state;
(3) the jurisdiction and date of its organization; (4) the county within this state in
which the office of the limited partnership is to be located; (5) a statement that the
secretary of state has been designated as its agent upon whom process against it
may be served and the post office address within or without this state to which the
secretary of state shall mail a copy of any process against it served upon him or her;
(6) if it has a registered agent, his or her name and address within the state and a
statement that the registered agent is its agent upon whom process may be served;
(7) the address of the office required to be maintained in the jurisdiction of its
organization by the laws of that jurisdiction or, if not so required, of the principal

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office of the foreign limited partnership; (8) a statement that the list of the names
and business or residence addresses of all general partners is available from the
secretary of state; (9) the name and address of the authorized officer in its
jurisdiction of organization where a copy of its certificate of limited partnership is
filed and, if no public filing of its certificate of limited partnership is required by the
law of its jurisdiction of organization, a statement that the limited partnership shall
provide, on request, a copy thereof with all amendments thereto (if such documents
are in a foreign language, a translation thereof under oath of the translator shall be
attached thereto), and the name and post office address of the person responsible
for providing such copies; and (10) the character or purpose of the business of such
partnership. Failure to cause such notice to be published or to file such proof within
one hundred twenty days of the filing of the application for authority shall prohibit
the limited partnership from maintaining any action or special proceeding in this
state unless and until such limited partnership causes such notice to be published
and files such proof of publication. The failure of a limited partnership to cause such
notice to be published or to file proof of publication shall not impair the validity of
any contract or act of the limited partnership or the right of any other party to the
contract to maintain any action or special proceeding thereon, and shall not prevent
the limited partnership from defending any action or special proceeding in this state.

S 121-903. Certificate of amendment.
(a) A foreign limited partnership may amend its application for authority from time to
time if the amendments contain only such provisions as might be lawfully contained
in an application for authority at the time of making such amendment. To
accomplish such amendment, a certificate, entitled "Certificate of amendment
of...(name of limited partnership) under section 121-903 of the Revised Limited
Partnership Act," shall be signed and delivered to the department of state. It shall
set forth:
(1) the name of the foreign organization as it appears on the index of names of
existing domestic and authorized foreign limited partnerships of any type or kind in
the department of state, and the fictitious name, if any, the foreign limited
partnership has agreed to use in this state pursuant to section 121-902 of this
article;
(2) the jurisdiction of its organization;
(3) the date it was authorized to do business in this state;
(4) each amendment effected thereby; and
(5) if the true name of the foreign limited partnership is to be changed, a statement
that the change of name has been effected under the laws of the jurisdiction of its
organization and the date the change was so effected.
(b) Every foreign limited partnership which has received a filing receipt evidencing
authority as provided herein, shall, within ninety days after it has changed its name
in the jurisdiction of its formation file an amendment to its application with the
department of state under subdivision (a) of this section.

S 121-903-A. Certificate of change.
(a) A foreign limited partnership may change its application for authority by filing
with the department of state a c ertificate of change entitled "Certificate of Change of
........ (name of limited partnership) under Section 121-903-A of the Revised Limited
Partnership Act" and shall be signed and delivered to the department of state. A
certificate of change may (i) change the location of the limited partnership’s office;
(ii) change the post office address to which the secretary of state shall mail a copy of

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process against the limited partnership served upon him; and (iii) make, revoke or
change the designation of a re gistered agent, or to specify or change the address of
its registered agent. It shall set forth:
(1) the name of the foreign limited partnership and, if applicable, the fictitious name
the foreign limited partnership has agreed to use in this state pursuant to section
121-902 of this article;
(2) the date its application for authority was filed by the department of state; and
(3) each change effected thereby.
(b) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a foreign limited
partnership served upon him or the address of the registered agent, provided such
address being changed is the address of a person, partnership or corporation whose
address, as agent, is the address to be changed or who has been designated as
registered agent for such foreign limited partnership shall be signed and delivered to
the department of state by such agent. The certificate of change shall set forth the
statements required under subdivision (a) of this section; that a notice of the
proposed change was mailed to the foreign limited partnership by the party signing
the certificate not less than thirty days prior to the date of delivery to the
department of state and that such foreign limited partnership has not objected
thereto; and that the party signing the certificate is the agent of such foreign limited
partnership to whose address the secretary of state is required to mail copies of
process or the registered agent, if such be the case. A certificate signed and
delivered under this subdivision shall not be deemed to effect a change of location of
the office of the limited partnership in whose behalf such certificate is filed.

S 121-904. Application for authority; effect.
(a) Upon filing by the department of state of the application for authority the foreign
limited partnership shall be authorized to do business in this state. Such authority
shall continue so long as it retains its authority to do business in the jurisdiction of
its formation and its authority to do business has not been surrendered, suspended
or annulled in accordance with the law.
(b) A foreign limited partnership which has received a certificate of authority shall
have such powers to conduct business in this state as are permitted by the laws of
the jurisdiction in which it was organized but no greater than those of a domestic
limited partnership; provided, that this subdivision shall not affect the powers of the
foreign limited partnership outside this state.

S 121-905. Surrender of certificate of authority.
(a) A foreign limited partnership may surrender its certificate of authority by filing
with the department of state a certificate entitled, "Certificate of surrender of
authority of.... (name of limited partnership)" signed by a general partner, or by a
trustee, receiver or other person authorized by law to wind up such partnership. The
authority of the foreign limited partnership to do business in this state shall
terminate on such filing of the certificate of surrender of authority. A surrender shall
not terminate the authority of the secretary of state to accept service of process on
the foreign limited partnership with respect to causes of action arising out of doing
(b) The certificat e of surrender of authority shall state:
(1) the name of the foreign limited partnership as it appears on the index of names
of existing domestic and authorized foreign limited partnerships of any type or kind
in the department of state, and the fictitious name the foreign limited partnership
has agreed to use in this state pursuant to section 121-902 of this article;
(2) the jurisdiction where it was organized;

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(3) the date on which its certificate of authority to do business in this state was filed
with the department of state;
(4) that it surrenders its authority to do business in this state;
(5) that it revokes the authority of its registered agent, if any, previously designated,
and that it consents that process against it in any action or special proceeding based
upon any liability or obligation incurred by it within this state before the filing of the
certificate of surrender may be served on the secretary of state in the manner set
forth in section 121-109 of this article; and
(6) a post office address within or without this state to which the secretary of state
shall mail a copy of any process against it served upon him.

S 121-906. Termination of existence.
When a foreign limited partnership which has received a certificate of authority is
dissolved or its authority to conduct its business or existence is otherwise terminated
or cancelled in the jurisdiction of its organization or when such foreign limited
partnership is merged into or consolidated with another foreign limited partnership,
(i) a certificate of the secretary of state, or official performing the equivalent function
as to limited partnership records, in the jurisdiction of organization of such limited
partnership attesting to the occurrence of any such event, or (ii) a certified copy of
an order or decree of a court of such jurisdiction directing the dissolution of such
foreign limited partnership, the termination of its existence or the surrender of its
authority, shall be delivered to the department of state. The filing of the certificate,
order or decree shall have the same effect as the filing of a certificate of surrender of
authority under section 121-905 of this article. The secretary of state shall continue
as agent of the foreign limited partnership upon whom process against it ma y be
served in the manner set forth in section 121-109 of this article, in any action or
proceeding based upon any liability or obligation incurred by the foreign limited
partnership within this state prior to the filing of such certificate, order or decree.
The post office address may be changed by filing with the department of state a
certificate of amendment under section 121-903 or a certificate of change under
section 121-903-A of this article.

S 121-907. Doing business without certificate of authority.
(a) A foreign limited partnership doing business in this state without having received
a certificate of authority to do business in this state may not maintain any action,
suit or special proceeding in any court of this state unless and until such partnership
shall have received a certificate of authority in this state and shall have filed proof of
publication pursuant to section 121-902 of this article.
(b) The failure of a foreign limited partnership that is doing business in this state to
comply with the provision of this article does not impair the validity of any contract
or act of the foreign limited partnership or prevent the foreign limited partnership
from defending any action or special proceeding in any court of this state.
(c) A limited partner of a foreign limited partnership is not liable as a general partner
of the foreign limited partnership solely by reason of the limited partnership’s doing
or having done business in this state without having received a certificate of
authority.
(d) A foreign limited partnership by doing business in this state without authority
appoints the secretary of state as its agent for service of process with respect to
causes of action arising out of doing business in this state. In any such case, process
against such foreign limited partnership may be served upon the secretary of state in
the manner set forth in section 121-109 of this article.

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S 121-908. Violations.
The attorney general shall, upon his own motion or upon the motion of proper
parties, bring an action to restrain a foreign limited partnership without a certificate
of authority from doing any business in this state in violation of this article, or from
doing any business in this state which is prohibited under the laws of this state. The
attorney general may bring an action or special proceeding to annul the authority of
a foreign limited partnership which is doing any business in this state which is
prohibited under the laws of this state. The attorney general shall deliver a certified
copy of the order of annulment to the department of state. Upon the filing thereof by
the department of state the certificate of authority of the foreign limited partnership
to do business in this state shall be annulled, and the provisions of section 121-906
of this article shall thereafter be applicable. The secretary of state shall continue as
agent of the foreign limited partnership upon whom process against it may be served
in any action, suit or special proceeding based upon any liability or obligation
incurred by the foregoing foreign limited partnership within the state prior to the
filing of the certified copy of the order of annulment by the department of state.

S 121-1001. Parties to actions.
A limited partner, unless he is also a general partner, is not a proper party to
proceedings by or against a partnership, except where the object is to enforce a
limited partner’s right against or liability to the partnership and except in cases
provided for in section 121-1002 of this article.

S 121-1002. Limited partners’ derivative action.
(a) A limited partner may bring an action in the right of a limited partnership to
recover a judgment in its favor if all general partners with authority to do so have
refused to bring the action or if an effort to cause those general partners to bring the
action is not likely to succeed.
(b) In a derivative action, at least one plaintiff must be a limited partner at the time
of bringing the action and (i) at the time of the transaction of which he complains, or
(ii) his status as a limited partner had devolved upon him by operation of law or in
accordance with the terms of the partnership agreement from a person who was a
partner at the time of the transaction of which he complains.
(c) In a derivative action, the complaint shall set forth with particularity the efforts of
the plaintiff to secure the initiation of such action by a general partner, or the
reasons for not making such effort.
(d) A derivative action shall not be discontinued, compromised or settled without the
approval of the court having jurisdiction of the action. If the court shall determine
that the interests of the limited partners will be substantially affected by such
discontinuance, compromise or settlement, the court, in its discretion, may direct
that notice, by publication or otherwise, shall be given to the limited partners whose
interests it determines will be so affected. If notice is so directed to be given, the
court may determine which one or more of the parties to the action shall bear the
expenses of giving the same, in such amount as the court shall determine and find to
be reasonable in the circumstances, and the amount of such expense shall be
awarded as special costs of the action and recoverable in the same manner as
statutory taxable costs.
(e) If the derivative action on behalf of the limited partnership is successful, in whole
or in part, or if anything is received by the plaintiff or plaintiffs or a claimant or
claimants as a result of a judgment, compromise or settlement of an action or claim,
the court may award the plaintiff or plaintiffs, claimant or claimants reasonable
expenses, including reasonable attorneys’ fees, and shall direct him or them to
account to the limited partnership for the remainder of the proceeds so received by

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him or them. This subdivision shall not apply to any judgment rendered for the
benefit of injured limited partners only and limited to a recovery of the loss or
damage sustained by them.

S 121-1003. Security for expenses.
In a derivative action, brought pursuant to section 121-1002 of this article, unless
the contributions of or allocable to the plaintiff or plaintiffs amount to five percent or
more of the contributions of all limited partners, in their status as limited partners, or
such contributions of or allocable to such plaintiff or plaintiffs have a fair value in
excess of fifty thousand dollars, the limited partnership in whose right such action is
brought shall be entitled at any stage of the proceedings before final judgment to
require the plaintiff or plaintiffs to give security for the reasonable expenses,
including attorney’s fees, which may be incurred by it in connection with such action
and by the other parties defendant in connection therewith for which the limited
partnership may become liable under this article or under any contract or otherwise
under law. The limited partnership shall have recourse to such security in such
amount as the court having jurisdiction of such action shall determine upon the
termination of such action. Notwithstanding the first sentence of this section, the
amount of any security may from time to time be determined in the discretion of the
court having jurisdiction of such action, even if the five percent of contributions or
fifty thousand dollar value test is met, upon a showing of the need therefor.

S 121-1004. Indemnification of general partner.
(a) No provision made to indemnify general partners for the defense of a derivative
action, brought pursuant to section 121-1002 of this article, whether contained in
the partnership agreement or otherwise, nor any award of indemnification by a
court, shall be valid unless consistent with this section. Nothing contained in this
section shall affect any rights to indemnification to which limited partners, employees
and agents of the limited partnership who are not general partners may be entitled
by contract or otherwise under law.
(b) A limited partnership may indemnify, and may advance expenses to, any general
partner, including a general partner made a party to an action in the right of a
limited partnership to procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a general partner in the limited partnership,
provided that no indemnification may be made to or on behalf of any general partner
if a judgment or other final adjudication adverse to the general partner establishes
that his acts were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was not
legally entitled.

S 121-1101. Merger and consolidation of limited partnerships.
One or more limited partnerships formed under this article or which complies with
subdivision (a) of section 121-1202 of this article may merge with, or consolidate
into, a limited partnership formed under this article or which complies with
subdivision (a) of such section or under the law of any other state. Whenever used in
this article, "merger" shall mean a procedure in which two or more limited
partnerships merge into a single limited partnership which shall be one of the
constituent limited partnerships and "consolidation" shall mean a procedure in which
two or more limited partnerships consolidate into a single limited partnership which
shall be a new limited partnership to be formed pursuant to the consolidation.

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S 121-1102. Procedure for merger or consolidation.
(a) The general partners of each constituent limited partnership shall adopt an
agreement of merger or consolidation, setting forth the partnership agreement of the
surviving or consolidated limited partnership and the terms and conditions of the
conversion of the interests of general and limited partners of the constituent limited
partnerships into general and limited partnership interests in the surviving or
resulting limited partnership or the cash or other consideration to be paid or
delivered in exchange for interests in a constituent limited partnership, or a
combination thereof. The agreement shall be submitted to the partners of each
constituent limited partnership at a regular or special meeting called on twenty days
notice or such greater notice as the partnership agreement may provide. Subject to
any requirement in the partnership agreement requiring approval by any greater or
lesser, which shall not be less than a majority in interest, percentage of limited
partners, the agreement shall be approved on behalf of each constituent limited
partnership (i) by such vote of general partners as shall be required by the
partnership agreement, or, if no provision is made, by all general partners, and (ii)
by limited partners representing a majority in interest of each class of limited
partners. Notwithstanding authorization by the partners, the plan of merger or
consolidation may be abandoned pursuant to a provision for such abandonment, if
any, contained in the plan of merger or consolidation.
(b) Any limited partner of a limited partnership which is a party to a proposed
merger or consolidation may, prior to that time of the meeting at which such merger
or consolidation is to be voted on, file with the limited partnership written notice of
dissent from the proposed merger or consolidation. Such notice of dissent may be
withdrawn by the dissenting limited partner at any time prior to the effective date of
the merger or consolidation and shall be deemed to be withdrawn if the limited
partner casts a vote in favor of the proposed merger or consolidation.
(c) Upon the effectiveness of the merger or consolidation the dissenting limited
partner of any constituent limited partnership shall not become or continue to be a
limited partner of the surviving or resulting limited partnership, but shall be entitled
to receive in cash from the surviving or resulting limited partnership the fair value of
his interest in the limited partnership as of the close of business of the day prior to
the effective date of the merger or consolidation in accordance with section 121-604
of this article, but without taking account of the effect of the merger or consolidation.
(d) A limited partner of a constituent limited partnership who has a right under this
article to demand payment for his partnership interest shall not have any right at law
or in equity under this article to attack the validity of the merger or consolidation, or
to have the merger or consolidation set aside or rescinded, except in an action or
contest with respect to compliance with the provisions of the partnership agreement
or subdiv ision (a) of this section.
(e) A limited partnership whose original certificate of limited partnership was filed
agreement.

S 121-1103. Certificate of merger or consolidation; contents.
(a) After adoption of the plan of merger or consolidation by the partners of each
constituent limited partnership, unless the merger or consolidation is abandoned in
accordance with subdivision (a) of section 121-1102 of this article, a certificate of
merger or consolidation, entitled "Certificate of merger (or consolidation) o f........
and....... into.......... (names of limited partnership) under Section 121-1103 of the
Revised Limited Partnership Act", shall be signed on behalf of each constituent

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limited partnership and delivered to the department of state. The certificate o f
merger or consolidation shall set forth:
(1) The name of each constituent limited partnership, and if the name has been
changed, the name under which it was formed; and the name of the surviving
limited partnership, or the name of the consolidated limited partnership;
(2) If a constituent is a domestic limited partnership, the date when its certificate of
limited partnership was filed with the department of state under this article, or the
date when and the county in which its original certificate of limited partnership was
filed under article eight of this chapter;
(3) If a constituent is a foreign limited partnership the jurisdiction and date of filing
of its original certificate of limited partnership and the date when its application for
authority was filed by the department of state or if no such application has been
filed, a statement to such effect and (if the constituent foreign limited partnership is
the survivor) that it is not to do business in this state until an application for such
authority shall have been filed by the department of state;
(4) If a domestic limited partnership is the surviving limited partnership, such
changes in its certificate of limited partnership as shall be necessary by reason of
merger;
(5) If a domestic limited partnership is the resulting limited partnership in a
consolidation, the matters required to be set forth under section 121-201 of this
article;
(6) If the surviving or resulting limited partnership is a foreign limited partnership:
An agreement that the surviving or consolidated foreign limited partnership may be
served with process in this state in any action or special proceeding for the
enforcement of any liability or obligation of any domestic limited partnership or of
any foreign limited partnership previously amenable to suit in this state which is a
constituent limited partnership in such merger or consolidation, and for the
enforcement as provided in this article, of the right of partners of any domestic
limited partnership to receive payment for their interest against the surviving or
consolidated limited partnership; and
(7) A designation of the secretary of state as its agent upon whom process against it
may be served in the manner set forth in section 121-109 of this article in any action
or special proceeding, and a post office address, within or without this state, to
which the secretary of state shall mail a copy of any process served upon him. Such
post office address shall supersede any prior address designated as the address to
which process shall be mailed.
(b) The merger or consolidation shall be effective upon the filing thereof by the
department of state of the certificate, or at such later date not more than thirty days
after the date of such filing as the certificates filed may provide.

S 121-1104. Effect of merger or consolidation.
When such merger or consolidation has been effected:
(a) all the property, real and personal, tangible and intangible, of each constituent
limited partnership shall vest in the surviving or resulting limited partnership;
(b) to the extent provided in the plan of merger or consolidation, the partners of
each constituent limited partnership shall continue or become partners in the
surviving or resulting limited partnership with such interest as the agreement of
me rger or consolidation shall provide;
(c) the surviving or resulting limited partnership shall be liable for all debts,
obligations, liabilities and penalties of each constituent limited partnership as though
each such debt, obligation, liability or penalty had been originally incurred by such
surviving or resulting limited partnership; and

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(d) no action, suit or proceeding, civil or criminal, then pending by or against any
such constituent limited partnership in its common name shall abate or be
discontinued by reason of such merger or consolidation, but may be prosecuted by or
proceed against such surviving or resulting limited partnership.

S 121-1105. Payment for interest of dissenting limited partners.
(a) Within ten days after the occurrence of an event described in section 121-1102 of
this article, the surviving or resulting limited partnership shall send to each
dissenting former limited partner a written offer to pay in cash the fair value of such
former partner’s interest. Payment in cash shall b made to each former limited
e
partner accepting such offer within ten days after notice of such acceptance is
received by the surviving or resulting limited partnership.
(b) If a former limited partner and the surviving or resulting limited partnership fail
to agree on the price to be paid for the former limited partner’s partnership interest
within ninety days after the surviving or resulting limited partnership shall have
made the offer provided for in subdivision (a) of this section, or if the limited
partnership or surviving limited partnership shall fail to make such an offer within the
period provided for in subdivision (a) of this section, the procedure provided for in
paragraphs (h)-(k) of section six hundred twenty-three of the business corporation
law shall apply, as they may be amended from time to time.
(c) A payment under this section shall constitute a return of a partner’s contribution
for the purposes of section 121-607 of this article.

S 121-1106. Mergers and consolidations involving other business entities.
One or more domestic limited partnerships formed under this article or which comply
with subdivision (a) of section 121-1202 of this article may merge with, or
consolidate into, one or more other business entities formed under the law of this
state or the law of any other state, in each case with the surviving or resulting entity
being a limited partnership or a domestic or foreign other business entity; provided
that (i) any limited partnership so merging or consolidating complies with the
provisions of this chapter so far as applicable to it and as applicable to any surviving
or resulting limited partnership and (ii) any such other business entity so merging or
consolidating complies with the applicable provisions of the statute governing such
other business entity. With respect to adoption of an agreement of merger or
consolidation pursuant to section 121-1102 of this article, the general partners of
each constituent limited partnership shall adopt an agreement of merger or
consolidation (to be submitted to the partners of the limited partnership as provided
in subdivision (a) of section 121-1102) setting forth the terms and conditions of the
conversion of the interests of the general and limited partners of such constituent
limited partnerships into interests in the surviving or resulting entity or the cash or
other consideration to be paid or delivered in exchange for interests in such
constituent limited partnerships, or a combination thereof. The rights of any
dissenting limited partner of any constituent limited partnership shall be as provided
in this chapter whether the surviving or resulting entity is a limited partnership or a
domestic or foreign other business entity. The certificate of merger or consolidation
required pursuant to section 121-1103 of this article shall include the information
required by paragraphs one, two, three and six of subdivision (a) of such section (as
applicable) as to the constituent other business entities. The provisions of section
121-1104 of this article shall govern the effect of the merger or consolidation with
respect to the property of, debts, obligations, liabilities and penalties of, and actions,
suits and proceedings by or against, the constituent limited partnership if the
survivor or resultant entity therefrom is a limited partnership.

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S 121-1201. Existing limited partnership.
(a) All limited partnerships formed on or after the effective date of this article shall
be governed by this article.
(b) Except as provided in section 121-1202 of this article, all domestic limited
partnerships formed under the laws of this state prior to the effective date of this
article shall continue to be governed by article eight of this chapter, as amended, in
the same manner as if this article had not been enacted.
(c) All foreign limited partnerships which have authority to do business in New York
on such effective date shall be deemed to have received authority under this article
and such foreign limited partnerships shall not be required to take any action with
respect thereto.

S 121-1202. Adoption by previously formed limited partnerships.
(a) A limited partnership formed under the laws of this state prior to the effective
date of this article may adopt and thereafter be governed by this article by filing with
the department of state a certificate of limited partnership conforming to the
requirements of section 121-201 of this article. Such certificate (i) shall be entitled
"Certificate of adoption of Revised Limited Partnership Act of...(name of limited
partnership) under Section 121-1202 of the Revised Limited Partnership Act", and
(ii) shall state the date and the county in which its original certificate of limited
partnership was filed, as well as the name of the limited partnership as provided in
such original certificate, if different. Simultaneously, such limited partnership shall
file a notice with the county clerk of the county in which its prior certificate was filed
stating that it has filed a certificate under this article in the department of state.
(b) On and after the effective date of this article, any limited partnership formed
under the laws of the state prior to the effective date of this article which does not
elect to be governed by this article which would be required under article eight to
amend its certificate of limited partnership or wishes to amend its certificate of
limited partnership shall file such amendment with the department of state, together
with a certificate of adoption as described in subdivision (a) of this section. Such
amendment shall (i) contain a caption that such amendment is filed pursuant to this
subdivision and (ii) shall state (A) the date on which and the county in which its
original certificate of limited partnership was filed as well as the name of the limited
partnership as provided in such original certificate, if different; and (B) if the
principal place of business stated in such original certificate of limited partnership
has been changed to another county and an amendment thereto filed with the
county clerk of the county in which such principal place of business was changed, the
date on and the county in which such amendment was filed. Simultaneously, such
limited partnership shall file a notice with the county clerk of the county in which its
prior certificate was filed stating that it has filed an amendment to its certificate
under this section. Following the filing of an initial notice to such clerks of the county
no further notice of any additional amendments need be filed with such clerks of the
county.
(c) Notwithstanding the provisions of section 121-102 of this article, any limited
partnership not electing to be governed by this article may continue to use the name
under which it has heretofore done business in this state. A limited partnership
electing not to be governed by this article upon filing the amendments provided for
in subdivision (b) of this section shall thereafter be governed by this article and not
by the law previously applicable to it.
(d) Unless otherwise provided in the partnership agreement of the limited
partnership organized prior to the effective date of this article, the general partners
of such limited partnership shall have the power and authority to elect whether at
any time such limited partnership shall be governed by this article.

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S 121-1300 Fees.
Except as otherwise provided, the department of state shall collect the following fees
and deposit such fees in the corporations, state records and uniform commercial
code account pursuant to this article:
(a) For the reservation of a limited partnership name pursuant to section 121-103 of
this article, twenty dollars.
(d) For the resignation of a registered agent for service of process pursuant to
subdivision (c) of section 121-105 of this article, twenty dollars.
(e) For filing a certificate of limited partnership pursuant to section 121-201 of this
article, two hundred dollars.
(f) For filing an affidavit of publication pursuant to either section 121-201 or 121-902
of this article, twenty-five dollars.
(g) For filing a certificate of amendment pursuant to section 121-202 of this article,
sixty dollars.
(h) For filing a certificate of cancellation pursuant to section 121-203 of this article,
sixty dollars.
(i) For filing a restated certificate of limited partnership pursuant to section 121-208
of this article, sixty dollars.
(j) For filing a judicial dissolution pursuant to section 121-802 of this article, sixty
dollars.
(k) For filing an application for authority pursuant to section 121-902 of this article,
two hundred dollars.
(l) For filing an amendment to an application for authority pursuant to section 121-
903 of this article, sixty dollars.
(m) For filing a certificate of surrender of authority pursuant to section 121-905 of
this article, sixty dollars.
(n) For filing a certificate of termination of existence pursuant to section 121-906 of
(o) For filing a certificate of merger or consolidation pursuant to section 121-1103 of
(p) For filing a certificate of adoption purs uant to section 121-1202 of this article,
two hundred dollars.
(q) For filing a certificate of resignation for receipt for process pursuant to section
121-104-A of this article, ten dollars.
(r) For service of process on the secretary of state pursuant to section 121-104-A or
section 121-109 of this article, forty dollars. No fee shall be collected for process
served on behalf of a county, city, town or village or other political subdivision of the
state.
(s) For filing a certificate of change pursuant to subdivision (a) of section 121-202-A
or subdivision (a) of section 121-903-A of this article, thirty dollars, and for filing a
certificate of change pursuant to subdivision (b) of section 121-202-A or subdivision
(b) of section 121-903-A of this article, five dollars.

ARTICLE 8-B
REGISTERED LIMITED LIABILITY PARTNERSHIPS

Section 121-1500. Registered limited liability partnership.
121-1501. Name of registered limited liability partnership.
121-1502. New York registered foreign limited liability
partnership.
121-1503. Transaction of business outside the state.
121-1504. Foreign related limited liability partnership.

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121-1505. Service of process.
121-1506. Resignation for receipt of process.

S 121-1500. Registered limited liability partnership.
(a) Notwithstanding the education law or any other provision of law, (i) a partnership
without limited partners each of whose partners is a professional authorized by law
to render a professional service within this state and who is or has been engaged in
the practice of such profession in such partnership or a predecessor entity, or will
engage in the practice of such profession in the registered limited liability partnership
within thirty days of the date of the effectiveness of the registration provided for in
this subdivision or a partnership without limited partners each of whose partners is a
professional, at least one of whom is authorized by law to render a professional
service within this state and who is or has been engaged in the practice of such
profession in such partnership or a predecessor entity, or will engage in the practice
of such profession in the registered limited liability partnership within thirty days of
the date of the effectiveness of the registration provided for in this subdivision, (ii) a
partnership without limited partners authorized by, or holding a license, certificate,
registration or permit issued by the licensing authority pursuant to the education law
to render a professional service within this state, which renders or intends to render
professional services within this state, or (iii) a related limited liability partnership
may register as a registered limited liability partnership by filing with the department
of state a registration which shall set forth:
(1) the name of the registered limited liability partnership;
(2) the address of the principal office of the partnership without limited partners;
(3) the profession or professions to be practiced by such partnership without limited
partners and a statement that it is eligible to register as a registered limited liability
partnership pursuant to subdivision (a) of this section;
(4) a designation of the secretary of state as agent of the partnership without limited
partners upon whom process against it may be served and the post office address
within or without this state to which the secretary of state shall mail a copy of any
process against it or served upon it;
(5) if the partnership without limited partners is to have a registered agent, its name
and address in this state and a statement that the registered agent is to be the
agent of the partnership without limited partners upon whom process against it may
be served;
(6) that the partnership without limited partners is filing a registration for status as a
registered limited liability partnership;
(7) if the registration of the partnership without limited partners is to be effective on
a date later than the time of filing, the date, not to exceed sixty days from the date
of such filing, of such proposed effectiveness;
(8) if all or specified partners of the registered limited liability partnership are to be
liable in their capacity as partners for all or specified debts, obligations or liabilities of
the registered limited liability partnership as authorized pursuant to subdivision (d)
of section twenty-six of this chapter, a statement that all or specified partners are so
liable for such debts, obligations or liabilities in their capacity as partners of the
registered limited liability partnership as authorized pursuant to subdivision (d) of
section twenty-six of this chapter; and
(9) any other matters the partnership without limited partners determines to include
in the registration.

Within one hundred twenty days after the effective date of the registration, a copy of
the same or a notice containing the substance thereof shall be published once in
each week for six successive weeks, in two newspapers of the county in which the

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principal office of the registered limited liability partnership is located in this state, to
be designated by the county clerk, one of which newspapers shall be a newspaper
published in the city or town in which the principal office within this state is intended
to be located, if a newspaper be published therein; or, if no newspaper is published
therein, in the newspaper nearest thereto, and proof of such publication by the
affidavit of the printer or publisher of each of such newspapers must be filed, with a
fee of twenty-five dollars, with the department of state. The notice shall include: (1)
the name of the registered limited liability partnership; (2) the date of filing of the
registration with the secretary of state; (3) the county within this state, in which the
principal office of the registered limited liability partnership is to be located; (4) a
statement that the secretary of state has been designated as agent of the registered
limited liability partnership upon whom process against it may be served and the
post offic e address within or without this state to which the secretary of state shall
mail a copy of any process against it served upon him or her; (5) if the registered
limited liability partnership is to have a registered agent, his or her name and
address within this state and a statement that the registered agent is to be the agent
of the registered limited liability partnership upon whom process against it may be
served; (6) if the registered limited liability partnership is to have a specific date of
dissolution in addition to the events of dissolution set forth in section sixty-two of
this chapter, the latest date upon which the registered limited liability partnership is
to dissolve; and (7) the character or purpose of the business of such registered
limited liability partnership. Failure to cause such notice to be published or to file
such proof within one hundred twenty days of the effective date of the registration
shall prohibit the registered limited liability partnership from maintaining any action
or special proceeding in this state unless and until such registered limited liability
partnership causes such notice to be published and files such proof of publication.
The failure of a registered limited liability partnership to cause such notice to be
published or to file proof of publication shall not impair the validity of any contract or
act of the registered limited liability partnership or the right of any other party to the
contract to maintain any action or special proceeding thereon, and shall not prevent
the registered limited liability partnership from defending any action or special
proceeding in this state.
(b) The registration shall be executed by one or more partners of the partnership
without limited partners.
(c) The registration shall be accompanied by a fee of two hundred dollars.
(d) A partnership without limited partners is registered as a registered limited
liability partnership at the time of the payment of the fee required by subdivision (c)
of this section and the filing of a completed registration with the department of state
or at the later date, if any, specified in such registration, not to exceed sixty days
from the date of such filing. A partnership without limited partners that has been
registered as a registered limited liability partnership is for all purposes the same
entity that existed before the registration and continues to be a partnership without
limited partners under the laws of this state. The status of a partnership without
limited partners as a registered limited liability partnership shall not be affected by
changes in the information stated in the registration after the filing of the
registration. If a partnership without limited partners that is a registered limited
liability partnership dissolves, a partnership without limited partners which is the
successor to such registered limited liability partnership (i) shall not be required to
file a new registration and shall be deemed to have filed the registration filed by the
registered limited liability partnership pursuant to subdivision (a) of this section, as
well as any withdrawal notice filed pursuant to subdivision (f) of this section, any
statement or certificate of consent

125

filed pursuant to subdivision (g) of this section or any certificate of amendment filed
pursuant to subdivision (j) of this section and (ii) shall be bound by any revocation of
registration pursuant to subdivision (g) of this section and any annulment thereof of
the dissolved partnership without limited partners that was a registered limited
liability partnership. For purposes of this section, a partnership without limited
partners is a successor to a partnership without limited partners that was a
registered limited liability partnership if a majority of the total interests in the current
profits of such successor partnership without limited partners are held by partners of
the predecessor partnership without limited partners that was a registered limited
liability partnership who were partners of such predecessor partnership immediately
prior to the dissolution of such predecessor partnership.
(e) If the signed registration delivered to the department of state for filing complies
as to form with the requirements of law and the filing fee required by any statute of
this state has been paid, the registration shall be filed and indexed by the
department of state.
(f) A registration may be withdrawn by filing with the department of state a written
withdrawal notice executed by one or more partners of the registered limited liability
partnership, with a filing fee of sixty dollars. A withdrawal notice must include: (i)
the name of the registered limited liability partnership (and if it has been changed
since registration, the name under which it was registered); (ii) the date the
registration was filed with the department of state pursuant to subdivision (a) of this
section; (iii) the address of the registered limited liability partnership’s principal
office; (iv) if the withdrawal of the registered limited liability partnership is to be
effective on a date later than the time of filing, the date, not to exceed sixty days
from the date of such filing, of such proposed effectiveness; (v) a statement
acknowledging that the withdrawal terminates the partnership’s status as a
registered limited liability partnership; and (vi) any other information determined by
the registered limited liability partnership.

A withdrawal notice terminates the status of the partnership as a registered limited
liability partnership as of the date of filing the notice or as of the later date, if any,
specified in the notice, not to exceed sixty days from the date of such filing. The
termination of registration shall not be affected by errors in the information stated in
the withdrawal notice. If a registered limited liability partnership is dissolved, it shall
within thirty days after the winding up of its affairs is completed file a withdrawal
notice pursuant to this subdivision.

(g) Each registered limited liability partnership shall, within sixty days prior to the
fifth anniversary of the effective date of its registration and every five years
thereafter, furnish a statement to the department of state setting forth: (i) the name
of the registered limited liability partnership, (ii) the address of the principal office of
the registered limited liability partnership, (iii) the post office address within or
without this state to which the secretary of state shall mail a copy of any process
accepted against it served upon him or her, which address shall supersede any
previous address on file with the department of state for this purpose, and (iv) a
statement that it is eligible to register as a registered limited liability partnership
pursuant to subdivision (a) of this section. The statement shall be executed by one
or more partners of the registered limited liability partnership. The statement shall
be accompanied by a fee of twenty dollars. If a registered limited liability partnership
shall not timely file the statement required by this subdivision, the department of
state may, upon sixty days’ notice mailed to the address of such registered limited
liability partnership as shown in the last registration or statement or certificate of
amendment filed by such registered limited liability partnership, make a

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proclamation declaring the registration of such registered limited liability partnership
to be revoked pursuant to this subdivision. The department of state shall file the
original proclamation in its office and shall publish a copy thereof in the state register
no later than three months following the date of such proclamation. Upon the
publication of such proclamation in the manner aforesaid, the registration of each
registered limited liability partnership named in such proclamation shall be deemed
revoked without further legal proceedings. Any registered limited liability partnership
whose registration was so revoked may file in the department of state a certificate of
consent certifying that either a statement required by this subdivision has been filed
or accompanies the certificate of consent and all fees imposed under this chapter on
the registered limited liability partnership have been paid. The filing of such
certificate of consent shall have the effect of annulling all of the proceedings
theretofore taken for the revocation of the registration of such registered limited
liability partnership under this subdivision and (1) the registered limited liability
partnership shall thereupon have such powers, rights, duties and obligations as it
had on the date of the publication of the proclamation, with the same force and
effect as if such proclamation had not been made or published and (2) such
publication shall not affect the applicability of the provisions of subdivision (b) of
section twenty-six of this chapter to any debt, obligation or liability incurred, created
or assumed from the date of publication of the proclamation through the date of the
filing of the certificate of consent. The filing of a certificate of consent shall be
accompanied by a fee of fifty dollars and if accompanied by a statement, the fee
required by this subdivision. If, after the publication of such proclamation, it shall be
determined by the department of state that the name of any registered limited
liability partnership was erroneously included in such proclamation, the department
of state shall make appropriate entry on its records, which entry shall have the effect
of annulling all of the proceedings theretofore taken for the revocation of the
registration of such registered limited liability partnership under this subdivision and
(A) such registered limited liability partnership shall have such powers, rights, duties
and obligations as it had on the date of the publication of the proclamation, with the
same force and effect as if such proclamation had not been made or published and
(B) such publication shall not affect the applicability of the provisions of subdivision
(b) of section twenty-six of this chapter to any debt, obligation or liability incurred,
created or assumed from the date of publication of the proclamation through the
date of the making of the entry on the records of the department of state. Whenever
a registered limited liability partnership shall have filed a certificate of consent
pursuant to this subdivision or if the name of a registered limited liability partnership
was erroneously included in a proclamation and such proclamation was annulled, the
department of state shall publish a notice thereof in the state register.
(h) The filing of a withdrawal notice by a registered limited liability partnership
pursuant to subdivision (f) of this section, a revocation of registration pursuant to
subdivision (g) of this section and the filing of a certificate of amendment pursuant
to subdivision (j) of this section shall not affect the applicability of the provisions of
subdivision (b) of section twenty-six of this chapter to any debt, obligation or liability
incurred, created or assumed while the partnership was a registered limited liability
partnership. After a withdrawal or revocation of registration, the partnership without
limited partners shall for all purposes remain the same entity that existed during
registration and continues to be a partnership without limited partners under the
laws of this state.
(i) The department of state shall remove from its active records the registration of a
registered limited liability partnership whose registration has been withdrawn or
revoked.

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(j) A registration or statement filed with the department of state under this section
may be amended or corrected by filing with the department of state a certificate of
amendment executed by one or more partners of the registered limited liability
partnership. No later than ninety days after (i) a change in the name of the
registered limited liability partnership or (ii) a partner of the registered limited
liability partnership becomes aware that any statement in a registration or statement
was false in any material respect when made or that an event has occurred which
makes the registration or statement inaccurate in any material respect, the
registered limited liability partnership shall file a certificate of amendment. The filing
of a certificate of amendment shall be accompanied by a fee of sixty dollars. The
certificate of amendment shall set forth: (i) the name of the limited liability
partnership and, if it has been changed, the name under which it was registered and
(ii) the date of filing its initial registration or statement.
(j-1) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a registered limited
liability partnership served upon him or the address of the registered agent, provided
such address being changed is the address of a person, partnership or corporation
whose address, as agent, is the address to be changed or who has been designated
as registered agent for such registered limited liability partnership shall be signed
and delivered to the department of state by such agent. The certificate of change
shall set forth: (i) the name of the registered limited liability partnership and, if it
has been changed, the name under which it was originally filed with the department
of state; (ii) the date of filing of its initial registration or notice statement; (iii) each
change effected thereby; (iv) that a notice of the proposed change was mailed to the
limited liability partnership by the party signing the certificate not less than thirty
days prior to the date of delivery to the department of state and that such limited
liability partnership has not objected thereto; and (v) that the party signing the
certificate is the agent of such limited liability partnership to whose address the
secretary of state is required to mail copies of process or the registered agent, if
such be the case. A certificate signed and delivered under this subdivision shall not
be deemed to effect a change of location of the office of the limited liability
partnership in whose behalf such certificate is filed. The certificate of change shall be
accompanied by a fee of five dollars.
(k) The filing of a certificate of amendment pursuant to subdivision (j) of this section
with the department of state shall not alter the effective date of the registration
being amended or corrected.
(l) Except as otherwise provided in any agreement between the partners, the
decision of a partnership without limited partners to file, withdraw or amend a
registration pursuant to subdivision (a), (f) or (j), respectively, of this section is an
ordinary matter connected with partnership business under subdivision eight of
section forty of this chapter.
(m) A registered limited liability partnership, other than a registered limited liability
partnership authorized to practice law, shall be under the supervision of the regents
of the university of the state of New York and be subject to disciplinary proceedings
and penalties in the same manner and to the same extent as is provided with respect
to individuals and their licenses, certificates and registrations in title eight of the
education law relating to the applicable profession. Notwithstanding the provisions
of this subdivision, a registered limited liability partnership authorized to practice
medicine shall be subject to the pre-hearing procedures and hearing procedures as
are provided with respect to individual physicians and their licenses in title two-A of
article two of the public health law. In addition to rendering the professional service
or services the partners are authorized to practice in this state, a registered limited
liability partnership may carry on, or conduct or transact any other business or

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activities as to which a partnership without limited partners may be formed.
Notwithstanding any other provision of this section, a registered limited liability
partnership (i) authorized to practice law may only engage in another profession or
business or activities or (ii) which is engaged in a profession or other business or
activities other than law may only engage in the practice of law, to the extent not
prohibited by any other law of this state or any rule adopted by the appropriate
appellate division of the supreme court or the court of appeals. Any registered
limited liability partnership may invest its funds in real estate, mortgages, stocks,
bonds or any other types of investments.
(n) No registered limited liability partnership may render a professional service
except through individuals authorized by law to render such professional service as
individuals, provided, that nothing in this chapter shall authorize a registered limited
liability partnership to render a professional service in this state except through
individuals authorized by law to render such professional service as individuals in this
state.
(o) This section shall not repeal, modify or restrict any provision of the education law
or the judiciary law or any rules or regulations adopted thereunder regulating the
professions referred to in the education law or the judiciary law except to the extent
in conflict herewith.
(p) A certified copy of the registration and of each certificate of amendment shall be
filed by the registered limited liability partnership with the licensing authority within
thirty days after the filing of such registration or amendment with the department of
state.
* (q) Each partner of a registered limited liability partnership formed to provide
medical services in this state must be licensed pursuant to article 131 of the
education law to practice medicine in this state and each partner of a registered
limited liability partnership formed to provide dental services in this state must be
licensed pursuant to article 133 of the education law to practice dentistry in this
state. Each partner of a registered limited liability partnership formed to provide
veterinary services in this state shall be licensed pursuant to article 135 of the
education law to practice veterinary medicine in this state. Each partner of a
registered limited liability partnership formed to provide professional engineering,
land surveying, architectural and/or landscape architectural services in this state
must be licensed pursuant to article 145, article 147 and/or article 148 of the
education law to practice one or more of such professions in this state.
* NB Effective until September 1, 2004

veterinary services in this state must be licensed pursuant to article 135 of the
education law to practice one or more of such professions in this state. Each partner
of a registered limited liability partnership formed to provide licensed clinical social
work services in this state must be licensed pursuant to article 154 of the education
law to practice clinical social work in this state.

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* NB Effective September 1, 2004 until January 1, 2005

veterinary services in this state must be licensed pursuant to article 135 of the
education law to practice one or more of such professions in this state. Each partner
of a registered limited liability partnership formed to provide licensed clinical social
work services in this state must be licensed pursuant to article 154 of the education
law to practice clinical social work in this state. Each partner of a registered limited
liability partnership formed to provide creative arts therapy services in this state
must be licensed pursuant to article 163 of the education law to practice creative
arts therapy in this state. Each partner of a registered limited liability partnership
formed to provide marriage and family therapy services in this state must be
licensed pursuant to article 163 of the education law to practice marriage and family
therapy in this state. Each partner of a registered limited liability partnership formed
to provide mental health counseling services in this state must be licensed pursuant
to article 163 of the education law to practice mental health counseling in this state.
Each partner of a registered limited liability partnership formed to provide
psychoanalysis services in this state must be licensed pursuant to article 163 of the
education law to practice psychoanalysis in this state.
* NB Effective January 1, 2005

S 121-1501. Name of registered limited liability partnership.
The name of each registered limited liability partnership shall contain without
abbreviation the words "Registered Limited Liability Partnership" or "Limited Liability
Partnership" or the abbreviations "R.L.L.P.", "RLLP", "L.L.P." or "LLP"; provided,
however, the partnership may use any such words or abbreviation, without
limitation, in addition to its registered name.

S 121-1502. New York registered foreign limited liability partnership.
(a) In order for a foreign limited liability partnership to carry on or conduct or
transact business or activities as a New York registered foreign limited liability
partnership in this state, such foreign limited liability partnership shall file with the
department of state a notice which shall set forth:
(i) the name under which the foreign limited liability partnership intends to carry on
or conduct or transact business or activities in this state;
(ii) the date on which and the jurisdiction in which it registered as a limited liability
partnership;
(iii) the address of the principal office of the foreign limited liability partnership;
(iv) the profession or professions to be practiced by such foreign limited liability
partnership and a statement that it is a foreign limited liability partnership eligible to
file a notice under this chapter;
(v) a designation of the secretary of state as agent of the foreign limited liability
partnership upon whom process against it may be served and the post office address

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within or without this state to which the secretary of state shall mail a copy of any
process against it or served upon it;
(vi) if the foreign limited liability partnership is to have a registered agent, its name
and address in this state and a statement that the registered agent is to be the
agent of the foreign limited liability partnership upon whom process against it ma y
be served;
(vii) a statement that its registration as a limited liability partnership is effective in
the jurisdiction in which it registered as a limited liability partnership at the time of
the filing of such notice;
(viii) a statement that the foreign limited liability partnership is filing a notice in
order to obtain status as a New York registered foreign limited liability partnership;
(ix) if the registration of the foreign limited liability partnership is to be effective on a
date later than the time of filing, the date, not to exceed sixty days from the date of
filing, of such proposed effectiveness; and (x) any other matters the foreign limited
liability partnership determines to include in the notice. Such notice shall be
accompanied by either (1) a copy of the last registration or renewal registration (or
similar filing), if any, filed by the foreign limited liability partnership with the
jurisdiction where it registered as a limited liability partnership or (2) a certificate,
issued by the jurisdiction where it registered as a limited liability partnership,
substantially to the effect that such foreign limited liability partnership has filed a
registration as a limited liability partnership which is effective on the date of the
certificate (if such registration, renewal registration or certificate is in a foreign
language, a translation thereof under oath of the translator shall be attached
thereto). Such notice shall also be accompanied by a fee of two hundred fifty dollars.
(b) Without excluding other activities which may not constitute the carrying on or
conducting or transacting of business or activities in this state, for purposes of
determining whether a foreign limited liability partnership is required to file a notice
pursuant to subdivision (a) of this section, a foreign limited liability partnership shall
not be considered to be carrying on or conducting or transacting business or
activities in this state by reason of carrying on in this state any one or more of the
following activities:
(i) maintaining or defending any action or proceeding, whether judicial,
administrative, arbitrative or otherwise, or effecting settlement thereof or the
settlement of claims or disputes;
(ii) holding meetings of its partners; or
(iii) maintaining bank accounts.

The specification in this subdivision does not establish a standard for activities which
may subject a foreign limited liability partnership to service of process under this
article or any other statute of this state. The filing of a notice pursuant to subdivision
(a) of this section by a foreign limited liability partnership shall not by itself be
deemed to be evidence that such foreign limited liability partnership is carrying on or
conducting or transacting business or activities in this state.
(c) A notice shall be executed by one or more partners of the foreign limited liability
partnership.
(d) If a signed notice delivered to the department of state for filing complies as to
form with the requirements of law and the filing fee required by any statute of this
state has been paid, the notice shall be filed and indexed by the department of state.
If a foreign limited liability partnership that is a New York registered foreign limited
liability partnership dissolves, a foreign limited liability partnership which is the
successor to such New York registered foreign limited liability partnership (i) shall
not be required to file a new notice and shall be deemed to have filed the notice filed
by the New York registered foreign limited liability partnership pursuant to

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subdivision (a) of this section, as well as any withdrawal notice filed pursuant to
subdivision (e) of this section, any statement or certificate of consent filed pursuant
to subdivision (f) of this section and any notice of amendment filed pursuant to
subdivision (i) of this section and (ii) shall be bound by any revocation of status
pursuant to subdivision (f) of this section and any annulment thereof of the dissolved
foreign limited liability partnership that was a New York registered foreign limited
liability partnership. For purposes of this section, a foreign limited liability
partnership is a successor to a foreign limited liability partnership that was a New
York registered foreign limited liability partnership if a majority of the total interests
in the current profits of such successor foreign limited liability partnership are held
by partners of the predecessor foreign limited liability partnership that was a New
York registered foreign limited liability partnership who were partners of such
predecessor partnership immediately prior to the dissolution of such predecessor
partnership.
(e) A notice may be withdrawn by filing with the department of state a written
withdrawal notice executed by one or more partners of the New York registered
foreign limited liability partnership, with a filing fee of sixty dollars. A withdrawal
notice must include: (i) the name or names under which the New York registered
foreign limited liability partnership carried on or conducted or transacted business or
activities in this state (and if it has been changed since the filing of the notice, the
name under which it filed such notice); (ii) the date a notice was filed with the
department of state pursuant to subdivision (a) of this section; (iii) the address of
the New York registered foreign limited liability partnership’s principal office and the
jurisdiction in which it is registered as a limited liability partnership; (iv) if the
withdrawal of the New York registered foreign limited liability partners hip is to be
effective on a date later than the time of such filing, the date, not to exceed sixty
days from the date of such filing, of such proposed effectiveness; (v) a statement
acknowledging that the withdrawal terminates the foreign limited liability
partnership’s status as a New York registered foreign limited liability partnership;
and (vi) any other information determined by the New York registered foreign limited
liability partnership. A withdrawal notice terminates the status of the foreign limited
liability partnership as a New York registered foreign limited liability partnership as of
the date of filing of the notice or as of the later date, if any, specified in the notice,
not to exceed sixty days from the date of such filing. The termination of status shall
not be affected by errors in the information stated in the withdrawal notice. If a New
York registered foreign limited liability partnership ceases to be denominated as a
registered limited liability partnership or limited liability partnership under the laws of
the jurisdiction governing the agreement under which such New York registered
foreign limited liability partnership operates, it shall within thirty days after the
occurrence of such event file a withdrawal notice pursuant to this subdivision.
(f) Each New York registered foreign limited liability partnership shall, within sixty
days prior to the fifth anniversary of the effective date of its notice and every five
years thereafter, furnish a statement to the department of state setting forth: (i) the
name under which the New York registered foreign limited liability partnership is
carrying on or conducting or transacting business or activities in this state, (ii) the
address of the principal office of the New York registered foreign limited liability
partnership, (iii) the post office address within or without this state to which the
secretary of state shall mail a copy of any process accepted against it served upon
him or her, which address shall supersede any previous address on file with the
department of state for this purpose, and (iv) a statement that it is a foreign limited
liability partnership. The statement shall be executed by one or more partners of the
New York registered foreign limited liability partnership. The statement shall be
accompanied by a fee of fifty dollars. If a New York registered foreign limited liability

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partnership shall not timely file the statement required by this subdivision, the
department of state may, upon sixty days’ notice mailed to the address of such New
York registered foreign limited liability partnership as shown in the last notice or
statement or certificate of amendment filed by such New York registered foreign
limited liability partnership, make a proclamation declaring the status of such New
York registered foreign limited liability partnership to be revoked pursuant to this
subdivision. The department of state shall file the original proclamation in its office
and shall publish a copy thereof in the state register no later than three months
following the date of such proclamation. Upon the publication of such proclamation in
the manner aforesaid, the status of each New York registered foreign limited liability
partnership named in such proclamation shall be deemed revoked without further
legal proceedings. Any New York registered foreign limited liability partnership whose
status was so revoked may file in the department of state a certificate of consent
certifying that either a statement required by this subdivision has been filed or
accompanies the certificate of consent and all fees imposed under this chapter on the
New York registered foreign limited liability partnership have been paid. The filing of
such certificate of consent shall have the effect of annulling all of the proceedings
theretofore taken for the revocation of the status of such New York registered foreign
limited liability partnership under this subdivision and (1) the New York registered
foreign limited liability partnership shall thereupon have such powers, rights, duties
and obligations as it had on the date of the publication of the proclamation, with the
same force and effect as if such proclamation had not been made or published and
(2) such publication shall not affect the applicability of the laws of the jurisdiction
governing the agreement under which such New York registered foreign limited
liability partnership is operating (including laws governing the liability of partners) to
any debt, obligation or liability incurred, created or assumed from the date of
publication of the proclamation through the date of the filing of the certificate of
consent. The filing of a certificate of consent shall be accompanied by a fee of fifty
dollars and if accompanied by a statement, the fee required by this subdivision. If,
after the publication of such proclamation, it shall be determined by the department
of state that the name of any New York registered foreign limited liability partnership
was erroneously included in such proclamation, the department of state shall make
appropriate entry on its records, which entry shall have the effect of annulling all of
the proceedings theretofore taken for the revocation of the status of such New York
registered foreign limited liability partnership under this subdivision and (1) such
New York registered foreign limited liability partnership shall have such powers,
rights, duties and obligations as it had on the date of the publication of the
proclamation, with the same force and effect as if such proclamation had not been
made or published and (2) such publication shall not affect the applicability of the
laws of the jurisdiction governing the agreement under which such New York
registered foreign limited liability partnership is operating (including laws governing
the liability of partners) to any debt, obligation or liability incurred, created or
assumed from the date of publication of the proclamation through the date of the
making of the entry on the records of the department of state. Whenever a New York
registered foreign limited liability partnership shall have filed a certificate of consent
pursuant to this subdivision or if the name of a New York registered foreign limited
liability partnership was erroneously included in a proclamation and such
proclamation was annulled, the department of state shall publish a notice thereof in
the state register.

