1-1 By: Wolens (Senate Sponsor - Harris of Dallas) H.B. No. 273
1-2 (In the Senate - Received from the House April 20, 1993;
1-3 April 21, 1993, read first time and referred to Committee on
1-4 Economic Development; May 3, 1993, rereferred to Committee on
1-5 Jurisprudence; May 4, 1993, reported favorably, as amended, by the
1-6 following vote: Yeas 6, Nays 0; May 4, 1993, sent to printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Henderson x
1-10 Harris of Tarrant x
1-11 Brown x
1-12 Harris of Dallas x
1-13 Luna x
1-14 Parker x
1-15 West x
1-16 COMMITTEE AMENDMENT NO. 1 By: Harris of Dallas
1-17 Amend H.B. 273 by inserting after line 65 and before line 66,
1-18 on page 6 of H.B. 273, in Article III, Sec. 3.02, BINDING EFFECT OF
1-19 PARTNER'S ACT, a new subsection (c) as follows:
1-20 "(c) CONVEYANCE OF REAL PROPERTY. A conveyance of real
1-21 property by the partner on behalf of the partnership not otherwise
1-22 binding on the partnership does bind the partnership if the
1-23 partnership real property has been conveyed by the grantee or a
1-24 person claiming through the grantee to a holder for value without
1-25 knowledge that the partner, in making the conveyance, has exceeded
1-26 that partner's authority."
1-27 COMMITTEE AMENDMENT NO. 2 By: Harris of Dallas
1-28 Amend H.B. No. 273 by striking "not" where it appears on page
1-29 5, line 18, and inserting in lieu thereof "nor".
1-30 COMMITTEE AMENDMENT NO. 3 By: Harris of Dallas
1-31 Amend H.B. No. 273 by striking "$100" where it appears on
1-32 page 8, line 57, and inserting in lieu thereof "$200".
1-33 A BILL TO BE ENTITLED
1-34 AN ACT
1-35 relating to partnerships and the regulation of limited partnership
1-36 interests as securities; adopting the Texas Revised Partnership
1-37 Act; providing penalties.
1-38 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-39 SECTION 1. The Texas Revised Partnership Act is enacted to
1-40 read as follows:
1-41 TEXAS REVISED PARTNERSHIP ACT
1-42 ARTICLE I. GENERAL PROVISIONS
1-43 Sec. 1.01. General Definitions. In this Act:
1-44 (1) "Business" means a trade, occupation, profession,
1-45 or other commercial activity.
1-46 (2) "Capital account" means the amount of a partner's
1-47 original contribution to a partnership, which consists of cash and
1-48 the agreed value of any other contribution to the partnership,
1-49 increased by the amount of additional contributions made by that
1-50 partner and by profits credited to that partner under Section
1-51 4.01(b), and decreased by the amount of distributions to that
1-52 partner and by losses charged to that partner under Section
1-53 4.01(b).
1-54 (3) "Court" means a court and judge having
1-55 jurisdiction in the case.
1-56 (4) "Debtor in bankruptcy" means a person who is the
1-57 subject of:
1-58 (A) an order for relief under Title 11 of the
1-59 United States Code or a comparable order under a successor statute
1-60 of general application; or
1-61 (B) a comparable order under federal or state
1-62 law governing insolvency.
1-63 (5) "Distribution" means a transfer of cash or other
1-64 property from a partnership to:
1-65 (A) a partner in the partner's capacity as a
1-66 partner; or
1-67 (B) the partner's transferee.
1-68 (6) "Event of withdrawal" or "withdrawal" means an
2-1 event specified by Section 6.01(b).
2-2 (7) "Event requiring a winding up" means an event
2-3 specified by Section 8.01.
2-4 (8) "Foreign limited partnership" means a partnership
2-5 formed under the laws of another state and having as partners one
2-6 or more general partners and one or more limited partners.
2-7 (9) "Majority-in-interest" means, as to all of or a
2-8 specified group of partners, partners owning more than 50 percent
2-9 of the current interest in the profits of the partnership owned by
2-10 all of the partners or by the partners in the specified group, as
2-11 appropriate.
2-12 (10) "Partnership" means an entity created as
2-13 described by Section 2.02(a). The term includes a registered
2-14 limited liability partnership formed under Section 3.08 or under
2-15 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
2-16 Civil Statutes) and its subsequent amendments.
2-17 (11) "Partnership agreement" means any agreement,
2-18 written or oral, of the partners concerning a partnership.
2-19 (12) "Partnership interest" means a partner's interest
2-20 in a partnership, including the partner's share of profits and
2-21 losses or similar items, and the right to receive distributions. A
2-22 partnership interest does not include a partner's right to
2-23 participate in management.
2-24 (13) "Person" includes an individual, corporation,
2-25 business trust, estate, trust, custodian, trustee, executor,
2-26 administrator, nominee, partnership (including a registered limited
2-27 liability partnership and a limited partnership), association,
2-28 limited liability company, government, governmental subdivision,
2-29 governmental agency, governmental instrumentality, and any other
2-30 legal or commercial entity, in its own or representative capacity.
2-31 (14) "Property" means all property, real, personal, or
2-32 mixed, tangible or intangible, or an interest in that property.
2-33 (15) "Registered limited liability partnership" means
2-34 a partnership registered under Section 3.08(b) and complying with
2-35 Sections 3.08(c) and (d)(1).
2-36 (16) "State" means a state of the United States, the
2-37 District of Columbia, the Commonwealth of Puerto Rico, or any
2-38 territory or insular possession subject to the jurisdiction of the
2-39 United States.
2-40 (17) "Transfer" includes:
2-41 (A) an assignment;
2-42 (B) a conveyance;
2-43 (C) a lease;
2-44 (D) a mortgage;
2-45 (E) a deed;
2-46 (F) an encumbrance; and
2-47 (G) the creation of a security interest.
2-48 (18) "Withdrawn partner" means a partner with respect
2-49 to whom an event of withdrawal has occurred. A partner withdraws
2-50 if an event of withdrawal has occurred with respect to that partner
2-51 under Section 6.01.
2-52 Sec. 1.02. Knowledge And Notice. (a) DEFINITION OF
2-53 KNOWLEDGE. "Knowledge" means actual knowledge. A person knows of
2-54 a fact only if the person has knowledge of it.
2-55 (b) HAVING NOTICE. A person has notice of a fact if the
2-56 person:
2-57 (1) knows of the fact;
2-58 (2) has received a communication of the fact as
2-59 provided by Subsection (d); or
2-60 (3) reasonably should have concluded, from all facts
2-61 known to that person at the time in question, that the fact exists.
2-62 (c) GIVING NOTICE. A person notifies or gives a notice to
2-63 another person of a fact by taking steps reasonably required to
2-64 inform the other person of the fact in the ordinary course of
2-65 business, regardless of whether the other person actually comes to
2-66 know of the fact.
2-67 (d) RECEIVING NOTICE. A person is notified or receives a
2-68 notice of a fact when the fact is communicated to:
2-69 (1) the person;
2-70 (2) the person's place of business; or
3-1 (3) another place held out by the person as the place
3-2 for receipt of communications.
3-3 (e) NOTICE TO PARTNER AS NOTICE TO PARTNERSHIP. Receipt of
3-4 notice by a partner of a fact relating to the partnership is
3-5 effective immediately as notice to the partnership except in the
3-6 case of fraud on the partnership committed by or with the consent
3-7 of the partner receiving the notice.
3-8 Sec. 1.03. Effect of Partnership Agreement; Nonwaivable and
3-9 Variable Provisions. (a) PARTNERSHIP AGREEMENT CONTROLS. Except
3-10 as provided by Subsection (b), a partnership agreement governs the
3-11 relations of the partners and between the partners and the
3-12 partnership. To the extent that the partnership agreement does not
3-13 otherwise provide, this Act governs the relations of the partners
3-14 and between the partners and the partnership.
3-15 (b) STATUTORY PROVISIONS THAT MAY NOT BE VARIED BY
3-16 AGREEMENT. A partnership agreement or the partners may not:
3-17 (1) unreasonably restrict a partner's right of access
3-18 to books and records under Section 4.03(b);
3-19 (2) eliminate the duty of loyalty under Section
3-20 4.04(b), but the partners may by agreement identify specific types
3-21 or categories of activities that do not violate the duty of
3-22 loyalty, if not manifestly unreasonable;
3-23 (3) eliminate the duty of care under Section 4.04(c),
3-24 but the partners may by agreement determine the standards by which
3-25 the performance of the obligation is to be measured, if the
3-26 standards are not manifestly unreasonable;
3-27 (4) eliminate the obligation of good faith under
3-28 Section 4.04(d), but the partners may by agreement determine the
3-29 standards by which the performance of the obligation is to be
3-30 measured, if the standards are not manifestly unreasonable;
3-31 (5) vary the power to withdraw as a partner under
3-32 Section 6.01(b)(1), (7), or (8), except to require the notice to be
3-33 in writing;
3-34 (6) vary the right to expel a partner by a court in
3-35 the events specified by Section 6.01(b)(5);
3-36 (7) vary the requirement to wind up the partnership
3-37 business in the events specified by Section 8.01(c), (d), or (e);
3-38 (8) restrict rights of third parties under this Act;
3-39 or
3-40 (9) select a governing law not permitted under Section
3-41 1.05(a)(1).
3-42 Sec. 1.04. Supplemental Principles of Law.
3-43 (a) SUPPLEMENTED BY LAW AND EQUITY. Unless displaced by a
3-44 particular provision of this Act, the principles of law and equity
3-45 supplement this Act.
3-46 (b) STRICT CONSTRUCTION NOT APPLICABLE. The rule that a
3-47 statute in derogation of the common law is to be strictly construed
3-48 does not apply to this Act.
3-49 (c) INTEREST RATE. If an obligation to pay interest arises
3-50 under this Act and the rate is not specified, the rate is the rate
3-51 specified by Article 1.03, Title 79, Revised Statutes (Article
3-52 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
3-53 amendments, or a successor statute.
3-54 Sec. 1.05. Law Governing Internal Affairs and Partner's
3-55 Liability. (a) INTERNAL AFFAIRS. A partnership's internal
3-56 affairs and the relations of the partners to one another are
3-57 governed by:
3-58 (1) the law of the state chosen by the partners to
3-59 govern if that state bears a reasonable relation to the partners or
3-60 to the partnership business and affairs under principles that apply
3-61 to a contract among the partners other than the partnership
3-62 agreement; or
3-63 (2) if the partners do not choose a governing law
3-64 under Subdivision (1), the law of the state in which the
3-65 partnership has its chief executive office.
3-66 (b) LIABILITY TO THIRD PARTIES. The law governing a
3-67 partnership's internal affairs also governs the liability of its
3-68 partners to third parties.
3-69 Sec. 1.06. Partnership Subject to Amendment or Repeal of
3-70 Act. A partnership governed by this Act is subject to an amendment
4-1 or repeal of this Act.
4-2 ARTICLE II. NATURE OF PARTNERSHIP
4-3 Sec. 2.01. Partnership as Entity. A partnership is an
4-4 entity distinct from its partners.
4-5 Sec. 2.02. Partnership Defined; Application to Joint Venture
4-6 and Limited Partnership; Capacity as Partner. (a) ASSOCIATION TO
4-7 CARRY ON BUSINESS FOR PROFIT. Except as provided by Subsections
4-8 (b) and (c), an association of two or more persons to carry on a
4-9 business for profit as owners creates a partnership, whether the
4-10 persons intend to create a partnership and whether the association
4-11 is called a "partnership," "joint venture," or other name. A
4-12 partnership may be created under:
4-13 (1) this Act;
4-14 (2) the Texas Uniform Partnership Act (Article 6132b,
4-15 Vernon's Texas Civil Statutes) and its subsequent amendments;
4-16 (3) the Texas Revised Limited Partnership Act (Article
4-17 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
4-18 amendments; or
4-19 (4) a statute of another jurisdiction comparable to
4-20 this Act or the Texas Revised Limited Partnership Act (Article
4-21 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
4-22 amendments.
4-23 (b) ENTITY NOT A PARTNERSHIP. An association or entity
4-24 created under a law other than the laws described in Subsection (a)
4-25 is not a partnership.
4-26 (c) PERSON WITH CAPACITY AS PARTNER. A person may be a
4-27 partner unless the person lacks capacity apart from this Act.
4-28 Sec. 2.03. Rules for Determining if Partnership is Created.
4-29 (a) FACTORS INDICATING CREATION OF PARTNERSHIP. Factors
4-30 indicating that persons have created a partnership include their:
4-31 (1) receipt or right to receive a share of profits of
4-32 the business;
4-33 (2) expression of an intent to be partners in the
4-34 business;
4-35 (3) participation or right to participate in control
4-36 of the business;
4-37 (4) sharing or agreeing to share:
4-38 (A) losses of the business; or
4-39 (B) liability for claims by third parties
4-40 against the business; and
4-41 (5) contributing or agreeing to contribute money or
4-42 property to the business.
4-43 (b) FACTORS NOT INDICATING CREATION OF PARTNERSHIP. One of
4-44 the following circumstances, by itself, does not indicate that a
4-45 person is a partner in the business:
4-46 (1) the receipt or right to receive a share of
4-47 profits:
4-48 (A) as repayment of a debt, by installments or
4-49 otherwise;
4-50 (B) as payment of wages or other compensation to
4-51 an employee or independent contractor;
4-52 (C) as payment of rent;
4-53 (D) as payment to a former partner, surviving
4-54 spouse or representative of a deceased or disabled partner, or
4-55 transferee of a partnership interest;
4-56 (E) as payment of interest or other charge on a
4-57 loan, regardless of whether the amount of payment varies with the
4-58 profits of the business, and including a direct or indirect present
4-59 or future ownership interest in collateral or rights to income,
4-60 proceeds, or increase in value derived from collateral; or
4-61 (F) as payment of consideration for the sale of
4-62 a business or other property by installments or otherwise;
4-63 (2) co-ownership of property, whether in the form of
4-64 joint tenancy, tenancy in common, tenancy by the entireties, joint
4-65 property, community property, or part ownership, whether combined
4-66 with sharing of profits from the property;
4-67 (3) sharing or having a right to share gross returns
4-68 or revenues, regardless of whether the persons sharing the gross
4-69 returns or revenues have a common or joint interest in the property
4-70 from which the returns or revenues are derived; or
5-1 (4) ownership of mineral property under a joint
5-2 operating agreement.
