By: Harris, O.H. "Ike" S.B. No. 909
73R6623 LJD-F
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to partnerships and the regulation of limited partnership
1-3 interests as securities; adopting the Texas Revised Partnership
1-4 Act; providing penalties.
1-5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-6 SECTION 1. The Texas Revised Partnership Act is enacted to
1-7 read as follows:
1-8 TEXAS REVISED PARTNERSHIP ACT
1-9 ARTICLE I. GENERAL PROVISIONS
1-10 Sec. 1.01. GENERAL DEFINITIONS. In this Act:
1-11 (1) "Business" means a trade, occupation, profession,
1-12 or other commercial activity.
1-13 (2) "Capital account" means the amount of a partner's
1-14 original contribution to a partnership, which consists of cash and
1-15 the agreed value of any other contribution to the partnership,
1-16 increased by the amount of additional contributions made by that
1-17 partner and by allocations to that partner of profits, and
1-18 decreased by the amount of distributions to that partner and by
1-19 allocations to that partner of partnership losses.
1-20 (3) "Court" means a court and judge having
1-21 jurisdiction in the case.
1-22 (4) "Debtor in bankruptcy" means a person who is the
1-23 subject of:
1-24 (A) an order for relief under Title 11 of the
2-1 United States Code or a comparable order under a successor statute
2-2 of general application; or
2-3 (B) a comparable order under federal or state
2-4 law governing insolvency.
2-5 (5) "Distribution" means a transfer of cash or other
2-6 property from a partnership to:
2-7 (A) a partner in the partner's capacity as a
2-8 partner; or
2-9 (B) the partner's transferee.
2-10 (6) "Event of withdrawal" or "withdrawal" means an
2-11 event specified by Section 6.01(b).
2-12 (7) "Event requiring a winding up" means an event
2-13 specified by Section 8.01.
2-14 (8) "Foreign limited partnership" means a partnership
2-15 formed under the laws of another state and having as partners one
2-16 or more general partners and one or more limited partners.
2-17 (9) "Majority-in-interest" means, as to all of or a
2-18 specified group of partners, partners owning more than 50 percent
2-19 of the current interest in the profits of the partnership owned by
2-20 all of the partners or by the partners in the specified group, as
2-21 appropriate.
2-22 (10) "Partnership" means an entity created as
2-23 described by Section 2.02(a). The term includes a registered
2-24 limited liability partnership formed under Section 3.08 or under
2-25 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
2-26 Civil Statutes) and its subsequent amendments.
2-27 (11) "Partnership agreement" means an agreement,
3-1 written or oral, of the partners concerning a partnership.
3-2 (12) "Partnership interest" means a partner's interest
3-3 in a partnership, including the partner's share of profits and
3-4 losses or similar items, and the right to receive distributions. A
3-5 partnership interest does not include a partner's right to
3-6 participate in management.
3-7 (13) "Person" includes an individual, corporation,
3-8 business trust, estate, trust, custodian, trustee, executor,
3-9 administrator, nominee, partnership (including a registered limited
3-10 liability partnership and a limited partnership), association,
3-11 limited liability company, government, governmental subdivision,
3-12 governmental agency, governmental instrumentality, and any other
3-13 legal or commercial entity, in its own or representative capacity.
3-14 (14) "Property" means all property, real, personal, or
3-15 mixed, tangible or intangible, or an interest in that property.
3-16 (15) "Registered limited liability partnership" means
3-17 a partnership registered under Section 3.08(b) and complying with
3-18 Sections 3.08(c) and (d)(1).
3-19 (16) "State" means a state of the United States, the
3-20 District of Columbia, the Commonwealth of Puerto Rico, or any
3-21 territory or insular possession subject to the jurisdiction of the
3-22 United States.
3-23 (17) "Transfer" includes:
3-24 (A) an assignment;
3-25 (B) a conveyance;
3-26 (C) a lease;
3-27 (D) a mortgage;
4-1 (E) a deed;
4-2 (F) an encumbrance; and
4-3 (G) the creation of a security interest.
4-4 (18) "Withdrawn partner" means a partner with respect
4-5 to whom an event of withdrawal has occurred. A partner withdraws
4-6 if an event of withdrawal has occurred with respect to that partner
4-7 under Section 6.01.
4-8 Sec. 1.02. KNOWLEDGE AND NOTICE. (a) DEFINITION OF
4-9 KNOWLEDGE. "Knowledge" means actual knowledge. A person knows of
4-10 a fact only if the person has knowledge of it.