Within one hundred twenty days after the effective date of the notice filed under
subdivision (a) of this section, a copy of the same or a notice containing the
substance thereof shall be published once in each week for six successive weeks, in

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two newspapers of the county within this state in which the principal office of the
foreign limited liability partnership is located, to be designated by the county clerk,
one of which newspapers shall be a newspaper published in the city or town in which
the principal office is intended to be located, if a newspaper be published therein; or,
if no newspaper is published therein, in the newspaper nearest thereto, and proof of
such publication by the affidavit of the printer or publisher of each of such
newspapers must be filed with the department of state, with a filing fee of twenty-
five dollars. The notice shall include: (l) the name of the foreign limited liability
partnership; (2) the date of filing of such notice with the secretary of state; (3) the
jurisdiction and date of its organization; (4) the county within this state, in which the
principal office of the foreign limited liability partnership is to be located; (5) a
statement that the secretary of state has been designated as agent of the foreign
limited liability partnership upon whom process against it may be served and the
post office address within or without this state to which the secretary of state shall
mail a copy of any process against it served upon him or her; (6) if the foreign
limited liability partnership is to have a registered agent, his or her name and
address within this state and a statement that the registered agent is to be the agent
of the foreign limited liability partnership upon whom process against it may be
served; (7) the address of the office required to be maintained in the jurisdiction of
its organization by the laws of that jurisdiction or, if not so required, of the principal
office of the foreign limited liability partnership; (8) the name and address of the
authorized officer in its jurisdiction in which it registered as a limited liability
partnership where a copy of its registration is filed or, if no public filing of its
registration is required by the law of its jurisdiction of organization, a statement that
the foreign limited liability partnership shall provide, on request, a copy thereof with
all amendments thereto (if such documents are in a foreign language, a translation
thereof under oath of the translator shall be attached thereto), and the name and
post office address of the person responsible for providing such copies; or (9) the
character or purpose of the business of such foreign limited liability partnership.
Failure to cause such notice to be published or to file such proof within one hundred
twenty days of the effective date of such notice shall prohibit the foreign limited
liability partnership from maintaining any action or special proceeding in this state
unless and until such foreign limited liability partnership causes such notice to be
published and files such proof of publication. The failure of a foreign limited liability
partnership to cause such notice to be published or to file proof of publication shall
not impair the validity of any contract or act of the foreign limited liability
partnership or the right of any other party to the contract to maintain any action or
special proceeding thereon, and shall not prevent the foreign limited liability
partnership from defending any action or special proceeding in this state.
(g) The filing of a withdrawal notice by a New York registered foreign limited liability
partnership pursuant to subdivision (e) of this section, a revocation of status
pursuant to subdivision (f) of this section and the filing of a notice of amendment
pursuant to subdivision (i) of this section shall not affect the applicability of the laws
of the jurisdiction governing the agreement under which such foreign limited liability
partnership is operating (including laws governing the liability of partners) to any
debt, obligation or liability incurred, created or assumed while the foreign limited
liability partnership was a New York registered foreign limited liability partnership.
After a withdrawal or revocation of registration, the foreign limited liability
partnership shall for all purposes continue to be a foreign partnership without limited
partners under the laws of this state.
(h) The department of state shall remove from its active records the notice of any
New York registered foreign limited liability partnership whose notice has been
withdrawn or revoked.

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(i) A notice or statement filed with the department of state under this section may be
amended or corrected by filing with the department of state a notice of amendment
executed in accordance with subdivision (c) of this section. No later than ninety days
after (i) a change in the name of the New York registered foreign limited liability
partnership or (ii) a partner of the New York registered foreign limited liability
partnership becomes aware that any statement in a notice or statement was false in
any material respect when made or that an event has occurred which makes the
notice or statement inaccurate in any material respect, the New York registered
foreign limited liability partnership shall file a notice of amendment. The filing of a
notice of amendment shall be accompanied by a fee of sixty dollars. The certificate of
amendment shall set forth: (i) the name of the limited liability partnership and, if it
has been changed, the name under which it originally filed a notice under this
section and (ii) the date of filing its initial registration or statement.
(i-1) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a New York registered
foreign limited liability partnership served upon him or the address of the registered
agent, provided such address being changed is the address of a person, partnership
or corporation whose address, as agent, is the address to be changed or who has
been designated as registered agent of such registered foreign limited liability
partnership shall be signed and delivered to the department of state by such agent.
The certificate of change shall set forth: (i) the name of the New York registered
foreign limited liability partnership; (ii) the date of filing of its initial registration or
notice statement; (iii) each change effected thereby; (iv) that a notice of the
proposed change was mailed to the limited liability partnership by the party signing
the certificate not less than thirty days prior to the date of delivery to the
department of state and that such limited liability partnership has not objected
thereto; and (v) that the party signing the certificate is the agent of such limited
liability partnership to whose address the secretary of state is required to mail copies
of process or the registered agent, if such be the case. A certificate signed and
delivered under this subdivision shall not be deemed to effect a change of location of
the office of the limited liability partnership in whose behalf such certificate is filed.
The certificate of change shall be accompanied by a fee of five dollars.
(j) The filing of a notice of amendment pursuant to subdivision (i) of this section with
the department of state shall not alter the effective date of the notice being
amended or corrected.
(k) Each foreign limited liability partnership carrying on or conducting or transacting
business or activities in this state shall use a name which contains without
abbreviation the words "Registered Limited Liability Partnership" or "Limited Liability
Partnership" or the abbreviations "R.L.L.P.", "RLLP", "P.L.L.", "PLL", "L.L.P." or "LLP";
provided, however, the partnership may use any such words or abbreviation, without
limitation, in addition to its registered name.
(l) Subject to the constitution of this state, the laws of the jurisdiction that govern a
foreign limited liability partnership shall determine its internal affairs and the liability
of partners for debts, obligations and liabilities of, or chargeable to, the foreign
limited liability partnership; provided that (i) each partner, employee or agent of a
foreign limited liability partnership who performs professio nal services in this state
on behalf of such foreign limited liability partnership shall be personally and fully
liable and accountable for any negligent or wrongful act or misconduct committed by
him or her or by any person under his or her direct supervision and control while
rendering such professional services in this state and shall bear professional
responsibility for compliance by such foreign limited liability partnership with all laws,
rules and regulations governing the practice of a profession in this state and (ii) each
shareholder,

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director, officer, member, manager, partner, employee or agent of a professional
service corporation, foreign professional service corporation, professional service
limited liability company, foreign professional serv ice limited liability company,
registered limited liability partnership, foreign limited liability partnership or
professional partnership that is a partner, employee or agent of a foreign limited
liability partnership who performs professional services in this state on behalf of such
foreign limited liability partnership shall be personally and fully liable and
accountable for any negligent or wrongful act or misconduct committed by him or
her or by any person under his or her direct supervision and control while rendering
professional services in this state in his or her capacity as a partner, employee or
agent of such foreign limited liability partnership and shall bear professional
responsibility for compliance by such foreign limited liability partnership with all laws,
rules and regulations governing the practice of a profession in this state. The
relationship of a professional to a foreign limited liability partnership with which such
professional is associated, whether as a partner, employee or agent, shall not modify
or diminish the jurisdiction over such professional of the licensing authority and, in
the case of an attorney and counsellor-at-law or a professional service corporation,
foreign professional service corporation, professional service limited liability
company, foreign professional service limited liability company, registered limited
liability partnership, foreign limited liability partnership or professional partnership
engaged in the practice of law, the courts of this state. A limited partnership formed
under the laws of any jurisdiction, other than this state, which is denominated as a
registered limited liability partnership or limited liability partnership under such laws
shall be recognized in this state as a foreign limited partnership but not as a foreign
limited liability partnership or a New York registered foreign limited liability
partnership. Except to the extent provided in article eight of the limited liability
company law, a partnership without limited partners operating under an agreement
governed by the laws of any jurisdiction, other than this state, which is denominated
as a registered limited liability partnership or a limited liability partnership under
such laws, but is not a foreign limited liability partnership, shall be recognized in this
state as a foreign partnership without limited partners, but not as a foreign limited
liability partnership or a New York registered foreign limited liability partnership.
(m) A foreign limited liability partnership carrying on or conducting or transacting
business or activities in this state without having filed a notice pursuant to
subdivision (a) of this section may not maintain any action, suit or special proceeding
in any court of this state unless and until such foreign limited liability partnership
shall have filed such notice and paid all fees that it would have been required to pay
had it filed a notice pursuant to subdivision (a) of this section before carrying on or
conducting or transacting business or activities as a New York registered foreign
limited liability partnership in this state and shall have filed proof of publication
pursuant to subdivision (f) of this section. The failure of a foreign limited liability
partnership that is carrying on or conducting or transacting business or activities in
this state to comply with the provisions of this section does not impair the validity of
any contract or act of the foreign limited liability partnership or prevent the foreign
limited liability partnership from defending any action or special proceeding in any
court of this state.
(n) A foreign limited liability partnership, other than a foreign limited liability
partnership authorized to practice law, shall be under the supervision of the regents
of the university of the stat e of New York and be subject to disciplinary proceedings
and penalties in the same manner and to the same extent as is provided with respect
to individuals and their licenses, certificates and registrations in title eight of the
education law relating to the applicable profession. Notwithstanding the provisions of
this subdivision, a foreign limited liability partnership authorized to practice medicine

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shall be subject to the pre-hearing procedures and hearing procedures as are
provided with respect to individual physicians and their licenses in title two-A of
article two of the public health law. No foreign limited liability partnership shall
engage in any profession or carry on, or conduct or transact any other business or
activities in this state other than the rendering of the professional services or the
carrying on, or conducting or transacting of any other business or activities for which
it is formed and is authorized to do business in this state; provided that such foreign
limited liability partnership may invest its funds in real estate, mortgages, stocks,
bonds or any other type of investments; provided, further, that a foreign limited
liability partnership (i) authorized to practice law may only engage in another
profession or other business or activities in this state or (ii) which is engaged in a
profession or other business or activities other than law may only engage in the
practice of law in this state, to the extent not prohibited by any other law of this
state or any rule adopted by the appropriate appellate division of the supreme court
or the court of appeals.
(o) No foreign limited liability partnership may render a professional service in this
state except through individuals authorized by law to render such professional
service as individuals in this state.
(p) This section shall not repeal, modify or restrict any provision of the education law
or the judiciary law or any rules or regulations adopted thereunder regulating the
professions referred to in the education law or the judiciary law except to the extent
in conflict herewith.
* (q) Each partner of a foreign limited liability partnership which provides medical
practice medicine in the state and each partner of a foreign limited liability
partnership which provides dental services in the state must be licensed pursuant to
article 133 of the education law to practice dentistry in this state. Each partner of a
foreign limited liability partnership which provides veterinary service in the state
shall be licensed pursuant to article 135 of the education law to practice veterinary
medicine in this state. Each partner of a foreign limited liability partnership which
provides professional engineering, land surveying, architectural and/or landscape
architectural services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or more of such
professions.
* NB Effective until January 1, 2005

* (q) Each partner of a foreign limited liability partnership which provides medical
practice medicine in the state and each partner of a foreign limited liability
partnership which provides dental services in the state must be licensed pursuant to
article 133 of the education law to practice dentistry in this state. Each partner of a
foreign limited liability partnership which provides veterinary service in the state
shall be licensed pursuant to article 135 of the education law to practice veterinary
medicine in this state. Each partner of a foreign limited liability partnership which
provides professional engineering, land surveying, architectural and/or landscape
arc hitectural services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or more of such
professions. Each partner of a foreign limited liability partnership which provides
creative arts therapy services in this state must be licensed pursuant to article 163
of the education law to practice creative arts therapy in this state. Each partner of a
foreign limited liability partnership which provides marriage and family therapy
practice marriage and family therapy in this state. Each partner of a foreign limited

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liability partnership which provides mental health counseling services in this state
must be licensed pursuant to article 163 of the education law to practice mental
health counseling in this state. Each partner of a foreign limited liability partnership
which provides psychoanalysis services in this state must be licensed pursuant to
article 163 of the education law to practice psychoanalysis in this state.
* NB Effective January 1, 2005

S 121-1503. Transaction of business outside the state.
(a) It is the intent of the legislature that the registration of a partnership without
limited partners as a registered limited liability partnership under this article shall be
recognized beyond the limits of this state and that such registered limited liability
partnership may conduct its business or activities, carry on its operations, and have
and exercise the powers granted by this article in any state, territory, district or
possession of the United States or in any foreign country and that, subject to any
reasonable registration requirements any such registered limited liability partnership
transacting b usiness outside this state and the laws of this state governing such
registered limited liability partnership shall be granted the protection of full faith and
credit under section 1 of article IV of the Constitution of the United States.
(b) It is the policy of this state that the internal affairs of a partnership without
limited partners registered as a registered limited liability partnership under this
article and the liability of partners in a registered limited liability partnership for
debts, obligations and liabilities of, or chargeable to, the registered limited liability
partnership shall be subject to and governed by the laws of this state, including the
provisions of this article.

S 121-1504. Foreign related limited liability partnership.
Any foreign related limited liability partnership that has filed a certificate of authority
under and satisfied all the requirements of section eight hundred two of the limited
liability company law shall be deemed to have filed a notice pursuant to section 121-
1502 of this chapter until the fifth anniversary of filing its application for such
certificate of authority, at which time the foreign related limited liability partnership
shall file a notice pursuant to section 121-1502 of this chapter.

S 121-1505. Service of process.
(a) Service of process on the secretary of state as agent of a registered limited
liability partnership under this article shall be made by personally delivering to and
leaving with the secretary of state or a deputy, or with any person authorized by the
secretary of state to receive such service, at the office of the department of state in
the city of Albany, duplicate copies of such process together with the statutory fee,
which fee shall be a taxable disbursement. Service of process on such registered
limited liability partnership shall be complete when the secretary of state is so
served. The secretary of state shall promptly send one of such copies by certified
mail, return receipt requested, to such registered limited liability partnership, at the
post office address on file in the department of state specified for such purpose.
(b) As used in this article, process shall mean judicial process and all orders,
demands, notices or other papers required or permitted by law to be personally
served on a registered limited liability partnership, for the purpose of acquiring
jurisdiction of such registered limited liability partnership in any action or proceeding,
civil or criminal, whether judicial, administrative, arbitrative or otherwise, in this
state or in the federal courts sitting in or for this state.
(c) Nothing in this section shall affect the right to serve process in any other manner
permitted by law.

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S 121-1506. Resignation for receipt of process.
(a) A registered agent may resign as such agent. A certificate entitled "Certificate of
resignation of registered agent of ...... (name of limited liability partnership) under
section 121-1506 of the Partnership Law" shall be signed and delivered to the
department of state. It shall set forth:
(1) That he resigns as registered agent for the designated limited liability
partnership.
(2) The date the certificate of registration of the designated limited liability
partnership was filed by the department of state.
(3) That he has sent a copy of the certificate of resignation by registered mail to the
designating limited liability partnership at the post office address on file in the
department of state specified for the mailing of process or if such address is the
address of the registered agent, then to the office of the designating limited liability
partnership in the jurisdiction of its formation.
(b) The party (or the party’s legal representative) whose post address has been
supplied by a limited liability partnership as its address for process may resign. A
certificate entitled "Certificate of Resignation for Receipt of Process under Section
121-1506(b) of the Partnership Law" shall be signed by such party and delivered to
the department of state. It shall set forth:
(1) The name of the limited liability partnership and the date that its certificate of
registration was filed by the department of state.
(2) That the address of the party has been designated by the limited liability
partnership as the post office address to which the secretary of state shall mail a
copy of any process served on the secretary of state as agent for such limited
liability partnership and that such party wishes to resign.
(3) That sixty days prior to the filing of the certificate of resignation with the
department of state the party has sent a copy of the certificate of resignation for
receipt of process by registered or certified mail to the address of the registered
agent of the designated limited liability partnership, if other than the party filing the
certificate of resignation, for receipt of process, or if the resigning limited liability
partnership has no registered agent, then to the last address of the designated
limited liability partnership, known to the party, specifying the address to which the
copy was sent. If there is no registered agent and no known address of the
designating limited liability partnership the party shall attach an affidavit to the
certificate stating that a diligent but unsuccessful search was made by the party to
locate the limited liability partnership, specifying what
efforts were made.
(4) That the designated limited liability partnership is required to deliver to the
department of state a certificate of amendment providing for the designation by the
limited liability partnership of a new address and that upon its failure to file such
certificate, its authority to do business in this state shall be suspended.
(c) Upon the failure of the designating limited liability partnership to file a certificate
of amendment providing for the designation by the limited liability partnership of the
new address after the filing of a certificate of resignation for receipt of process with
the secretary of state, its authority to do business in this state shall be suspended.
(d) The filing by the department of state of a certificate of amendment providing for
a new address by a designating limited liability partnership shall annul the
suspension and its authority to do business in this state shall be restored and
continued as if no suspension had occurred.
(e) The resignation for receipt of process shall become effective upon the filing by
the department of state of a certificate of resignation for receipt of process.
(f)(1) In any case in which a limited liability partnership suspended pursuant to this
section would be subject to the personal or other jurisdiction of the courts of this

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state under article three of the civil practice law and rules, process against such
limited liability partnership may be served upon the secretary of state as its agent
pursuant to this section. Such process may be issued in any court in this state
having jurisdiction of the subject matter.
(2) Service of such process upon the secretary of state shall be made by personally
delivering to and leaving with him or his deputy, or with any person authorized by
the secretary of state to receive such service, at the office of the department of state
in the city of Albany, a copy of such process together with the statutory fee, which
fee shall be a taxable disbursement. Such servic e shall be sufficient if notice thereof
and a copy of the process are:
(i) delivered personally within or without this state to such limited liability
partnership by a person and in the manner authorized to serve process by law of the
jurisdiction in which service is made, or
(ii) sent by or on behalf of the plaintiff to such limited liability partnership by
registered or certified mail with return receipt requested to the last address of such
limited liability partnership known to the plaintiff.
(3)(i) Where service of a copy of process was effected by personal service, proof of
service shall be by an affidavit of compliance with this section filed, together with the
process, within thirty days after such service, with the clerk of the court in which the
(ii) Where service of a copy of process was effected by mailing in accordance with
this section, proof of servic e shall be by affidavit of compliance with this section filed,
by the limited liability partnership, or other official proof of delivery or of the original
envelope ma iled. If a copy of the process is mailed in accordance with this section,
such limited liability partnership or other official proof of delivery, if acceptance was
refused by it, the original envelope with a notation by the postal authorities that
acceptance was refused. If acceptance was refused a copy of the notice and process
together with notice of the mailing by registered or certified mail and refusal to
accept s hall be promptly sent to such limited liability partnership at the same
address by ordinary mail and the affidavit of compliance shall so state. Service of
process shall be complete ten days after such papers are filed with the clerk of the
court. The refusal to accept delivery of the registered or certified mail or to sign the
return receipt shall not affect the validity of the service and such limited liability
partnership refusing to accept such registered or certified mail shall be charged with
knowledge of the contents thereof.
(4) Service made as provided in this section without the state shall have the same
force as personal service made within this state.
(5) Nothing in this section shall affect the right to serve process in any other manner
permitted by law.
(g) The filing of a certificate of resignation of a registered agent pursuant to
subdivision (a) of this section shall be accompanied by the fee of ten dollars, and the
filing of a certificate of resignation for receipt of process pursuant to subdivision (b)
of this section shall be accompanied by the fee of ten dollars.

***

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ANNEXURE 2

CHAPTER 15. DELAWARE REVISED UNIFORM PARTNERSHIP ACT30

Subchapter I. General Provisions
§ 15-101. Definitions.
As used in this chapter unless the context otherwise requires:
(1) "Business" includes every trade, occupation and profession, the holding or
ownership of property and any other activity for profit.
(2) "Certificate" means a certificate of conversion to partnership under § 15-901
of this title, a certificate of conversion to a non-Delaware entity under § 15-
903 of this title, a certificate of merger or consolidation under § 15-902 of
this title, a certificate of partnership domestication under § 15-904 of this
title, a certificate of transfer and a certificate of transfer and continuance
under § 15-905 of this title, a certificate of correction and a corrected
certificate under § 15-118 of this title, and a certificate of termination of a
certificate with a future effective date or time and a certificate of amendment
of a certificate with a future effective date or time under § 15-105(i) of this
title.
(3) "Debtor in bankruptcy" means a person who is the subject of:
(i) an order for relief under Title 11 of the United States Code or a
comparable order under a successor statute of general application; or
(ii) a comparable order under State of Delaware federal, state or foreign
law governing insolvency.
(4) "Distribution" means a transfer of money or other property from a partnership
to a partner in the partner's capacity as a partner or to a transferee of all or a
part of a partner's economic interest.
(5) "Domestic partnership" means an association of two or more persons formed
under § 15-202 of this title or predecessor law to carry on any lawful
business, purpose or activity.
(6) "Economic interest" means a partner's share of the profits and losses of a
partnership and the partner's right to receive distributions.
(7) "Foreign limited liability partnership" means a partnership that:
(i) is formed under l ws other than the laws of the State of Delaware;
a
and
(ii) has the status of a limited liability partnership under those laws.
(8) "Limited liability partnership" means a domestic partnership that has filed a
statement of qualification under § 15-1001 of this title.
(9) "Liquidating Trustee" means a person, other than a partner, carrying out the
winding up of a partnership.
(10) "Partner" means a person who has been admitted to a partnership as a
partner of the partnership.
(11) "Partnership" means an association of two or more persons formed under §
15-202 of this title, predecessor law or comparable law of another jurisdiction
to carry on any business, purpose or activity.
(12) "Partnership agreement" means the agreement, whether written, oral or
implied, among the partners concerning the partnership, including
amendments to the partnership agreement. A partnership is not required to
execute its partnership agreement. A partnership is bound by its partnership
agreement whether or not the partnership executes the partnership

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agreement. A partnership agreement may provide rights to any person,
including a person who is not a party to the partnership agreement, to the
extent set forth therein. A partner of a partnership or a transferee of an
economic interest is bound by the partnership agreement whether or not the
partner or transferee executes the partnership agreement.
(13) "Partnership at will" means a partnership that is not a partnership for a
definite term or particular undertaking.
(14) "Partnership for a definite term or particular undertaking" means a
partnership in which the partners have agreed to remain partners until the
expiration of a definite term or the completion of a particular undertaking.
(15) "Partnership interest" or "partner's interest in the partnership" means all of a
partner's interests in the partnership, including the partner's economic
interest and all management and other rights.
(16) "Person" means a natural person, partnership, limited partnership, trust,
estate, limited liability company, association, corporation, custodian, nominee
or any other individual or entity in its own or any representative capacity, in
each case, whether domestic or foreign.
(17) "Property" means all property, real, personal or mixed, tangible or intangible,
or any interest therein.
(18) "State" means the District of Columbia or the Commonwealth of Puerto Rico
or any state, territory, possession or other jurisdiction of the United States
other than the State of Delaware.
(19) "Statement" means a statement of partnership existence under § 15-303 of
this title, a statement of denial under § 15-304 of this title, a statement of
dissociation under § 15-704 of this title, a statement of dissolution under §
15-805 of this title, a statement of qualification under § 15-1001 of this title,
a statement of foreign qualification under § 15-1102 of this title, and an
amendment or cancellation of any of the foregoing under § 15-105 of this title
and a statement of correction and a corrected statement under § 15-118 of
this title.
(20) "Transfer" includes an assignment, conveyance, lease, mortgage, deed, and
encumbrance. (72 Del. Laws, c. 151, § 1; 73 Del. Laws, c. 85, §§ 1-3; 73 Del.
Laws, c. 296, § 1; 74 Del. Laws, c. 103, § 1; 74 Del. Laws, c. 266, § 1; 75
Del. Laws, c. 50, §§ 1, 2.)

§ 15-102. Knowledge and notice.
(a) A person knows a fact if the person has actual knowledge of it.
(b) A person has notice of a fact:
(1) if the person knows of it;
(2) if the person has received a notification of it;
(3) if the person has reason to know it exists from all of the facts known
to the person at the time in question; or
(4) by reason of a filing or recording of a statement or certificate to the
extent provided by and subject to the limitations set forth in this
chapter.
(c) A person notifies or gives a notification to another by taking steps reasonably
required to inform the other person in the ordinary course, whether or not the
other person obtains knowledge of it.
(d) A person receives a notification when the notification:
(1) comes to the person's attention; or
(2) is received at the person's place of business or at any other place held
out by the person as a place for receiving communications.

142

(e) Except as otherwise provided in subsection (f), a person other than an
individual knows, has notice, or receives a notification of a fact for purposes of
a particular transaction when the individual conducting the transaction knows,
has notice, or receives a notification of the fact, or in any event when the fact
would have been brought to the individual's attention if the person had
exercised reasonable diligence. The person exercises reasonable diligence if it
maintains reasonable routines for communicating significant information to
the individual conducting the transaction and there is reasonable compliance
with the routines. Reasonable diligence does not require an individual acting
for the person to communicate information unless the communication is part
of the individual's regular duties or the individual has reason to know of the
transaction and that the transaction would be materially affected by the
information.
(f) A partner's knowledge, notice or receipt of a notification of a fact relating to
the partnership is effective immediately as knowledge by, notice to or receipt
of a notification by the partnership, except in the case of a fraud on the
partnership committed by or with the consent of that partner. (72 Del. Laws,
c. 151, § 1.)

§ 15-103. Effect of partnership agreement; nonwaivable provisions.
(a) Except as otherwise provided in subsection (b), relations among the partners
and between the partners and the partnership are governed by the
partnership agreement. To the extent the partnership agreement does not
otherwise provide, this chapter governs relations among the partners and
between the partners and the partnership.
(b) The partnership agreement may not:
(1) Vary the rights and duties under Section 15-105 except to eliminate the
duty to provide copies of statements to all of the partners;
(2) Restrict a partner's rights to obtain information as provided in § 15-403
of this title, except as permitted by § 15-403(f) of this title;
(3) Eliminate the implied contractual covenant of good faith and fair dealing;
(4) Vary the power to dissociate as a partner under Section 15-602(a),
except to require the notice under Section 15-601(1) to be in writing;
(5) Vary the right of a court to expel a partner in the events specified in
Section 15-601(5);
(6) Vary the requirement to wind up the partnership business in cases
specified in Section 15-801(4), (5) or (6); or
(7) Vary the law applicable to a limited liability partnership under Section
15-106(b).
(c) Notwithstanding anything to the contrary contained in this section, §§ 15-201,
15-203 and 15-501 of this title may be modified only to the extent provided in
a statement of partnership existence and in a partnership agreement.
(d) It is the policy of this chapter to give maximum effect to the principle of
freedom of contract and to the enforceability of partnership agreements.
(e) A partner or other person shall not be liable to a partnership or to another
partner or to another person that is a party to or is otherwise bound by a
partnership agreement for breach of fiduciary duty for the partner's or other
person's good faith reliance on the provisions of the partnership agreement.
(f) A partnership agreement may provide for the limitation or elimination of any
and all liabilities for breach of contract and breach of duties (including
fiduciary duties) of a partner or other person to a partnership or to another
partner or to another person that is a party to or is otherwise bound by a
partnership agreement; provided, that a partnership agreement may not limit

143

or eliminate liability for any act or omission that constitutes a bad faith
violation of the implied contractual covenant of good faith and fair dealing. (72
Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §§ 1-3; 73 Del. Laws, c. 85, § 4;
74 Del. Laws, c. 266, §§ 2-4.)

§ 15-104. Supplemental principles of law.
(a) In any case not provided for in this chapter, the rules of law and equity,
including the law merchant, shall govern.
(b) No obligation of a partner to a partnership arising under a partnership
agreement or a separate agreement or writing, and no note, instruction or
other writing evidencing any such obligation of a partner, shall be subject to
the defense of usury, and no partner shall interpose the defense of usury with
respect to any such obligation in any action. If an obligation to pay interest
arises under this chapter and the rate is not specified, the rate is that
specified in § 2301 of this title.
(c) Sections 9-406 and 9-408 of this title do not apply to any interest in a
domestic partnership, including all rights, powers and interests arising under
a partnership agreement or this chapter. This provision prevails over §§ 9 -
406 and 9-408 of this title. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §
4; 73 Del. Laws, c. 223, § 1.)

§ 15-105. Execution, filing and recording of statements and certificates.
(a) A statement or certificate may be filed with the Secretary of State by delivery
to the Secretary of State of the signed copy of the statement or of the
certificate. A certified copy of a statement that is filed in an office in another
state may be filed with the Secretary of State. Either filing in the State of
Delaware has the effect provided in this chapter with respect to partnership
property located in or transactions that occur in the State of Delaware.
(b) Only a certified copy of a filed statement recorded in the office for recording
transfers of real property has the effect provided for recorded statements in
this chapter.
(c) A statement or certificate filed by a partnership must be executed by at least
one partner or by one or more authorized persons. Other statements must be
executed by a partner or other authorized person. The execution of a
statement or certificate by an individual as, or on behalf of, a partner or other
person named as a partner in a statement or certificate constitutes an oath or
affirmation, under the penalties of perjury in the third degree, that, to the
best of the individual's knowledge and belief, the facts stated therein are true.
A person who executes a statement or a certificate as an agent or fiduciary
need not exhibit evidence of his authority as a prerequisite to filing. Any
signature on any statement or certificate authorized to be filed with the
Secretary of State under any provision of this chapter may be a facsimile, a
conformed signature or an electronically transmitted signature. Upon delivery
of any statement or certificate, the Secretary of State shall record the date
and time of its delivery. Unless the Secretary of State finds that any
statement or certificate does not conform to law, upon receipt of all filing fees
required by law the Secretary of State shall:
(1) Certify that the statement or certificate has been filed with the
Secretary of State by endorsing upon the original statement or
certificate the word "Filed", and the date and time of the filing. This
endorsement is conclusive of the date and time of its filing in the
absence of actual fraud. Except as provided in subdivision (c)(5) or
(c)(6) of this section, such date and time of filing of a statement or

144

certificate shall be the date and time of delivery of the statement or
certificate;
(2) File and index the endorsed statement or certificate;
(3) Prepare and return to the person who filed it or the person's
representative a copy of the signed statement or certificate similarly
endorsed, and shall certify such copy as a true copy of the signed
statement or certificate; and
(4) Cause to be entered such information from the statement or certificate
as the Secretary of State deems appropriate into the Delaware
Corporation Information System or any system which is a successor
thereto in the office of the Secretary of State, and such information and
a copy of such statement or certificate shall be permanently maintained
as a public record on a suitable medium. The Secretary of State is
authorized to grant direct access to such system to registered agents
subject to the execution of an operating agreement between the
Secretary of State and such registered agent. Any registered agent
granted such access shall demonstrate the existence of policies to
ensure that information entered into the system accurately reflects the
content of statements or certificates in the possession of the registered
agent at the time of entry.
(5) Upon request made upon or prior to delivery, the Secretary of State
may, to the extent deem practicable, establish as the date and time of
ed
filing of a statement or certificate a date and time after its delivery. If
the Secretary of State refuses to file any statement or certificate due to
an error, omission or other imperfection, the Secretary of State may
hold such statement or certificate in suspension, and in such event,
upon delivery of a replacement statement or certificate in proper form
for filing and tender of the required fees within 5 business days after
notice of such suspension is given to the filer, the Secretary of State
shall establish as the date and time of filing of such statement or
certificate the date and time that would have been the date and time of
filing of the rejected statement or certificate had it been accepted for
filing. The Secretary of State shall not issue a certificate of good
standing with respect to any partnership with a statement or certificate
held in suspension pursuant to this subsection. The Secretary of State
may establish as the date and time of filing of a statement or certificate
the date and time at which information from such statement or
certificate is entered pursuant to subdivision (c)(4) of this section if such
statement or certificate is delivered on the same date and within 4 hours
after such information is entered.
(6) If:
a. Together with the actual delivery of a statement or certificate and
tender of the required fees, there is delivered to the Secretary of
State a separate affidavit (which in its heading shall be designated
as an affidavit of extraordinary condition) attesting, on the basis of
personal knowledge of the affiant or a reliable source of knowledge
identified in the affidavit, that an earlier effort to deliver such
statement or certificate and tender such fees was made in good
faith, specifying the nature, date and time of such good faith effort
and requesting that the Secretary of State establish such date and
time as the date and time of filing of such statement or certificate;
or

145

b. Upon the actual delivery of a statement or certificate and
tender of the required fees, the Secretary of State in his or her
discretion provides a written waiver of the requirement for such
an affidavit stating that it appears to the Secretary of State that
an earlier effort to deliver such statement or certificate and
tender such fees was made in good faith and specifying the
date and time of such effort; and
c. The Secretary of State determines that an extraordinary
condition existed at such date and time, that such earlier effort
was unsuccessful as a result of the existence of such
extraordinary condition, and that such actual delivery and
tender were made within a reasonable period (not to exceed 2
business days) after the cessation of such extraordinary
condition, then the Secretary of State may establish such date
and time as the date and time of filing of such statement or
certificate. No fee shall be paid to the Secretary of State for
receiving an affidavit of extraordinary condition. For purposes
of this subsection, an extraordinary condition means: any
emergency resulting from an attack on, invasion or occupation
by foreign military forces of, or disaster, catastrophe, war or
other armed conflict, revolution or insurrection or rioting or civil
commotion in, the United States or a locality in w hich the
Secretary of State conducts its business or in which the good
faith effort to deliver the statement or certificate and tender the
required fees is made, or the immediate threat of any of the
foregoing; or any malfunction or outage of the electrical or
telephone service to the Secretary of State's office, or weather
or other condition in or about a locality in which the Secretary
of State conducts its business, as a result of which the
Secretary of State's office is not open for the purpose of the
filing of statements and certificates under this chapter or such
filing cannot be effected without extraordinary effort. The
Secretary of State may require such proof as it deems
necessary to make the determination required under this
subparagraph c. of this subdivision, and any such determination
shall be conclusive in the absence of actual fraud. If the
Secretary of State establishes the date and time of filing of a
statement or certificate pursuant to this subsection, the date
and time of delivery of the affidavit of extraordinary condition
or the date and time of the Secretary of State's written waiver
of such affidavit shall be endorsed on such affidavit or waiver
and such affidavit or waiver, so endorsed, shall be attached to
the filed statement or certificate to which it relates. Such filed
statement or certificate shall be effective as of the date and
time established as the date and time of filing by the Secretary
of State pursuant to this subsection, except as to those persons
who are substantially and adversely affected by such
establishment and, as to those persons, the statement or
certificate shall be effective from the date and time endorsed on
the affidavit of extraordinary condition or written waiver
attached thereto.
(d) A person authorized by this chapter to file a statement or certificate may
amend or cancel the statement or certificate by filing an amendment or

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cancellation that names the partnership, identifies the statement or
certificate, and states the substance of the amendment or cancellation. A
person authorized by this chapter to file a statement or certificate who
becomes aware that such statement or certificate was false when made, or
that any matter described in the statement or certificate has changed, making
the statement or certificate false in any material respect, shall promptly
amend the statement or certificate. Upon the filing of a statement or a
certificate amending or correcting a statement or a certificate (or judicial
decree of amendment) with the Secretary of State, or upon the future
effective date or time of a statement or a certificate amending or correcting a
statement or a certificate (or judicial decree thereof), as provided for therein,
the statement or the certificate being corrected or amended shall be corrected
or amended as set forth therein. Upon the filing of a statement of cancellation
(or judicial decree thereof), or a certificate of merger or consolidation which
acts as a statement of cancellation, or a certificate of transfer, or a certificate
of conversion to a non-Delaware entity, or upon the future effective date or
time of a statement of cancellation (or a judicial decree thereof) or of a
certificate of merger or consolidation which acts as a statement of
cancellation, or a certificate of transfer, or a certificate of conversion to a non-
Delaware entity, as provided for therein, or as specified in § 15-111(d) of this
title, the statement of partnership existence is cancelled. A statement of
partnership existence shall be cancelled upon the dissolution and the
completion of winding up of the partnership, or as provided in § 15-111(d) of
this title, or upon the filing of a certificate of merger or consolidation if the
domestic partnership is not the surviving or resulting entity in a merger or
consolidatio n, or upon the filing of a certificate of transfer, or upon the filing
of a certificate of conversion to a non-Delaware entity. A statement of
cancellation shall be filed with the Secretary of State to accomplish the
cancellation of a statement of partnership existence upon the dissolution and
the completion of winding up of a domestic partnership and shall set forth:
(1) The name of the partnership;
(2) The date of filing of its statement of partnership existence; and
(3) Any other information the person filing the statement of cancellation
determines.
Upon the filing of a certificate of partnership domestication, or upon the future
effective date or time of a certificate of partnership domestication, the entity
filing the certificate of partnership domestication is domesticated as a
partnership with the effect provided in § 15-904 of this title. Upon the filing of
a certificate of conversion to partnership, or upon the future effective date or
time of a certificate of conversion to partnership, the entity filing the
certificate of conversion to partnership is converted to a partnership with the
effect provided in § 15-901 of this title. Upon the filing of a certificate of
transfer and continuance, or upon the future effective date or time of a
certificate of transfer and continuance, as provided for therein, the partnership
filing the certificate of transfer and continuance shall continue to exist as a
partnership of the State of Delaware with the effect provided in § 15-905 of
this title.
(e) A person who files a statement or certificate pursuant to this section shall
promptly send a copy of the statement or certificate to every nonfiling partner
and to any other person named as a partner in the statement or certificate.
Failure to send a copy of a statement or certificate to a partner or other
person does not limit the effectiveness of the statement or certificate as to a
person not a partner.

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(f) The filing of a statement of partnership existence under § 15-303, a
statement of qualification under § 15-1001 or a statement of foreign
qualification under § 15-1102 with the Secretary of State shall make it
unnecessary to file any other document under Chapter 31 of this Title.
(g) A statement or certificate filed with the Secretary of State shall be effective if
there has been substantial compliance with the requirements of this chapter.
(h) A statement or certificate shall be effective at the time of its filing with the
Secretary of State or at any later date or time specified in the statement or
certificate.
(i) If any certificate filed in accordance with this chapter provides for a future
effective date or time and if, prior to such future effective date or time set
forth in such certificate, the transaction is terminated or its terms are
amended to change the future effective date or time or any other matter
described in such certificate so as to make such certificate false or inaccurate
in any respect, such certificate shall, prior to the future effective date or time
set forth in such certificate, be terminated or amended by the filing of a
certificate of termination or certificate of amendment of such certificate,
executed in the same manner as the certificate being terminated or amended
is required to be executed in accordance with this section, which shall identify
the certificate which has been terminated or amended and shall state that the
certificate has been terminated or the manner in which it has been amended.
Upon the filing of a certificate of amendment of a certificate with a future
effective date or time, the certificate identified in such certificate of
amendment is amended. Upon the filing of a certificate of termination of a
certificate with a future effective date or time, the certificate identified in such
certificate of termination is terminated.
(j) A fee as set forth in § 15-1207 of this title shall be paid at the time of the
filing of a statement or a certificate.
(k) A fee as set forth in § 15-1207 of this title shall be paid for a certified copy of
any paper on file as provided for by this chapter, and a fee as set forth in §
15-1207 of this title shall be paid for each page copied. (72 Del. Laws, c. 151,
§ 1; 70 Del. Laws, c. 186, § 1; 72 Del. Laws, c. 390, §§ 5-7; 73 Del. Laws, c.
85, §§ 5, 6; 73 Del. Laws, c. 296, § 2; 74 Del. Laws, c. 103, §§ 2-8.)

§ 15-106. Governing law.
(a) Except as otherwise provided in subsection (b), the law of the jurisdiction
governing a partnership agreement governs relations among the partners and
between the partners and the partnership.
(b) The law of the State of Delaware governs relations among the partners and
between the partners and the partnership and the liability of partners for an
obligation of a limited liability partnership.
(c) If (i) a partnership agreement provides for the application of the laws of the
State of Delaware, and (ii) the partnership files with the Secretary of State a
statement of partnership existence, then the partnership agreement shall be
governed by and construed under the laws of the State of Delaware. (72 Del.
Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 8.)

§ 15-107. Reserved power of State of Delaware to alter or repeal chapter.
All provisions of this chapter may be altered from time to time or repealed and all
rights of partners are subject to this reservation. Unless expressly stated to the
contrary in this chapter, all amendments of this chapter shall apply to partnerships
and partners whether or not existing at the time of the enactment of any such
amendment. (72 Del. Laws, c. 151, § 1.)

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§ 15-108. Name of partnership.
(a) The name of a partnership: (i) may contain the name of a partner and (ii)
may contain the following words: "Company," "Association," "Club,"
"Foundation," "Fund," "Institute," "Society," "Union," "Syndicate," "Trust" (or
abbreviations of like import).
(b) The name of a limited liability partnership shall contain as the last words or
letters of its name the words "Limited Liability Partnership," the abbreviation
"L.L.P." or the designation "LLP."
(c) The name of a partnership to be included in the statement of partnership
existence, statement of qualification or statement of foreign qualification filed
by such partnership must be such as to distinguish it upon the records of the
Secretary of State from the name on such records of any corporation,
partnership (including a limited liability partnership), limited partnership
(including a limited liability limited partnership), statutory trust or limited
liability company organized under the laws of the State of Delaware and
reserved, registered, formed or organized with the Secretary of State or
qualified to do business and registered as a foreign corporation, foreign
limited liability partnership, foreign limited partnership, foreign statutory trust
or foreign limited liability company in the State of Delaware; provided,
however, that a partnership may be registered under any name which is not
such as to distinguish it upon the records of the Secretary of State from the
name on such records of any domestic or foreign corporation, partnership
(including a limited liability partnership), limited partnership (including a
limited liability limited partnership), statutory trust or limited liability company
reserved, registered, formed or organized under the laws of the State of
Delaware with the written consent of the other corporation, partnership
(including a limited liability partnership), limited partnership (including a
limited liability limited partnership), statutory trust or limited liability
company, which written consent shall be filed with the Secretary of State. (72
Del. Laws, c. 151, § 1; 73 Del. Laws, c. 296, § 3; 73 Del. Laws, c. 329, § 11.)

§ 15-109. Reservation of name.
(a) The exclusive right to use of a specified name in a statement using the
specified name may be reserved by: (1) any person intending to organize a
partnership under this chapter and to adopt that name; (2) any partnership or
any foreign limited liability partnership registered in the State of Delaware
which, in either case, proposes to change its name; (3) any foreign limited
liability partnership intending to register in the State of Delaware and adopt
that name; and (4) any person intending to organize a foreign limited liability
partnership and intending to have it register in the State of Delaware and
adopt that name.
(b) The reservation of a specified name shall be made by filing with the Secretary
of State an application, executed by the applicant, specifying the name to be
reserved and the name and address of the applicant. If the Secretary of State
finds that the name is available for use, the Secretary shall reserve the name
for exclusive use of the applicant in a statement using the specified name for
a period of 120 days. Once having so reserved a name, the same applicant
may again reserve the same name for successive 120 day periods. The right
to the exclusive use of a reserved name in a statement using the specified
name may be transferred to any other person by filing with the Secretary of
State a notice of the transfer, executed by the applicant for whom the name
was reserved, specifying the name to be transferred and the name and

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address of the transferee. The reservation of a specified name may be
canceled by filing with the Secretary of State a notice of cancellation,
executed by the applicant or transferee, specifying the name reservation to be
canceled and the name and address of the applicant or transferee. Unless the
Secretary of State finds that any application, notice of transfer or notice of
cancellation filed with the Secretary of State as required by this subsection
does not conform to law, upon receipt of all filing fees required by law, the
Secretary shall prepare and return to the person who filed such instrument a
copy of the filed instrument with a notation thereon of the action taken by the
Secretary of State.
(c) A fee as set forth in Section 15-1207 of this chapter shall be paid at the time
of the initial reservation of any name, at the time of the renewal of any such
reservation and at the time of the filing of a notice of the transfer or
cancellation of any such reservation. (72 Del. Laws, c. 151, § 1; 72 Del. Laws,
c. 390, § 9.)

§ 15-110. Indemnification.
Subject to such standards and restrictions, if any, as are set forth in its partnership
agreement, a partnership may, and shall have the power to, indemnify and hold
harmless any partner or other person from and against any and all claims and
demands whatsoever. (72 Del. Laws, c. 151, § 1.)

§ 15-111. Registered office; registered agent.
(a) Each partnership that files a statement of partnership existence, a statement
of qualification or a statement of foreign qualification shall have and maintain
in the State of Delaware:
(1) A registered office, which may but need not be a place of its business in
the State of Delaware; and
(2) A registered agent for service of process on the partnership, which agent
may be either an individual resident of the State of Delaware whose
business office is identical with the partnership's registered office, or a
domestic corporation, or a domestic limited partnership, or a dome stic
limited liability company, or a domestic statutory trust, or a domestic
limited liability partnership, or a foreign corporation, or a foreign limited
partnership, or a foreign limited liability company, or a foreign statutory
trust, or a foreign limited liability partnership authorized to do business
in the State of Delaware having a business office identical with such
registered office, which is generally open during normal business hours
to accept service of process and otherwise perform the functions of a
registered agent, or the partnership itself.
(b) A registered agent may change the address of the registered office of
the partnership(s) for which it is registered agent to another address in
the State of Delaware by paying a fee as set forth in § 15-1207 of this
title and filing with the Secretary of State a certificate, executed by such
registered agent, setting forth the address at which such registered
agent has maintained the registered office for each of the partnerships
for which it is a registered agent, and further certifying to the new
address to which each such registered office will be changed on a given
day, and at which new address such registered agent will thereafter
maintain the registered office for each of the partnerships for which it is
a registered agent. Upon the filing of such certificate, the Secretary of
State shall furnish to the registered agent a certified copy of the same
under the Secretary's hand and seal of office, and thereafter, or until

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further change of address as authorized by law, the registered office in
the State of Delaware of each of the partnerships for which the agent is
a registered agent shall be located at the new address of the registered
agent thereof as given in the certificate. In the event of a change of
name of any person acting as a registered agent of a partnership, such
registered agent shall file with the Secretary of State a certificate,
executed by such registered agent, setting forth the new name of such
registered agent, the name of such registered agent before it was
changed and the address at which such registered agent has maintained
the registered office for each of the partnerships for which it is a
registered agent, and shall pay a fee as set forth in § 15-1207 of this
title. Upon the filing of such certificate, the Secretary of State shall
furnish to the registered agent a certified copy of the certificate under
his or her hand and seal of office. A change of name of any person
acting as a registered agent of a partnership as a result of a merger or
consolidation of the registered agent, with or into another person which
succeeds to its assets and liabilities by operation of law, shall be deemed
a change of name for purposes of this section. Filing a certificate under
this section shall be deemed to be an amendment of the statement of
partnership existence, statement of qualification or statement of foreign
qualification of each partnership affected thereby and each such
partnership shall not be required to take any further action, with respect
thereto, to amend its statement of partnership existence, statement of
qualification or statement of foreign qualification under § 15-105(d) of
this title. Any registered agent filing a certificate under this section shall
promptly, upon such filing, deliver a copy of any such certificate to each
partnership affected thereby.
(c) The registered agent of 1 or more partnerships may resign and appoint
a successor registered agent by paying a fee as set forth in § 15-1207 of
this title and filing a certificate with the Secretary of State, stating the
name and address of the successor registered agent. There shall be
attached to such certificate a statement of each affected partnership
ratifying and approving such change of registered agent. Upon such
filing, the successor registered agent shall become the registered agent
of such partnerships as have ratified and approved such substitution and
the successor registered agent's address, as stated in such certificate,
shall become the address of each such partnership's registered office in
the State of Delaware. The Secretary of State shall then issue a
certificate that the successor registered agent has become the
registered agent of the partnerships so ratifying and approving such
change and setting out the names of such partnerships. Filing of such
certificate of resignation shall be deemed to be an amendment of the
statement of partnership existence, statement of qualification or
statement of foreign qualification of each partnership affected thereby
and each such partnership shall not be required to take any further
action with respect thereto to amend its statement of partnership
existence, statement of qualification or statement of foreign qualification
under § 15-105(d) of this title.
(d) The registered agent of 1 or more partnerships may resign without
appointing a successor registered agent by paying a fee as set forth in §
15-1207 of this title and filing a certificate of resignation with the
Secretary of State, but such resignation shall not become effective until
30 days after the certificate is filed. The certificate shall contain a

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statement that written notice of resignation was given to each affected
partnership at least 30 days prior to the filing of the certificate by
mailing or delivering such notice to the partnership at its address last
known to the registered agent and shall set forth the date of such
notice. After receipt of the notice of the resignation of its registered
agent, the partnership for which such registered agent was acting shall
obtain and designate a new registered agent to take the place of the
registered agent so resigning. If such partnership fails to obtain and
designate a new registered agent as aforesaid prior to the expiration of
the period of 30 days after the filing by the registered agent of the
certificate of resignation, the statement of partnership existence,
statement of qualification or statement of foreign qualification of such
partnership shall be deemed to be canceled. After the resignation of the
registered agent shall have become effective as provided in this section
and if no new registered agent shall have been obtained and designated
in the time and manner aforesaid, service of legal process against each
partnership for which the resigned registered agent h been acting
ad
shall thereafter be upon the Secretary of State in accordance with § 15-
113 of this title. (72 Del. Laws, c. 151, § 1; 70 Del. Laws, c. 186, § 1;
73 Del. Laws, c. 85, § 7; 73 Del. Laws, c. 329, § 12.)

§ 15-112. Service of process on partnership filing a statement.
(a) Service of legal process upon any partnership which has filed a statement of
partnership existence, a statement of qualification or a statement of foreign
qualification shall be made by delivering a copy personally to any partner of
the partnership in the State of Delaware or any partner who signed a
statement of partnership existence, a statement of qualification or a
statement of foreign qualification or the registered agent of the partnership in
the State of Delaware or by leaving it at the dwelling house or usual place of
abode in the State of Delaware of any such partner or registered agent (if the
registered agent be an individual), or at the registered office or any place of
business of the partnership in the State of Delaware. Service by copy left at
the dwelling house or usual place of abode of a partner, registered agent, or
at the registered office or any place of business of the partnership in the State
of Delaware, to be effective, must be delivered thereat at least 6 days before
the return date of the process, and in the presence of an adult person, and
the officer serving the process shall distinctly state the manner of service in
the return thereto. Process returnable forthwith must be delivered personally
to the partner or registered agent.
(b) In case the officer whose duty it is to serve legal process cannot by due
diligence serve the process in any manner provided for by subsection (a) of
this section, it shall be lawful to serve the process against the partnership
upon the Secretary of State, and such service shall be as effectual for all
intents and purposes as if made in any of the ways provided for in subsection
(a) hereof. In the event that service is effected through the Secretary of State
in accordance with this subsection, the Secretary of State shall forthwith
notify the partnership by letter, certified mail, return receipt requested,
directed to the partnership at the address of any partner as it appears on the
records relating to such partnership on file with the Secretary of State or, if no
such address appears, at the last registered office. Such letter shall enclose a
copy of the process and any other papers served on the Secretary of State
pursuant to this subsection. It shall be the duty of the plaintiff in the event of
such service to serve process and any other papers in duplicate, to notify the

152

Secretary of State that service is being effected pursuant to this subsection,
and to pay the Secretary of State the sum of $50 for the use of the State of
Delaware, which sum shall be taxed as part of the costs in the proceeding if
the plaintiff shall prevail therein. The Secretary of State shall maintain an
alphabetical record of any such service setting forth the name of the plaintiff
and defendant, the title, docket number and nature of the proceeding in which
process has been served upon him, the fact that service has been effected
pursuant to this subsection, the return date thereof, and the day and hour
when the service was made. The Secretary of State shall not be required to
retain such information for a period longer than 5 years from receipt of the
service of process. (72 Del. Laws, c. 151, § 1; 70 Del. Laws, c. 186, § 1.)

§ 15-113. Service of process on a partnership not filing a statement.
(a) Service of legal process upon any partnership which has not filed a statement
of partnership existence, a statement of qualification or a statement of foreign
qualification and which is formed under the laws of the State of Delaware or
doing business in the State of Delaware shall be made by delivering a copy
personally to any partner doing business in the State of Delaware or by
leaving it at the dwelling house or usual place of abode in the State of
Delaware of a partner or at a place of business of the partnership in the State
of Delaware. Service by copy left at the dwelling house or usual place of
abode of a partner or at a place of business of the partnership in the State of
Delaware, to be effective, must be delivered thereat at least 6 days before the
return date of the process, and in the presence of an adult person, and the
officer serving the process shall distinctly state the manner of service in the
return thereto. Process returnable forthwith must be delivered personally to
the partner.
(b) In case the officer whose duty it is to serve legal process cannot by due
diligence serve the process in any manner provided for by subsection (a) of
this section, it shall be lawful to serve the process against the partnership
upon the Secretary of State, and such service shall be as effectual for all
intents and purposes as if made in any of the ways provided for in subsection
(a) hereof. In the event that service is effected through the Secretary of State
in accordance with this subsection, the Secretary of State shall forthwith
notify the partnership by letter, certified mail, return receipt requested,
directed to the partnership at the address of any partner or the partnership as
it is furnished to the Secretary State by the person desiring to make service.
Such letter shall enclose a copy of the process and any other papers served on
the Secretary of State pursuant to this subsection. It shall be the duty of the
plaintiff in the event of such service to serve process and any other papers in
duplicate, to notify the Secretary of State that service is being effected
pursuant to this subsection, and to pay the Secretary of State the sum of $50
for the use of the State of Delaware, which sum shall be taxed as part of the
costs on the proceeding if the plaintiff shall prevail therein. The Secretary of
State shall maintain an alphabetical record of any such service setting forth
the name of the plaintiff and defendant, the title, docket number and nature
of the proceeding in which process has been served upon the Secretary of
State, the fact that service has been effected pursuant to this subsection, the
return date thereof, and the day and hour when the service was made. The
Secretary of State shall not be required to retain such information for a period
longer than 5 years from the Secretary of State's receipt of the service of
process. (72 Del. Laws, c. 151, § 1.)