5-3 (c) ADDITIONAL RULES. An agreement to share losses by the
5-4 owners of a business is not necessary to create a partnership.
5-5 Except as provided by Sections 3.06 and 7.03, a person who is not a
5-6 partner in a partnership under Section 2.02 is not a partner as to
5-7 a third person and is not liable to a third person under this Act.
5-8 Sec. 2.04. Partnership Property not Property of Partners.
5-9 Partnership property is not property of the partners. Neither a
5-10 partner not a partner's spouse has an interest in partnership
5-11 property.
5-12 Sec. 2.05. Partnership Property. (a) ACQUISITION IN
5-13 CERTAIN NAMES. Property is partnership property if acquired:
5-14 (1) in the name of the partnership; or
5-15 (2) in the name of one or more partners with an
5-16 indication in the instrument transferring title to the property of
5-17 the person's capacity as a partner or of the existence of a
5-18 partnership, regardless of whether the name of the partnership is
5-19 indicated.
5-20 (b) PROPERTY IN PARTNERSHIP NAME. Property is acquired in
5-21 the name of the partnership by a transfer to:
5-22 (1) the partnership in its name; or
5-23 (2) one or more partners in their capacity as partners
5-24 in the partnership, if the name of the partnership is indicated in
5-25 the instrument transferring title to the property.
5-26 (c) PROPERTY ACQUIRED WITH PARTNERSHIP PROPERTY. Property
5-27 is presumed to be partnership property if acquired with partnership
5-28 property, whether acquired in the name of the partnership or of one
5-29 or more partners with an indication in the instrument transferring
5-30 title to the property of the person's capacity as a partner or of
5-31 the existence of a partnership.
5-32 (d) PROPERTY ACQUIRED IN PARTNER'S NAME. Property acquired
5-33 in the name of one or more of the partners, without an indication
5-34 in the instrument transferring title to the property of the
5-35 person's capacity as a partner or of the existence of a
5-36 partnership, and without use of partnership property, is presumed
5-37 to be the partner's property, regardless of whether the property is
5-38 used for partnership purposes.
5-39 Sec. 2.06. Partnership Continues until Terminated.
5-40 (a) CONTINUATION OF PARTNERSHIP AFTER EVENT OF WITHDRAWAL. A
5-41 partnership continues after an event of withdrawal, but the event
5-42 of withdrawal affects the relationships among the withdrawn
5-43 partner, the partnership, and the continuing partners as provided
5-44 by Sections 6.02, 7.01, 7.02, and 7.03.
5-45 (b) EFFECT OF OCCURRENCE OF EVENT REQUIRING A WINDING UP.
5-46 On the occurrence of an event requiring a winding up of a
5-47 partnership under Section 8.01, the partnership continues as
5-48 provided by Section 8.03, but the relationship among the partners
5-49 is changed as provided by Sections 8.02, 8.03, 8.04, 8.05, and
5-50 8.06.
5-51 (c) EFFECT OF WITHDRAWAL ON RELATION BETWEEN CREDITOR AND
5-52 PARTNERSHIP. Relationships between a partnership and its creditors
5-53 are not affected by the withdrawal of a partner or by the addition
5-54 of a new partner.
5-55 ARTICLE III. RELATIONS OF PARTNERS TO PERSONS
5-56 DEALING WITH PARTNERSHIP
5-57 Sec. 3.01. General Powers of Partnership. Unless restricted
5-58 by applicable law, a partnership has the same powers as an
5-59 individual or corporation to do all things necessary or convenient
5-60 to carry out its business and affairs, including the power to:
5-61 (1) sue and be sued, complain, and defend in its
5-62 partnership name;
5-63 (2) purchase, receive, lease, or otherwise acquire,
5-64 and own, hold, improve, use, and otherwise deal with, real or
5-65 personal property, or any legal or equitable interest in property,
5-66 wherever located;
5-67 (3) sell, convey, mortgage, pledge, lease, exchange,
5-68 and otherwise dispose of all or any part of its property;
5-69 (4) purchase, receive, subscribe for, or otherwise
5-70 acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or
6-1 otherwise dispose of; and deal in and with shares or other
6-2 interests in, or obligations of, any other entity;
6-3 (5) make contracts and guarantees, incur liabilities,
6-4 borrow money, issue its notes, bonds, and other obligations, which
6-5 may be convertible into or include the option to purchase other
6-6 securities of the partnership, and secure its obligations by
6-7 mortgage or pledge of its property, franchises, or income;
6-8 (6) lend money, invest, and reinvest its funds, and
6-9 receive and hold real and personal property as security for
6-10 repayment;
6-11 (7) be a promoter, partner, member, associate, or
6-12 manager of a partnership, joint venture, trust, or other entity;
6-13 (8) conduct its business, locate offices, and exercise
6-14 the powers granted by this Act within or outside this state;
6-15 (9) appoint employees and agents of the partnership,
6-16 define their duties, fix their compensation, and lend them money or
6-17 credit;
6-18 (10) pay pensions and establish pension plans, pension
6-19 trusts, profit sharing plans, share bonus plans, share option
6-20 plans, and benefit or incentive plans for any or all of its current
6-21 or former partners, employees, and agents;
6-22 (11) make donations for the public welfare or for
6-23 charitable, scientific, or educational purposes;
6-24 (12) transact any lawful business that will aid
6-25 governmental policy;
6-26 (13) make payments or donations, or do any other act,
6-27 not inconsistent with law, that furthers the business and affairs
6-28 of the partnership;
6-29 (14) enter into mergers and similar transactions to
6-30 the extent permitted by applicable law;
6-31 (15) indemnify a person who was, is, or is threatened
6-32 to be made a defendant or respondent in a proceeding and purchase
6-33 and maintain liability insurance for the person; and
6-34 (16) exercise all of the rights and powers conferred
6-35 by Sections 111.019 through 111.022, Natural Resources Code, and
6-36 their subsequent amendments, if the partnership is engaged as a
6-37 common carrier in the pipeline business for transporting oil, oil
6-38 products, gas, carbon dioxide, salt brine, fuller's earth, sand,
6-39 clay, liquefied minerals, or other mineral solutions.
6-40 Sec. 3.02. Binding Effect of Partner's Act. (a) PARTNER
6-41 AGENT OF PARTNERSHIP AS TO PARTNERSHIP BUSINESS. Each partner is
6-42 an agent of the partnership for the purpose of its business.
6-43 Unless the partner does not have authority to act for the
6-44 partnership in the particular matter and the person with whom the
6-45 partner is dealing knows that the partner lacks authority, an act
6-46 of a partner, including the execution of an instrument in the
6-47 partnership name, binds the partnership if the act is for
6-48 apparently carrying on in the usual way:
6-49 (1) the partnership business; or
6-50 (2) business of the kind carried on by the
6-51 partnership.
6-52 (b) ACT OUTSIDE SCOPE OF BUSINESS. An act of a partner does
6-53 not bind the partnership unless authorized by the other partners if
6-54 the act is not apparently for carrying on in the usual way:
6-55 (1) the partnership business; or
6-56 (2) business of the kind carried on by the
6-57 partnership.
6-58 Sec. 3.03. Partnership Liable for Partner's Actionable
6-59 Conduct. (a) A partnership is liable for loss or injury to a
6-60 person, including a partner, or for a penalty caused by or incurred
6-61 as a result of a wrongful act or omission or other actionable
6-62 conduct of a partner acting:
6-63 (1) in the ordinary course of business of the
6-64 partnership; or
6-65 (2) with the authority of the partnership.
6-66 (b) A partnership is liable for the loss of money or
6-67 property of a person not a partner that is received in the course
6-68 of the partnership's business and misapplied by a partner while in
6-69 the custody of the partnership.
6-70 Sec. 3.04. Nature of Partner's Liability Partnership.
7-1 Except as provided by Section 3.08(a) for a registered limited
7-2 liability partnership, all partners are liable jointly and
7-3 severally for all debts and obligations of the partnership unless
7-4 otherwise agreed by the claimant or provided by law.
7-5 Sec. 3.05. Enforcement of Partnership and Partner Liability.
7-6 (a) PARTNERSHIP AS PARTY. A partnership may sue and be sued in
7-7 the name of the partnership.
7-8 (b) ACTION AGAINST PARTNERSHIP AND PARTNERS. An action may
7-9 be brought against a partnership and any or all of the partners in
7-10 the same action or in separate actions.
7-11 (c) JUDGMENT AGAINST PARTNER. A judgment against a
7-12 partnership is not by itself a judgment against a partner, but a
7-13 judgment may be entered against a partner who has been served with
7-14 process in a suit against the partnership.
7-15 (d) LIMITATION ON CREDITOR'S PURSUIT OF PARTNER'S PROPERTY.
7-16 Except as provided by Subsection (e), a creditor may proceed
7-17 against one or more partners or their property to satisfy a
7-18 judgment based on a claim that could have been successfully
7-19 asserted against the partnership only if:
7-20 (1) a judgment is also obtained against the partner;
7-21 and
7-22 (2) a judgment based on the same claim is obtained
7-23 against the partnership that:
7-24 (A) has not been reversed or vacated; and
7-25 (B) remains unsatisfied for 90 days after:
7-26 (i) the date of entry of the judgment; or
7-27 (ii) the date of expiration or termination
7-28 of the stay, if the judgment is contested by appropriate
7-29 proceedings and execution on the judgment has been stayed.
7-30 (e) CREDITOR'S DIRECT PURSUIT OF PARTNER'S PROPERTY.
7-31 Subsection (d) does not prohibit a creditor from proceeding
7-32 directly against one or more partners or their property without
7-33 first seeking satisfaction from partnership property if:
7-34 (1) the partnership is a debtor in bankruptcy;
7-35 (2) the creditor and the partnership agreed that the
7-36 creditor is not required to comply with Subsection (d);
7-37 (3) a court orders otherwise, based on a finding that
7-38 partnership property subject to execution within the state is
7-39 clearly insufficient to satisfy the judgment or that compliance
7-40 with Subsection (d) is excessively burdensome; or
7-41 (4) liability is imposed on the partner by law
7-42 independently of the person's status as a partner.
7-43 Sec. 3.06. False Representation of Partnership.
7-44 (a) REPRESENTATION OF PARTNERSHIP. A representation or other
7-45 conduct indicating that a person is a partner with another person,
7-46 if that is not the case, does not of itself create a partnership.
7-47 (b) REPRESENTATION OF MEMBERSHIP IN PARTNERSHIP. A
7-48 representation or other conduct indicating that a person is a
7-49 partner in an existing partnership, if that is not the case, does
7-50 not of itself make that person a partner in the partnership.
7-51 (c) Creditor's Rights Governed By Other Law. The rights of
7-52 a person extending credit in reliance on a representation described
7-53 by Subsections (a) or (b) are determined by law other than this
7-54 Act, including the law of estoppel, agency, negligence, fraud, and
7-55 unjust enrichment.
7-56 (d) Legal Status Of Person Making Misrepresentation. The
7-57 rights and duties of a person held liable under Subsection (c) are
7-58 also determined by law other than this Act, including the law of
7-59 estoppel, agency, negligence, fraud, and unjust enrichment.
7-60 Sec. 3.07. Liability Of Incoming Partner. A person admitted
7-61 as a partner into an existing partnership does not have personal
7-62 liability under Section 3.04 for an obligation of the partnership
7-63 that:
7-64 (1) arose before the partner's admission to the
7-65 partnership;
7-66 (2) relates to an action taken or omissions occurring
7-67 before the partner's admission to the partnership; or
7-68 (3) arises before or after the partner's admission
7-69 under a contract or commitment entered into before the partner's
7-70 admission to the partnership.
8-1 Sec. 3.08. Liability In And Registration Of Registered
8-2 Limited Liability Partnership. (a) Liability of Partner. (1) A
8-3 partner in a registered limited liability partnership is not
8-4 individually liable for debts and obligations of the partnership
8-5 arising from errors, omissions, negligence, incompetence, or
8-6 malfeasance committed while the partnership is a registered limited
8-7 liability partnership and in the course of the partnership business
8-8 by another partner or a representative of the partnership not
8-9 working under the supervision or direction of the first partner
8-10 unless the first partner:
8-11 (A) was directly involved in the specific
8-12 activity in which the errors, omissions, negligence, incompetence,
8-13 or malfeasance were committed by the other partner or
8-14 representative; or
8-15 (B) had notice or knowledge of the errors,
8-16 omissions, negligence, incompetence, or malfeasance by the other
8-17 partner or representative at the time of occurrence and then failed
8-18 to take reasonable steps to prevent or cure the errors, omissions,
8-19 negligence, incompetence, or malfeasance.
8-20 (2) Subsection (a)(1) does not affect:
8-21 (A) the joint and several liability of a partner
8-22 for debts and obligations of the partnership arising from a cause
8-23 other than the causes specified by Subsection (a)(1);
8-24 (B) the liability of a partnership to pay its
8-25 debts and obligations out of partnership property; or
8-26 (C) the manner in which service of citation or
8-27 other civil process may be served in an action against a
8-28 partnership.
8-29 (3) In this subsection, "representative" includes an
8-30 agent, servant, or employee of a registered limited liability
8-31 partnership.
8-32 (b) REGISTRATION. (1) In addition to complying with
8-33 Subsections (c) and (d)(1), to become a registered limited
8-34 liability partnership, a partnership must file with the secretary
8-35 of state an application stating:
8-36 (A) the name of the partnership;
8-37 (B) the federal tax identification number of the
8-38 partnership;
8-39 (C) the street address of the partnership's
8-40 principal office in this state and outside this state, as
8-41 applicable;
8-42 (D) the number of partners at the date of
8-43 application; and
8-44 (E) in brief, the partnership's business.
8-45 (2) The application must be executed by a
8-46 majority-in-interest of the partners or by one or more partners
8-47 authorized by a majority-in-interest of the partners.
8-48 (3) Two copies of the application must be filed,
8-49 accompanied by a fee of $100 for each partner.
8-50 (4) A partnership is registered as a registered
8-51 limited liability partnership on filing a completed initial or
8-52 renewal application, in duplicate with the required fee, or on a
8-53 later date specified in the application. A registration is not
8-54 affected by later changes in the partners of the partnership.
8-55 (5) An initial application filed under this subsection
8-56 and registered by the secretary of state expires one year after the
8-57 date of registration or later effective date unless earlier
8-58 withdrawn or revoked or unless renewed in accordance with
8-59 Subdivision (7).
