By Wolens H.B. No. 273
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to partnerships and the regulation of limited partnership
1-3 interests as securities; adopting the Texas Revised Partnership
1-4 Act; providing penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Revised Partnership Act is enacted to
1-7 read as follows:
1-8 TEXAS REVISED PARTNERSHIP ACT
1-9 ARTICLE I. GENERAL PROVISIONS
1-10 Sec. 1.01. General Definitions. In this Act:
1-11 (1) "Business" means a trade, occupation, profession,
1-12 or other commercial activity.
1-13 (2) "Capital account" means the amount of a partner's
1-14 original contribution to a partnership, which consists of cash and
1-15 the agreed value of any other contribution to the partnership,
1-16 increased by the amount of additional contributions made by that
1-17 partner and by profits credited to that partner under Section
1-18 4.01(b), and decreased by the amount of distributions to that
1-19 partner and by losses charged to that partner under Section
1-20 4.01(b).
1-21 (3) "Court" means a court and judge having
1-22 jurisdiction in the case.
1-23 (4) "Debtor in bankruptcy" means a person who is the
2-1 subject of:
2-2 (A) an order for relief under Title 11 of the
2-3 United States Code or a comparable order under a successor statute
2-4 of general application; or
2-5 (B) a comparable order under federal or state
2-6 law governing insolvency.
2-7 (5) "Distribution" means a transfer of cash or other
2-8 property from a partnership to:
2-9 (A) a partner in the partner's capacity as a
2-10 partner; or
2-11 (B) the partner's transferee.
2-12 (6) "Event of withdrawal" or "withdrawal" means an
2-13 event specified by Section 6.01(b).
2-14 (7) "Event requiring a winding up" means an event
2-15 specified by Section 8.01.
2-16 (8) "Foreign limited partnership" means a partnership
2-17 formed under the laws of another state and having as partners one
2-18 or more general partners and one or more limited partners.
2-19 (9) "Majority-in-interest" means, as to all of or a
2-20 specified group of partners, partners owning more than 50 percent
2-21 of the current interest in the profits of the partnership owned by
2-22 all of the partners or by the partners in the specified group, as
2-23 appropriate.
2-24 (10) "Partnership" means an entity created as
2-25 described by Section 2.02(a). The term includes a registered
3-1 limited liability partnership formed under Section 3.08 or under
3-2 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
3-3 Civil Statutes) and its subsequent amendments.
3-4 (11) "Partnership agreement" means any agreement,
3-5 written or oral, of the partners concerning a partnership.
3-6 (12) "Partnership interest" means a partner's interest
3-7 in a partnership, including the partner's share of profits and
3-8 losses or similar items, and the right to receive distributions. A
3-9 partnership interest does not include a partner's right to
3-10 participate in management.
3-11 (13) "Person" includes an individual, corporation,
3-12 business trust, estate, trust, custodian, trustee, executor,
3-13 administrator, nominee, partnership (including a registered limited
3-14 liability partnership and a limited partnership), association,
3-15 limited liability company, government, governmental subdivision,
3-16 governmental agency, governmental instrumentality, and any other
3-17 legal or commercial entity, in its own or representative capacity.
3-18 (14) "Property" means all property, real, personal, or
3-19 mixed, tangible or intangible, or an interest in that property.
3-20 (15) "Registered limited liability partnership" means
3-21 a partnership registered under Section 3.08(b) and complying with
3-22 Sections 3.08(c) and (d)(1).
3-23 (16) "State" means a state of the United States, the
3-24 District of Columbia, the Commonwealth of Puerto Rico, or any
3-25 territory or insular possession subject to the jurisdiction of the
4-1 United States.
4-2 (17) "Transfer" includes:
4-3 (A) an assignment;
4-4 (B) a conveyance;
4-5 (C) a lease;
4-6 (D) a mortgage;
4-7 (E) a deed;
4-8 (F) an encumbrance; and
4-9 (G) the creation of a security interest.
4-10 (18) "Withdrawn partner" means a partner with respect
4-11 to whom an event of withdrawal has occurred. A partner withdraws
4-12 if an event of withdrawal has occurred with respect to that partner
4-13 under Section 6.01.
4-14 Sec. 1.02. Knowledge And Notice. (a) DEFINITION OF
4-15 KNOWLEDGE. "Knowledge" means actual knowledge. A person knows of
4-16 a fact only if the person has knowledge of it.
4-17 (b) HAVING NOTICE. A person has notice of a fact if the
4-18 person:
4-19 (1) knows of the fact;
4-20 (2) has received a communication of the fact as
4-21 provided by Subsection (d); or
4-22 (3) reasonably should have concluded, from all facts
4-23 known to that person at the time in question, that the fact exists.
4-24 (c) GIVING NOTICE. A person notifies or gives a notice to
4-25 another person of a fact by taking steps reasonably required to
5-1 inform the other person of the fact in the ordinary course of
5-2 business, regardless of whether the other person actually comes to
5-3 know of the fact.
5-4 (d) RECEIVING NOTICE. A person is notified or receives a
5-5 notice of a fact when the fact is communicated to:
5-6 (1) the person;
5-7 (2) the person's place of business; or
5-8 (3) another place held out by the person as the place
5-9 for receipt of communications.
5-10 (e) NOTICE TO PARTNER AS NOTICE TO PARTNERSHIP. Receipt of
5-11 notice by a partner of a fact relating to the partnership is
5-12 effective immediately as notice to the partnership except in the
5-13 case of fraud on the partnership committed by or with the consent
5-14 of the partner receiving the notice.
5-15 Sec. 1.03. Effect of Partnership Agreement; Nonwaivable and
5-16 Variable Provisions. (a) PARTNERSHIP AGREEMENT CONTROLS. Except
5-17 as provided by Subsection (b), a partnership agreement governs the
5-18 relations of the partners and between the partners and the
5-19 partnership. To the extent that the partnership agreement does not
5-20 otherwise provide, this Act governs the relations of the partners
5-21 and between the partners and the partnership.
5-22 (b) STATUTORY PROVISIONS THAT MAY NOT BE VARIED BY
5-23 AGREEMENT. A partnership agreement or the partners may not:
5-24 (1) unreasonably restrict a partner's right of access
5-25 to books and records under Section 4.03(b);
6-1 (2) eliminate the duty of loyalty under Section
6-2 4.04(b), but the partners may by agreement identify specific types
6-3 or categories of activities that do not violate the duty of
6-4 loyalty, if not manifestly unreasonable;
6-5 (3) eliminate the duty of care under Section 4.04(c),
6-6 but the partners may by agreement determine the standards by which
6-7 the performance of the obligation is to be measured, if the
6-8 standards are not manifestly unreasonable;
6-9 (4) eliminate the obligation of good faith under
6-10 Section 4.04(d), but the partners may by agreement determine the
6-11 standards by which the performance of the obligation is to be
6-12 measured, if the standards are not manifestly unreasonable;
6-13 (5) vary the power to withdraw as a partner under
6-14 Section 6.01(b)(1), (7), or (8), except to require the notice to be
6-15 in writing;
6-16 (6) vary the right to expel a partner by a court in
6-17 the events specified by Section 6.01(b)(5);
6-18 (7) vary the requirement to wind up the partnership
6-19 business in the events specified by Section 8.01(c), (d), or (e);
6-20 (8) restrict rights of third parties under this Act;
6-21 or
6-22 (9) select a governing law not permitted under Section
6-23 1.05(a)(1).
6-24 Sec. 1.04. Supplemental Principles of Law. (a)
6-25 SUPPLEMENTED BY LAW AND EQUITY. Unless displaced by a particular
7-1 provision of this Act, the principles of law and equity supplement
7-2 this Act.
7-3 (b) STRICT CONSTRUCTION NOT APPLICABLE. The rule that a
7-4 statute in derogation of the common law is to be strictly construed
7-5 does not apply to this Act.
7-6 (c) INTEREST RATE. If an obligation to pay interest arises
7-7 under this Act and the rate is not specified, the rate is the rate
7-8 specified by Article 1.03, Title 79, Revised Statutes (Article
7-9 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
7-10 amendments, or a successor statute.
7-11 Sec. 1.05. Law Governing Internal Affairs and Partner's
7-12 Liability. (a) INTERNAL AFFAIRS. A partnership's internal
7-13 affairs and the relations of the partners to one another are
7-14 governed by:
7-15 (1) the law of the state chosen by the partners to
7-16 govern if that state bears a reasonable relation to the partners or
7-17 to the partnership business and affairs under principles that apply
7-18 to a contract among the partners other than the partnership
7-19 agreement; or
7-20 (2) if the partners do not choose a governing law
7-21 under Subdivision (1), the law of the state in which the
7-22 partnership has its chief executive office.
7-23 (b) LIABILITY TO THIRD PARTIES. The law governing a
7-24 partnership's internal affairs also governs the liability of its
7-25 partners to third parties.
8-1 Sec. 1.06. Partnership Subject to Amendment or Repeal of
8-2 Act. A partnership governed by this Act is subject to an amendment
8-3 or repeal of this Act.
8-4 ARTICLE II. NATURE OF PARTNERSHIP
8-5 Sec. 2.01. Partnership as Entity. A partnership is an
8-6 entity distinct from its partners.
8-7 Sec. 2.02. Partnership Defined; Application to Joint Venture
8-8 and Limited Partnership; Capacity as Partner. (a) ASSOCIATION TO
8-9 CARRY ON BUSINESS FOR PROFIT. Except as provided by Subsections
8-10 (b) and (c), an association of two or more persons to carry on a
8-11 business for profit as owners creates a partnership, whether the
8-12 persons intend to create a partnership and whether the association
8-13 is called a "partnership," "joint venture," or other name. A
8-14 partnership may be created under:
8-15 (1) this Act;
8-16 (2) the Texas Uniform Partnership Act (Article 6132b,
8-17 Vernon's Texas Civil Statutes) and its subsequent amendments;
8-18 (3) the Texas Revised Limited Partnership Act (Article
8-19 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
8-20 amendments; or
8-21 (4) a statute of another jurisdiction comparable to
8-22 this Act or the Texas Revised Limited Partnership Act (Article
8-23 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
8-24 amendments.
8-25 (b) ENTITY NOT A PARTNERSHIP. An association or entity
9-1 created under a law other than the laws described in Subsection (a)
9-2 is not a partnership.
9-3 (c) PERSON WITH CAPACITY AS PARTNER. A person may be a
9-4 partner unless the person lacks capacity apart from this Act.
9-5 Sec. 2.03. Rules for Determining if Partnership is Created.
9-6 (a) FACTORS INDICATING CREATION OF PARTNERSHIP. Factors
9-7 indicating that persons have created a partnership include their:
9-8 (1) receipt or right to receive a share of profits of
9-9 the business;
9-10 (2) expression of an intent to be partners in the
9-11 business;
9-12 (3) participation or right to participate in control
9-13 of the business;
9-14 (4) sharing or agreeing to share:
9-15 (A) losses of the business; or
9-16 (B) liability for claims by third parties
9-17 against the business; and
9-18 (5) contributing or agreeing to contribute money or
9-19 property to the business.
9-20 (b) FACTORS NOT INDICATING CREATION OF PARTNERSHIP. One of
9-21 the following circumstances, by itself, does not indicate that a
9-22 person is a partner in the business:
9-23 (1) the receipt or right to receive a share of
9-24 profits:
9-25 (A) as repayment of a debt, by installments or
10-1 otherwise;
10-2 (B) as payment of wages or other compensation to
10-3 an employee or independent contractor;
10-4 (C) as payment of rent;
10-5 (D) as payment to a former partner, surviving
10-6 spouse or representative of a deceased or disabled partner, or
10-7 transferee of a partnership interest;
10-8 (E) as payment of interest or other charge on a
10-9 loan, regardless of whether the amount of payment varies with the
10-10 profits of the business, and including a direct or indirect present
10-11 or future ownership interest in collateral or rights to income,
10-12 proceeds, or increase in value derived from collateral; or
10-13 (F) as payment of consideration for the sale of
10-14 a business or other property by installments or otherwise;
10-15 (2) co-ownership of property, whether in the form of
10-16 joint tenancy, tenancy in common, tenancy by the entireties, joint
10-17 property, community property, or part ownership, whether combined
10-18 with sharing of profits from the property;
10-19 (3) sharing or having a right to share gross returns
10-20 or revenues, regardless of whether the persons sharing the gross
10-21 returns or revenues have a common or joint interest in the property
10-22 from which the returns or revenues are derived; or
10-23 (4) ownership of mineral property under a joint
10-24 operating agreement.
10-25 (c) ADDITIONAL RULES. An agreement to share losses by the
11-1 owners of a business is not necessary to create a partnership.
11-2 Except as provided by Sections 3.06 and 7.03, a person who is not a
11-3 partner in a partnership under Section 2.02 is not a partner as to
11-4 a third person and is not liable to a third person under this Act.
11-5 Sec. 2.04. Partnership Property not Property of Partners.
11-6 Partnership property is not property of the partners. Neither a
11-7 partner not a partner's spouse has an interest in partnership
11-8 property.
11-9 Sec. 2.05. Partnership Property. (a) ACQUISITION IN
11-10 CERTAIN NAMES. Property is partnership property if acquired:
11-11 (1) in the name of the partnership; or
11-12 (2) in the name of one or more partners with an
11-13 indication in the instrument transferring title to the property of
11-14 the person's capacity as a partner or of the existence of a
11-15 partnership, regardless of whether the name of the partnership is
11-16 indicated.
11-17 (b) PROPERTY IN PARTNERSHIP NAME. Property is acquired in
11-18 the name of the partnership by a transfer to:
11-19 (1) the partnership in its name; or
11-20 (2) one or more partners in their capacity as partners
11-21 in the partnership, if the name of the partnership is indicated in
11-22 the instrument transferring title to the property.
11-23 (c) PROPERTY ACQUIRED WITH PARTNERSHIP PROPERTY. Property
11-24 is presumed to be partnership property if acquired with partnership
11-25 property, whether acquired in the name of the partnership or of one
12-1 or more partners with an indication in the instrument transferring
12-2 title to the property of the person's capacity as a partner or of
12-3 the existence of a partnership.