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§ 15-114. Service of process on a partner and liquidating trustee.
(a) A partner or a liquidating trustee of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware may
be served with process in the manner prescribed in this section in all civil
actions or proceedings brought in the State of Delaware involving or relating
to the business of the partnership or a violation by the partner or the
liquidating trustee of a duty to the partnership or any partner of the
partnership, whether or not the partner or the liquidating trustee is a partner
or a liquidating trustee at the time suit is commenced. A person who is at the
time of the effectiveness of this section or who becomes a partner or a
liquidating trustee of a partnership thereby consents to the appointment of
the registered agent of the partnership (or, if there is none, the Secretary of
State) as such person's agent upon whom service of process may be made as
provided in this section. Any process when so served shall be of the same
legal force and validity as if served upon such partner or liquidating trustee
within the State of Delaware and such appointment of the registered agent
(or, if there is none, the Secretary of State) shall be irrevocable.
(b) Service of process shall be effected by serving the registered agent (or, if
there is none, the Secretary of State) with 1 copy of such process in the
manner provided by law for service of writs of summons. In the event service
is made under this subsection upon the Secretary of State, the plaintiff shall
pay to the Secretary of State the sum of $50 for the use of the State of
Delaware, which sum shall be taxed as part of the costs of the proceeding if
the plaintiff shall prevail therein. In addition, the Prothonotary or the Register
in Chancery of the court in which the civil action or proceeding is pending
shall, within 7 days of such service, deposit in the United States mails, by
registered mail, postage prepaid, true and attested copies of the process,
together with a statement that service is being made pursuant to this section,
addressed to such partner or liquidating trustee at the partner's or liquidating
trustee's address furnished to the Prothonotary or Register in Chancery by the
person desiring to make service, which address shall be the partner's or the
liquidating trustee's address as the same appears in any statement of the
partnership or, if no such address appears, the partner's or the liquidating
trustees's last known address.
(c) In any action in which any such partner or liquidating trustee has been served
with process as hereinabove provided, the time in which a defendant shall be
required to appear and file a responsive pleading shall be computed from the
date of mailing by the Prothonotary or the Register in Chancery as provided in
subsection (b) of the section; however, the court in which such action has
been commenced may order such continuance or continuances as may be
necessary to afford such partner or liquidating trustee reasonable opportunity
to defend the action.
(d) In a written partnership agreement or other writing, a partner may consent to
be subject to the nonexclusive jurisdiction of the courts of, or arbitration in, a
specified jurisdiction, or the exclusive jurisdiction of the courts of the State of
Delaware, or the exclusivity of arbitration in a specified jurisdiction or the
State of Delaware, and to be served with legal process in the manner
prescribed in such partnership agreement or other writing.
(e) Nothing herein contained limits or affects the right to serve process in any
other manner now or hereafter provided by law. This section is an extension
of and not a lmitation upon the right otherwise existing of service of legal
i
process upon nonresidents.

154

(f) The Court of Chancery and the Superior Court may make all necessary rules
respecting the form of process, the manner of issuance and return thereof
and such other rules which may be necessary to implement this section and
are not inconsistent with this section. (72 Del. Laws, c. 151, § 1; 72 Del.
Laws, c. 390, § 10.)

§ 15-115. Doing business.
A limited partnership, a partnership, a limited liability company, a business or other
trust or association, or a corporation formed or organized under the laws of any
foreign country or other foreign jurisdiction or the laws of any state shall not be
deemed to be doing business in the State of Delaware solely by reason of its being a
partner in a domestic partnership. (72 Del. Laws, c. 151, § 1.)

§ 15-116. Restated statement of partnership existence.
(a) A statement of partnership existence may be restated by integrating into a
single instrument all of the provisions of the statement of partnership
existence which are then in effect and operative as a result of there having
been theretofore filed 1 or more amendments pursuant to Section 15-105(d)
or other instruments having the effect of amending a statement of
partnership existence and the statement of partnership existence may be
amended or further amended by the filing of a restated statement of
partnership existence. The restated statement of partnership existence shall
be specifically designated as such in its heading and shall set forth:
(1) The present name of the partnership, and if it has been changed, the
name under which the partnership was originally formed;
(2) The date of filing of the original statement of partnership existence with
the Secretary of State;
(3) The information required to be included pursuant to Section 15-303(a);
and
(4) Any other information desired to be included therein.
(b) Upon the filing of the restated statement of partnership existence with the
Secretary of State, or upon the future effective date or time of a restated
statement of partnership existence as provided for therein, the initial
statement of partnership existence, as theretofore amended, shall be
superseded; thenceforth, the restated statement of partnership existence,
including any further amendment made thereby, shall be the statement of
partnership existence of the partnership, but the original date of formation of
the partnership shall remain unchanged.
(c) Any amendment effected in connection with the restatement of the statement
of partnership existence shall be subject to any other provision of this
chapter, not inconsistent with this section, which would apply if a separate
amendment were filed to effect such amendment. (72 Del. Laws, c. 151, § 1.)

§ 15-117. Execution, amendment or cancelation by judicial order.
(a) If a person required by this chapter to execute any statement or certificate
fails or refuses to do so, any other person who is adversely affected by the
failure or refusal, may petition the Court of Chancery to direct the execution of
the statement or certificate. If the Court finds that the execution of the
statement or certificate is proper and that any person so designated has failed
or refused to execute the statement or certificate, the Court shall order the
Secretary of State to file an appropriate statement or certificate.
(b) If a person required to execute a partnership agreement or amendment
thereof fails or refuses to do so, any other person who is adversely affected by

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the failure or refusal may petition the Court of Chancery to direct the
execution of the partnership agreement or amendment thereof. If the Court
finds that the partnership agreement or amendment thereof should be
executed and that any person so designated has failed or refused to do so, the
Court shall enter an order granting appropriate relief. (72 Del. Laws, c. 151, §
1.)

§ 15-118. Statement or certificate of correction; corrected statement or
certificate.
(a) Whenever any statement or certificate authorized to be filed with the
Secretary of State under any provision of this chapter has been so filed and is
an inaccurate record of the action therein referred to, or was defectively or
erroneously executed, such statement or certificate may be corrected by filing
with the Secretary of State a statement or certificate of correction of such
statement or certificate. The statement or certificate of correction shall specify
the inaccuracy or defect to be corrected, shall set forth the portion of the
statement or certificate in corrected form and shall be executed and filed as
required by this chapter. The statement or certificate of correction shall be
effective as of the date the original statement or certificate was filed, except
as to those persons who are substantially and adversely affected by the
correction, and as to those persons the statement or certificate of correction
shall be effective from the filing date.
(b) In lieu of filing a statement or certificate of correction, a statement or
certificate may be corrected by filing with the Secretary of State a corrected
statement or certificate which shall be executed and filed as if the corrected
statement or certificate were the statement or certificate being corrected, and
a fee equal to the fee payable to the Secretary of State if the statement or
certificate being corrected were then being filed shall be paid to and collected
by the Secretary of State for the use of the State of Delaware in connection
with the filing of the corrected statement or certificate. The corrected
statement or certificate shall be specifically designated as such in its heading,
shall specify the inaccuracy or defect to be corrected, and shall set forth the
entire statement or certificate in corrected form. A statement or certificate
corrected in accordance with this section shall be effective as of the date the
original statement or certificate was filed, except as to those persons who are
substantially and adversely affected by the correction and as to those persons
the statement or certificate as corrected shall be effective from the filing date.
(72 Del. Laws, c. 151, § 1.)

§ 15-119. Business transactions of partner with the partnership.
Except as provided in the partnership agreement, a partner may lend money to,
borrow money from, act as a surety, guarantor or endorser for, guarantee or assume
1 or more specific obligations of, provide collateral for and transact other business
with, the partnership and, subject to other applicable law, has the same rights and
obligations with respect thereto as a person who is not a partner. (72 Del. Laws, c.
151, § 1.)

§ 15-120. Contractual appraisal rights.
A partnership agreement or an agreement of merger or consolidation may provide
that contractual appraisal rights with respect to a partnership interest or another
interest in a partnership shall be available for any class or group of partners or
partnership interests in connection with any amendment of a partnership agreement,
any merger or consolidation in which the partnership is a constituent party to the

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merger or consolidation, any conversion of the partnership to another business form,
any transfer to or domestication in any jurisdiction by the partnership, or the sale of
all or substantially all of the partnership's assets. The Court of Chancery shall have
jurisdic tion to hear and determine any matter relating to any such appraisal rights.
(72 Del. Laws, c. 151, § 1; 73 Del. Laws, c. 296, § 4.)

§ 15-121. Contested matters relating to partners; contested votes.
(a) Upon application of any partner of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware, the
Court of Chancery may hear and determine the validity of any admission,
election, appointment or dissociation of a partner of the partnership, and the
right of any person to become or continue to be a partner of the partnership,
and to that end make such order or decree in any such case as may be just
and proper, with power to enforce the production of any books, papers and
records relating to the issue. In any such application, the partnership shall be
named as a party, and service of copies of the application upon the
partnership shall be deemed to be service upon the partnership and upon the
person or persons whose right to be a partner is contested and u pon the
person or persons, if any, claiming to be a partner or claiming the right to be
a partner; and the person upon whom service is made shall forward
immediately a copy of the application to the partnership and to the person or
persons whose right to be a partner is contested and to the person or persons,
if any, claiming to be a partner or the right to be a partner, in a postpaid,
sealed, registered letter addressed to such partnership and such person or
persons at their post-office addresses last known to the person upon whom
service is made or furnished to the person upon whom service is made by the
applicant partner. The Court may make such order respecting further or other
notice of such application as it deems proper under the circumstances.
(b) Upon application of any partner of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware, the
Court of Chancery may hear and determine the result of any vote of partners
upon matters as to which the partners of the partnership, or any class or
group of partners, have the right to vote pursuant to the partnership
agreement or other agreement or this chapter (other than the admission,
election, appointment or dissociation of partners). In any such application, the
partnership shall be named as a party, and service of the application upon the
person upon whom service is made shall be deemed to be service upon the
partnership, and no other party need be joined in order for the Court to
adjudicate the result of the vote. The Court may make such order respecting
further or other notice of such application as it deems proper under the
circumstances.
(c) Nothing herein contained limits or affects the right to serve process in any
other manner now or hereafter provided by law. This section is an extension
of and not a limitation upon the right otherwise existing of service of legal
process upon nonresidents. (72 Del. Laws, c. 151, § 1.)

§ 15-122. Interpretation and enforcement of partnership agreement.
Any action to interpret, apply or enforce the provisions of a partnership agreement of
a partnership which is formed under the laws of the State of Delaware or doing
business in the State of Delaware, or the duties, obligations or liabilities of such
partnership to the partners of the partnership, or the duties, obligations or liabilities
among partners or of partners to such partnership, or the rights or powers of, or

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restrictions on, such partnership or partners, including actions authorized by Section
15-405, may be brought in the Court of Chancery. (72 Del. Laws, c. 151, § 1.)

Subchapter II. Nature of Partnership
§ 15-201. Partnership as entity.
(a) A partnership is a separate legal entity which is an entity distinct from its
partners unless otherwise provided n a statement of partnership existence
i
and in a partnership agreement.
(b) A limited liability partnership continues to be the same entity that existed
before the filing of a statement of qualification under Section 15-1001. (72
Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 11.)

§ 15-202. Formation of partnership; powers.
(a) Except as otherwise provided in subsection (b), the association of two or more
persons (i) to carry on as co-owners a business for profit forms a partnership,
whether or not the persons intend to form a partnership, and (ii) to carry on
any purpose or activity not for profit, forms a partnership when the persons
intend to form a partnership. A limited liability partnership is for all purposes a
partnership.
(b) Subject to § 15-1206 of this title, an association formed under a statute other
than (i) this chapter, (ii) a predecessor statute or (iii) a comparable statute of
another jurisdiction, is not a partnership under this chapter.
(c) In determining whether a partnership is formed under Section 15-202(a)(i),
the following rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the entireties, joint
property, common property or part ownership does not by itself
establish a partnership, even if the co-owners share profits made by the
use of the property.
(2) The sharing of gross returns does not by itself establish a partnership,
even if the persons sharing them have a joint or common right or
interest in property from which the returns are derived.
(3) A person who receives a share of the profits of a business is presumed
to be a partner in the business, unless the profits were received in
payment:
(i) of a debt by installments or otherwise;
(ii) for services as an independent contractor or of wages or other
compensation to an emp loyee;
(iii) of rent;
(iv) of an annuity or other retirement or health benefit to a
beneficiary, representative or designee of a deceased or retired
partner;
(v) of interest or other charge on a loan, even if the amount of
payment varies with the profits of the business, including a
direct or indirect present or future ownership of the collateral,
or rights to income, proceeds or increase in value derived from
the collateral; or
(vi) for the sale of the goodwill of a business or other property by
installments or otherwise.
(d) A partnership shall possess and may exercise all the powers and privileges
granted by this chapter or by any other law or by its partnership agreement,
together with any powers incidental thereto, including such powers and
privileges as are necessary or convenient to the conduct, promotion or
attainment of the business, purposes or activities of the partnership.

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(e) Notwithstanding any provision of this chapter to the contrary, without limiting
the general powers enumerated in subsection (d) of this section, a
partnership shall, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, have the power and authority to make
contracts of guaranty and suretyship and enter into interest rate, basis,
currency, hedge or other swap agreements or cap, floor, put, call, option,
exchange or collar agreements, derivative agreements, or other agreements
similar to any of the foregoing. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c.
390, § 12; 73 Del. Laws, c. 296, § 5.)

§ 15-203. Partnership property.
Unless otherwise provided in a statement of partnership existence and in a
partnership agreement, property acquired by a partnership is property of the
partnership and not of the partners individually. (72 Del. Laws, c. 151, § 1; 72 Del.
Laws, c. 390, § 13.)

§ 15-204. When property is partnership property.
(a) Property is partnership property if acquired in the name of:
(1) the partnership; or
(2) one or more persons with an indication in the instrument transferring
title to the property of the person's capacity as a partner or of the
existence of a partnership but without an indication of the name of the
partnership.
(b) Property is acquired in the name of the partnership by a transfer to:
(1) the partnership in its name; or
(2) one or more persons in their capacity as partners in the partnership, if
the name of the partnership is indicated in the instrument transferring
title to the property.
(c) Property is presumed to be partnership property if purchased with partnership
assets, even if not acquired in the name of the partnership or of one or more
persons with an indication in the instrument transferring title to the property
of the person's capacity as a partner or of the existence of a partnership.
(d) Property acquired in the name of one or more persons, without an indication
in the instrument transferring title to the property of the person's capacity as
a partner or of the existence of a partnership and without use of partnership
assets, is presumed to be s eparate property, even if used for partnership
purposes. (72 Del. Laws, c. 151, § 1.)

§ 15-205. Admission without contribution or partnership interest.
Each person to be admitted as a partner to a partnership formed under either § 15-
202(a)(i) or § 15-202(a)(ii) of this title may be admitted as a partner and may
receive a partnership interest in the partnership without making a contribution or
being obligated to make a contribution to the partnership. Each person to be
admitted as a partner to a partnership formed under either § 15-202(a)(i) or § 15-
202(a)(ii) of this title may be admitted as a partner without acquiring an economic
interest in the partnership. Nothing contained in this section shall affect a partner's
liability under § 15-306 of this title. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390,
§ 14.)

§ 15-206. Form of contribution.
The contribution of a partner may be in cash, property or services rendered, or a
promissory note or other obligation to contribute cash or property or to perform
services. (72 Del. Laws, c. 151, § 1.)

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§ 15-207. Liability for contribution.
(a) A partner is obligated to the partnership to perform any promise to contribute
cash or property or to perform services, even if the partner is unable to
perform because of death, disability or any other reason. If a partner does not
make the required contribution of property or services, the partner is
obligated at the option of the partnership to contribute cash equal to that
portion of the value of the contribution that has not been made. The foregoing
option shall be in addition to, and not in lieu of, any other rights, including the
right to specific performance, that the partnership may have against such
partner under the partnership agreement or applicable law.
(b) A partnership agreement may provide that the partnership interest of any
partner who fails to make any contribution that the partner is obligated to
make shall be subject to specified penalties for, or specified consequences of,
such failure. Such penalty or consequence may take the form of reducing or
eliminating the defaulting partner's interest in the partnership, subordinating
the partner's partnership interest to that of nondefaulting partners, a forced
sale of the partner's partnership interest, forfeiture of the partner's
partnership interest, the lending by other partners of the amount necessary to
meet the partner's commitment, a fixing of the value of the partner's
partnership interest by appraisal or by formula and redemption or sale of the
partner's partnership interest at such value, or other penalty or consequence.
(72 Del. Laws, c. 151, § 1.)

Subchapter III. Relations of Partners to Persons Dealing with Partnership

§ 15-301. Partner agent of partnership.
Subject to the effect of a statement of partnership existence under Section 15-303:
(1) Each partner is an agent of the partnership for the purpose of its business,
purposes or activities. An act of a partner, including the execution of an
instrument in the partnership name, for apparently carrying on in the ordinary
course the partnership's business, purposes or activities or business,
purposes or activities of the kind carried on by the partnership binds the
partnership, unless the partner had no authority to act for the partnership in
the particular matter and the person with whom the partner was dealing had
notice that the partner lacked authority.
(2) An act of a partner which is not apparently for carrying on in the ordinary
course the partnership's business, purposes or activities or business,
purposes or activities of the kind carried on by the partnership binds the
partnership only if the act was authorized by the other partners. (72 Del.
Laws, c. 151, § 1.)

§ 15-302. Transfer of partnership property.
(a) Partnership property may be transferred as follows:
(1) Subject to the effect of a statement of partnership existence under
Section 15-303, partnership property held in the name of the
partnership may be transferred by an instrument of transfer executed by
a partner in the partnership name.
(2) Partnership property held in the name of one or more partners with an
indication in the instrument transferring the property to them of their
capacity as partners or of the existence of a partnership, but without an
indication of the name of the partnership, may be transferred by an

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instrument of transfer executed by the persons in whose name the
property is held.
(3) Partnership property held in the name of one or more persons other
than the partnership, without an indication in the instrument transferring
the property to them of their capacity as partners or of the existence of
a partnership, may be transferred by an instrument of transfer executed
by the persons in whose name the property is held.
(b) A partnership may recover partnership property from a transferee only if it
proves that execution of the instrument of initial transfer did not bind the
partnership under Section 15-301 and:
(1) as to a subsequent transferee who gave value for property transferred
under Section 15-302(a)(1) and (2), proves that the subsequent
transferee had notice that the person who executed the instrument of
initial transfer lacked authority to bind the partnership; or
(2) as to a transferee who gave value for property transferred under
subsection (a)(3), proves that the transferee had notice that the
property was partnership property and that the person who executed
the instrument of initial transfer lacked authority to bind the
partnership.
(c) A partnership may not recover partnership property from a subsequent
transferee if the partnership would not have been entitled to recover the
property, under Section 15-302(b), from any earlier transferee of the
property.
(d) If a person holds all of the partners' interests in the partnership, all of the
partnership property vests in that person. The person may execute a
document in the name of the partnership to evidence vesting of the property
in that person and may file or record the document. (72 Del. Laws, c. 151, §
1.)

§ 15-303. Statement of partnership existence.
(a) A partnership may file a statement of partnership existence, which:
(1) must include:
(i) the name of the partnership; and
(ii) the address of the registered office and the name and address
of the registered agent for service of process required to be
maintained by Section 15-111 of this title; and
(2) may state (i) the names of the partners authorized to execute an
instrument transferring real property held in the name of the
partnership, (ii) the authority, or limitations on the authority, of some
or all of the partners to enter into other transactions on behalf of the
partnership and (iii) any other matter.
(b) A statement of partnership existence supplements the authority of a partner
to enter into transactions on behalf of the partnership as follows:
(1) Except for transfers of real property, a grant of authority contained in a
statement of partnership existence is conclusive in favor of a person who
gives value without knowledge to the contrary, so long as and to the
extent that a limitation on that authority is not then contained in
another statement. A filed cancellation of a limitation on authority
revives the previous grant of authority.
(2) A grant of authority to transfer real property held in the name of the
partnership contained in a certified copy of a statement of partnership
existence recorded in the office for recording transfers of that real
property is conclusive in favor of a person who gives value without

161

knowledge to the contrary, so long as and to the extent that a certified
copy of a statement containing a limitation on that authority is not then
of record in the office for recording transfers of that real property. The
recording in the office for recording transfers of that real property of a
certified copy of a cancellation of a limitation on authority revives the
previous grant of authority.
(c) A person not a partner is deemed to know of a limitation on the authority of a
partner to transfer real property held in the name of the partnership if a
certified copy of the statement containing the limitation on authority is of
record in the office for recording transfers of that real property.
(d) Except as otherwise provided in subsections (b) and (c) and Sections 15-704
and 15-805, a person not a partner is not deemed to know of a limitation on
the authority of a partner merely because the limitation is contained in a
statement. (72 Del. Laws, c. 151, § 1.)

§ 15-304. Denial of status as partner.
If a person named in a statement of partnership existence is or may be adversely
affected by being so named, the person may petition the Court of Chancery to direct
the correction of the statement. If the Court finds that correction of the statement is
proper and that an authorized person has failed or refused to execute and file a
certificate of correction or a corrected statement, the Court shall order the Secretary
of State to file an appropriate correction. (72 Del. Laws, c. 151, § 1.)

§ 15-305. Partnership liable for partner's actionable conduct.
(a) A partnership is liable for loss or injury caused to a person, or for a penalty
incurred, as a result of a wrongful act or omission, or other actionable
conduct, of a partner acting in the ordinary course of business of the
partnership or with authority of the partnership.
(b) If, in the course of the partnership's business or while acting with authority of
the partnership, a partner receives or causes the partnership to receive
money or property of a person not a partner, and the money or property is
misapplied by a partner, the partnership is liable for the loss. (72 Del. Laws, c.
151, § 1.)

§ 15-306. Partner's liability.
(a) Except as otherwise provided in subsections (b) and (c), all partners are liable
jointly and severally for all obligations of the partnership unless otherwise
agreed by the claimant or provided by law.
(b) A person admitted as a partner into an existing partnership is not personally
liable for any obligation of the partnership incurred before the person's
admission as a partner.
(c) An obligation of a partnership incurred while the partnership is a limited
liability partnership, whether arising in contract, tort or otherwise, is solely the
obligation of the partnership. A partner is not personally liable, directly or
indirectly, by way of indemnification, contribution, assessment or otherwise,
for such an obligation solely by reason of being or so acting as a partner.
(d) The ability of an attorney-at-law, admitted to the practice of law in the State
of Delaware, to practice law in Delaware in a limited liability partnership, shall
be determined by the Rules of the Supreme Court of the State of Delaware.
(e) Notwithstanding the provisions of subsection (c) of this section, under a
partnership agreement or under another agreement, a partner may agree to
be personally liable, directly or indirectly, by way of indemnification,
contribution, assessment or otherwise, for any or all of the obligations of the

162

partnership incurred while the partnership is a limited liability partnership. (72
Del. Laws, c. 151, § 1; 73 Del. Laws, c. 85, § 8; 73 Del. Laws, c. 296, § 6; 75
Del. Laws, c. 50, § 3.)

§ 15-307. Actions by and against partnership and partners.
(a) A partnership may sue and be sued in the name of the partnership.
(b) An action may be brought against the partnership and, to the extent not
inconsistent with Section 15-306, any or all of the partners in the same action
or in separate actions.
(c) A judgment against a partnership is not by itself a judgment against a
partner. A judgment against a partnership may not be satisfied from the
assets of a partner liable as provided in Section 15-306 for a partnership
obligation unless there is also a judgment against the partner for such
obligation.
(d) A judgment creditor of a partner may not levy execution against the assets of
the partner to satisfy a judgment based on a claim against the partnership
unless:
(1) the claim is for an obligation of the partnership for which the partner is
liable as provided in Section 15-306 and either:
(i) a judgment based on the same claim has been obtained against
the partnership and a writ of execution on the judgment has
been returned unsatisfied in whole or in part;
(ii) the partnership is a debtor in bankruptcy;
(iii) the partner has agreed that the creditor need not exhaust
partnership assets; or
(iv) a court grants permission to the judgment creditor to levy
execution against the assets of a partner based on a finding
that partnership assets subject to execution are clearly
insufficient to satisfy the judgment, that exhaustion of
partnership assets is excessively burdensome, or that the grant
of permission is an appropriate exercise of the court's equitable
powers; or
(2) liability is imposed on the partner by law or contract independent of
the existence of the partnership.
(e) This section applies to any obligation of the partnership resulting from a
representation by a partner or purported partner under Section 15-308. (72
Del. Laws, c. 151, § 1.)

§ 15-308. Liability of purported partner.
(a) If a person, by words or conduct, purports to be a partner, or consents to
being represented by another as a partner, in a partnership or with one or
more persons not partners, the purported partner is liable to a person to
whom the representation is made, if that person, relying on the
representation, enters into a transaction with the actual or purported
partnership. If the representation, either by the purported partner or by a
person with the purported partner's consent, is made in a public manner, the
purported partner is liable to a person who relies upon the purported
partnership even if the purported partner is not aware of being held out as a
partner to the claimant. If a partnership obligation results, the purported
partner is liable with respect to that obligation as if the purported partner
were a partner. If no p artnership obligation results, the purported partner is
liable with respect to that obligation jointly and severally with any other
person consenting to the representation. In the case of a limited liability

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partnership, a person's liability under Section 15-308(a) is subject to Section
15-306 as if the person were a partner in the limited liability partnership.
(b) If a person is thus represented to be a partner in an existing partnership, or
with one or more persons not partners, the purported partner is an agent of
persons consenting to the representation to bind them to the same extent and
in the same manner as if the purported partner were a partner, with respect
to persons who enter into transactions in reliance upon the representation. If
all of the partners of the existing partnership consent to the representation, a
partnership act or obligation results. If fewer than all of the partners of the
existing partnership consent to the representation, the person acting and the
partners consenting to the representation are jointly and severally liable.
(c) A person is not liable as a partner merely because the person is named by
another in a statement of partnership existence.
(d) A person does not continue to be liable as a partner merely because of a
failure to file a statement of dissociation or to amend a statement of
partnership existence to indicate the partner's dissociation from the
partnership.
(e) Except as otherwise provided in subsections (a) and (b), persons who are not
partners as to each other are not liable as partners to other persons. (72 Del.
Laws, c. 151, § 1.)

§ 15-309. Limitations on distribution.
(a) A limited liability partnership shall not make a distribution to a partner to the
extent that at the time of the distribution, after giving effect to the
distribution, all liabilities of the limited liability partnership, other than
liabilities to partners on account of their economic interests and liabilities for
which the recourse of creditors is limited to specified property of the limited
liability partnership, exceed the fair value of the assets of the limited liability
partnership, except that the fair value of property that is subject to a liability
for which the recourse of creditors is limited shall be included in the assets of
the limited liability partnership only to the extent that the fair value of that
property exceeds that liability. For purposes of this subsection, the term
"distribution" shall not include amounts constituting reasonable compensation
for present or past services or reasonable payments made in the ordinary
course of business pursuant to a bona fide retirement plan or other benefits
program.
(b) A partner of a limited liability partnership who receives a distribution in
violation of subsection (a) of this section, and who knew at the time of the
distribution that the distribution violated subsection (a) of this section, shall
be liable to the partnership for the amount of the distribution. A partner of a
limited liability partnership who receives a distribution in violation of
subsection (a) of this section, and who did not know at the time of the
distribution that the distribution violated subsection (a) of this section, shall
not be liable for the amount of the distribution. Subject to subsection (c) of
this section, this subsection (b) shall not affect any obligation or liability of a
partner of a limited liability partnership under an agreement or other
applicable law for the amount of a distribution.
(c) Unless otherwise agreed, a partner of a limited liability partnership who
receives a distribution from a partnership shall have no liability under this
chapter or other applicable law for the amount of the distribution after the
expiration of three years from the date of the distribution. (72 Del. Laws, c.
151, § 1; 72 Del. Laws, c. 390, § 15.)

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Subchapter IV. Relations of Partners to Each Other and to Partnership
§ 15-401. Partner's rights and duties.
(a) Each partner is deemed to have an account that is:
(1) credited with an amount equal to the money plus the value of any other
property, net of the amount of any liabilities, the partner contributes to
the partnership and the partner's share of the partnership profits; and
(2) charged with an amount equal to the money plus the value of any other
property, net of the amount of any liabilities, distributed by the
partnership to the partner and the partner's share of the partnership
losses.
(b) Each partner is entitled to an equal share of the partnership profits and is
chargeable with a share of the partnership losses in proportion to the
partner's share of the profits.
(c) In addition to indemnification under Section 15-110, a partnership shall
reimburse a partner for payments made and indemnify a partner for liabilities
incurred by the partner in the ordinary course of the business of the
partnership or for the preservation of its business or property; however, no
person shall be required as a consequence of any such indemnification to
make any payment to the extent that the payment is inconsistent with
Sections 15-306(b) or (c).
(d) A partnership shall reimburse a partner for an advance to the partnership
beyond the amount of capital the partner agreed to contribute.
(e) A payment or advance made by a partner which gives rise to a partnership
obligation under subsection (c) or (d) constitutes a loan to the partnership
which accrues interest from the date of the payment or advance.
(f) Each partner has equal rights in the management and conduct of the
partnership business and affairs.
(g) A partner may use or possess p artnership property only on behalf of the
partnership.
(h) A partner is not entitled to remuneration for services performed for the
partnership, except for reasonable compensation for services rendered in
winding up the partnership.
(i) A person may become a partner only with the consent of all of the partners.
(j) A difference arising as to a matter in the ordinary course of business of a
partnership may be decided by a majority of the partners. An act outside the
ordinary course of business of a partnership may be undertaken only with the
consent of all of the partners.
(k) This section does not affect the obligations of a partnership to other persons
under Section 15-301.
(l) A partner has the power and authority to delegate to one or more other
persons the partner's rights and powers to manage and control the business
and affairs of the partnership, including to delegate to agents, officers and
employees of the partner or the partnership, and to delegate by a
management agreement or other agreement with, or otherwise to, other
persons. Such delegation by a partner shall not cause the partner to cease to
be a partner of the partnership or cause the person to whom any such rights
and powers have been delegated to be a partner of the partnership.
(m) Unless otherwise provided in a partnership agreement or another agreement,
a partner shall have no preemptive right to subscribe to any additional issue
of partnership interests or another interest in a partnership. (72 Del. Laws, c.
151, § 1; 73 Del. Laws, c. 296, §§ 7, 8.)

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§ 15-402. Distributions in kind.
A partner, regardless of the nature of the partner's contribution, has no right to
demand and receive any distribution from a partnership in kind. A partner may not
be compelled to accept a distribution of any asset in kind from a partnership to the
extent that the percentage of the asset distributed to the partner exceeds a
percentage of that asset which is equal to the percentage in which the partner shares
in distributions from the partnership. A partner may be compelled to accept a
distribution of any asset in kind from a partnership to the extent that the percentage
of the asset distributed to the partner is equal to a percentage of that asset which is
equal to the percentage in which the partner shares in distributions from the
partnership. (72 Del. Laws, c. 151, § 1.)

§ 15-403. Partner's rights and duties with respect to information.
(a) Each partner and the partnership shall provide partners, former partners and
the legal representative of a deceased partner or partner under a legal
disability and their agents and attorneys, access to the books and records of
the partnership and other information concerning the partnership's business
and affairs (in the case of former partners, only with respect to the period
during which they were partners) upon reasonable demand, for any purpose
reasonably related to the partner's interest as a partner in the partnership.
The right of access shall include access to:
(1) True and full information regarding the status of the business and
financial condition of the partnership;
(2) Promptly after becoming available, a copy of the partnership's federal,
state and local income tax returns for each year;
(3) A current list of the name and last known business, residence or mailing
address of each partner;
(4) A copy of any statement and written partnership agreement and all
amendments thereto, together with executed copies of any written
powers of attorney pursuant to which the statement or the partnership
agreement and any amendments thereto have been executed;
(5) True and full information regarding the amount of cash and a description
and statement of the agreed value of any other property or services
contributed by each partner and which each partner has agreed to
contribute in the future, and the date on which each partner became a
partner; and
(6) Other information regarding the affairs of the partnership as is just and
reasonable.
The right of access includes the right to examine and make extracts from books and
records and other information concerning the partnership's business and affairs. The
partnership agreement may provide for, and in the absence of such provision in the
partnership agreement, the partnership or the partner from whom access is sought
may impose, reasonable standards (including standards governing what information
and documents are to be furnished at what time and location and at whose expense)
with respect to exercise of the right of access.

(b) A partnership agreement may provide that the partnership shall have the right
to keep confidential from partners for such period of time as the partnership
deems reasonable, any information which the partnership reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the partnership in good faith believes is not in the best interest of the
partnership or could damage the partnership or its business or affairs or which

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the partnership is required by law or by agreement with a third party to keep
confidential.
(c) A partnership and its partners may maintain the books and records and other
information concerning the partnership in other than a written form if such
form is capable of conversion into written form within a reasonable time.
(d) Any demand by a partner under this section shall be in writing and shall state
the purpose of such demand.
(e) Any action to enforce any right arising under this section shall be brought in
the Court of Chancery. If the partnership or a partner refuses to permit access
as described in subsection (a)(3) of this section or does not reply to a demand
that has been made within 5 business days after the demand has been made,
the demanding partner, former partner, or legal representative of a deceased
partner or partner under a legal disability may apply to the Court of Chancery
for an order to compel such disclosure. The Court of Chancery is hereby
vested with exclusive jurisdiction to determine whether or not the person
making the demand is entitled to the books and records or other information
concerning the partnership's business and affairs sought. The Court of
Chancery may summarily order the partnership or partner to permit the
demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability and their agents and attorneys to
provide access to the information described in subsection (a)(3) of this section
and to make copies or extracts therefrom; or the Court of Chancery may
summarily order the partnership or partner to furnish to the demanding
partner, former partner or legal representative of a deceased partner or
partner under a legal disability and their agents and attorneys the information
described in subsection (a)(3) of this section on the condition that the partner,
former partner or legal representative of a deceased partner or partner under
a legal disability first pay to the partnership or to the partner from whom
access is sought the reasonable cost of obtaining and furnishing such
information and on such other conditions as the Court of Chancery deems
appropriate. When a demanding partner, former partner or legal
representative of a deceased partner or partner under a legal disability seeks
to obtain access to information described in subsection (a)(3) of this section,
the demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability shall first establish (1) that the
demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability has complied with the provisions of
this section respecting the form and manner of making demand for obtaining
access to such information and (2) that the information the demanding
partner, former partner or legal representative of a deceased partner or
partner under a legal disability seeks is reasonably related to the partner's
interest as a partner in the partnership. The Court of Chancery may, in its
discretion, prescribe any limitations or conditions with reference to the access
to information, or award such other or further relief as the Court of Chancery
may deem just and proper. The Court of Chancery may order books,
documents and records, pertinent extracts therefrom, or duly authenticated
copies thereof, to be brought within the State of Delaware and kept in the
State of Delaware upon such terms and conditions as the order may prescribe.
(f) The rights of a partner to obtain information as provided in this section may
be restricted in an original partnership agreement or in any subsequent
amendment approved or adopted by all of the partners and in compliance with
any applicable requirements of the partnership agreement. (72 Del. Laws, c.
151, § 1; 73 Del. Laws, c. 85, § 9.)

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§ 15-404. General standards of partner's conduct.
(a) The only fiduciary duties a partner owes to the partnership and the other
partners are the duty of loyalty and the duty of care set forth in subsections
(b) and (c).
(b) A partner's duty of loyalty to the partnership and the other partners is limited
to the following:
(1) to account to the partnership and hold as trustee for it any property,
profit or benefit derived by the partner in the conduct or winding up of
the partnership business or affairs or derived from a use by the partner
of partnership property, including the appropriation of a partnership
opportunity;
(2) to refrain from dealing with the partnership in the conduct or winding up
of the partnership business or affairs as or on behalf of a party having
an interest adverse to the partnership; and
(3) to refrain from competing with the partnership in the conduct of the
partnership business or affairs before the dissolution of the partnership.
(c) A partner's duty of care to the partnership and the other partners in the
conduct and winding up of the partnership business or affairs is limited to
refraining from engaging in grossly negligent or reckless conduct, intentional
misconduct, or a knowing violation of law.
(d) A partner does not violate a duty or obligation under this chapter or under the
partnership agreement solely because the partner's conduct furthers the
partner's own interest.
(e) A partner may lend money to, borrow money from, act as a surety, guarantor
or endorser for, guarantee or assume 1 or more specific obligations of,
provide collateral for and transact other business with, the partnership and,
subject to other applicable law, has the same rights and obligations with
respect thereto as a person who is not a partner.
(f) This section applies to a person winding up the partnership business or affairs
as the personal or legal representative of the last surviving partner as if the
person were a partner. (72 Del. Laws, c. 151, § 1; 74 Del. Laws, c. 266, § 5.)

§ 15-405. Actions by partnership and partners; derivative actions.
(a) A partnership may maintain an action against a partner for a breach of the
partnership agreement, or for the violation of a duty to the partnership,
causing harm to the partnership.
(b) A partner may maintain an action against the partnership or another partner
for legal or equitable relief, with or without an accounting as to partnership
business, to:
(1) enforce the partner's rights under the partnership agreement;
(2) enforce the partner's rights under this chapter, including:
(i) the partner's rights under Sections 15-401, 15-403 or 15-404;
(ii) the partner's right on dissociation to have the partner's interest
in the partnership purchased pursuant to Section 15-701 or
enforce any other right under Subchapter VI or VII; or
(iii) the partner's right to compel a dissolution and winding up of
the partnership business under Section 15-801 or enforce any
other right under Subchapter VIII; or
(3) enforce the rights and otherwise protect the interests of the partner,
including rights and interests arising independently of the partnership
relationship.

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(c) The accrual of, and any time limitation on, a right of action for a remedy
under this section is governed by other law. A right to an accounting upon a
dissolution and winding up does not revive a claim barred by law.
(d) A partner may bring a derivative action in the Court of Chancery in the right of
a partnership to recover a judgment in the partnership's favor.
(e) In a derivative action, the plaintiff must be a partner at the time of bringing
the action and:
(1) At the time of the transaction of which the partner complains; or
(2) The partner's status as a partner had devolved upon the partner by
operation of law or pursuant to the terms of the partnership
agreement from a person who was a partner at the time of the
transaction.
(f) In a derivative action, the complaint shall set forth with particularity the
effort, if any, of the plaintiff to secure initiation of the action by the
partnership or the reason for not making the effort.
(g) If a derivative action is successful, in whole or in part, as a result of a
judgment, compromise or settlement of any such action, the court may award
the plaintiff reasonable expenses, including reasonable attorney's fees, from
any recovery in any such action or from a partnership. (72 Del. Laws, c. 151,
§ 1.)

§ 15-406. Continuation of partnership beyond definite term or particular
undertaking.
(a) If a partnership for a definite term or particular undertaking is continued,
without an express agreement, after the expiration of the term or completion
of the undertaking, the rights and duties of the partners remain the same as
they were at the expiration or completion, so far as is consistent with a
partnership at will.
(b) If the partners, or those of them who habitually acted in the business or
affairs during the term or undertaking, continue the business or affairs
without any settlement or liquidation of the partnership, they are presumed to
have agreed that the partnership will continue. (72 Del. Laws, c. 151, § 1.)

§ 15-407. Classes and voting.
(a) A partnership agreement may provide for classes or groups of partners having
such relative rights, powers and duties as the partnership agreement may
provide, and may make provision for the future creation in the manner
provided in the partnership agreement of additional classes or groups of
partners having such relative rights, powers and duties as may from time to
time be established, including rights, powers and duties senior to existing
classes and groups of partners. A partnership agreement may provide for the
taking of an action, including the amendment of the partnership agreement,
without the vote or approval of any partner or class or group of partners,
including an action to create under the provisions of the partnership
agreement a class or group of partnership interests that was not previously
outstanding. A partnership agreement may provide that any partner or class
or group of partners shall have no voting rights.
(b) The partnership agreement may grant to all or certain identified partners or a
specified class or group of the partners the right to vote separately or with all
or any class or group of the partners on any matter. Voting by partners may
be on a per capita, number, financial interest, class, group or any other basis.
(c) A partnership agreement may set forth provisions relating to notice of the
time, place or purpose of any meeting at which any matter is to be voted on

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by any partners, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy, or any other matter with respect to the exercise of any
such right to vote.
(d) On any matter that is to be voted on, consented to or approved by partners,
the partners may take such action without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the partners having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all partners entitled to vote thereon were present and voted.
On any matter that is to be voted on by partners, the partners may vote in
person or by proxy, and such proxy may be granted in writing, by means of
electronic transmission or as otherwise permitted by applicable law. Unless
otherwise provided in a partnership agreement, a consent transmitted by
electronic transmission by a partner or by a person or persons authorized to
act for a partner shall be deemed to be written and signed for purposes of this
subsection (d). For purposes of this subsection (d), the term "electronic
transmission" means any form of communication not directly involving the
physical transmission of paper that creates a record that may be retained,
retrieved and reviewed by a recipient thereof and that may be directly
reproduced in paper form by such a recipient through an automated process.
(e) If a partnership agreement provides for the manner in which it may be
amended, including by requiring the approval of a person who is not a party
to the partnership agreement or the satisfaction of conditions, it may be
amended only in that manner or as otherwise permitted by law (provided that
the approval of any person may be waived by such person and that any such
conditions may be waived by all persons for whose benefit such conditions
were intended). If a partnership agreement does not provide for the manner
in which it may be amended, the partnership agreement may be amended
with the approval of all the partners or as otherwise permitted by law. (72
Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 16; 73 Del. Laws, c. 85, § 10;
74 Del. Laws, c. 266, § 6.)

§ 15-408. Remedies for breach of partnership agreement.
A partnership agreement may provide that (i) a partner who fails to perform in
accordance with, or to comply with the terms and conditions of, the partnership
agreement shall be subject to specified penalties or specified consequences, and (ii)
at the time or upon the happening of events specified in the partnership agreement,
a partner shall be subject to specified penalties or specified consequences. Such
specified penalties or specified consequences may include and take the form of any
penalty or consequence set forth in § 15-207(b) of this title. (72 Del. Laws, c. 151, §
1; 72 Del. Laws, c. 390, § 17; 73 Del. Laws, c. 85, § 11.)

§ 15-409. Reliance on reports and information by partner or liquidating
trustee.
(a) A liquidating trustee of a partnership (including a limited liability partnership)
shall be fully protected in relying in good faith upon the records of the
partnership and upon information, opinions, reports or statements presented
by a partner of the partnership, an officer or employee of the partnership,
another liquidating trustee, or committees of the partnership or partners, or
by any other person as to matters the liquidating trustee reasonably believes
are within such other person's professional or expert competence, including
information, opinions, reports or statements as to the value and amount of

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assets, liabilities, profits or losses of the partnership, or the value and amount
of assets or reserves or contracts, agreements or other undertakings that
would be sufficient to pay claims and obligations of the partnership or to make
reasonable provision to pay such claims and obligations, or any other facts
pertinent to the existence and amount of assets from which distributions to
partners or creditors might properly be paid.
(b) A partner of a limited liability partnership shall be fully protected in relying in
good faith upon the records of the partnership and upon information, opinions,
reports or statements presented by another partner of the partnership, an
officer or employee of the partnership, a liquidating trustee, or committees of
the partnership or partners, or by any other person as to matters the partner
reasonably believes are within such other person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of assets, liabilities, profits or losses of the partnership, or
the value and amount of assets or reserves or contracts, agreements or other
undertakings that would be sufficient to pay claims and obligations of the
partnership or to make reasonable provision to pay such claims and
obligations, or any other facts pertinent to the existence and amount of assets
from which distributions to partners or creditors might properly be paid.
(c) A partner of a partnership that is not a limited liability partnership shall be
fully protected from liability to the partnership, its partners or other persons
party to or otherwise bound by the partnership agreement in relying in good
faith upon the records of the partnership and upon information, opinions,
reports or statements presented by another partner of the partnership, an
officer or employee of the partnership, a liquidating trustee, or committees of
the partnership or partners, or by any other person as to matters the partner
reasonably believes are within such other person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of assets, liabilities, profits or losses of the partnership, or
the value and amount of assets or reserves or contracts, agreements or other
undertakings that would be sufficient to pay claims and obligations of the
partnership or to make reasonable provision to pay such claims and
obligations, or any other facts pertinent to the existence and amount of assets
from which distributions to partners or creditors might properly be paid. (75
Del. Laws, c. 50, § 4.)

Subchapter V. Transferees and Creditors of Partner
§ 15-501. Partner not co-owner of partnership property.
Unless otherwise provided in a statement of partnership existence and in a
partnership agreement, a partner is not a co-owner of partnership property and has
no interest in specific partnership property. (72 Del. Laws, c. 151, § 1; 72 Del. Laws,
c. 390, § 18.)

§ 15-502. Partner's economic interest in partnership; personal property.
A partnership interest is personal property. Only a partner's economic interest may
be transferred. (72 Del. Laws, c. 151, § 1.)

§ 15-503. Transfer of partner's economic interest.
(a) A transfer, in whole or in part, of a partner's economic interest in the
partnership:
(1) is permissible;
(2) does not by itself cause the partner's dissociation or a dissolution and
winding up of the partnership business or affairs; and

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(3) does not entitle the transferee to participate in the management or
conduct of the partnership business or affairs, to require access to
information concerning partnership transactions, or to inspect or copy
the partnership books or records.
(b) A transferee of a partner's economic interest in the partnership has a right:
(1) to receive, in accordance with the transfer, distributions to which the
transferor would otherwise be entitled;
(2) to receive upon the dissolution and winding up of the partnership
business or affairs, in accordance with the transfer, the net amount
otherwise distributable to the transferor; and
(3) to seek under Section 15-801(6) a judicial determination that it is
equitable to wind up the partnership business or affairs.
(c) In a dissolution and winding up, a transferee is entitled to an account of
partnership transactions only from the date of the latest account agreed to by
all of the partners.
(d) Upon transfer, the transferor retains the rights and duties of a partner other
than the economic interest transferred.
(e) A partnership need not give effect to a transferee's rights under this section
until it has notice of the transfer. Upon request of a partnership or a partner,
a transferee must furnish reasonable proof of a transfer.
(f) A transfer of a partner's economic interest in the partnership in violation of a
restriction on transfer contained in a partnership agreement is ineffective.
(g) Notwithstanding anything to the contrary under applicable law, a partnership
agreement may provide that a partner's economic interest may not be
transferred prior to the dissolution and winding up of the partnership.
(h) A partnership interest in a partnership may be evidenced by a certificate of
partnership interest issued by the partnership. A partnership agreement may
provide for the transfer of any partnership interest represented by such a
certificate and make other provisions with respect to such certificates.
(i) Except to the extent assumed by agreement, until a transferee of a
partnership interest becomes a partner, the transferee shall have no liability
as a partner solely as a result of the transfer.
(j) A partnership may acquire, by purchase, redemption or otherwise, any
partnership interest or other interest of a partner in the partnership. Any such
interest so acquired by the partnership shall be deemed canceled. (72 Del.
Laws, c. 151, § 1; 73 Del. Laws, c. 85, § 12.)

§ 15-504. Partner's economic interest subject to charging order.
(a) On application by a judgment creditor of a partner or of a partner's transferee,
a court having jurisdiction may charge the economic interest of the judgment
debtor to satisfy the judgment. To the extent so charged, the judgment
creditor has only the right to receive any distribution or distributions to which
the judgment debtor would otherwise have been entitled in respect of such
economic interest.
(b) A charging order constitutes a lien on the judgment debtor's economic interest
in the partnership.
(c) This chapter does not deprive a partner or a partner's transferee of a right
under exemption laws with respect to the judgment debtor's economic interest
in the partnership.
(d) The entry of a charging order is the exclusive remedy by which a judgment
creditor of a partner or of a partner's transferee may satisfy a judgment out of
the judgment debtor's economic interest in the partnership.

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(e) No creditor of a partner or of a partner's transferee shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies with
respect to, the property of the partnership.
(f) The Court of Chancery shall have jurisdiction to hear and determine any
matter relating to any such charging order. (72 Del. Laws, c. 151, § 1; 72 Del.
Laws, c. 390, § 19; 75 Del. Laws, c. 50, §§ 5-11.)

§ 15-601. Events causing partner's dissociation.
A partner is dissociated from a partnership upon the occurrence of any of the
following events:
(1) the partnership's having notice of the partner's express will to withdraw as a
partner on a later date specified by the partner in the notice or, if no later
date is specified, then upon receipt of notice;
(2) an event agreed to in the partnership agreement as causing the partner's
dissociation;
(3) the partner's expulsion pursuant to the partnership agreement;
(4) the partner's expulsion by the unanimous vote of the other partners if:
(i) it is unlawful to carry on the partnership business or affairs with that
partner; or
(ii) there has been a transfer of all or substantially all of that partner's
economic interest, other than a transfer for security purposes, or a
court order charging the partner's interest which, in either case, has
not been foreclosed;
(5) on application by or for the partnership or another partner to the Court of
Chancery, the partner's expulsion by determination by the Court of Chancery
because:
(i) the partner engaged in wrongful conduct that adversely and materially
affected the partnership business or affairs;
(ii) the partner willfully or persistently committed a material breach of
either the partnership agreement or of a duty owed to the partnership
or the other partners; or
(iii) the partner engaged in conduct relating to the partnership business or
affairs which makes it not reasonably practicable to carry on the
business or affairs in partnership with the partner;
(6) The partner's:
a. Making an assignment for the benefit of creditors;
b. Filing a voluntary petition in bankruptcy;
c. Being adjudged a bankrupt or insolvent, or having entered against that
partner an order for relief in any bankruptcy or insolvency proceeding;
d. Filing a petition or answer seeking for that partner any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation;
e. Filing an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against that partner in any
proceeding of this nature;
f. Seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator of that partner or of all or any substantial part of
that partner's properties; or
g. Failing, within 120 days after its commencement, to have dismissed
any proceeding against that partner seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, or failing, within 90
days after the appointment without that partner's consent or

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acquiescence, to have vacated or stayed the appointment of a trustee,
receiver or liquidator of that partner or of all or any substantial part of
that partner's properties, or failing, within 90 days after the expiration
of any such stay, to have the appointment vacated;
(7) in the case of a partner who is an individual:
(i) the partner's death;
(ii) the appointment of a guardian or general conservator for the partner;
or
(iii) a judicial determination that the partner has otherwise become
incapable of performing the partner's duties under the partnership
agreement;
(8) in the case of a partner that is a trust or is acting as a partner by virtue of
being a trustee of a trust, distribution of the trust's entire economic interest,
but not merely by reason of the substitution of a successor trustee;
(9) in the case of a partner that is an estate or is acting as a partner by virtue of
being a personal representative of an estate, distribution of the estate's entire
economic interest, but not merely by reason of the substitution of a successor
personal representative;
(10) the expiration of 90 days after the partnership notifies a corporate partner
that it will be expelled because it has filed a certificate of dissolution or the
equivalent, its existence has been terminated or its certificate of incorporation
has been revoked, or its right to conduct business has been suspended by the
jurisdiction of its incorporation, if there is no revocation of the certificate of
dissolution or no reinstatement of its existence, its certificate of incorporation
or its right to conduct business;
(11) a partnership, a limited liability company, a trust or a limited partnership that
is a partner has been dissolved and its business is being wound up; or
(12) termination of a partner who is not an individual, partnership, corporation,
trust, limited partnership, limited liability company or estate. (72 Del. Laws,
c. 151, § 1; 72 Del. Laws, c. 390, § 20.)

§ 15-602. Partner's power to dissociate; wrongful dissociation.

(a) A partner has the power to dissociate at any time, rightfully or wrongfully, by
express will pursuant to Section 15-601(1).

(b) A partner's dissociation is wrongful only if any of the following apply:

(1) it is in breach of an express provision of the partnership agreement; or

(2) in the case of a partnership for a definite term or particular
undertaking, before the expiration of the term or the completion of the
undertaking if any of the following apply:
(i) the partner withdraws by express will, unless the withdrawal
follows within 90 days after another partner's dissociation by death
or otherwise under Section 15-601(6) through (12) or wrongful
dissociation under this subsection;
(ii) the partner is expelled by judicial determination under Section 15-
601(5);
(iii) the partner is dissociated under Section 15-601(6); or
(iv) in the case of a partner who is not an individual, trust (other
than a statutory trust), or estate, the partner is expelled or

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otherwise dissociated because it willfully dissolved or
terminated.

(c) A partner who wrongfully dissociates is liable to the partnership and to the
other partners for damages caused by the dissociation. Such liability is in
addition to any other obligation of the partner to the partnership or to the
other partners. (72 Del. Laws, c. 151, § 1; 73 Del. Laws, c. 329, § 13.)

§ 15-603. Effect of partner's dissociation.
(a) If a partner's dissociation results in a dissolution and winding up of the
partnership business, Subchapter VIII applies; otherwise, Subchapter VII applies.
(b) Upon a partner's dissociation:
(1) the partner's right to participate in the management and conduct of the
partnership business terminates, except as otherwise provided in
Section 15-803;
(2) the partner's duty of loyalty under Section 15-404(b)(3) terminates; and
(3) the partner's duty of loyalty under Section 15-404(b)(1) and (2) and
duty of care under Section 15-404(c) continue only with regard to
matters arising and events occurring before the partner's dissociation,
unless the partner participates in winding up the partnership's business
pursuant to Section 15-803. (72 Del. Laws, c. 151, § 1.)