8-60 (6) A registration may be withdrawn by filing in
8-61 duplicate with the secretary of state a written withdrawal notice
8-62 executed by a majority-in-interest of the partners or by one or
8-63 more partners authorized by a majority-in-interest of the partners.
8-64 A withdrawal notice must include the name of the partnership, the
8-65 federal tax identification number of the partnership, the date of
8-66 registration of the partnership's last application under this
8-67 section, and a current street address of the partnership's
8-68 principal office in this state and outside this state, if
8-69 applicable. A withdrawal notice terminates the status of the
8-70 partnership as a registered limited liability partnership as of the
9-1 date of filing the notice or a later date specified in the notice,
9-2 but not later than the expiration date under Subdivision (5).
9-3 (7) An effective registration may be renewed before
9-4 its expiration by filing in duplicate with the secretary of state
9-5 an application containing current information of the kind required
9-6 in an initial application and the most recent date of registration
9-7 of the partnership. The renewal application must be accompanied by
9-8 a fee of $200 for each partner on the date of renewal. A renewal
9-9 application filed under this section continues an effective
9-10 registration for one year after the date the effective registration
9-11 would otherwise expire.
9-12 (8) The secretary of state may remove from its active
9-13 records the registration of a partnership whose registration has
9-14 been withdrawn or revoked or has expired and not been renewed.
9-15 (9) The secretary of state may revoke the filing of a
9-16 document filed under this subsection if the secretary of state
9-17 determines that the filing fee for the document was paid by an
9-18 instrument that was dishonored when presented by the state for
9-19 payment. The secretary of state shall return the document and give
9-20 notice of revocation to the filing party by regular mail. Failure
9-21 to give or receive notice does not invalidate the revocation. A
9-22 revocation of a filing does not affect an earlier filing.
9-23 (10) The secretary of state may provide forms for
9-24 application for or renewal of registration.
9-25 (11) A document filed under this subsection may be
9-26 amended or corrected by filing in duplicate with the secretary of
9-27 state articles of amendment executed by a majority-in-interest of
9-28 the partners or by one or more partners authorized by a
9-29 majority-in-interest of the partners. The articles of amendment
9-30 must contain the name of the partnership, the tax identification
9-31 number of the partnership, the identity of the document being
9-32 amended, the date on which the document being amended was filed,
9-33 the part of the document being amended, and the amendment or
9-34 correction. Two copies of the articles of amendment must be filed,
9-35 accompanied by a fee of $10 plus, if the amendment increases the
9-36 number of partners, $200 for each partner added by amendment of the
9-37 number of partners.
9-38 (12) A document filed under this subsection may be a
9-39 photographic, facsimile, or similar reproduction of a signed
9-40 document. A signature on a document filed under this section may
9-41 be a facsimile.
9-42 (13) A person commits an offense if the person signs a
9-43 document the person knows is false in any material respect with the
9-44 intent that the document be delivered on behalf of a partnership to
9-45 the secretary of state for filing. An offense under this
9-46 subdivision is a Class A misdemeanor.
9-47 (14) The secretary of state is not responsible for
9-48 determining if a partnership is in compliance with the requirements
9-49 of Subsection (d)(1).
9-50 (15) The secretary of state may adopt procedural rules
9-51 on filing documents under this subsection.
9-52 (c) Name. A registered limited liability partnership's name
9-53 must contain the words "registered limited liability partnership"
9-54 or the abbreviation "L.L.P." as the last words or letters of its
9-55 name.
9-56 (d) Insurance or Financial Responsibility. (1) A
9-57 registered limited liability partnership must:
9-58 (A) carry at least $100,000 of liability
9-59 insurance of a kind that is designed to cover the kinds of errors,
9-60 omissions, negligence, incompetence, or malfeasance for which
9-61 liability is limited by Subsection (a)(1); or
9-62 (B) provide $100,000 of funds specifically
9-63 designated and segregated for the satisfaction of judgments against
9-64 the partnership based on the kinds of errors, omissions,
9-65 negligence, incompetence, or malfeasance for which liability is
9-66 limited by Subsection (a)(1) by:
9-67 (i) deposit in trust or in bank escrow of
9-68 cash, bank certificates of deposit, or United States Treasury
9-69 obligations; or
9-70 (ii) a bank letter of credit or insurance
10-1 company bond.
10-2 (2) If the registered limited liability partnership is
10-3 in compliance with Subdivision (1), the requirements of this
10-4 subsection shall not be admissible or in any way be made known to
10-5 the jury in determining an issue of liability for or extent of the
10-6 debt or obligation or damages in question.
10-7 (3) If compliance with Subdivision (1) is disputed:
10-8 (A) compliance must be determined separately
10-9 from the trial or proceeding to determine the partnership debt or
10-10 obligation in question, its amount, or partner liability for the
10-11 debt or obligation; and
10-12 (B) the burden of proof of compliance is on the
10-13 person claiming limitation of liability under Subsection (a)(1).
10-14 (e) LIMITED PARTNERSHIP. A limited partnership may become a
10-15 registered limited liability partnership by complying with
10-16 applicable provisions of the Texas Revised Limited Partnership Act
10-17 (Article 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
10-18 amendments.
10-19 ARTICLE IV. RELATIONS OF PARTNERS TO EACH OTHER AND TO PARTNERSHIP
10-20 Sec. 4.01. Partner's Rights And Duties. (a) CAPITAL
10-21 CREDITS AND CHARGES. Each partner is credited with an amount equal
10-22 to the cash plus the value of property the partner contributes to a
10-23 partnership and the partner's share of the partnership's profits.
10-24 Each partner is charged with an amount equal to the cash plus the
10-25 value of other property distributed by the partnership to the
10-26 partner and the partner's share of the partnership's losses.
10-27 (b) PROFITS AND LOSSES. Each partner is credited with an
10-28 equal share of the profits of a partnership. Each partner is
10-29 charged with a share of the losses, whether capital or operating,
10-30 of the partnership in proportion to the partner's share of the
10-31 profits.
10-32 (c) DISPROPORTIONATE PAYMENT OR ADVANCE. A partner who, in
10-33 the proper conduct of the business of the partnership or for the
10-34 preservation of its business or property, reasonably makes a
10-35 payment or advance beyond the amount the partner agreed to
10-36 contribute, or who reasonably incurs a liability, is entitled to be
10-37 repaid and to receive interest from the date of the payment or
10-38 advance or the incurrence of the liability.
10-39 (d) PARTICIPATION IN MANAGEMENT. Each partner has equal
10-40 rights in the management and conduct of the business of a
10-41 partnership. A partner's right to participate in the management
10-42 and conduct of the business is not community property.
10-43 (e) PARTNERSHIP PROPERTY. A partner may use or possess
10-44 partnership property only on behalf of the partnership.
10-45 (f) COMPENSATION. A partner is not entitled to compensation
10-46 for services performed for a partnership other than reasonable
10-47 compensation for services rendered in winding up the business of
10-48 the partnership.
10-49 (g) NEW PARTNER. A person may become a partner only with
10-50 the consent of all partners.
10-51 (h) MAJORITY DECISION ON ORDINARY MATTER. A difference
10-52 arising as to a matter in the ordinary course of the business of
10-53 the partnership may be decided by a majority-in-interest of the
10-54 partners. An act outside the ordinary course of business of a
10-55 partnership may be undertaken only with the consent of all
10-56 partners.
10-57 (i) AMENDMENT OF AGREEMENT. An amendment to a partnership
10-58 agreement may be effected only with the consent of all partners.
10-59 (j) PARTNERSHIP OBLIGATION. This section does not limit a
10-60 partnership's obligation to another person under Section 3.02.
10-61 (k) PARTNER TRANSACTION OF BUSINESS WITH PARTNERSHIP. A
10-62 partner may lend money to or transact other business with a
10-63 partnership and, subject to other applicable law, has the same
10-64 rights and obligations with respect to that matter as a person who
10-65 is not a partner.
10-66 (l) CLASSES OR GROUPS OF PARTNERS. A written partnership
10-67 agreement may establish classes or groups of one or more partners
10-68 having certain expressed relative rights, powers, and duties,
10-69 including voting rights, and may provide for the future creation of
10-70 additional classes or groups of partners having certain relative
11-1 rights, powers, and duties, including voting rights, expressed in
11-2 the partnership agreement or at the time of creation of the class
11-3 or group. The rights, powers, or duties of a class or group may be
11-4 senior to those of one or more existing classes or groups of
11-5 partners.
11-6 (m) VOTING RIGHTS. A written partnership agreement that
11-7 grants or provides for granting to a partner a right to vote may
11-8 contain provisions relating to:
11-9 (1) giving notice of the time, place, or purposes of a
11-10 meeting at which a matter is to be voted on by the partners;
11-11 (2) waiver of notice;
11-12 (3) action by consent without a meeting;
11-13 (4) the establishment of a record date;
11-14 (5) quorum requirements;
11-15 (6) voting in person or by proxy; or
11-16 (7) any other matter relating to the exercise of the
11-17 right to vote.
11-18 (n) NOTICE OF NONUNANIMOUS ACTION. (1) Prompt notice of
11-19 the taking of an action under an agreement that requires consent of
11-20 fewer than all of the partners and that may be taken without a
11-21 meeting shall be given to the partners who have not consented in
11-22 writing to the action.
11-23 (2) For the purposes of this section, the taking of an
11-24 action includes amending the partnership agreement or creating,
11-25 under provisions of the partnership agreement, a class of partner
11-26 that did not previously exist.
11-27 Sec. 4.02. DISTRIBUTION IN KIND. A partner does not have a
11-28 right to receive, and may not be required to accept, a distribution
11-29 in kind.
11-30 Sec. 4.03. INFORMATION REGARDING A PARTNERSHIP. (a) BOOKS
11-31 AND RECORDS AT CHIEF EXECUTIVE OFFICE. A partnership shall keep
11-32 its books and records, if any, at its chief executive office.
11-33 (b) ACCESS TO BOOKS AND RECORDS. A partnership shall
11-34 provide access to its books and records to partners and their
11-35 agents and attorneys. The partnership shall provide former
11-36 partners and their agents and attorneys access to books and records
11-37 pertaining to the period during which the former partners were
11-38 partners or for any other proper purpose with respect to another
11-39 period. The right of access includes the opportunity to inspect
11-40 and copy books and records during ordinary business hours. A
11-41 partnership may impose a reasonable charge, covering the costs of
11-42 labor and material, for copies of documents furnished.
11-43 (c) INFORMATION CONCERNING THE PARTNERSHIP. Each partner
11-44 and the partnership shall furnish, on request and to the extent
11-45 just and reasonable, to a partner, the legal representative of a
11-46 deceased partner or a partner under legal disability, or an
11-47 assignee, complete and accurate information concerning the
11-48 partnership. A legal representative of a deceased partner or a
11-49 partner under legal disability and an assignee are subject to the
11-50 same duties as a partner with respect to information made
11-51 available.
11-52 Sec. 4.04. GENERAL STANDARDS OF PARTNER'S CONDUCT.
11-53 (a) Duties. A partner owes to the partnership and the other
11-54 partners:
11-55 (1) a duty of loyalty; and
11-56 (2) a duty of care.
11-57 (b) LOYALTY. A partner's duty of loyalty includes:
11-58 (1) accounting to the partnership and holding for it
11-59 any property, profit, or benefit derived by the partner in the
11-60 conduct and winding up of the partnership business or from use by
11-61 the partner of partnership property;
11-62 (2) refraining from dealing with the partnership on
11-63 behalf of a party having an interest adverse to the partnership;
11-64 and
11-65 (3) refraining from competing with the partnership or
11-66 dealing with the partnership in a manner adverse to the
11-67 partnership.
11-68 (c) CARE. A partner's duty of care to the partnership and
11-69 the other partners is to act in the conduct and winding up of the
11-70 partnership business with the care an ordinarily prudent person
12-1 would exercise in similar circumstances. An error in judgment does
12-2 not by itself constitute a breach of this duty of care. A partner
12-3 is presumed to satisfy this duty if the partner acts on an informed
12-4 basis and in compliance with Subsection (d).
12-5 (d) METHOD OF DISCHARGE. A partner shall discharge the
12-6 partner's duties to the partnership and the other partners under
12-7 this Act or under the partnership agreement, and exercise any
12-8 rights and powers in the conduct or winding up of the partnership
12-9 business:
12-10 (1) in good faith; and
12-11 (2) in a manner the partner reasonably believes to be
12-12 in the best interest of the partnership.
12-13 (e) EFFECT OF PARTNER BENEFIT. A partner does not violate a
12-14 duty or obligation under this Act or under the partnership
12-15 agreement merely because the partner's conduct furthers the
12-16 partner's own interest.
12-17 (f) TRUSTEE STANDARD INAPPLICABLE. A partner, in that
12-18 capacity, is not a trustee and is not held to the same standards as
12-19 a trustee.
12-20 (g) APPLICATION TO NONPARTNER WINDING UP. This section
12-21 applies to a person winding up the partnership business as the
12-22 personal or legal representative of the last surviving partner as
12-23 if the person were a partner.
12-24 Sec. 4.05. PARTNER'S LIABILITY TO PARTNERSHIP. A partner is
12-25 liable to a partnership and the other partners for a breach of the
12-26 partnership agreement or for a violation of a duty to the
12-27 partnership or the other partners under this Act that causes harm
12-28 to the partnership or the other partners.
12-29 Sec. 4.06. REMEDIES OF PARTNERSHIP AND PARTNERS.
12-30 (a) ACTION BY PARTNERSHIP. A partnership may maintain an action
12-31 against a partner for a breach of the partnership agreement or for
12-32 the violation of a duty to the partnership causing harm to the
12-33 partnership.
12-34 (b) ACTION BY PARTNER. A partner may maintain an action
12-35 against the partnership or another partner for legal or equitable
12-36 relief, including an accounting as to partnership business, to:
12-37 (1) enforce a right under the partnership agreement;
12-38 (2) enforce a right under this Act, including:
12-39 (A) the partner's rights under Sections 4.01,
12-40 4.03, and 4.04;
12-41 (B) the partner's right on withdrawal to have
12-42 the partner's interest in the partnership redeemed under Section
12-43 7.01 or enforce any other right under Article 6 or 7; and
12-44 (C) the partner's rights under Article 8; or
12-45 (3) enforce the rights and otherwise protect the
12-46 interests of the partner, including rights and interests arising
12-47 independently of the partnership relationship.