12-4 (d) PROPERTY ACQUIRED IN PARTNER'S NAME. Property acquired
12-5 in the name of one or more of the partners, without an indication
12-6 in the instrument transferring title to the property of the
12-7 person's capacity as a partner or of the existence of a
12-8 partnership, and without use of partnership property, is presumed
12-9 to be the partner's property, regardless of whether the property is
12-10 used for partnership purposes.
12-11 Sec. 2.06. Partnership Continues until Terminated. (a)
12-12 CONTINUATION OF PARTNERSHIP AFTER EVENT OF WITHDRAWAL. A
12-13 partnership continues after an event of withdrawal, but the event
12-14 of withdrawal affects the relationships among the withdrawn
12-15 partner, the partnership, and the continuing partners as provided
12-16 by Sections 6.02, 7.01, 7.02, and 7.03.
12-17 (b) EFFECT OF OCCURRENCE OF EVENT REQUIRING A WINDING UP.
12-18 On the occurrence of an event requiring a winding up of a
12-19 partnership under Section 8.01, the partnership continues as
12-20 provided by Section 8.03, but the relationship among the partners
12-21 is changed as provided by Sections 8.02, 8.03, 8.04, 8.05, and
12-22 8.06.
12-23 (c) EFFECT OF WITHDRAWAL ON RELATION BETWEEN CREDITOR AND
12-24 PARTNERSHIP. Relationships between a partnership and its creditors
12-25 are not affected by the withdrawal of a partner or by the addition
13-1 of a new partner.
13-2 ARTICLE III. RELATIONS OF PARTNERS TO PERSONS
13-3 DEALING WITH PARTNERSHIP
13-4 Sec. 3.01. General Powers of Partnership. Unless restricted
13-5 by applicable law, a partnership has the same powers as an
13-6 individual or corporation to do all things necessary or convenient
13-7 to carry out its business and affairs, including the power to:
13-8 (1) sue and be sued, complain, and defend in its
13-9 partnership name;
13-10 (2) purchase, receive, lease, or otherwise acquire,
13-11 and own, hold, improve, use, and otherwise deal with, real or
13-12 personal property, or any legal or equitable interest in property,
13-13 wherever located;
13-14 (3) sell, convey, mortgage, pledge, lease, exchange,
13-15 and otherwise dispose of all or any part of its property;
13-16 (4) purchase, receive, subscribe for, or otherwise
13-17 acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or
13-18 otherwise dispose of; and deal in and with shares or other
13-19 interests in, or obligations of, any other entity;
13-20 (5) make contracts and guarantees, incur liabilities,
13-21 borrow money, issue its notes, bonds, and other obligations, which
13-22 may be convertible into or include the option to purchase other
13-23 securities of the partnership, and secure its obligations by
13-24 mortgage or pledge of its property, franchises, or income;
13-25 (6) lend money, invest, and reinvest its funds, and
14-1 receive and hold real and personal property as security for
14-2 repayment;
14-3 (7) be a promoter, partner, member, associate, or
14-4 manager of a partnership, joint venture, trust, or other entity;
14-5 (8) conduct its business, locate offices, and exercise
14-6 the powers granted by this Act within or outside this state;
14-7 (9) appoint employees and agents of the partnership,
14-8 define their duties, fix their compensation, and lend them money or
14-9 credit;
14-10 (10) pay pensions and establish pension plans, pension
14-11 trusts, profit sharing plans, share bonus plans, share option
14-12 plans, and benefit or incentive plans for any or all of its current
14-13 or former partners, employees, and agents;
14-14 (11) make donations for the public welfare or for
14-15 charitable, scientific, or educational purposes;
14-16 (12) transact any lawful business that will aid
14-17 governmental policy;
14-18 (13) make payments or donations, or do any other act,
14-19 not inconsistent with law, that furthers the business and affairs
14-20 of the partnership;
14-21 (14) enter into mergers and similar transactions to
14-22 the extent permitted by applicable law;
14-23 (15) indemnify a person who was, is, or is threatened
14-24 to be made a defendant or respondent in a proceeding and purchase
14-25 and maintain liability insurance for the person; and
15-1 (16) exercise all of the rights and powers conferred
15-2 by Sections 111.019 through 111.022, Natural Resources Code, and
15-3 their subsequent amendments, if the partnership is engaged as a
15-4 common carrier in the pipeline business for transporting oil, oil
15-5 products, gas, carbon dioxide, salt brine, fuller's earth, sand,
15-6 clay, liquefied minerals, or other mineral solutions.
15-7 Sec. 3.02. Binding Effect of Partner's Act. (a) PARTNER
15-8 AGENT OF PARTNERSHIP AS TO PARTNERSHIP BUSINESS. Each partner is
15-9 an agent of the partnership for the purpose of its business.
15-10 Unless the partner does not have authority to act for the
15-11 partnership in the particular matter and the person with whom the
15-12 partner is dealing knows that the partner lacks authority, an act
15-13 of a partner, including the execution of an instrument in the
15-14 partnership name, binds the partnership if the act is for
15-15 apparently carrying on in the usual way:
15-16 (1) the partnership business; or
15-17 (2) business of the kind carried on by the
15-18 partnership.
15-19 (b) ACT OUTSIDE SCOPE OF BUSINESS. An act of a partner does
15-20 not bind the partnership unless authorized by the other partners if
15-21 the act is not apparently for carrying on in the usual way:
15-22 (1) the partnership business; or
15-23 (2) business of the kind carried on by the
15-24 partnership.
15-25 Sec. 3.03. Partnership Liable for Partner's Actionable
16-1 Conduct. (a) A partnership is liable for loss or injury to a
16-2 person, including a partner, or for a penalty caused by or incurred
16-3 as a result of a wrongful act or omission or other actionable
16-4 conduct of a partner acting:
16-5 (1) in the ordinary course of business of the
16-6 partnership; or
16-7 (2) with the authority of the partnership.
16-8 (b) A partnership is liable for the loss of money or
16-9 property of a person not a partner that is received in the course
16-10 of the partnership's business and misapplied by a partner while in
16-11 the custody of the partnership.
16-12 Sec. 3.04. Nature of Partner's Liability Partnership.
16-13 Except as provided by Section 3.08(a) for a registered limited
16-14 liability partnership, all partners are liable jointly and
16-15 severally for all debts and obligations of the partnership unless
16-16 otherwise agreed by the claimant or provided by law.
16-17 Sec. 3.05. Enforcement of Partnership and Partner Liability.
16-18 (a) PARTNERSHIP AS PARTY. A partnership may sue and be sued in
16-19 the name of the partnership.
16-20 (b) ACTION AGAINST PARTNERSHIP AND PARTNERS. An action may
16-21 be brought against a partnership and any or all of the partners in
16-22 the same action or in separate actions.
16-23 (c) JUDGMENT AGAINST PARTNER. A judgment against a
16-24 partnership is not by itself a judgment against a partner, but a
16-25 judgment may be entered against a partner who has been served with
17-1 process in a suit against the partnership.
17-2 (d) LIMITATION ON CREDITOR'S PURSUIT OF PARTNER'S PROPERTY.
17-3 Except as provided by Subsection (e), a creditor may proceed
17-4 against one or more partners or their property to satisfy a
17-5 judgment based on a claim that could have been successfully
17-6 asserted against the partnership only if:
17-7 (1) a judgment is also obtained against the partner;
17-8 and
17-9 (2) a judgment based on the same claim is obtained
17-10 against the partnership that:
17-11 (A) has not been reversed or vacated; and
17-12 (B) remains unsatisfied for 90 days after:
17-13 (i) the date of entry of the judgment; or
17-14 (ii) the date of expiration or termination
17-15 of the stay, if the judgment is contested by appropriate
17-16 proceedings and execution on the judgment has been stayed.
17-17 (e) CREDITOR'S DIRECT PURSUIT OF PARTNER'S PROPERTY.
17-18 Subsection (d) does not prohibit a creditor from proceeding
17-19 directly against one or more partners or their property without
17-20 first seeking satisfaction from partnership property if:
17-21 (1) the partnership is a debtor in bankruptcy;
17-22 (2) the creditor and the partnership agreed that the
17-23 creditor is not required to comply with Subsection (d);
17-24 (3) a court orders otherwise, based on a finding that
17-25 partnership property subject to execution within the state is
18-1 clearly insufficient to satisfy the judgment or that compliance
18-2 with Subsection (d) is excessively burdensome; or
18-3 (4) liability is imposed on the partner by law
18-4 independently of the person's status as a partner.
18-5 Sec. 3.06. False Representation of Partnership. (a)
18-6 REPRESENTATION OF PARTNERSHIP. A representation or other conduct
18-7 indicating that a person is a partner with another person, if that
18-8 is not the case, does not of itself create a partnership.
18-9 (b) REPRESENTATION OF MEMBERSHIP IN PARTNERSHIP. A
18-10 representation or other conduct indicating that a person is a
18-11 partner in an existing partnership, if that is not the case, does
18-12 not of itself make that person a partner in the partnership.
18-13 (c) Creditor's Rights Governed By Other Law. The rights of
18-14 a person extending credit in reliance on a representation described
18-15 by Subsections (a) or (b) are determined by law other than this
18-16 Act, including the law of estoppel, agency, negligence, fraud, and
18-17 unjust enrichment.
18-18 (d) Legal Status Of Person Making Misrepresentation. The
18-19 rights and duties of a person held liable under Subsection (c) are
18-20 also determined by law other than this Act, including the law of
18-21 estoppel, agency, negligence, fraud, and unjust enrichment.
18-22 Sec. 3.07. Liability Of Incoming Partner. A person admitted
18-23 as a partner into an existing partnership does not have personal
18-24 liability under Section 3.04 for an obligation of the partnership
18-25 that:
19-1 (1) arose before the partner's admission to the
19-2 partnership;
19-3 (2) relates to an action taken or omissions occurring
19-4 before the partner's admission to the partnership; or
19-5 (3) arises before or after the partner's admission
19-6 under a contract or commitment entered into before the partner's
19-7 admission to the partnership.
19-8 Sec. 3.08. Liability In And Registration Of Registered
19-9 Limited Liability Partnership. (a) Liability of Partner. (1) A
19-10 partner in a registered limited liability partnership is not
19-11 individually liable for debts and obligations of the partnership
19-12 arising from errors, omissions, negligence, incompetence, or
19-13 malfeasance committed while the partnership is a registered limited
19-14 liability partnership and in the course of the partnership business
19-15 by another partner or a representative of the partnership not
19-16 working under the supervision or direction of the first partner
19-17 unless the first partner:
19-18 (A) was directly involved in the specific
19-19 activity in which the errors, omissions, negligence, incompetence,
19-20 or malfeasance were committed by the other partner or
19-21 representative; or
19-22 (B) had notice or knowledge of the errors,
19-23 omissions, negligence, incompetence, or malfeasance by the other
19-24 partner or representative at the time of occurrence and then failed
19-25 to take reasonable steps to prevent or cure the errors, omissions,
20-1 negligence, incompetence, or malfeasance.
20-2 (2) Subsection (a)(1) does not affect:
20-3 (A) the joint and several liability of a partner
20-4 for debts and obligations of the partnership arising from a cause
20-5 other than the causes specified by Subsection (a)(1);
20-6 (B) the liability of a partnership to pay its
20-7 debts and obligations out of partnership property; or
20-8 (C) the manner in which service of citation or
20-9 other civil process may be served in an action against a
20-10 partnership.
20-11 (3) In this subsection, "representative" includes an
20-12 agent, servant, or employee of a registered limited liability
20-13 partnership.
20-14 (b) REGISTRATION. (1) In addition to complying with
20-15 Subsections (c) and (d)(1), to become a registered limited
20-16 liability partnership, a partnership must file with the secretary
20-17 of state an application stating:
20-18 (A) the name of the partnership;
20-19 (B) the federal tax identification number of the
20-20 partnership;
20-21 (C) the street address of the partnership's
20-22 principal office in this state and outside this state, as
20-23 applicable;
20-24 (D) the number of partners at the date of
20-25 application; and
21-1 (E) in brief, the partnership's business.
21-2 (2) The application must be executed by a
21-3 majority-in-interest of the partners or by one or more partners
21-4 authorized by a majority-in-interest of the partners.
21-5 (3) Two copies of the application must be filed,
21-6 accompanied by a fee of $100 for each partner.
21-7 (4) A partnership is registered as a registered
21-8 limited liability partnership on filing a completed initial or
21-9 renewal application, in duplicate with the required fee, or on a
21-10 later date specified in the application. A registration is not
21-11 affected by later changes in the partners of the partnership.
21-12 (5) An initial application filed under this subsection
21-13 and registered by the secretary of state expires one year after the
21-14 date of registration or later effective date unless earlier
21-15 withdrawn or revoked or unless renewed in accordance with
21-16 Subdivision (7).
21-17 (6) A registration may be withdrawn by filing in
21-18 duplicate with the secretary of state a written withdrawal notice
21-19 executed by a majority-in-interest of the partners or by one or
21-20 more partners authorized by a majority-in-interest of the partners.
21-21 A withdrawal notice must include the name of the partnership, the
21-22 federal tax identification number of the partnership, the date of
21-23 registration of the partnership's last application under this
21-24 section, and a current street address of the partnership's
21-25 principal office in this state and outside this state, if
22-1 applicable. A withdrawal notice terminates the status of the
22-2 partnership as a registered limited liability partnership as of the
22-3 date of filing the notice or a later date specified in the notice,
22-4 but not later than the expiration date under Subdivision (5).
22-5 (7) An effective registration may be renewed before
22-6 its expiration by filing in duplicate with the secretary of state
22-7 an application containing current information of the kind required
22-8 in an initial application and the most recent date of registration
22-9 of the partnership. The renewal application must be accompanied by
22-10 a fee of $200 for each partner on the date of renewal. A renewal
22-11 application filed under this section continues an effective
22-12 registration for one year after the date the effective registration
22-13 would otherwise expire.