Subchapter VII. Partner's Dissociation When Business or Affairs Not Wound
Up

§ 15-701. Purchase of dissociated partner's partnership interest.
(a) If a partner is dissociated from a partnership without resulting in a dissolution
and winding up of the partnership business or affairs under Section 15-801, the
partnership shall cause the dissociated partner's interest in the partnership to be
purchased for a buyout price determined pursuant to subsection (b).
(b) The buyout price of a dissociated partner's partnership interest is an amount
equal to the fair value of such partner's economic interest as of the date of
dissociation based upon such partner's right to share in distributions from the
partnership. Interest must be paid from the date of dissociation to the date of
payment.
(c) Damages for wrongful dissociation under Section 15-602(b), and all other
amounts owing, whether or not presently due, from the dissociated partner to
the partnership, must be offset against the buyout price. Interest must be paid
from the date the amount owed becomes due to the date of payment.
(d) A partnership shall indemnify a dissociated partner whose partnership interest is
being purchased against all partnership obligations, whether incurred before or
after the dissociation, except partnership obligations incurred by an act of the
dissociated partner under Section 15-702.
(e) If no agreement for the purchase of a dissociated partner's partnership interest
is reached within 120 days after a written demand for payment, the partnership
shall pay, or cause to be paid, in cash to the dissociated partner the amount the
partnership estimates to be the buyout price and accrued interest, reduced by
any offsets and accrued interest under subsection (c).
(f) If a deferred payment is authorized under subsection (h), the partnership may
tender a written offer to pay the amount it estimates to be the buyout price and
accrued interest, reduced by any offsets under subsection (c), stating the time of
payment, the amount and type of security for payment, and the other terms and
conditions of the obligation.

175

(g) The payment or tender required by subsection (e) or (f) of this section must be
accompanied by the following:
(1) a written statement of partnership assets and liabilities as of the date of
dissociation;
(2) the latest available partnership balance sheet and income statement, if
any;
(3) a written explanation of how the estimated amount of the payment was
calculated; and
(4) written notice which shall state that the payment is in full satisfaction of
the obligation to purchase unless, within 120 days after the written
notice, the dissociated partner commences an action in the Court of
Chancery under (i) to determine the buyout price of that partner's
partnership interest, any offsets under subsection (c) or other terms of
the obligation to purchase.
(h) A partner who wrongfully dissociates before the expiration of a definite term
or the completion of a particular undertaking is not entitled to payment of any
portion of the buyout price until the expiration of the term or completion of
the undertaking, unless the partner establishes to the satisfaction of the Court
of Chancery that earlier payment will not cause undue hardship to the
business of the partnership. A deferred payment must bear interest and, to
the extent it would not cause undue hardship to the business of the
partnership, be adequately secured.
(i) A dissociated partner may maintain an action against the partnership,
pursuant to Section 15-405(b)(2)(ii), to determine the buyout price of that
partner's partnership interest, any offsets under subsection (c), or other terms
of the obligation to purchase. The action must be commenced within 120 days
after the partnership has tendered payment or an offer to pay or within one
year after written demand for payment if no payment or offer to pay is
tendered. The Court of Chancery shall determine the buyout price of the
dissociated partner's partnership interest, any offset due under subsection (c),
and accrued interest, and enter judgment for any additional payment or
refund. If deferred payment is authorized under subsection (h), the Court of
Chancery shall also determine the security, if any, for payment and other
terms of the obligation to purchase. The Court of Chancery may assess
reasonable attorney's fees and the fees and expenses of appraisers or other
experts for a party to the action, in amounts the Court of Chancery finds
equitable, against a party that the Court of Chancery finds acted arbitrarily,
vexatiously or not in good faith. The finding may be based on the
partnership's failure to tender payment or an offer to pay or to comply with
subsection (g). (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 21.)

§ 15-702. Dissociated partner's power to bind and liability to partnership.
(a) For one year after a partner dissociates without resulting in a dissolution and
winding up of the partnership business, the partnership, including a surviving
partnership under Subchapter IX, is bound by an act of the dissociated
partner which would have bound the partnership under Section 15-301 before
dissociation only if at the time of entering into the transaction the other
party:
(1) reasonably believed that the dissociated partner was then a partner
and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the partner's dissociation; and
(3) is not deemed to have had knowledge under Section 15-303(c) or
notice under Section 15-704(c).

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(b) A dissociated partner is liable to the partnership for any damage caused to
the partnership arising from an obligation incurred by the dissociated partner
after dissociation for which the partnership is liable under subsection (a). (72
Del. Laws, c. 151, § 1.)

§ 15-703. Dissociated partner's liability to other persons.
(a) A partner's dissociation does not of itself discharge the partner's liability for a
partnership obligation incurred before dissociation. A dissociated partner is not
liable for a partnership obligation incurred after dissociation, except as
otherwise provided in subsection (b).
(b) A partner who dissociates without resulting in a dissolution and winding up of
the partnership business is liable as a partner to the other party in a
transaction entered into by the partnership, or a surviving partnership under
Subchapter IX, within one year after the partner's dissociation, only if the
partner is liable for the obligation under Section 15-306 and at the time of
entering into the transaction the other party:
(1) reasonably believed that the dissociated partner was then a partner
and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the partner's dissociation; and
(3) is not deemed to have had knowledge under Section 15-303(c) or
notice under Section 15-704(c).
(c) By agreement with the partnership creditor and the partners continuing the
business, a dissociated partner may be released from liability for a partnership
obligation.
(d) A dissociated partner is released from liability for a partnership obligation if a
partnership creditor, with notice of the partner's dissociation but without the
partner's consent, a grees to a material alteration in the nature or time of
payment of a partnership obligation. (72 Del. Laws, c. 151, § 1.)

§ 15-704. Statement of dissociation.
(a) A dissociated partner or, after the filing by the partnership of a statement of
partnership existence, the partnership may file a statement of dissociation
stating the name of the partnership and that the partner is dissociated from
the partnership.
(b) A statement of dissociation is a limitation on the authority of a dissociated
partner for the purposes of Section 15-303(b) and (c).
(c) For the purposes of Sections 15-702(a)(3) and 15-703(b)(3), a person not a
partner is deemed to have notice of the dissociation 60 days after the
statement of dissociation is filed. (72 Del. Laws, c. 151, § 1.)

§ 15-705. Continued use of partnership name.
Continued use of a partnership name, or a dissociated partner's name as part
thereof, by partners continuing the business does not of itself make the dissociated
partner liable for an obligation of the partners or the partnership. (72 Del. Laws, c.
151, § 1.)

Subchapter VIII. Winding Up Partnership Business or Affairs
§ 15-801. Events causing dissolution and winding up of partnership
business or affairs.
A partnership is dissolved, and its business must be wound up, only upon the
occurrence of any of the following events:
(1) In a partnership at will, the partnership's having notice from a partner, other
than a partner who is dissociated under Section 15-601(2) through (12), of

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that partner's express will to withdraw as a partner, on a later date specified
by the partner in the notice or, if no later date is specified, then upon receipt
of notice;
(2) In a partnership for a definite term or particular undertaking:
(i) Within 90 days after a partner's dissociation b death or otherwise
y
under Section 15-601(6) through (12) or wrongful dissociation under
Section 15-602(b), at least half of the remaining partners express the
will to wind up the partnership business, for which purpose a partner's
rightful dissociation pursuant to Section 15-602(b)(2)(i) of this title
constitutes the expression of that partner's will to wind up the
partnership business;
(ii) The express will of all of the partners to wind up the partnership
business or affairs; or
(iii) The expiration of the term or the completion of the undertaking;
(3) An event agreed to in the partnership agreement resulting in the winding up
of the partnership business or affairs;
(4) An event that makes it unlawful for all or substantially all of the business or
affairs of the partnership to be continued, but a cure of such illegality within
90 days after the partnership has notice of the event is effective retroactively
to the date of the event for purposes of this section;
(5) On application by or for a partner to the Court of Chancery, the entry of a
decree of dissolution of a partnership by the Court of Chancery upon a
determination by the Court of Chancery that it is not reasonably practicable to
carry on the partnership business, purpose or activity in conformity with the
partnership agreement; or
(6) On application by a transferee of a partner's economic interest to the Court of
Chancery, a determination by the Court of Chancery that it is equitable to
wind up the partnership business or affairs:
(i) After the expiration of the term or completion of the undertaking, if
the partnership was for a definite term or particular undertaking at the
time of the transfer or entry of the charging order that gave rise to the
transfer; or
(ii) At any time, if the partnership was a partnership at will at the time of
the transfer or entry of the charging order that gave rise to the
transfer. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 22.)

§ 15-802. Partnership continues after dissolution.
(a) Subject to subsection (b), a partnership continues after dissolution only for
the purpose of winding up its business or affairs. The partnership is
terminated when the winding up of its business or affairs is completed.
(b) At any time after the dissolution of a partnership and before the winding up of
its business or affairs is completed, all of the partners, including any
dissociating partner other than a wrongfully dissociating partner, may waive
the right to have the partnership's business or affairs wound up and the
partnership terminated. In that event:
(1) the partnership resumes carrying on its business or affairs as if
dissolution had never occurred, and any liability incurred by the
partnership or a partner after the dissolution and before the waiver is
determined as if dissolution had never occurred; and
(2) the rights of a third party accruing under Section 15-804(1) or arising
out of conduct in reliance on the dissolution before the third party knew
or received a notification of the waiver may not be adversely affected.
(72 Del. Laws, c. 151, § 1.)

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§ 15-803. Right to wind up partnership business or affairs.
(a) A partner at the time of dissolution, including a partner who has dissociated
but not wrongfully, may participate in winding up the partnership's business
or affairs, but on application of any partner or a partner's legal representative
or transferee, the Court of Chancery for good cause shown, may order judicial
supervision of the winding up.
(b) The legal representative of the last surviving partner may wind up a
partnership's business or affairs.
(c) The persons winding up the partnership's business or affairs may, in the name
of, and for and on behalf of, the partnership, prosecute and defend suits,
whether civil, criminal or administrative, gradually settle and close the
partnership's business or affairs, dispose of and convey the partnership's
property, discharge or make reasonable provision for the partnership's
liabilities, distribute to the partners pursuant to Section 15-807 any remaining
assets of the partnership, and perform other acts which are necessary or
convenient to the winding up of the partnership's business or affairs. (72 Del.
Laws, c. 151, § 1.)

§ 15-804. Partner's power to bind partnership after dissolution.
Subject to Section 15-805, a partnership is bound by a partner's act after dissolution
that:
(1) is appropriate for winding up the partnership business or affairs; or
(2) would have bound the partnership under Section 15-301 before dissolution, if
the other party to the transaction did not have notice of the dissolution. (72
Del. Laws, c. 151, § 1.)

§ 15-805. Statement of dissolution.
(a) After dissolution, a partnership may file a statement of dissolution stating the
name of the partnership and that the partnership has dissolved and is winding
up its business or affairs.
(b) A statement of dissolution cancels a filed statement of partnership existence
for the purposes of Section 15-303(b) and is a limitation on authority for the
purposes of Section 15-303(c).
(c) For the purposes of Sections 15-301 and 15-804, a person not a partner is
deemed to have notice of the dissolution and the limitation on the partners'
authority as a result of a statement of dissolution 60 days after it is filed.
(d) After filing a statement of dissolution, a dissolved partnership may file a
statement of partnership existence which will operate with respect to a person
not a partner as provided in Section 15-303(b) and (c) in any transaction,
whether or not the transaction is appropriate for winding up the partnership
business or affairs.
(e) If a partnership which has dissolved fails or refuses to file a statement of
dissolution, any partner or dissociated partner who is or may be adversely
affected by the failure or refusal may petition the Court of Chancery to direct
the filing. If the Court finds that the statement of dissolution should be filed
and that the partnership has failed or refused to do so, it shall enter an order
granting appropriate relief. (72 Del. Laws, c. 151, § 1.)

§ 15-806. Partner's liability to other partners after dissolution.
(a) Except as otherwise provided in subsection (b) and Section 15-306, after
dissolution a partner is liable to the other partners for the partner's share of
any partnership obligation incurred under Section 15-804.

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(b) A partner who, with knowledge of the dissolution, causes the partnership to
incur an obligation under Section 15-804(2) by an act that is not appropriate
for winding up the partnership business or affairs is liable to the partnership
for any damage caused to the partnership arising from the obligation. (72 Del.
Laws, c. 151, § 1.)

§ 15-807. Settlement of accounts and contributions among partners.
(a) In winding up a partnership's business or affairs, the assets of the
partnership, including the contributions of the partners required by this
section, must be applied to pay or make reasonable provision to pay the
partnership's obligations to creditors, including, to the extent permitted by
law, partners who are creditors. Any surplus must be applied to pay in cash
the net amount distributable to partners in accordance with their right to
distributions under subsection (b).
(b) Each partner is entitled to a settlement of all partnership accounts upon
winding up the partnership business or affairs. In settling accounts among the
partners, profits and losses that result from the liquidation of the partnership
assets must be credited and charged to the partners" accounts. The
partnership shall make a distribution to a partner in an amount equal to any
excess of the credits over the charges in the partner's account. A partner shall
contribute to the partnership an amount equal to any excess of the charges
over the credits in the partner's account but excluding from the calculation
charges attributable to an obligation for which the partner is not personally
liable under Section 15-306.
(c) After the settlement of accounts, each partner shall contribute, in the
proportion in which the partner shares partnership losses, the amount
necessary to pay or make reasonable provis ion to pay partnership obligations
that were not known at the time of the settlement and for which the partner is
personally liable under Section 15-306.
(d) If a partner fails to contribute, all of the other partners shall contribute, in the
proportions in which those partners share partnership losses, the additional
amount necessary to pay or make reasonable provision to pay the partnership
obligations for which they are personally liable under Section 15-306.
(e) A partner or partner's legal representative may recover from the other
partners any contributions the partner makes to the extent the amount
contributed exceeds that partner's share of the partnership obligations for
which the partner is personally liable under Section 15-306.
(f) The estate of a deceased partner is liable for the partner's obligation to
contribute to the partnership.
(g) An assignee for the benefit of creditors of a partnership or a partner, or a
person appointed by a court to represent creditors of a partnership or a
partner, may enforce a partner's obligation to contribute to the partnership.
(h) A limited liability partnership which has dissolved (i) shall pay or make
reasonable provision to pay all claims and obligations, including all contingent,
conditional or unmatured contractual claims, known to the limited liability
partnership, (ii) shall make such provision as will be reasonably likely to be
sufficient to provide compensation for any claim against the limited liability
partnership which is the subject of a pending action, suit or proceeding to
which the limited liability partnership is a party and (iii) shall make such
provision as will be reasonably likely to be sufficient to provide compensation
for claims that have not been made known to the limited liability partnership
or that have not arisen but that, based on facts known to the limited liability
partnership, are likely to arise or to become known to the limited liability

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partnership within 10 years after the date of dissolution. If there are sufficient
assets, such claims and obligations shall be paid in full and any such provision
for payment made shall be made in full. If there are insufficient assets, such
claims and obligations shall be paid or provided for according to their priority
and, among claims of equal priority, ratably to the extent of assets available
therefor. Unless otherwise provided in the partnership agreement, any
remaining assets shall be distributed as provided in this chapter. Any
liquidating trustee winding up a limited liability partnership's affairs who has
complied with this section shall not be personally liable to the claimants of the
dissolved limited liability partnership by reason of such person's actions in
winding up the limited liability partnership.
(i) A partner of a limited liability partnership who receives a distribution in
violation of subjection (h) of this section, and who knew at the time of the
distribution that the distribution violated subsection (h) of this section, shall
be liable to the limited liability partnership for the amount of the distribution.
For purposes of the immediately preceding sentence, the term "distribution"
shall not include amounts constituting reasonable compensation for present or
past services or reasonable payments made in the ordinary course of business
pursuant to a bona fide retirement plan or other benefits program. A partner
of a limited liability partnership who receives a distribution in violation of
subsection (h) of this section, and who did not know at the time of the
distribution that the distribution violated subsection (h) of this section, shall
not be liable for the amount of the distribution. Subject to subsection (j) of
this section, this subsection shall not affect any obligation or liability of a
partner of a limited liability partnership under an agreement or other
applicable law for the amount of a distribution.
(j) Unless otherwise agreed, a partner of a limited liability partnership who
receives a distribution from a limited liability partnership shall have no liability
under this chapter or other applicable law for the amount of the distribution
after the expiration of 3 years from the date of the distribution.
(k) Section 15-309 of this chapter shall not apply to a distribution to which this
section applies. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §§ 23, 24.)

Subchapter IX. Conversion; Merger; Domestication; and Transfer
§ 15-901. Conversion of certain entities to a domestic partnership.
(a) As used in this section, the term "other entity" means a corporation, a
statutory trust, a business trust or association, a real estate investment trust,
a commonlaw trust or any other unincorporated business, including a limited
partnership (including a limited liability limited partnership), a foreign
partnership or a limited liability company.
(b) Any other entity may convert to a domestic partnership (including a limited
liability partnership) by complying with subsection (h) of this section and filing
with the Secretary of State in accordance with § 15-105 of this chapter:
(1) A certificate of conversion to partnership that has been executed in
accordance with § 15-105 of this chapter;
(2) A statement of partnership existence that complies with § 15-303 of this
chapter and has been executed in accordance with § 15-105 of this
chapter; and
(3) In the case of a conversion to a limited liability partnership, a statement
of qualification in accordance with subsection (c) of § 15-1001 of this
title.
(c) The certificate of conversion to partnership shall state:

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(1) The date on which and jurisdiction where the other entity was first
created, formed or otherwise came into being and, if it has changed, its
jurisdiction immediately prior to its conversion to a domestic
partnership;
(2) The name of the other entity immediately prior to the filing of the
certificate of conversion to partnership;
(3) The name of the partnership as set forth in its statement of partnership
existence filed in accordance with subsection (b) of this section;
(4) The future effective date or time (which shall be a date or time certain)
of the conversion to a partnership if it is not to be effective upon the
filing of the certificate of conversion to partnership and the statement of
partnership existence; and
(5) In the case of a conversion to a limited liability partnership, that the
partnership agreement of the partnership states that the partnership
shall be a limited liability partnership.
(d) Upon the filing with the Secretary of State of the certificate of conversion to
partnership, the statement of partnership existence and the statement of
qualification (if applicable), or upon the future effective date or time of the
certificate of conversion to partnership, the statement of partnership existence
and the statement of qualification (if applicable), the other e ntity shall be
converted into a domestic partnership (including a limited liability partnership,
if applicable) and the partnership shall thereafter be subject to all of the
provisions of this chapter, except that the existence of the partnership shall be
deemed to have commenced on the date the other entity commenced its
existence in the jurisdiction in which the other entity was first created,
formed, incorporated or otherwise came into being.
(e) The conversion of any other entity into a domestic partnership (including a
limited liability partnership) shall not be deemed to affect any obligations or
liabilities of the other entity incurred prior to its conversion to a domestic
partnership, or the personal liability of any person incurred prior to such
conversion.
(f) When any conversion shall have become effective under this section, for all
purposes of the laws of the State of Delaware, all of the rights, privileges and
powers of the other entity that has converted, and all property, real, personal
and mixed, and all debts due to such other entity, as well as all other things
and causes of action belonging to such other entity, shall remain vested in the
domestic partnership to which such other entity has converted and shall be
the property of such domestic partnership, and the title to any real property
vested by deed or otherwise in such other entity shall not revert or be in any
way impaired by reason of this chapter; but all rights of creditors and all liens
upon any property of such other entity shall be preserved unimpaired, and all
debts, liabilities and duties of the other entity that has converted shall remain
attached to the domestic partnership to which such other entity has
converted, and may be enforced against it to the same extent as if said debts,
liabilities and duties had originally been incurred or contracted by it in its
capacity as a domestic partnership. The rights, privileges, powers and
interests in property of the other entity, as well as the debts, liabilities and
duties of the other entity, shall not be deemed, as a consequence of the
conversion, to have been transferred to the domestic partnership to which
such other entity has converted for any purpose of the laws of the State of
Delaware.
(g) Unless otherwise agreed, for all purposes of the laws of the State of Delaware,
the converting other entity shall not be required to wind up its affairs or pay

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its liabilities and distribute its assets, the conversion shall not be deemed to
constitute a dissolution of such other entity, and the conversion shall
constitute a continuation of the existence of the converting other entity in the
form of a domestic partnership. When another entity has been converted to a
domestic partnership pursuant to this section, the domestic partnership shall,
for all purposes of the laws of the State of Delaware, be deemed to be the
same entity as the converting other entity.
(h) Prior to filing a certificate of conversion to partnership with the Secretary of
State, the conversion shall be approved in the manner provided for by the
document, instrument, agreement or other writing, as the case may be,
governing the internal affairs of the other entity and the conduct of its
business or by applicable law, as appropriate, and a partnership agreement
shall be approved by the same authorization required to approve the
conversion; provided, that in any event, such approval shall include the
approval of any person who, at the effective date or time of the conversion,
shall be a partner of the partnership.
(i) In connection with a conversion hereunder, rights or securities of, or interests
in, the other entity which is to be converted to a domestic partnership may be
exchanged for or converted into cash, property, rights or securities of or
interests in such domestic partnership or, in addition to or in lieu thereof, may
be exchanged for or converted into cash, property, rights or securities of or
interests in another domestic partnership or other entity or may be cancelled.
(j) In connection with the conversion of any other entity to a domestic
partnership (including a limited liability partnership), a person is admitted as a
partner of the partnership as provided in the partnership agreement. For the
purpose of subsection (b) of § 15-306 of this title, a person who, at the
effective time or date of the conversion of any other entity to a domestic
partnership (including a limited liability partnership), is a partner of the
partnership, shall be deemed admitted as a partner of the partnership at the
effective date or time of such conversion.
(k) The provisions of this section shall not be construed to limit the
accomplishment of a change in the law governing, or the domicile of, an other
entity to the State of Delaware by any other means provided for in a
document, instrument, agreement or other writing, including by the
amendment of any such document, instrument, agreement or other writing, or
by applicable law. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §§ 25-27;
73 Del. Laws, c. 85, § 13; 73 Del. Laws, c. 329, § 14; 74 Del. Laws, c. 103, §
9; 74 Del. Laws, c. 266, § 7; 75 Del. Laws, c. 50, §§ 12-21.)

§ 15-902. Merger or consolidation.
(a) As used in this section, "other business entity" means a corporation, a
statutory trust, a business trust or association, a real estate investment trust,
a common-law trust, or an unincorporated business, including a limited
liability company, a limited partnership (including a limited liability limited
partnership) and a foreign partnership, but excluding a domestic partnership.
(b) Pursuant to an agreement of merger or consolidation, 1 or more domestic
partnerships may merge or consolidate with or into 1 or more domestic
partnerships or 1 or more other business entities formed or organized under
the laws of the State of Delaware or any other state or the United States or
any foreign country or other foreign jurisdiction, or any combination thereof,
with such domestic partnership or other business entity as the agreement
shall provide being the surviving or resulting domestic partnership or other
business entity. Unless otherwise provided in the partnership agreement, a

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merger or consolidation shall be approved by each domestic partnership which
is to merge or consolidate by all of its partners. In connection with a merger
or consolidation hereunder, rights or securities of, or interests in, a domestic
partnership or other business entity which is a constituent party to the merger
or consolidation may be exchanged for or converted into cash, property, rights
or securities of, or interests in, the surviving or resulting domestic partnership
or other business entity or, in addition to or in lieu thereof, may be exchanged
for or converted into cash, property, rights or securities of, or interests in a
domestic partnership or other business entity which is not the surviving or
resulting domestic partnership or other business entity in the merger or
consolidation or may be cancelled. Notwithstanding prior approval, an
agreement of merger or consolidation may be terminated or amended
pursuant to a provision for such termination or amendment contained in the
agreement of merger or consolidation.
(c) If a domestic partnership is merging or consolidating under this section, (i) if
the domestic partnership has not filed a statement of partnership existence,
then the domestic partnership shall file a statement of partnership existence
and (ii) the domestic partnership or other business entity surviving or
resulting in or from the merger or consolidation shall file a certificate of
merger or consolidation executed by at least 1 partner on behalf of the
domestic partnership when it is the surviving or resulting entity with the
Secretary of State. The certificate of merger or consolidation shall state:
(1) The name and jurisdiction of formation or organization of each of the
domestic partnerships and other business entities which is to merge or
consolidate;
(2) That an agreement of merger or consolidation has been approved and
executed by each of the domestic partnerships and other business
entities which is to merge or consolidate;
(3) The name of the surviving or resulting domestic partnership or other
business entity;
(4) In the case of a merger in which a domestic partnership is the surviving
entity, such amendments, if any, to the statement of partnership
existence of the surviving domestic partnership (and in the case of a
surviving domestic partnership that is a limited liability partnership, to
the statement of qualification of such surviving domestic partnership) to
change its name as are desired to be effected by the merger;
of the merger or consolidation if it is not to be effective upon the filing of
the certificate of merger or consolidation;
(6) That the agreement of me rger or consolidation is on file at a place of
business of the surviving or resulting domestic partnership or other
business entity, and shall state the address thereof;
(7) That a copy of the agreement of merger or consolidation will be
furnished by the s urviving or resulting domestic partnership or other
business entity, on request and without cost, to any partner of any
domestic partnership or any person holding an interest in any other
business entity which is to merge or consolidate; and
(8) If the surviving or resulting entity is not formed, organized or created
under the laws of the State of Delaware, a statement that such surviving
or resulting entity agrees that it may be served with process in the State
of Delaware in any action, suit or proceeding for the enforcement of any
obligation of any domestic partnership which is to merge or consolidate,
irrevocably appointing the Secretary of State as its agent to accept

184

service of process in any such action, suit or proceeding and specifying
the address to which a copy of such process shall be mailed to it by the
Secretary of State. In the event of service hereunder upon the Secretary
of State, the procedures set forth in Section 15-113(b) of this chapter
shall be applicable, except that the plaintiff in any such action, suit or
proceeding shall furnish the Secretary of State with the address
specified in the certificate of merger or consolidation provided for in this
section and any other address which the plaintiff may elect to furnish,
together with copies of each process as required by the Secretary of
State, and the Secretary of State shall notify such surviving or resulting
entity at all such addresses furnished by the plaintiff in accordance with
the procedures set forth in Section 15-113(b) of this chapter.
(d) Any failure to file a certificate of merger or consolidation in connection with a
merger or consolidation which occurred prior to the effective date of this
chapter shall not affect the validity or effectiveness of any such merger or
consolidation.
(e) Unless a future effective date or time is provided in a certificate of merger or
consolidation, in which event a merger or consolidation shall be effective at
any such future effective date or time, a merger or consolidation shall be
effective upon the filing with the Secretary of State of a certificate of merger
or consolidation.
(f) A certificate of merger or consolidation shall act as a certificate of cancellation
of the statement of partnership existence for a domestic partnership which is
not the surviving or resulting entity in the merger or consolidation. A
certificate of merger that sets forth any amendment in accordance with
subsection (c)(4) of this section shall be deemed to be an amendment to the
statement of partnership existence (and if applicable to the statement of
qualification) of the domestic partnership, and the domestic partnership shall
not be required to take any further action to amend its statement of
partnership existence (or if applicable its statement of qualification) under §
15-105 of this title with respect to such amendments set forth in the
certificate of merger. Whenever this section requires the filing of a certificate
of merger or consolidation, such requirement shall be deemed satisfied by the
filing of an agreement of merger or consolidation containing the information
required by this section to be set forth in the certificate of merger or
consolidation.
(g) An agreement of merger or consolidation approved in accordance with
subsection (b) of this section may (1) effect any amendment to the
partnership agreement or (ii) effect the adoption of a new partnership
agreement for a domestic partnership if it is the surviving or resulting
partnership in the merger or consolidation. Any amendment to a partnership
agreement or adoption of a new partnership agreement made pursuant to the
foregoing sentence shall be effective at the effective time or date of the
merger or consolidation. The provisions of this subsection shall not be
construed to limit the accomplishment of a me rger or of any of the matters
referred to herein by any other means provided for in a partnership
agreement or other agreement or as otherwise permitted by law, including
that the partnership agreement of any constituent domestic partnership to the
merger or consolidation (including a domestic partnership formed for the
purpose of consummating a merger or consolidation) shall be the partnership
agreement of the surviving or resulting domestic partnership.
(h) When any merger or consolidation shall have become effective under this
section, for all purposes of the laws of the State of Delaware, all of the rights,

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privileges and powers of each of the domestic partnerships and other business
entities that have merged or consolidated, and all property, real, personal and
mixed, and all debts due to any of said domestic partnerships and other
business entities, as well as all other things and causes of action belonging to
each of such domestic partnerships and other business entities, shall be
vested in the surviving or resulting domestic partnership or other business
entity, and shall thereafter be the property of the surviving or resulting
domestic partnership or other business entity as they were of each of the
domestic partnerships and other business entities that have merged or
consolidated, and the title to any real property vested by deed or otherwise,
under the laws of the State of Delaware, in any of such domestic partnerships
and other business entities, shall not revert or be in any way impaired by
reason of this chapter; but all rights of creditors and all liens upon any
property of any of said domestic partnerships and other business entities shall
be preserved unimpaired, and all debts, liabilities and duties of each of the
said domestic partnerships and other business entities that have merged or
consolidated shall thenceforth attach to the surviving or resulting domestic
partnership or other business entity, and may be enforced against it to the
same extent as if said debts, liabilities and duties had been incurred or
contracted by it. Unless otherwise agreed, a merger or consolidation of a
domestic partnership, including a domestic partnership which is not the
surviving or resulting entity in the merger or consolidation, shall not require
such domestic partnership to wind up its affairs under Subchapter VIII or pay
its liabilities and distribute its assets under Subchapter VIII.
(i) Except as provided by agreement with a person to whom a partner of a
domestic partnership is obligated, a merger or consolidation of a domestic
partnership that has become effective shall not affect any obligation or liability
existing at the time of such merger or consolidation of a partner of a domestic
partnership which is merging or consolidating.
(j) If a domestic partnership is a constituent party to a merger or consolidation
that shall have become effective, but the domestic partnership is not the
surviving or resulting entity of the merger or consolidation, then a judgment
creditor of a partner of such domestic partnership may not levy execution
against the assets of the partner to satisfy a judgment based on a claim
against the surviving entity of the merger or consolidation unless:
(1) The claim is for an obligation of the domestic partnership for which the
partner is liable as provided in Section 15-306 and either:
(i) A judgment based on the same claim has been obtained against
the surviving or resulting entity of the merger or consolidation
and a writ of execution on the judgment has been returned
unsatisfied in whole or in part;
(ii) The surviving or resulting entity of the merger or consolidation
is a debtor in bankruptcy;
(iii) The partner has agreed that the creditor need not exhaust the
assets of the domestic partnership that was not the surviving or
resulting entity of the merger or consolidation;
(iv) The partner has agreed that the creditor need not exhaust the
assets of the surviving or resulting entity of the merger or
consolidation; or
(v) A court grants permission to the judgment creditor to levy
execution against the assets of the partner based on a finding
that the assets of the surviving or resulting entity of the merger
or consolidation that are subject to execution are clearly

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insufficient to satisfy the judgment, that exhaustion of the
assets of the surviving or resulting entity of the merger or
consolidation is excessively burdensome, or that the grant of
permission is an appropriate exercise of the court's equitable
powers; or
(2) Liability is imposed on the partner by law or contract independent of
the existence of the surviving or resulting entity of the merger or
consolidation.
(k) A person is admitted as a partner of a surviving or resulting domestic
partnership pursuant to a merger or consolidation approved in accordance
with subsection (b) of this section as provided in the partnership agreement
of the surviving or resulting domestic partnership or in the agreement of
merger or consolidation, and in the event of any inconsistency, the terms of
the agreement of merger or consolidation shall control. A person is admitted
as a partner of a domestic partnership pursuant to a merger or consolidation
in which such domestic partnership is not the surviving or resulting domestic
partnership in the merger or consolidation as provided in the partnership
agreement of such domestic partnership. (72 Del. Laws, c. 151, § 1; 72 Del.
Laws, c. 390, § 28; 73 Del. Laws, c. 85, §§ 14, 15; 73 Del. Laws, c. 329, §
15; 74 Del. Laws, c. 103, § 10; 74 Del. Laws, c. 266, §§ 8-10; 75 Del. Laws,
c. 50, § 22.)

§ 15-903. Approval of conversion of a domestic partnership.
(a) Upon compliance with this section, a domestic partnership may convert to a
corporation, a statutory trust, a business trust or association, a real estate
investment trust, a common-law trust or any other unincorporated business,
including a limited partnership (including a limited liability limited
partnership), a foreign partnership or a limited liability company. If a domestic
partnership is converting under this section to another business form
organized, formed or created under the laws of a jurisdiction other than the
State of Delaware and has not filed a statement of partnership existence, then
the domestic partnership shall file a statement of partnership existence prior
to or at the time of the filing of the certificate of conversion to non-Delaware
entity.
(b) If the partnership agreement specifies the manner of authorizing a conversion
of the partnership, the conversion shall be authorized as specified in the
partnership agreement. If the partnership a greement does not specify the
manner of authorizing a conversion of the partnership and does not prohibit a
conversion of the partnership, the conversion shall be authorized in the same
manner as is specified in the partnership agreement for authorizing a merger
or consolidation that involves the partnership as a constituent party to the
merger or consolidation. If the partnership agreement does not specify the
manner of authorizing a conversion of the partnership or a merger or
consolidation that involves the partnership as a constituent party and does not
prohibit a conversion of the partnership, the conversion shall be authorized by
the approval by all the partners.
(c) Unless otherwise agreed, the conversion of a domestic partnership to another
business form pursuant to this section shall not require such partnership to
wind up its affairs under Subchapter VIII of this chapter or pay its liabilities
and distribute its assets under Subchapter VIII.
(d) In connection with a conversion of a domestic partnership to another business
form pursuant to this section, rights or securities of or interests in the
domestic partnership which is to be converted may be exchanged for or

187

converted into cash, property, rights or securities of or interests in the
business form into which the domestic partnership is being converted or, in
addition to or in lieu thereof, may be exchanged for or converted into cash,
property, rights or securities of or interests in another business form or may
be cancelled.
(e) If a partnership shall convert in accordance with this section to another
business form organized, formed or created under the laws of a jurisdiction
other than the State of Delaware, a certificate of conversion to non-Delaware
entity executed in accordance with § 15-105 of this title shall be filed in the
office of the Secretary of State in accordance with § 15-105 of this title. The
certificate of conversion to non-Delaware entity shall state:
(1) The name of the partnership and, if it has been changed, the name
under whic h its statement of partnership existence was originally filed;
(2) The date of the filing of its original statement of partnership existence
with the Secretary of State;
(3) The jurisdiction in which the business form, to which the partnership
shall be converted, is organized, formed or created;
of the conversion if it is not to be effective upon the filing of the
certificate of conversion to non-Delaware entity;
(5) That the conversion has been approved in accordance with this section;
(6) The agreement of the partnership that it may be served with process in
the State of Delaware in any action, suit or proceeding for enforcement
of any obligation of the partnership arising while it was a partnership of
the State of Delaware, and that it irrevocably appoints the Secretary of
State as its agent to accept service of process in any such action, suit or
proceeding;
(7) The address to which a copy of the process referred to in subdivision
(e)(6) of this section shall be mailed to it by the Secretary of State. In
the event of service hereunder upon the Secretary of State, the
procedures set forth in § 15-112(b) of this title shall be applicable,
except that the plaintiff in any such action, suit or proceeding shall
furnish the Secretary of State with the address specified in this
subdivision and any other address that the plaintiff may elect to furnish,
together with copies of such process as required by the Secretary of
State, and the Sec retary of State shall notify the partnership that has
converted out of the State of Delaware at all such addresses furnished
by the plaintiff in accordance with the procedures set forth in § 15-
112(b) of this title.
(f) Upon the filing in the office of the Secretary of State of the certificate of
conversion to non-Delaware entity or upon the future effective date or time of
the certificate of conversion to non-Delaware entity and payment to the
Secretary of State of all fees prescribed in this chapter, the Secretary of State
shall certify that the partnership has filed all documents and paid all fees
required by this chapter, and thereupon the partnership shall cease to exist as
a partnership of the State of Delaware. Such certificate of the Secretary of
State shall be prima facie evidence of the conversion by such partnership out
of the State of Delaware.
(g) The conversion of a partnership out of the State of Delaware in accordance
with this section and the resulting cessation of its existence as a partnership
of the State of Delaware pursuant to a certificate of conversion to non-
Delaware entity shall not be deemed to affect any obligations or liabilities of
the partnership incurred prior to such conversion or the personal liability of

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any person incurred prior to such conversion, nor shall it be deemed to affect
the choice of law applicable to the partnership with respect to matters arising
prior to such conversion.
(h) When a domestic partnership has been converted to another business form
pursuant to this section, the other business form shall, for all purposes of the
laws of the State of Delaware, be deemed to be the same entity as the
domestic partnership. When any conversion shall have become effective
under this section, for all purposes of the laws of the State of Delaware, all of
the rights, privileges and powers of the domestic partnership that has
converted, and all property, real, personal and mixed, and all debts due to
such partnership, as well as all other things and causes of action belonging to
such partnership, shall remain vested in the other business form to which
such partnership has converted and shall be the property of such other
business form, and the title to any real property vested by deed or otherwise
in such partnership shall not revert or be in any way impaired by reason of
this chapter; but all rights of creditors and all liens upon any property of such
partnership shall be preserved unimpaired, and all debts, liabilities and duties
of the domestic partnership that has converted shall remain attached to the
other business form to which such partnership has converted, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had originally been incurred or contracted by it in its capacity as such other
business form. The rights, privileges, powers and interests in property of the
domestic partnership that has converted, as well as the debts, liabilities and
duties of such partnership, shall not be deemed, as a consequence of the
conversion, to have b een transferred to the other business form to which
such partnership has converted for any purpose of the laws of the State of
Delaware. (72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, § 29; 73 Del.
Laws, c. 329, § 16; 74 Del. Laws, c. 103, § 11; 74 Del. Laws, c. 266, §§ 11,
12.)

§ 15-904. Domestication of non-United States entities.
(a) As used in this section, "non-United States entity" means a foreign limited
partnership (other than one formed under the laws of a state)(including a
foreign limited liability limited partnership (other than one formed under the
laws of a state)), or a corporation, a business trust or association, a real
estate investment trust, a common-law trust or any other unincorporated
business, including a general partnership (including a limited liability
partnership) or a limited liability company, formed, incorporated, created or
that otherwise came into being under the laws of any foreign country or other
foreign jurisdiction (other than any state).
(b) Any non-United States ent ity may become domesticated as a partnership in
the State of Delaware by complying with subsection (g) of this section and
filing with the Secretary of State in accordance with Section 15-105 of this
chapter:
(1) A certificate of partnership domestication that has been executed in
accordance with Section 15-105 of this chapter; and
(2) A statement of partnership existence that complies with Section 15-303
of this chapter and has been executed in accordance with Section 15-
105 of this chapter.
(c) The certificate of partnership domestication shall state:
(1) The date on which and jurisdiction where the non-United States entity
was first formed, incorporated, created or otherwise came into being;

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(2) The name of the non-United States entity immediately prior to the filing
of the certificate of partnership domestication;
(3) The name of the partnership as set forth in the statement of partnership
existence filed in accordance with subsection (b) of this section;
of the domestication as a partnership if it is not to be effective upon the
filing of the certificate of partnership domestication and the statement of
partnership existence; and
(5) The jurisdiction that constituted the seat, siege social, or principal place
of business or central administration of the non-United States entity, or
any other equivalent thereto under applicable law, immediately prior to
the filing of the certificate of partnership domestication.
(d) Upon the filing with the Secretary of State of the certificate of partnership
domestication and the statement of partnership existence or upon the future
effective date or time of the certificate of partnership domestication and the
statement of partnership existence, the non-United States entity shall be
domesticated as a partnership in the State of Delaware and the partnership
shall thereafter be subject to all of the provisions of this chapter, provided
that the existence of the partnership shall be deemed to have commenced on
the date the non-United States entity commenced its existence in the
jurisdiction in which the non-United States entity was first formed,
incorporated, created or otherwise came into being.
(e) The domestication of any non-United States entity as a partnership in the
State of Delaware shall not be deemed to affect any obligations or liabilities of
the non-United States entity incurred prior to its domestication as a
partnership in the State of Delaware, or the personal liability of any person
therefor.
(f) The filing of a certificate of partnership domestication shall not affect the
choice of law applicable to the non-United States entity, except that from the
effective date or time of the domestication, the laws of the State of Delaware,
including the provisions of this chapter, shall apply to the non-United States
entity to the same extent as if the non-United States entity had been formed
as a partnership on that date.
(g) Prior to filing a certificate of partnership domestication with the Secretary of
State, the domestication shall be approved in the manner provided for by the
document, instrument, agreement or other writing, as the case may be,
governing the internal affairs of the non-United States entity and the conduct
of its business or by applicable non-Delaware law, as appropriate, and a
partnership agreement shall be approved by the same authorization required
to approve the domestication; provided that, in any event, such approval shall
include the approval of any person who, at the effective date or time of the
domestication, shall be a partner of the partnership.
(h) When any domestication shall have become effective under this section, for all
purposes of the laws of the State of Delaware, all of the rights, privileges and
powers of the non-United States entity that has been domesticated, and all
property, real, personal and mixed, and all debts due to such non-United
States entity, as well as all other things and causes of action belonging to
such non-United States entity, shall remain vested in the domestic partnership
to which such non-United States entity has been domesticated and shall be
the property of such domestic partnership, and the title to any real property
vested by deed or otherwise in such non-United States entity shall not revert
or be in any way impaired by reason of this chapter; but all rights of creditors
and all liens upon any property of such non-United States entity shall be

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preserved unimpaired, and all debts, liabilities and duties of the non-United
States entity that has been domesticated shall remain attached to the
domestic partnership to which such non-United States entity has been
domesticated, and may be enforced against it to the same extent as if said
debts, liabilities and duties had originally been incurred or contracted by it in
its capacity as a domestic partnership. The rights, privileges, powers and
interests in property of the non-United States entity, as well as the debts,
liabilities and duties of the non-United States entity, shall not be deemed, as a
consequence of the domestication, to have been transferred to the domestic
partnership to which such non-United States entity has domesticated for any
purpose of the laws of the State of Delaware.
(i) When a non-United States entity has become domestic ated as a domestic
partnership pursuant to this section, the domestic partnership shall, for all
purposes of the laws of the State of Delaware, be deemed to be the same
entity as the domesticating non-United States entity. Unless otherwise
agreed, for all purposes of the laws of the State of Delaware, the
domesticating non-United States entity shall not be required to wind up its
affairs or pay its liabilities and distribute its assets, the domestication shall not
be deemed to constitute a dissolution of such non-United States entity, and
the domestication shall constitute a continuation of the existence of the
domesticating non-United States entity in the form of a domestic partnership.
If, following domestication, a non-United States entity that has become
domesticated as a domestic partnership continues its existence in the foreign
country or other foreign jurisdiction in which it was existing immediately prior
to domestication, the domestic partnership and such non-United States entity
shall, for all purposes of the laws of the State of Delaware, constitute a single
entity formed, incorporated, created or otherwise having come into being, as
applicable, and existing under the laws of the State of Delaware and the laws
of such foreign country or other foreign jurisdiction.
(j) In connection with a domestication hereunder, rights or securities of, or
interests in, the non-United States entity that is to be domesticated as a
domestic partnership may be exchanged for or converted into cash, property,
rights or securities of, or interests in, such domestic partnership or, in
addition to or in lieu thereof, may be exchanged for or converted into cash,
property, rights or securities of, or interests in, another domestic partnership
or other entity or may be cancelled.
(k) In connection with the domestication of a non-United States entity as a
domestic partnership (including a limited liability partnership), a person is
admitted as a partner of the partnership as provided in the partnership
agreement. For the purpose of subsection (b) of § 15-306 of this title, a
person who, at the effective time or date of the domestication of any non-
United States entity as a domestic partnership (including a limited liability
partnership), is a partner of the partnership, shall be deemed admitted as a
partner of the partnership at the effective date or time of such domestication.
(72 Del. Laws, c. 151, § 1; 72 Del. Laws, c. 390, §§ 30, 31; 73 Del. Laws, c.
85, §§ 16, 17; 74 Del. Laws, c. 103, § 12; 74 Del. Laws, c. 266, § 13; 75 Del.
Laws, c. 50, §§ 23, 24.)

§ 15-905. Transfer of continuance of domestic partnerships.
(a) Upon compliance with the provisions of this section, any domestic partnership
may transfer to or domesticate in any jurisdiction, other than any state, and,
in connection therewith, may elect to continue its existence as a partnership
in the State of Delaware. If a domestic partnership is transferring or

191

domesticating or continuing under this section and has not filed a statement
of partnership existence, then the domestic partnership shall file a statement
of partnership existence prior to or at the time of the filing of the certificate of
transfer or certificate of transfer and continuance.
(b) If the partnership agreement specifies the manner of authorizing a transfer or
domestication described in subsection (a) of this section, the transfer or
domestication shall be authorized as specified in the partnership agreement. If
the partnership agreement does not specify the manner of authorizing a
transfer or domestication described in subsection (a) of this section and does
not prohibit such a transfer or domestication, the transfer or domestication
shall be authorized in the same manner as is specified in the partnership
agreement for authorizing a merger or consolidation that involves the
partnership as a constituent party to the merger or consolidation. If the
partnership agreement does not specify the manner of authorizing a transfer
or domestication described in subsection (a) of this section or a merger or
consolidation that involves the partnership as a constituent party and does not
prohibit such a transfer or domestication, the transfer or domestication shall
be authorized by the approval by all the partners. If a transfer or
domestication described in subsection (a) of this section shall be authorized as
provided in this subsection (b), a certificate of transfer if the partnership's
existence as a partnership of the State of Delaware is to cease, or a certificate
of transfer and continuance if the partnership's existence as a partnership in
the State of Delaware is to continue, executed in accordance with Section 15-
105 of this chapter, shall be filed with the Secretary of State in accordance
with Section 15-105 of this chapter. The certificate of transfer or the
certificate of transfer and continuance shall state:
(1) The name of the partnership and, if it has been changed, the name
under which its statement of partnership existence was originally filed;
(2) The date of the filing of its original statement of partnership existence
with the Secretary of State;
(3) The jurisdiction to which the partnership shall be transferred or in which
it shall be domesticated;
of the transfer or domestic ation to the jurisdiction specified in subsection
(b)(3) of this section if it is not to be effective upon the filing of the
certificate of transfer or the certificate of transfer and continuance;
(5) That the transfer or domestication or continuance of the partnership has
been approved in accordance with the provisions of this section;
(6) In the case of a certificate of transfer, (i) that the existence of the
partnership as a partnership of the State of Delaware shall cease when
the certificate of transfer becomes effective and (ii) the agreement of
the partnership that it may be served with process in the State of
Delaware in any action, suit or proceeding for enforcement of any
obligation of the partnership arising while it was a partnership of the
State of Delaware, and that it irrevocably appoints the Secretary of
State as its agent to accept service of process in any such action, suit or
proceeding;
(7) The address to which a copy of the process referred to in subsection
(b)(6) of this section shall be mailed to it by the Secretary of State. In
the event of service hereunder upon the Secretary of State, the
procedures set forth in Section 15-113(b) of this chapter shall be
applicable, except that the plaintiff in any such action, suit or proceeding
shall furnish the Secretary of State with the address specified in this

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subsection and any other address that the plaintiff may elect to furnish,
together with copies of such process as required by the Secretary of
State, and the Secretary of State shall notify the partnership that has
transferred or domesticated out of the State of Delaware at all such
addresses furnished by the plaintiff in accordance with the procedures
set forth in Section 15-113(b) of this chapter; and
(8) In the case of a certificate of transfer and continuance, that the
partnership will continue to exist as a partnership of the State of
Delaware after the certificate of transfer and continuance becomes
effective.
(c) Upon the filing with the Secretary of State of the certificate of transfer or upon
the future effective date or time of the certificate of transfer and payment to
the Secretary of State of all fees prescribed in this chapter, the Secretary of
State shall certify that the partnership has filed all documents and paid all
fees required by this chapter, and thereupon the partnership shall cease to
exist as a partnership of the State. Such certificate of the Secretary of State
shall be prima facie evidence of the transfer or domestication by such
partnership out of the State of Delaware.
(d) The transfer or domestication of a partnership out of the State of Delaware in
accordance with this section and the resulting cessation of its existence as a
partnership of the State of Delaware pursuant to a certificate of transfer shall
not be deemed to affect any obligations or liabilities of the partnership
incurred prior to such transfer or domestication or the personal liability of any
person incurred prior to such transfer or domestication, nor shall it be deemed
to affect the choice of law applicable to the partnership with respect to
matters arising prior to such transfer or domestication. Unless otherwise
agreed, the transfer or domestication of a partnership out of the State of
Delaware in accordance with this section shall not require such partnership to
wind up its affairs under subchapter VIII of this chapter or pay its liabilities
and distribute its assets under subchapter VIII.
(e) If a partnership files a certificate of transfer and continuance, after the time
the certificate of transfer and continuance becomes effective, the partnership
shall continue to exist as a partnership of the State of Delaware, and the laws
of the State of Delaware, including the provisions of this chapter, shall apply
to the partnership, to the same extent as prior to such time. So long as a
partnership continues to exist as a partnership of the State of Delaware
following the filing of a certificate of transfer and continuance, the continuing
domestic partnership and the entity formed, incorporated, created or that
otherwise came into being as a consequence of the transfer of the partnership
to, or its domestication in, a foreign country or other foreign jurisdiction shall,
for all purposes of the laws of the State of Delaware, constitute a single entity
formed, incorporated, created or otherwise having come into being, as
applicable, and existing under the laws of the State of Delaware and the laws
of such foreign country or other foreign jurisdiction.
(f) In connection with a transfer or domestication of a domestic partnership to or
in another jurisdiction pursuant to subsection (a) of this section, rights or
securities of, or interests in, such partnership may be exchanged for or
converted into cash, property, rights or securities of, or interests in, the
business form in which the partnership will exist in such other jurisdiction as a
consequence of the transfer or domestication or, in addition to or in lieu
thereof, may be exchanged for or converted into cash, property, rights or
securities of, or interests in, another business form or may be cancelled.

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(g) When a domestic partnership has transferred or domesticated out of the State
of Delaware pursuant to this section, the transferred or domesticated
business form shall, for all purposes of the laws of the State of Delaware, be
deemed to be the same entity as the domestic partnership. When any
transfer or domestication of a domestic partnership out of the State of
Delaware shall have become effective under this section, for all purposes of
the laws of the State of Delaware, all of the rights, privileges and powers of
the domestic partnership that has transferred or domesticated, and all
property, real, personal and mixed, and all debts due to such partnership, as
well as all other things and causes of action belonging to such partnership,
shall remain vested in the transferred or domesticated business form and
shall be the property of such transferred or domesticated business form, and
the title to any real property vested by deed or otherwise in such partnership
shall not revert or be in any way impaired by reason of this chapter; but all
rights of creditors and all liens upon any property of such partnership shall be
preserved unimpaired, and all debts, liabilities and duties of the domestic
partnership that has transferred or domesticated shall remain attached to the
transferred or domesticated business form, and may be enforced against it to
the same extent as if said debts, liabilities and duties had originally been
incurred or contracted by it in its capacity as the transferred or domesticated
business form. The rights, privileges, powers and interests in property of the
domestic partnership that has transferred or domesticated, as well as the
debts, liabilities and duties of such partnership, shall not be deemed, as a
consequence of the transfer or domestication out of the State of Delaware, to
have been transferred to the transferred or domesticated business form for
any purpose of the laws of the State of Delaware. (72 Del. Laws, c. 151, § 1;
72 Del. Laws, c. 390, §§ 32, 33; 73 Del. Laws, c. 85, § 18; 74 Del. Laws, c.
103, §§ 13-16; 74 Del. Laws, c. 266, §§ 14, 15; 75 Del. Laws, c. 50, § 25.)

Subchapter X. Limited Liability Partnership
§ 15-1001. Statement of qualification of a domestic partnership.
(a) A domestic partnership may be formed as, or may become, a limited liability
partnership pursuant to this section.
(b) In order to form a limited liability partnership, the original partnership
agreement of the partnership shall state that the partnership is formed as a
limited liability partnership, and the partnership shall file a statement of
qualification in accordance with subsection (c) of this section. In order for an
existing partnership to become a limited liability partnership, the terms and
conditions on which the partnership becomes a limited liability partnership
must be approved by the vote necessary to amend the partnership agreement
and, in the case of a partnership agreement that expressly considers
obligations to contribute to the partnership, also the vote necessary to amend
those provisions, and after such approval, the partnership shall file a
statement of qualification in accordance with subsection (c) of this section.
(c) The statement of qualification must contain:
(1) The name of the partnership;
(2) The address of the registered office and the name and address of the
registered agent for service of process required to be maintained by
Section 15-111 of this chapter;
(3) The number of partners of the partnership;
(4) A statement that the partnership elects to be a limited liability
partnership; and

194

(5) The future effective date or time (which shall be a date or time
certain) of the statement of qualification if it is not to be effective upon
the filing of the statement of qualification.
(d) The status of a partnership as a limited liability partnership is effective on the
later of the filing of the statement of qualification or a future effective date or
time specified in the statement of qualification. The status as a limited liability
partnership remains effective, regardless of changes in the partnership, until it
is canceled pursuant to Section 15-105(d) of this chapter or revoked pursuant
to Section 15-1003 of this chapter.
(e) A partnership is a limited liability partnership if there has been substantial
compliance with the requirements of this subchapter. The status of a
partnership as a limited liability partnership and the liability of its partners is
not affected by errors or later changes in the information required to be
contained in the statement of qualification under subsection (c).
(f) The filing of a statement of qualification establishes that a partnership has
satisfied all conditions precedent to the qualification of the partnership as a
(g) An amendment or cancellation of a statement of qualification is effective when
it is filed or on a future effective date or time specified in the amendment or
cancellation.
(h) If a person is included in the number of partners of a limited liability
partnership set forth in a statement of qualification, a statement of foreign
qualification or an annual report, the inclusion of such person shall not be
admissible as evidence in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, for the purpose of determining
whether such person is liable as a partner of such limited liability partnership.
The status of a partnership as a limited liability partnership and the liability of
a partner of such limited liability partnership shall not be adversely affected if
the number of partners stated in a statement of qualification, a statement of
foreign qualification or an annual report is erroneously stated provided that
the statement of qualification, the statement of foreign qualification or the
annual report was filed in good faith.
(i) Notwithstanding anything in this chapter to the contrary, a domestic
partnership having, or that but for its election in accordance with § 15-
1206(c) of this chapter, would have had, on December 31, 2001, the status of
a registered limited liability partnership under predecessor law, shall have the
status of a limited liability partnership under this chapter as of January 1,
2002, and to the extent such partnership has not filed a statement of
qualification pursuant to this section, the latest application or renewal
application filed by such partnership under such predecessor law shall
constitute a statement of qualification filed under this section. (72 Del. Laws,
c. 151, § 1; 73 Del. Laws, c. 223, § 2; 75 Del. Laws, c. 50, §§ 26-29.)