12-48 (c) ACCRUAL OF ACTION. The accrual of and a time limitation
12-49 on a right of action for a remedy under this section is governed by
12-50 other law.
12-51 (d) NO REVIVAL BY ACCOUNTING. A right to an accounting does
12-52 not revive a claim barred by law.
12-53 Sec. 4.07. CONTINUATION OF PARTNERSHIP. (a) CONTINUATION
12-54 BY EXPRESS AGREEMENT. If all the partners in a partnership for a
12-55 definite term or a particular undertaking or for which the
12-56 partnership agreement provides for winding up on a specified event
12-57 agree to continue the business of the partnership despite the
12-58 expiration of the term, the completion of the undertaking, or the
12-59 occurrence of the event, other than the withdrawal of a partner,
12-60 the partnership is continued and the partnership agreement is
12-61 considered amended to provide that the expiration, the completion,
12-62 or the occurrence of the event did not result in an event requiring
12-63 the winding up of the partnership business.
12-64 (b) CONTINUATION BY ACTION. A continuation of the business
12-65 for 90 days by the partners or those who habitually acted in the
12-66 business during the term or undertaking or preceding the event,
12-67 without a settlement or liquidation of the partnership business and
12-68 without objection from a partner, is prima facie evidence of
12-69 agreement by all partners to continue the business.
12-70 ARTICLE V. TRANSFEREE OF PARTNER
13-1 Sec. 5.01. PARTNER'S INTEREST IN PARTNERSHIP PROPERTY NOT
13-2 TRANSFERABLE. A partner is not a co-owner of partnership property
13-3 and does not have an interest that can be transferred, either
13-4 voluntarily or involuntarily, in partnership property.
13-5 Sec. 5.02. NATURE OF PARTNER'S PARTNERSHIP INTEREST.
13-6 (a) PERSONAL PROPERTY. A partner's partnership interest is
13-7 personal property for all purposes. A partner's partnership
13-8 interest may be community property under applicable law.
13-9 (b) CERTIFICATE EVIDENCING INTEREST. A written partnership
13-10 agreement may:
13-11 (1) provide that a partner's partnership interest may
13-12 be evidenced by a certificate of partnership interest issued by the
13-13 partnership;
13-14 (2) provide for the assignment or transfer of a
13-15 partnership interest represented by the certificate; and
13-16 (3) make other provisions with respect to the
13-17 certificate.
13-18 Sec. 5.03. TRANSFER OF PARTNER'S PARTNERSHIP INTEREST.
13-19 (a) ACT OF TRANSFER. A transfer of a partner's partnership
13-20 interest:
13-21 (1) is permissible, in whole or in part;
13-22 (2) is not an event of withdrawal;
13-23 (3) does not by itself cause a winding up of the
13-24 partnership business; and
13-25 (4) does not, as against the other partners or the
13-26 partnership, entitle the transferee, during the continuance of the
13-27 partnership, to participate in the management or conduct of the
13-28 partnership business.
13-29 (b) BASIC RIGHTS OF TRANSFEREE. A transferee of a partner's
13-30 partnership interest is entitled to receive, to the extent
13-31 transferred, distributions to which the transferor otherwise would
13-32 be entitled. After transfer, the transferor continues to have the
13-33 rights and duties of a partner other than the interest transferred.
13-34 Until a transferee becomes a partner, the transferee does not have
13-35 liability as a partner solely as a result of the transfer. For a
13-36 proper purpose the transferee may require reasonable information or
13-37 an account of partnership transactions and make reasonable
13-38 inspection of the partnership books.
13-39 (c) RIGHTS OF TRANSFEREE ON WINDING UP. If an event
13-40 requires a winding up of partnership business under Section 8.01, a
13-41 transferee is entitled to receive, to the extent transferred, the
13-42 net amount otherwise distributable to the transferor. In a winding
13-43 up a transferee may require an accounting only from the date of the
13-44 latest account agreed to by all of the partners.
13-45 (d) NOTICE TO PARTNERSHIP. Until receipt of notice of a
13-46 transfer, a partnership does not have a duty to give effect to a
13-47 transferee's rights under this section.
13-48 (e) NO EFFECT IF PROHIBITED. A partnership does not have a
13-49 duty to give effect to a transfer, assignment, or grant of a
13-50 security interest prohibited by a partnership agreement.
13-51 Sec. 5.04. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
13-52 INTEREST. (a) DIVORCE. On the divorce of a partner, the
13-53 partner's spouse, to the extent of the spouse's partnership
13-54 interest, shall be regarded for purposes of this Act as a
13-55 transferee of the partnership interest from the partner.
13-56 (b) DEATH OF PARTNER. On the death of a partner, the
13-57 partner's surviving spouse, if any, and the partner's heirs,
13-58 legatees, or personal representative, to the extent of their
13-59 respective partnership interests, shall be regarded for purposes of
13-60 this Act as transferees of the partnership interests from the
13-61 partner.
13-62 (c) DEATH OF PARTNER'S SPOUSE. On the death of a partner's
13-63 spouse, the spouse's heirs, legatees or personal representative, to
13-64 the extent of their respective partnership interests, shall be
13-65 regarded for purposes of this Act as transferees of the partnership
13-66 interest from the partner.
13-67 (d) EVENT INVOLVING PARTNER'S SPOUSE NOT WITHDRAWAL. An
13-68 event of the type described in Section 6.01 occurring with respect
13-69 to a partner's spouse is not an event of withdrawal.
13-70 (e) NO IMPAIRMENT OF PURCHASE RIGHTS. This Act does not
14-1 impair an agreement for the purchase or sale of a partnership
14-2 interest at the time of death of the owner of the partnership
14-3 interest or at any other time.
14-4 ARTICLE VI. EVENTS OF WITHDRAWAL
14-5 Sec. 6.01. EVENTS OF WITHDRAWAL. (a) NO LONGER A
14-6 PARTNER. A person ceases to be a partner on the occurrence of an
14-7 event of withdrawal.
14-8 (b) EVENT OF WITHDRAWAL. An event of withdrawal of a
14-9 partner occurs on:
14-10 (1) receipt by the partnership of notice of the
14-11 partner's express will to withdraw as a partner on the date of
14-12 receipt of the notice or on a later date specified in the notice;
14-13 (2) an event specified in the partnership agreement as
14-14 causing the partner's withdrawal;
14-15 (3) the partner's expulsion as provided in the
14-16 partnership agreement;
14-17 (4) the partner's expulsion by the vote of a
14-18 majority-in-interest of the other partners if:
14-19 (A) it is unlawful to carry on the partnership
14-20 business with that partner;
14-21 (B) there has been a transfer of all or
14-22 substantially all of that partner's partnership interest, other
14-23 than:
14-24 (i) a transfer for security purposes that
14-25 has not been foreclosed; or
14-26 (ii) the substitution of a successor
14-27 trustee or successor personal representative;
14-28 (C) within 90 days after the date the
14-29 partnership notifies a corporate partner that it will be expelled
14-30 because it has filed a certificate of dissolution or the
14-31 equivalent, its charter has been revoked, or its right to conduct
14-32 business has been suspended by the jurisdiction of its
14-33 incorporation, the certificate of dissolution is not revoked or its
14-34 charter or its right to conduct business is not reinstated; or
14-35 (D) an event requiring a winding up has occurred
14-36 with respect to a partnership that is a partner;
14-37 (5) application by the partnership or another partner
14-38 for the partner's expulsion by judicial decree because:
14-39 (A) the partner engaged in wrongful conduct that
14-40 adversely and materially affected the partnership business;
14-41 (B) the partner wilfully or persistently
14-42 committed a material breach of the partnership agreement or of a
14-43 duty owed to the partnership or the other partners under Section
14-44 4.04; or
14-45 (C) the partner engaged in conduct relating to
14-46 the partnership business that made it not reasonably practicable to
14-47 carry on the business in partnership with that partner;
14-48 (6) the partner:
14-49 (A) becoming a debtor in bankruptcy;
14-50 (B) executing an assignment for the benefit of
14-51 creditors;
14-52 (C) seeking, consenting to, or acquiescing in
14-53 the appointment of a trustee, receiver, or liquidator of that
14-54 partner or of all or substantially all of that partner's property;
14-55 or
14-56 (D) failing, within 90 days after the
14-57 appointment, to have vacated or stayed the appointment of a
14-58 trustee, receiver, or liquidator of the partner or of all or
14-59 substantially all of the partner's property obtained without the
14-60 partner's consent or acquiescence, or failing within 90 days after
14-61 the date of expiration of a stay to have the appointment vacated;
14-62 (7) in the case of a partner who is an individual:
14-63 (A) the partner's death;
14-64 (B) the appointment of a guardian or general
14-65 conservator for the partner; or
14-66 (C) a judicial determination that the partner
14-67 has otherwise become incapable of performing the partner's duties
14-68 under the partnership agreement;
14-69 (8) termination of a partner's existence;
14-70 (9) in the case of a partner that has transferred all
15-1 of the partner's partnership interest, redemption of the
15-2 transferee's interest under Sections 7.01(n)-(r); or
15-3 (10) an agreement to continue the partnership under
15-4 Section 8.01(g) if the partnership has received a notice from the
15-5 partner under Section 8.01(g) requesting that the partnership be
15-6 wound up.
15-7 Sec. 6.02. WRONGFUL WITHDRAWAL. (a) POWER TO WITHDRAW. A
15-8 partner at any time before the occurrence of an event requiring a
15-9 winding up has the power to withdraw from the partnership and cease
15-10 to be a partner as provided by Section 6.01.
15-11 (b) WRONGFUL WITHDRAWAL. A partner's withdrawal is wrongful
15-12 only if:
15-13 (1) it is in breach of an express provision of the
15-14 partnership agreement;
15-15 (2) in the case of a partnership for a definite term
15-16 or particular undertaking or for which the partnership agreement
15-17 provides for winding up on a specified event, before the expiration
15-18 of the term, the completion of the undertaking, or the occurrence
15-19 of the event:
15-20 (A) the partner withdraws by express will; or
15-21 (B) in the case of a partner that is not an
15-22 individual, a trust other than a business trust, or an estate, the
15-23 partner is expelled or otherwise withdraws because the partner
15-24 wilfully terminated; or
15-25 (3) the partner is expelled by judicial decree under
15-26 Subsection (b)(5).
15-27 (c) LIABILITY FOR DAMAGES. A wrongfully withdrawing partner
15-28 is liable to the partnership and to the other partners for damages
15-29 caused by the withdrawal, in addition to other liability of the
15-30 partner to the partnership or to the other partners.
15-31 ARTICLE VII. PARTNER'S WITHDRAWAL IF BUSINESS NOT WOUND UP
15-32 Sec. 7.01. REDEMPTION OF WITHDRAWING PARTNER OR TRANSFEREE'S
15-33 INTEREST IF PARTNERSHIP NOT WOUND UP. (a) REDEMPTION. If an
15-34 event of withdrawal occurs under Sections 6.01(b)(1)-(9) and an
15-35 event requiring a winding up does not occur within 60 days after
15-36 the date of the withdrawal, or on a partner's withdrawal under
15-37 Section 6.01(b)(10), the partnership interest of the withdrawn
15-38 partner automatically is redeemed by the partnership as of the date
15-39 of withdrawal in accordance with this section.
15-40 (b) REDEMPTION PRICE. (1) The redemption price of a
15-41 withdrawn partner's partnership interest is the fair value of the
15-42 interest as of the date of withdrawal, except that the redemption
15-43 price of the partnership interest of a partner who wrongfully
15-44 withdraws before the expiration of a definite term, the completion
15-45 of a particular undertaking, or the occurrence of a specified event
15-46 requiring a winding up is the lesser of:
15-47 (A) the fair value of the withdrawn partner's
15-48 partnership interest as of the date of withdrawal; or
15-49 (B) the amount that the withdrawn partner would
15-50 have received if an event requiring a winding up had occurred at
15-51 the time of the partner's withdrawal.
15-52 (2) Interest is payable on the amount owed under this
15-53 subsection.
15-54 (c) CONTRIBUTIONS FROM WRONGFULLY WITHDRAWING PARTNER. If a
15-55 wrongfully withdrawing partner would have been liable to make
15-56 contributions to the partnership under Section 8.06(b) or (c) if an
15-57 event requiring winding up had occurred at the time of withdrawal,
15-58 the withdrawn partner is liable to the partnership to make
15-59 contributions in that amount to the partnership, plus interest on
15-60 the amount owed.
15-61 (d) SETOFF. The partnership may set off the damages for
15-62 wrongful withdrawal under Section 6.02(b) and all other amounts
15-63 owed by the withdrawn partner to the partnership, whether currently
15-64 due, including interest, against the redemption price payable to
15-65 the withdrawn partner.
15-66 (e) INTEREST. Interest owed under Subsection (b), (c), or
15-67 (d) accrues from the date of the withdrawal to the date of payment.
15-68 (f) INDEMNITY. (1) A partnership shall indemnify a
15-69 withdrawn partner against a partnership liability incurred before
15-70 the withdrawal except a liability:
16-1 (A) then unknown to the partnership; or
16-2 (B) incurred by an act of the withdrawn partner
16-3 under Section 7.02.
16-4 (2) For purposes of this subsection, a liability not
16-5 known to a partner other than the withdrawn partner is not known to
16-6 the partnership.
16-7 (g) TENDER OF REDEMPTION PRICE. If a deferred payment is
16-8 not authorized under Subsection (k) and an agreement on the
16-9 redemption price of a withdrawn partner's interest is not reached
16-10 within 120 days after the date of a written demand for payment by
16-11 either party, within 30 days after the expiration of the 120-day
16-12 period the partnership shall:
16-13 (1) pay in cash to the withdrawn partner the amount
16-14 the partnership estimates to be the redemption price plus accrued
16-15 interest, reduced by any setoffs and accrued interest under
16-16 Subsection (d); or
16-17 (2) make written demand for payment of its estimate of
16-18 the amount owed by the withdrawn partner, net of amounts owed to
16-19 the partner, to the partnership.
16-20 (h) WRITTEN OFFER TO PAY OR DEMAND FOR PAYMENT. If a
16-21 deferred payment is authorized under Subsection (k) or a
16-22 contribution or other amount is owed by the withdrawn partner to
16-23 the partnership, the partnership may tender a written offer to pay
16-24 or deliver a written statement of demand for the amount that it
16-25 estimates to be the net amount owed to it, stating the amount and
16-26 other terms and conditions of the obligation.