22-14 (8) The secretary of state may remove from its active
22-15 records the registration of a partnership whose registration has
22-16 been withdrawn or revoked or has expired and not been renewed.
22-17 (9) The secretary of state may revoke the filing of a
22-18 document filed under this subsection if the secretary of state
22-19 determines that the filing fee for the document was paid by an
22-20 instrument that was dishonored when presented by the state for
22-21 payment. The secretary of state shall return the document and give
22-22 notice of revocation to the filing party by regular mail. Failure
22-23 to give or receive notice does not invalidate the revocation. A
22-24 revocation of a filing does not affect an earlier filing.
22-25 (10) The secretary of state may provide forms for
23-1 application for or renewal of registration.
23-2 (11) A document filed under this subsection may be
23-3 amended or corrected by filing in duplicate with the secretary of
23-4 state articles of amendment executed by a majority-in-interest of
23-5 the partners or by one or more partners authorized by a
23-6 majority-in-interest of the partners. The articles of amendment
23-7 must contain the name of the partnership, the tax identification
23-8 number of the partnership, the identity of the document being
23-9 amended, the date on which the document being amended was filed,
23-10 the part of the document being amended, and the amendment or
23-11 correction. Two copies of the articles of amendment must be filed,
23-12 accompanied by a fee of $10 plus, if the amendment increases the
23-13 number of partners, $200 for each partner added by amendment of the
23-14 number of partners.
23-15 (12) A document filed under this subsection may be a
23-16 photographic, facsimile, or similar reproduction of a signed
23-17 document. A signature on a document filed under this section may
23-18 be a facsimile.
23-19 (13) A person commits an offense if the person signs a
23-20 document the person knows is false in any material respect with the
23-21 intent that the document be delivered on behalf of a partnership to
23-22 the secretary of state for filing. An offense under this
23-23 subdivision is a Class A misdemeanor.
23-24 (14) The secretary of state is not responsible for
23-25 determining if a partnership is in compliance with the requirements
24-1 of Subsection (d)(1).
24-2 (15) The secretary of state may adopt procedural rules
24-3 on filing documents under this subsection.
24-4 (c) Name. A registered limited liability partnership's name
24-5 must contain the words "registered limited liability partnership"
24-6 or the abbreviation "L.L.P." as the last words or letters of its
24-7 name.
24-8 (d) Insurance or Financial Responsibility. (1) A
24-9 registered limited liability partnership must:
24-10 (A) carry at least $100,000 of liability
24-11 insurance of a kind that is designed to cover the kinds of errors,
24-12 omissions, negligence, incompetence, or malfeasance for which
24-13 liability is limited by Subsection (a)(1); or
24-14 (B) provide $100,000 of funds specifically
24-15 designated and segregated for the satisfaction of judgments against
24-16 the partnership based on the kinds of errors, omissions,
24-17 negligence, incompetence, or malfeasance for which liability is
24-18 limited by Subsection (a)(1) by:
24-19 (i) deposit in trust or in bank escrow of
24-20 cash, bank certificates of deposit, or United States Treasury
24-21 obligations; or
24-22 (ii) a bank letter of credit or insurance
24-23 company bond.
24-24 (2) If the registered limited liability partnership is
24-25 in compliance with Subdivision (1), the requirements of this
25-1 subsection shall not be admissible or in any way be made known to
25-2 the jury in determining an issue of liability for or extent of the
25-3 debt or obligation or damages in question.
25-4 (3) If compliance with Subdivision (1) is disputed:
25-5 (A) compliance must be determined separately
25-6 from the trial or proceeding to determine the partnership debt or
25-7 obligation in question, its amount, or partner liability for the
25-8 debt or obligation; and
25-9 (B) the burden of proof of compliance is on the
25-10 person claiming limitation of liability under Subsection (a)(1).
25-11 (e) LIMITED PARTNERSHIP. A limited partnership may become a
25-12 registered limited liability partnership by complying with
25-13 applicable provisions of the Texas Revised Limited Partnership Act
25-14 (Article 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
25-15 amendments.
25-16 ARTICLE IV. RELATIONS OF PARTNERS TO EACH OTHER AND TO PARTNERSHIP
25-17 Sec. 4.01. Partner's Rights And Duties. (a) CAPITAL
25-18 CREDITS AND CHARGES. Each partner is credited with an amount equal
25-19 to the cash plus the value of property the partner contributes to a
25-20 partnership and the partner's share of the partnership's profits.
25-21 Each partner is charged with an amount equal to the cash plus the
25-22 value of other property distributed by the partnership to the
25-23 partner and the partner's share of the partnership's losses.
25-24 (b) PROFITS AND LOSSES. Each partner is credited with an
25-25 equal share of the profits of a partnership. Each partner is
26-1 charged with a share of the losses, whether capital or operating,
26-2 of the partnership in proportion to the partner's share of the
26-3 profits.
26-4 (c) DISPROPORTIONATE PAYMENT OR ADVANCE. A partner who, in
26-5 the proper conduct of the business of the partnership or for the
26-6 preservation of its business or property, reasonably makes a
26-7 payment or advance beyond the amount the partner agreed to
26-8 contribute, or who reasonably incurs a liability, is entitled to be
26-9 repaid and to receive interest from the date of the payment or
26-10 advance or the incurrence of the liability.
26-11 (d) PARTICIPATION IN MANAGEMENT. Each partner has equal
26-12 rights in the management and conduct of the business of a
26-13 partnership. A partner's right to participate in the management
26-14 and conduct of the business is not community property.
26-15 (e) PARTNERSHIP PROPERTY. A partner may use or possess
26-16 partnership property only on behalf of the partnership.
26-17 (f) COMPENSATION. A partner is not entitled to compensation
26-18 for services performed for a partnership other than reasonable
26-19 compensation for services rendered in winding up the business of
26-20 the partnership.
26-21 (g) NEW PARTNER. A person may become a partner only with
26-22 the consent of all partners.
26-23 (h) MAJORITY DECISION ON ORDINARY MATTER. A difference
26-24 arising as to a matter in the ordinary course of the business of
26-25 the partnership may be decided by a majority-in-interest of the
27-1 partners. An act outside the ordinary course of business of a
27-2 partnership may be undertaken only with the consent of all
27-3 partners.
27-4 (i) AMENDMENT OF AGREEMENT. An amendment to a partnership
27-5 agreement may be effected only with the consent of all partners.
27-6 (j) PARTNERSHIP OBLIGATION. This section does not limit a
27-7 partnership's obligation to another person under Section 3.02.
27-8 (k) PARTNER TRANSACTION OF BUSINESS WITH PARTNERSHIP. A
27-9 partner may lend money to or transact other business with a
27-10 partnership and, subject to other applicable law, has the same
27-11 rights and obligations with respect to that matter as a person who
27-12 is not a partner.
27-13 (l) CLASSES OR GROUPS OF PARTNERS. A written partnership
27-14 agreement may establish classes or groups of one or more partners
27-15 having certain expressed relative rights, powers, and duties,
27-16 including voting rights, and may provide for the future creation of
27-17 additional classes or groups of partners having certain relative
27-18 rights, powers, and duties, including voting rights, expressed in
27-19 the partnership agreement or at the time of creation of the class
27-20 or group. The rights, powers, or duties of a class or group may be
27-21 senior to those of one or more existing classes or groups of
27-22 partners.
27-23 (m) VOTING RIGHTS. A written partnership agreement that
27-24 grants or provides for granting to a partner a right to vote may
27-25 contain provisions relating to:
28-1 (1) giving notice of the time, place, or purposes of a
28-2 meeting at which a matter is to be voted on by the partners;
28-3 (2) waiver of notice;
28-4 (3) action by consent without a meeting;
28-5 (4) the establishment of a record date;
28-6 (5) quorum requirements;
28-7 (6) voting in person or by proxy; or
28-8 (7) any other matter relating to the exercise of the
28-9 right to vote.
28-10 (n) NOTICE OF NONUNANIMOUS ACTION. (1) Prompt notice of
28-11 the taking of an action under an agreement that requires consent of
28-12 fewer than all of the partners and that may be taken without a
28-13 meeting shall be given to the partners who have not consented in
28-14 writing to the action.
28-15 (2) For the purposes of this section, the taking of an
28-16 action includes amending the partnership agreement or creating,
28-17 under provisions of the partnership agreement, a class of partner
28-18 that did not previously exist.
28-19 Sec. 4.02. DISTRIBUTION IN KIND. A partner does not have a
28-20 right to receive, and may not be required to accept, a distribution
28-21 in kind.
28-22 Sec. 4.03. INFORMATION REGARDING A PARTNERSHIP. (a) BOOKS
28-23 AND RECORDS AT CHIEF EXECUTIVE OFFICE. A partnership shall keep
28-24 its books and records, if any, at its chief executive office.
28-25 (b) ACCESS TO BOOKS AND RECORDS. A partnership shall
29-1 provide access to its books and records to partners and their
29-2 agents and attorneys. The partnership shall provide former
29-3 partners and their agents and attorneys access to books and records
29-4 pertaining to the period during which the former partners were
29-5 partners or for any other proper purpose with respect to another
29-6 period. The right of access includes the opportunity to inspect
29-7 and copy books and records during ordinary business hours. A
29-8 partnership may impose a reasonable charge, covering the costs of
29-9 labor and material, for copies of documents furnished.
29-10 (c) INFORMATION CONCERNING THE PARTNERSHIP. Each partner
29-11 and the partnership shall furnish, on request and to the extent
29-12 just and reasonable, to a partner, the legal representative of a
29-13 deceased partner or a partner under legal disability, or an
29-14 assignee, complete and accurate information concerning the
29-15 partnership. A legal representative of a deceased partner or a
29-16 partner under legal disability and an assignee are subject to the
29-17 same duties as a partner with respect to information made
29-18 available.
29-19 Sec. 4.04. GENERAL STANDARDS OF PARTNER'S CONDUCT.
29-20 (a) Duties. A partner owes to the partnership and the other
29-21 partners:
29-22 (1) a duty of loyalty; and
29-23 (2) a duty of care.
29-24 (b) LOYALTY. A partner's duty of loyalty includes:
29-25 (1) accounting to the partnership and holding for it
30-1 any property, profit, or benefit derived by the partner in the
30-2 conduct and winding up of the partnership business or from use by
30-3 the partner of partnership property;
30-4 (2) refraining from dealing with the partnership on
30-5 behalf of a party having an interest adverse to the partnership;
30-6 and
30-7 (3) refraining from competing with the partnership or
30-8 dealing with the partnership in a manner adverse to the
30-9 partnership.
30-10 (c) CARE. A partner's duty of care to the partnership and
30-11 the other partners is to act in the conduct and winding up of the
30-12 partnership business with the care an ordinarily prudent person
30-13 would exercise in similar circumstances. An error in judgment does
30-14 not by itself constitute a breach of this duty of care. A partner
30-15 is presumed to satisfy this duty if the partner acts on an informed
30-16 basis and in compliance with Subsection (d).
30-17 (d) METHOD OF DISCHARGE. A partner shall discharge the
30-18 partner's duties to the partnership and the other partners under
30-19 this Act or under the partnership agreement, and exercise any
30-20 rights and powers in the conduct or winding up of the partnership
30-21 business:
30-22 (1) in good faith; and
30-23 (2) in a manner the partner reasonably believes to be
30-24 in the best interest of the partnership.
30-25 (e) EFFECT OF PARTNER BENEFIT. A partner does not violate a
31-1 duty or obligation under this Act or under the partnership
31-2 agreement merely because the partner's conduct furthers the
31-3 partner's own interest.
31-4 (f) TRUSTEE STANDARD INAPPLICABLE. A partner, in that
31-5 capacity, is not a trustee and is not held to the same standards as
31-6 a trustee.
31-7 (g) APPLICATION TO NONPARTNER WINDING UP. This section
31-8 applies to a person winding up the partnership business as the
31-9 personal or legal representative of the last surviving partner as
31-10 if the person were a partner.
31-11 Sec. 4.05. PARTNER'S LIABILITY TO PARTNERSHIP. A partner is
31-12 liable to a partnership and the other partners for a breach of the
31-13 partnership agreement or for a violation of a duty to the
31-14 partnership or the other partners under this Act that causes harm
31-15 to the partnership or the other partners.
31-16 Sec. 4.06. REMEDIES OF PARTNERSHIP AND PARTNERS.
31-17 (a) ACTION BY PARTNERSHIP. A partnership may maintain an action
31-18 against a partner for a breach of the partnership agreement or for
31-19 the violation of a duty to the partnership causing harm to the
31-20 partnership.
31-21 (b) ACTION BY PARTNER. A partner may maintain an action
31-22 against the partnership or another partner for legal or equitable
31-23 relief, including an accounting as to partnership business, to:
31-24 (1) enforce a right under the partnership agreement;
31-25 (2) enforce a right under this Act, including:
32-1 (A) the partner's rights under Sections 4.01,
32-2 4.03, and 4.04;
32-3 (B) the partner's right on withdrawal to have
32-4 the partner's interest in the partnership redeemed under Section
32-5 7.01 or enforce any other right under Article 6 or 7; and
32-6 (C) the partner's rights under Article 8; or
32-7 (3) enforce the rights and otherwise protect the
32-8 interests of the partner, including rights and interests arising
32-9 independently of the partnership relationship.
32-10 (c) ACCRUAL OF ACTION. The accrual of and a time limitation
32-11 on a right of action for a remedy under this section is governed by
32-12 other law.
32-13 (d) NO REVIVAL BY ACCOUNTING. A right to an accounting does
32-14 not revive a claim barred by law.
32-15 Sec. 4.07. CONTINUATION OF PARTNERSHIP. (a) CONTINUATION
32-16 BY EXPRESS AGREEMENT. If all the partners in a partnership for a
32-17 definite term or a particular undertaking or for which the
32-18 partnership agreement provides for winding up on a specified event
32-19 agree to continue the business of the partnership despite the
32-20 expiration of the term, the completion of the undertaking, or the
32-21 occurrence of the event, other than the withdrawal of a partner,
32-22 the partnership is continued and the partnership agreement is
32-23 considered amended to provide that the expiration, the completion,
32-24 or the occurrence of the event did not result in an event requiring
32-25 the winding up of the partnership business.