4-11 (b) HAVING NOTICE. A person has notice of a fact if the
4-12 person:
4-13 (1) knows of the fact;
4-14 (2) has received a communication of the fact as
4-15 provided by Subsection (d); or
4-16 (3) reasonably should have concluded, from all facts
4-17 known to that person at the time in question, that the fact exists.
4-18 (c) GIVING NOTICE. A person notifies or gives a notice to
4-19 another person of a fact by taking steps reasonably required to
4-20 inform the other person of the fact in the ordinary course of
4-21 business, whether the other person actually comes to know of the
4-22 fact.
4-23 (d) RECEIVING NOTICE. A person is notified or receives a
4-24 notice of a fact when the fact is communicated to:
4-25 (1) the person;
4-26 (2) the person's place of business; or
4-27 (3) another place held out by the person as the place
5-1 for receipt of communications.
5-2 (e) NOTICE TO PARTNER AS NOTICE TO PARTNERSHIP. Receipt of
5-3 notice by a partner of a fact relating to the partnership is
5-4 effective immediately as notice to the partnership except in the
5-5 case of fraud on the partnership committed by or with the consent
5-6 of the partner receiving the notice.
5-7 Sec. 1.03. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE AND
5-8 VARIABLE PROVISIONS. (a) PARTNERSHIP AGREEMENT CONTROLS. Except
5-9 as provided by Subsection (b), a partnership agreement governs the
5-10 relations of the partners and between the partners and the
5-11 partnership. To the extent that the partnership agreement does not
5-12 otherwise provide, this Act governs the relations of the partners
5-13 and between the partners and the partnership.
5-14 (b) STATUTORY PROVISIONS THAT MAY NOT BE VARIED BY
5-15 AGREEMENT. A partnership agreement or the partners may not:
5-16 (1) unreasonably restrict a partner's right of access
5-17 to books and records under Section 4.03(b);
5-18 (2) eliminate the duty of loyalty under
5-19 Section 4.04(b), but the partners may by agreement identify
5-20 specific types or categories of activities that do not violate the
5-21 duty of loyalty, if not manifestly unreasonable;
5-22 (3) eliminate the duty of care under Section 4.04(c),
5-23 but the partners may by agreement determine the standards by which
5-24 the performance of the obligation is to be measured, if the
5-25 standards are not manifestly unreasonable;
5-26 (4) eliminate the obligation of good faith under
5-27 Section 4.04(d), but the partners may by agreement determine the
6-1 standards by which the performance of the obligation is to be
6-2 measured, if the standards are not manifestly unreasonable;
6-3 (5) vary the power to withdraw as a partner under
6-4 Section 6.01(b)(1), (7), or (8), except to require the notice to be
6-5 in writing;
6-6 (6) vary the right to expel a partner by a court in
6-7 the events specified by Section 6.01(b)(5);
6-8 (7) vary the requirement to wind up the partnership
6-9 business in the events specified by Section 8.01(c), (d), or (e);
6-10 (8) restrict rights of third parties under this Act;
6-11 or
6-12 (9) select a governing law not permitted under
6-13 Section 1.05(a)(1).
6-14 Sec. 1.04. SUPPLEMENTAL PRINCIPLES OF LAW.
6-15 (a) SUPPLEMENTED BY LAW AND EQUITY. Unless displaced by a
6-16 particular provision of this Act, the principles of law and equity
6-17 supplement this Act.
6-18 (b) STRICT CONSTRUCTION NOT APPLICABLE. The rule that a
6-19 statute in derogation of the common law is to be strictly construed
6-20 does not apply to this Act.
6-21 (c) INTEREST RATE. If an obligation to pay interest arises
6-22 under this Act and the rate is not specified, the rate is the rate
6-23 specified by Article 1.03, Title 79, Revised Statutes (Article
6-24 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
6-25 amendments, or a successor statute.
6-26 Sec. 1.05. LAW GOVERNING INTERNAL AFFAIRS AND PARTNER'S
6-27 LIABILITY. (a) INTERNAL AFFAIRS. A partnership's internal
7-1 affairs and the relations of the partners to one another are
7-2 governed by:
7-3 (1) the law of the state chosen by the partners to
7-4 govern if that state bears a reasonable relation to the partners or
7-5 to the partnership business and affairs under principles that apply
7-6 to a contract among the partners other than the partnership
7-7 agreement; or
7-8 (2) if the partners do not choose a governing law
7-9 under Subdivision (1), the law of the state in which the
7-10 partnership has its chief executive office.
7-11 (b) LIABILITY TO THIRD PARTIES. The law governing a
7-12 partnership's internal affairs also governs the liability of its
7-13 partners to third parties.
7-14 Sec. 1.06. PARTNERSHIP SUBJECT TO AMENDMENT OR REPEAL OF
7-15 ACT. A partnership governed by this Act is subject to an amendment
7-16 or repeal of this Act.