16-27 (i) EXPLANATORY STATEMENT ACCOMPANYING OR FOLLOWING TENDER.
16-28 On request of the other party, the payment, tender, or demand
16-29 required or allowed by Subsection (g) or (h) must be accompanied or
16-30 followed promptly by:
16-31 (1) a statement of partnership property and
16-32 liabilities as of the date of the partner's withdrawal and the
16-33 latest available partnership balance sheet and income statement, if
16-34 any, if payment, tender, or demand is made or delivered by the
16-35 partnership; and
16-36 (2) an explanation of the computation of the estimated
16-37 payment obligation.
16-38 (j) TENDER IN FULL SATISFACTION. The terms of a payment or
16-39 tender under Subsection (g) or (h) govern a redemption if:
16-40 (1) the payment or tender is accompanied by written
16-41 notice that:
16-42 (A) the payment or tendered amount, if made, is
16-43 in full satisfaction of a party's obligations relating to the
16-44 redemption of the withdrawn partner's partnership interest; and
16-45 (B) an action to determine the redemption price,
16-46 a contribution obligation or setoff under Subsection (c) or (d), or
16-47 other terms of the redemption obligation must be commenced within
16-48 one year after the later of:
16-49 (i) the date the written notice is given;
16-50 or
16-51 (ii) the date of delivery of the
16-52 information required by Subsection (i); and
16-53 (2) the party receiving the payment or tender does not
16-54 commence an action within that one-year period.
16-55 (k) DEFERRAL OF PAYMENT TO WRONGFULLY WITHDRAWING PARTNER.
16-56 A partner who wrongfully withdraws before the expiration of a
16-57 definite term, the completion of a particular undertaking, or the
16-58 occurrence of a specified event requiring a winding up is not
16-59 entitled to receive any portion of the redemption price until the
16-60 expiration of the term, the completion of the undertaking, or the
16-61 occurrence of the specified event unless the partner establishes to
16-62 the satisfaction of a court that earlier payment will not cause
16-63 undue hardship to the partnership. A deferred payment bears
16-64 interest. The withdrawn partner may seek to demonstrate to the
16-65 satisfaction of the court that security for a deferred payment is
16-66 appropriate.
16-67 (l) ACTION TO DETERMINE REDEMPTION TERMS. A withdrawn
16-68 partner or the partnership may maintain an action against the other
16-69 party under Section 4.06 to determine the terms of redemption of
16-70 that partner's interest, including a contribution obligation or
17-1 setoff under Subsection (c) or (d) or other terms of the redemption
17-2 obligations of either party. The action must be commenced within
17-3 one year after the later of the date of delivery of information
17-4 required by Subsection (i) or the date written notice is given
17-5 under Subsection (j). The court shall determine the terms of the
17-6 redemption of the withdrawn partner's interest, any contribution
17-7 obligation or setoff due under Subsection (c) or (d), and accrued
17-8 interest and enter judgment for an additional payment or refund.
17-9 If deferred payment is authorized under Subsection (k), the court
17-10 shall also determine the security for payment if requested to
17-11 consider whether security is appropriate. If the court finds that
17-12 a party acted arbitrarily, vexatiously, or not in good faith,
17-13 including failure to tender payment or make an offer to pay or to
17-14 comply with the requirements of Subsection (i), the court may
17-15 assess damages against the party, including if appropriate a share
17-16 of the profits of the continuing business, reasonable attorney's
17-17 fees, and the fees and expenses of appraisers or other experts for
17-18 a party to the action, in amounts the court finds equitable.
17-19 (m) DEFERRAL OF PAYMENT ON OCCURRENCE OF EVENT REQUIRING
17-20 WINDING UP. If a partner withdraws under Section 6.01 and an event
17-21 occurs within 60 days of the date of withdrawal that requires a
17-22 winding up of the partnership under Section 8.01:
17-23 (1) the partnership may defer paying the redemption
17-24 price to the withdrawn partner until the partnership first makes a
17-25 winding up distribution to the remaining partners; and
17-26 (2) the redemption price or contribution obligation is
17-27 the amount the withdrawn partner would have received or contributed
17-28 if the event requiring a winding up had occurred at the time of the
17-29 partner's withdrawal.
17-30 (n) OBLIGATION TO REDEEM TRANSFEREE. A partnership must
17-31 redeem the partnership interest of a transferee for its fair value
17-32 if:
17-33 (1) the interest was transferred when:
17-34 (A) the partnership was for a definite term not
17-35 then expired or a particular undertaking not then completed; or
17-36 (B) the partnership agreement provided for
17-37 winding up on a specified event that has not yet occurred;
17-38 (2) the definite term has expired, the particular
17-39 undertaking has been completed, or the specified event has
17-40 occurred; and
17-41 (3) the transferee makes a written demand for
17-42 redemption.
17-43 (o) PAYMENT TO TRANSFEREE. If an agreement for the
17-44 redemption price of a transferee's interest is not reached within
17-45 120 days after the date of a written demand for redemption, within
17-46 30 days after the expiration of the 120-day period the partnership
17-47 must pay in cash to the transferee the amount the partnership
17-48 estimates to be the redemption price, plus accrued interest from
17-49 the date of demand.
17-50 (p) INFORMATION TO TRANSFEREE. On request of the
17-51 transferee, the payment required by Subsection (o) must be
17-52 accompanied or followed by:
17-53 (1) a statement of partnership property and
17-54 liabilities as of the date of the demand for redemption;
17-55 (2) the latest available partnership balance sheet and
17-56 income statement, if any; and
17-57 (3) an explanation of the computation of the estimated
17-58 payment obligation.
17-59 (q) PRICE FOR TRANSFEREE. If payment required by Subsection
17-60 (o) is accompanied by written notice that the payment is in full
17-61 satisfaction of the partnership's obligations relating to the
17-62 redemption of the transferee's interest, the payment, less
17-63 interest, is the redemption price unless the transferee within one
17-64 year after the date of the written notice commences an action to
17-65 determine the redemption price.
17-66 (r) SUIT BY TRANSFEREE. A transferee may maintain an action
17-67 against a partnership to determine the redemption price of the
17-68 transferee's interest. The court shall determine the redemption
17-69 price of the transferee's interest and accrued interest and enter
17-70 judgment for payment or refund. If the court finds that the
18-1 partnership acted arbitrarily, vexatiously, or not in good faith,
18-2 including failure to make payment, the court may assess reasonable
18-3 attorney's fees and the fees and expenses of appraisers or other
18-4 experts for a party to the action, in amounts the court finds
18-5 equitable, against the partnership.
18-6 (s) DEFERRAL OF TRANSFEREE REDEMPTION. The redemption of a
18-7 transferee's interest under Subsections (n) and (o) may be deferred
18-8 as determined by the court if the partnership establishes to the
18-9 satisfaction of the court that failure to defer redemption will
18-10 cause undue hardship to the business of the partnership.
18-11 Sec. 7.02. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.
18-12 (a) POWER TO BIND FOR ONE YEAR. The action of a withdrawn partner
18-13 within one year after the date of the person's withdrawal binds the
18-14 partnership if the transaction is one that would bind the
18-15 partnership before the person's withdrawal and the other party to
18-16 the transaction:
18-17 (1) does not have notice of the person's withdrawal as
18-18 a partner;
18-19 (2) had done business with the partnership within one
18-20 year preceding the date of withdrawal; and
18-21 (3) reasonably believed that the withdrawn partner was
18-22 a partner at the time of the transaction.
18-23 (b) WITHDRAWN PARTNER'S LIABILITY FOR LOSS. A withdrawn
18-24 partner is liable to the partnership for loss caused to the
18-25 partnership arising from an obligation incurred by the withdrawn
18-26 partner after withdrawal and for which the partnership is liable
18-27 under Subsection (a).
18-28 Sec. 7.03. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
18-29 LIABILITY. (a) WITHDRAWAL DOES NOT DISCHARGE LIABILITY.
18-30 Withdrawal of a partner does not of itself discharge the partner's
18-31 liability for an obligation of the partnership incurred before
18-32 withdrawal.
18-33 (b) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
18-34 deceased partner is liable for an obligation of the partnership
18-35 incurred while the deceased was a partner to the same extent that a
18-36 withdrawn partner is liable for an obligation of the partnership
18-37 incurred before withdrawal.
18-38 (c) DISCHARGE OF WITHDRAWN PARTNER BY AGREEMENT OF CREDITOR.
18-39 A withdrawn partner is discharged from liability incurred before
18-40 the withdrawal by an agreement to that effect between the partner
18-41 and a partnership creditor.
18-42 (d) MATERIAL ALTERATION OF OBLIGATION WITHOUT CONSENT
18-43 DISCHARGES WITHDRAWN PARTNER. If a creditor of a partnership has
18-44 notice of a partner's withdrawal and without the consent of the
18-45 withdrawn partner agrees to a material alteration in the nature or
18-46 time of payment of an obligation of the partnership incurred before
18-47 the withdrawal, the withdrawn partner is discharged from the
18-48 obligation.
18-49 (e) LIABILITY OF WITHDRAWN PARTNER TO CREDITOR. A person
18-50 who withdraws as a partner in a circumstance that does not
18-51 constitute an event requiring a winding up under Section 8.01 is
18-52 liable as a partner to another party in a transaction entered into
18-53 by the partnership or a surviving partnership under Section 9.02
18-54 within two years after the date of the partner's withdrawal only if
18-55 the other party to the transaction:
18-56 (1) does not have notice of the partner's withdrawal;
18-57 and
18-58 (2) reasonably believed that the withdrawn partner was
18-59 a partner at the time of the transaction.
18-60 ARTICLE VIII. WINDING UP PARTNERSHIP BUSINESS
18-61 Sec. 8.01. EVENTS REQUIRING WINDING UP OF PARTNERSHIP.
18-62 (a) EXPRESS WILL OF MAJORITY-IN-INTEREST IN CERTAIN PARTNERSHIPS.
18-63 In a partnership that is not for a definite term or a particular
18-64 undertaking or in which the partnership agreement does not provide
18-65 for winding up on a specified event, the express will of a
18-66 majority-in-interest of the partners who have not assigned their
18-67 interests requires a winding up of the partnership.
18-68 (b) TERM OR UNDERTAKING. In a partnership for a definite
18-69 term or particular undertaking, winding up is required on:
18-70 (1) the express will of all the partners; or
19-1 (2) the expiration of the term or the completion of
19-2 the undertaking, unless otherwise continued under Section 4.07.
19-3 (c) AGREEMENT ON SPECIFIED EVENT. In a partnership in which
19-4 the partnership agreement provides for winding up on a specified
19-5 event, winding up is required on:
19-6 (1) the express will of all the partners; or
19-7 (2) the occurrence of the specified event, unless
19-8 otherwise continued under Section 4.07.
19-9 (d) ILLEGAL TO CONTINUE. An event that makes it illegal for
19-10 all or substantially all of the business of the partnership to be
19-11 continued requires a winding up of a partnership, but a cure of
19-12 illegality within 90 days after the date of notice to the
19-13 partnership of the event is effective retroactively to the date of
19-14 the event for purposes of this subsection.
19-15 (e) JUDICIAL DECREE. A judicial decree, on application by a
19-16 partner, requires a winding up if the decree determines that:
19-17 (1) the economic purpose of the partnership is likely
19-18 to be unreasonably frustrated;
19-19 (2) another partner has engaged in conduct relating to
19-20 the partnership business that makes it not reasonably practicable
19-21 to carry on the business in partnership with that partner; or
19-22 (3) it is not otherwise reasonably practicable to
19-23 carry on the partnership business in conformity with the
19-24 partnership agreement.
19-25 (f) SALE OF PROPERTY. The sale of all or substantially all
19-26 of the property of the partnership outside the ordinary course of
19-27 business requires a winding up of a partnership.
19-28 (g) NOTICE FROM PARTNER IF NO TERM OR UNDERTAKING; OPTION TO
19-29 CONTINUE. If a partnership is not for a definite term or a
19-30 particular undertaking and its partnership agreement does not
19-31 provide for a specified event requiring a winding up, a request for
19-32 winding up the partnership from a partner, other than a partner who
19-33 has agreed not to withdraw, requires a winding up 60 days after the
19-34 date of the partnership's receipt of notice of the request or at a
19-35 later date as specified by the notice, unless a
19-36 majority-in-interest of the partners agree to continue the
19-37 partnership. The continuation of the business by the other
19-38 partners or by those who habitually acted in the business before
19-39 the notice, other than the partner giving the notice, without any
19-40 settlement or liquidation of the partnership business, is prima
19-41 facie evidence of an agreement to continue the partnership.
19-42 Sec. 8.02. PARTNERSHIP CONTINUES AFTER OCCURRENCE OF EVENT
19-43 REQUIRING WINDING UP. A partnership continues after the occurrence
19-44 of an event requiring winding up until the winding up of its
19-45 business is completed, at which time the partnership is terminated.
19-46 Sec. 8.03. CONDUCT OF WINDING UP. (a) PERSONS AUTHORIZED
19-47 TO WIND UP. After the occurrence of an event requiring a winding
19-48 up:
19-49 (1) the partners who have not withdrawn may wind up a
19-50 partnership's business;
19-51 (2) the legal representative of the last surviving
19-52 partner may wind up a partnership's business; or
19-53 (3) on application of a partner, a partner's legal
19-54 representative or transferee, or a withdrawn partner whose interest
19-55 is not redeemed under Section 7.01(k), a court, for good cause, may
19-56 appoint a person to carry out the winding up and may make an order,
19-57 direction, or inquiry that the circumstances require.
19-58 (b) AUTHORIZED ACTIONS. To the extent appropriate for
19-59 winding up, as soon as reasonably practicable, and in the name of
19-60 and for and on behalf of the partnership, a person winding up a
19-61 partnership's business may:
19-62 (1) prosecute and defend civil, criminal, or
19-63 administrative suits;
19-64 (2) settle and close the partnership's business;
19-65 (3) dispose of and convey the partnership's property;
19-66 (4) satisfy or provide for the satisfaction of the
19-67 partnership's liabilities;
19-68 (5) distribute to the partners any remaining property
19-69 of the partnership; and
19-70 (6) perform any other necessary act.