33-1 (b) CONTINUATION BY ACTION. A continuation of the business
33-2 for 90 days by the partners or those who habitually acted in the
33-3 business during the term or undertaking or preceding the event,
33-4 without a settlement or liquidation of the partnership business and
33-5 without objection from a partner, is prima facie evidence of
33-6 agreement by all partners to continue the business.
33-7 ARTICLE V. TRANSFEREE OF PARTNER
33-8 Sec. 5.01. PARTNER'S INTEREST IN PARTNERSHIP PROPERTY NOT
33-9 TRANSFERABLE. A partner is not a co-owner of partnership property
33-10 and does not have an interest that can be transferred, either
33-11 voluntarily or involuntarily, in partnership property.
33-12 Sec. 5.02. NATURE OF PARTNER'S PARTNERSHIP INTEREST.
33-13 (a) PERSONAL PROPERTY. A partner's partnership interest is
33-14 personal property for all purposes. A partner's partnership
33-15 interest may be community property under applicable law.
33-16 (b) CERTIFICATE EVIDENCING INTEREST. A written partnership
33-17 agreement may:
33-18 (1) provide that a partner's partnership interest may
33-19 be evidenced by a certificate of partnership interest issued by the
33-20 partnership;
33-21 (2) provide for the assignment or transfer of a
33-22 partnership interest represented by the certificate; and
33-23 (3) make other provisions with respect to the
33-24 certificate.
33-25 Sec. 5.03. TRANSFER OF PARTNER'S PARTNERSHIP INTEREST.
34-1 (a) ACT OF TRANSFER. A transfer of a partner's partnership
34-2 interest:
34-3 (1) is permissible, in whole or in part;
34-4 (2) is not an event of withdrawal;
34-5 (3) does not by itself cause a winding up of the
34-6 partnership business; and
34-7 (4) does not, as against the other partners or the
34-8 partnership, entitle the transferee, during the continuance of the
34-9 partnership, to participate in the management or conduct of the
34-10 partnership business.
34-11 (b) BASIC RIGHTS OF TRANSFEREE. A transferee of a partner's
34-12 partnership interest is entitled to receive, to the extent
34-13 transferred, distributions to which the transferor otherwise would
34-14 be entitled. After transfer, the transferor continues to have the
34-15 rights and duties of a partner other than the interest transferred.
34-16 Until a transferee becomes a partner, the transferee does not have
34-17 liability as a partner solely as a result of the transfer. For a
34-18 proper purpose the transferee may require reasonable information or
34-19 an account of partnership transactions and make reasonable
34-20 inspection of the partnership books.
34-21 (c) RIGHTS OF TRANSFEREE ON WINDING UP. If an event
34-22 requires a winding up of partnership business under Section 8.01, a
34-23 transferee is entitled to receive, to the extent transferred, the
34-24 net amount otherwise distributable to the transferor. In a winding
34-25 up a transferee may require an accounting only from the date of the
35-1 latest account agreed to by all of the partners.
35-2 (d) NOTICE TO PARTNERSHIP. Until receipt of notice of a
35-3 transfer, a partnership does not have a duty to give effect to a
35-4 transferee's rights under this section.
35-5 (e) NO EFFECT IF PROHIBITED. A partnership does not have a
35-6 duty to give effect to a transfer, assignment, or grant of a
35-7 security interest prohibited by a partnership agreement.
35-8 Sec. 5.04. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
35-9 INTEREST. (a) DIVORCE. On the divorce of a partner, the
35-10 partner's spouse, to the extent of the spouse's partnership
35-11 interest, shall be regarded for purposes of this Act as a
35-12 transferee of the partnership interest from the partner.
35-13 (b) DEATH OF PARTNER. On the death of a partner, the
35-14 partner's surviving spouse, if any, and the partner's heirs,
35-15 legatees, or personal representative, to the extent of their
35-16 respective partnership interests, shall be regarded for purposes of
35-17 this Act as transferees of the partnership interests from the
35-18 partner.
35-19 (c) DEATH OF PARTNER'S SPOUSE. On the death of a partner's
35-20 spouse, the spouse's heirs, legatees or personal representative, to
35-21 the extent of their respective partnership interests, shall be
35-22 regarded for purposes of this Act as transferees of the partnership
35-23 interest from the partner.
35-24 (d) EVENT INVOLVING PARTNER'S SPOUSE NOT WITHDRAWAL. An
35-25 event of the type described in Section 6.01 occurring with respect
36-1 to a partner's spouse is not an event of withdrawal.
36-2 (e) NO IMPAIRMENT OF PURCHASE RIGHTS. This Act does not
36-3 impair an agreement for the purchase or sale of a partnership
36-4 interest at the time of death of the owner of the partnership
36-5 interest or at any other time.
36-6 ARTICLE VI. EVENTS OF WITHDRAWAL
36-7 Sec. 6.01. EVENTS OF WITHDRAWAL. (a) NO LONGER A
36-8 PARTNER. A person ceases to be a partner on the occurrence of an
36-9 event of withdrawal.
36-10 (b) EVENT OF WITHDRAWAL. An event of withdrawal of a
36-11 partner occurs on:
36-12 (1) receipt by the partnership of notice of the
36-13 partner's express will to withdraw as a partner on the date of
36-14 receipt of the notice or on a later date specified in the notice;
36-15 (2) an event specified in the partnership agreement as
36-16 causing the partner's withdrawal;
36-17 (3) the partner's expulsion as provided in the
36-18 partnership agreement;
36-19 (4) the partner's expulsion by the vote of a
36-20 majority-in-interest of the other partners if:
36-21 (A) it is unlawful to carry on the partnership
36-22 business with that partner;
36-23 (B) there has been a transfer of all or
36-24 substantially all of that partner's partnership interest, other
36-25 than:
37-1 (i) a transfer for security purposes that
37-2 has not been foreclosed; or
37-3 (ii) the substitution of a successor
37-4 trustee or successor personal representative;
37-5 (C) within 90 days after the date the
37-6 partnership notifies a corporate partner that it will be expelled
37-7 because it has filed a certificate of dissolution or the
37-8 equivalent, its charter has been revoked, or its right to conduct
37-9 business has been suspended by the jurisdiction of its
37-10 incorporation, the certificate of dissolution is not revoked or its
37-11 charter or its right to conduct business is not reinstated; or
37-12 (D) an event requiring a winding up has occurred
37-13 with respect to a partnership that is a partner;
37-14 (5) application by the partnership or another partner
37-15 for the partner's expulsion by judicial decree because:
37-16 (A) the partner engaged in wrongful conduct that
37-17 adversely and materially affected the partnership business;
37-18 (B) the partner wilfully or persistently
37-19 committed a material breach of the partnership agreement or of a
37-20 duty owed to the partnership or the other partners under Section
37-21 4.04; or
37-22 (C) the partner engaged in conduct relating to
37-23 the partnership business that made it not reasonably practicable to
37-24 carry on the business in partnership with that partner;
37-25 (6) the partner:
38-1 (A) becoming a debtor in bankruptcy;
38-2 (B) executing an assignment for the benefit of
38-3 creditors;
38-4 (C) seeking, consenting to, or acquiescing in
38-5 the appointment of a trustee, receiver, or liquidator of that
38-6 partner or of all or substantially all of that partner's property;
38-7 or
38-8 (D) failing, within 90 days after the
38-9 appointment, to have vacated or stayed the appointment of a
38-10 trustee, receiver, or liquidator of the partner or of all or
38-11 substantially all of the partner's property obtained without the
38-12 partner's consent or acquiescence, or failing within 90 days after
38-13 the date of expiration of a stay to have the appointment vacated;
38-14 (7) in the case of a partner who is an individual:
38-15 (A) the partner's death;
38-16 (B) the appointment of a guardian or general
38-17 conservator for the partner; or
38-18 (C) a judicial determination that the partner
38-19 has otherwise become incapable of performing the partner's duties
38-20 under the partnership agreement;
38-21 (8) termination of a partner's existence;
38-22 (9) in the case of a partner that has transferred all
38-23 of the partner's partnership interest, redemption of the
38-24 transferee's interest under Sections 7.01(n)-(r); or
38-25 (10) an agreement to continue the partnership under
39-1 Section 8.01(g) if the partnership has received a notice from the
39-2 partner under Section 8.01(g) requesting that the partnership be
39-3 wound up.
39-4 Sec. 6.02. WRONGFUL WITHDRAWAL. (a) POWER TO WITHDRAW. A
39-5 partner at any time before the occurrence of an event requiring a
39-6 winding up has the power to withdraw from the partnership and cease
39-7 to be a partner as provided by Section 6.01.
39-8 (b) WRONGFUL WITHDRAWAL. A partner's withdrawal is wrongful
39-9 only if:
39-10 (1) it is in breach of an express provision of the
39-11 partnership agreement;
39-12 (2) in the case of a partnership for a definite term
39-13 or particular undertaking or for which the partnership agreement
39-14 provides for winding up on a specified event, before the expiration
39-15 of the term, the completion of the undertaking, or the occurrence
39-16 of the event:
39-17 (A) the partner withdraws by express will; or
39-18 (B) in the case of a partner that is not an
39-19 individual, a trust other than a business trust, or an estate, the
39-20 partner is expelled or otherwise withdraws because the partner
39-21 wilfully terminated; or
39-22 (3) the partner is expelled by judicial decree under
39-23 Subsection (b)(5).
39-24 (c) LIABILITY FOR DAMAGES. A wrongfully withdrawing partner
39-25 is liable to the partnership and to the other partners for damages
40-1 caused by the withdrawal, in addition to other liability of the
40-2 partner to the partnership or to the other partners.
40-3 ARTICLE VII. PARTNER'S WITHDRAWAL IF BUSINESS NOT WOUND UP
40-4 Sec. 7.01. REDEMPTION OF WITHDRAWING PARTNER OR TRANSFEREE'S
40-5 INTEREST IF PARTNERSHIP NOT WOUND UP. (a) REDEMPTION. If an
40-6 event of withdrawal occurs under Sections 6.01(b)(1)-(9) and an
40-7 event requiring a winding up does not occur within 60 days after
40-8 the date of the withdrawal, or on a partner's withdrawal under
40-9 Section 6.01(b)(10), the partnership interest of the withdrawn
40-10 partner automatically is redeemed by the partnership as of the date
40-11 of withdrawal in accordance with this section.
40-12 (b) REDEMPTION PRICE. (1) The redemption price of a
40-13 withdrawn partner's partnership interest is the fair value of the
40-14 interest as of the date of withdrawal, except that the redemption
40-15 price of the partnership interest of a partner who wrongfully
40-16 withdraws before the expiration of a definite term, the completion
40-17 of a particular undertaking, or the occurrence of a specified event
40-18 requiring a winding up is the lesser of:
40-19 (A) the fair value of the withdrawn partner's
40-20 partnership interest as of the date of withdrawal; or
40-21 (B) the amount that the withdrawn partner would
40-22 have received if an event requiring a winding up had occurred at
40-23 the time of the partner's withdrawal.
40-24 (2) Interest is payable on the amount owed under this
40-25 subsection.
41-1 (c) CONTRIBUTIONS FROM WRONGFULLY WITHDRAWING PARTNER. If a
41-2 wrongfully withdrawing partner would have been liable to make
41-3 contributions to the partnership under Section 8.06(b) or (c) if an
41-4 event requiring winding up had occurred at the time of withdrawal,
41-5 the withdrawn partner is liable to the partnership to make
41-6 contributions in that amount to the partnership, plus interest on
41-7 the amount owed.
41-8 (d) SETOFF. The partnership may set off the damages for
41-9 wrongful withdrawal under Section 6.02(b) and all other amounts
41-10 owed by the withdrawn partner to the partnership, whether currently
41-11 due, including interest, against the redemption price payable to
41-12 the withdrawn partner.
41-13 (e) INTEREST. Interest owed under Subsection (b), (c), or
41-14 (d) accrues from the date of the withdrawal to the date of payment.
41-15 (f) INDEMNITY. (1) A partnership shall indemnify a
41-16 withdrawn partner against a partnership liability incurred before
41-17 the withdrawal except a liability:
41-18 (A) then unknown to the partnership; or
41-19 (B) incurred by an act of the withdrawn partner
41-20 under Section 7.02.
41-21 (2) For purposes of this subsection, a liability not
41-22 known to a partner other than the withdrawn partner is not known to
41-23 the partnership.
41-24 (g) TENDER OF REDEMPTION PRICE. If a deferred payment is
41-25 not authorized under Subsection (k) and an agreement on the
42-1 redemption price of a withdrawn partner's interest is not reached
42-2 within 120 days after the date of a written demand for payment by
42-3 either party, within 30 days after the expiration of the 120-day
42-4 period the partnership shall:
42-5 (1) pay in cash to the withdrawn partner the amount
42-6 the partnership estimates to be the redemption price plus accrued
42-7 interest, reduced by any setoffs and accrued interest under
42-8 Subsection (d); or
42-9 (2) make written demand for payment of its estimate of
42-10 the amount owed by the withdrawn partner, net of amounts owed to
42-11 the partner, to the partnership.
42-12 (h) WRITTEN OFFER TO PAY OR DEMAND FOR PAYMENT. If a
42-13 deferred payment is authorized under Subsection (k) or a
42-14 contribution or other amount is owed by the withdrawn partner to
42-15 the partnership, the partnership may tender a written offer to pay
42-16 or deliver a written statement of demand for the amount that it
42-17 estimates to be the net amount owed to it, stating the amount and
42-18 other terms and conditions of the obligation.
42-19 (i) EXPLANATORY STATEMENT ACCOMPANYING OR FOLLOWING TENDER.
42-20 On request of the other party, the payment, tender, or demand
42-21 required or allowed by Subsection (g) or (h) must be accompanied or
42-22 followed promptly by:
42-23 (1) a statement of partnership property and
42-24 liabilities as of the date of the partner's withdrawal and the
42-25 latest available partnership balance sheet and income statement, if
43-1 any, if payment, tender, or demand is made or delivered by the
43-2 partnership; and
43-3 (2) an explanation of the computation of the estimated
43-4 payment obligation.