§ 15-1002. Name.
The name of a limited liability partnership shall comply with Section 15-108 of this
chapter. (72 Del. Laws, c. 151, § 1.)

§ 15-1003. Annual report.
(a) A limited liability partnership, and a foreign limited liability partnership
authorized to transact business in the State of Delaware, shall file an annual
report with the Secretary of State which contains:

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(1) the name of the limited liability partnership and the state or other
jurisdiction under whose laws the foreign limited liability partnership is
formed and the number of partners of the partnership; and
(2) the address of the registered office and the name and address of the
Section 15-111 of this chapter.
(b) An annual report must be filed by June 1 of each year following the calendar
year in which a statement of qualification filed by a partnership becomes
effective or a foreign partnership becomes authorized to transact business in
the State of Delaware.
(c) On or before March 31 of each year, the Secretary of State shall mail to each
partnership at its registered office set forth in the last filed statement of
qualification or statement of foreign qualification or annual report a notice
specifying that the annual report together with applicable fees shall be due on
June 1 of the current year and stating that the statement of qualification or
statement of foreign qualification of the partnership shall be deemed to be
revoked unless such report is filed and such filing fee is paid on or before June
1 of the following year. The Secretary of State shall not issue a certificate of
good standing with respect to any partnership which has not filed an annual
report and paid the required filing fee pursuant to this section. The statement
of qualification or statement of foreign qualification of any such partnership
that fails to file such annual report or pay such required filing fee on or before
June 1 of the following year shall be deemed to be revoked.
(d) A revocation under subsection (c) only affects a partnership's status as a
limited liability partnership and is not an event of dissolution of the
partnership.
(e) A partnership whose statement of qualification or statement of foreign
qualification has been revoked pursuant to subsection (c) may apply to the
Secretary of State for reinstatement after the effective date of the revocation.
The application must state:
(1) the name of the partnership and the effective date of the revocation;
and
(2) that the ground for revocation either did not exist or has been corrected.
(f) A reinstatement under subsection (e) relates back to and takes effect as of
the effective date of the revocation, and the partnership's status as a limited
liability partnership continues as if the revocation had never occurred. (72
Del. Laws, c. 151, § 1; 73 Del. Laws, c. 223, § 3; 75 Del. Laws, c. 50, §§ 30,
31.)

Subchapter XI. Foreign Limited Liability Partnership
§ 15-1101. Law governing foreign limited liability partnership.
(a) The law under which a foreign limited liability partnership is formed governs
relations among the partners and between the partners and the partnership
and the liability of partners for obligations of the partnership.
(b) A foreign limited liability partnership may not be denied a statement of foreign
qualification by reason of any difference between the law under which the
partnership was formed and the law of the State of Delaware.
(c) A statement of foreign qualification does not authorize a foreign limited
liability partnership to engage in any business or exercise any power that a
partnership may not engage in or exercise in the State of Delaware as a
limited liability partnership. (72 Del. Laws, c. 151, § 1.)

196

§ 15-1102. Statement of foreign qualification.
(a) Before doing business in the State of Delaware, a foreign limited liability
partnership shall register with the Secretary of State by filing a statement of
foreign qualification. The statement of foreign qualification must contain:
(1) the name of the foreign limited liability partnership which satisfies the
requirements of the State or other jurisdiction under whose law it is
formed and ends with the words "Registered Limited Liability
Partnership" or "Limited Liability Partnership," the abbreviation
"R.L.L.P." or "L.L.P." or the designation "RLLP" or "LLP";
(2) the address of the registered office and the name and address of the
Section 15-111 of this chapter;
(3) the number of partners of the partnership; and
(4) the future effective date or time (which shall be a date or time certain)
of the statement of foreign qualification if it is not to be effective upon
the filing of the statement of foreign qualification.
(b) The status of a partnership as a foreign limited liability partnership is effective
on the later of the filing of the statement of foreign qualification or the future
effective date or time specified in the statement of foreign qualification. The
status re mains effective, regardless of changes in the partnership, until it is
canceled pursuant to Section 15-105(d) of this chapter or revoked pursuant to
Section 15-1003 of this chapter.
(c) An amendment or cancellation of a statement of foreign qualification is
effective when it is filed or on the future effective date or time specified in the
amendment or cancellation. (72 Del. Laws, c. 151, § 1.)

§ 15-1103. Effect of failure to qualify.
(a) A foreign limited liability partnership doing business in the State of Delaware
may not maintain an action or proceeding in the State of Delaware until it has
in effect a statement of foreign qualification and has paid to the State of
Delaware all fees and penalties for the years or parts thereof during which it
did business in the State of Delaware without such qualification.
(b) The failure of a foreign limited liability partnership to have in effect a
statement of foreign qualification does not impair the validity of a contract or
act of the foreign limited liability partnership or preclude it from defending an
action or proceeding in the State of Delaware or does not impair the right of
any other party to a contract to maintain any action, suit or proceeding on the
contract.
(c) A limitation on personal liability of a partner is not waived solely by doing
business in the State of Delaware without a statement of foreign qualification
having been filed.
(d) If a foreign limited liability partnership does business in the State of Delaware
without a statement of foreign qualification having been filed, the Secretary of
State is its agent for service of process with respect to a right of action arising
out of the doing of business in the State of Delaware and service of process
may be made in accordance with the procedures set forth in Section 15-113
of this chapter. (72 Del. Laws, c. 151, § 1.)

§ 15-1104. Activities not constituting doing business.
(a) Activities of a foreign limited liability partnership in the State of Delaware
which do not constitute doing business for the purpose of this subchapter
include:
(1) Maintaining, defending or settling an action or proceeding;

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(2) Holding meetings of its partners or carrying on any other activity
concerning its internal affairs;
(3) Maintaining bank accounts;
(4) Maintaining offic es or agencies for the transfer, exchange or registration
of the partnership's own securities or maintaining trustees or
depositories with respect to those securities;
(5) Selling through independent contractors;
(6) Soliciting or obtaining orders, whether by mail or through employees or
agents or otherwise, if the orders require acceptance outside the State
of Delaware before they become contracts;
(7) Selling, by contract consummated outside the State of Delaware, and
agreeing, by the contract, to deliver into the State of Delaware,
machinery, plants or equipment, the construction, erection or
installation of which within the State of Delaware requires the
supervision of technical engineers or skilled employees performing
services not generally available, and as part of the contract of sale
agreeing to furnish such services, and such services only, to the vendee
at the time of construction, erection or installation;
(8) Creating, as borrower or lender, or acquiring indebtedness with or
without a mortgage or other security interest in property;
(9) Collecting debts or foreclosing mortgages or other security interests in
property securing the debts, and holding, protecting and maintaining
property so acquired;
(10) Conducting an isolated transaction that is not one in the course of
similar transactions;
(11) Doing business in interstate commerce; and
(12) Doing business in the State of Delaware as an insurance company.
(b) A person shall not be deemed to be doing business in the State of Delaware
solely by reason of being a partner in a partnership.
(c) This section does not apply in determining whether a foreign limited liability
partnership is subject to service of process, taxation or regulation under any
other law of the State of Delaware. (72 Del. Laws, c. 151, § 1; 75 Del. Laws,
c. 50, §§ 32-37.)

§ 15-1105. Foreign limited liability partnerships doing business without
having qualified; injunctions.
(a) The Court of Chancery shall have jurisdiction to enjoin any foreign limited
liability partnership, or any agent thereof, from doing any business in the
State of Delaware if such foreign limited liability partnership has failed to
register under this subchapter or if such foreign limited liability partnership's
statement of foreign qualification contains false or misleading
representations. The Attorney General shall, upon his own motion or upon the
relation of proper parties, proceed for this purpose by complaint in any county
in which such foreign limited liability partnership is doing or has done
business.
(b) Any foreign limited liability partnership doing business in the State of
Delaware without first having registered shall pay to the Secretary of State a
fee of $200 for each year or part thereof during which the foreign limited
liability partnership failed to register in the State of Delaware. (72 Del. Laws,
c. 151, § 1; 70 Del. Laws, c. 186, § 1.)

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Subchapter XII. Miscellaneous Provisions
§ 15-1201. Uniformity of application and construction.
This chapter shall be applied and construed to effectuate its general purpose to make
uniform the law with respect to the subject of this chapter among states enacting it.
The rule that statutes in derogation of the common law are to be strictly construed
shall have no application to this chapter. (72 Del. Laws, c. 151, § 1.)

§ 15-1202. Short title.
This chapter may be cited as the Delaware Revised Uniform Partnership Act. (72 Del.
Laws, c. 151, § 1.)

§ 15-1203. Severability clause.
If any provision of this chapter or its application to any person or circumstance is
held invalid, the invalidity does not affect other provisions or applications of this
chapter which can be given effect without the invalid provision or application, and to
this end the provisions of this chapter are severable. (72 Del. Laws, c. 151, § 1.)

§ 15-1204. Effective date.
This chapter takes effect January 1, 2000. (72 Del. Laws, c. 151, § 1.)

§ 15-1205. Repeals.
Except with respect to limited partnerships (see 6 Del. C. § 17-1105), effective
January 1, 2002, the Delaware Uniform Partnership Law, 6 Del. C. § 1501 -- § 1553
is repealed. (72 Del. Laws, c. 151, § 1.)

§ 15-1206. Applicability.
(a) Before January 1, 2002, this chapter governs only a partnership formed:
(1) after the effective date of this chapter, except a partnership that is
continuing the business of a dissolved partnership under 6 Del. C. §
1541; and
(2) before the effective date of this chapter, that elects, as provided by
subsection (c), to be governed by this chapter.
(b) On and after January 1, 2002, this chapter governs all partnerships.
(c) Before January 1, 2002, a partnership voluntarily may elect, in the manner
provided in its partnership agreement or by law for amending the partnership
agreement, to be governed by this chapter. The provisions of this chapter
relating to the liability of the partnership's partners to third parties apply to
limit those partners' liability to a third party who had done business with the
partnership within one year before the partnership's election to be governed
by this chapter only if the third party knows or has received a notification of
the partnership's election to be governed by this chapter. (72 Del. Laws, c.
151, § 1.)

§ 15-1207. Fees.
(a) No document required to be filed under this chapter shall be effective until the
applicable fee required by this section is paid. The following fees shall be paid
to and collected by the Secretary of State for the use of the State of
Delaware:
(1) Upon the receipt for filing of any statement or certificate, a fee in the
amount of $100.00.

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(2) Upon the receipt for filing of an application for reservation of name, an
application for renewal of reservation or a notice of transfer or
cancellation of reservation pursuant to Section 15-109 of this chapter, a
fee in the amount of $75.
(3) Upon the receipt for filing of a statement of qualification, a statement of
foreign qualification or an annual report for a limited liability partnership
or a foreign limited liability partnership, a fee in the amount of $200 for
each partner, but in no event shall the fee payable for any year with
respect to a limited liability partnership or a foreign limited liability
partnership under this section be more than $120,000.
(4) For certifying copies of any paper on file as provided for by this chapter,
a fee in the amount of $30 for each copy certified.
(5) The Secretary of State may issue photocopies or electronic image copies
of instruments on file, as well as instruments, documents and other
papers not on file, and for all such photocopies or electronic image
copies, whether certified or not, a fee of $10 shall be paid for the first
page and $2 for each additional page. The Secretary of State may also
issue microfiche copies of instruments on file as well as instruments,
documents and other papers not on file, and for each such microfiche a
fee of $2 shall be paid therefor. Notwithstanding the State of Delaware's
Freedom of Information Act ›Chapter 100 of Title 29| or other provision
of this Code granting access to public records, the Secretary of State
shall issue only photocopies, microfiche or electronic image copies of
records in exchange for the fees described above.
(6) Upon the receipt for filing of a certificate under Section 15-111(b) of this
chapter, a fee in the amount of $50, upon the receipt for filing of a
certificate under Section 15-111(c) of this chapter, a fee in the amount
of $50 and a further fee of $2 for each partnership affected by such
certificate, and upon the receipt for filing of a certificate under Section
15-111(d) of this chapter, a fee in the amount of $10.
(7) For preclearance of any document for filing, a fee in the amount of
$250.
(8) For preparing and providing a written report of a record search, a fee in
the amount of $30.
(9) For issuing any certificate of the Secretary of State, including but not
limited to a certificate of good standing, other than a certification of a
copy under paragraph (2) of this subsection, a fee in the amount of $30,
except that for issuing any certificate of the Secretary of State that
recites all of a partnership's filings with the Secretary of State, a fee of
$125 shall be paid for each such certificate.
(10) For receiving and filing and/or indexing any certificate, affidavit,
agreement or any other paper provided for by this chapter, for which no
different fee is specifically prescribed, a fee in the amount of $50.
(11) The Secretary of State may in the Secretary of State's discretion charge
a fee of $60 for each check received for payment of any fee that is
returned due to insufficient funds or the result of a stop payment order.
(b) In addition to those fees charged under subsection (a) of this section, there
shall be collected by and paid to the Secretary of State the following:
(1) For all services described in subsection (a) of this section that are
requested to be completed within 1 hour on the same day as the day of
the request, an additional sum of up to $1,000 and for all services
described in subsection (a) of this section that are requested to be

200

completed within 2 hours on the same day as the day of the request, an
additional sum of up to $500;
requested to be completed within the same day as the day of the
request, an additional sum of up to $200; and
requested to be completed within a 24-hour period from the time of the
request, an additional sum of up to $100.
The Secretary of State shall establish (and may from time to time
amend) a schedule of specific fees payable pursuant to this subsection.
(c) The Secretary of State may in the Secretary of State's discretion permit the
extension of credit for the fees required by this section upon such terms as
the Secretary of State shall deem to be appropriate.
(d) The Secretary of State shall retain from the revenue collected from the fees
required by this section a sum sufficient to provide at all times a fund of at
least $500, but not more than $1,500, from which the Secretary of State may
refund any payment made pursuant to this section to the extent that it
exceeds the fees required by this section. The funds shall be deposited in a
financial institution which is a legal depository of State of Delaware moneys to
the credit of the Secretary of State and shall be disbursable on order of the
Secretary of State.
(e) Except as provided in this section, the fees of the Secretary of State shall be
as provided in Section 2315 of Title 29. (72 Del. Laws, c. 151, § 1; 74 Del.
Laws, c. 52, §§ 5-11.)

§ 15-1208. Annual tax of partnership.
(a) Every partnership that has filed a statement of partnership existence shall pay
an annual tax, for the use of the State of Delaware, in the amount of $200.
(b) The annual tax shall be due and payable on the first day of June following the
close of the calendar year or upon the cancellation of a statement of
partnership existence. The Secretary of State shall receive the annual tax and
pay over all taxes collected to the Department of Finance of the State of
Delaware. If the annual tax remains unpaid after the due date established by
subsection (d) of this section, the tax shall bear interest at the rate of 1 1/2%
for each month or portion thereof until fully paid.
(c) The Secretary of State shall, at least 60 days prior to the first day of June of
each year, cause to be mailed to each partnership required to comply with the
provisions of this section in care of its registered agent in the State of
Delaware an annual statement for the tax to be paid hereunder.
(d) In the event of neglect, refusal or failure on the part of any partnership to pay
the annual tax to be paid hereunder on or before the first day of June in any
year, such partnership shall pay the sum of $100 to be recovered by adding
that amount to the annual tax, and such additional sum shall become a part of
the tax and shall be collected in the same manner and subject to the same
penalties.
(e) In case any partnership shall fail to pay the annual tax due within the time
required by this section, and in case the agent in charge of the registered
office of any partnership upon whom process against such partnership may be
served shall die, resign, refuse to act as such, remove from the State of
Delaware or cannot with due diligence be found, it shall be lawful while default
continues to serve process against such partnership upon the Secretary of
State. Such service upon the Secretary of State shall be made in the manner

201

and shall have the effect stated in Section 15-113 of this chapter in the case
of a partnership and shall be governed in all respects by said sections.
(f) The annual tax shall be a debt due from a partnership to the State of
Delaware, for which an action at law may be maintained after the same shall
have been in arrears for a period of one month. The tax shall also be a
preferred debt in the case of insolvency.
(g) A partnership that neglects, refuses or fails to pay the annual tax when due
shall cease to be in good standing as a partnership in the State of Delaware.
(h) A partnership that has ceased to be in good standing by reason of the failure
to pay an annual tax shall be restored to and have the status of a partnership
in good standing in the State of Delaware upon the payment of the annual tax
and all penalties and interest thereon for each year for which such partnership
neglected, refused or failed to pay an annual tax.
(i) The Attorney General, either on his own motion or upon request of the
Secretary of State, whenever any annual tax due under this chapter from any
partnership shall have remained in arrears for a period of 3 months after the
tax shall have become payable, may apply to the Court of Chancery, by
petition in the name of the State of Delaware, on 5 days' notice to such
partnership, which notice may be served in such manner as the Court may
direct, for an injunction to restrain such partnership from the transaction of
any business within the State of Delaware or elsewhere, until the payment of
the annual tax, and all penalties and interest due thereon and the cost of the
application, which shall be fixed by the Court. The Court of Chancery may
grant the injunction, if a proper case appears, and upon granting and service
of the injunction, such partnership thereafter shall not transact any business
until the injunction shall be dissolved.
(j) A partnership that has ceased to be in good standing by reason of its neglect,
refusal or failure to pay an annual tax shall remain a partnership formed
under this chapter. The Secretary of State shall not accept for filing any
certificate (except a certificate of resignation of a registered agent when a
successor registered agent is not being appointed) required or permitted by
this chapter to be filed in respect of any partnership which has neglected,
refused or failed to pay an annual tax, and shall not issue any certificate of
good standing with respect to such partnership, unless and until such
partnership shall have been restored to and have the status of a partnership
in good standing in the State of Delaware.
(k) A partnership that has ceased to be in good standing in the State of Delaware
by reason of its neglect, refusal or failure to pay an annual tax may not
maintain any action, suit or proceeding in any court of the State of Delaware
until such partnership has been restored to and has the status of a
partnership in good standing in the State of Delaware. An action, suit or
proceeding may not be maintained in any court of the State of Delaware by
any successor or assignee of such partnership on any right, claim or demand
arising out of the transaction of business by such partnership after it has
ceased to be in good standing in the State of Delaware until such partnership,
or any person that has acquired all or substantially all of its assets, has paid
any annual tax then due and payable, together with penalties and interest
thereon.
(l) The neglect, refusal or failure of a partnership to pay an annual tax shall not
impair the validity of any contract, deed, mortgage, security interest, lien or
act of such partnership or prevent such partnership from defending any
action, suit, or proceeding in any court of the State of Delaware. (72 Del.
Laws, c. 151, § 1; 70 Del. Laws, c. 186, § 1; 74 Del. Laws, c. 52, § 12.)

202

§ 15-1209. Cancelation of statement of partnership existence for failure to
pay annual tax.
(a) The statement of partnership existence of a partnership shall be deemed to be
canceled if the partnership shall fail to pay the annual tax due under Section
15-1208 of this chapter for a period of three years from the date it is due,
such cancellation to be effective on the third anniversary of such due date.
(b) A list of those partnerships whose statement of partnership existence were
canceled on June 1 of such calendar year pursuant to § 15-1209(a) of this
title shall be filed in the office of the Secretary of State. On or before October
31 of each calendar year, the Secretary of State shall publish such list on the
Internet or on a similar medium for a period of 1 week and shall advertise the
website or other address where such list can be accessed in at least 1
newspaper of general circulation in the State of Delaware.
(c) A partnership whose statement of partnership existence has been canceled
and has not been revived pursuant to § 15-1210 of this title shall be deemed,
from the date such cancellation became effective, to be a partnership that has
not filed a statement of partnership existence. (72 Del. Laws, c. 151, § 1; 73
Del. Laws, c. 296, § 9; 75 Del. Laws, c. 50, § 38.)

§ 15-1210. Revival of statement of partnership existence.
(a) A statement of partnership existence that has been canceled pursuant to
Section 15-111(d) or Section 15-1209(a) of this chapter may be revived by
filing in the office of the Secretary of State a certificate of revival
accompanied by the payment of the fee required by Section 15-1207 of this
chapter and payment of the annual tax due under Section 15-1208 of this
chapter and all penalties and interest thereon for each year for which such
partnership neglected, refused or failed to pay such annual tax, including
each year between the cancellation of its statement of partnership existence
and its revival. The certificate of revival shall set forth:
(1) The name of the partnership at the time its statement of partnership
existence was canceled and, if such name is not available at the time of
revival, the name under which the partnership is to be revived;
(2) The date of filing of the original statement of partnership existence of
the partnership;
(3) The address of the partnership's registered office in the State of
Delaware and the name and address of the partnership's registered
agent in the State of Delaware;
(4) A statement that the certificate of revival is filed by one or more
partners of the partnership authorized to execute and file the certificate
of revival to revive the partnership; and
(5) Any other matters the partner or partners executing the certificate of
revival determine to include therein.
(b) The certificate of revival shall be deemed to be an amendment to the
statement of partnership existence of the partnership, a nd the partnership
shall not be required to take any further action to amend its statement of
partnership existence under Section 15-105 of this chapter with respect to the
matters set forth in the certificate of revival.
(c) Upon the filing of a certificate of revival, the statement of partnership
existence of the partnership shall be revived with the same force and effect as
if its statement of partnership existence had not been canceled pursuant to
Section 15-111(d) or Section 15-1209(a) of this chapter. (72 Del. Laws, c.
151, § 1; 75 Del. Laws, c. 50, §§ 39-41.)

203

CHAPTER 3: LIMITED LIABILITY PARTNERSHIP LAWS IN THE CHANNEL
ISLAND OF JERSEY

3.0 Introduction
Globalization has accelerated the race-to-the-bottom by freeing capital from the
prison of territorial boundaries. In pursuit of higher profits and lower social
obligations, capital roams the world to secure favourable trading conditions. Some
business enterprises have become so powerful that they make legislative and
political demands upon governments with the threat that if their demands are not
met they will cause social turbulence by uprooting and locating in other places. Such
tendencies have been further encouraged by the rise of the microstates, or Offshore
Financial Centres (OFCs) that provide secrecy, minimalist regulation, and a
willingness to enact laws with the sole purpose of getting around the laws of other
countries.3 1

As a significant fraction of international capital, major accountancy firms also have
incentives to reduce costs, liabilities and social obligations. They can also use OFCs
to secure favourable trading conditions and squeeze concessions from major nation
states. However, little is known about such strategies.3 2

The Channel Island of Jersey 3 3 is a British Crown Dependency3 4 . In 1997, Jersey
enacted the Limited Liability Partnership (Jersey) Law 1997 (See Annexure 1). The
driving force that led to the codification of the legislation was that the major
Accountancy firms in UK were facing a number of high profile lawsuits arising out of
real/alleged audit failures. But even after their long campaign, they could not secure
liability concessions from the UK government. As a result they approached the Jersey
Authorities in mid 1990s to enact similar legislation3 5 .

The Jersey LLP Bill was drafted by Ernst & Young and Price Waterhouse (now part of
PricewaterhouseCoopers), at a private cost of more than £1 million 3 6 and was
designed to dilute ‘joint and several’ liability and reduce the redress available to
audit stakeholders 3 7 . To secure business, Ernst & Young and Price Waterhouse
portrayed themselves as fierce rivals, but in pursuit of lower liabilities and dilution of
third party rights they co-operated and developed a joint strategy. Jersey hoped to
financially gain from its LLP legislation in the hope that the lower liability obligations
would attract major firms to locate there and improve government finances by
paying annual registration levies.

31
Prem Sikka, Globalisation and its discontents: Accounting firms buy Limited Liability Partnership
Legislation in Jersey.
32
Ibid.
33
The Channel Islands consist of five islands. These are Jersey, Guernsey, Sark, Herm and Alderney.
Jersey is by the far the largest of these islands. Each island has its own government. Jersey is a
parliamentary democracy and a dependency of the British Crown. It is not part of the United Kingdom, nor
is it a colony. Her Majesty Queen Elizabeth II of the UK is the Head of State of Jersey. The Lieutenant
Governor represents the Sovereign in the Island. While Jersey makes its own laws, it has pledged
allegiance to the English Crown since 1066.
34
http://www.cia.gov/cia/publications/factbook/geos/je.html
35
Cousins et al, 1999.
36
The Accountant, November 1996, p. 5
37
Globalization and its discontents: Accounting firms buy limited liability partnership legislation in Jersey
by Prem Sikka, University of Essex

204

The Bill was “championed by the Island’s leading politicians” 3 8 who also promised to
‘fast track’ it, effectively displacing the previously agreed legislative programme 3 9
persuading some to conclude that Jersey was offering its ‘legislature for hire’4 0 to
enable major accountancy firms (or international capital) to hold other nation-states
(e.g. the UK) to ransom. The approach to Jersey was accompanied by a threat that if
the British government failed to match the liability concessions, the firms would
relocate their operations to Jersey4 1 . The threat was sufficient to discipline the UK
government and it promised similar legislation “within a week” 4 2 . The UK
government eventually enacted the LLP legislation and the firms did not register in
Jersey.

A member of Jersey parliament described the externally drafted legislation as “not
offshore tax avoidance, on which our finance industry is built, but offshore liability
avoidance”4 3 .

The Limited Liability Partnership (Jersey) Law 1997 extends the concept of limited
liability for partners to those partners who are actively involved in the business of
the partnership. It is considered that, Jersey incorporated Limited Liability
Partnerships (LLPs) appeal to substantial professional partnerships around the world,
and mitigates unlimited liability for losses arising from negligence claims against
their partnerships. 4 4

As per the Jersey Law, an LLP is required to pay a £10,000 as registration fee, which
makes it affordable only to businesses of stature. The Act classifies partners as
‘partners’ and ‘designated partners’. Every LLP must also have a registered office in
Jersey at which it must maintain those records specified in Article 8(4) of the law,
which shall be available for inspection by partners. The names and addresses of all
the partners of an LLP will be a matter of public record. However, LLPs will not be
required to file partnership agreement, accounts or to have their accounts audited;
they must, however, maintain proper accounting records.

On a closer look at the provisions of the law, one finds that the provisions are
somewhat similar to legislation in the State of Delaware (US). The law allows
partners to take an active part in the management of a partnership whilst retaining
their own individual limited liability. Every LLP is required to make a £5 million
provision for judgments against the partnership and to compensate creditors. This
financial provision against debts and liabilities of the partnership are required to be
maintained throughout the life of the partnership and not permitted to be made the
subject of a security or set-off4 5 .

Despite actually having a separate legal personality, the Jersey limited liability
partnership is treated as a partnership for taxation purposes. It is rather fiscally
transparent i.e. tax is levied on the individual partner’s share of profits rather than
the overall partnership profit. In this respect the Jersey LLP is also similar to the
Scottish general partnership structure.

38
Financial Times, 26 September 1996, p. 7
39
Accountancy, September 1996, p. 29
40
Hampton and Christensen, 1999a
41
Cousins et al., 1998
42
Financial Times, 28 June 1996, p. 22; 24 July 1996, p. 9
43
Jersey Evening Post, 25 July 1996, p. 1
44
http://www.volaw.com/pg405.htm
45
http://www.volaw.com/pg405.htm

205

There will be no restrictions on the LLP making distributions to its partners. However,
each distribution will, of course, be repayable if the LLP is insolvent at the time that
the distribution is made or becomes insolvent as a result of the payment.

A partner will be able to contribute to the business of the partnership, provided that
he does so as an agent of the partnership (Article 15 (2)) rather than as agent of the
other partners, as is usual in a partnership structure. The law provides that partners
will not bind the partnership if they are acting outside the ordinary course of
business of the LLP and without express authority of the LLP. Since partners are not
deemed to be agents of the other partners, they are not liable for any loss caused by
another partner’s negligence.

There will be no limit to the number of persons that may be partners of an LLP. The
partnership will be open to any person who is willing to contribute effort and skill to
the business of the LLP. Equally companies and other limited liability vehicles may
become partners in an LLP.

The law provides that an LLP will be a distinct legal person separate from its
partners. Such identity will not be affected by the admission or retirement of a
partner. An LLP will be able to sue and be sued in its own name and will be able to
own and dispose of all forms of property. However, if the number of its partners falls
below two or the LLP is declared bankrupt it will automatically be dissolved.

Detailed provisions are included in the law for the winding-up of LLPs. An LLP may be
dissolved by an act of the partners or, on application by a partner, by the Royal
Court on the grounds that the conduct of another partner is prejudicial to the
carrying on of the partnership’s business; or otherwise, in circumstances where it
would be just and equitable to do so. There is a provision in the draft law for
regulations to be made concerning the winding-up of insolvent LLPs.

Many professional partnerships in Jersey appear to believe that an LLP is a more
satisfactory way to deal with litigation risk than the alternative of incorporation as a
limited liability company. There is no doubt that operating a professional firm
through an LLP as opposed to a limited liability company requires fewer changes in
business culture and less disclosure of previously confidential information; yet at the
same time provide individual partners with protection of their assets against 'deep
pocket' style litigation. 4 6

46
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ANNEXURE 1

JERSEY LAW 3/1997

LIMITED LIABILITY PARTNERSHIPS (JERSEY) LAW 1997
____________

ARRANGEMENT OF ARTICLES
____________

PART I

PRELIMINARY

1. Interpretation.

PART II

ESSENTIALS OF A LIMITED LIABILITY PARTNERSHIP

2. Limited liability partnership.
3. Limited liability partnership property.
4. Liability of a limited liability partnership.
5. Liability of a partner or former partner in a limited liability
partnership.
6. Requirement for and payment of financial provision.
7. Name of limited liability partnership.
8. Registered office.
9. Accounts and audit.
10. Keeping and form of limited liability partnership records.

PART III

RELATIONS OF PARTNERS IN A LIMITED LIABILITY PARTNERSHIP WITH ONE
ANOTHER AND THIRD PARTIES

11. Relations of partners to one another.
12. Dealings by partners with limited liability partnership.
13. Admission and retirement of partners.
14. Assignments, etc.
15. Agency of partner in a limited liability partnership.

PART IV

REGISTRATION OF A LIMITED LIABILITY PART NERSHIP

16. Registration of a limited liability partnership.

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17. Amendment of declaration.
18. Annual declaration.
19. Validity and proof of registration.

PART V

DISSOLUTION AND WINDING UP ETC.

20. Dissolution upon a change in the partners in a partnership.
21. Dissolution upon partnership ceasing to have two or more
partners.
22. Dissolution by act of partner or other occurrence.
23. Power of Court to order dissolution.
24. Continuation of partnership following dissolution.
25. Winding up.
26. Power of Court to give directions as to winding up.
27. Application of financial provision.
28. Settling accounts on winding up.
29. Completion of winding up.
30. Effect of declaration that a partnership is “en désastre”.
31. Cancellation of registration following winding up etc.

PART VI

MISCELLANEOUS AND GENERAL

32. Recognition of proceedings in other jurisdictions.
33. Legal proceedings.
34. Service of documents.
35. Order for compliance.
36. Appointment and functions of registrar.
37. Fees and forms.
38. Inspection and production of documents kept by registrar.
39. Destruction of old records, etc.
40. Registration in the Public Registry.
41. Offences.
42. Aiders and abettors.
43. Penalty for offences.
44. Regulations relating to insolvent limited liability partnerships.
45. Regulations to amend Article 6.
46. Orders.
47. Rules of court.
48. Consequential amendments.
49. Customary Law.
50. Short title and commencement.
SCHEDULE - Amendment of enactments.

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LIMITED LIABILITY PARTNERSHIPS (JERSEY) LAW 1997
____________

A LAW to make provision for the establishment, dissolution and winding up of
limited liability partnerships, for their registration and for connected
purposes, sanctioned by Order of Her Majesty in Council of the
19th day of NOVEMBER 1996

____________

(Registered on the 10th day of January 1997)

____________

STATES OF JERSEY

____________

The 24th day of September 1996

____________

THE STATES, subject to the sanction of Her Most Excellent Majesty in
Council, have adopted the following Law –

PART I

PRELIMINARY

ARTICLE 1

Interpretation

(1) In this Law, unless the context otherwise requires –

“act” includes omission;

“annual declaration” shall be construed in accordance with Article 18;

“bank” means a person registered under the Banking Business (Jersey) Law 19911 ;

“charge” includes a security interest created in accordance with the Security
Interests (Jersey) Law 19832 , and cognate terms shall be construed accordingly;

“the Committee” means the Finance and Economics Committee;

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“the Court” means the Royal Court;

“debt” includes obligation;

“declaration” means a declaration delivered to the registrar pursuant to Article 16
together with any statement delivered to the registrar pursuant to Article 17 or
paragraph (2) of Article 24 specifying a change in the information stated in it;

“designated partner” means, in relation to a limited liability partnership, any partner
identified as such in the declaration or, if none, the partner whose name first appears
in the statement of partners in the declaration;

“insolvent” shall be construed in accordance with paragraph (2);

“insurance company” means a company carrying on insurance business in
accordance with the requirements of the Insurance Business (Jersey) Law 1996;3

“limited liability partnership” shall be construed in accordance with Article 2;

“limited liability partnership property” has the meaning given to it in paragraph (1) of
Article 3.

“loss” includes damage and injury;

“partner” means, in relation to a limited liability partnership, any person who is a
partner in that partnership and named as such in the declaration;

“partnership agreement” means any agreement of the partners as to the affairs of a
limited liability partnership and the rights and obligations of the partners among
themselves;

“partnership interest” means, in relation to a partner in a limited liability partnership,
his share of the profits and losses of the partnership and his right to receive
distributions of the limited liability partnership property, including any sum due to
him and for the time being retained in the partnership otherwise than by way of a
loan, together with any other benefit conferred by the partnership agreement other
than any liability of the partnership to him by way of loan;

“prescribed” means prescribed by Order made by the Committee;

“property” means land, money, goods, things in action, goodwill, and every valuable
thing, whether movable or immovable, and whether situated in the Island or
elsewhere, and also means obligations, servitudes, and every description of estate,
interest, and profit, present or future, vested or contingent, arising out of or incident
to property;

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“register” means the register maintained pursuant to paragraph (2) of Article 36;

“registrar” shall be construed in accordance with paragraph (1) of Article 36 and “his
seal” in relation to the registrar means a seal prepared under that Article;

“registration date” means, in relation to a limited liability partnership, the date
specified in the certificate issued pursuant to paragraph (5) of Article 16;

“retirement” means any act or occurrence whereby a person ceases to be a partner
in a limited liability partnership, other than by, where the person is an individual, his
death or, where the person is not an individual, its ceasing to exist.

(2) For the purposes of this Law, a limited liability partnership is insolvent if it is
unable to discharge its debts, including any liability to a partner or former
partner by way of loan but excluding any liability to a partner or former
partner in respect of his partnership interest or otherwise, as they fall due.

(3) For the purposes of this Law, any reference to a loan includes any payment of
interest on the loan which has fallen due.

(4) In this Law, where a limited liability partnership has more than one
designated partner –

(a) any thing that the designated partner is required by this Law to do may
be done by any one of the designated partners; and

(b) any thing which constitutes an offence by the designated partner under
this Law constitutes an offence by each of the designated partners.

(5) Where more than one person is responsible for winding up the affairs of a
limited liability partnership, paragraph (4) shall have effect in relation to the
persons responsible for winding up the affairs of the limited liability
partnership as it has effect in relation to designated partners.

(6) In this Law, except as provided in paragraph (8) of Article 6, any reference to
the person responsible for winding up the affairs of a limited liability
partnership shall be construed as a reference to the person so responsible by
virtue of paragraph (1) or (2) of Article 25 or paragraph (5) of Article 32.

(7) In this Law, any requirement to give the name and address of any person
shall be construed as a requirement to give –

(a) where the person is an individual, his full name and an address for
service in the Island;

(b) where the person is a body corporate, its full name, the place where it is
incorporated, and its registered office;

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(c) where the person is a limited liability partnership, its name, as it appears
in its declaration, and its registered office; and

in any other case its full name and principal place of business.

(8) A reference in this Law to an Article by number only, and without further
identification, is a reference to the Article of that number contained in this Law.

(9) A reference in an Article or other division of this Law to a paragraph, sub-
paragraph or clause by number or letter only, and without further identification,
is a reference to the paragraph, sub-paragraph or clause of that number or letter
contained in the Article or other division of this Law in which the reference
occurs.

(10) A reference in this Law to an enactment is a reference to that enactment as
amended, and includes a reference to that enactment as extended or applied
by or under any other enactment, including any other provision of that
enactment.

PART II

ESSENTIALS OF A LIMITED LIABILITY PARTNERSHIP

ARTICLE 2

Limited liability partnership

(1) A limited liability partnership shall only have the benefit of this Law if and
for so long as it is registered in accordance with this Law.

(2) A limited liability partnership may be registered where persons who wish a
business to be carried on with a view of profit have agreed (with or without other
terms) –

(a) that the business shall be carried on, following the registration
date, in the form of a limited liability partnership;

(b) that they shall each contribute effort and skill to the business as an
agent of the limited liability partnership but not of each other, in
accordance with Article 15; and

(c) that the profits of the business shall be divided between them and
that they shall each have an interest in the limited liability partnership
property to the extent described in paragraph (6).

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(3) Registration of a limited liability partnership shall take effect upon its
registration date, and shall cease to have effect upon cancellation of its registration
pursuant to Article 31.

(4) Except as provided in paragraph (4) of Article 25, a limited liability
partnership is a legal person (other than a body corporate) distinct from the partners
of whom it is for the time being composed and accordingly (but without limitation) –

(a) any contract which binds the limited liability partnership is made
only with that legal person; and

(b) any change in the limited liability partnership brought about by the
admission, retirement or death of a partner, or by a partner other than
an individual ceasing to exist, shall not affect the existence, rights or
liabilities of that legal person.

(5) Sub-paragraph (b) of paragraph (4) shall not be construed as limiting the
circumstances in which a limited liability partnership is or may be dissolved, whether
in accordance with the partnership agreement or otherwise.

(6) Notwithstanding paragraph (4), each partner in a limited liability
partnership has, subject to this Law and to the partnership agreement, an interest in
the profits of the limited liability partnership and, in accordance with Article 28, in
the limited liability partnership property.

(7) Any number of persons may be partners in a limited liability partnership.

(8) Any person may be a partner in a limited liability partnership.

ARTICLE 3

Limited liability partnership property

(1) The property of a limited liability partnership consists of all property –

(a) brought into the partnership; or

(b) created or acquired by or acquired on account of the partnership
either in the course of the partnership business or with money of the
partnership.

(2) Limited liability partnership property –

(a) shall be vested in the limited liability partnership or held by any
person on its behalf; and

(b) subject to the partnership agreement, and except as provided in
paragraph (4) of Article 25, shall continue to be so vested or held

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notwithstanding any change in the persons who are partners in the
limited liability partnership for the time being.

ARTICLE 4

Liability of a limited liability partnership

(1) A limited liability partnership shall be liable for any debt or loss for which,
if the limited liability partnership were an ordinary partnership, the partners would
otherwise be liable, either jointly or jointly and severally.

(2) There shall be available to meet any liability of a limited liability
partnership its limited liability partnership property.

ARTICLE 5

Liability of a partner or former partner in a limited liability partnership

(1) Subject to paragraphs (2) to (4) of this Article and paragraph (4) of Article
6, a partner or former partner in a limited liability partnership shall not be liable for
any debt or loss to which paragraph (1) of Article 4 applies, including any debt of or
loss caused by the act of another partner in the partnership.

(2) Paragraph (1) shall not affect any liability of a partner or former partner in
a limited liability partnership for –

(a) his personal debts; and

(b) any loss caused by him.

(3) Where any limited liability partnership property, including a share in the
partnership profits, is withdrawn by a partner at a time when the partnership is
unable to pay its debts, or if the partnership becomes unable to pay its debts as a
result of the withdrawal, he shall be liable for any debt or loss to which paragraph
(1) of Article 4 applies, but his liability shall be limited to an amount equal to the
value of the withdrawal, less any amount previously recovered from him by virtue of
this paragraph or paragraph (4).

(4) Where, during the period of six months preceding the time when a limited
liability partnership becomes unable to pay its debts, any limited liability partnership
property, including a share in the partnership profits, is withdrawn by a partner other
than in the ordinary course of the affairs of the partnership, he shall be liable for any
debt or loss to which paragraph (1) of Article 4 applies, but his liability shall be
limited to an amount equal to the value of the withdrawal, less any amount
previously recovered from him by virtue of this paragraph or paragraph (3).

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(5) For the purposes of this Article, a limited liability partnership is unable to
pay its debts at any time when it is unable to pay its debts which have fallen due,
including any liability to a partner or former partner by way of loan, but excluding –

(a) any liability to a partner or former partner in respect of his
partnership interest; and

(b) any debt to the extent that the partnership has bona fide grounds
on which to dispute it.

(6) In any proceedings the burden of proving that a limited liability
partnership had bona fide grounds on which to dispute a debt to any extent shall rest
with the person denying liability under paragraph (3) or (4).

(7) This Article shall continue to apply to a person who was a partner or
former partner in a limited liability partnership after that partnership’s registration
has been cancelled in accordance with Article 31.

ARTICLE 6

Requirement for and payment of financial provision

(1) A limited liability partnership shall, throughout the relevant period,
maintain the financial provision described in paragraph (2).

(2) The financial provision –

(a) shall require one or more banks or insurance companies, upon
dissolution of the limited liability partnership, to pay to the person
responsible for winding up the affairs of the limited liability partnership an
amount, or aggregate amount, as the case may be, which is not less than
the specified sum, without set-off or retention of any kind; and

(b) shall not be assigned, charged or otherwise encumbered by the

(3) No proceedings for enforcement of any judgment or act may be taken in
respect of the financial provision described in paragraph (2) by any creditor of the
limited liability partnership or of any partner in it.

(4) Subject to paragraphs (5) and (6), if a limited liability partnership is
dissolved and the payment described in sub-paragraph (a) of paragraph (2) is not
made, the following persons shall be liable to any creditor in the payment of whom
the payment described in paragraph (2) would have been applied by virtue of
paragraph (1) of Article 27 as if paragraph (1) of Article 5 did not apply –

(a) the persons who were partners in the limited liability partnership
immediately before its dissolution; and

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(b) where paragraph (1) was not complied with at the time when the
debt was incurred or arose or loss caused which gave rise to the
creditor’s claim, any person who was a partner at that time.

(5) For the purposes of paragraph (4), the payment described in sub-
paragraph (a) of paragraph (2) shall be deemed to have been made if, upon
dissolution of a limited liability partnership, an amount, or aggregate amount, which
is not less than the specified sum is paid to the person responsible for winding up the
affairs of the limited liability partnership from any source without set-off or retention
of any kind.

(6) For the purposes of sub-paragraph (b) of paragraph (4), a failure to
maintain the financial provision described in paragraph (2) which is not attributable
to the default of any of the partners and which is remedied within 28 days after the
day on which it arises shall not constitute a failure to comply with paragraph (1).

(7) In any proceedings, the burden of proving that the foregoing provisions of
this Article have been complied with shall rest with the person who claims the
limitation of liability conferred by paragraph (1) of Article 5.

(8) In this Article and in Article 27, in the case of a limited liability partnership
to which paragraph (1) of Article 30 applies, any reference to the person responsible
for winding up the affairs of the limited liability partnership means the Viscount.

(9) In this Article –

“the relevant period” means, in relation to a limited liability partnership, the
period beginning upon its registration date and ending upon whichever shall
be the earlier of –

(a) the payment described in sub-paragraph (a) of paragraph (2) or
paragraph (5) being made; or

(b) cancellation of its registration in accordance with Article 31;

“specified sum” means £5 million, or such other sum as may be prescribed.

ARTICLE 7

Name of limited liability partnership

(1) The name of a limited liability partnership shall end with the words
“Limited Liability Partnership”.

(2) Notwithstanding paragraph (1), a limited liability partnership may use the
abbreviation “LLP” or “L.L.P.” in place of the words “Limited Liability Partnership”.

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(3) A change of name of a limited liability partnership shall not take effect
before a certificate in respect of it is issued by the registrar pursuant to paragraph
(3) of Article 17.

(4) Where the name to be registered in respect of a limited liability
partnership is, in the opinion of the registrar, in any way misleading or otherwise
undesirable, he may –

(a) where the name is stated in a declaration delivered pursuant to
Article 16, refuse to register the limited liability partnership; and

(b) where the name is specified in a statement delivered pursuant to
paragraph (1) of Article 17, refuse to register the name and issue a
certificate in respect of it pursuant to paragraph (3) of that Article.

(5) A change of name of a limited liability partnership does not affect any
rights or obligations of the limited liability partnership or render defective any legal
proceedings by or against it and any legal proceedings that might have been
continued or commenced against it by its former name may be continued or
commenced against it by its new name.

(6) Where a limited liability partnership which has its name inscribed in the
Public Registry of Contracts as being the holder of, or having an interest in,
immovable property changes its name, the designated partner shall deliver to the
Judicial Greffier a copy of the certificate issued by the registrar pursuant to
paragraph (3) of Article 17 within 14 days after it is issued.

(7) Upon delivery to him of the copy referred to in paragraph (6), the Judicial
Greffier shall cause the new name to be registered in the Public Registry of
Contracts.

(8) If default is made in compliance with paragraph (6), the designated
partner is guilty of an offence.

(9) A limited liability partnership shall have its name, the number assigned to
it by the registrar on registration (if any) and the words “registered as a limited
liability partnership in Jersey” clearly stated on all its correspondence, invoices,
statements and other public documents.

ARTICLE 8

Registered office

(1) A limited liability partnership shall have a registered office in the Island.

(2) A change of the address of the registered office of a limited liability
partnership shall not take effect before the delivery to the registrar of a statement in
respect of it pursuant to paragraph (1) of Article 17.

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(3) Where the change of address of a limited liability partnership is to take
effect before the expiry of the period of 14 days beginning on the day on which the
statement in respect of it is delivered to the registrar, a person may validly serve
any document on the partnership or on any of its partners, within that period, at the
partnership’s previous registered office.

(4) A limited liability partnership shall keep at its registered office –

(a) a list showing in alphabetical order the name and address of each
partner and indicating which of them is a designated partner;

(b) a copy of the declaration;

(c) a copy of the most recent annual declaration;

(d) a copy of any statement delivered to the registrar under this Law;

(e) a copy of any certificate issued by the registrar under this Law;
and

(f) if the partnership agreement has been reduced to writing, a copy
of that agreement and any amendment made to it.

(5) The records kept under paragraph (4) shall be –

(a) prima facie evidence of the particulars which are by that paragraph
directed to be contained in them;

(b) available for inspection and copying without charge during ordinary
business hours at the request of a partner.

(6) The list kept under sub-paragraph (a) of paragraph (4) shall be amended
within 28 days after any change in the particulars contained in it.

(7) If default is made in compliance with this Article the designated partner is
guilty of an offence.

ARTICLE 9

Accounts and audit

(1) A limited liability partnership shall keep for 10 years accounting records
which are sufficient to show and explain its transactions and are such as to disclose
with reasonable accuracy at any time its financial position.

(2) Subject to the partnership agreement, it shall not be necessary for a
limited liability partnership to appoint an auditor or have its accounts audited.

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(3) If default is made in compliance with paragraph (1) the designated
partner is guilty of an offence and liable to a fine or up to two years’ imprisonment or
to both a fine and such imprisonment.

ARTICLE 10

Keeping and form of limited liability partnership records

(1) A limited liability partnership shall take reasonable precautions –

(a) to prevent loss or destruction of;

(b) to prevent falsification of entries in; and

(c) to facilitate detection and correction of inaccuracies in,

the records it is required by paragraph (4) of Article 8 and paragraph (1) of Article 9
to keep.

(2) The records referred to in paragraph (1) may be kept in the form of a
bound or loose-leaf book, or photographic film, or may be entered or recorded by a
system of mechanical or electronic data processing or any other information storage
device that is capable of reproducing any required information in intelligible written
form within a reasonable time.

partner is guilty of an offence and liable to a fine or up to two years’ imprisonment or
to both a fine and such imprisonment.

PART III

RELATIONS OF PARTNERS IN A LIMITED LIABILITY PARTNERSHIP WITH ONE
ANOTHER AND THIRD PARTIES

ARTICLE 11

Relations of partners to one another

(1) Subject to Parts I to V, the rights and duties of the partners in a limited
liability partnership shall, as between themselves, be determined by the partnership
agreement.

(2) Nothing in the partnership agreement may deprive the partners of the
benefit of paragraph (1) of Article 5.

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(3) Paragraph (2) shall not be construed as limiting the ability of the partners
in a limited liability partnership, as between themselves, to indemnify any of them or
any former partner in respect of any debt or loss.

ARTICLE 12

Dealings by partners with limited liability partnership

A partner in a limited liability partnership may enter into any transaction with the
partnership, including lending money to and borrowing money from it.

ARTICLE 13

Admission and retirement of partners

(1) An additional partner shall not be admitted to a limited liability partnership
except in accordance with the partnership agreement.

(2) Except as described in paragraph (1) of Article 24, a partner may only
retire from a limited liability partnership in accordance with the partnership
agreement.

(3) No retirement shall have effect before a statement is delivered to the
registrar specifying the change pursuant to paragraph (1) of Article 17 or paragraph
(2) of Article 24, as the case may be.

ARTICLE 14

Assignments, etc

(1) A partner in a limited liability partnership may not assign the whole or
part of his partnership interest, except by way of charge.

(2) Notwithstanding paragraph (1), changes may be made in the partnership
interests in a limited liability partnership on the admission or retirement of a partner,
on the death of a partner who is an individual, on a partner who is not an individual
ceasing to exist, or in accordance with the partnership agreement.

(3) Subject to the partnership agreement, a partner in a limited liability
partnership may create a charge over his partnership interest.

ARTICLE 15

Agency of partner in a limited liability partnership

(1) A partner in a limited liability partnership is not an agent of the other
partners in that partnership.

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(2) Every partner in a limited liability partnership is the agent of that
partnership and accordingly, but subject to paragraph (3), the acts of a partner in his
capacity as a partner shall bind the limited liability partnership.

(3) The acts of a partner in a limited liability partnership shall not bind that
partnership where –

(a) he is not acting as a partner or is acting without authority; and

(b) the person with whom he is dealing knows or should know that to
be the position.

(4) A partner shall not be acting with authority unless he is acting –

(a) in the ordinary course of the business of the limited liability
partnership; or

(b) with express authority conferred by or pursuant to the partnership
agreement.

(5) For the purposes of paragraph (3), no person is deemed to have notice of
any records by reason only that they are made available by the registrar for
inspection.

PART IV

REGISTRATION OF A LIMITED LIABILITY PART NERSHIP

ARTICLE 16

Registration of limited liability partnership

(1) An application for registration as a limited liability partnership may be
made by persons to whom paragraph (2) of Article 2 applies.

(2) An application shall be in the form of a declaration, signed by any person
who is, on registration, to be a designated partner, delivered to the registrar.

(3) The declaration shall state –

(a) that the persons by whom the application is made are persons to
whom paragraph (2) of Article 2 applies;

(b) the proposed name of the limited liability partnership, such name
to comply with paragraph (1) of Article 7;

221

(c) the intended address of the registered office of the limited liability
partnership;

(d) the name and address of each person who is to be a partner in the
limited liability partnership, indicating which of them is to be a designated
partner;

(e) the date on which it is proposed that registration should take
effect;

(f) the term, if any, for which the limited liability partnership is to
exist or, if for unlimited duration, a statement to that effect; and

(g) such other information as may be prescribed.

(4) The declaration shall be accompanied by such documents as may be
prescribed.

(5) Subject to paragraph (4) of Article 7, upon receipt of an application
complying with paragraphs (2) to (4), the registrar shall register the limited liability
partnership and issue a certificate specifying the date on which registration of the
limited liability partnership takes effect, being a date not earlier than the date on
which the certificate is issued.

ARTICLE 17

Amendment of declaration

(1) Subject to paragraph (2), within 28 days after any change in the
information stated in the declaration, there shall be delivered to the registrar a
statement signed by the designated partner specifying the nature of the change.

(2) No statement is required to be delivered under paragraph (1) in respect of
the retirement of a partner which is specified in a statement delivered pursuant to
paragraph (2) of Article 24.

(3) Subject to paragraph (4) of this Article and paragraph (4) of Article 7,
upon delivery of a statement pursuant to paragraph (1) the registrar shall register
the change specified in it and issue a certificate to that effect.

(4) A statement delivered to the registrar specifying the admission of an
additional partner to the limited liability partnership shall be deemed to be delivered
to the registrar on the day that the partner is so admitted, whether before or after
the day on which the statement is delivered.


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ARTICLE 18

Annual Declaration

(1) Subject to paragraph (2), before the end of February, in every year
following the year in which a limited liability partnership is registered, the designated
partner shall deliver an annual declaration signed by him to the registrar stating the
name and address of every person who, on the first day of January in that year, was
a partner in the partnership.