7-17 ARTICLE II. NATURE OF PARTNERSHIP
7-18 Sec. 2.01. PARTNERSHIP AS ENTITY. A partnership is an
7-19 entity distinct from its partners.
7-20 Sec. 2.02. PARTNERSHIP DEFINED; APPLICATION TO JOINT VENTURE
7-21 AND LIMITED PARTNERSHIP; CAPACITY AS PARTNER. (a) ASSOCIATION TO
7-22 CARRY ON BUSINESS FOR PROFIT. Except as provided by Subsections
7-23 (b) and (c), an association of two or more persons to carry on a
7-24 business for profit as owners creates a partnership, whether the
7-25 persons intend to create a partnership and whether the association
7-26 is called a "partnership," "joint venture," or other name. A
7-27 partnership may be created under:
8-1 (1) this Act;
8-2 (2) the Texas Uniform Partnership Act (Article 6132b,
8-3 Vernon's Texas Civil Statutes) and its subsequent amendments;
8-4 (3) the Texas Revised Limited Partnership Act (Article
8-5 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
8-6 amendments; or
8-7 (4) a statute of another jurisdiction comparable to
8-8 this Act or the Texas Revised Limited Partnership Act (Article
8-9 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
8-10 amendments.
8-11 (b) ENTITY NOT A PARTNERSHIP. An association or entity
8-12 created under a law other than the laws described in Subsection (a)
8-13 is not a partnership.
8-14 (c) PERSON WITH CAPACITY AS PARTNER. A person may be a
8-15 partner unless the person lacks capacity apart from this Act.
8-16 Sec. 2.03. RULES FOR DETERMINING IF PARTNERSHIP IS CREATED.
8-17 (a) FACTORS INDICATING CREATION OF PARTNERSHIP. Factors
8-18 indicating that persons have created a partnership include their:
8-19 (1) receipt or right to receive a share of profits of
8-20 the business;
8-21 (2) expression of an intent to be partners in the
8-22 business;
8-23 (3) participation or right to participate in control
8-24 of the business;
8-25 (4) sharing or agreeing to share:
8-26 (A) losses of the business; or
8-27 (B) liability for claims by third parties
9-1 against the business; and
9-2 (5) contributing or agreeing to contribute money or
9-3 property to the business.
9-4 (b) FACTORS NOT INDICATING CREATION OF PARTNERSHIP. One of
9-5 the following circumstances, by itself, does not indicate that a
9-6 person is a partner in the business:
9-7 (1) the receipt or right to receive a share of
9-8 profits:
9-9 (A) as repayment of a debt, by installments or
9-10 otherwise;
9-11 (B) as payment of wages or other compensation to
9-12 an employee or independent contractor;
9-13 (C) as payment of rent;
9-14 (D) as payment to a former partner, surviving
9-15 spouse or representative of a deceased or disabled partner, or
9-16 transferee of a partnership interest;
9-17 (E) as payment of interest or other charge on a
9-18 loan, regardless of whether the amount of payment varies with the
9-19 profits of the business, and including a direct or indirect present
9-20 or future ownership interest in collateral or rights to income,
9-21 proceeds, or increase in value derived from collateral; or
9-22 (F) as payment of consideration for the sale of
9-23 a business or other property by installments or otherwise;
9-24 (2) co-ownership of property, whether in the form of
9-25 joint tenancy, tenancy in common, tenancy by the entireties, joint
9-26 property, community property, or part ownership, whether combined
9-27 with sharing of profits from the property;
10-1 (3) sharing or having a right to share gross returns
10-2 or revenues, regardless of whether the persons sharing the gross
10-3 returns or revenues have a common or joint interest in the property
10-4 from which the returns or revenues are derived; or
10-5 (4) ownership of mineral property under a joint
10-6 operating agreement.
10-7 (c) ADDITIONAL RULES. An agreement to share losses by the
10-8 owners of a business is not necessary to create a partnership.
10-9 Except as provided by Sections 3.06 and 7.03, a person who is not a
10-10 partner in a partnership under Section 2.02 is not a partner as to
10-11 a third person and is not liable to a third person under this Act.
10-12 Sec. 2.04. PARTNERSHIP PROPERTY NOT PROPERTY OF PARTNERS.
10-13 Partnership property is not property of the partners. Neither a
10-14 partner nor a partner's spouse has an interest in partnership
10-15 property.