43-5 (j) TENDER IN FULL SATISFACTION. The terms of a payment or
43-6 tender under Subsection (g) or (h) govern a redemption if:
43-7 (1) the payment or tender is accompanied by written
43-8 notice that:
43-9 (A) the payment or tendered amount, if made, is
43-10 in full satisfaction of a party's obligations relating to the
43-11 redemption of the withdrawn partner's partnership interest; and
43-12 (B) an action to determine the redemption price,
43-13 a contribution obligation or setoff under Subsection (c) or (d), or
43-14 other terms of the redemption obligation must be commenced within
43-15 one year after the later of:
43-16 (i) the date the written notice is given;
43-17 or
43-18 (ii) the date of delivery of the
43-19 information required by Subsection (i); and
43-20 (2) the party receiving the payment or tender does not
43-21 commence an action within that one-year period.
43-22 (k) DEFERRAL OF PAYMENT TO WRONGFULLY WITHDRAWING PARTNER.
43-23 A partner who wrongfully withdraws before the expiration of a
43-24 definite term, the completion of a particular undertaking, or the
43-25 occurrence of a specified event requiring a winding up is not
44-1 entitled to receive any portion of the redemption price until the
44-2 expiration of the term, the completion of the undertaking, or the
44-3 occurrence of the specified event unless the partner establishes to
44-4 the satisfaction of a court that earlier payment will not cause
44-5 undue hardship to the partnership. A deferred payment bears
44-6 interest. The withdrawn partner may seek to demonstrate to the
44-7 satisfaction of the court that security for a deferred payment is
44-8 appropriate.
44-9 (l) ACTION TO DETERMINE REDEMPTION TERMS. A withdrawn
44-10 partner or the partnership may maintain an action against the other
44-11 party under Section 4.06 to determine the terms of redemption of
44-12 that partner's interest, including a contribution obligation or
44-13 setoff under Subsection (c) or (d) or other terms of the redemption
44-14 obligations of either party. The action must be commenced within
44-15 one year after the later of the date of delivery of information
44-16 required by Subsection (i) or the date written notice is given
44-17 under Subsection (j). The court shall determine the terms of the
44-18 redemption of the withdrawn partner's interest, any contribution
44-19 obligation or setoff due under Subsection (c) or (d), and accrued
44-20 interest and enter judgment for an additional payment or refund.
44-21 If deferred payment is authorized under Subsection (k), the court
44-22 shall also determine the security for payment if requested to
44-23 consider whether security is appropriate. If the court finds that
44-24 a party acted arbitrarily, vexatiously, or not in good faith,
44-25 including failure to tender payment or make an offer to pay or to
45-1 comply with the requirements of Subsection (i), the court may
45-2 assess damages against the party, including if appropriate a share
45-3 of the profits of the continuing business, reasonable attorney's
45-4 fees, and the fees and expenses of appraisers or other experts for
45-5 a party to the action, in amounts the court finds equitable.
45-6 (m) DEFERRAL OF PAYMENT ON OCCURRENCE OF EVENT REQUIRING
45-7 WINDING UP. If a partner withdraws under Section 6.01 and an event
45-8 occurs within 60 days of the date of withdrawal that requires a
45-9 winding up of the partnership under Section 8.01:
45-10 (1) the partnership may defer paying the redemption
45-11 price to the withdrawn partner until the partnership first makes a
45-12 winding up distribution to the remaining partners; and
45-13 (2) the redemption price or contribution obligation is
45-14 the amount the withdrawn partner would have received or contributed
45-15 if the event requiring a winding up had occurred at the time of the
45-16 partner's withdrawal.
45-17 (n) OBLIGATION TO REDEEM TRANSFEREE. A partnership must
45-18 redeem the partnership interest of a transferee for its fair value
45-19 if:
45-20 (1) the interest was transferred when:
45-21 (A) the partnership was for a definite term not
45-22 then expired or a particular undertaking not then completed; or
45-23 (B) the partnership agreement provided for
45-24 winding up on a specified event that has not yet occurred;
45-25 (2) the definite term has expired, the particular
46-1 undertaking has been completed, or the specified event has
46-2 occurred; and
46-3 (3) the transferee makes a written demand for
46-4 redemption.
46-5 (o) PAYMENT TO TRANSFEREE. If an agreement for the
46-6 redemption price of a transferee's interest is not reached within
46-7 120 days after the date of a written demand for redemption, within
46-8 30 days after the expiration of the 120-day period the partnership
46-9 must pay in cash to the transferee the amount the partnership
46-10 estimates to be the redemption price, plus accrued interest from
46-11 the date of demand.
46-12 (p) INFORMATION TO TRANSFEREE. On request of the
46-13 transferee, the payment required by Subsection (o) must be
46-14 accompanied or followed by:
46-15 (1) a statement of partnership property and
46-16 liabilities as of the date of the demand for redemption;
46-17 (2) the latest available partnership balance sheet and
46-18 income statement, if any; and
46-19 (3) an explanation of the computation of the estimated
46-20 payment obligation.
46-21 (q) PRICE FOR TRANSFEREE. If payment required by Subsection
46-22 (o) is accompanied by written notice that the payment is in full
46-23 satisfaction of the partnership's obligations relating to the
46-24 redemption of the transferee's interest, the payment, less
46-25 interest, is the redemption price unless the transferee within one
47-1 year after the date of the written notice commences an action to
47-2 determine the redemption price.
47-3 (r) SUIT BY TRANSFEREE. A transferee may maintain an action
47-4 against a partnership to determine the redemption price of the
47-5 transferee's interest. The court shall determine the redemption
47-6 price of the transferee's interest and accrued interest and enter
47-7 judgment for payment or refund. If the court finds that the
47-8 partnership acted arbitrarily, vexatiously, or not in good faith,
47-9 including failure to make payment, the court may assess reasonable
47-10 attorney's fees and the fees and expenses of appraisers or other
47-11 experts for a party to the action, in amounts the court finds
47-12 equitable, against the partnership.
47-13 (s) DEFERRAL OF TRANSFEREE REDEMPTION. The redemption of a
47-14 transferee's interest under Subsections (n) and (o) may be deferred
47-15 as determined by the court if the partnership establishes to the
47-16 satisfaction of the court that failure to defer redemption will
47-17 cause undue hardship to the business of the partnership.
47-18 Sec. 7.02. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.
47-19 (a) POWER TO BIND FOR ONE YEAR. The action of a withdrawn partner
47-20 within one year after the date of the person's withdrawal binds the
47-21 partnership if the transaction is one that would bind the
47-22 partnership before the person's withdrawal and the other party to
47-23 the transaction:
47-24 (1) does not have notice of the person's withdrawal as
47-25 a partner;
48-1 (2) had done business with the partnership within one
48-2 year preceding the date of withdrawal; and
48-3 (3) reasonably believed that the withdrawn partner was
48-4 a partner at the time of the transaction.
48-5 (b) WITHDRAWN PARTNER'S LIABILITY FOR LOSS. A withdrawn
48-6 partner is liable to the partnership for loss caused to the
48-7 partnership arising from an obligation incurred by the withdrawn
48-8 partner after withdrawal and for which the partnership is liable
48-9 under Subsection (a).
48-10 Sec. 7.03. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
48-11 LIABILITY. (a) WITHDRAWAL DOES NOT DISCHARGE LIABILITY.
48-12 Withdrawal of a partner does not of itself discharge the partner's
48-13 liability for an obligation of the partnership incurred before
48-14 withdrawal.
48-15 (b) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
48-16 deceased partner is liable for an obligation of the partnership
48-17 incurred while the deceased was a partner to the same extent that a
48-18 withdrawn partner is liable for an obligation of the partnership
48-19 incurred before withdrawal.
48-20 (c) DISCHARGE OF WITHDRAWN PARTNER BY AGREEMENT OF CREDITOR.
48-21 A withdrawn partner is discharged from liability incurred before
48-22 the withdrawal by an agreement to that effect between the partner
48-23 and a partnership creditor.
48-24 (d) MATERIAL ALTERATION OF OBLIGATION WITHOUT CONSENT
48-25 DISCHARGES WITHDRAWN PARTNER. If a creditor of a partnership has
49-1 notice of a partner's withdrawal and without the consent of the
49-2 withdrawn partner agrees to a material alteration in the nature or
49-3 time of payment of an obligation of the partnership incurred before
49-4 the withdrawal, the withdrawn partner is discharged from the
49-5 obligation.
49-6 (e) LIABILITY OF WITHDRAWN PARTNER TO CREDITOR. A person
49-7 who withdraws as a partner in a circumstance that does not
49-8 constitute an event requiring a winding up under Section 8.01 is
49-9 liable as a partner to another party in a transaction entered into
49-10 by the partnership or a surviving partnership under Section 9.02
49-11 within two years after the date of the partner's withdrawal only if
49-12 the other party to the transaction:
49-13 (1) does not have notice of the partner's withdrawal;
49-14 and
49-15 (2) reasonably believed that the withdrawn partner was
49-16 a partner at the time of the transaction.
49-17 ARTICLE VIII. WINDING UP PARTNERSHIP BUSINESS
49-18 Sec. 8.01. EVENTS REQUIRING WINDING UP OF PARTNERSHIP.
49-19 (a) EXPRESS WILL OF MAJORITY-IN-INTEREST IN CERTAIN PARTNERSHIPS.
49-20 In a partnership that is not for a definite term or a particular
49-21 undertaking or in which the partnership agreement does not provide
49-22 for winding up on a specified event, the express will of a
49-23 majority-in-interest of the partners who have not assigned their
49-24 interests requires a winding up of the partnership.
49-25 (b) TERM OR UNDERTAKING. In a partnership for a definite
50-1 term or particular undertaking, winding up is required on:
50-2 (1) the express will of all the partners; or
50-3 (2) the expiration of the term or the completion of
50-4 the undertaking, unless otherwise continued under Section 4.07.
50-5 (c) AGREEMENT ON SPECIFIED EVENT. In a partnership in which
50-6 the partnership agreement provides for winding up on a specified
50-7 event, winding up is required on:
50-8 (1) the express will of all the partners; or
50-9 (2) the occurrence of the specified event, unless
50-10 otherwise continued under Section 4.07.
50-11 (d) ILLEGAL TO CONTINUE. An event that makes it illegal for
50-12 all or substantially all of the business of the partnership to be
50-13 continued requires a winding up of a partnership, but a cure of
50-14 illegality within 90 days after the date of notice to the
50-15 partnership of the event is effective retroactively to the date of
50-16 the event for purposes of this subsection.
50-17 (e) JUDICIAL DECREE. A judicial decree, on application by a
50-18 partner, requires a winding up if the decree determines that:
50-19 (1) the economic purpose of the partnership is likely
50-20 to be unreasonably frustrated;
50-21 (2) another partner has engaged in conduct relating to
50-22 the partnership business that makes it not reasonably practicable
50-23 to carry on the business in partnership with that partner; or
50-24 (3) it is not otherwise reasonably practicable to
50-25 carry on the partnership business in conformity with the
51-1 partnership agreement.
51-2 (f) SALE OF PROPERTY. The sale of all or substantially all
51-3 of the property of the partnership outside the ordinary course of
51-4 business requires a winding up of a partnership.
51-5 (g) NOTICE FROM PARTNER IF NO TERM OR UNDERTAKING; OPTION TO
51-6 CONTINUE. If a partnership is not for a definite term or a
51-7 particular undertaking and its partnership agreement does not
51-8 provide for a specified event requiring a winding up, a request for
51-9 winding up the partnership from a partner, other than a partner who
51-10 has agreed not to withdraw, requires a winding up 60 days after the
51-11 date of the partnership's receipt of notice of the request or at a
51-12 later date as specified by the notice, unless a
51-13 majority-in-interest of the partners agree to continue the
51-14 partnership. The continuation of the business by the other
51-15 partners or by those who habitually acted in the business before
51-16 the notice, other than the partner giving the notice, without any
51-17 settlement or liquidation of the partnership business, is prima
51-18 facie evidence of an agreement to continue the partnership.
51-19 Sec. 8.02. PARTNERSHIP CONTINUES AFTER OCCURRENCE OF EVENT
51-20 REQUIRING WINDING UP. A partnership continues after the occurrence
51-21 of an event requiring winding up until the winding up of its
51-22 business is completed, at which time the partnership is terminated.
51-23 Sec. 8.03. CONDUCT OF WINDING UP. (a) PERSONS AUTHORIZED
51-24 TO WIND UP. After the occurrence of an event requiring a winding
51-25 up:
52-1 (1) the partners who have not withdrawn may wind up a
52-2 partnership's business;
52-3 (2) the legal representative of the last surviving
52-4 partner may wind up a partnership's business; or
52-5 (3) on application of a partner, a partner's legal
52-6 representative or transferee, or a withdrawn partner whose interest
52-7 is not redeemed under Section 7.01(k), a court, for good cause, may
52-8 appoint a person to carry out the winding up and may make an order,
52-9 direction, or inquiry that the circumstances require.
52-10 (b) AUTHORIZED ACTIONS. To the extent appropriate for
52-11 winding up, as soon as reasonably practicable, and in the name of
52-12 and for and on behalf of the partnership, a person winding up a
52-13 partnership's business may:
52-14 (1) prosecute and defend civil, criminal, or
52-15 administrative suits;
52-16 (2) settle and close the partnership's business;
52-17 (3) dispose of and convey the partnership's property;
52-18 (4) satisfy or provide for the satisfaction of the
52-19 partnership's liabilities;
52-20 (5) distribute to the partners any remaining property
52-21 of the partnership; and
52-22 (6) perform any other necessary act.
52-23 (c) CONTINUATION TO PRESERVE VALUE. A person winding up a
52-24 partnership's business may continue the business of the partnership
52-25 in whole or in part, including delaying the disposition of
53-1 partnership property, but only for the limited period necessary to
53-2 avoid unreasonable loss of the partnership's property or business.