20-1 (c) CONTINUATION TO PRESERVE VALUE. A person winding up a
20-2 partnership's business may continue the business of the partnership
20-3 in whole or in part, including delaying the disposition of
20-4 partnership property, but only for the limited period necessary to
20-5 avoid unreasonable loss of the partnership's property or business.
20-6 Sec. 8.04. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
20-7 OCCURRENCE OF EVENT REQUIRING WINDING UP. (a) LIABILITY OF ALL
20-8 PARTNERS FOR LOSSES. Except as provided by Subsection (b), after
20-9 occurrence of an event requiring winding up the losses with respect
20-10 to which a partner must contribute under Section 8.06(c) include
20-11 losses from any liabilities incurred under Section 8.05.
20-12 (b) INDIVIDUAL LIABILITY OF ACTING PARTNER FOR LOSSES. A
20-13 partner who, with notice that an event requiring a winding up has
20-14 occurred, incurs a partnership liability under Section 8.05(2) by
20-15 an act that is not appropriate for winding up the partnership
20-16 business is liable to the partnership for a loss caused to the
20-17 partnership arising from that liability.
20-18 Sec. 8.05. PARTNER'S POWER TO BIND PARTNERSHIP AFTER
20-19 OCCURRENCE OF EVENT REQUIRING WINDING UP. After the occurrence of
20-20 an event requiring winding up, a partnership is bound by a
20-21 partner's act that:
20-22 (1) is appropriate for winding up the partnership
20-23 business; or
20-24 (2) would bind the partnership under Section 3.02
20-25 before the occurrence of the event requiring winding up, if the
20-26 other party to the transaction does not have notice that an event
20-27 requiring winding up has occurred.
20-28 Sec. 8.06. RULES FOR DISTRIBUTION ON WINDING UP.
20-29 (a) APPLICATION OF PROPERTY TO OBLIGATIONS. In winding up the
20-30 partnership business, the property of the partnership must be
20-31 applied to discharge its obligations to creditors, including
20-32 partners who are creditors other than in their capacities as
20-33 partners. A surplus must be applied to pay in cash the net amount
20-34 distributable to partners in accordance with their right to
20-35 distributions under Subsection (b).
20-36 (b) SETTLEMENT OF ACCOUNTS AMONG PARTNERS. Each partner is
20-37 entitled to a settlement of all partnership accounts on winding up
20-38 the partnership business. In settling accounts among the partners,
20-39 the partnership interest of a withdrawn partner that is not
20-40 redeemed under Section 7.01 is credited with a share of any profits
20-41 for the period after the partner's withdrawal but is charged with a
20-42 share of losses for that period only to the extent of profits
20-43 credited for that period, and the profits and losses that result
20-44 from the liquidation of the partnership property must be credited
20-45 and charged to the partners' capital accounts. The partnership
20-46 shall make a distribution to a partner in an amount equal to that
20-47 partner's positive balance in the partner's capital account. A
20-48 partner shall contribute to the partnership an amount equal to that
20-49 partner's negative balance in the partner's capital account.
20-50 (c) CONTRIBUTION TO SATISFY OBLIGATIONS. To the extent not
20-51 taken into account in settling the accounts among partners under
20-52 Subsection (b), each partner must contribute, in the proportion in
20-53 which the partner shares partnership losses, the amount necessary
20-54 to satisfy partnership obligations, excluding liabilities that
20-55 creditors have agreed may be satisfied only with partnership
20-56 property without recourse to individual partners. If a partner
20-57 fails to contribute, the other partners shall contribute, in the
20-58 proportions in which the partners share partnership losses, the
20-59 additional amount necessary to satisfy the partnership obligations.
20-60 A partner or partner's legal representative may enforce or recover
20-61 from the other partners, or from the estate of a deceased partner,
20-62 contributions the partner or estate makes to the extent the amount
20-63 contributed exceeds that partner's or the estate's share of the
20-64 partnership obligations.
20-65 (d) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
20-66 deceased partner is liable for the partner's obligation to
20-67 contribute to the partnership.
20-68 (e) ENFORCEMENT OF OBLIGATION OF ESTATE OF DECEASED PARTNER.
20-69 The partnership, an assignee for the benefit of creditors of a
20-70 partnership or a partner, or a person appointed by a court to
21-1 represent creditors of a partnership or a partner may enforce the
21-2 obligation of a partner or the estate of a deceased partner to
21-3 contribute to a partnership.
21-4 ARTICLE IX. PARTNERSHIP CONVERSIONS, MERGERS, AND EXCHANGES
21-5 Sec. 9.01. CONVERSIONS. (a) GENERAL TO LIMITED
21-6 PARTNERSHIP. A partnership that is not a limited partnership may
21-7 convert, with the consent of a majority-in-interest of the
21-8 partners, to a domestic or foreign limited partnership by properly
21-9 filing a certificate of limited partnership in the state in which
21-10 the limited partnership is to be formed. If the limited
21-11 partnership is formed under the law of this state, in addition to
21-12 other matters required, the certificate must state:
21-13 (1) that the partnership is converting from a
21-14 partnership that is not a limited partnership to a limited
21-15 partnership;
21-16 (2) the name or names of the partnership before the
21-17 conversion to a limited partnership;
21-18 (3) the names of the general partners before the
21-19 conversion;
21-20 (4) the state in which the partnership was organized
21-21 before conversion;
21-22 (5) the change in name required, if any, in connection
21-23 with the operation of the partnership as a limited partnership in
21-24 this state; and
21-25 (6) the effective date of the conversion if different
21-26 from the date the certificate is filed.
21-27 If a partnership that is not a limited partnership converts
21-28 to a limited partnership, a partner who did not consent to the
21-29 conversion is considered to be a partner who has withdrawn from the
21-30 partnership effective immediately before the effective date of the
21-31 conversion unless, within 60 days after the later of the effective
21-32 date of the conversion or the date the partner receives actual
21-33 notice of the conversion, the partner notifies the partnership in
21-34 writing of the partner's desire not to withdraw. A withdrawal
21-35 under the described circumstances is not a wrongful withdrawal.
21-36 (b) LIMITED TO GENERAL. A domestic or foreign limited
21-37 partnership may convert, on the affirmative vote of a
21-38 majority-in-interest of the partners, to a partnership that is not
21-39 a limited partnership by:
21-40 (1) cancelling its certificate of limited partnership
21-41 in the state of formation or otherwise complying with the
21-42 provisions of that state's law as of the date that partnership's
21-43 existence terminated;
21-44 (2) amending its partnership agreement to reflect its
21-45 change in status and any change in name required to comply with
21-46 this Act; and
21-47 (3) stating the effective date of the conversion in
21-48 the partnership agreement if different from the date of the
21-49 cancellation of the limited partnership certificate.
21-50 If a limited partnership converts to a partnership that is
21-51 not a limited partnership, a partner who did not consent to the
21-52 conversion is considered to be a partner who has withdrawn from the
21-53 limited partnership effective immediately before the effective date
21-54 of the conversion unless, within 60 days after the later of the
21-55 effective date of the conversion or the date the partner receives
21-56 actual notice of the conversion, the partner notifies the
21-57 partnership in writing of the partner's desire not to withdraw. A
21-58 withdrawal under the described circumstances is not a wrongful
21-59 withdrawal.
21-60 (c) LIABILITY OF FORMER LIMITED PARTNER. A limited partner
21-61 who remains in a partnership that results from the conversion of a
21-62 limited partnership to a partnership that is not a limited
21-63 partnership is treated as an incoming partner in the partnership as
21-64 of the effective date of the conversion for purposes of determining
21-65 the partner's liability:
21-66 (1) to the partners of the partnership; and
21-67 (2) for the debts and obligations of the partnership.
21-68 (d) LIABILITY OF GENERAL PARTNER IN CONVERTED LIMITED
21-69 PARTNERSHIP. If a partnership that is not a limited partnership
21-70 converts to a limited partnership, a partner who converts to a
22-1 limited partner continues to be liable to the partners of the
22-2 partnership and for a debt or obligation of the partnership
22-3 incurred before the date of conversion on the same basis as a
22-4 withdrawn partner remains liable to the partners of the partnership
22-5 or for a debt or obligation of a partnership incurred before
22-6 withdrawal.
22-7 (e) AUTHORITY OF FORMER PARTNER WHO IS LIMITED PARTNER IN
22-8 CONVERTED LIMITED PARTNERSHIP. If a partnership that is not a
22-9 limited partnership converts to a limited partnership, an action of
22-10 a partner who converts to a limited partner that is taken within
22-11 one year after the effective date of the conversion binds the
22-12 partnership to a transaction for which the former partner no longer
22-13 has authority to bind the partnership if:
22-14 (1) the transaction is one in which the partner's
22-15 action would bind the partnership before the effective date of the
22-16 conversion; and
22-17 (2) the other party to the transaction:
22-18 (A) does not have notice of the person's
22-19 conversion to a limited partner;
22-20 (B) has done business with the partnership
22-21 within one year preceding the effective date of the conversion; and
22-22 (C) reasonably believed that the partner who
22-23 converted was a partner with authority to bind the partnership to
22-24 the transaction at the time of the transaction.
22-25 (f) EFFECTIVE DATE OF CONVERSION. A conversion of a
22-26 partnership that is not a limited partnership to a limited
22-27 partnership or a conversion of a limited partnership to a
22-28 partnership that is not a limited partnership is effective on the
22-29 later of the date specified in a written agreement concerning the
22-30 conversion between the partners or the date all actions required by
22-31 this section have been completed.
22-32 Sec. 9.02. MERGERS. (a) ADOPTION OF PLAN. A partnership
22-33 may adopt a plan of merger and one or more partnerships may merge
22-34 with one or more domestic or foreign partnerships or other entities
22-35 if each domestic or foreign partnership that is a party to the plan
22-36 of merger approves the plan of merger in the manner prescribed for
22-37 mergers in its partnership agreement or constituent documents or by
22-38 applicable law. If one or more foreign partnerships or other
22-39 entities is a party to the merger or is to be created by the terms
22-40 of the plan of merger:
22-41 (1) the merger must be permitted by:
22-42 (A) the laws under which each foreign
22-43 partnership and each other entity that is a party to the merger is
22-44 formed or organized; or
22-45 (B) the partnership agreement or other
22-46 constituent documents of the foreign partnership or other entity
22-47 not inconsistent with those laws; and
22-48 (2) each foreign partnership or other entity that is a
22-49 party to the merger must comply with the laws or documents in
22-50 effecting the merger.
22-51 (b) CONTENTS OF PLAN OF MERGER. If a partnership merges
22-52 with one or more domestic or foreign limited partnerships or other
22-53 entities, other than another partnership that is not a limited
22-54 partnership, a plan of merger must be adopted. The plan must
22-55 include:
22-56 (1) the name and state of organization of:
22-57 (A) each domestic or foreign partnership or
22-58 other entity that is a party to the merger;
22-59 (B) each domestic or foreign partnership or
22-60 other entity, if any, that will survive the merger, which may be
22-61 one or more of the domestic or foreign partnerships or other
22-62 entities who are a party to the merger; and
22-63 (C) each new domestic or foreign partnership or
22-64 other entity, if any, that may be created by the terms of the plan
22-65 of merger;
22-66 (2) the terms and conditions of the merger, including,
22-67 if more than one domestic or foreign partnership or other entity is
22-68 to survive or to be created by the terms of the plan of merger, the
22-69 manner and basis of:
22-70 (A) allocating and vesting the real estate and
23-1 other property of each domestic or foreign partnership and of each
23-2 other entity that is a party to the merger among one or more of the
23-3 surviving or new domestic or foreign partnerships or other
23-4 entities; and
23-5 (B) allocating all liabilities and obligations
23-6 of each domestic or foreign partnership and other entity that is a
23-7 party to the merger, or making adequate provision for the payment
23-8 and discharge of the liabilities and obligations, among one or more
23-9 of the surviving or new domestic or foreign partnerships or other
23-10 entities;
23-11 (3) the manner and basis of converting any of the
23-12 partnership interests or other evidences of ownership of each
23-13 domestic or foreign partnership and other entity that is a party to
23-14 the merger into:
23-15 (A) partnership interests, shares, obligations,
23-16 evidences of ownership, rights to purchase securities, or other
23-17 securities of one or more of the surviving or new domestic or
23-18 foreign partnerships or other entities;
23-19 (B) cash; or
23-20 (C) other property, including shares,
23-21 obligations, evidences of ownership, rights to purchase securities,
23-22 or other securities of another person or entity; or
23-23 (D) any combination of those items;
23-24 (4) the certificate of limited partnership, articles
23-25 of incorporation, articles of organization, or other organizational
23-26 documents of each other entity that is to be created or will act as
23-27 a surviving entity by the terms of the plan of merger;
23-28 (5) the names of the principal officer of the
23-29 surviving entities and the registered office and registered agent
23-30 of the surviving entities if a registered office or agent is
23-31 required by the laws under which the surviving entities are formed;
23-32 (6) a statement describing whether the surviving
23-33 entity is a partnership, limited partnership, corporation, limited
23-34 liability company, or other entity; and
23-35 (7) other provisions relating to the merger.
23-36 (c) CERTIFICATE OF MERGER. After a plan of merger has been
23-37 approved by each of the partnerships or other entities that is a
23-38 party to the plan of merger and a partnership merges with one or
23-39 more domestic or foreign limited partnerships or other entities, a
23-40 certificate of merger shall be executed on behalf of each
23-41 partnership or other entity by at least one general partner of each
23-42 partnership that is a party to the plan of merger and by an
23-43 authorized officer, agent, or other representative of each other
23-44 entity that is a party to the plan of merger. The certificate must
23-45 include:
23-46 (1) the plan of merger; and
23-47 (2) for each domestic or foreign partnership or other
23-48 entity that is a party to the plan of merger, a statement that the
23-49 plan of merger was authorized by all actions required by the laws
23-50 under which it was formed or organized and by its constituent
23-51 documents.
23-52 (d) FILING. The certificate of merger must be filed for
23-53 each surviving and new domestic or foreign partnership or other
23-54 entity and for each other entity that is a party to the plan of
23-55 merger. The filing must be with the secretary of state or other
23-56 authority with which the entity must file organizational or related
23-57 documents and must comply with that authority's filing
23-58 requirements.
23-59 (e) Effective Date of Merger. If a certificate of merger is
23-60 delivered to the secretary of state, the merger is effective on the
23-61 date of the issuance of the certificate of merger by the secretary
23-62 of state or on a later date stated in the certificate of merger.