10-16 Sec. 2.05. PARTNERSHIP PROPERTY. (a) ACQUISITION IN
10-17 CERTAIN NAMES. Property is partnership property if acquired:
10-18 (1) in the name of the partnership; or
10-19 (2) in the name of one or more partners with an
10-20 indication in the instrument transferring title to the property of
10-21 the person's capacity as a partner or of the existence of a
10-22 partnership, regardless of whether the name of the partnership is
10-23 indicated.
10-24 (b) PROPERTY IN PARTNERSHIP NAME. Property is acquired in
10-25 the name of the partnership by a transfer to:
10-26 (1) the partnership in its name; or
10-27 (2) one or more partners in their capacity as partners
11-1 in the partnership, if the name of the partnership is indicated in
11-2 the instrument transferring title to the property.
11-3 (c) PROPERTY ACQUIRED WITH PARTNERSHIP PROPERTY. Property
11-4 is presumed to be partnership property if acquired with partnership
11-5 property, whether acquired in the name of the partnership or of one
11-6 or more partners with an indication in the instrument transferring
11-7 title to the property of the person's capacity as a partner or of
11-8 the existence of a partnership.
11-9 (d) PROPERTY ACQUIRED IN PARTNER'S NAME. Property acquired
11-10 in the name of one or more of the partners, without an indication
11-11 in the instrument transferring title to the property of the
11-12 person's capacity as a partner or of the existence of a
11-13 partnership, and without use of partnership property, is presumed
11-14 to be the partner's property, regardless of whether the property is
11-15 used for partnership purposes.
11-16 Sec. 2.06. PARTNERSHIP CONTINUES UNTIL TERMINATED.
11-17 (a) CONTINUATION OF PARTNERSHIP AFTER EVENT OF WITHDRAWAL. A
11-18 partnership continues after an event of withdrawal, but the event
11-19 of withdrawal affects the relationships among the withdrawn
11-20 partner, the partnership, and the continuing partners as provided
11-21 by Sections 6.02, 7.01, 7.02, and 7.03.
11-22 (b) EFFECT OF OCCURRENCE OF EVENT REQUIRING A WINDING UP.
11-23 On the occurrence of an event requiring a winding up of a
11-24 partnership under Section 8.01, the partnership continues as
11-25 provided by Section 8.03, but the relationship among the partners
11-26 is changed as provided by Sections 8.02, 8.03, 8.04, 8.05, and
11-27 8.06.
12-1 (c) EFFECT OF WITHDRAWAL ON RELATION BETWEEN CREDITOR AND
12-2 PARTNERSHIP. Relationships between a partnership and its creditors
12-3 are not affected by the withdrawal of a partner or by the addition
12-4 of a new partner.
12-5 ARTICLE III. RELATIONS OF PARTNERS TO PERSONS
12-6 DEALING WITH PARTNERSHIP
12-7 Sec. 3.01. GENERAL POWERS OF PARTNERSHIP. Unless restricted
12-8 by applicable law, a partnership has the same powers as an
12-9 individual or corporation to do all things necessary or convenient
12-10 to carry out its business and affairs, including the power to:
12-11 (1) sue and be sued, complain, and defend in its
12-12 partnership name;
12-13 (2) purchase, receive, lease, or otherwise acquire,
12-14 and own, hold, improve, use, and otherwise deal with, real or
12-15 personal property, or any legal or equitable interest in property,
12-16 wherever located;
12-17 (3) sell, convey, mortgage, pledge, lease, exchange,
12-18 and otherwise dispose of all or any part of its property;
12-19 (4) purchase, receive, subscribe for, or otherwise
12-20 acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or
12-21 otherwise dispose of; and deal in and with shares or other
12-22 interests in, or obligations of, any other entity;
12-23 (5) make contracts and guarantees, incur liabilities,
12-24 borrow money, issue its notes, bonds, and other obligations, which
12-25 may be convertible into or include the option to purchase other
12-26 securities of the partnership, and secure its obligations by
12-27 mortgage or pledge of its property, franchises, or income;
13-1 (6) lend money, invest, and reinvest its funds, and
13-2 receive and hold real and personal property as security for
13-3 repayment;
13-4 (7) be a promoter, partner, member, associate, or
13-5 manager of a partnership, joint venture, trust, or other entity;
13-6 (8) conduct its business, locate offices, and exercise
13-7 the powers granted by this Act within or outside this state;
13-8 (9) appoint employees and agents of the partnership,
13-9 define their duties, fix their compensation, and lend them money or
13-10 credit;
13-11 (10) pay pensions and establish pension plans, pension
13-12 trusts, profit sharing plans, share bonus plans, share option
13-13 plans, and benefit or incentive plans for any or all of its current
13-14 or former partners, employees, and agents;
13-15 (11) make donations for the public welfare or for
13-16 charitable, scientific, or educational purposes;
13-17 (12) transact any lawful business that will aid
13-18 governmental policy;
13-19 (13) make payments or donations, or do any other act,
13-20 not inconsistent with law, that furthers the business and affairs
13-21 of the partnership;
13-22 (14) enter into mergers and similar transactions to
13-23 the extent permitted by applicable law; and
13-24 (15) indemnify a person who was, is, or is threatened
13-25 to be made a defendant or respondent in a proceeding and to
13-26 purchase and maintain liability insurance for the person.