53-3 Sec. 8.04. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
53-4 OCCURRENCE OF EVENT REQUIRING WINDING UP. (a) LIABILITY OF ALL
53-5 PARTNERS FOR LOSSES. Except as provided by Subsection (b), after
53-6 occurrence of an event requiring winding up the losses with respect
53-7 to which a partner must contribute under Section 8.06(c) include
53-8 losses from any liabilities incurred under Section 8.05.
53-9 (b) INDIVIDUAL LIABILITY OF ACTING PARTNER FOR LOSSES. A
53-10 partner who, with notice that an event requiring a winding up has
53-11 occurred, incurs a partnership liability under Section 8.05(2) by
53-12 an act that is not appropriate for winding up the partnership
53-13 business is liable to the partnership for a loss caused to the
53-14 partnership arising from that liability.
53-15 Sec. 8.05. PARTNER'S POWER TO BIND PARTNERSHIP AFTER
53-16 OCCURRENCE OF EVENT REQUIRING WINDING UP. After the occurrence of
53-17 an event requiring winding up, a partnership is bound by a
53-18 partner's act that:
53-19 (1) is appropriate for winding up the partnership
53-20 business; or
53-21 (2) would bind the partnership under Section 3.02
53-22 before the occurrence of the event requiring winding up, if the
53-23 other party to the transaction does not have notice that an event
53-24 requiring winding up has occurred.
53-25 Sec. 8.06. RULES FOR DISTRIBUTION ON WINDING UP.
54-1 (a) APPLICATION OF PROPERTY TO OBLIGATIONS. In winding up the
54-2 partnership business, the property of the partnership must be
54-3 applied to discharge its obligations to creditors, including
54-4 partners who are creditors other than in their capacities as
54-5 partners. A surplus must be applied to pay in cash the net amount
54-6 distributable to partners in accordance with their right to
54-7 distributions under Subsection (b).
54-8 (b) SETTLEMENT OF ACCOUNTS AMONG PARTNERS. Each partner is
54-9 entitled to a settlement of all partnership accounts on winding up
54-10 the partnership business. In settling accounts among the partners,
54-11 the partnership interest of a withdrawn partner that is not
54-12 redeemed under Section 7.01 is credited with a share of any profits
54-13 for the period after the partner's withdrawal but is charged with a
54-14 share of losses for that period only to the extent of profits
54-15 credited for that period, and the profits and losses that result
54-16 from the liquidation of the partnership property must be credited
54-17 and charged to the partners' capital accounts. The partnership
54-18 shall make a distribution to a partner in an amount equal to that
54-19 partner's positive balance in the partner's capital account. A
54-20 partner shall contribute to the partnership an amount equal to that
54-21 partner's negative balance in the partner's capital account.
54-22 (c) CONTRIBUTION TO SATISFY OBLIGATIONS. To the extent not
54-23 taken into account in settling the accounts among partners under
54-24 Subsection (b), each partner must contribute, in the proportion in
54-25 which the partner shares partnership losses, the amount necessary
55-1 to satisfy partnership obligations, excluding liabilities that
55-2 creditors have agreed may be satisfied only with partnership
55-3 property without recourse to individual partners. If a partner
55-4 fails to contribute, the other partners shall contribute, in the
55-5 proportions in which the partners share partnership losses, the
55-6 additional amount necessary to satisfy the partnership obligations.
55-7 A partner or partner's legal representative may enforce or recover
55-8 from the other partners, or from the estate of a deceased partner,
55-9 contributions the partner or estate makes to the extent the amount
55-10 contributed exceeds that partner's or the estate's share of the
55-11 partnership obligations.
55-12 (d) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
55-13 deceased partner is liable for the partner's obligation to
55-14 contribute to the partnership.
55-15 (e) ENFORCEMENT OF OBLIGATION OF ESTATE OF DECEASED PARTNER.
55-16 The partnership, an assignee for the benefit of creditors of a
55-17 partnership or a partner, or a person appointed by a court to
55-18 represent creditors of a partnership or a partner may enforce the
55-19 obligation of a partner or the estate of a deceased partner to
55-20 contribute to a partnership.
55-21 ARTICLE IX. PARTNERSHIP CONVERSIONS, MERGERS, AND EXCHANGES
55-22 Sec. 9.01. CONVERSIONS. (a) GENERAL TO LIMITED
55-23 PARTNERSHIP. A partnership that is not a limited partnership may
55-24 convert, with the consent of a majority-in-interest of the
55-25 partners, to a domestic or foreign limited partnership by properly
56-1 filing a certificate of limited partnership in the state in which
56-2 the limited partnership is to be formed. If the limited
56-3 partnership is formed under the law of this state, in addition to
56-4 other matters required, the certificate must state:
56-5 (1) that the partnership is converting from a
56-6 partnership that is not a limited partnership to a limited
56-7 partnership;
56-8 (2) the name or names of the partnership before the
56-9 conversion to a limited partnership;
56-10 (3) the names of the general partners before the
56-11 conversion;
56-12 (4) the state in which the partnership was organized
56-13 before conversion;
56-14 (5) the change in name required, if any, in connection
56-15 with the operation of the partnership as a limited partnership in
56-16 this state; and
56-17 (6) the effective date of the conversion if different
56-18 from the date the certificate is filed.
56-19 If a partnership that is not a limited partnership converts
56-20 to a limited partnership, a partner who did not consent to the
56-21 conversion is considered to be a partner who has withdrawn from the
56-22 partnership effective immediately before the effective date of the
56-23 conversion unless, within 60 days after the later of the effective
56-24 date of the conversion or the date the partner receives actual
56-25 notice of the conversion, the partner notifies the partnership in
57-1 writing of the partner's desire not to withdraw. A withdrawal
57-2 under the described circumstances is not a wrongful withdrawal.
57-3 (b) LIMITED TO GENERAL. A domestic or foreign limited
57-4 partnership may convert, on the affirmative vote of a
57-5 majority-in-interest of the partners, to a partnership that is not
57-6 a limited partnership by:
57-7 (1) cancelling its certificate of limited partnership
57-8 in the state of formation or otherwise complying with the
57-9 provisions of that state's law as of the date that partnership's
57-10 existence terminated;
57-11 (2) amending its partnership agreement to reflect its
57-12 change in status and any change in name required to comply with
57-13 this Act; and
57-14 (3) stating the effective date of the conversion in
57-15 the partnership agreement if different from the date of the
57-16 cancellation of the limited partnership certificate.
57-17 If a limited partnership converts to a partnership that is
57-18 not a limited partnership, a partner who did not consent to the
57-19 conversion is considered to be a partner who has withdrawn from the
57-20 limited partnership effective immediately before the effective date
57-21 of the conversion unless, within 60 days after the later of the
57-22 effective date of the conversion or the date the partner receives
57-23 actual notice of the conversion, the partner notifies the
57-24 partnership in writing of the partner's desire not to withdraw. A
57-25 withdrawal under the described circumstances is not a wrongful
58-1 withdrawal.
58-2 (c) LIABILITY OF FORMER LIMITED PARTNER. A limited partner
58-3 who remains in a partnership that results from the conversion of a
58-4 limited partnership to a partnership that is not a limited
58-5 partnership is treated as an incoming partner in the partnership as
58-6 of the effective date of the conversion for purposes of determining
58-7 the partner's liability:
58-8 (1) to the partners of the partnership; and
58-9 (2) for the debts and obligations of the partnership.
58-10 (d) LIABILITY OF GENERAL PARTNER IN CONVERTED LIMITED
58-11 PARTNERSHIP. If a partnership that is not a limited partnership
58-12 converts to a limited partnership, a partner who converts to a
58-13 limited partner continues to be liable to the partners of the
58-14 partnership and for a debt or obligation of the partnership
58-15 incurred before the date of conversion on the same basis as a
58-16 withdrawn partner remains liable to the partners of the partnership
58-17 or for a debt or obligation of a partnership incurred before
58-18 withdrawal.
58-19 (e) AUTHORITY OF FORMER PARTNER WHO IS LIMITED PARTNER IN
58-20 CONVERTED LIMITED PARTNERSHIP. If a partnership that is not a
58-21 limited partnership converts to a limited partnership, an action of
58-22 a partner who converts to a limited partner that is taken within
58-23 one year after the effective date of the conversion binds the
58-24 partnership to a transaction for which the former partner no longer
58-25 has authority to bind the partnership if:
59-1 (1) the transaction is one in which the partner's
59-2 action would bind the partnership before the effective date of the
59-3 conversion; and
59-4 (2) the other party to the transaction:
59-5 (A) does not have notice of the person's
59-6 conversion to a limited partner;
59-7 (B) has done business with the partnership
59-8 within one year preceding the effective date of the conversion; and
59-9 (C) reasonably believed that the partner who
59-10 converted was a partner with authority to bind the partnership to
59-11 the transaction at the time of the transaction.
59-12 (f) EFFECTIVE DATE OF CONVERSION. A conversion of a
59-13 partnership that is not a limited partnership to a limited
59-14 partnership or a conversion of a limited partnership to a
59-15 partnership that is not a limited partnership is effective on the
59-16 later of the date specified in a written agreement concerning the
59-17 conversion between the partners or the date all actions required by
59-18 this section have been completed.
59-19 Sec. 9.02. MERGERS. (a) ADOPTION OF PLAN. A partnership
59-20 may adopt a plan of merger and one or more partnerships may merge
59-21 with one or more domestic or foreign partnerships or other entities
59-22 if each domestic or foreign partnership that is a party to the plan
59-23 of merger approves the plan of merger in the manner prescribed for
59-24 mergers in its partnership agreement or constituent documents or by
59-25 applicable law. If one or more foreign partnerships or other
60-1 entities is a party to the merger or is to be created by the terms
60-2 of the plan of merger:
60-3 (1) the merger must be permitted by:
60-4 (A) the laws under which each foreign
60-5 partnership and each other entity that is a party to the merger is
60-6 formed or organized; or
60-7 (B) the partnership agreement or other
60-8 constituent documents of the foreign partnership or other entity
60-9 not inconsistent with those laws; and
60-10 (2) each foreign partnership or other entity that is a
60-11 party to the merger must comply with the laws or documents in
60-12 effecting the merger.
60-13 (b) CONTENTS OF PLAN OF MERGER. If a partnership merges
60-14 with one or more domestic or foreign limited partnerships or other
60-15 entities, other than another partnership that is not a limited
60-16 partnership, a plan of merger must be adopted. The plan must
60-17 include:
60-18 (1) the name and state of organization of:
60-19 (A) each domestic or foreign partnership or
60-20 other entity that is a party to the merger;
60-21 (B) each domestic or foreign partnership or
60-22 other entity, if any, that will survive the merger, which may be
60-23 one or more of the domestic or foreign partnerships or other
60-24 entities who are a party to the merger; and
60-25 (C) each new domestic or foreign partnership or
61-1 other entity, if any, that may be created by the terms of the plan
61-2 of merger;
61-3 (2) the terms and conditions of the merger, including,
61-4 if more than one domestic or foreign partnership or other entity is
61-5 to survive or to be created by the terms of the plan of merger, the
61-6 manner and basis of:
61-7 (A) allocating and vesting the real estate and
61-8 other property of each domestic or foreign partnership and of each
61-9 other entity that is a party to the merger among one or more of the
61-10 surviving or new domestic or foreign partnerships or other
61-11 entities; and
61-12 (B) allocating all liabilities and obligations
61-13 of each domestic or foreign partnership and other entity that is a
61-14 party to the merger, or making adequate provision for the payment
61-15 and discharge of the liabilities and obligations, among one or more
61-16 of the surviving or new domestic or foreign partnerships or other
61-17 entities;
61-18 (3) the manner and basis of converting any of the
61-19 partnership interests or other evidences of ownership of each
61-20 domestic or foreign partnership and other entity that is a party to
61-21 the merger into:
61-22 (A) partnership interests, shares, obligations,
61-23 evidences of ownership, rights to purchase securities, or other
61-24 securities of one or more of the surviving or new domestic or
61-25 foreign partnerships or other entities;
62-1 (B) cash; or
62-2 (C) other property, including shares,
62-3 obligations, evidences of ownership, rights to purchase securities,
62-4 or other securities of another person or entity; or
62-5 (D) any combination of those items;
62-6 (4) the certificate of limited partnership, articles
62-7 of incorporation, articles of organization, or other organizational
62-8 documents of each other entity that is to be created or will act as
62-9 a surviving entity by the terms of the plan of merger;
62-10 (5) the names of the principal officer of the
62-11 surviving entities and the registered office and registered agent
62-12 of the surviving entities if a registered office or agent is
62-13 required by the laws under which the surviving entities are formed;
62-14 (6) a statement describing whether the surviving
62-15 entity is a partnership, limited partnership, corporation, limited
62-16 liability company, or other entity; and
62-17 (7) other provisions relating to the merger.
62-18 (c) CERTIFICATE OF MERGER. After a plan of merger has been
62-19 approved by each of the partnerships or other entities that is a
62-20 party to the plan of merger and a partnership merges with one or
62-21 more domestic or foreign limited partnerships or other entities, a
62-22 certificate of merger shall be executed on behalf of each
62-23 partnership or other entity by at least one general partner of each
62-24 partnership that is a party to the plan of merger and by an
62-25 authorized officer, agent, or other representative of each other
63-1 entity that is a party to the plan of merger. The certificate must
63-2 include:
63-3 (1) the plan of merger; and
63-4 (2) for each domestic or foreign partnership or other
63-5 entity that is a party to the plan of merger, a statement that the
63-6 plan of merger was authorized by all actions required by the laws
63-7 under which it was formed or organized and by its constituent
63-8 documents.
63-9 (d) FILING. The certificate of merger must be filed for
63-10 each surviving and new domestic or foreign partnership or other
63-11 entity and for each other entity that is a party to the plan of
63-12 merger. The filing must be with the secretary of state or other
63-13 authority with which the entity must file organizational or related
63-14 documents and must comply with that authority's filing
63-15 requirements.
63-16 (e) Effective Date of Merger. If a certificate of merger is
63-17 delivered to the secretary of state, the merger is effective on the
63-18 date of the issuance of the certificate of merger by the secretary
63-19 of state or on a later date stated in the certificate of merger.