(2) Paragraph (1) shall not apply to a limited liability partnership which is the
subject of a declaration made under Article 6 of the Bankruptcy Désastre (Jersey)
Law 1990.


ARTICLE 19

Validity and proof of registration

(1) No error in the declaration delivered to the registrar pursuant to Article
16, the annual declaration delivered pursuant to Article 18 or any statement
delivered to the registrar pursuant to this Law, nor any default in the delivery of an
annual declaration, any such statement or any copy required to be delivered to the
registrar under this Law shall affect the validity of the registration of a limited liability
partnership.

(2) A certificate issued under paragraph (5) of Article 16 is conclusive
evidence as to the registration of a limited liability partnership.

PART V

DISSOLUTION AND WINDING UP, ETC

ARTICLE 20

Dissolution upon a change in the partners in a partnership

Subject to Article 21, a limited liability partnership shall not be dissolved by any
change in the persons who a re partners in it if the partnership agreement so
provides.

ARTICLE 21

Dissolution upon partnership ceasing to have two or more partners

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(1) Notwithstanding any provision, express or implied, of the partnership
agreement to the contrary, a limited liability partnership shall be dissolved
immediately upon there ceasing to be two or more partners in the partnership.

(2) Where the person responsible for winding up the affairs of the limited
liability partnership is the person who, at the time of dissolution, was the last
remaining partner he shall, within 28 days after the dissolution, deliver a statement
of dissolution signed by him to the registrar.

(3) Where the person responsible for winding up the affairs of the limited
liability partnership is not the person described in paragraph (2), he shall, within 28
days after the day on which he becomes the person so responsible, deliver a
statement of dissolution signed by him to the registrar.

(4) Upon delivery to him of a s tatement under paragraph (2) or (3), the
registrar shall register the statement and issue a certificate of dissolution.

(5) If default is made in compliance with paragraph (2), the person described
in that paragraph is guilty of an offence.

(6) If default is made in compliance with paragraph (3), the person described
in that paragraph is guilty of an offence.

ARTICLE 22

Dissolution by act of partner or other occurrence

(1) Where a limited liability partnership is dissolved by any act of a partner or
by any other occurrence, other than the occurrence described in paragraph (1) of
Article 21, the designated partner shall, within 28 days after the dissolution, deliver
to the registrar a statement of dissolution signed by him.

(2) Upon delivery to him of a statement under paragraph (1), the registrar
shall register the statement and issue a certificate of dissolution.


ARTICLE 23

Power of Court to order dissolution

(1) The Court may, on the application of any partner in a limited liability
partnership, order the dissolution of the partnership in any of the following cases –

(a) when a partner, other than the partner making the application,
becomes in any way permanently incapable of performing his part of the
partnership contract;

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(b) when a partner, other than the partner making the application, has
been guilty of such conduct as, in the opinion of the Court, regard being
had to the nature of the business, is calculated to prejudicially affect the
carrying on of the business;

(c) when a partner, other than the partner making the application,
wilfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership
business that it is not reasonably practicable for the other partner or
partners to carry on the business in partnership with him;

(d) when the business of the partnership can only be carried on at a
loss; or

(e) whenever in any case circumstances have arisen which, in the
opinion of the Court, render it just and equitable that the partnership be
dissolved.

(2) Where the Court orders the dissolution of a limited liability partnership,
the partner making the application shall deliver a copy of the order to the registrar
within 28 days after it is made.

(3) Failure to comply with paragraph (2) is an offence.

ARTICLE 24

Continuation of partnership following dissolution

(1) Where, following dissolution of a limited liability partnership but before
completion of the winding up of its affairs, two or more of the partners are to acquire
the partnership interests of each of the remaining partners, either by agreement or
upon a direction of the Court pursuant to paragraph (2) of Article 26 –

(a) the affairs of the limited liability partnership shall not be wound up
and the partnership shall continue as if it had not been dissolved; and

(b) subject to paragraph (3) of Article 13, upon the acquisition taking
place, the partners whose interests are acquired shall be taken to retire
from it.

(2) One of the acquiring partners shall, within 28 days after the agreement or
direction described in paragraph (1), deliver to the registrar a statement of cessation
of dissolution signed by him specifying –

(a) the date for acquisition of the retiring partners’ interests;

(b) the names of the acquiring partners and indicating which of them
is to be a designated partner; and

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(c) the names of the retiring partners.

(3) Upon delivery to him of a statement made pursuant to paragraph (2) the
registrar shall register the statement and issue a certificate to that effect.

(4) With effect from the issue of the certificate described in paragraph (3),
Article 6 shall apply as if the limited liability partnership had not been dissolved.

(5) If default is made in compliance with paragraph (2), each of the acquiring
partners is guilty of an offence.

ARTICLE 25

Winding up

(1) Subject to paragraph (2) and Article 24 –

(a) in the event of the dissolution of a limited liability partnership in
the circumstances described in paragraph (1) of Article 21, its affairs shall
be wound up by the person who, at the time of dissolution, was the last
remaining partner or, if he is deceased, his personal representatives; and

(b) in the event of the dissolution of a limited liability partnership in
any other circumstances, its affairs shall be wound up by a person
appointed by the partners for the purpose or, if none, the designated
partner, or if more than one, all of the designated partners.

(2) The Court may appoint a person to wind up the affairs of a limited liability
partnership upon the application of –

(a) a partner in the partnership;

(b) a creditor of the partnership; or

(c) where the partnership is dissolved by the death of a partner, the
personal representatives of that deceased partner.

(3) After the dissolution of a limited liability partnership, paragraphs (2) to (4)
of Article 15 shall only continue to apply so far as may be necessary or desirable to
achieve a beneficial winding up of its affairs or to such lesser extent as the
partnership agreement may provide.

(4) Upon the dissolution of a limited liability partnership in the circumstances
described in paragraph (1) of Article 21, or upon the limited liability partnership
ceasing to have two or more partners at any time during the winding up of its affairs
following its dissolution in any other circumstances –

(a) the limited liability partnership shall cease to be a legal person;

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(b) the limited liability partnership property vested in the limited
liability partnership and the beneficial interest of the limited liability
partnership in any limited liability partnership property held by any
person on its behalf, shall vest in the person responsible for winding up
the affairs of the limited liability partnership;

(c) any proceedings which might have been continued or commenced
against the limited liability partnership may be continued or commenced
against the person responsible for winding up the affairs of the limited
liability partnership in his capacity as such;

(d) any judgment obtained against the limited liability partnership
prior to its ceasing to have two or more partners and any judgment
obtained against the person responsible for winding up the affairs of the
partnership in his capacity a such in any proceedings continued or
s
commenced in accordance with sub-paragraph (c) shall only be
enforceable against the limited liability partnership property.

(5) Where the name of a limited liability partnership is inscribed in the Public
Registry of Contracts as the holder of or having an interest in immoveable property,
the person responsible for winding up the affairs of the limited liability partnership, in
whom that property or interest vests by virtue of sub-paragraph (b) of paragraph (4)
shall deliver to the Judicial Greffier notice of the name of the person responsible for
winding up the affairs of the limited liability partnership, in whom the property has
vested, within 28 days after the property so vests.

(6) If default is made in compliance with paragraph (5) the person responsible
for winding up the affairs of the limited liability partnership is guilty of an offence.

ARTICLE 26

Power of Court to give directions as to winding up

(1) The Court may give such directions as it thinks fit in the course of the
winding up of the affairs of a limited liability partnership upon the application of –

(a) any partner in the partnership;

(b) any creditor of the partnership;

(c) the person responsible for winding up the affairs of the
partnership; or

(d) where the partnership is dissolved by the death of a partner, the
personal representatives of that deceased partner.

(2) Without prejudice to the discretion conferred by paragraph (1), on an
application by the relevant majority, the Court may give a direction that the

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applicants purchase the partnership interest of each of the remaining partners at
such a price and otherwise upon such terms as it thinks fit.

(3) In paragraph (2), “relevant ma jority” in relation to a limited liability
partnership shall have the meaning assigned to it for the purposes of that paragraph
by the partnership agreement or, if no meaning is so assigned, shall mean a majority
of the partners of which such partnership was composed at the date of its
dissolution, being either –

(a) a majority of the partners by number; or

(b) such number of partners as were at the date of dissolution
together entitled to a majority of the profits of the partnership.

(4) In paragraph (2),the reference to the partnership interest of each of the
remaining partners includes the partnership interest of any deceased partner and of
any partner other than an individual, which ceases to exist.

ARTICLE 27

Application of financial provision

(1) Notwithstanding Article 28 or any other enactment or law to the contrary,
the person responsible for winding up the affairs of a limited liability partnership shall
apply any payment made pursuant to paragraph (2) or (5) of Article 6 in the
payment of creditors to whom the limited liability partnership is liable by virtue of
paragraph (1) of Article 4, excluding any partner or former partner in the limited
liability partnership in respect of his partnership interest or in respect of any loan
made by him to the partnership for any purpose.

(2) A failure to comply with paragraph (1) shall be actionable at the suit of a
creditor of the limited liability partnership who suffers loss as a result of the failure,
subject to the defences and other incidents applying to actions for breach of
statutory duty.

(3) Any money remaining after payment of the creditors described in
paragraph (1) shall be distributed in accordance with Article 28.

ARTICLE 28

Settling accounts on winding up

(1) Where accounts are settled in the course of the winding up of the affairs
of a limited liability partnership, the liabilities of the partnership shall be paid in the
following order of priority –

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(a) liabilities to creditors, excluding any partner or former partner in
the limited liability partnership in respect of his partnership interest or in
respect of any loan made by him to the partnership for any purpose; then

(b) subject to the partnership agreement and to any agreement
between the partnership and the former partner in question –

(i) liabilities to former partners in the limited liability partnership
in respect of any loans made by them to the partnership for any
purpose, then

(ii) liabilities to former partners i the limited liability partnership
n
in respect of their partnership interests or otherwise; then

(c) subject to the partnership agreement –

(i) liabilities to partners in the limited liability partnership in
respect of any loans made by them to the partnership for any
purpose, then

(ii) liabilities to partners in the limited liability partnership in
respect of their partnership interests or otherwise.

(2) Subject to the partnership agreement, any limited liability partnership
property remaining after payment of the liabilities described in paragraph (1) shall
be distributed equally to the partners.

ARTICLE 29

Completion of winding up

(1) Within 28 days after the completion of the winding up of the affairs of a
limited liability partnership, a statement to that effect signed by the person
responsible for winding up the affairs of the limited liability partnership shall be
delivered to the registrar.

(2) If default is made in compliance with paragraph (1), the person
responsible for winding up the affairs of the limited liability partnership is guilty of an
offence.

ARTICLE 30

Effect of declaration that a partnership is “en désastre”

(1) For the purposes of Articles 6 and 27, the making of a declaration in
respect of a limited liability partnership shall be deemed to be an order for its
dissolution and the winding up of its affairs.

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(2) Where an order recalling a declaration is made in respect of a limited
liability partnership, Article 6 shall apply to the partnership, with effect from the
issue of a certificate under paragraph (4) in respect of the order, as if the declaration
had not been deemed to be an order for its dissolution and the winding up of its
affairs.

(3) Where a declaration, or an order recalling a declaration, is made in
respect of a limited liability partnership, the designated partner shall deliver a copy
of the declaration or order to the registrar within 28 days of its being made.

(4) Upon delivery to him of a copy of a declaration or of an order recalling a
declaration, the registrar shall register it and issue a certificate to that effect.


(6) In this Article –

“declaration” shall have the same meaning as in the Bankruptcy (Désastre)
(Jersey) Law 19904 ; and

“order recalling a declaration” shall be construed in accordance with Article 7
of that Law.

ARTICLE 31

Cancellation of registration following winding up etc.

(1) Upon receipt of –

(a) a statement delivered to him pursuant to Article 29; or

(b) notification under paragraph (3) of Article 36 of the Bankruptcy
(Désastre) (Jersey) Law 19905 ,

the registrar shall cancel the entry in the register relating to the limited liability
partnership and issue a certificate of cancellation to the person delivering the
statement to him or notifying him, as the case may be.

(2) A certificate issued under paragraph (1) is conclusive evidence as to the
cancellation of the registration of a limited liability partnership.

PART VI

MISCELLANEOUS AND GENERAL

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ARTICLE 32

Recognition of proceedings in other jurisdictions

(1) This Article applies where an order is made by a court outside the Island
for the dissolution or winding up of the affairs of a limited liability partnership, and
references in this Article to an order shall be construed accordingly.

(2) For the purposes of this Law, a limited liability partnership shall not be
taken to be dissolved by an order until that order has been recognized by the Court,
but, once an order has been recognized by the Court, it shall be taken to be an order
for the dissolution and winding up of the affairs of the limited liability partnership.

(3) An application to the Court for recognition of an order may be made by
the person appointed under it to wind up the affairs of the limited liability partnership
or, if none, the person on whose application the order was made.

(4) In determining whether or not to recognize an order the Court shall have
regard to –

(a) whether the grounds on which it is made would constitute grounds
for dissolution in the Island; and

(b) the arrangements made for compliance with Article 27.

(5) Where the Court decides to recognize an order, it may also appoint a
person to be responsible for winding up the affairs of the limited liability partnership
and give such directions as it thinks fit as to the winding up.

(6) Where the Court decides to recognize an order in respect of a limited
liability partnership, the designated partner shall deliver a copy of the decision of the
Court to the registrar within 28 days after it is made.

(7) Upon delivery to him of a copy of the decision referred to in paragraph
(6), the registrar shall register it and issue a certificate to that effect.


ARTICLE 33

Legal proceedings

(1) Except as provided in sub-paragraph (c) of paragraph (4) of Article 25,
legal proceedings by or against a limited liability partnership shall be instituted by or
against the limited liability partnership and any judgment shall be made in such
proceedings in favour of or against the limited liability partnership only in the
partnership name.

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(2) Subject to paragraph (3) of this Article and except as provided in sub-
paragraph (d) of paragraph (4) of Article 25, no judgment shall be enforced against
any limited liability partnership property unless such judgment has been granted
against the limited liability partnership.

(3) Paragraph (2) shall not affect any right of a judgment creditor of a partner
in a limited liability partnership to enforcement against that partner’s partnership
interest and any sum due to him from the partnership by way of repayment of a
loan.

(4) Where a judgment creditor of a partner in a limited liability partnership
has a right to enforcement against any of the partner’s assets described in paragraph
(3), the other partner or partners in the limited liability partnership may prevent or
stop enforcement against those assets by paying to the creditor whichever is the
lesser of the amount for which enforcement is sought and an amount equal to the
value of the first mentioned partner’s partnership interest, and any sum due to him
from the partnership by way of repayment of a loan.

(5) Execution to enforce a judgment obtained against a limited liability
partnership pursuant to paragraph (1) or against the person responsible for winding
up the affairs of the limited liability partnership pursuant to sub-paragraph (d) of
paragraph (4) of Article 25 shall only be capable of being issued against and satisfied
out of the limited liability partnership property as at the date of such execution (no
account being taken of any changes in the partners composing the limited liability
partnership prior to such date).

(6) Any person shall have the right to join or otherwise institute proceedings
against –

(a) one or more of the partners and any former partner of a limited
liability partnership who is liable by virtue of paragraph (3) or (4) of
Article 5; and

(b) any person holding limited liability partnership property on behalf
of a limited liability partnership for the purposes of enforcement against
that property.

ARTICLE 34

Service of documents

For the purposes of this Law –

(a) service of a document on a limited liability partnership may be
effected by sending it by post or delivering it to the registered office of
the limited liability partnership; and

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(b) service of a document on a partner in his capacity as such may be
effected by sending it by post or delivering it to him at the registered
office of the limited liability partnership or at the address for service
stated for him in the declaration.

ARTICLE 35

Order for compliance

(1) Where a person who is required by this Law to sign, deliver or permit
inspection or copying of, any document fails to do so, a person who is aggrieved by
the failure may apply to the Court for an order directing that person to comply with
the Law and upon such application the Court may make such order as it considers
appropriate in the circumstances.

(2) An application may be made under paragraph (1) notwithstanding the
imposition of a penalty in respect of the failure and in addition to any other rights the
applicant may have at law.

ARTICLE 36

Appointment and functions of registrar

(1) The registrar of companies appointed pursuant to Article 196 of the
Companies (Jersey) Law 19916 shall be the registrar of limited liability partnerships.

(2) The registrar shall maintain a register of limited liability partnerships and
record in it any declaration, statement or copy delivered to him and the issue of any
certificate by him pursuant to this Law.

(3) Any certificate issued by the registrar under this Law shall be signed by
him and sealed with his seal (if any).

(4) The Committee may direct a seal or seals to be prepared for the
authentication of documents required for or in connexion with the registration of
limited liability partnerships.

(5) Any functions of the registrar under this Law may, to the extent
authorized by him, be exercised by an officer on his staff.

(6) In paragraph (5), “officer” has the same meaning as in the Civil Service
(Administration) (Jersey) Law 19537 .

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ARTICLE 37

Fees and forms

(1) The Committee may by Order require the payment to the registrar of such
fees as may be prescribed in respect of –

(a) the performance by the registrar of such functions under this Law
as may be prescribed, including the receipt by him of any document
which is required to be delivered to him under this Law; and

(b) the inspection or copying of documents or other material held by
him under this Law.

(2) The registrar may charge a fee for any services provided by him otherwise
than in pursuance of an obligation imposed on him by this Law.

(3) Where a fee is provided for or charged under this Article for the discharge
of any function or the provision of any service by the registrar, no action need be
taken by him until the fee is paid, and where the fee is payable on the receipt by him
of a document required to be delivered to him he shall be deemed not to have
received it until the fee is paid.

(4) The Committee may prescribe forms to be used for any of the purposes of
this Law and the manner in which any document to be delivered to the registrar is to
be authenticated.

(5) Fees paid to the registrar shall f
orm part of the annual income of the
States.

ARTICLE 38

Inspection and production of documents kept by registrar

(1) Any person may –

(a) inspect any document delivered to the registrar under this Law and
kept by the registrar or, if the registrar thinks fit, a copy of it;

(b) obtain a copy of any certificate issued by the registrar under this
Law and of all or part of any document referred to in sub-paragraph (a).

(2) A copy of any document kept by the registrar or of any certificate issued
by him which is certified in writing by him (whose position it is unnecessary to prove)
to be an accurate copy of such document or certificate shall in all legal proceedings
be admissible in evidence as of equal validity with the original and as evidence of any
fact stated in it of which direct oral evidence would be admissible.

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ARTICLE 39

Destruction of old records, etc

(1) The registrar may destroy any record or document relating to a
limited liability partnership which has been in his possession or under his control for
more than 30 years.

(2) Where any record or document has been in the possession of the
registrar or under his control for more than 30 years, no responsibility rests on any
person by reason of that record o document not being forthcoming to a person
r
claiming to be interested in it.

ARTICLE 40

Registration in the Public Registry

The Judicial Greffier shall register in the Public Registry of Contracts all Acts
and orders affecting immovable property made under this Law.

ARTICLE 41

Offences

(1) Any person who makes a statement in any document, material,
evidence or information which is required to be delivered to the registrar under this
Law that, at the time and in the light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or that omits to state any
material fact the omission of which makes the statement false or misleading, shall be
guilty of an offence and liable to a fine or up to two years’ imp risonment, or to both
a fine and such imprisonment.

(2) A person shall not be guilty of an offence under paragraph (1) if he
did not know that the statement was false or misleading and with the exercise of
reasonable diligence could not have known that the statement was false or
misleading.

(3) Any persons who wilfully take or use any name, title, addition or
description implying that they are partners in a limited liability partnership when
they are not, or implying that they are partners in a partnership which is not a
limited liability partnership when they are, shall each be guilty of an offence and
liable to a fine or up to two years’ imprisonment or to both a fine and such
imprisonment.

(4) Where an offence under this Law committed by a body corporate is
proved to have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of any director, manager, secretary, or other
similar officer of the body corporate, or any person purporting to act in any such

235

capacity, he, as well as the body corporate, shall be guilty of the same offence and
liable in the same manner to the penalty provided for that offence.

ARTICLE 42

Aiders and abettors

Any person who knowingly or wilfully aids, abets, counsels, causes, procures
or commands the commission of an offence punishable by this Law shall be liable to
be dealt with, tried and punished as a principal offender.

ARTICLE 43

Penalty for offences

Any person guilty of an offence under –

(a) paragraph (8) of Article 7;

(b) paragraph (7) of Article 8;

(c) paragraph (5) of Article 17;

(d) paragraph (3) of Article 18;

(e) paragraph (5) or (6) of Article 21;

(f) paragraph (3) of Article 22;

(g) paragraph (3) of Article 23;

(h) paragraph (5) of Article 24;

(j) paragraph (6) of Article 25;

(k) paragraph (2) of Article 29;

(l) paragraph (5) of Article 30; or

(m) paragraph (8) of Article 32,

shall be liable to a fine not exceeding level 4 on the standard scale8 and, in the case
of a continuing offence, to a further fine not exceeding level 2 on the standard scale
for each day on which the offence so continues.

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ARTICLE 44

Regulations relating to insolvent limited liability partnerships

(1) The States may make Regulations modifying all or any of
paragraphs (3) to (6) of Article 5 and the provisions of Part V in their application to
insolvent limited liability partnerships.

(2) Regulations made under paragraph (1) may –

(a) make different provision for different cases and contain such incidental,
supplemental and transitional provisions as appear to the States to be
necessary or expedient; and

(b) make a contravention of any of the provisions of the Regulations an
offence liable to a fine or up to two years’ imprisonment or to both a fine
and such imprisonment.

ARTICLE 45

Regulations to amend Article 6

(1) The States may by Regulations amend, substitute or repeal Article
6.

(2) Regulations made under paragraph (1) may make different
provision for different cases and contain such incidental, supplemental and
transitional provisions as appear to the States to be necessary or expedient.

ARTICLE 46

Orders

(1) The Committee may by Order make provision for the purpose of
carrying this Law into effect and in particular, but without prejudice to the generality
of the foregoing, for prescribing any matter which is to be prescribed under this Law.

(2) Any provision of an Order prescribing any matter for the purposes
of Article 6 shall not come into force until a period of not less than three months has
elapsed from the day on which the Order is made.

(3) An Order made under this Law may make different provision for
different cases and contain such incidental, supplemental and transitional provisions
as appear to the Committee to be necessary or expedient.

(4) The Subordinate Legislation (Jersey) Law 19609 shall apply to
Orders made under this Law.

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ARTICLE 47

Rules of Court

The power to make Rules of Court under the Royal Court (Jersey) Law 194810
shall include a power to make Rules for the purposes of this Law.

ARTICLE 48

Consequential amendments

The enactments specified in the Schedule shall be amended in the manner set
out in it.

ARTICLE 49

Customary Law

The rules of customary law applicable to a partnership shall apply to a limited
liability partnership except in so far as they are inconsistent with the express
provisions of this Law.

ARTICLE 50

Short title and commencement

This Law may be cited as the Limited Liability Partnerships (Jersey) Law 1997
and shall come into force on such day as the States may by Act appoint and different
days may be appointed for different provisions or different purposes of this Law.

G.H.C. COPPOCK
Greffier of the States.

SCHEDULE

(Article 48)

AMENDMENT OF ENACTMENTS

Borrowing (Control) (Jersey) Law 194711

1. In the long title –

(a) the word “and” following the words “the issue of securities,” shall be
deleted; and

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(b) after the words “sale or exchange,” there shall be inserted the words
“the creation of partnership interests and the registration of limited
liability partnerships”.

2. In Article 1 –

(a) in paragraph (1), after the definition of “issue” there shall be inserted
the following definition –

“ ‘limited liability partnership’ has the meaning given to it by the Limited
Liability Partnerships (Jersey) Law 1997;”.

(b) after paragraph (5) there shall be added the following paragraph –

“(6) For the purposes of this Law, the registration of a limited
liability partnership under the Limited Liability Partnerships (Jersey) Law
1997 shall be deemed to be the creation of a partnership interest for the
purposes of the limited liability partnership.”.

3. In Article 2 –

(a) at the end of paragraph (1AA) there shall be added the words “and, in
relation to the creation of a partnership interest for the purposes of a
limited liability partnership, the Committee shall also have regard to the
size of the limited liability partnership and to the status of the applicant
or the holder of the consent, as the case may be”;

(b) in paragraph (2A) –

(i) after the words “under a limited partnership” where they first
appear there shall be inserted the words “or a limited liability
partnership”;

(ii) in sub-paragraph (a), the word “limited” shall be deleted; and

(iii) at the end of sub-paragraph (b) there shall be added the words “or
under a limited liability partnership registered, or not registered, in
accordance with the Limited Liability Partnerships (Jersey) Law
1997”.

Registration of Business Names (Jersey) Law 195612

1. In paragraph (1) of Article 1 –

(a) in the definition of “firm” after the words “shall not include” insert the
words “a limited liability partnership or”;

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(b) after the definition of “initials” there shall be inserted the following
definition –

“ ‘limited liability partnership’ means a limited liability partnership
registered in accordance with the Limited liability Partnerships (Jersey)
Law 1997.”.

2. In Article 2 after sub-paragraph (e) insert the following sub-
paragraph –

“(f) every limited liability partnership carrying on business under a
business name which does not consist of the name under which it is
registered without any addition;”.

Security Interests (Jersey) Law 198313

In Article 12 of the Security Interests (Jersey) Law 1983, in paragraph (2),
after the words “domiciled in the Island” there shall be inserted the words “or, being
a limited liability partnership, registered under the Limited Liability Partnerships
(Jersey) Law 1997”.

Collective Investment Funds (Jersey) Law 198814

In Article 4, in paragraph (2), after the words “or the Companies (Jersey) Law
1991” there shall be inserted “and no limited liability partnership registered under
the Limited Liability Partnerships (Jersey) Law 1997”.

Bankruptcy (Désastre) (Jersey) Law 199015

1. In Article 1, in paragraph (1) –

(a) after the definition of “insolvency” there shall be inserted the following
definition –

“ ‘limited liability partnership’ has the meaning given to it in the Limited
Liability Partnerships (Jersey) Law 1997;”;

(b) for the definition of “registrar” there shall be substituted the following
definition –

“ ‘registrar’ means –

(a) in relation to a company, the registrar of companies appointed
pursuant to Article 196 of the Companies (Jersey) Law 1991; and

(b) in relation to a limited liability partnership, the registrar appointed
pursuant to Article 36 of the Limited Liability Partnerships (Jersey)
Law 1997;”.

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2. In Article 4, in paragraph (1) –

(a) the word “or” following sub-paragraph (c) shall be deleted; and

(b) after sub-paragraph (d) there shall be inserted the following word and
sub-paragraph –

“or

(e) who is a limited liability partnership,”.

3. In Article 36, after paragraph (2), there shall be added the
following paragraph –

“(3) Where the debtor is a limited liability partnership, the
Viscount shall notify the registrar in writing of the date of payment of the
final dividend.”.

Banking Business (Jersey) Law 199116

In Article 3, in sub-paragraph (b) of paragraph (3), after the words “in the
Island” there shall be inserted “or a limited liability partnership registered under the
Limited Liability Partnerships (Jersey) Law 1997”.

Companies (Jersey) Law 199117

In Article 1, after sub-paragraph (c) of paragraph (2), there shall be added
the following sub-paragraph –

“(d) do not include a limited liability partnership registered under the
Limited Liability Partnerships (Jersey) Law 1997.”.

Insurance Business (Jersey) Law 199618

In Article 4, in paragraph (6), after the words “the Companies (Jersey) Law
1991” there shall be inserted the words “or a limited liability partnership registered
under the Limited Liability Partnerships (Jersey) Law 1997”.

1
Volume 1990–1991, page 477, and Volume 1992–1993, page 93.
2
3
Volume 1996-1997, page 81.
4
5
Page 551 of this Volume.
6
Volume 1990–1991, page 1054.
7
Tome VIII, page 319.
8
Volume 1992–1993, page 437.
9
Tome VIII, page 849.

241

10
10Tome VIII, page 502, Volume 1984–1985, page 175, Volume 1979–1981,
page 195, Volume 1990–1991, page 113, and Volume 1992–1993, page 461.
11
Tome VII, page 386, Volume 1986–1987, page 57, and Volume 1994–1995,
page 100.
12
Tome VIII, page 519, and Volume 1994–1995, page 100.
13
14
15
16
Volume 1990–1991, page 490.
17
Volume 1990–1991, page 890.
1
8 Volume 1996–1997, page 81.

242

CHAPTER 4: LIMITED LIABILITY PARTNERSHIP LAWS IN THE UNITED
KINGDOM

4.0 INTRODUCTION
In the United Kingdom businesses used to operate in the main as limited companies,
sole traders or partnerships. Each of these is subject to different regulatory and tax
regimes reflecting their organisation and ownership.

The only option for many professions, in the past, was to operate as partnerships, as
either statute or the rules of their professional body denied them the ability to
incorporate. For example, accountancy firms have only been able to incorporate
since 1989. The fact that professional bodies were required to operate as
partnerships meant that they were subject to the particular rules relating to the
liability of partners.

The Partnership Act 1890 sets out special rules relating to the liability of partners to
persons dealing with them. First, every partner is liable jointly, and in Scotland
severally also, with his other partners for all the debts and obligations of the
partnership incurred d uring his membership. Second, every partner is jointly and
severally liable for any loss or damage arising from the wrongful acts or omissions of
any of his partners (as well as his own), which were done in the ordinary course of
the partnership’s business or, with the authority of the partners. When the members
are liable jointly and severally for any loss or damage this has the effect that an
injured person may sue one or more of the members separately or all of them
together at his option.

These arrangements were generally appropriate when all partnerships were small
and the partners were of the same profession working closely one with another.
However, unlimited liability for partners has become an increasing cause for concern
in the light of:
(a) a general increase in the incidence of litigation for professional negligence and
in the size of claims;
(b) the growth in the size of partnerships (since in a very large partnership not all
the partners will be personally known to one another);
(c) the increase in specialisation among partners and the coming together of
different professions within a partnership; and
(d) the risk to a partner's personal assets when a claim exceeds the sum of the
assets and insurance cover of the partnership.

Although these concerns arise most acutely in very large professional partnerships
they are relevant to partnerships generally.

The limited liability partnership goes some way towards addressing these concerns.
Its members benefit from limited liability because the LLP is a separate legal person.
In general the LLP and not its members will be liable to third parties.

The idea that there should be the opportunity in Great Britain to organise as an LLP
emerged out of a review of the law of joint and several liabilities. In 1996 the DTI
published a feasibility investigation of joint and several liabilities carried out by the
Common Law Team of the Law Commission. The investigation focused particularly,
but not exclusively, on the joint and several liabilities of professional defendants,
seeking to ascertain whether there was an arguable case for replacing joint and

243

several liabilities by, for example, a system whereby each defendant might be liable
for only a proportionate share of the loss. Although the remit did not extend to the
question of joint and several liabilities within partnerships, the DTI took the
opportunity to consult on the distinct but related question whether to amend the law
in Great Britain to allow limited liability partnerships. This question was asked in the
knowledge that the concept of LLPs was well known in some overseas jurisdictions,
particularly the USA. Jersey too was working on implementing its own LLP legislation
in response to representations from the accountancy profession, with a view to
attracting offshore registrations.

In February 1997 the Department published a consultation paper "Limited Liability
Partnerships: A New Form of Business Association for Professions". The response to
the paper confirmed that there was a demand for the n ew vehicle across a wide
range of professions, and agreement in principle from those consultees who are
potential clients of and providers of capital to LLPs. The paper was followed by the
publication of a draft Bill and regulations in September 1998. Revised draft
regulations were published again for consultation, together with the draft Bill in July
1999. In February 2000 a further consultation document was published concerning
regulatory default provisions governing the relationship between members, and
revised regulatory default provisions were published in May 2000.

The UK Limited Liability Partnerships Act 2000 (See Annexure 1) came into force
on 6 April 20014 7 providing a limited liability partnership the organisational flexibility
and tax status of a partnership with limited liability for its members.

4.1.0 OVERVIEW OF THE LIMITED LIABILITY PARTNERSHIP

4.1.1 Separate legal entity
The limited liability partnership is a separate legal entity with unlimited capacity. This
means that an LLP can do anything that a natural person could do. It has the ability
to enter into contracts and hold property, and will continue in existence in spite of
any change in membership. The LLP's existence as a separate legal entity makes it
more closely akin to a company than to a partnership (except insofar as the internal
relations are governed by agreement between the members. The underlying
approach, therefore, was to draw on the principles enshrined in the legislative
treatment of companies.

The LLP's existence as a corporate entity means that the effect of the general law is
different in comparison with a partnership. For example, it is anticipated that a third
party will usually contract with the LLP itself rather than with an individual member
of the LLP whereas, in general, a partner contracts as principal and on behalf of the
other partners.

Should a partner be negligent in the work that he carries out for a client, there will
generally be two possible causes of action against that partner: contract and tort.
However, because the limited liability partnership will be a separate legal entity with
which the client has contracted, only one action (the tort action) is potentially
available against the member.

Should the courts consider the case of a negligent member of an LLP whose
conduct has resulted in economic loss for his client, the courts decision cannot be

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244

forecast with certainty. But, recent case law suggests that in deciding whether
such a member was potentially liable to a client, the courts would have regard to
various factors including whether the member of the LLP assumed personal
responsibility for the advice, whether the client relied on the assumption of
responsibility and whether such reliance was reasonable.

4.1.2 Internal relations
As regards the management of the internal affairs of the LLP there is a parallel with
the system that operates for partnerships. Members will not be obliged to enter into
a formal agreement among them and there will be no obligation to publish any
agreement, which is entered into. As in the case of partnerships, however, there will,
in general, be clear advantages in having a formal written agreement between
members to regulate the affairs of the undertaking and to avoid disputes between
them. The formal procedures n eeded to establish an LLP, including the need for an
application to the registrar of companies, are likely to encourage the members to set
up a formal arrangement before the LLP commences business. However, we have
published regulatory default provisions governing the relationship between the
members, which would apply where no agreement existed, or the agreement did not
include provision to deal with a particular issue.

4.1.3 Taxation
The profits of the business of an LLP will be taxed as if the business were carried on
by partners in partnership, rather than by a body corporate. This ensures that the
commercial choice between using an LLP or a partnership is a tax neutral one.

The taxation clauses in the Act are expressed in broad terms so that the existing
rules for partnerships and partners will, in general, simply apply to LLPs, and
members of LLPs, which are carrying on businesses, as if these were partnerships
and partners respectively.

The transfer of an existing business to an LLP will only be treated for tax purposes as
giving rise to a cessation of the business of the partnership which is making the
transfer if in otherwise identical circumstances a transfer between one partnership
and another would do so.

The transfer of assets between a partnership and an LLP will only give rise to
chargeable gain or capital allowance consequences if, in otherwise identical
circumstances, a transfer of assets between one partnership and another would so
do.

Similarly, Inland Revenue Statements of Practic e and Extra Statutory Concessions
will apply to LLPs and members of LLPs as they apply to partnerships and to
partners.

4.2.0 SALIENT FEATURES OF THE ACT
The Act classifies partners into two categories namely ‘members’ and ‘designated
members’. Members of an LLP can be an individual, another LLP, or a company but
not a limited partnership or a general partnership. An LLP must notify the Companies
House for any changes to its membership and its members' residential addresses. 4 8
A limited liability partnership must have at least two, formally appointed, designated

48
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members at all times. Designated members are similar to executive or managing
directors and the company secretary of a company. If there are fewer than two
designated members then every member autom atically becomes a designated
member. By virtue of section 24 of the UK Companies Act 1985, where a limited
liability partnership continues for more than six months with a single member, then
that member becomes liable jointly and severally with the LLP for the debts of the
firms contracted for during that period.
The management structure of a limited liability partnership is governed by its
agreement among members and LLP and members inter se. The agreement should
cover the sort of issues dealt within a normal partnership agreement. It is however
not mandatory to file the same with the Registrar. The First Schedule of the Act
provides for certain default provisions, which are applicable if the members’
agreement is silent on a certain issue.

A limited liability partnership is also considered to be a 'Legal Person' in its own right,
and can operate in the same way as a company in most respects. However, one
important difference between an LLP and a limited company is the way in which the
profits are taxed, with each member of the partnership being taxed according to the
share of the profits that they receive rather than the LLP paying tax directly on its
profits.

A LLP is required to produce and publish financial accounts with a similar level of
details to a similar sized limited company and to submit accounts and an annual
return to the Registrar of Companies each year. This requirement is far more
demanding than the position for normal partnerships and some specific accounting
rules may lead to different profits from those of a normal partnership. Further, the
Act applies the provisions of company law and insolvency law, with appropriate
modifications, to LLPs.

The LLP Structure is open to all forms of businesses and is not just restricted to
professionals only. However, some professionals are required to satisfy certain
conditions set by their professional bodies to do so. If the rules of a profession
prevent its members from carrying on a business as employees or members of a
corporation, then an LLP business formed by them will not be lawful and the
Registrar of Companies will refuse its registration. For instance, architects who
practice through LLPs have to register with the Architects' Registration Board 4 9 .

There were 7056 LLPs registered in England and Wales as at 31 March 2004, but the
number of effective LLPs stood at 5279 after deducting those registered LLPs that
were either in liquidation or on the path to dissolution. The average number of
members per LLP was approximately four, although there were some LLPs with over
200 members. 5 0

4.3.0 COMMENTARY ON SECTIONS

4.3.1 Section 1: Limited liability partnerships
Subsections (1) to (3) An LLP is a legal person in its own right. It is a body
corporate, formed on incorporation (see section 3). It has unlimited capacity and

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Selected Places.

246

will, therefore, be able to undertake the full range of business activities which a
partnership could undertake.

Subsection (4) While in law an LLP is separate from its members, its members may
be liable to contribute to its asset s if it is wound up. The extent of that potential
liability will be set out in regulations.

Subsection (5) As an LLP will be a body corporate, partnership law will not in general
apply to an LLP. Elements of partnership law may, however, be applied to LLPs by
regulations made under section 15(c), and section 5(1)(b) provides that regulations
under section 15(c) will apply in the absence of agreement as to any matter
concerning the mutual obligations of LLP members, or LLP members and the LLP.

4.3.2 Section 2: Incorporation document etc
Section 2 sets out the conditions, which must be met for an LLP to be incorporated.

Subsection (1) To form an LLP, there must at the outset be at least two people who
are associated for the carrying on of a lawful business with a view to profit and who
subscribe their names to a document called an "incorporation document". The
incorporation document must be delivered to the registrar. A statement must also be
delivered to the registrar that there has been compliance with the requirement that
at least two persons, associated for the purpose of carrying on a lawful business with
a view to profit, have subscribed their names to the incorporation document. The
statement must be made by a subscriber to the incorporation docume nt or a solicitor
engaged in the formation of the LLP.

Subsection (2) The incorporation document must contain various items of
information: the name of the LLP, whether the registered office is to be situated in
England and Wales, in Wales or in Scotland, the address of the registered office, the
name and address of the persons who are to be members on incorporation and
whether some or all of the members are to be designated members.

Subsection (3) An offence is committed if a person makes a statement under
subsection (1)(c) that he knows to be false or does not believe to be true.

Subsection (4) Where a person is guilty of an offence under subsection (3) that
person will be liable on summary conviction to imprisonment for no longer than six
months or a fine that does not exceed the statutory maximum (currently £5,000) or
both. If the conviction is on indictment that person will be liable to imprisonment for
a period of not more than two years or a fine or both.

4.3.3 Section 3: Incorporation by registration
Subsection (1) When the registrar receives the incorporation document he will retain
and register it. Once the documents have been registered, the registrar will issue a
certificate that the LLP is incorporated by the name specified in the incorporation
document.

Subsection (2) A statement that is delivered under section 2(1)(c) may be accepted
by the registrar as sufficient evidence that the requirement in section 2(1)(a) has
been complied with.

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Subsection (4) The certificate issued by the registrar is evidence that all
requirements have been complied with.

4.3.4 Section 4: Members
Subsection (1) The first members of an LLP are those who signed the incorporation
document.

Subsection (2) After incorporation, any person may become a member of an LLP by
agreement with the existing members.

Subsection (3) A person may cease to be a member by death, dissolution and in
accordance with any agreement with the other members of the LLP. Where there is
no agreement a member may cease to be a member by giving reasonable notice to
the other members.

Subsection (4) A member of an LLP will not be regarded as an employee of the
entity, unless, if he and the other members were partners in a partnership, he would
be regarded as an employee.

4.3.5 Section 5: Relationship of members etc
Subsection (1) deals with the relationship between members. The rights and duties
of the members of an LLP to one another and to the LLP are governed by the
provisions of any agreement between the members, subject to the provisions of any
enactment. The Act does not require an agreement to be entered into between the
members and there is no requirement to publish it. In the case where there is no
agreement on any matter the mutual rights and duties of the LLP and its members
will be governed by default regulations made under section 15(c). The default
regulations (see paragraph 12 above) will make provision concerning various
matters, including the entitlement of members to share equally in the capital and
profits of the business and that every member may take part in the management of
the LLP

Subsection (2) provides that when an LLP comes into being it is bound by the terms
of any agreement that is entered into by the subscribers to the incorporation
document.

4.3.6 Section 6: Members as agents
Subsection (1) Each member of the LLP is an agent of the LLP. Each member may,
therefore, represent and act on behalf of the LLP in all its business (subject to
subsection (2)).

Subsection (2) An LLP is not, however, bound by the actions of a member where that
member has no authority to act for the LLP, and the person dealing with the member
is aware of this or does not know or believe that the member was in fact a member
of the LLP.

Subsection (3) Transactions with a person who is no longer a member of an LLP are
still valid transactions with the LLP, unless the other party has been told that the
person is no longer a member, or the registrar has received a notice to that effect.
Subsection (4) ensures that where a member of an LLP is liable to a person (other
than another member of the LLP) for a wrongful act or omission in the course of
business of the LLP or with its authority, the LLP will be liable to the same extent as
the member.

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4.3.7 Section 7: Ex-members
This concerns the situation where a person ceases to be a member of an LLP, or his
interest in the LLP is transferred to another person. A former member, the member's
personal representatives, the member's trustee in bankruptcy or liquidator or the
trustees under the trust deed for the benefit of his creditors or assignee may not
interfere with the management or administration of the LLP, but may receive any
amount to which they are entitled.

4.3.8 Section 8: Designated members
In general, the role of designated members is to perform the administrative and
filing duties of the LLP. However, some provisions of the Companies Act 1985 and
the Insolvency Act 1986, as intended to be applied by regulations under the Act, will
place on them tasks which go beyond the mere administrative and in the
performance of which they would be representing all the members of the LLP, for
example, the signing of the LLP's accounts.

Subsection (1) provides that, where the incorporation document specifies that
certain members are to be the designated members, then they will be the designated
members on incorporation. Other members may become designated members by
agreement with the members. A member may cease to be a designated member by
agreement with the other members.

Subsection (2) requires there to be at least two designated members and provides
that if no members or only one are designated then all members are designated
members.

Subsection (3) provides that if the incorporation document states that every person
who is a member of the LLP is a designated member then all persons who are from
time to time members are designated members.

Subsection (4) permits the LLP to notify the registrar that all members of the LLP are
designated members or that specified members will be designated. Where the LLP
notifies the registrar the effect will be as though it had been stated in the
incorporation document.

Subsection (6) explains that when a person ceases to be member of the LLP he will
also cease to be a designated member.

4.3.9 Section 9: Registration of membership changes
Subsection (1) provides that where a person becomes or ceases to be a member or a
designated member the registrar must be notified within fourteen days and that a
change in the name or address of a member must b notified within twenty eight
e
days.

Subsection (2) states that where all the members of an LLP are designated members
notification only needs to be given that a person has ceased to be a member and
there needs to be no separate notification that they have ceased to be a designated
member.

Subsection (4) provides that, where subsection (1) is not complied with, the LLP and
all designated members commit an offence.

249

Subsection (5) explains that a defence to subsection (4) is available for designated
members if they can prove that they took all reasonable steps to ensure that
subsection (1) was complied with.

Subsection (6) explains that where a person is guilty of an offence under subsection
(4) they would be liable on summary conviction to a fine not exceeding level 5 on the
standard scale (currently £5,000).

4.3.10 Section 10: Income tax and chargeable gains
This section ensures that the members of an LLP which is carrying on a business with
a view to profit are treated for the purposes of income tax and capital gains tax as if
they were partners carrying on a business in partnership, despite the fact that
section 1(2) of the Act establishes an LLP as a body corporate.

In subsection (1) the new section 118ZA of the Income and Corporation Taxes Act
1988 (ICTA) provides that, for the purposes of the Acts relating to income tax and
corporation tax, a trade, profession or business carried on with a view to profit by an
LLP shall be treated as carried on by the members of the LLP as partners carrying on
a trade profession or business in partnership. It also provides that the property of
the LLP shall be treated for those purposes as partnership property. This ensures
that, like partners, the members will be individually liable to tax on their shares of
the profits of the trade, profession or business carried on by the LLP.

The new section 118ZB ICTA operates to extend the provisions of sections 117 and
118 ICTA to members of LLPs that carry on a trade. The new section 118ZC will
establish the limit on the tax relief for interest and trading losses that members of an
LLP can claim against income other than from the LLP. The limit for relief claimed by
members of LLPs would be the amount they have subscribed to the LLP together with
any further amount that they have undertaken to contribute in the event that the
LLP is wound up. Subject to the further provisions of the new section 118ZC(3) the
amount subscribed will normally be the amount of the partner's investment in a
conventional partnership that becomes an LLP or the amount that he has invested in
the LLP when he became a member or founded the LLP. The further provisions set
out in this new provision ensure that the capital invested remains in the LLP and that
there are no other arrangements for extracting value from the LLP in some other
way. For example, there is a requirement that the investment in the LLP must
endure for a given period so that members cannot make capital contributions to give
them access to the tax relief and then, after having the relief, withdraw them.

The restriction on tax relief that is imposed by sections 117 and 118 of ICTA is only
against tax relief for interest and trading losses set against the members' income
other than that which they earn from the LLP. There will be no restriction on any
relief set against LLP income. This means that any balance of loss relief after the
restriction is applied can be carried forward and set against members' future shares
of their LLP profits.

The new section 118ZD is designed to ensure that tax relief can be obtained where a
member of an LLP who has had relief restricted to their capital contribution makes a
further capital contribution in a later chargeable period.

Subsection (3) inserts new section 59A in the Taxation of Chargeable Gains Act 1992
(TCGA). New section 59A(1) provides that the assets of the LLP shall be treated as
assets held by the members as partners for the purpose of taxing chargeable gains.

250

This ensures that the members of the LLP, rather than the LLP itself, will be liable to
tax for chargeable gains on the disposal of LLP assets. The section brings LLPs in line
with the approach adopted for partnerships in section 59 TCGA, which similarly
treats assets as held by the partners rather than by the partnership entity.

The new section 59A(2) sets out how the chargeable gains of an LLP will be taxed
when section 59A(1) ceases to apply (usually, when the LLP goes into liquidation).
This provides that the LLP (through its liquidator) will be taxed on disposals of assets
under the normal corporate insolvency rules. Chargeable gains on assets disposed of
in the liquidation period will be taxed as if the section 59A(1) partnership tax
treatment had never applied and the only capital asset, which the members will then
hold for tax purposes, will be their interest in the LLP. The proceeds of disposal of
members' interests will be based on the amount of the liquidator's capital
distributions (if any) to the members, after he has met the claims of the creditors of
the LLP. And in calculating the chargeable gain or allowable loss on that disposal,
each member's interest will be taken as acquired on the date they originally joined
the LLP and by reference to their capital cost of becoming a member.

Subsection (4) inserts new section 156A TCGA. This ensures that any gain on an LLP
asset which a member has postponed as a result of claiming business asset roll-over
relief (under sections 152 to 154 TCGA), and which has not subsequently come back
into charge on disposal of the replacem ent asset prior to liquidation of the LLP, will
be taxed on the member when that liquidation occurs. This section is required to
prevent deferred gains from falling out of charge when members cease to be taxed
as partners on the disposal of LLP assets. The reasons why such gains would
otherwise fail to be taxed are, firstly that there is no general occasion of charge on
members when the LLP's assets vest in a liquidator and, secondly, because a
member's previous roll-over relief claim cannot be taken into a ccount where the
replacement asset is disposed of by, and taxed on, an LLP (through its liquidator) as
a separate taxable entity.

4.3.11 Section 11: Inheritance tax
This section inserts a new section in the Inheritance Tax Act 1984. This provides that
for inheritance tax purposes the members of an LLP are treated as if they were
partners in a partnership. This ensures that inheritance tax will be charged in respect
of members' interests in an LLP as it is in respect of partners' interests in a
partnership, and that business relief will be available on the same basis.

4.3.12 Section 12: Stamp duty
Subsection (1) provides for relief from stamp duty on an instrument transferring
property from a person to a newly incorporated LLP in connection with its
incorporation, subject to a time limit of one year from incorporation and to the
conditions in subsections (2) and (3).

Subsection (2) The first condition is that at the relevant time the person is either a
partner in a partnership of the persons who are or are to be members of the limited
liability partnership, or holds the property as nominee or bare trustee for one or
more of the partners.

Subsection (3) The second condition is that either the proportions of the property
transferred to which the persons referred to in subsection (2)(a) are entitled
immediately after the transfer are the same as at the relevant time, or none of the
differences in those proportions is attributable to tax avoidance.

251

Subsection (4) sets out the circumstances in which a person holds property as bare
trustee for the purpose of subsection (2).

Subsection (5) defines "relevant time" for the purpose of the section.

Subsection (6) provides the administrative procedure for relief under the section.

4.3.13 Section 13: Class 4 national insurance contributions
This section ensures that Class 4 national insurance contributions, which are
chargeable on partners' shares of partnership profit, are chargeable in the same way
on members of LLPs.

4.3.14 Section 14: Insolvency and winding up
Subsection (1) The Secretary of State is required to make regulations applying or
incorporating, with such modifications as appear appropriate, Parts I to IV, VI and
VII of the Insolvency Act 1986.

The Insolvency Act provides a comprehensive code of procedures relating to both
corporate and individual insolvency. This subsection ensures that the major
corporate insolvency and winding up procedures including company voluntary
arrangements, administration, receivership and voluntary and compulsory winding
up, will be applied to LLPs. Such procedures will be adapted as necessary to suit
LLPs.

Subsection (2) The Secretary of State may make regulations making other provision
about the winding up and insolvency of an LLP or an oversea limited liability
partnership by applying or incorporating with or without modifications, or
disapplying, any law relating to the insolvency or winding up of companies or other
corporations.

4.3.15 Section 15: Application of company law etc
Section 15 allows the Secretary of State to make regulations applying or
incorporating the law relating to corporations, companies and partnerships (with
appropriate modifications) to LLPs.

4.3.16 Section 16: Consequential amendments
This section allows for enactments, in particular those affecting companies, other
corporations or partnerships, to be amended in consequence of the provisions in the
Act or of any regulations, which may be made under it.

4.3.17 Section 17: General
This section makes general provision about regulations under the Act, and in
particular allows regulations to provide that failure to comply with their requirements
is a criminal offence. The section provides which of the regulations require the
affirmative resolution procedure and which the negative resolution procedure.

4.3.18 Section 19: Commencement, extent and short title
Subsection (3) is designed to enable the regulation- making functions relating to the
process of winding up of a Scottish LLP to be exercised by Scottish Ministers.

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4.3.19.0 SCHEDULE – NAME AND REGISTERED OFFICE

4.3.19.1 Part I - Names
The name of an LLP must end with limited liability partnership, llp or LLP. Should the
incorporation document give the registered office as situated in Wales it must end
with either limited liability partnership, partneriaeth atebolrwydd cyfyngedig, llp, LLP,
pac or PAC.

An LLP cannot be registered by a name which has one of the above expressions or
abbreviations in it (unless it is at the end). Neither can it have a name that is already
used by a registered company or another LLP, nor where the Secretary of State
considers the use of the name would constitute a criminal offence or the name to be
offensive.

An LLP shall not be registered by a name that is likely to give the impression that it
is connected with HM Government or with a local authority.

An LLP can change its name at any time. However, where an LLP has been registered
by a name, which, in the opinion of the Secretary of State, is misleading, or the
same or very similar to one already used by a registered company or another LLP,
the Secretary of State may direct the LLP to change its name.

When an LLP changes its name it should notify the registrar. Once the registrar has
received notification and if the name is satisfactory a certificate of change of name
will be issued and the change will be effective from the date of issue.

Changing the name of the LLP will not affect any of its rights and obligations, or
make any difference to any legal proceedings by or against it.

Should a person carry on business using the expression "limited liability partnership"
or "partneriaeth atebolrwydd cyfyngedig" or an imitation of either expression at the
end of their name, the person who does so and is not an LLP or an oversea LLP will
be guilty of an offence.

4.3.19.2 Part II - Registered Offices
An LLP has to have a registered office at all times and this must be situated in either
England and Wales, Wales or Scotland. Details of the LLP's registered office must be
included in the incorporation document. Where the registered office is in Wales but
the incorporation document does not state that it is situated in Wales (as opposed to
England and Wales) the LLP can notify the registrar that the registered office is
situated in Wales.

An LLP can change its registered office by sending notification to the registrar.

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ANNEXURE 1
UK Limited Liability Partnerships Act 2000 51

Introductory
Limited liability partnerships.
1. (1) There shall be a new form of legal entity to be known as a limited liability
partnership.
(2) A limited liability partnership is a body corporate (with legal personality
separate from that of its members) which is formed by being incorporated
under this Act; and-
(a) in the following provisions of this Act (except in the phrase "oversea
limited liability partnership"), and
(b) in any other enactment (except where provision is made to the
contrary or the context otherwise requires),references to a limited
liability partnership are to such a body corporate.
(3) A limited liability partnership has unlimited capacity.
(4) The members of a limited liability partnership have such liability to
contribute to its assets in the event of its being wound up as is
provided for by virtue of this Act.
(5) Accordingly, except as far as otherwise provided by this Act or any
other enactment, the law relating to partnerships does not apply to a
(6) The Schedule (which makes provision about the names and registered
offices of limited liability partnerships) has effect.