23-63 If a certificate of merger is not required to be filed with the
23-64 secretary of state, the merger is effective on the date agreed to
23-65 by the parties to the merger as set out in the plan of merger or as
23-66 otherwise agreed to by the parties.
23-67 (f) Effect Of Merger. (1) A partner of a partnership that
23-68 is a party to a merger does not become personally liable as a
23-69 result of the merger for a liability or obligation of another
23-70 person that is a party to the merger unless the partner consents to
24-1 becoming personally liable by action taken in connection with the
24-2 specific plan of merger approved by the partner. A partner who
24-3 remains in or enters a domestic or foreign partnership or other
24-4 entity that survives a merger or that enters a domestic or foreign
24-5 partnership or other entity created by the terms of the plan of
24-6 merger shall be treated as an incoming partner in the new or
24-7 surviving partnership as of the effective date of the merger for
24-8 the purpose of determining the partner's liability for a debt or
24-9 obligation of the other partnerships or entities that are parties
24-10 to the merger and in which the partner was not associated.
24-11 (2) The separate existence of every domestic
24-12 partnership or other entity that is a party to a merger, except a
24-13 surviving or new domestic partnership or other entity, ceases when
24-14 a merger takes effect.
24-15 (3) All rights, title, and interest to all real estate
24-16 and other property owned by each domestic or foreign partnership
24-17 and by each other entity that is a party to the merger are
24-18 allocated to and vested in one or more of the surviving or
24-19 resulting entities as provided in a plan of merger without
24-20 reversion or impairment, without further act or deed, and without
24-21 any transfer or assignment having occurred, but subject to any
24-22 existing liens or other encumbrances on the property, when a merger
24-23 takes effect.
24-24 (4) When a merger takes effect, all liabilities and
24-25 obligations of each domestic or foreign partnership and other
24-26 entity that is a party to the merger are allocated to one or more
24-27 of the surviving or new domestic or foreign partnerships or other
24-28 entities in the manner prescribed by the plan of merger, and each
24-29 surviving or new domestic or foreign partnership or other entity to
24-30 which a liability or obligation is allocated under the plan of
24-31 merger becomes the primary obligor for the liability or obligation.
24-32 Except as otherwise provided by the plan of merger or by law or
24-33 contract, a party to the merger, other than a surviving domestic or
24-34 foreign partnership or other entity with liability at the time of
24-35 the merger, or another domestic or foreign partnership or other
24-36 entity created by the merger does not become liable for the debt or
24-37 obligation.
24-38 (5) After a merger, a proceeding pending by or against
24-39 a domestic or foreign partnership or another entity that is a party
24-40 to the merger may be continued as if the merger did not occur and
24-41 the partnership or other entity that has been allocated the
24-42 liabilities, obligations, asset, or rights associated with the
24-43 proceeding under the terms of the plan of merger remains the
24-44 primary obligor, or the surviving or new domestic or foreign
24-45 partnership or other entity or entities to which the liability,
24-46 obligation, asset, or right associated with the proceeding is
24-47 allocated to and vested in under the plan of merger may be
24-48 substituted in the proceeding.
24-49 (6) The partnership agreement, certificate of limited
24-50 partnership, and other constituent documents of each other entity
24-51 that will act as a surviving entity by the terms of a plan of
24-52 merger is considered amended to the extent provided in the plan of
24-53 merger when the merger takes effect.
24-54 (7) Each new domestic partnership named in a plan of
24-55 merger under Subsection (b)(1), each new domestic limited
24-56 partnership for which a certificate of limited partnership is
24-57 included in a plan of merger under Subsection (b)(4), and each
24-58 other entity to be formed or organized under the laws of this state
24-59 for which organizational documents are included in a plan of merger
24-60 under Subsection (b)(4) are formed or organized as provided in the
24-61 plan of merger on:
24-62 (A) delivering an executed copy of the
24-63 certificate of merger to, or filing the certificate with, the
24-64 governmental entity with which organizational documents of the
24-65 partnership or other entity are required to be delivered or filed,
24-66 if any; and
24-67 (B) meeting additional requirements, if any, of
24-68 law for its formation or organization.
24-69 (8) The partnership interest of each domestic or
24-70 foreign partnership and the interest, shares, or evidences of
25-1 ownership in each other entity that is a party to the merger that
25-2 are to be converted or exchanged, in whole or in part, into (i)
25-3 partnership interests, shares, obligations, evidences of ownership,
25-4 rights to purchase securities, or other securities of one or more
25-5 of the surviving or new domestic or foreign partnerships or other
25-6 entities, (ii) cash, or (iii) other property, including shares,
25-7 obligations, evidences of ownership, rights to purchase securities,
25-8 or other securities of any other person or entity, or into any
25-9 combination of those items, are converted and exchanged when a
25-10 merger takes effect. After the merger the former partners of each
25-11 domestic partnership and owners of shares or evidences of ownership
25-12 in each other domestic entity that is a party to the merger are
25-13 entitled only to the rights provided in the plan of merger.
25-14 (9) If a plan of merger fails to provide for the
25-15 allocation and vesting of the right, title, and interest in a
25-16 particular item of real estate or other property or for the
25-17 allocation of a liability or obligation of a party to the merger,
25-18 when the merger takes effect the item of real estate or other
25-19 property shall be owned in undivided interests by, or the liability
25-20 or obligation shall be a joint and several liability and obligation
25-21 of, each of the surviving and new domestic and foreign partnerships
25-22 and other entities, pro rata to the total number of surviving and
25-23 new domestic and foreign partnerships and other entities resulting
25-24 from the merger.
25-25 (10) If a domestic or foreign partnership merges with
25-26 another domestic or foreign partnership or other entity and through
25-27 the merger process no longer exists, a person who becomes a member
25-28 of the surviving domestic or foreign partnership or other entity,
25-29 for a period of one year after the effective date of the merger,
25-30 may bind the surviving entity to a transaction for which it no
25-31 longer has authority to bind the entity if the transaction is one
25-32 in which the partner's actions would bind the foreign or domestic
25-33 partnership before the effective date of the merger and the other
25-34 party to the transaction:
25-35 (A) does not have notice of the merger;
25-36 (B) had done business with the partnership which
25-37 no longer exists within one year preceding the effective date of
25-38 the merger; and
25-39 (C) reasonably believes that the partner who was
25-40 previously a member of the partnership which was merged into the
25-41 surviving entity and is now a partner of the surviving entity was a
25-42 partner with authority to bind the partnership to the transaction
25-43 at the time of the transaction.
25-44 (g) Definition Of "Other Entity." For purposes of this
25-45 section, the term "other entity" means any entity, whether
25-46 organized for profit or not, that is a corporation, limited
25-47 partnership, limited liability company, joint venture, joint stock
25-48 company, cooperative, association, bank, insurance company, or
25-49 other legal entity organized under the laws of this state or
25-50 another state or country to the extent the laws or the constituent
25-51 documents of that entity, not inconsistent with law, permit that
25-52 entity to enter into a merger or partnership interest exchange as
25-53 permitted by this section.
25-54 Sec. 9.03. Exchange. (a) One or more domestic or foreign
25-55 partnerships may adopt a plan of exchange by which a domestic or
25-56 foreign partnership or other entity acquires all of the outstanding
25-57 partnership interests of one or more domestic partnerships in
25-58 exchange for cash or securities of the acquiring domestic or
25-59 foreign partnership or other entity, if:
25-60 (1) each domestic or foreign partnership, the
25-61 partnership interests of which are to be acquired under the plan of
25-62 exchange, approves the plan of exchange in the manner prescribed in
25-63 its partnership agreement; and
25-64 (2) each acquiring domestic or foreign partnership or
25-65 other entity takes all action that may be required by the laws of
25-66 the state under which it was formed or incorporated and as required
25-67 by its partnership agreement or other constituent documents in
25-68 order to effect the exchange.
25-69 (b) Filing with the secretary of state is not necessary to
25-70 evidence or effect an interest exchange under this section for a
26-1 domestic partnership that is a party to the interest exchange.
26-2 When an interest exchange takes effect as provided in the plan of
26-3 exchange:
26-4 (1) the partnership interest of each domestic
26-5 partnership that is to be acquired under the plan of exchange is
26-6 considered exchanged as provided in the plan of exchange;
26-7 (2) the former holders of the partnership interests
26-8 exchanged under the plan of exchange are entitled only to the
26-9 exchange rights provided in the plan of exchange; and
26-10 (3) the acquiring domestic or foreign partnership or
26-11 other entity or entities are entitled to all rights, title, and
26-12 interest with respect to the partnership interests so acquired and
26-13 exchanged, subject to the provisions in the plan of exchange.
26-14 (c) For purposes of this section, the term "other entity"
26-15 means any entity, whether organized for profit or not, that is a
26-16 corporation, limited partnership, limited liability company, joint
26-17 venture, joint stock company, cooperative, association, bank,
26-18 insurance company, or other legal entity organized under the laws
26-19 of this state or another state or country to the extent the laws or
26-20 the constituent documents of that entity, not inconsistent with
26-21 law, permit that entity to enter into a merger or partnership
26-22 interest exchange as permitted by this section.
26-23 Sec. 9.04. LAW GOVERNING LIMITED PARTNERSHIP. A limited
26-24 partnership's participation in a merger or exchange is governed by
26-25 Section 2.11, Texas Revised Limited Partnership Act (Article
26-26 6132a-1, Vernon's Texas Civil Statutes), and its subsequent
26-27 amendments, not Sections 9.02 or 9.03 of this Act.
26-28 ARTICLE X. MISCELLANEOUS PROVISIONS
26-29 Sec. 10.01. SHORT TITLE. This Act may be cited as the
26-30 "Texas Revised Partnership Act."
26-31 Sec. 10.02. SEVERABILITY. If a provision of this Act or its
26-32 application to a person or circumstance is held invalid, the
26-33 invalidity does not affect other provisions or applications of this
26-34 Act that can be given effect without the invalid provision or
26-35 application, and to this end the provisions of this Act are
26-36 severable.
26-37 Sec. 10.03. APPLICATION. (a) BEFORE JANUARY 1, 1999.
26-38 Except as provided by Subsection (b), before January 1, 1999, this
26-39 Act applies only to a partnership formed:
26-40 (1) on or after January 1, 1994, unless that
26-41 partnership is continuing the business of a dissolved partnership
26-42 under Section 41, Texas Uniform Partnership Act (Article 6132b,
26-43 Vernon's Texas Civil Statutes), and its subsequent amendments; and
26-44 (2) before January 1, 1994, that elects, as provided
26-45 by Subsection (d), to be governed by this Act.
26-46 (b) REGISTERED LIMITED LIABILITY PARTNERSHIP. Section 3.08
26-47 of this Act, including the fee provisions, applies to a registered
26-48 limited liability partnership, regardless of the date of formation
26-49 and regardless of whether the partnership elects to be governed by
26-50 this Act, except that a registered limited liability partnership
26-51 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
26-52 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
26-53 Vernon's Texas Civil Statutes), for purposes of determining
26-54 liability for errors, omissions, negligence, incompetence, or
26-55 malfeasance occurring before January 1, 1994.
26-56 (c) AFTER DECEMBER 31, 1998. After December 31, 1998, this
26-57 Act applies to all partnerships.
26-58 (d) VOLUNTARY APPLICATION EARLY. Before January 1, 1999, a
26-59 partnership formed before January 1, 1994, voluntarily may elect,
26-60 by complying with the procedures provided in its partnership
26-61 agreement for amending the partnership agreement, to adopt this
26-62 Act. The provisions of this Act relating to the liability of the
26-63 partnership's partners to third parties apply to limit those
26-64 partners' liability to a third party who had done business with the
26-65 partnership within one year preceding the partnership's election to
26-66 adopt this Act only if the partnership gives notice to the third
26-67 party of the partnership's election to adopt this Act.
26-68 Sec. 10.04. APPLICATION TO EXISTING RELATIONSHIPS.
26-69 (a) This Act does not impair the obligations of a contract
26-70 existing when this Act takes effect or affect an action or
27-1 proceeding begun or right accrued before this Act takes effect.
27-2 (b) A judgment against a partnership or a partner in an
27-3 action commenced before the effective date of this Act may be
27-4 enforced in the same manner as a judgment rendered before the
27-5 effective date of this Act.
27-6 SECTION 2. Part VII, Texas Uniform Partnership Act (Article
27-7 6132b, Vernon's Texas Civil Statutes), is amended by adding Section
27-8 47 to read as follows:
27-9 Sec. 47. APPLICATION; EXPIRATION. (a) Except as provided
27-10 by Section 10.03(b), Texas Revised Partnership Act, this Act does
27-11 not apply to a partnership to which the Texas Revised Partnership
27-12 Act applies.
27-13 (b) This Act expires January 1, 1999.
27-14 SECTION 3. Subsection A, Section 4, The Securities Act
27-15 (Article 581-4, Vernon's Texas Civil Statutes), is amended to read
27-16 as follows:
27-17 A. The term "security" or "securities" shall include any
27-18 limited partner interest in a limited partnership, share, stock,
27-19 treasury stock, stock certificate under a voting trust agreement,
27-20 collateral trust certificate, equipment trust certificate,
27-21 preorganization certificate or receipt, subscription or
27-22 reorganization certificate, note, bond, debenture, mortgage
27-23 certificate or other evidence of indebtedness, any form of
27-24 commercial paper, certificate in or under a profit sharing or
27-25 participation agreement, certificate or any instrument representing
27-26 any interest in or under an oil, gas or mining lease, fee or title,
27-27 or any certificate or instrument representing or secured by an
27-28 interest in any or all of the capital, property, assets, profits or
27-29 earnings of any company, investment contract, or any other
27-30 instrument commonly known as a security, whether similar to those
27-31 herein referred to or not. Provided, however, that this definition
27-32 shall not apply to any insurance policy, endowment policy, annuity
27-33 contract, optional annuity contract, or any contract or agreement
27-34 in relation to and in consequence of any such policy or contract,
27-35 issued by an insurance company subject to the supervision or
27-36 control of the State Board of Insurance when the form of such
27-37 policy or contract has been duly filed with the Board as now or
27-38 hereafter required by law.