63-20 If a certificate of merger is not required to be filed with the
63-21 secretary of state, the merger is effective on the date agreed to
63-22 by the parties to the merger as set out in the plan of merger or as
63-23 otherwise agreed to by the parties.
63-24 (f) Effect Of Merger. (1) A partner of a partnership that
63-25 is a party to a merger does not become personally liable as a
64-1 result of the merger for a liability or obligation of another
64-2 person that is a party to the merger unless the partner consents to
64-3 becoming personally liable by action taken in connection with the
64-4 specific plan of merger approved by the partner. A partner who
64-5 remains in or enters a domestic or foreign partnership or other
64-6 entity that survives a merger or that enters a domestic or foreign
64-7 partnership or other entity created by the terms of the plan of
64-8 merger shall be treated as an incoming partner in the new or
64-9 surviving partnership as of the effective date of the merger for
64-10 the purpose of determining the partner's liability for a debt or
64-11 obligation of the other partnerships or entities that are parties
64-12 to the merger and in which the partner was not associated.
64-13 (2) The separate existence of every domestic
64-14 partnership or other entity that is a party to a merger, except a
64-15 surviving or new domestic partnership or other entity, ceases when
64-16 a merger takes effect.
64-17 (3) All rights, title, and interest to all real estate
64-18 and other property owned by each domestic or foreign partnership
64-19 and by each other entity that is a party to the merger are
64-20 allocated to and vested in one or more of the surviving or
64-21 resulting entities as provided in a plan of merger without
64-22 reversion or impairment, without further act or deed, and without
64-23 any transfer or assignment having occurred, but subject to any
64-24 existing liens or other encumbrances on the property, when a merger
64-25 takes effect.
65-1 (4) When a merger takes effect, all liabilities and
65-2 obligations of each domestic or foreign partnership and other
65-3 entity that is a party to the merger are allocated to one or more
65-4 of the surviving or new domestic or foreign partnerships or other
65-5 entities in the manner prescribed by the plan of merger, and each
65-6 surviving or new domestic or foreign partnership or other entity to
65-7 which a liability or obligation is allocated under the plan of
65-8 merger becomes the primary obligor for the liability or obligation.
65-9 Except as otherwise provided by the plan of merger or by law or
65-10 contract, a party to the merger, other than a surviving domestic or
65-11 foreign partnership or other entity with liability at the time of
65-12 the merger, or another domestic or foreign partnership or other
65-13 entity created by the merger does not become liable for the debt or
65-14 obligation.
65-15 (5) After a merger, a proceeding pending by or against
65-16 a domestic or foreign partnership or another entity that is a party
65-17 to the merger may be continued as if the merger did not occur and
65-18 the partnership or other entity that has been allocated the
65-19 liabilities, obligations, asset, or rights associated with the
65-20 proceeding under the terms of the plan of merger remains the
65-21 primary obligor, or the surviving or new domestic or foreign
65-22 partnership or other entity or entities to which the liability,
65-23 obligation, asset, or right associated with the proceeding is
65-24 allocated to and vested in under the plan of merger may be
65-25 substituted in the proceeding.
66-1 (6) The partnership agreement, certificate of limited
66-2 partnership, and other constituent documents of each other entity
66-3 that will act as a surviving entity by the terms of a plan of
66-4 merger is considered amended to the extent provided in the plan of
66-5 merger when the merger takes effect.
66-6 (7) Each new domestic partnership named in a plan of
66-7 merger under Subsection (b)(1), each new domestic limited
66-8 partnership for which a certificate of limited partnership is
66-9 included in a plan of merger under Subsection (b)(4), and each
66-10 other entity to be formed or organized under the laws of this state
66-11 for which organizational documents are included in a plan of merger
66-12 under Subsection (b)(4) are formed or organized as provided in the
66-13 plan of merger on:
66-14 (A) delivering an executed copy of the
66-15 certificate of merger to, or filing the certificate with, the
66-16 governmental entity with which organizational documents of the
66-17 partnership or other entity are required to be delivered or filed,
66-18 if any; and
66-19 (B) meeting additional requirements, if any, of
66-20 law for its formation or organization.
66-21 (8) The partnership interest of each domestic or
66-22 foreign partnership and the interest, shares, or evidences of
66-23 ownership in each other entity that is a party to the merger that
66-24 are to be converted or exchanged, in whole or in part, into (i)
66-25 partnership interests, shares, obligations, evidences of ownership,
67-1 rights to purchase securities, or other securities of one or more
67-2 of the surviving or new domestic or foreign partnerships or other
67-3 entities, (ii) cash, or (iii) other property, including shares,
67-4 obligations, evidences of ownership, rights to purchase securities,
67-5 or other securities of any other person or entity, or into any
67-6 combination of those items, are converted and exchanged when a
67-7 merger takes effect. After the merger the former partners of each
67-8 domestic partnership and owners of shares or evidences of ownership
67-9 in each other domestic entity that is a party to the merger are
67-10 entitled only to the rights provided in the plan of merger.
67-11 (9) If a plan of merger fails to provide for the
67-12 allocation and vesting of the right, title, and interest in a
67-13 particular item of real estate or other property or for the
67-14 allocation of a liability or obligation of a party to the merger,
67-15 when the merger takes effect the item of real estate or other
67-16 property shall be owned in undivided interests by, or the liability
67-17 or obligation shall be a joint and several liability and obligation
67-18 of, each of the surviving and new domestic and foreign partnerships
67-19 and other entities, pro rata to the total number of surviving and
67-20 new domestic and foreign partnerships and other entities resulting
67-21 from the merger.
67-22 (10) If a domestic or foreign partnership merges with
67-23 another domestic or foreign partnership or other entity and through
67-24 the merger process no longer exists, a person who becomes a member
67-25 of the surviving domestic or foreign partnership or other entity,
68-1 for a period of one year after the effective date of the merger,
68-2 may bind the surviving entity to a transaction for which it no
68-3 longer has authority to bind the entity if the transaction is one
68-4 in which the partner's actions would bind the foreign or domestic
68-5 partnership before the effective date of the merger and the other
68-6 party to the transaction:
68-7 (A) does not have notice of the merger;
68-8 (B) had done business with the partnership which
68-9 no longer exists within one year preceding the effective date of
68-10 the merger; and
68-11 (C) reasonably believes that the partner who was
68-12 previously a member of the partnership which was merged into the
68-13 surviving entity and is now a partner of the surviving entity was a
68-14 partner with authority to bind the partnership to the transaction
68-15 at the time of the transaction.
68-16 (g) Definition Of "Other Entity." For purposes of this
68-17 section, the term "other entity" means any entity, whether
68-18 organized for profit or not, that is a corporation, limited
68-19 partnership, limited liability company, joint venture, joint stock
68-20 company, cooperative, association, bank, insurance company, or
68-21 other legal entity organized under the laws of this state or
68-22 another state or country to the extent the laws or the constituent
68-23 documents of that entity, not inconsistent with law, permit that
68-24 entity to enter into a merger or partnership interest exchange as
68-25 permitted by this section.
69-1 Sec. 9.03. Exchange. (a) One or more domestic or foreign
69-2 partnerships may adopt a plan of exchange by which a domestic or
69-3 foreign partnership or other entity acquires all of the outstanding
69-4 partnership interests of one or more domestic partnerships in
69-5 exchange for cash or securities of the acquiring domestic or
69-6 foreign partnership or other entity, if:
69-7 (1) each domestic or foreign partnership, the
69-8 partnership interests of which are to be acquired under the plan of
69-9 exchange, approves the plan of exchange in the manner prescribed in
69-10 its partnership agreement; and
69-11 (2) each acquiring domestic or foreign partnership or
69-12 other entity takes all action that may be required by the laws of
69-13 the state under which it was formed or incorporated and as required
69-14 by its partnership agreement or other constituent documents in
69-15 order to effect the exchange.
69-16 (b) Filing with the secretary of state is not necessary to
69-17 evidence or effect an interest exchange under this section for a
69-18 domestic partnership that is a party to the interest exchange.
69-19 When an interest exchange takes effect as provided in the plan of
69-20 exchange:
69-21 (1) the partnership interest of each domestic
69-22 partnership that is to be acquired under the plan of exchange is
69-23 considered exchanged as provided in the plan of exchange;
69-24 (2) the former holders of the partnership interests
69-25 exchanged under the plan of exchange are entitled only to the
70-1 exchange rights provided in the plan of exchange; and
70-2 (3) the acquiring domestic or foreign partnership or
70-3 other entity or entities are entitled to all rights, title, and
70-4 interest with respect to the partnership interests so acquired and
70-5 exchanged, subject to the provisions in the plan of exchange.
70-6 (c) For purposes of this section, the term "other entity"
70-7 means any entity, whether organized for profit or not, that is a
70-8 corporation, limited partnership, limited liability company, joint
70-9 venture, joint stock company, cooperative, association, bank,
70-10 insurance company, or other legal entity organized under the laws
70-11 of this state or another state or country to the extent the laws or
70-12 the constituent documents of that entity, not inconsistent with
70-13 law, permit that entity to enter into a merger or partnership
70-14 interest exchange as permitted by this section.
70-15 Sec. 9.04. LAW GOVERNING LIMITED PARTNERSHIP. A limited
70-16 partnership's participation in a merger or exchange is governed by
70-17 Section 2.11, Texas Revised Limited Partnership Act (Article
70-18 6132a-1, Vernon's Texas Civil Statutes), and its subsequent
70-19 amendments, not Sections 9.02 or 9.03 of this Act.
70-20 ARTICLE X. MISCELLANEOUS PROVISIONS
70-21 Sec. 10.01. SHORT TITLE. This Act may be cited as the
70-22 "Texas Revised Partnership Act."
70-23 Sec. 10.02. SEVERABILITY. If a provision of this Act or its
70-24 application to a person or circumstance is held invalid, the
70-25 invalidity does not affect other provisions or applications of this
71-1 Act that can be given effect without the invalid provision or
71-2 application, and to this end the provisions of this Act are
71-3 severable.
71-4 Sec. 10.03. APPLICATION. (a) BEFORE JANUARY 1, 1999.
71-5 Except as provided by Subsection (b), before January 1, 1999, this
71-6 Act applies only to a partnership formed:
71-7 (1) on or after January 1, 1994, unless that
71-8 partnership is continuing the business of a dissolved partnership
71-9 under Section 41, Texas Uniform Partnership Act (Article 6132b,
71-10 Vernon's Texas Civil Statutes), and its subsequent amendments; and
71-11 (2) before January 1, 1994, that elects, as provided
71-12 by Subsection (d), to be governed by this Act.
71-13 (b) REGISTERED LIMITED LIABILITY PARTNERSHIP. Section 3.08
71-14 of this Act, including the fee provisions, applies to a registered
71-15 limited liability partnership, regardless of the date of formation
71-16 and regardless of whether the partnership elects to be governed by
71-17 this Act, except that a registered limited liability partnership
71-18 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
71-19 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
71-20 Vernon's Texas Civil Statutes), for purposes of determining
71-21 liability for errors, omissions, negligence, incompetence, or
71-22 malfeasance occurring before January 1, 1994.
71-23 (c) AFTER DECEMBER 31, 1998. After December 31, 1998, this
71-24 Act applies to all partnerships.
71-25 (d) VOLUNTARY APPLICATION EARLY. Before January 1, 1999, a
72-1 partnership formed before January 1, 1994, voluntarily may elect,
72-2 by complying with the procedures provided in its partnership
72-3 agreement for amending the partnership agreement, to adopt this
72-4 Act. The provisions of this Act relating to the liability of the
72-5 partnership's partners to third parties apply to limit those
72-6 partners' liability to a third party who had done business with the
72-7 partnership within one year preceding the partnership's election to
72-8 adopt this Act only if the partnership gives notice to the third
72-9 party of the partnership's election to adopt this Act.
72-10 Sec. 10.04. APPLICATION TO EXISTING RELATIONSHIPS. (a)
72-11 This Act does not impair the obligations of a contract existing
72-12 when this Act takes effect or affect an action or proceeding begun
72-13 or right accrued before this Act takes effect.
72-14 (b) A judgment against a partnership or a partner in an
72-15 action commenced before the effective date of this Act may be
72-16 enforced in the same manner as a judgment rendered before the
72-17 effective date of this Act.
72-18 SECTION 2. Part VII, Texas Uniform Partnership Act (Article
72-19 6132b, Vernon's Texas Civil Statutes), is amended by adding Section
72-20 47 to read as follows:
72-21 Sec. 47. APPLICATION; EXPIRATION. (a) Except as provided
72-22 by Section 10.03(b), Texas Revised Partnership Act, this Act does
72-23 not apply to a partnership to which the Texas Revised Partnership
72-24 Act applies.
72-25 (b) This Act expires January 1, 1999.
73-1 SECTION 3. Subsection A, Section 4, The Securities Act
73-2 (Article 581-4, Vernon's Texas Civil Statutes), is amended to read
73-3 as follows:
73-4 A. The term "security" or "securities" shall include any
73-5 limited partner interest in a limited partnership, share, stock,
73-6 treasury stock, stock certificate under a voting trust agreement,
73-7 collateral trust certificate, equipment trust certificate,
73-8 preorganization certificate or receipt, subscription or
73-9 reorganization certificate, note, bond, debenture, mortgage
73-10 certificate or other evidence of indebtedness, any form of
73-11 commercial paper, certificate in or under a profit sharing or
73-12 participation agreement, certificate or any instrument representing
73-13 any interest in or under an oil, gas or mining lease, fee or title,
73-14 or any certificate or instrument representing or secured by an
73-15 interest in any or all of the capital, property, assets, profits or
73-16 earnings of any company, investment contract, or any other
73-17 instrument commonly known as a security, whether similar to those
73-18 herein referred to or not. Provided, however, that this definition
73-19 shall not apply to any insurance policy, endowment policy, annuity
73-20 contract, optional annuity contract, or any contract or agreement
73-21 in relation to and in consequence of any such policy or contract,
73-22 issued by an insurance company subject to the supervision or
73-23 control of the State Board of Insurance when the form of such
73-24 policy or contract has been duly filed with the Board as now or
73-25 hereafter required by law.