Incorporation
Incorporation document etc.
2. - (1) For a limited liability partnership to be incorporated-

(a) two or more persons associated for carrying on a lawful business with a view to
profit must have subscribed their names to an incorporation document,

(b) there must have been delivered to the registrar either the incorporation
document or a copy authenticated in a manner approved by him, and

(c) there must have been so delivered a statement in a form approved by the
registrar, made by either a solicitor engaged in the formation of the limited liability
partnership or anyone who subscribed his name to the incorporation document, that
the requirement imposed by paragraph (a) has been complied with.

(2) The incorporation document must-

(a) be in a form approved by the registrar (or as near to such a form as
circumstances allow),

(b) state the name of the limited liability partnership,

(c) state whether the registered office of the limited liability partnership is to be
situated in England and Wales, in Wales or in Scotland,

(d) state the address of that registered office,

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254

(e) state the name and address of each of the persons who are to be members of the
limited liability partnership on incorporation, and

(f) either specify which of those persons are to be designated members or state that
every person who from time to time is a member of the limited liability partnership is
a designated member.

(3) If a person makes a false statement under subsection (1)(c) which he-

(a) knows to be false, or

(b) does not believe to be true,
he commits an offence.

(4) A person guilty of an offence under subsection (3) is liable-

(a) on summary conviction, to imprisonment for a period not exceeding six months
or a fine not exceeding the statutory maximum, or to both, or

(b) on conviction on indictment, to imprisonment for a period not exceeding two
years or a fine, or to both.

Incorporation by registration.
3. (1) When the requirements imposed by paragraphs (b) and (c) of subsection
(1) of section 2 have been complied with, the registrar shall retain the
incorporation document or copy delivered to him and, unless the requirement
imposed by paragraph (a) of that subsection has not been complied with, he
shall-

(a) register the incorporation document or copy, and

(b) give a certificate that the limited liability partnership is incorporated by
the name specified in the incorporation document.
(2) The registrar may accept the statement delivered under paragraph (c) of
subsection (1) of section 2 as sufficient evidence that the requirement
imposed by paragraph (a) of that subsection has been complied with.
(3) The certificate shall either be signed by the registrar or be authenticated
by his official seal.
(4) The certificate is conclusive evidence that the requirements of section 2
are complied with and that the limited liability partnership is incorporated by
the name specified in the incorporation document.

Membership

Membership Members.
4. (1) On the incorporation of a limited liability partnership its members are the
persons who subscribed their names to the incorporation document (other than any
who have died or been dissolved).
(2) Any other person may become a member of a limited liability partnership by and
in accordance with an agreement with the existing members.
(3) A person may cease to be a member of a limited liability partnership (as well as
by death or dissolution) in accordance with an agreement with the other members

255

or, in the absence of agreement with the other members as to cessation of
membership, by giving reasonable notice to the other members.
(4) A member of a limited liability partnership shall not be regarded for any purpose
as employed by the limited liability partnership unless, if he and the other members
were partners in a partnership, he would be regarded for that purpose as employed
by the partnership.

Relationship of members etc.
5. (1) Except as far as otherwise provided by this Act or any other enactment,
the mutual rights and duties of the members of a limited liability partnership,
and the mutual rights and duties of a limited liability partnership and its
members, shall be governed-

(a) by agreement between the members, or between the limited liability
partnership and its members, or

(b) in the absence of agreement as to any matter, by any provision made in
relation to that matter by regulations under section 15(c).

(2) An agreement made before the incorporation of a limited liability partnership
between the persons who subscribe their names to the incorporation document may
impose obligations on the limited liability partnership (to take effect at any time after
its incorporation).

Members as agents.
6. (1) Every member of a limited liability partnership is the agent of the limited
(2) But a limited liability partnership is not bound by anything done by a
member in dealing with a person if-

(a) the member in fact has no authority to act for the limited liability
partnership by doing that thing, and

(b) the person knows that he has no authority or does not know or believe
him to be a member of the limited liability partnership.
(3) Where a person has ceased to be a member of a limited liability
partners hip, the former member is to be regarded (in relation to any person
dealing with the limited liability partnership) as still being a member of the
limited liability partnership unless-

(a) the person has notice that the former member has ceased to be a
member of the limited liability partnership, or

(b) notice that the former member has ceased to be a member of the limited
liability partnership has been delivered to the registrar.
(4) Where a member of a limited liability partnership is liable to any person
(other than another member of the limited liability partnership) as a result of
a wrongful act or omission of his in the course of the business of the limited
liability partnership or with its authority, the limited liability partnership is
liable to the same extent as the member.

256

Ex-members.
7. (1) This section applies where a member of a limited liability partnership has
either ceased to be a member or-

(a) has died,

(b) has become bankrupt or had his estate sequestrated or has been wound
up,

(c) has granted a trust deed for the benefit of his creditors, or

(d) has assigned the whole or any part of his share in the limited liability
partnership (absolutely or by way of charge or security).
(2) In such an event the former me mber or-

(a) his personal representative,

(b) his trustee in bankruptcy or permanent or interim trustee (within the
meaning of the Bankruptcy (Scotland) Act 1985) or liquidator,

(c) his trustee under the trust deed for the benefit of his creditors, or

(d) his assignee,
may not interfere in the management or administration of any business or
affairs of the limited liability partnership.

(3) But subsection (2) does not affect any right to receive an amount from
the limited liability partnership in that event.

Designated members.
8. (1) If the incorporation document specifies who are to be designated
members-

(a) they are designated members on incorporation, and

(b) any member may become a designated member by and in accordance
with an agreement with the other members, and a member may cease to be
a designated member in accordance with an agreement with the other
members.
(2) But if there would otherwise be no designated members, or only one,
every member is a designated member.
(3) If the incorporation document states that every person who from time to
time is a member of the limited liability partnership is a designated member,
every member is a designated member.
(4) A limited liability partnership may at any time deliver to the registrar-

(a) notice that specified members are to be designated members, or

(b) notice that every person who from time to time is a member of the limited
liability partnership is a designated member, and, once it is delivered,
subsection (1) (apart from paragraph (a)) and subsection (2), or subsection
(3), shall have effect as if that were stated in the incorporation document.

257

(5) A notice delivered under subsection (4)-

(a) shall be in a form approved by the registrar, and

(b) shall be signed by a designated member of the limited liability partnership
or authenticated in a manner approved by the registrar.
(6) A person ceases to be a designated member if he ceases to be a member.

Registration of membership changes.
9. (1) A limited liability partnership must ensure that-

(a) where a person becomes or ceases to be a member or designated
member, notice is delivered to the registrar within fourteen days, and

(b) where there is any change in the name or address of a member, notice is
delivered to the registrar within 28 days.
(2) Where all the members from time to time of a limited liability partnership
are designated members, subsection (1)(a) does not require notice that a
person has become or ceased to be a designated member as well as a
member.
(3) A notice delivered under subsection (1)-


or authenticated in a manner approved by the registrar, and, if it relates to a
person becoming a member or designated member, shall contain a statement
that he consents to becoming a member or designated member signed by
him or authenticated in a manner approved by the registrar.

(4) If a limited liability partnership fails to comply with subsection (1), the
partnership and every designated member commits an offence.

(5) But it is a defence for a designated member charged with an offence
under subsection (4) to prove that he took all reasonable steps for securing
that subsection (1) was complied with.

(6) A person guilty of an offence under subsection (4) is liable on summary
conviction to a fine not exceeding level 5 on the standard scale.

Taxation
Income tax and chargeable gains.
10. (1) In the Income and Corporation Taxes Act 1988, after section 118 insert-

"Limited liability partnerships
Treatment of 118ZA. For the purposes of the Tax Acts, a trade, profession or
limited liability business carried on by a limited liability partnership with a view to
partnerships. profit shall be treated as carried on in partnership by its members
(and not by the limited liability partnership as such); and,
accordingly, the property of the limited liability partnership shall
be treated for those purposes as partnership property.

258

Restriction on 118ZB. Sections 117 and 118 have effect in relation to a
relief. member of a limited liability partnership as in relation to a limited
partner, but subject to sections 118ZC and 118ZD.

Member's 118ZC. - (1) Subsection (3) of section 117 does not have effect
contribution to in relation to a member of a limited liability partnership.
trade.
(2) But, for the purposes of that section and section 118, such
a member's contribution to a trade at any time ("the relevant
time") is the greater of-

(a) the amount subscribed by him, and
(b) the amount of his liability on a winding up.
(3) The amount subscribed by a member of a limited liability
partnership is the amount which he has contributed to the limited
liability partnership as capital, less so much of that amount (if
any) as-

(a) he has previously, directly or indirectly, drawn out or
received back,
(b) he so draws out or receives back during the period of
five years beginning with the relevant time,
(c) he is or may be entitled so to draw out or receive back
at any time when he is a member of the limited liability
partnership, or
(d) he is or may be entitled to require another person to
reimburse to him.
(4) The amount of the liability of a member of a limited liability
partnership on a winding up is the amount which-

(a) he is liable to contribute to the assets of the limited
liability partnership in the event of its being wound up, and
(b) he remains liable so to contribute for the period of at
least five years beginning with the relevant time (or until it
is wound up, if that happens before the end of that
period).
Carry forward of 118ZD. - (1) Where amounts relating to a trade carried on by a
unrelieved losses. member of a limited liability partnership are, in any one or more
chargeable periods, prevented from being given or allowed by
section 117 or 118 as it applies otherwise than by virtue of this
section (his "total unrelieved loss"), subsection (2) applies in each
subsequent chargeable period in which-

(a) he carries on the trade as a member of the limited
liability partnership, and
(b) any of his total unrelieved loss remains outstanding.
(2) Sections 380, 381, 393A(1) and 403 (and sections 117 and

259

118 as they apply in relation to those sections) shall have effect in
the subsequent chargeable period as if-

(a) any loss sustained or incurred by the member in the
trade in that chargeable period were increased by an
amount equal to so much of his total unrelieved loss as
remains outstanding in that period, or
(b) (if no loss is so sustained or incurred) a loss of that
amount were so sustained or incurred.
(3) To ascertain whether any (and, if so, how much) of a
member's total unrelieved loss remains outstanding in the
subsequent chargeable period, deduct from the amount of his
total unrelieved loss the aggregate of-

(a) any relief given under any provision of the Tax Acts
(otherwise than as a result of subsection (2)) in respect of
his total unrelieved loss in that or any previous chargeable
period, and
(b) any amount given or allowed in respect of his total
unrelieved loss as a result of subsection (2) in any
previous chargeable period (or which would have been so
given or allowed had a claim been made)."
(2) In section 362(2)(a) of that Act (loan to buy into partnership), after
"partner" insert "in a limited partnership registered under the Limited Partnerships
Act 1907".
(3) In the Taxation of Chargeable Gains Act 1992, after section 59 insert-

"Limited liability 59A. - (1) Where a limited liability partnership carries on a trade
partnerships. or business with a view to profit-

(a) assets held by the limited liability partnership shall be
treated for the purposes of tax in respect of chargeable
gains as held by its members as partners, and
(b) any dealings by the limited liability partnership shall be
treated for those purposes as dealings by its members in
partnership (and not by the limited liability partnership as
such),
and tax in respect of chargeable gains accruing to the members of
the limited liability partnership on the disposal of any of its assets
shall be assessed and charged on them separately.

(2) Where subsection (1) ceases to apply in relation to a limited
liability partnership with the effect that tax is assessed and
charged-

(a) on the limited liability partnership (as a company) in
respect of chargeable gains accruing on the disposal of any
of its assets, and
(b) on the members in respect of chargeable gains accruing

260

on the disposal of any of their capital interests in the limited
liability partnership,
it shall be assessed and charged on the limited liability partnership
as if subsection (1) had never applied in relation to it.

(3) Neither the commencement of the application of subsection
(1) nor the cessation of its application in relation to a limited
liability partnership is to be taken as giving rise to the disposal of
any assets by it or any of its members."

(4) After section 156 of that Act insert-

"Cessation of 156A. - (1) Where, immediately before the time of cessation of
trade by limited trade, a member of a limited liability partnership holds an asset,
liability or an interest in an asset, acquired by him for a consideration
partnership. treated as reduced under section 152 or 153, he shall be treated
as if a chargeable gain equal to the amount of the reduction
accrued to him immediately before that time.

(2) Where, as a result of section 154(2), a chargeable gain on
the disposal of an asset, or an interest in an asset, by a member
of a limited liability partnership has not accrued before the time
of cessation of trade, the member shall be treated as if the
chargeable gain accrued immediately before that time.

(3) In this section "the time of cessation of trade", in relation
to a limited liability partnership, means the time when section
59A(1) ceases to apply in relation to the limited liability
partnership."

Inheritance tax. 11. In the Inheritance Tax Act 1984, after section 267 insert-

"Limited liability 267A. For the purposes of this Act and any other enactments
partnerships. relating to inheritance tax-

(a) property to which a limited liability partnership is
entitled, or which it occupies or uses, shall be treated as
property to which its members are entitled, or which they
occupy or use, as partners,
(b) any business carried on by a limited liability partnership
shall be treated as carried on in partnership by its
members,
(c) incorporation, change in membership or dissolution of a
limited liability partnership shall be treated as formation,
alteration or dissolution of a partnership, and
(d) any transfer of value made by or to a limited liability
partnership shall be treated as made by or to its members
in partnership (and not by or to the limited liability
partnership as such)."

261

Stamp duty.
12. (1) Stamp duty shall not be chargeable on an instrument by which property is
conveyed or transferred by a person to a limited liability partnership in
connection with its incorporation within the period of one year beginning with
the date of incorporation if the following two conditions are satisfied.

(2) The first condition is that at the relevant time the person-

(a) is a partner in a partnership comprised of all the persons who are or are
to be members of the limited liability partnership (and no-one else), or

(b) holds the property conveyed or transferred as nominee or bare trustee for
one or more of the partners in such a partnership.

(3) The second condition is that-

(a) the proportions of the property conveyed or transferred to which the
persons mentioned in subsection (2)(a) are entitled immediately after the
conveyance or transfer are the same as those to which they were entitled at
the relevant time, or

(b) none of the differences in those proportions has arisen as part of a
scheme or arrangement of which the main purpose, or one of the main
purposes, is avoidance of liability to any duty or tax.

(4) For the purposes of subsection (2) a person holds property as bare
trustee for a partner if the partner has the exclusive right (subject only to
satisfying any outstanding charge, lien or other right of the trustee to resort
to the property for payment of duty, taxes, costs or other outgoings) to direct
how the property shall be dealt with.

(5) In this section "the relevant time" means-

(a) if the person who conveyed or transferred the property to the limited
liability partnership acquired the property after its incorporation, immediately
after he acquired the property, and

(b) in any other case, immediately before its incorporation.

(6) An instrument in respect of which stamp duty is not chargeable by virtue
of subsection (1) shall not be taken to be duly stamped unless-

(a) it has, in accordance with section 12 of the Stamp Act 1891, been
stamped with a particular stamp denoting that it is not chargeable with any
duty or that it is duly stamped, or

(b) it is stamped with the duty to which it would be liable apart from that
subsection.

Class 4 national insurance contributions.
13. In section 15 of the Social Security Contributions and Benefits Act 1992 and
section 15 of the Social Security Contributions and Benefits (Northern Ireland) Act

262

1992 (Class 4 contributions), after subsection (3) insert-

"(3A) Where income tax is (or would be) charged on a member of a limited liability
partnership in respect of profits or gains arising from the carrying on of a trade or
profession by the limited liability partnership, Class 4 contributions shall be payable
by him if they would be payable were the trade or profession carried on in
partnership by the members."

Regulations

Insolvency and winding up.
14. - (1) Regulations shall make provision about the insolvency and winding up of
limited liability partnerships by applying or incorporating, with such modifications as
appear appropriate, Parts I to IV, VI and VII of the Insolvency Act 1986.

(2) Regulations may make other provision about the insolvency and winding up of
limited liability partnerships, and provision about the insolvency and winding up of
oversea limited liability partnerships, by-

(a) applying or incorporating, with such modifications as appear appropriate,
any law relating to the insolvency or winding up of companies or other
corporations which would not otherwise have effect in relation to them, or

(b) providing for any law relating to the insolvency or winding up of
companies or other corporations which would otherwise have effect in relation
to them not to apply to them or to apply to them with such modifications as
appear appropriate.

(3) In this Act "oversea limited liability partnership" means a body incorporated or
otherwise established outside Great Britain and having such connection with Great
Britain, and such other features, as regulations may prescribe.

Application of company law etc.
15. Regulations may make provision about limited liability partnerships and oversea
limited liability partnerships (not being provision about insolvency or winding up) by-

(a) applying or incorporating, with such modifications as appear appropriate,
any law relating to companies or other corporations which would not
otherwise have effect in relation to them,

(b) providing for any law relating to companies or other corporations which
would otherwise have effect in relation to them not to apply to them or to
apply to them with such modifications as appear appropriate, or

(c) applying or incorporating, with such modifications as appear appropriate,
any law relating to partnerships.

Consequential amendments.
16. - (1) Regulations may make in any enactment such amendments or repeals as
appear appropriate in consequence of this Act or regulations made under it.
(2) The regulations may, in particular, make amendments and repeals affecting

263

companies or other corporations or partnerships.

General.
17. - (1) In this Act "regulations" means regulations made by the Secretary of State
by statutory instrument.
(2) Regulations under this Act may in particular-

(a) make provision for dealing with non-compliance with any of the
regulations (including the creation of criminal offences),

(b) impose fees (which shall be paid into the Consolidated Fund), and

(c) provide for the exercise of functions by persons prescribed by the
regulations.
(3) Regulations under this Act may-

(a) contain any appropriate consequential, incidental, supplementary or
transitional provisions or savings, and

(b) make different provision for different purposes.
(4) No regulatio ns to which this subsection applies shall be made unless a draft
of the statutory instrument containing the regulations (whether or not together with
other provisions) has been laid before, and approved by a resolution of, each House
of Parliament.
(5) Subsection (4) applies to-

(a) regulations under section 14(2) not consisting entirely of the application
or incorporation (with or without modifications) of provisions contained in or
made under the Insolvency Act 1986,

(b) regulations under section 15 not consisting entirely of the application or
incorporation (with or without modifications) of provisions contained in or
made under Part I, Chapter VIII of Part V, Part VII, Parts XI to XIII, Parts XVI
to XVIII, Part XX or Parts XXIV to XXVI of the Companies Act 1985,

(c) regulations under section 14 or 15 making provision about oversea limited
liability partnerships, and

(d) regulations under section 16.
(6) A statutory instrument containing regulations under this Act shall (unless a
draft of it has been approved by a resolution of each House of Parliament) be subject
to annulment in pursuance of a resolution of either House of Parliament.

Supplementary

Interpretation.
18. In this Act-

"address", in relation to a me mber of a limited liability partnership, means-

(a) if an individual, his usual residential address, and

264

(b) if a corporation or Scottish firm, its registered or principal office,

"business" includes every trade, profession and occupation,

"designated member" shall be construed in accordance with section 8,

"enactment" includes subordinate legislation (within the meaning of the
Interpretation Act 1978),

"incorporation document" shall be construed in accordance with section 2,

"limited liability partnership" has the meaning given by section 1(2),

"member" shall be construed in accordance with section 4,

"modifications" includes additions and omissions,

"name", in relation to a member of a limited liability partnership, means-

(a) if an individual, his forename and surname (or, in the case of a
peer or other person usually known by a title, his title instead of or in
addition to either or both his forename and surname), and

(b) if a corporation or Scottish firm, its corporate or firm name,

"oversea limited liability partnership" has the meaning given by section 14(3),

"the registrar" means-

(a) if the registered office of the limited liability partnership is, or is to
be, situated in England and Wales or in Wales, the registrar or other
officer performing under the Companies Act 1985 the duty of
registration of companies in England and Wales, and

(b) if its registered office is, or is to be, situated in Scotland, the
registrar or other officer performing under that Act the duty of
registration of companies in Scotland, and

"regulations" has the meaning given by section 17(1).

Commencement, extent and short title.
19. - (1) The preceding provisions of this Act shall come into force on such day as
the Secretary of State may by order made by statutory instrument appoint; and
different days may be appointed for different purposes.
(2) The Secretary of State may by order made by statutory instrument make
any transitional provisions and savings which appear appropriate in connection with
the coming into force of any provision of this Act.
(3) For the purposes of the Scotland Act 1998 this Act shall be taken to be a
pre-commencement enactment within the meaning of that Act.
(4) Apart from sections 10 to 13 (and this section), this Act does not extend to
Northern Ireland.
(5) This Act may be cited as the Limited Liability Partnerships Act 2000.

265

SCHEDULE
NAMES AND REGISTERED OFFICES
PART I NAMES

Index of names
1. In section 714(1) of the Companies Act 1985 (index of names), after paragraph
(d) insert-

"(da) limited liability partnerships incorporated under the Limited Liability
Partnerships Act 2000,".

Name to indicate status
2. - (1) The name of a limited liability partnership must end with-

(a) the expression "limited liability partnership", or

(b) the abbreviation "llp" or "LLP".
(2) But if the incorporation document for a limited liability partnership states
that the registered office is to be situated in Wales, its name must end with-

(a) one of the expressions "limited liability partnership" and "partneriaeth
atebolrwydd cyfyngedig", or

(b) one of the abbreviations "llp", "LLP", "pac" and "PAC".

Registration of names
3. - (1) A limited liability partnership shall not be registered by a name-

(a) which includes, otherwise than at the end of the name, either of the
expressions "limited liability partnership" and "partneriaeth atebolrwydd
cyfyngedig" or any of the abbreviations "llp", "LLP", "pac" and "PAC",

(b) which is the same as a name appearing in the index kept under section
714(1) of the Companies Act 1985,

(c) the use of which by the limited liability partnership would in the opinion of
the Secretary of State constitute a criminal offence, or

(d) which in the opinion of the Secretary of State is offensive.
(2) Except with the approval of the Secretary of State, a limited liability
partnership shall not be registered by a name which-

(a) in the opinion of the Secretary of State would be likely to give the
impression that it is connected in any way with Her Majesty's Government or
with any local authority, or

(b) includes any word or expression for the time being specified in regulations
under section 29 of the Companies Act 1985 (names needing approval),
and in paragraph (a) "local authority" means any local authority within the meaning
of the Local Government Act 1972 or the Local Government etc. (Scotland) Act 1994,
the Common Council of the City of London or the Council of the Isles of Scilly.

266

Change of name
4. - (1) A limited liability partnership may change its name at any time.
(2) Where a limited liability partnership has been registered by a name which-

(a) is the same as or, in the opinion of the Secretary of State, too like a name
appearing at the time of registration in the index kept under section 714(1) of
the Companies Act 1985, or

(b) is the same as or, in the opinion of the Secretary of State, too like a name
which should have appeared in the index at that time,
the Secretary of State may within twelve months of that time in writing direct the
limited liability partnership to change its name within such period as he may specify.
(3) If it appears to the Secretary of State-

(a) that misleading information has been given for the purpose of the
registration of a limited liability partnership by a particular name, or

(b) that undertakings or assurances have been given for that purpose and
have not been fulfilled,
he may, within five years of the date of its registration by that name, in writing
direct the limited liability partnership to change its name within such period as he
may specify.
(4) If in the Secretary of State's opinion the name by which a limited liability
partnership is registered gives so misleading an indication of the nature of its
activities as to be likely to cause harm to the public, he may in writing direct the
limited liability partnership to change its name within such period as he may specify.
(5) But the limited liability partnership may, within three weeks from the date
of the direction apply to the court to set it aside and the court may set the direction
aside or confirm it and, if it confirms it, shall specify the period within which it must
be complied with.
(6) In sub-paragraph (5) "the court" means-

(a) if the registered office of the limited liability partnership is situated in
England and Wales or in Wales, the High Court, and

(b) if it is situated in Scotland, the Court of Session.
(7) Where a direction has been given under sub-paragraph (2), (3) or (4)
specifying a period within which a limited liability partnership is to change its name,
the Secretary of State may at any time before that period ends extend it by a further
direction in writing.
(8) If a limited liability partnership fails to comply with a direction under this
paragraph-

(a) the limited liability partnership, and

(b) any designated member in default,
commits an offence.
(9) A person guilty of an offence under sub-paragraph (8) is liable on summary

267

Notification of change of name
5. - (1) Where a limited liability partnership changes its name it shall deliver notice
of the change to the registrar.
(2) A notice delivered under sub-paragraph (1)-


(3) Where the registrar receives a notice under sub-paragraph (2) he shall
(unless the new name is one by which a limited liability partnership may not be
registered)-

(a) enter the new name in the index kept under section 714(1) of the
Companies Act 1985, and

(b) issue a certificate of the change of name.
(4) The change of name has effect from the date on which the certificate is
issued.

Effect of change of name
6. A change of name by a limited liability partnership does not-

(a) affect any of its rights or duties,

(b) render defective any legal proceedings by or against it,
and any legal proceedings that might have been commenced or continued against it
by its former name may be commenced or continued against it by its new name.

Improper use of "limited liability partnership" etc.
7. - (1) If any person carries on a business under a name or title which includes as
the last words-

(a) the expression "limited liability partnership" or "partneriaeth atebolrwydd
cyfyngedig", or

(b) any contraction or imitation of either of those expressions,
that person, unless a limited liability partnership or oversea limited liability
partnership, commits an offence.
(2) A person guilty of an offence under sub-paragraph (1) is liable on summary

Similarity of names
8. In determining for the purposes of this Part whether one name is the same as
another there are to be disregarded-

(1) the definite article as the first word of the name,

(2) any of the following (or their Welsh equivalents or abbreviations of them
or their Welsh equivalents) at the end of the name -

"limited liability partnership",

268

"company",

"and company",

"company limited",

"and company limited",

"limited",

"unlimited",

"public limited company", and

"investment company with variable capital", and

(3) type and case of letters, accents, spaces between letters and punctuation
marks,
and "and" and "&" are to be taken as the same.

PART II REGISTERED OFFICES

Situation of registered office
9. - (1) A limited liability partnership shall-

(a) at all times have a registered office situated in England and Wales or in
Wales, or

(b) at all times have a registered office situated in Scotland,
to which communications and notices may be addressed.
(2) On the incorporation of a limited liability partnership the situation of its
registered office shall be that stated in the incorporation document.
(3) Where the registered office of a limited liability partnership is situated in
Wales, but the incorporation document does not state that it is to be situated in
Wales (as opposed to England and Wales), the limited liability partnership may
deliver notice to the registrar stating that its registered office is to be situated in
Wales.



Change of registered office
10. - (1) A limited liability partnership may change its registered office by delivering
notice of the change to the registrar.



269

ANNEXURE 2

Statutory Instrument 2001 No. 1090

Limited Liability Partnerships Regulations 2001

© Crown Copyright 2001

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270

STATUTORY INSTRUMENTS

2001 No. 1090

PARTNERSHIP

LIMITED LIABILITY PARTNERSHIPS

Limited Liability Partnerships Regulations 2001

Made 19th March 2001

Coming into force 6th April 2001

ARRANGEMENT OF REGULATIONS

PART I

Citation, Commencement and Interpretation
1. Citation and commencement.
2. Interpretation.

PART II

Accounts and Audit
3. Application of the accounts and audit provisions of the Companies Act 1985
to limited liability partnerships.

PART III

Companies Act 1985 and Company Directors Disqualification Act 1986
4. Application to limited liability partnerships of the remainder of the provisions
of the Companies Act 1985 and of the Company Directors Disqualification
Act 1986.

PART IV

Winding Up and Insolvency
5. Application of the Insolvency Act 1986 to limited liability partnerships.

PART V

Financia l Services and Markets
6. Application of provisions contained in Parts XV and XXIV of the 2000 Act to
limited liability partnerships.

271

PART VI

Default Provision and Expulsion
7. Default provision for limited liability partnerships.
8. Expulsion.

PART VII

Miscellaneous
9. General and consequential amendments.
10. Application of subordinate legislation.

SCHEDULES

Schedule 1 - Modifications to Part VII of the Companies Act 1985.

Schedule 2 -
Part I Modifications to provisions of the Companies Act 1985 applied
to limited liability partnerships.
Part II Modifications to the Company Directors Disqualification Act
1986.

Schedule 3 - Modifications to the Insolvency Act 1986.

Schedule 4 - Application of provisions to Scotland.

Schedule 5 - General and consequential amendments in other legislation.

Schedule 6 - Subordinate legislation applied.

Whereas a draft of these Regulations has been approved by a resolution of each
House of Parliament pursuant to section 17(4) of the Limited Liability Partnerships
Act 2000[1];

Now, therefore, the Secretary of State, in exercise of the powers conferred on him
by sections 14, 15, 16 and 17 of the Limited Liability Partnerships Act 2000 and all
other powers enabling him in that behalf hereby makes the following Regulations:

272

PART I

CITATION, COMMENCEMENT AND INTERPRETATION

Citation and commencement
1. These Regulations may be cited as the Limited Liability Partnerships Regulations
2001 and shall come into force on 6th April 2001.

Interpretation
2. In these Regulations -

"the 1985 Act" means the Companies Act 1985[2];
"the 1986 Act" means the Insolvency Act 1986[3];
"the 2000 Act" means the Financial Services and Markets Act 2000[4];
"devolved", in relation to the provisions of the 1986 Act, means the provisions of the
1986 Act which are listed in Schedule 4 and, in their application to Scotland, concern
wholly or partly, matters which are set out in Section C.2 of Schedule 5 to the
Scotland Act 1998[5] as being exceptions to the reservations made in that Act in the
field of insolvency;
"limited liability partnership agreement", in relation to a limited liability partnership,
means any agreement express or implied between the members of the limited
liability partnership or between the limited liability partnership and the members of
the limited liability partnership which determines the mutual rights and duties of the
members, and their rights and duties in relation to the limited liability partnership;
"the principal Act" means the Limited Liability Partnerships Act 2000; and
"shadow member", in relation to limited liability partnerships, means a person in
accordance with whose directions or instructions the members of the limited liability
partnership are accustomed to act (but so that a person is not deemed a shadow
member by reason only that the members of the limited partnership act on advice
given by him in a professional capacity).

273

PART II

ACCOUNTS AND AUDIT

Application of the accounts and audit provisions of the 1985 Act to limited
liability partnerships
3. - (1) Subject to paragraph (2), the provisions of Part VII of the 1985 Act
(Accounts and Audit)[6] shall apply to limited liability partnerships.

(2) The enactments referred to in paragraph (1) shall apply to limited liability
partnerships, except where the context otherwise requires, with the following
modifications -

(a) references to a company shall include references to a limited liability partnership;

(b) references to a director or to an officer of a company shall include references to a
member of a limited liability partnership;

(c) references to other provisions of the 1985 Act and to provisions of the Insolvency
Act 1986 shall include references to those provisions as they apply to limited liability
partnerships in accordance with Parts III and IV of these Regulations;

(d) the modifications set out in Schedule 1 to these Regulations; and

(e) such further modifications as the context requires for the purpose of giving effect
to those provisions as applied by this Part of these Regulations.

274

PART III

COMPANIES ACT 1985 AND COMPANY DIRECTORS DISQUALIFICATION ACT
1986

Application of the remainder of the provisions of the 1985 Act and of the
provisions of the Company Directors Disqualification Act 1986 to limited
liability partnerships
4. - (1) The provisions of the 1985 Act specified in the first column of Part I of
Schedule 2 to these Regulations shall apply to limited liability partnerships, except
where the context otherwise requires, with the following modifications -


(b) references to the Companies Acts shall include references to the principal Act and
regulations made thereunder;

(c) references to the Insolvency Act 1986 shall include references to that Act as it
applies to limited liability partnerships by virtue of Part IV of these Regulations;

(d) references in a provision of the 1985 Act to other provisions of that Act shall
include references to those other provisions as they apply to limited liability
partnerships by virtue of these Regulations;

(e) references to the memorandum of association of a company shall include
references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include
references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part I of Schedule 2
opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect
to that legislation as applied by these Regulations.

(2) The provisions of the Company Director Disqualification Act 1986[7] shall
apply to limited liability partnerships, except where the context otherwise
requires, with the following modifications -


(b) references to the Companies Acts shall include references to the principal Act and
regulations made thereunder and references to the companies legislation shall
include references to the principal Act, regulations made thereunder and to any
enactment applied by regulations to limited liability partnerships;

(d) references to the Insolvency Act 1986 shall include references to that Act as it
applies to limited liability partnerships by virtue of Part IV of these Regulations;

(e) references to the memorandum of association of a company shall include

275

references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include
references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part II of Schedule 2
opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect

276

PART IV

WINDING UP AND INSOLVENCY

Application of the 1986 Act to limited liability partnerships
5. - (1) Subject to paragraphs (2) and (3), the following provisions of the 1986 Act,
shall apply to limited liability partnerships -

(a) Parts I, II, III, IV, VI and VII of the First Group of Parts (company insolvency;
companies winding up),

(b) the Third Group of Parts (miscellaneous matters bearing on both company and
individual insolvency; general interpretation; final provisions)[8].

(2) The provisions of the 1986 Act referred to in paragraph (1) shall apply to
limited liability partnerships, except where the context otherwise requires,
with the following modifications -


(b) references to a director or to an officer of a company shall include references to a
member of a limited liability partnership;

(c) references to a shadow director shall include references to a shadow member;

(d) references to the 1985 Act, the Company Directors Disqualification Act 1986, the
Companies Act 1989[9] or to any provisions of those Acts or to any provisions of the
1986 Act shall include references to those Acts or provisions as they apply to limited
liability partnerships by virtue of the principal Act;

(e) references to the memorandum of association of a company and to the articles of
association of a company shall include references to the limited liability partnership
agreement of a limited liability partnership;

(f) the modifications set out in Schedule 3 to these Regulations; and

(g) such further modifications as the context requires for the purpose of giving effect

(3) In the application of this regulation to Scotland, the provisions of the
1986 Act referred to in paragraph (1) shall not include the provisions listed in
Schedule 4 to the extent specified in that Schedule.

277

PART V

FINANCIAL SERVICES AND MARKETS

Application of provisions contained in Parts XV and XXIV of the 2000 Act to
limited liability partnerships
6. - (1) Subject to paragraph (2), sections 215(3),(4) and (6), 356, 359(1) to
(4), 361 to 365, 367, 370 and 371 of the 2000 Act shall apply to limited liability
partnerships.

(2) The provisions of the 2000 Act referred to in paragraph (1) shall apply to
limited liability partnerships, except where the context otherwise requires, with the
following modifications -


(b) references to body shall include references to a limited liability partnership; and

(c) references to the 1985 Act, the 1986 Act or to any of the provisions of those Acts
shall include references to those Acts or provisions as they apply to limited liability
partnerships by virtue of the principal Act.

278

PART VI

DEFAULT PROVISION

Default provision for limited liability partnerships
7. The mutual rights and duties of the members and the mutual rights and duties
of the limited liability partnership and the members shall be determined, subject to
the provisions of the general law and to the terms of any limited liability partnership
agreement, by the following rules:

(1) All the members of a limited liability partnership are entitled to share equally
in the capital and profits of the limited liability partnership.

(2) The limited liability partnership must indemnify each member in respect of
payments made and personal liabilities incurred by him -

(a) in the ordinary and proper conduct of the business of the limited liability
partnership; or

(b) in or about anything necessarily done for the preservation of the business or
property of the limited liability partnership.

(3) Every member may take part in the management of the limited

(4) No member shall be entitled to remuneration for acting in the business
or management of the limited liability partnership.

(5) No person may be introduced as a member or voluntarily assign an
interest in a limited liability partnership without the consent of all existing
members.

(6) Any difference arising as to ordinary matters connected with the
business of the limited liability partnership may be decided by a majority of
the members, but no change may be made in the nature of the business of
the limited liability partnership without the consent of all the members.

(7) The books and records of the limited liability partnership are to be
made available for inspection at the registered office of the limited liability
partnership or at such other place as the members think fit and every
member of the limited liability partnership may when he thinks fit have
access to and inspect and copy any of them.

(8) Each member shall render true accounts and full information of all
things affecting the limited liability partnership to any member or his legal
representatives.

(9) If a member, without the consent of the limited liability partnership,
carries on any business of the same nature as and competing with the
limited liability partnership, he must account for and pay over to the limited
liability partnership all profits made by him in that business.

(10) Every member must account to the limited liability partnership for

279

any benefit derived by him without the consent of the limited liability
partnership from any transaction concerning the limited liability partnership,
or from any use by him of the property of the limited liability partnership,
name or business connection.

Expulsion
8. No majority of the members can expel any member unless a power to
do so has been conferred by express agreement between the members.

280

PART VII

MISCELLANEOUS

General and consequential amendments
9. - (1) Subject to paragraph (2), the enactments mentioned in Schedule 5 shall
have effect subject to the amendments specified in that Schedule.

(2) In the application of this regulation to Scotland -

(a) paragraph 15 of Schedule 5 which amends section 110 of the 1986 Act shall not
extend to Scotland; and

(b) paragraph 22 of Schedule 5 which applies to limited liability partnerships the
culpable officer provisions in existing primary legislation shall not extend to Scotland
insofar as it relates to matters which have not been reserved by Schedule 5 to the
Scotland Act 1998.

Application of subordinate legislation

10. - (1) The subordinate legislation specified in Schedule 6 shall apply as from
time to time in force to limited liability partnerships and -

(a) in the case of the subordinate legislation listed in Part I of that Schedule with
such modifications as the context requires for the purpose of giving effect to the
provisions of the Companies Act 1985 which are applied by these Regulations;

(b) in the case of the subordinate legislation listed in Part II of that Schedule with
provisions of the Insolvency Act 1986 which are applied by these Regulations; and

(c) in the case of the subordinate legislation listed in Part III of that Schedule with
provisions of the Business Names Act 1985 and the Company Directors
Disqualification Act 1986 which are applied by these Regulations.

(2) In the case of any conflict between any provision of the subordinate
legislation applied by paragraph (1) and any provision of these Regulations, the
latter shall prevail.

Kim Howells,
Parliamentary Under-Secretary of State, for Consumers and Corporate Affairs,
Department of Trade and Industry

19th March 2001

281

SCHEDULE 1

Regulation 3

MODIFICATIONS TO PROVISIONS OF PART VII OF THE 1985 ACT APPLIEDBY THESE
REGULATIONS

Provision of Part VII Modification

Section 222 (Where and for
how long accounting records to
be kept)[10]

subsection (5) In paragraph (a), omit the words "in the case of a
private company," and the word "and". Omit
paragraph (b).

Section 224 (accounting
reference periods and
accounting reference date)[11]

subsections (2) and (3) Omit subsections (2) and (3).

subsection (3A) Omit the words "incorporated on or after 1st April
1996".

Section 225 (alteration of
accounting reference date)[12]

subsection (5) For the words "laying and delivering accounts and
reports" substitute "delivering the accounts and the
auditors' report".

Section 228 (exemption for Omit subsection (4).
parent companies included in
accounts of larger group)[13]

Section 231 (disclosure
required in notes to accounts:
related undertakings)[14]

subsection (3) Omit the words from "This subsection" to the end.

Section 232 (disclosure in notes Omit section 232, save that Schedule 6 shall apply
to accounts: emoluments etc of for the purpose of paragraph 56A of Schedule 4, as
directors and others)[15] inserted by this Schedule.

Section 233 (approval and
signing of accounts)[16]

282

subsection (1) For subsection (1) substitute -

" (1) A limited liability partnership's annual
accounts shall be approved by the members, and
shall be signed on behalf of all the members by a
designated member.".

subsection (3) Omit the words from "laid before" to "otherwise",
and for the words "the board" substitute “the
members of the limited liability partnership".

subsection (4) For the words “the board by a director of the
company" substitute "the members by a
designated member".

subsection (6) In paragraph (a), omit the words "laid before the
company, or otherwise".

Sections 234 (duty to prepare Omit sections 234 and 234A.
directors' report)[17] and 234A
(approval and signing of
directors' report)[18]

Section 235 (auditors'
report)[19]


" (1) The limited liability partnership's annual
accounts shall be submitted to its auditors, who
shall make a report on them to the members of the
limited liability partnership.".

subsection (3) Omit subsection (3).

Section 236 (signature of
auditors' report)[20]


" (2)

Every copy of the auditors' report which is
circulated, published or issued shall state the
names of the auditors.".

subsection (4) In paragraph (a) omit the words "laid before the
company, or otherwise".

Section 237 (duties of
auditors)[21]

283


Section 238 (persons entitled to
receive copies of accounts and
report)[22]


" (1) A copy of the limited liability partnership's
annual accounts, together with a copy of the
auditors' report on those accounts, shall be sent to
every member of the limited liability partnership
and to every holder of the limited liability
partnership's debentures, within one month of their
being signed in accordance with section 233(1) and
in any event not later than 10 months after the
end of the relevant accounting reference period."

subsection (2) (a) In paragraph (a), omit the words from "who is"
to "meetings and", and (b) in paragraph (b) and
(c), omit the words "shares or" in both places
where they occur.


subsection (4A) Omit the words ", of the directors' report".

subsections (4C) to (4E) Omit subsections (4C) to (4E).

Section 239 (right to demand
copies of accounts and
report)[23]

subsection (1) Omit the words "and directors' report".

subsection (2B) Omit subsection (2B).

Section 240 (requirements in
connection with publication of
accounts)[24]

subsection (1) Omit the words from "or, as the case may be," to
the end.

subsection (3) (a) In paragraph (c) omit the words from "and, if
no such report has been made," to "any financial
year",

284

(b) in paragraph (d), omit the words "or whether
any report made for the purposes of section
249A(2) was qualified", and

(c) omit the words "or any report made for the
purposes of section 249A(2)".

Section 241 (accounts and Omit section 241.
report to be laid before general
meeting)[25]

Section 242 (accounts and
report to be delivered to
registrar)[26]

subsection (1) (a) For the words "The directors of a company"
substitute "The designated members of a limited
liability partnership",

(b) omit the words "a copy of the directors' report
for that year and",

(c) for the words "or reports" substitute "or that
report", and

(d) for the words "the directors shall annex"
substitute "the designated members shall annex".

subsection (2) (a) For the words "laying and delivering accounts
and reports", substitute "delivering the accounts
and the auditors' report", and

(b) for the word "director" substitute the words
"designated member".

subsection (3) For the words "the directors" in each place where
they occur substitute the words " the designated
members".

subsection (4) For the words "laying and delivering accounts and
reports", substitute "delivering the accounts and
the auditors' report".

Section 242A (civil penalty for
failure to deliver accounts)[27]

and reports" substitute "delivering the accounts
and the auditors' report", and

285

(b) for the words "the directors" substitute "the
designated members".

and reports" substitute "delivering the accounts
and the auditors' report",

(b) omit the words ", and whether the company is
a public or private company,",

(c) omit the heading "Public company" and all
entries under it, and

(d) for the heading "Private company" substitute
"Amount of penalty".

Section 242B (delivery and
publications of accounts in
euros)[28]

subsection (2) For the words "the directors of a company"
substitute "the designated members of a limited
liability partnership".

Section 243 (accounts of
subsidiary undertakings to be
appended in certain cases)[29]

subsection (4) For the words "the directors" substitute "the
designated members".

Section 244 (period allowed for
delivering accounts and
report)[30]

subsection (1) For subsection (1), substitute the following -

" (1) The period allowed for delivering the
accounts and the auditors' report is 10 months
after the end of the relevant accounting reference
period.

This is subject to the following provisions of this
section."

subsection (2) In paragraph (a), omit the words "or 7 months, as
the case may be,".

subsection (3) (a) For the words "the directors" substitute "the
designated members", and

286

(b) in paragraph (b), for the words "laying and
delivering accounts and reports" substitute
"delivering the accounts and the auditors' report".

subsection (4) For the words "laying and delivering accounts"
substitute "delivering the accounts and the
auditors' report".

Section 245 (voluntary revision
of accounts)[31]

subsection (1) Omit the words ", or any directors' report," and the
words "or a revised report".

subsection (2) (a) Omit the words " or report" in both places
where they occur, and

(b) omit the words "laid before the company in
general meeting or".

subsection (3) Omit the words "or a revised directors' report".

subsection (4) (a) In paragraph (a), omit the words "or report",

(b) in paragraph (b), omit the words "or reporting
accountant" and the words "or report", and

(c) in paragraph (c) -

(i) for the words "previous accounts or
report" substitute "previous accounts",

(ii) omit sub-paragraph (ii), and

(iii) omit the words from ",or where a
summary financial statement" to the end.

Section 245A (Secretary of
State's notice in respect of
annual accounts)[32]

subsection (1) For the words from "copies of" to "general meeting
or" substitute "a copy of a limited liability
partnership's annual accounts has been".

Section 245B (application to
court in respect of defective
accounts)[33]

subsection (3) Omit paragraph (b).

287

Section 246 special provisions
for small companies)[34]

subsection (3) Omit paragraph (a), and paragraph (b) (ii), (iii)
and (iv).


subsection (5) (a) For the words "the directors of the company"
substitute "the designated members of the limited
liability partnership", and

(b) omit paragraph (b).

subsection (6) Omit paragraphs (b) and (c).

subsection (8) Omit paragraph (b) and the words ", in the report"
and ", 234A".

Section 246A (special
provisions for medium-sized
companies)[35]

subsection (3) (a) For the words "The company" substitute "The
designated members", and

(b) for paragraph (a), substitute the following -

" (a) which includes a profit and loss account in
which the following items listed in the profit and
loss account formats set out in Part I of Schedule 4
are combined as one item under the heading
"gross profit or loss"" -

Items 1 to 3 and 6 in Format 1

Items 1 to 5 in Format 2.

Section 247 (qualification of
company as small or medium
sized)[36]

subsection (5) In paragraph (a), for the words "items A to D"
substitute "items B to D".

Section 247A (cases in which
special provisions do not
apply)[37]

subsection (1) Omit paragraphs (a)(i) and (ii).

288

Section 247B (special auditors'
report)[38]

subsection (1) (a) In paragraph (a), for the words "the directors
of a company" substitute "the designated members
of a limited liability partnership", and

(b) in paragraph (b) omit the words "or (2)".

Section 249A (exemptions from
audit)[39]


subsection (3A) Omit subsection (3A).


subsection (6) Omit the words "or gross income".

subsection (6A) Omit the words "or (2)".

subsection (7) Omit the words from ", and ‘gross income'" to the
end.

Section 249AA (dormant
companies)[40]

subsection (1) For the words "section 249B(2) to (5)" substitute
"section 249B (4) and (5)".

subsection (2) In paragraph (a), for the words "section
247A(1)(a)(i) or (b)" substitute "section
247A(1)(b)".

subsection (3) Omit paragraph (a).

subsection (5) In paragraph (b), omit the words "(6) or".


subsection (7) In paragraph (a), for the words "section 28
(change of name)" substitute "paragraph 5 of the
Schedule to the Limited Liability Partnerships Act
2000".Omit paragraph (b).

289

Section 249B (cases where
audit exemption not
available)[41]

subsection (1) Omit the words "or (2)" and paragraphs (a) and
(b).

subsection (1C) For paragraph (b), substitute "that the group's
aggregate turnover in that year (calculated in
accordance with section 249) is not more than £1
million net (or £1.2 million gross),".


subsection (4) (a) Omit the words "or (2)" in both places where
they occur, and (b) omit paragraph (b).

Sections 249C (the report Omit sections 249C and 249D.
required for the purposes of
section 249A(2))[42] and 249D
(the reporting accountant)[43]

Section 249E (effect of
exemption from audit)[44]

subsection (1) (a) In paragraph (b) omit the words from "or laid"
to the end, and

(b) omit paragraph (c).


Section 251 (provis ion of Omit section 251.
summary financial statement
by listed public companies)[45]

Sections 252 and 253 (private Omit section 252 and 253.
company election to dispense
with laying of accounts and
reports)[46]

Section 254 (exemption for Omit section 254.
unlimited companies from
requirement to deliver accounts
and reports)[47]

Section 255 (special provisions Omit section 255.
for banking and insurance
companies)[48]

Section 255A (special Omit section 255A.

290

provisions for banking and
insurance groups)[49]

Section 255B (modification of Omit section 255B.
disclosure requirements in
relation to banking company or
group)[50]

Section 255D (power to apply Omit section 255D.
provisions to banking
partnerships)[51]

Section 257 (power of Omit section 257.
Secretary of State to alter
accounting requirements)[52]

Section 260 (participating
interests)[53]

subsection (6) For the words from ", Schedule 8A," to "Schedule
9A" substitute the words "and Schedule 8A".

Section 262 (minor
definitions)[54]

subsection (1) (a) Omit the definitions of "annual report", and
"credit institution", and

(b) insert the following definition at the appropriate
place -

" "limited liability partnership" means a limited
liability partnership formed and registered under
the Limited Liability Partnerships Act 2000;".


Section 262A (index of defined In the index of defined expressions - (a) the
expressions)[55] entries relating to "annual report" "credit
institution" and "reporting accountant", and all
entries relating to sections 255 and 255A and to
Schedules 9 and 9A, shall be omitted, and

(b) the following entry shall be inserted at the
appropriate place -

" "limited liability partnership" section 262".

Schedule 4 (form and content
of company accounts)[56]

Paragraph 1 In sub-paragraph (1)(b), for the words "any one

291

of" substitute "either of".

Paragraph 3[57] In sub-paragraph (2)(b), omit the words "shares
or".Omit sub-paragraph (7)(b) and (c).

Balance Sheet Format Omit the following items and the notes on the
1[58] balance sheet formats which relate to them - (a)
item A (called up share capital not paid),

(b) item B.III.7 (own shares),

(c) item C.II.5 (called up share capital not paid),
and

(d) item C.III.2 (own shares).

For item K (capital and reserves) substitute -

" K. Loans and other debts due to members (12)

L. Members' other interests

I Members' capital

II Revaluation reserve

III Other reserves."

Balance Sheet Format 2 Omit the following items and the notes on the
balance sheet format which relate to them - (a)
Assets item A (called up share capital not paid),

(b) Assets item B.III.7 (own shares),

(c) Assets item C.II.5 (called up share capital not
paid), and

(d) Assets item C.III.2 (own shares).

For Liabilities item A (capital and reserves)
substitute -

" A. Loans and other debts due to members (12)

AA. Members' other interests

I Members' capital


292

III Other reserves."

Notes on the balance
sheet formats

Note (12) Substitute the following as Note (12) - " (12)
Loans and other debts due to members

(Format 1, item K and Format 2, item A)

The following amounts shall be shown separately
under this item -

(a) the aggregate amount of money advanced to
the limited liability partnership by the members by
way of loan,

(b) the aggregate amount of money owed to
members by the limited liability partnership in
respect of profits,

(c) any other amounts."

Profit and Loss Account In Format 1,[59] for item 20 (profit or loss for the
Formats financial year) substitute "20. Profit or loss for the
financial year before members' remuneration and
profit shares"In Format 2, for item 22 (profit or
loss for the financial year) substitute "22. Profit or
loss for the financial year before members'
remuneration and profit shares"

Omit Profit and Loss Account Formats 3 and 4 and
the notes on the profit and loss account formats
which relate to them.

Notes on the profit and
loss account Formats

Note (15) (income from other At the end of Note (15) insert the words "Interest
fixed asset investments: other receivable from members shall not be included
interest receivable and similar under this item."
income)

Note (16) (interest payable and At the end of Note (16) insert "Interest payable to
similar charges) members shall not be included under this item."

Accounting principles and
rules

Paragraph 12[60] In sub-paragraph (b) omit the words "on behalf of
the board of directors".

293

Paragraph 34[61] Omit sub-paragraph (3), (3A) and (3B).

Notes to the accounts

Paragraph 37 For the words "38 to 51" substitute the words "41
to 51(1)".

Insertion of new paragraph Insert the following new paragraph after paragraph
after paragraph 37 37 -

" Loans and other debts due to members

37A. The following information shall be given -

(a) the aggregate amounts of loans and other
debts due to members as at the date of the
beginning of the financial year,

(b) the aggregate amounts contributed by
members during the financial year,

(c) the aggregate amounts transferred to or from
the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members
or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts
due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts
due to members that fall due after one year."

Paragraphs 38 to 40Paragraphs Omit paragraphs 38 to 40.Omit paragraphs 49 and
49 and 51(2) 51(2).

Paragraph 56[62] Insert the following paragraph after paragraph 56 -

" Particulars of members

56A. -

(1) Particulars shall be given of the average
number of members of the limited liability
partnership in the financial year, which number
shall be determined by dividing the relevant annual
number by the number of months in the financial
year.

(2) The relevant annual number shall be
determined by ascertaining for each month in the

294

financial year the number of members of the
limited liability partnership for all or part of that
month, and adding together all the monthly
numbers.

(3) Where the amount of the profit of the limited
liability partnership for the financial year before
members' remuneration and profit shares exceeds
£200,000, there shall be disclosed the amount of
profit (including remuneration) which is
attributable to the member with the largest
entitlement to profit (including remuneration).

For the purpose of determining the amount to be
disclosed, "remuneration" includes any
emoluments specified in paragraph 1(1)(a), (c) or
(d) of Schedule 6 to this Act which are paid by or
receivable from -

(i) the limited liability partnership; and

(ii) the limited liability partnership's subsidia ry
undertakings; and

(iii) any other person.".

Paragraph 58[63] Omit sub-paragraph (3)(c).

Special provisions where the
company is an investment
company

Paragraphs 71 to 73 Omit paragraphs 71 to 73.

Schedule 4A (form and
content of group
accounts)[64]

Paragraph 1[65] Omit sub-paragraph (3).

Paragraph 10 Omit sub-paragraph (1)(a) to (c).Omit sub-
paragraph (2).

Paragraph 11 For sub-paragraph (1), substitute -

" (1) Where a limited liability partnership adopts
the merger method of accounting, it must comply
with this paragraph, and with generally accepted
accounting principles or practice."

Omit sub-paragraphs (5) to (7).