27-39 SECTION 4. Section 1.03, Texas Revised Limited Partnership
27-40 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
27-41 read as follows:
27-42 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
27-43 2.14(a)(3) of this Act, the <The> name of a limited partnership as
27-44 stated in its certificate of limited partnership, a reserved or
27-45 registered name, or the name under which a foreign limited
27-46 partnership is permitted to register to do business in Texas as
27-47 contained in its application for registration as a foreign limited
27-48 partnership must contain the words "Limited Partnership,"
27-49 "Limited," or the abbreviation "L.P." or "Ltd." as the last words
27-50 or letters of its name and may not:
27-51 (1) contain the name of a limited partner unless:
27-52 (A) that name is also the name of a general
27-53 partner; or
27-54 (B) the business of the limited partnership or
27-55 foreign limited partnership had been carried on under that name
27-56 before the admission of that limited partner;
27-57 (2) contain a word or phrase indicating or implying
27-58 that it is organized other than for a purpose stated in its
27-59 partnership agreement;
27-60 (3) be the same as or deceptively similar to the name
27-61 of a corporation or limited partnership that exists under the laws
27-62 of Texas, that has a certificate of authority to transact business
27-63 as a foreign corporation in Texas, or that is registered as a
27-64 foreign limited partnership in Texas, or a name that has been
27-65 reserved or registered for a corporation, limited partnership, or
27-66 foreign limited partnership under the laws of Texas, except that a
27-67 limited partnership or foreign limited partnership may adopt,
27-68 reserve, or register, as appropriate, a name that is similar if
27-69 written consent is obtained from the corporation, limited
27-70 partnership, or foreign limited partnership having the name
28-1 considered similar or from the person for whom the name considered
28-2 similar is reserved or registered in the office of the secretary of
28-3 state; or
28-4 (4) contain a word or phrase indicating or implying
28-5 that it is a corporation.
28-6 SECTION 5. Article 2, Texas Revised Limited Partnership Act
28-7 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
28-8 adding Section 2.14 to read as follows:
28-9 Sec. 2.14. LIMITED PARTNERSHIP AS REGISTERED LIMITED
28-10 LIABILITY PARTNERSHIP. (a) A limited partnership is a registered
28-11 limited liability partnership as well as a limited partnership if
28-12 it:
28-13 (1) registers as a registered limited liability
28-14 partnership as provided by Section 3.08(b), Texas Revised
28-15 Partnership Act, as permitted by its partnership agreement or, if
28-16 its partnership agreement does not include provisions for becoming
28-17 a registered limited liability partnership, with the consent of
28-18 partners required to amend its partnership agreement;
28-19 (2) complies with Section 3.08(d), Texas Revised
28-20 Partnership Act; and
28-21 (3) has as the last words or letters of its name the
28-22 words "Limited Partnership" or the abbreviation "Ltd." followed by
28-23 the words "registered limited liability partnership" or the
28-24 abbreviation "L.L.P."
28-25 (b) In applying Section 3.08(b), Texas Revised Partnership
28-26 Act, to a limited partnership:
28-27 (1) an application to become a registered limited
28-28 liability partnership or to withdraw a registration must be
28-29 executed by at least one general partner; and
28-30 (2) all other references to partners mean general
28-31 partners only.
28-32 (c) If a limited partnership is a registered limited
28-33 liability partnership, Section 3.08(a), Texas Revised Partnership
28-34 Act, applies to its general partners and to any of its limited
28-35 partners who, under other provisions of this Act, are liable for
28-36 the debts or obligations of the limited partnership.
28-37 SECTION 6. Section 11.13, Texas Revised Limited Partnership
28-38 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
28-39 read as follows:
28-40 Sec. 11.13. LIMITS ON A CONTRACTUAL INDEMNIFICATION. A
28-41 provision for a limited partnership to indemnify or to advance
28-42 expenses to a general partner who was, is, or is threatened to be
28-43 made a named defendant or respondent in a proceeding, whether
28-44 contained in the limited partnership agreement, a resolution of the
28-45 general partners or the limited partners, an agreement, or
28-46 otherwise, except in accordance with Section 11.18 of this Act, is
28-47 valid only to the extent that it is consistent with this article or
28-48 with the applicable reimbursement provisions of the Texas Uniform
28-49 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes), or
28-50 the Texas Revised Partnership Act and its subsequent amendments as
28-51 limited by the limited partnership agreement, if such a limitation
28-52 exists.
28-53 SECTION 7. Section 13.03, Texas Revised Limited Partnership
28-54 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
28-55 read as follows:
28-56 Sec. 13.03. CASES NOT PROVIDED FOR BY THIS ACT. (a) In any
28-57 case not provided for by this Act, the applicable statute governing
28-58 partnerships that are not limited partnerships <Texas Uniform
28-59 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes)> and
28-60 the rules of law and equity, including the law merchant, govern.
28-61 (b) Before January 1, 1999:
28-62 (1) the Texas Uniform Partnership Act (Article 6132b,
28-63 Vernon's Texas Civil Statutes) and its subsequent amendments
28-64 applies to a limited partnership formed or a foreign partnership
28-65 registered in this state before January 1, 1994, that does not
28-66 elect, as provided by Subsection (b), to have the Texas Revised
28-67 Partnership Act apply as its supplemental law; and
28-68 (2) the Texas Revised Partnership Act applies to a
28-69 limited partnership formed or a foreign limited partnership
28-70 registered in this state:
29-1 (A) on or after January 1, 1994; and
29-2 (B) before January 1, 1994, that elects, as
29-3 provided by Subsection (d), to have the Texas Revised Partnership
29-4 Act apply as its supplemental law.
29-5 (c) After December 31, 1998, the applicable statute
29-6 governing a partnership that is not a limited partnership is the
29-7 Texas Revised Partnership Act for all limited partnerships and
29-8 foreign limited partnerships registered in this state.
29-9 (d) Before January 1, 1999, a limited partnership formed or
29-10 foreign limited partnership registered in this state before January
29-11 1, 1994, voluntarily may elect, by complying with the procedures in
29-12 its partnership agreement for amending the partnership agreement,
29-13 to have the Texas Revised Partnership Act apply as its supplemental
29-14 law. The election is made effective by amending its certificate of
29-15 limited partnership or amending its application for registration to
29-16 state that it has so elected.
29-17 SECTION 8. Article 13, Texas Revised Limited Partnership Act
29-18 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
29-19 adding Sections 13.05-13.09 to read as follows:
29-20 Sec. 13.05. PERIODIC REPORT BY LIMITED PARTNERSHIP.
29-21 (a) The secretary of state may require a domestic limited
29-22 partnership or a foreign limited partnership authorized to transact
29-23 business in this state to file a report as required by this
29-24 section. The report may not be required to be filed more than once
29-25 every four years. The report must include:
29-26 (1) the name of the limited partnership and the state
29-27 or territory under the laws of which it is organized;
29-28 (2) the address of the registered office of the
29-29 limited partnership in this state and the name of the registered
29-30 agent at that address;
29-31 (3) the address of the principal office in the United
29-32 States where records are to be kept or made available under Section
29-33 1.07 of this Act; and
29-34 (4) the name, mailing address, and street address of
29-35 the business or residence of each general partner.
29-36 (b) The report must be made on a form adopted by the
29-37 secretary of state for that purpose, and the information contained
29-38 in the report must be given as of the date of the execution of the
29-39 report. The report must be signed on behalf of the limited
29-40 partnership by at least one general partner. The filing fee for
29-41 the report is $50.
29-42 (c) The report must be delivered to the secretary of state
29-43 not later than the 30th day after the date on which notice is
29-44 mailed by the secretary of state stating that the report is due.
29-45 The notice shall be addressed to the limited partnership and mailed
29-46 to:
29-47 (1) the registered office of the limited partnership;
29-48 (2) the last known address of the limited partnership
29-49 as it appears on record in the office of the secretary of state; or
29-50 (3) any other known place of business of the limited
29-51 partnership.
29-52 (d) Along with the notice that the report is due, the
29-53 secretary of state shall mail to the limited partnership copies of
29-54 a report form to be prepared and filed as provided by this section.
29-55 Two copies of the report shall be delivered to the secretary of
29-56 state. If the secretary of state finds that the report complies
29-57 with this section, the secretary shall:
29-58 (1) endorse on the report the word "Filed" and the
29-59 month, day, and year of filing;
29-60 (2) notify the limited partnership of the filing of
29-61 the report; and
29-62 (3) update the records of the secretary of state's
29-63 office to reflect:
29-64 (A) address changes reported for the registered
29-65 office, principal office, and the business or residence address of
29-66 a general partner; and
29-67 (B) a reported change in the name of the
29-68 registered agent.
29-69 (e) The filing of a report under this section does not
29-70 relieve the limited partnership of the requirement to file an
30-1 amendment to the certificate of limited partnership required under
30-2 Section 2.02 of this Act, except that the limited partnership is
30-3 not required to file an amendment to change the registered office
30-4 or agent.
30-5 (f) The secretary of state shall mail each limited
30-6 partnership subject to this Act its first notice under Subsection
30-7 (c) of this section on or before September 1, 1997. This
30-8 subsection expires September 2, 1997.
30-9 Sec. 13.06. FORFEITURE OF RIGHT TO TRANSACT BUSINESS FOR
30-10 FAILURE TO FILE PERIODIC REPORT. (a) A domestic or foreign
30-11 limited partnership that fails to file a report required under
30-12 Section 13.05 of this Act when due forfeits its right to transact
30-13 business in this state.
30-14 (b) A forfeiture under this section takes effect without
30-15 judicial ascertainment. The secretary of state shall enter on the
30-16 record kept in the secretary's office relating to the limited
30-17 partnership a notation that the right to transact business has been
30-18 forfeited together with the date of forfeiture. Notice of the
30-19 forfeiture shall be mailed to the limited partnership at:
30-20 (1) the registered office of the limited partnership;
30-21 (2) the last known address of the limited partnership;
30-22 or
30-23 (3) any other place of business of the limited
30-24 partnership.
30-25 (c) Unless the right of the limited partnership to transact
30-26 business is revived in accordance with Section 13.07 of this Act,
30-27 the limited partnership may not maintain an action, suit, or
30-28 proceeding in a court of this state, and a successor or assignee of
30-29 the limited partnership may not maintain an action, suit, or
30-30 proceeding in a court of this state on a right, claim, or demand
30-31 arising out of the transaction of business by the limited
30-32 partnership in this state. The forfeiture of the right to transact
30-33 business in this state does not impair the validity of a contract
30-34 or act of the limited partnership and does not prevent the limited
30-35 partnership from defending an action, suit, or proceeding in a
30-36 court of this state.
30-37 (d) This section does not affect the liability of a limited
30-38 partner in the limited partnership.
30-39 Sec. 13.07. REVIVAL OF RIGHT TO TRANSACT BUSINESS AFTER
30-40 FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) A limited
30-41 partnership that forfeits the right to transact business in this
30-42 state as provided by Section 13.06 of this Act may be relieved from
30-43 the forfeiture by filing the required report not later than the
30-44 120th day after the date of mailing of the notice of forfeiture
30-45 under Section 13.06(b) of this Act, together with:
30-46 (1) the filing fee; and
30-47 (2) a late fee in an amount equal to the lesser of:
30-48 (A) $25 for each month or fractional part of a
30-49 month that has elapsed since the date of the notice of forfeiture;
30-50 or
30-51 (B) $100.
30-52 (b) If a limited partnership complies with Subsection (a) of
30-53 this section, the secretary of state shall revive the right of the
30-54 limited partnership to transact business in this state, cancelling
30-55 the notation regarding the forfeiture and noting the revival and
30-56 the date of revival on the record kept in the secretary's office
30-57 relating to the limited partnership.
30-58 Sec. 13.08. CANCELLATION OF CERTIFICATE OR REGISTRATION
30-59 AFTER FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) The
30-60 secretary of state may cancel the certificate of a limited
30-61 partnership, or the registration of a foreign limited partnership,
30-62 if the limited partnership forfeits its right to transact business
30-63 in this state under Section 13.06 of this Act and fails to revive
30-64 that right under Section 13.07 of this Act. The cancellation takes
30-65 effect without judicial ascertainment. The secretary of state
30-66 shall enter on the record kept in the secretary's office relating
30-67 to the limited partnership a notation of the cancellation and the
30-68 date of cancellation.
30-69 (b) On cancellation, the status of the limited partnership
30-70 is changed to inactive according to the records of the secretary of
31-1 state. The change to inactive status does not affect the liability
31-2 of a limited partner of the limited partnership.
31-3 Sec. 13.09. REINSTATEMENT OF CERTIFICATE OR REGISTRATION
31-4 AFTER CANCELLATION FOR FAILURE TO FILE PERIODIC REPORT. (a) A
31-5 limited partnership whose certificate or registration has been
31-6 canceled as provided by Section 13.08 of this Act may be relieved
31-7 of the cancellation by filing the report required by Section 13.05,
31-8 together with the filing fee for the report, a late fee of $100,
31-9 and a reinstatement fee of $100.
31-10 (b) If the limited partnership complies with the fees
31-11 required by Subsection (a) of this section, the secretary of state
31-12 shall reinstate the certificate or registration of the limited
31-13 partnership without judicial ascertainment. The secretary shall
31-14 change the status of the limited partnership to active and note the
31-15 reinstatement on the record kept in the secretary's office relating
31-16 to the limited partnership. If the name of the limited partnership
31-17 is not available at the time of reinstatement, the secretary shall
31-18 require the limited partnership to file an amendment to its
31-19 certificate or application or adopt an assumed name for use in this
31-20 state as a precondition to reinstatement.
31-21 SECTION 9. This Act takes effect January 1, 1994.
31-22 SECTION 10. The importance of this legislation and the
31-23 crowded condition of the calendars in both houses create an
31-24 emergency and an imperative public necessity that the
31-25 constitutional rule requiring bills to be read on three several
31-26 days in each house be suspended, and this rule is hereby suspended.
31-27 * * * * *
31-28 Austin,
31-29 Texas
31-30 May 4, 1993
31-31 Hon. Bob Bullock
31-32 President of the Senate
31-33 Sir:
31-34 We, your Committee on Jurisprudence to which was referred H.B. No.
31-35 273, have had the same under consideration, and I am instructed to
31-36 report it back to the Senate with the recommendation that it do
31-37 pass, as amended, and be printed.
31-38 Henderson,
31-39 Chairman
31-40 * * * * *
31-41 WITNESSES
31-42 FOR AGAINST ON
31-43 ___________________________________________________________________
31-44 Name: Robert Sneed x
31-45 Representing: Tx Land Title Assoc.
31-46 City: Austin
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