74-1 SECTION 4. Section 1.03, Texas Revised Limited Partnership
74-2 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
74-3 read as follows:
74-4 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
74-5 2.14(a)(3) of this Act, the <The> name of a limited partnership as
74-6 stated in its certificate of limited partnership, a reserved or
74-7 registered name, or the name under which a foreign limited
74-8 partnership is permitted to register to do business in Texas as
74-9 contained in its application for registration as a foreign limited
74-10 partnership must contain the words "Limited Partnership,"
74-11 "Limited," or the abbreviation "L.P." or "Ltd." as the last words
74-12 or letters of its name and may not:
74-13 (1) contain the name of a limited partner unless:
74-14 (A) that name is also the name of a general
74-15 partner; or
74-16 (B) the business of the limited partnership or
74-17 foreign limited partnership had been carried on under that name
74-18 before the admission of that limited partner;
74-19 (2) contain a word or phrase indicating or implying
74-20 that it is organized other than for a purpose stated in its
74-21 partnership agreement;
74-22 (3) be the same as or deceptively similar to the name
74-23 of a corporation or limited partnership that exists under the laws
74-24 of Texas, that has a certificate of authority to transact business
74-25 as a foreign corporation in Texas, or that is registered as a
75-1 foreign limited partnership in Texas, or a name that has been
75-2 reserved or registered for a corporation, limited partnership, or
75-3 foreign limited partnership under the laws of Texas, except that a
75-4 limited partnership or foreign limited partnership may adopt,
75-5 reserve, or register, as appropriate, a name that is similar if
75-6 written consent is obtained from the corporation, limited
75-7 partnership, or foreign limited partnership having the name
75-8 considered similar or from the person for whom the name considered
75-9 similar is reserved or registered in the office of the secretary of
75-10 state; or
75-11 (4) contain a word or phrase indicating or implying
75-12 that it is a corporation.
75-13 SECTION 5. Article 2, Texas Revised Limited Partnership Act
75-14 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
75-15 adding Section 2.14 to read as follows:
75-16 Sec. 2.14. LIMITED PARTNERSHIP AS REGISTERED LIMITED
75-17 LIABILITY PARTNERSHIP. (a) A limited partnership is a registered
75-18 limited liability partnership as well as a limited partnership if
75-19 it:
75-20 (1) registers as a registered limited liability
75-21 partnership as provided by Section 3.08(b), Texas Revised
75-22 Partnership Act, as permitted by its partnership agreement or, if
75-23 its partnership agreement does not include provisions for becoming
75-24 a registered limited liability partnership, with the consent of
75-25 partners required to amend its partnership agreement;
76-1 (2) complies with Section 3.08(d), Texas Revised
76-2 Partnership Act; and
76-3 (3) has as the last words or letters of its name the
76-4 words "Limited Partnership" or the abbreviation "Ltd." followed by
76-5 the words "registered limited liability partnership" or the
76-6 abbreviation "L.L.P."
76-7 (b) In applying Section 3.08(b), Texas Revised Partnership
76-8 Act, to a limited partnership:
76-9 (1) an application to become a registered limited
76-10 liability partnership or to withdraw a registration must be
76-11 executed by at least one general partner; and
76-12 (2) all other references to partners mean general
76-13 partners only.
76-14 (c) If a limited partnership is a registered limited
76-15 liability partnership, Section 3.08(a), Texas Revised Partnership
76-16 Act, applies to its general partners and to any of its limited
76-17 partners who, under other provisions of this Act, are liable for
76-18 the debts or obligations of the limited partnership.
76-19 SECTION 6. Section 11.13, Texas Revised Limited Partnership
76-20 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
76-21 read as follows:
76-22 Sec. 11.13. LIMITS ON A CONTRACTUAL INDEMNIFICATION. A
76-23 provision for a limited partnership to indemnify or to advance
76-24 expenses to a general partner who was, is, or is threatened to be
76-25 made a named defendant or respondent in a proceeding, whether
77-1 contained in the limited partnership agreement, a resolution of the
77-2 general partners or the limited partners, an agreement, or
77-3 otherwise, except in accordance with Section 11.18 of this Act, is
77-4 valid only to the extent that it is consistent with this article or
77-5 with the applicable reimbursement provisions of the Texas Uniform
77-6 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes), or
77-7 the Texas Revised Partnership Act and its subsequent amendments as
77-8 limited by the limited partnership agreement, if such a limitation
77-9 exists.
77-10 SECTION 7. Section 13.03, Texas Revised Limited Partnership
77-11 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
77-12 read as follows:
77-13 Sec. 13.03. CASES NOT PROVIDED FOR BY THIS ACT. (a) In any
77-14 case not provided for by this Act, the applicable statute governing
77-15 partnerships that are not limited partnerships <Texas Uniform
77-16 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes)> and
77-17 the rules of law and equity, including the law merchant, govern.
77-18 (b) Before January 1, 1999:
77-19 (1) the Texas Uniform Partnership Act (Article 6132b,
77-20 Vernon's Texas Civil Statutes) and its subsequent amendments
77-21 applies to a limited partnership formed or a foreign partnership
77-22 registered in this state before January 1, 1994, that does not
77-23 elect, as provided by Subsection (b), to have the Texas Revised
77-24 Partnership Act apply as its supplemental law; and
77-25 (2) the Texas Revised Partnership Act applies to a
78-1 limited partnership formed or a foreign limited partnership
78-2 registered in this state:
78-3 (A) on or after January 1, 1994; and
78-4 (B) before January 1, 1994, that elects, as
78-5 provided by Subsection (d), to have the Texas Revised Partnership
78-6 Act apply as its supplemental law.
78-7 (c) After December 31, 1998, the applicable statute
78-8 governing a partnership that is not a limited partnership is the
78-9 Texas Revised Partnership Act for all limited partnerships and
78-10 foreign limited partnerships registered in this state.
78-11 (d) Before January 1, 1999, a limited partnership formed or
78-12 foreign limited partnership registered in this state before January
78-13 1, 1994, voluntarily may elect, by complying with the procedures in
78-14 its partnership agreement for amending the partnership agreement,
78-15 to have the Texas Revised Partnership Act apply as its supplemental
78-16 law. The election is made effective by amending its certificate of
78-17 limited partnership or amending its application for registration to
78-18 state that it has so elected.
78-19 SECTION 8. Article 13, Texas Revised Limited Partnership Act
78-20 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
78-21 adding Sections 13.05-13.09 to read as follows:
78-22 Sec. 13.05. PERIODIC REPORT BY LIMITED PARTNERSHIP. (a)
78-23 The secretary of state may require a domestic limited partnership
78-24 or a foreign limited partnership authorized to transact business in
78-25 this state to file a report as required by this section. The
79-1 report may not be required to be filed more than once every four
79-2 years. The report must include:
79-3 (1) the name of the limited partnership and the state
79-4 or territory under the laws of which it is organized;
79-5 (2) the address of the registered office of the
79-6 limited partnership in this state and the name of the registered
79-7 agent at that address;
79-8 (3) the address of the principal office in the United
79-9 States where records are to be kept or made available under Section
79-10 1.07 of this Act; and
79-11 (4) the name, mailing address, and street address of
79-12 the business or residence of each general partner.
79-13 (b) The report must be made on a form adopted by the
79-14 secretary of state for that purpose, and the information contained
79-15 in the report must be given as of the date of the execution of the
79-16 report. The report must be signed on behalf of the limited
79-17 partnership by at least one general partner. The filing fee for
79-18 the report is $50.
79-19 (c) The report must be delivered to the secretary of state
79-20 not later than the 30th day after the date on which notice is
79-21 mailed by the secretary of state stating that the report is due.
79-22 The notice shall be addressed to the limited partnership and mailed
79-23 to:
79-24 (1) the registered office of the limited partnership;
79-25 (2) the last known address of the limited partnership
80-1 as it appears on record in the office of the secretary of state; or
80-2 (3) any other known place of business of the limited
80-3 partnership.
80-4 (d) Along with the notice that the report is due, the
80-5 secretary of state shall mail to the limited partnership copies of
80-6 a report form to be prepared and filed as provided by this section.
80-7 Two copies of the report shall be delivered to the secretary of
80-8 state. If the secretary of state finds that the report complies
80-9 with this section, the secretary shall:
80-10 (1) endorse on the report the word "Filed" and the
80-11 month, day, and year of filing;
80-12 (2) notify the limited partnership of the filing of
80-13 the report; and
80-14 (3) update the records of the secretary of state's
80-15 office to reflect:
80-16 (A) address changes reported for the registered
80-17 office, principal office, and the business or residence address of
80-18 a general partner; and
80-19 (B) a reported change in the name of the
80-20 registered agent.
80-21 (e) The filing of a report under this section does not
80-22 relieve the limited partnership of the requirement to file an
80-23 amendment to the certificate of limited partnership required under
80-24 Section 2.02 of this Act, except that the limited partnership is
80-25 not required to file an amendment to change the registered office
81-1 or agent.
81-2 (f) The secretary of state shall mail each limited
81-3 partnership subject to this Act its first notice under Subsection
81-4 (c) of this section on or before September 1, 1997. This
81-5 subsection expires September 2, 1997.
81-6 Sec. 13.06. FORFEITURE OF RIGHT TO TRANSACT BUSINESS FOR
81-7 FAILURE TO FILE PERIODIC REPORT. (a) A domestic or foreign
81-8 limited partnership that fails to file a report required under
81-9 Section 13.05 of this Act when due forfeits its right to transact
81-10 business in this state.
81-11 (b) A forfeiture under this section takes effect without
81-12 judicial ascertainment. The secretary of state shall enter on the
81-13 record kept in the secretary's office relating to the limited
81-14 partnership a notation that the right to transact business has been
81-15 forfeited together with the date of forfeiture. Notice of the
81-16 forfeiture shall be mailed to the limited partnership at:
81-17 (1) the registered office of the limited partnership;
81-18 (2) the last known address of the limited partnership;
81-19 or
81-20 (3) any other place of business of the limited
81-21 partnership.
81-22 (c) Unless the right of the limited partnership to transact
81-23 business is revived in accordance with Section 13.07 of this Act,
81-24 the limited partnership may not maintain an action, suit, or
81-25 proceeding in a court of this state, and a successor or assignee of
82-1 the limited partnership may not maintain an action, suit, or
82-2 proceeding in a court of this state on a right, claim, or demand
82-3 arising out of the transaction of business by the limited
82-4 partnership in this state. The forfeiture of the right to transact
82-5 business in this state does not impair the validity of a contract
82-6 or act of the limited partnership and does not prevent the limited
82-7 partnership from defending an action, suit, or proceeding in a
82-8 court of this state.
82-9 (d) This section does not affect the liability of a limited
82-10 partner in the limited partnership.
82-11 Sec. 13.07. REVIVAL OF RIGHT TO TRANSACT BUSINESS AFTER
82-12 FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) A limited
82-13 partnership that forfeits the right to transact business in this
82-14 state as provided by Section 13.06 of this Act may be relieved from
82-15 the forfeiture by filing the required report not later than the
82-16 120th day after the date of mailing of the notice of forfeiture
82-17 under Section 13.06(b) of this Act, together with:
82-18 (1) the filing fee; and
82-19 (2) a late fee in an amount equal to the lesser of:
82-20 (A) $25 for each month or fractional part of a
82-21 month that has elapsed since the date of the notice of forfeiture;
82-22 or
82-23 (B) $100.
82-24 (b) If a limited partnership complies with Subsection (a) of
82-25 this section, the secretary of state shall revive the right of the
83-1 limited partnership to transact business in this state, cancelling
83-2 the notation regarding the forfeiture and noting the revival and
83-3 the date of revival on the record kept in the secretary's office
83-4 relating to the limited partnership.
83-5 Sec. 13.08. CANCELLATION OF CERTIFICATE OR REGISTRATION
83-6 AFTER FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) The
83-7 secretary of state may cancel the certificate of a limited
83-8 partnership, or the registration of a foreign limited partnership,
83-9 if the limited partnership forfeits its right to transact business
83-10 in this state under Section 13.06 of this Act and fails to revive
83-11 that right under Section 13.07 of this Act. The cancellation takes
83-12 effect without judicial ascertainment. The secretary of state
83-13 shall enter on the record kept in the secretary's office relating
83-14 to the limited partnership a notation of the cancellation and the
83-15 date of cancellation.
83-16 (b) On cancellation, the status of the limited partnership
83-17 is changed to inactive according to the records of the secretary of
83-18 state. The change to inactive status does not affect the liability
83-19 of a limited partner of the limited partnership.
83-20 Sec. 13.09. REINSTATEMENT OF CERTIFICATE OR REGISTRATION
83-21 AFTER CANCELLATION FOR FAILURE TO FILE PERIODIC REPORT. (a) A
83-22 limited partnership whose certificate or registration has been
83-23 canceled as provided by Section 13.08 of this Act may be relieved
83-24 of the cancellation by filing the report required by Section 13.05,
83-25 together with the filing fee for the report, a late fee of $100,
84-1 and a reinstatement fee of $100.
84-2 (b) If the limited partnership complies with the fees
84-3 required by Subsection (a) of this section, the secretary of state
84-4 shall reinstate the certificate or registration of the limited
84-5 partnership without judicial ascertainment. The secretary shall
84-6 change the status of the limited partnership to active and note the
84-7 reinstatement on the record kept in the secretary's office relating
84-8 to the limited partnership. If the name of the limited partnership
84-9 is not available at the time of reinstatement, the secretary shall
84-10 require the limited partnership to file an amendment to its
84-11 certificate or application or adopt an assumed name for use in this
84-12 state as a precondition to reinstatement.
84-13 SECTION 9. This Act takes effect January 1, 1994.
84-14 SECTION 10. The importance of this legislation and the
84-15 crowded condition of the calendars in both houses create an
84-16 emergency and an imperative public necessity that the
84-17 constitutional rule requiring bills to be read on three several
84-18 days in each house be suspended, and this rule is hereby suspended.