295

Paragraph 17 (a) In sub-paragraph (2)(a), for the words "item K"
substitute "item L",

(b) in sub-paragraph (2)(b), for the words "item A"
substitute "item AA", and

(c) In sub-paragraphs (3) and (4), omit paragraphs
(c) and (d).

Paragraph 21 In sub-paragraph (3), omit paragraphs (c) and (d).

Schedule 5 (disclosure of
information: related
undertakings)[66]

Paragraph 6[67] Omit paragraph 6.

Paragraph 9A[68] Omit paragraph 9A.

Paragraph 20 Omit paragraph 20.

Paragraph 28A[69] Omit paragraph 28A.

Schedule 8 (form and
content of accounts
prepared by small
companies)[70]

Paragraph 1 In sub-paragraph (1)(b), for the words "any one
of" substitute "either of".

Paragraph 3 In sub-paragraph (2)(b), omit the words "shares
or".Omit sub-paragraph (7)(b).

Balance Sheet Format 1 Omit item A (called up share capital not paid) and
note (1) on the balance sheet format.For item K
(capital and reserves) substitute -

" K. Loans and other debts due to members(9)


I Members' capital


III Other reserves".

Balance Sheet Format 2 Omit Assets item A (called up share capital not
paid) and note (1) on the balance sheet format.For
Liabilities item A (capital and reserves) substitute -

296

" A. Loans and other debts due to members (9)


I Members' capital



Notes on the balance sheet
formats

Note (4) (Others: Other Omit Note (4).
investments)

Note (9) Substitute the following as Note (9) -

" (9) Loans and other debts due to members

(Format 1, item K and Format 2, item A)

The following amounts shall be shown separately
under this item -

(a) the aggregate amount of money
advanced to the limited liability partnership
by the members by way of loan,

(b) the aggregate amount of money owed
to members by the limited liability
partnership in respect of profits,

(c) any other amounts.".

Profit and Loss Account In Format 1, for item 20 (profit or loss for the
Formats financial year) substitute "20. Profit or loss for the
financial year before members' remuneration and
profit shares"In Format 2, for item 22 (profit or
loss for the financial year) substitute "22. Profit or
loss for the financial year before members'
remuneration and profit shares"

Omit Profit and Loss Account Formats 3 and 4 and
the notes on the profit and loss account formats
which relate to them.

Notes on the profit and loss
account formats

297

Note (12) (income from other At the end of Note (12) insert the words "Interest
fixed asset investments: other receivable from members shall not be included
interest receivable and similar under this item."
income)

Note (13) (interest payable and At the end of Note (13) insert "Interest payable to
similar charges) members shall not be included under this item.".

Accounting principles and
rules

Paragraph 12 In sub-paragraph (b), omit the words "on behalf of
the board of directors".

Paragraph 34 Omit sub-paragraphs (3), (4) and (5).


Paragraph 37 For the words "Paragraphs 38 to 47" substitute
"Paragraphs 40 to 47".

Insertion of new paragraph Insert the following new paragraph after paragraph
after paragraph 37 37 -

" Loans and other debts due to members
37A. The following information shall be given -

(a) the aggregate amount of loans and other debts
due to members as at the date of the beginning of
the financial year,

(b) the aggregate amounts contributed by
members during the financial year,

(c) the aggregate amounts transferred to or from
the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members
or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts
due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts
due to members that fall due after one year."

Paragraphs 38 and 39 Omit paragraphs 38 and 39.

Paragraph 45 Omit paragraph 45.

Paragraph 51 Omit sub-paragraph (3)(c).

Schedule 8A (form and
content of abbreviated

298

accounts of small companies
delivered to registrar)[71]

Balance Sheet Format 1 Omit item A (called up share capital not paid).For
item K (capital and reserves) substitute -

" K. Loans and other debts due to members


I Members' capital



Balance Sheet Format 2 Omit Assets item A (called up share capital not
paid).For Liabilities item A (capital and reserves)
substitute -

" A. Loans and other debts due to members


I Members' capital




Paragraphs 5 and 6 Omit paragraphs 5 and 6.

Paragraph 9 Omit sub-paragraph (3)(c).

299

SCHEDULE 2
Regulation 4

PART I

MODIFICATIONS TO PROVISIONS OF THE 1985 ACT APPLIED TO LIMITED LIABILITY
PARTNERSHIPS

Provisions Modifications

Formalities of Carrying on Business

24 (minimum membership for carrying In the first paragraph omit the words ",
on business)[72] other than a private company limited by
shares or by guarantee,".

36 (company contracts England and
Wales)[73]

36A (execution of documents England In subsection (4) for "a director and the
and Wales) secretary of a company, or by two
directors of a company," substitute "two
members of a limited liability
partnership".In subsection (6) for "a
director and the secretary of a company, or
by two directors of the company"
substitute "two members of a limited

36C (pre-incorporation contracts, deeds
and obligations)

37 (bills of exchange and promissory
notes)

38 (execution of deeds abroad)[74]

39 (power of company to have official In subsection (1), omit the words "whose
seal for use abroad)[75] objects require or comprise the transaction
of business in foreign countries may, if
authorised by its articles" and before the
word "have" insert the word "may".

41 (authentication of documents)[76] For "director, secretary or other authorised
officer" substitute "member".

42 (events affecting a company's
status)

subsection (1) In subsection (1), for "other persons"
substitute "persons other than members of
the limited liability partnership".

300

subsection (1)(b) In subsection (1)(b) omit the words "or
articles".

subsection (1)(c) Omit subsection (1)(c).

Miscellaneous provisions about shares and debentures

183 (transfer and registration)[77]

subsection (1) Subsection (1), omit the words "shares in
or".For the words "com pany's articles"
substitute "limited liability partnership
agreement.".

subsection (2) Subsection (2), omit the words
"shareholder or" together with the words
"shares in or".



subsection (5) Omit the words "shares or".

184 (certification of transfers)[78]

subsection (1) Subsection (1), omit the words "shares in
or" together with the words "shares or".

185 (duty of company as to issue of
certificates)

subsection (1) Subsection (1), omit the words "shares," in
each of the four places that it occurs.


subsection (4) Omit the words "shares or" together with
the words "shares,".

Debentures

190 (register of debenture holders)

191 (right to inspect register)[79]

subsection (1) In subsection (1), paragraph (a), for the
words "or any holder of shares in the
company" substitute "or any member of

301

subsection (2) In subsection (2), delete "or holder of
shares".

subsection (6) In subsection (6), delete the words "in the
articles or".

192 (liability of trustees of debentures)

193 (perpetual debentures)

194 (power to re-issue redeemed
debentures)

subsection (1)(a) In subsection (1)(a), omit the words "in
the articles or".

subsection (1)(b) In subsection (1)(b), for "passing a
resolution" substitute "making a
determination".

195 (contract to subscribe for
debentures)

196 (payment of debts out of assets
subject to floating charge (England and
Wales))[80]

Officers and registered office

287 (registered office)[81] For section 287 there shall be substituted:

" (1) The change of registered office takes
effect upon the notice of c hange of
registered office (delivered to the registrar
in accordance with paragraph 10 of the
Schedule to the Limited Liability
Partnerships Act 2000), being registered by
the registrar, but until the end of the
period of 14 days beginning with the date
on which it is registered a person may
validly serve any document on the limited
liability partnership at its previous
registered office.

(2) Where a limited liability partnership
unavoidably ceases to perform at its
registered office any duty to keep at it s
registered office any register, index or
other document or to mention the address
of its registered office in any document in
circumstances in which it was not
practicable to give prior notice to the
registrar of a change in the situation of the
registered office, but -

302

(a) resumes performance of that duty at
other premises as soon as practicable, and

(b) gives notice accordingly to the registrar
of a change in the situation of its
registered office within 14 days of doing so

it shall not be treated as having
failed to comply with that duty".

288 (register of directors and For section 288 there shall be substituted:
secretaries)[82]
" Where a person becomes a member or
designated member of a limited liability
partnership the notice to be delivered to
the registrar under section 9(1)(a) of the
Limited Liability Partnerships Act 2000 shall
contain the following particulars with
respect to that person:

(1) name, which

(a) in the case of an individual means his
forename and surname (or, in the case of a
peer or other person usually known by a
title, his title instead of or in addition to
either or both his forename and surname),
and

(b) if a corporation or a Scottish firm, its
corporate or firm name; and

(2) address, which

(a) in the case of an individual means his
usual residential address; and

(b) if a corporation or a Scottish firm, its
registered or principal office; and

(3) in the case of an individual, the
date of his birth."

Company Identification

348 (company name to appear outside
place of business)

349 (company's name to appear in its
correspondence)

303

350 (company seal)[83]

351 (particulars in correspondence In subsection (1) for paragraph (c)
etc.)[84] substitute the words "in the case of a
limited liability partnership, whose name
ends with the abbreviatio n "llp", "LLP",
"pac" or "PAC", the fact that it is a limited
liability partnership or a partneriaeth
atebolrwydd cyfyngedig."Also in subsection
(1) delete paragraph (d) and delete
subsection (2).

Annual Return

363 (duty to deliver annual Section 363 of the 1985 Act shall apply to
returns)[85] a limited liability partnership being
modified so as to read as follows: " (1)
Every limited liability partnership shall
deliver to the registrar successive annual
returns each of which is made up to a date
not later than the date which is from time
to time the "return date" of the limited
liability partnership, that is -

(a) the anniversary of the incorporation of
the limited liability partnership, or

(b) if the last return delivered by the
limited liability partnership in accordance
with this section was made up to a
different date, the anniversary of that date.

(2) Each return shall -

(a) be in a form approved by the registrar,

(b) contain the information required by
section 364, and

(c) be signed by a designated member of

(3) If a limited liability partnership
fails to deliver an annual return in
accordance with this section before
the end of the period of 28 days
after the return date, the limited
liability partnership is guilty of an
offence and liable on summary
conviction to a fine not exceeding
level 5 on the standard scale. The

304

contravention continues until such
time as an annual return made up
to that return date and complying
with the requirements of
subsection (2) (except as to date
of delivery) is delivered by the
limited liability partnership to the
registrar.

(4) Where a limited liability
partnership is guilty of an offence
under subsection (3) every
designated member of the limited
liability partnership is similarly
liable unless he shows that he took
all reasonable steps to avoid the
commission of or the continuance
of the offence."

364 (contents of annual return: For section 364 substitute the following -
general)[86]
" Every annual return shall state the date
to which it is made up and shall contain the
following information -

(a) the address of the registered office of
the limited liability partnership,

(b) the names and usual residential
addresses of the members of the limited
liability partnership and, if some only of
them are designated members, which of
them are designated members, and

(c) if any register of debenture holders (or
a duplicate of any such register or a part of
it) is not kept at the registered office of the
limited liability partnership, the address of
the place where it is kept."

Auditors

384 (duty to appoint auditors)[87]

subsection (2) In subsection (2), for the words from
"(appointment at general meeting at which
accounts are laid)" to the end substitute
the words "(appointment of auditors)".

subsection (3) In subsection (3), omit the words from "or
385A(2)" to the end.

305

subsection (4) For subsection (4) substitute the following
subsection:

" (4) A person is eligible for appointment
by a limited liability partnership as auditor
only if, were the limited liability partnership
a company, he would be eligible under Part
II of the Companies Act 1989 for
appointment as a "company auditor"."

subsection (5) Insert a new subsection (5):

" (5) Part II of the Companies Act 1989
shall apply in respect of auditors of limited
liability partnerships as if the limited
liability partnerships were companies
formed and registered under this Act, and
references in Part II to an officer of a
company shall include reference to a
member of a limited liability partnership."

385 (appointment at general meeting
at which accounts laid)[88]

title to the section In the title to the section for the existing
wording substitute "Appointment of
auditors".


subsection (2) For subsection (2) substitute:

" (2) The designated members of a
limited liability partnership shall appoint
the auditors for the first financial year in
respect of which auditors are appointed
before the end of that financial year and
thereafter before the expiration of not
more than two months following the
approval of the accounts for the preceding
financial year in accordance with section
233.".


" (3) The auditor of a limited liability
partnership shall hold office until not later
than the expiration of two months following
the approval in accordance with section
233 of the accounts for the financial year in

306

respect of which the auditor was
appointed."


" (4) If the designated members fail to
exercise their powers under subsection (2),
the powers may be exercised by the
members of the limited liability partnership
in a meeting convened for the purpose".

387 (appointment by Secretary of State
in default of appointment by
company)[89]

subsection (1) In subsection (1), omit the words "re-
appointed or deemed to be re-appointed".

subsection (2) In subsection (2), for the word "officer"
substitute the words "designated member".

388 (filling of casual vacancies)[90]

subsection (1) In subsection (1), for "directors, or the
company in general meeting," substitute
"designated members".



388A (certain companies exempt from
obligation to appoint auditors)[91]


" (3) The designated members may
appoint auditors and the auditors so
appointed shall hold office until the
expiration of two months following the
approval in accordance with section 233 of
the accounts for the financial year in
respect of which the auditor was
appointed."



307

" (5) If the designated me mbers fail to
exercise their powers under subsection (3),
the powers may be exercised by the
in a meeting convened for the purpose."

389A (rights to information)[92]

390 (right to attend company
meetings)[93]

subsection (1) In paragraph (a), (b) and (c) of subsection
(1) omit the word "general" in each place
where it occurs.At the end of paragraph (a)
add the words "and where any part of the
business of the meeting concerns them as
auditors."

At the end of paragraph (b) add the words
"where any part of the business of the
meeting concerns them as auditors."



390A (remuneration of auditors)[94]

subsection (1) For subsection (1) substitute:" The
remuneration of auditors appointed by the
limited liability partnership shall be fixed by
the designated members or in such manner
as the members of the limited liability
partnership may determine".

subsection (2) In subsection (2), omit the words
"directors or the", in both places where
they occur, and omit the words "as the
case may be".

390B (remuneration of auditors or their
associates for non-audit work)[95]

391 (removal of auditors)[96]

subsection (1) In subsection (1), for the words "A
company may by ordinary resolution"
substitute "The designated members of a
limited liability partnership may" and for
the words "between it and" substitute

308

"with".

subsection (2) (a) In subsection (2), for the words "a
resolution removing an auditor is passed at
a general meeting of a company, the
company" substitute the words "the
designated members of the limited liability
partnership have made a determination to
remove an auditor, the designated
members".

(b) For the words "every officer of it who is
in default" substitute "every designated
member of it who is in default".

subsection (4) In subsection (4), omit the word "general".

391A (rights of auditors who are
removed or not re-appointed)[97]

subsection (1) For subsection (1) substitute" The
designated members shall give seven days'
prior written notice to

(a) any auditor whom it is proposed to
remove before the expiration of his term of
office; or

(b) a retiring auditor where it is proposed
to appoint as auditor a person other than
the retiring auditor."


subsection (3) In subsection (3), for the words "intended
resolution" substitute the word "proposal"
and omit the words "of the company".

subsection (4) Omit the words "(unless the
representations are received by it too late
for it to do so)".Omit subsection (4)(a).

In subsection (4)(b), for the words "of the
company to whom notice in writing of the
meeting is or has been sent." Substitute
"within twenty one days' of receipt.".

subsection (5) For subsection (5) substitute:" If a copy of
the representations is not sent out as

309

required by subsection (4), then unless
subsection (6) applies, the limited liability
partnership and any designated member in
default commits an offence. A person guilty
of an offence under this section is liable on
summary conviction to a fine not exceeding
level 3 on the standard scale."

subsection (6) In subsection (6), the words "and the
representations need not be read at the
meeting" shall be omitted.

392 (resignation of auditors)[98]

subsection (3) In the second paragraph of subsection (3)
for "and every officer of it who is in
default" substitute "and every designated
member of it who is in default".

392A (rights of resigning auditors)[99]

subsection (2) In subsection (2), for "directors" substitute
"designated members" and for "an
extraordinary general meeting of the
company" substitute "a meeting of the
members of the limited liability
partnership".

subsection (3) In subsection (3), omit ",or" from
paragraph (a) and omit paragraph (b).

subsection (5) In subsection (5), for "directors" substitute
"designated members" and for "director"
substitute "designated member".

subsection (8) In subsection (8), omit the word "general"
and the phrase "(a) or (b)".

394 (statement by person ceasing to
hold office as auditor)[100]

394A (offences of failing to comply with
section 394)[101]

Registration of charges

The following references are to sections of the 1985 Act which were replaced by
section 92 of the Companies Act 1989. They will apply to limited liability partnerships
until the said section 92 is commenced.

395 (certain charges void if not
registered)[102]

396 (charges which have to be In subsection (1) delete paragraphs (b)
registered)[103] and (g).

310

397 (formalities of registration In subsection (1), paragraph (b) for the
(debentures)) word "resolutions" substitute
"determinations of the limited liability
partnership".

398 (verification of charge on property
outside United Kingdom)

399 (company's duty to register
charges it creates)

400 (charges existing on property
acquired)

401 (register of charges to be kept by
registrar of companies)

402 (endorsement of certificate on
debentures)

403 (entries of satisfaction and In subsection (1A), after "of the company"
release)[104] insert "or designated member,
administrator or administrative receiver of

404 (rectification of register of charges) In subsection (1), omit the words "or
shareholders".

405 (registration of enforcement of
security)

406 (companies to keep copies of
instruments creating charges)

407 (company's register of charges) In subsection (1), for "limited company"
substitute "company (including limited
liability partnership)".

408 (right to inspect instruments which In subsection (1) delete "in general
create charges etc.) meeting".

410 (charges void unless In subsection (4) delete paragraph (b) and
registered)[105] sub-paragraph (ii) of paragraph (c).In
subsection (5) for "an incorporated
company" substitute "a limited liability
partnership".

411 (charges on property outside the
United Kingdom)

412 (negotiable instrument to secure
book debts)

413 (charges associated with In subsection (2)(b), for the word
debentures) "resolutions" substitute "determinations of

311


414 (charge by way of ex facie absolute
disposition, etc.)

415 (company's duty to register
charges created by it)

416 (duty to register charges existing
on property acquired)

417 (register of charges to be kept by
registrar of companies)

418 (certificate of registration to be
issued)

419 (entries of satisfaction and In subsection (1A), after the words "of the
relief)[106] company" insert "or a designated member,
liquidator, receiver or administrative
receiver of the limited liability partnership".

420 (rectification of the register) Omit the words "or shareholders".

421 (copies of instruments creating
charges to be kept by the company)

422 (company's register of charges)

423 (right to inspect copies of In subsection (1) delete "in general
instruments, and the company's meeting".
register)

Arrangements and Reconstructions

425 (power of company to compromise
with creditors and members)[107]

subsection (3) Omit the words "and a copy of every such
order shall be annexed to every copy of the
company's memorandum issued after the
order has been made or, in the case of a
company not having a memorandum, of
every copy so issued of the instrument
constituting the company or defining its
constitution." For the semi-colon after the
word "registration" substitute a full stop.


426 (information as to compromise to
be circulated)[108]

subsection (2) Omit the words "as directors or".

312

427 (provisions for facilitating company
reconstruction or amalgamation)[109]

subsection (3) In paragraph (b) for the words "policies or
other like interests" substitute "policies,
other like interests or, in the case of a
limited liablity partnership, property or
interests in the limited liability
partnership".

subsection (6) For the words ""c ompany" includes only a
company as defined in section 735(1)"
substitute ""company" includes only a
company as defined in section 735(1) or a
limited liability partnership".

Investigation of companies and their affairs: Requisition of documents

431 (investigation of a company on its For subsection (2) substitute the
own application or that of its members) following: " (2) - The appointment may
be made on the application of the limited
liability partnership or on the application of
not less than one-fifth in number of those
who appear from notifications made to the
registrar of companies to be currently
members of the limited liability
partnership."

432 (other company
investigations)[110]

subsection (4) For the words "but to
whom shares in the company have
been transferred or transmitted by
operation of law" substitute "but to
whom a member's share in the limited
liability partnership has been
transferred or transmitted by operation
of law."

433 (inspectors' powers during
investigation)[111]

434 (production of documents and
evidence to inspectors)[112]

436 (obstruction of inspectors treated
as contempt of court)[113]

437 (inspectors' reports)[114]

438 (power to bring civil proceedings
on company's behalf)[115]

313

439 (expenses of investigating a
company's affairs)[116]

subsection (5) Omit paragraph (b) together with the word
"or" at the end of paragraph (a).

441 (inspectors' report to be
evidence)[117]

447 (Secretary of State's power to
require production of documents)[118]

448 (entry and search of
premises)[119]

449 (provision for security of
information obtained)[120]

450 (punishment for destroying, In subsection (1), omit the words ", or of
mutilating etc. company an insurance company to which Part II of
documents)[121] the Insurance Companies Act 1982
applies,".

451 (punishment for furnishing false
information)[122]

451A (disclosure of information by In subsection (1), for the words "sections
Secretary of State or inspector)[123] 434 to 446" substitute "sections 434 to
441".Omit subsection (5).

452 (privileged information)[124] In subsection (1), for the words "sections
431 to 446" substitute "sections 431 to
441".In subsection (1A), for the words
"sections 434, 443 or 446" substitute
"section 434".

Fraudulent Trading

458 (punishment for fraudulent trading)

Protection of company's members against unfair prejudice

459 (order on application of company At the beginning of subsection (1), insert
member)[125] the words "Subject to subsection (1A),".
After subsection (1) insert as subsection
(1A):" The members of a limited liability
partnership may by unanimous agreement
exclude the right contained in subsection
459(1) for such period as shall be agreed.
The agreement referred to in this
subsection shall be recorded in writing."

314

Omit subsections (2) and (3).

460 (order on application of Secretary In subsection (1) omit the words "or,
of State)[126] section 43A or 44(2) to (6) of the
Insurance Companies Act 1982 . . .,".Omit
subsection (2).

461 (provisions as to orders and In subsection (2)(d) for the words "the
petitions under this Part)[127] shares of any members of the company by
other members or by the company itself
and, in the case of a purchase by the
company itself, the reduction of the
company's capital accordingly" substitute
the words "the shares of any members in
the limited liability partnership by other
members or by the limited liability
partnership itself.".In subsection (3) for the
words "memorandum or articles" substitute
the words "limited liability partnership
agreement".

For the existing words of subsection (4)
substitute the words "Any alteration in the
limited liability partnership agreement
made by virtue of an order under this Part
is of the same effect as if duly agreed by
the members of the limited liability
partnership and the provisions of this Act
apply to the limited liability partnership
agreement as so altered accordingly.".

Omit subsection (5).

Floating charges and Receivers (Scotland)

464 (ranking of floating charges)[128] In subsection (1), for the words "section
462" substitute "the law of Scotland".

466 (alteration of floating Omit subsections (1), (2), (3) and (6).
charges)[129]

486 (interpretation for Part XVIII For the current definition of "company"
generally)[130] substitute" "company" means a limited
liability partnership;"

Omit the definition of "Register of Sasines".

487 (extent of Part XVIII)

Matters arising subsequent to winding up

315

651 (power of court to declare
dissolution of company void)[131]

652 (registrar may strike defunct In subsection (6) paragraph (a) omit the
company off the register) word "director".

652A (registrar may strike private In this section the references to "a private
company off the register on company" shall include a reference to "a
application)[132] limited liability partnership".

subsection (1) In subsection (1) the following shall be
substituted for the existing wording" On
application by two or more designated
members of a limited liability partnership,
the registrar of companies may strike the
limited liability partnership's name off the
register".

Omit subsection 2(a) and in subsection
2(b) after the word "be" insert the word
"made".

In subsection (6), omit the word "director".

652B (duties in connection with making In paragraph (a) of subsection (5) for "no
an application under section 652A) meetings are" substitute "no meeting is".In
paragraph (b) of subsection (5) for
"meetings summoned under that section
fail" substitute "the meeting summoned
under that section fails".

In paragraph (c) of subsection (5) for
"meetings" substitute "a meeting".

In paragraph (d) of subsection (5) for "at
previous meetings" substitute "at a
previous meeting".

652C (directors' duties following In subsection (2), for the words "is a
application under section 652A) director of the company" substitute "is a
designated member of the limited liability
partnership".In subsection (2) omit
paragraph (d).

In subsection (5) for the words "is a
director of the company" substitute "is a
designated member of the limited liability
partnership".

In subsection (6), omit paragraph (d).

316

652D (sections 652B and 652C:
supplementary provisions)

652E (sections 652B and 652C:
enforcement)

652F (other offences connected with
section 652A)

653 (objection to striking off by person
aggrieved)[133]

654 (property of dissolved company to
be bona vacantia)

655 (effect on section 654 of
company's revival after dissolution)

656 (crown disclaimer of property
vesting as bona vacantia)

657 (effect of crown disclaimer under
section 656)[134]

658 (liability for rentcharge on
company's land after dissolution)[135]

Oversea Limited Liability Partnerships

693 (obligation to state name and other For the wording of subsection (1) there
particulars)[136] shall be substituted the following words:"
Every oversea limited liability partnership
shall -

(a) in every prospectus inviting
subscriptions for its debentures in Great
Britain, state the country in which the
limited liability partnership is incorporated,

(b) conspicuously exhibit on every place
where it carries on business in Great
Britain the name of the limited liability
partnership and the country in which it is
incorporated,

(c) cause the name of the limited liability
partnership and the country in which it is
incorporated to be stated in legible
characters in all bill heads, letter paper,
and in all notices and other official
publications and communications of the
limited lia bility partnership."

For subsection (2) there shall be

317

substituted the following words
"For the purposes of this section
"oversea limited liability
partnership" means a body
incorporated or otherwise
established outside Great Britain
whose name under its law of
incorporation or establishment
includes the words "limited liability
partnership."".

Subsections (3) and (4) shall be
omitted.

The Registrar of Companies: His functions and offices

704 (registration offices)[137]

705 (companies' registered Omit subsection (5).
numbers)[138]

706 (delivery to the registrar of In subsection (2)(a), omit the words from
documents in legible form)[139] "and, if the document is delivered" to the
end of that paragraph.

707A (the keeping of company records Omit subsection (4).
by the registrar)[140]

707B (delivery to the registrar using In subsection (3), omit the "or" at the end
electronic communications)[141] of paragraph (a) and omit paragraph (b).

708 (fees payable to the
registrar)[142]

709 (inspection of records kept by the
registrar)[143]

710 (certificate of incorporation)[144]

710A (provision and authentication by
registrar of documents in non-legible
form)[145]

710B (documents relating to Welsh In subsection (7), omit the words "272(5)
companies)[146] and 273(7) and paragraph 7(3) of Part II
of Schedule 9".

711 (public notice by registrar of In subsection (1) delete "or articles" in
receipt and issue of certain paragraph (b) and delete paragraphs (d) to
documents)[147] (j), (l), (m) and (s) to (z).

713 (enforcement of company's duty to In subsection (1), in the penultimate line
make returns)[148] for "any officer" substitute "any designated
member".In subsections (2) and (3) for

318

"officers" substitute "designated
members".

714 (registrar's index of company and
corporate names)[149]

715A (interpretation)[150]

Miscellaneous and supplementary provisions

721 (production and inspection of In subsection (2)(b), for the words "the
books where offence suspected) secretary of the company or such other"
substitute "such".

722 (form of company registers, etc.)

723 (use of computers for company Omit subsection (2).
records)

723A (obligations of company as to
inspections of registers, & etc.)[151]

725 (service of documents) In subsection (2), for the words "other
head officer" substitute "a designated
member".

726 (costs and expenses in actions by References to a "limited company" shall
certain limited companies) include references to a "limited liability
partnership".

727 (power of court to grant relief in In subsection (1) delete the words "an
certain cases) officer of a company or" and "officer or".In
subsection (2), delete the words "officer
or".

728 (enforcement of High Court orders)

729 (annual report by Secretary of
State)

730 (punishment of offences)[152]

731 (summary proceedings)[153]

732 (prosecution by public authorities) Delete the references to sections 210, 324,
329 and 455.Omit subsection (2)
paragraphs (a) and (c). In subsection
(2)(b), for the words "either one of those
two persons" substitute "either the
Secretary of State, the Director of Public
Prosecutions".

Omit subsection (3).

319

733 (offences by bodies
corporate)[154]

subsection (1) In subsection (1), delete the references to
section 210 and 216(3).

subsection (2) In subsection (2), omit the word
"secretary".


734 (criminal proceedings against
unincorporated bodies)[155]

Interpretation

735A (relationship of this Act to the In subsection (1), delete all the references
Insolvency Act)[156] to provisions of the 1985 Act other than
the references to sections 425(6)(a),
460(2) and 728.

736 ("subsidiary", "holding company",
and "wholly-owned subsidiary")[157]

subsection (1) For subsection (1) there shall be
substituted the following words: " (1)
Subject to subsection (1A), a company is a
subsidiary of a limited liability partnership,
its "holding company", if that limited
liability partnership -

(a) holds a majority of the voting rights in
it, or

(b) is a member of it and has the right to
appoint or remove a majority of its board
of directors, or

(c) is a member of it and controls alone,
pursuant to an agreement with other
shareholders or members, a majority of
the voting rights in it,

or if it is a subsidiary of a company
or limited liability partnership
which is itself a subsidiary of that
other company."

subsection (1A) Insert as subsection (1A) - " (1A) A
limited liability partnership is a subsidiary
of a company or a subsidiary of another
limited liability partnership, (such company

320

or limited liability partnership being
referred to in this section as its "holding
company") if that company or limited
liability partnership -

(a) holds a majority of the voting rights in
it;

(b) is a member of it and has the right to
appoint or remove a majority of other
members; or

(c) is a member of it and controls, alone or
pursuant to an agreement with other
members, a majority of voting rights in it,

or if it is a subsidiary of a company
or limited liability partnership
which is itself a subsidiary of that
holding company".

subsection (2) For subsection (2) substitute "A company
or a limited liability partnership is a
"wholly-owned subsidiary" of another
company or limited liability partnership if it
has no members except that other and that
other's wholly-owned subsidiaries or
persons acting on behalf of that other or its
wholly-owned subsidiaries."

736A (provisions supplementing section After subsection (1) insert a new
736)[158] subsection (1A) in the following form - "
(1A) In section 736(1A)(a) and (c) the
references to the voting rights in a limited
liability partnership are to the rights
conferred on members in respect of their
interest in the limited liability partnership
to vote on those matters which are to be
decided upon by a vote of the members of
the limited liability partnership."

After subsection (2) insert the new
subsection (2A) in the following form -

" (2A) In section 736(1A)(b) the
reference to the right to appoint or remove
a majority of the members of the limited
liability partnership is to the right to
appoint or remove members holding a
majority of the voting rights referred to in

321

subsection (1A) and for this purpose -

(a) a person shall be treated as having the
right to appoint a member if

(i) a person's appointment as member
results directly from his appointment as a
director or member of the holding
company, or

(ii) the member of the limited liability
partnership is the company or limited
liability partnership which is the holding
company; and

(b) a right to appoint or remove
which is exercisable only with the
consent or concurrence of another
person shall be left out of account."

In subsection (7) after the words
"Rights attached to shares" insert
the words "or to a member's
interest in a limited liability
partnership".

"held by a company", in both
places where they occur, insert "or
a limited liability partnership".

"in the interest of company" insert
"or a limited liability partnership"
and after the words "that
company" in both places where
they occur insert "or limited liability
partnership".

"a company" insert the words "or a
limited liability partnership" and
after the words "by the company"
insert the words "or the limited

In subsection (12) for the existing
words substitute "In this section
"company" includes a body
corporate other than a limited
liability partnership."

322

739 ("non-cash asset")

740 ("body corporate" and
"corporation")

741 ("director" and "shadow Omit subsection (3).
director")[159]

742 (expressions used in connection
with accounts)[160]

743A (meaning of "office copy" in
Scotland)[161]

744 (expressions used generally in this Delete the definitions of expressions not
Act)[162] used in provisions which apply to limited
liability partnerships and insert the
following definitions - " "limited liability
partnership" has the meaning given it in
section 1(2) of the Limited Liability
Partnerships Act 2000.".

"shadow member" has the same meaning
as it has in the Limited Liability
Partnerships Regulations 2000.

744A (index of defined Delete the references to expressions not
expressions)[163] used in provisions which apply to limited
liability partnerships including, in
particular, the following
expressions:Allotment (and related
expressions)

Section 738

Annual general meeting

Section 366

Authorised minimum

Section 118

Called up share capital

Section 737(1)

Capital redemption reserve

Section 170(1)

Elective resolution

323

Section 379A

Employees' share scheme

Section 743

Existing company

Section 735(1)

Extraordinary general meeting

Section 368

Extraordinary resolution

Section 378(1)

The former Companies Acts

Section 735(1)

The Joint Stock Companies Acts

Section 735(3)

Overseas branch register

Section 362

Paid up (and related expressions)

Section 738

Registered office (of a company)

Section 287

Resolution for reducing share capital

Section 135(3)

Share premium account

Section 130(1)

Share warrant

Section 188

Special notice (in relation to a resolution)

324

Section 379

Special resolution

Section 378(2)

Uncalled share capital

Section 737(2)

Undistributable reserves

Section 264(3)

Unlimited company

Section 1(2)

Unregistered company

Section 718

SCHEDULE 24 (PUNISHMENT OF Delete the references to those sections
OFFENCES UNDER THIS ACT) which are not applied to limited liability
partnerships including, in particular, the
following sections:Section 6(3) company
failing to deliver to the registrar notice or
other document, following alteration of its
objects;

Section 18(3) company failing to register
change in memorandum or articles;

Section 19(2) company failing to send to
one of its members a copy of the
memorandum or articles, when so required
by the member;

Section 20(2) where company's
memorandum altered, company issuing
copy of the memorandum without the
alteration;

Section 28(5) company failing to change
name on direction of Secretary of State;

Section 31(5) company altering its
memorandum or articles, so ceasing to be
exempt from having "limited" after its
name;

325

Section 31(6) company failing to change
name, on Secretary of State's direction, so
as to have "limited" (or Welsh equivalent)
at the end;

Section 32(4) company failing to comply
with the Secretary of State's direction to
change its name, on grounds that the
name is misleading;

Section 33 trading under misleading name
(use of "public limited company" or Welsh
equivalent when not so entitled);
purporting to be a private company;

Section 34 trading or carrying on business
with improper use of "limited" or
"cyfyngedig";

Section 54(10) public company failing to
give notice, or copy of court order, to
registrar, concerning application to re-
register as private company;

Section 80(9) directors exercising
company's power of allotment without the
authority required by section 80(1);

Section 81(2) private company offering
shares to the public, or allotting shares
with a view to their being so offered;

Section 82(5) allotting shares or
debentures before third day after issue of
prospectus;

Section 86(6) company failing to keep
money in separate bank account, where
received in pursuance of prospectus stating
that stock exchange listing is to be applied
for;

Section 87(4) offeror of shares for sale
failing to keep proceeds in separate bank
account;

Section 88(5) officer of company failing to
deliver return of allotments, etc. to the
registrar;

Section 95(6) knowingly or recklessly
authorising or permitting misleading, false

326

or deceptive material in statement by
directors under section 95(5);

Section 97(4) company failing to deliver to
registrar the prescribed form disclosing
amount or rate of share commission;

Section 110(2) making misleading, false or
deceptive statement in connection with
valuation under section 103 or 104;

Section 111(3) officer of company failing to
deliver copy of asset valuation report to
registrar;

Section 111(4) company failing to deliver
to registrar copy of resolution under
Section 104(4), with respect to transfer of
an asset as consideration for allotment;

Section 114 contravention of any of the
provisions of sections 99 to 104, 106;

Section 117(7) company doing business or
exercising borrowing powers contrary to
section 117;

Section 122(2) company failing to give
notice to registrar of reorganisation of
share capital;

notice to registrar of increase of share
capital;

Section 127(5) company failing to forward
to registrar copy of court order, when
application made to cancel resolution
varying shareholders' rights;

Section 128(5) company failing to send to
registrar statement or notice required by
section 128 (particulars of shares carrying
special rights);

Section 129(4) company failing to deliver
to registrar statement or notice required by
section 129 (registration of newly created
class rights);

Section 141 officer of company concealing
name of creditor entitled to object to

327

reduction of capital, or wilfully
misrepresenting the nature or amount of
debt or claim, etc.;

Section 142(2) director authorising or
permitting non-compliance with section
142 (requirement to convene company
meeting to consider serious loss of
capital);

Section 143(2) company acquiring its own
shares in breach of section 143;

Section 149(2) company failing to cancel
its own shares acquired by itself, as
required by section 146(2); or failing to
apply for re-registration as private
company as so required in the case there
mentioned;

Section 151(3) company giving financial
assistance towards acquisition of its own
shares;

statutory declaration under section 155;

Section 156(7) director making statutory
declaration under section 155, without
having reasonable grounds for opinion
expressed in it;

Section 169(6) default by company's
officer in delivering to registrar the return
required by section 169 (disclosure by
company of purchase of its own shares);

copy of contract, etc., at registered office;
refusal of inspection to person demanding
it;

Section 173(6) director making statutory
declaration under section 173 without
having reasonable grounds for the opinion
expressed in the declaration;

Section 175(7) refusal of inspection of
statutory declaration and auditor's report
under section 173, etc.;


328

notice to registrar of application to court
under section 176, or to register court
order;

Section 183(6) company failing to send
notice of refusal to register a transfer of
shares or debentures;

Section 185(5) company default in
compliance with section 185(1)
(certificates to be made ready following
allotment or transfer of shares, etc.);

Section 189(1) offences of fraud and
forgery in connection with share warrants
in Scotland;

Section 189(2) unauthorised making of, or
using or possessing apparatus for making
share warrants in Scotland;

Section 210(3) failure to discharge
obligation of disclosure under Part VI;
other forms of non-compliance with that
Part;

register of interests disclosed under Part
IV; other contraventions of section 211;

Section 214(5) company failing to exercise
powers under section 212, when so
required by the members;

compliance with section 215 (company
report of investigation of shareholdings on
members' requisition);

Section 216(3) failure to comply with
company notice under section 212;

Making false statement in response etc.;

Section 217(7) company failing to notify
a person that he has been named as a
shareholder; on removal of name from
register, failing to alter associated index;

Section 218(3) improper removal of entry
from register of interests disclosed;

329

company failing to restore entry improperly
removed;

register or report under Part VI; failure to
send copy when required;

Section 232(4) default by director or officer
of a company in giving notice of matters
relating to himself for purposes of Schedule
6 Part I;

Section 234(5) non-compliance with Part
VII as to directors' report and its content;

directors individually liable;

Section 234A(4) laying, circulating or
delivering directors' report without required
signature;

Section 241(2) failure to lay accounts and
reports before the company in general
meeting before the end of the period
allowed for doing this;

Section 251(6) failure to comply with
requirements in relation to summary
financial statements;

Section 288(4) default in complying with
section 288 (keeping register of directors
and secretaries, refusal of inspection);

Section 291(5) acting as director of a
company without having the requisite
share qualification;

Section 294(3) director failing to give
notice of his attaining retirement age;

acting as director under appointment
invalid due to his attaining it;

complying with section 305 (directors'
name to appear on company
correspondence, etc.);

Section 306(4) failure to state that liability
of proposed director or manager is
unlimited; failure to give notice of that fact

330

to person accepting office;

Section 314(3) director failing to comply
with section 314;

Section 317(7) director failing to disclose
interest in contract;

Section 318(8) company in default in
complying with section 318(1) or (5);

Section 322B(4) terms of unwritten
contract between sole member of a private
company limited by shares or by guarantee
and the company not set out in a written
memorandum or recorded in minutes of a
directors' meeting;

Section 323(2) director dealing in options
to buy or sell company's listed shares or
debentures;

Section 324(7) director failing to notify
interest in company's shares; making false
statement in purported notification;

Section 326(2), (3), (4) and (5) various
defaults in connection with company
register of directors' interests;

Section 328(6) director failing to notify
company that members of his family etc.
have or have exercised options to buy
shares or debentures; making false
statement in purported notification;

Section 329(3) company failing to notify
investment exchange of acquisition of its
securities by a director;

Section 342(1) director or relevant
company authorising or permitting
company to enter into transaction or
arrangement, knowing or suspecting it to
contravene section 330;

Section 342(2) relevant company entering
into transaction or arrangement for a
director in contravention of section 330;

Section 342(3) procuring a relevant
company to enter into transaction or

331

arrangement known to be contrary to
section 330;

Section 343(8) company failing to maintain
register of transactions etc. made with and
for directors and not disclosed in company
accounts; failing to make register available
at registered office or at company meeting;

complying with section 352 (requirement
to keep register of members and their
particulars);

Section 352A(3) company default in
complying with section 352A (statement
that company has only one member);

Section 353(4) company failing to send
notice to registrar as to place where
register of members is kept;

index of members;

members' register; failure to send copy on
requisition;

Section 364(4) company without share
capital failing to complete and register
annual return in due time;

Section 366(4) company default in holding
annual general meeting;

complying with Secretary of State's
direction to hold a company meeting;

resolution that meeting held under section
367 is to be its annual general meeting;

Section 372(4) failure to give notice, to
member entitled to vote at company
meeting, that he may do so by proxy;

Section 372(6) officer of company
authorising or permitting issue of irregular
invitations to appoint proxies;

332

Section 376(7) officer of company in
default as to circulation of members'
resolutions for company meeting;

Section 380(5) company failing to comply
with section 380 (copies of certain
resolutions etc. to be sent to registrar of
companies);

Section 380(6) company failing to include
copy of resolution to which section 380
applies in articles; failing to forward copy
to member on request;

Section 381B(2) director or secretary of
company failing to notify auditors of
proposed written resolution;

minutes of proceedings at company and
board meetings, etc.;

Section 382B(2) failure of sole member to
provide the company with a written record
of a decision;

minutes of general meeting; failure to send
copy of minutes on member's request;

Section 389(10) person acting as a
company auditor knowing himself to be
disqualified: failing to give notice vacating
office when he becomes disqualified;

Section 429(6) offeror failing to send
copy of notice or making statutory
declaration knowing it to be false etc.;

Section 430A(6) offeror failing to give
rights to minority shareholder;

Section 444(3) failing to give Secretary of
State, when required to do so, information
about interests in shares etc.; giving false
information;

Section 455(1) exercising a right to
dispose of, or vote in respect of, shares
which are subject to restrictions under Part
XV; failing to give notice in respect of
shares so subject; entering into agreement

333

void under section 454(2), (3);

Section 455(2) issuing shares in
contravention of restrictions under Part XV;

Section 461(5) failure to register office
copy of court order under Part XVII
altering, or giving leave to alter, company's
memorandum;

Section 697(1) oversea company failing to
comply with any of sections 691 to 693 or
696;

Section 697(2) oversea company
contravening section 694(6) (carrying on
business under its corporate name after
Secretary of State's direction);

comply with section 695A or Schedule 21A;

comply with requirements as to accounts
and reports;

Section 703D(5) oversea company failing
to deliver particulars of charge to registrar;

Section 703R(1) company failing to
register winding up or commencement of
insolvency proceedings etc.;

Section 703R(2) liquidator failing to
register appointment, termination of
winding up or striking off of company;

Section 720(4) insurance company etc.
failing to send twice yearly statement in
form of Schedule 23;

Schedule 14, Pt II, paragraph 1(3)
company failing to give notice of location of
overseas branch register, etc.;

Schedule 14, Pt II, paragraph 4(2)
company failing to transmit to its
registered office in Great Britain copies of
entries in overseas branch register or to
keep duplicate of overseas branch
register.;

334

Schedule 21C, Pt I, paragraph 7 credit or
financial institution failing to deliver
accounting documents;

Schedule 21C, Pt II, paragraph 15 credit or
financial institution failing to deliver
accounts and reports;

Schedule 21D, Pt I, paragraph 5 company
failing to deliver accounting documents;

Schedule 21D, Pt I, Paragraph 13 company
failing to deliver accounts and reports.

335

PART II

MODIFICATIONS TO THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986

Part II of After paragraph 8 insert - " 8A The extent of the member's and
Schedule I shadow members' responsibility for events leading to a member or
shadow member, whether himself or some other member or shadow
member, being declared by the court to be liable to make a contribution
to the assets of the limited liability partnership under section 214A of
the Insolvency Act 1986."

SCHEDULE 3

Regulation 5

MODIFICATIONS TO THE 1986 ACT

Provisions Modifications

Section 1 (those who may
propose an arrangement)

subsection (1) For "The directors of a company" substitute "A
limited liability partnership" and delete "to the
company and".

subsection (3) At the end add "but where a proposal is so made
it must also be made to the limited liability
partnership".

The following modifications to sections 2 to 7 apply where a proposal under section 1
has been made by the limited liability partnership.

Section 2 (procedure where the
nominee is not the liquidator or
administrator)

subsection (2) In paragraph (a) for "meetings of the company
and of it creditors" substitute "a meeting of the
creditors of the limited liability partnership";In
paragraph (b) for the first "meetings" substitute
"a meeting" and for the second "meetings"
substitute "meeting".

subsection (3) For "the person intending to make the proposal"

336

subsection (4) For "the person intending to make the proposal"

Section 3 (summoning of
meetings)

subsection (1) For "such meetings as are mentioned in section
2(2)" substitute "a meeting of creditors" and for
"those meetings" substitute "that meeting".

subsection (2) Delete subsection (2).

Section 4 (decisions of
meetings)

subsection (1) For "meetings" substitute "meeting".

subsection (5) For "each of the meetings" substitute "the
meeting".

new subsection (5A) Insert a new subsection (5A) as follows - " (5A)
If modifications to the proposal are proposed at
the meeting the chairman of the meeting shall,
before the conclusion of the meeting, ascertain
from the limited liability partnership whether or
not it accepts the proposed modifications; and if
at that conclusion the limited liability partnership
has failed to respond to a proposed modification it
shall be presumed not to have agreed to it."

subsection (6) For "either" substitute "the"; after "the result of
the meeting", in the first place where it occurs,
insert "(including, where modifications to the
proposal were proposed at the meeting, the
response to those proposed modifications made
by the limited liability partnership)"; and at the
end add "and to the limited liability partnership".

Section 5 (effect of approval)

subsection (1) For "each of the meetings" substitute "the
meeting" and for "with the same modifications"
substitute "with modifications agreed to by the

subsection (4) For "each of the reports" substitute "the report".

Section 6 (challenge of
decisions)

337

subsection (1) For "meetings" substitute "meeting" and for
"either of the meetings" substitute "the meeting".

subsection (2) For "either of the meetings" substitute "the
meeting" and after paragraph (a) add a new
paragraph (aa) as follows - " (aa) any member of
the limited liability partnership; and".

Omit the word "and" at the end of paragraph (b)
and omit paragraph (c).

subsection (3) For "each of the reports" substitute "the report".

subsection (4) For subsection (4) substitute the following - "
(4) Where on such an application the court is
satisfied as to either of the grounds mentioned in
subsection (1), it may do one or both of the
following, namely -

(a) revoke or suspend the approval given by the
meeting;

(b) give a direction to any person for the
summoning of a further meeting to consider any
revised proposal the limited liability partnership
may make or, in a case falling within subsection
(1)(b), a further meeting to consider the original
proposal.".

subsection (5) For the first "meetings" substitute "a meeting", for
the second "meetings" substitute "meeting" and
for "person who made the original proposal"
substitute "limited liability partnership".

Section 7 (implementation of
proposal)

subsection (1) For "meetings" substitute "meeting".

The following modifications to sections 2 and 3 apply where a proposal under section
1 has been made, where an administration order is in force in relation to the limited
liability partnership, by the administrator or, where the limited liability partnership is
being wound up, by the liquidator.

Section 2 (procedure where the
nominee is not the liquidator or
administrator)

subsection (2) In paragraph (a) for "meetings of the company"
substitute "meetings of the members of the

338


Section 3 (summoning of
meetings)

subsection (2) For "meetings of the company" substitute "a
meeting of the members of the limited liability
partnership".

Section 8 (power of court to
make order)[164]



Section 9 (application for
order)[165]

subsection (1) Delete ", or the directors".

Section 10 (effect of application)

subsection (1) In paragraph (a) for "no resolution may be
passed" to the end of the subsection substitute
"no determination may be made or order made
for the winding up of the limited liability
partnership.".

Section 11 (effect of order)

subsection (3) In paragraph (a) for "no resolution may be
passed" to the end of the subsection substitute
"no determination may be made or order made
for the winding up of the limited liability
partnership.".

Section 13 (appointment of
administrator)

subsection (3) In paragraph (c) delete "or the directors".

Section 14 (general powers)

subsection (2) For paragraph (a) substitute - " (a) to prevent any
person from taking part in the management of the
business of the limited liability partnership and to
appoint any person to be a manager of that
business, and";

and at the end add the following -

339

" Subsections (3) and (4) of section 92 shall apply
for the purposes of this subsection as they apply
for the purposes of that section."

Section 73 (alternative modes of
winding up)

subsection (1) Delete ",within the meaning given to that
expression by section 735 of the Companies Act,".

Section 74 (liability as
contributories of present and
past members)

For section 74 there shall be
substituted the following -

" 74. When a limited liability partnership is
wound up every present and past member of the
limited liability partnership who has agreed with
the other members or with the limited liability
partnership that he will, in circumstances which
have arisen, be liable to contribute to the assets
of the limited liability partnership in the event that
the limited liability partnership goes into
liquidation is liable, to the extent that he has so
agreed, to contribute to its assets to any amount
sufficient for payment of its debts and liabilities,
and the expenses of the winding up, and for the
adjustment of the rights of the contributories
among themselves.

However, a past member shall only be liable if the
obligation arising from such agreement survived
his ceasing to be a member of the limited liability
partnership."

Section 75 to 78 Delete sections 75 to 78.

Section 79 (meaning of
"contributory")

subsection (1) In subsection (1) for "every person" substitute"
(a) every present member of the limited liability
partnership and (b) every past member of the

subsection (2) After "section 214 (wrongful trading)" insert" or

214A (adjustment of withdrawals)".

340

subsection (3) Delete subsection (3).

Section 83 (companies
registered under Companies Act,
Part XXII, Chapter II)

Delete section 83.

Section 84 (circumstances in
which company may be wound
up voluntarily)

(1) A limited liability partnership may be wound
up voluntarily when it determines that it is to be
wound up voluntarily."


(3) Within 15 days after a limited liability
partnership has determined that it be wound up
there shall be forwarded to the registrar of
companies either a printed copy or else a copy in
some other form approved by the registrar of the
determination."

subsection (4) After subsection (3) insert a new subsection (4) -
" (4) If a limited liability partnership fails to
comply with this regulation the limited liability
partnership and every designated member of it
who is in default is liable on summary conviction
to a fine not exceeding level 3 on the standard
scale."

Section 85 (notice of resolution
to wind up)

(1) When a limited liability partnership has
determined that it shall be wound up voluntarily,
it shall within 14 days after the making of the
determination give notice of the determination by
advertisement in the Gazette."

Section 86 (commencement of
winding up)

Substitute the following new section - " 86. A

341

voluntary winding up is deemed to commence at
the time when the limited liability partnership
determines that it be wound up voluntarily.".

Section 87 (effect on business
and status of company)

subsection (2) In subsection (2), for "articles" substitute "limited
liability partnership agreement".

Section 88 (avoidance of share
transfers, etc. after winding-up
resolution)

For "shares" substitute "the interest of any
member in the property of the limited liability
partnership".

Section 89 (statutory declaration
of solvency)

For "director(s)" wherever it appears in section 89
substitute "designated member(s)";

subsection (2) For paragraph (a) substitute the following - " (a)
it is made within the 5 weeks immediately
preceding the date when the limited liability
partnership determined that it be wound up
voluntarily or on that date but before the making
of the determination, and".

subsection (3) For "the resolution for winding up is passed"
substitute "the limited liability partnership
determined that it be wound up voluntarily".

subsection (5) For "in pursuance of a resolution passed"
substitute "voluntarily".

Section 90 (distinction between
"members" and "creditors"
voluntary winding up)

For "directors'" substitute "designated members'".

Section 91 (appointment of
liquidator)

subsection (1) Delete "in general meeting".

subsection (2) For the existing wording substitute " (2) On the
appointment of a liquidator the powers of the
members of the limited liability partnership shall
cease except to the extent that a meeting of the

342

summoned for the purpose or the liquidator
sanctions their continuance."

After subsection (2) insert -

" (3) Subsections (3) and (4) of section 92
shall apply for the purposes of this section as they
apply for the purposes of that section."

Section 92 (power to fill vacancy
in office of liquidator)

subsection (1) For "the company in general meeting" substitute
"a meeting of the members of the limited liability
partnership summoned for the purpose".

subsection (2) For "a general meeting" substitute "a meeting of
the members of the limited liability partnership".

subsection (3) In subsection (3), for "articles" substitute "limited
liability partnership agreement".

new subsection (4) Add a new subsection (4) as follows - " (4) The
quorum required for a meeting of the members of
the limited liability partnership shall be any
quorum required by the limited liability
partnership agreement for meetings of the
members of the limited liability partnership and if
no requirement for a quorum has been agreed
upon the quorum shall be 2 members."

Section 93 (general company
meeting at each year's end)

subsection (1) For "a general meeting of the company" substitute
partnership".

new subsection (4) Add a new subsection (4) as follows - " (4)
subsections (3) and (4) of section 92 shall apply
for the purposes of this section as they apply for
the purposes of that section."

Section 94 (final meeting prio r
to dissolution)

partnership".

new subsection (5A) Add a new subsection (5A) as follows - " (5A)

343

Subsections (3) and (4) of section 92 shall apply
for the purposes of this section as they apply for
the purposes of that section."

partnership".

Section 95 (effect of c ompany's
insolvency)

subsection (1) For "directors'" substitute "designated members'".

(7) In this section ‘the relevant period' means the
period of 6 months immediately preceding the
date on which the limited liability partnership
determined that it be wound up voluntarily."

Section 96 (conversion to
creditors' voluntary winding up)

paragraph (a) For "directors'" substitute "designated members'".

paragraph (b) Substitute a new paragraph (b) as follows - " (b)
the creditors' meeting was the meeting mentioned

Free e book on limited liability partnership - 2005

Free e book on limited liability partnership - 2005

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