13-27 Sec. 3.02. BINDING EFFECT OF PARTNER'S ACT. (a) PARTNER
14-1 AGENT OF PARTNERSHIP AS TO PARTNERSHIP BUSINESS. Each partner is
14-2 an agent of the partnership for the purpose of its business.
14-3 Unless the partner does not have authority to act for the
14-4 partnership in the particular matter and the person with whom the
14-5 partner is dealing knows that the partner lacks authority, an act
14-6 of a partner, including the execution of an instrument in the
14-7 partnership name, binds the partnership if the act is for
14-8 apparently carrying on in the usual way:
14-9 (1) the partnership business; or
14-10 (2) business of the kind carried on by the
14-11 partnership.
14-12 (b) ACT OUTSIDE SCOPE OF BUSINESS. An act of a partner does
14-13 not bind the partnership unless authorized by the other partners if
14-14 the act is not apparently for carrying on in the usual way:
14-15 (1) the partnership business; or
14-16 (2) business of the kind carried on by the
14-17 partnership.
14-18 Sec. 3.03. PARTNERSHIP LIABLE FOR PARTNER'S ACTIONABLE
14-19 CONDUCT. (a) A partnership is liable for loss or injury to a
14-20 person, including a partner, or for a penalty caused by or incurred
14-21 as a result of a wrongful act or omission or other actionable
14-22 conduct of a partner acting:
14-23 (1) in the ordinary course of business of the
14-24 partnership; or
14-25 (2) with the authority of the partnership.
14-26 (b) A partnership is liable for the loss of money or
14-27 property of a person not a partner that is received in the course
15-1 of the partnership's business and misapplied by a partner while in
15-2 the custody of the partnership.
15-3 Sec. 3.04. NATURE OF PARTNER'S LIABILITY PARTNERSHIP.
15-4 Except as provided by Section 3.08(a) for a registered limited
15-5 liability partnership, all partners are liable jointly and
15-6 severally for all debts and obligations of the partnership unless
15-7 otherwise agreed by the claimant or provided by law.
15-8 Sec. 3.05. ENFORCEMENT OF PARTNERSHIP AND PARTNER LIABILITY.
15-9 (a) PARTNERSHIP AS PARTY. A partnership may sue and be sued in
15-10 the name of the partnership.
15-11 (b) ACTION AGAINST PARTNERSHIP AND PARTNERS. An action may
15-12 be brought against a partnership and any or all of the partners in
15-13 the same action or in separate actions.
15-14 (c) JUDGMENT AGAINST PARTNER. A judgment against a
15-15 partnership is not by itself a judgment against a partner, but a
15-16 judgment may be entered against a partner who has been served with
15-17 process in a suit against the partnership.
15-18 (d) LIMITATION ON CREDITOR'S PURSUIT OF PARTNER'S PROPERTY.
15-19 Except as provided by Subsection (e), a creditor may proceed
15-20 against one or more partners or their property to satisfy a
15-21 judgment based on a claim that could have been successfully
15-22 asserted against the partnership only if:
15-23 (1) a judgment is also obtained against the partner;
15-24 and
15-25 (2) a judgment based on the same claim is obtained
15-26 against the partnership that:
15-27 (A) has not been reversed or vacated; and
16-1 (B) remains unsatisfied for 90 days after:
16-2 (i) the date of entry of the judgment; or
16-3 (ii) the date of expiration or termination
16-4 of the stay, if the judgment is contested by appropriate
16-5 proceedings and execution on the judgment has been stayed.
16-6 (e) CREDITOR'S DIRECT PURSUIT OF PARTNER'S PROPERTY.
16-7 Subsection (d) does not prohibit a creditor from proceeding
16-8 directly against one or more partners or their property without
16-9 first seeking satisfaction from partnership property if:
16-10 (1) the partnership is a debtor in bankruptcy;
16-11 (2) the creditor and the partnership agreed that the
16-12 creditor is not required to comply with Subsection (d);
16-13 (3) a court orders otherwise, based on a finding that
16-14 partnership property subject to execution within the state is
16-15 clearly insufficient to satisfy the judgment or that compliance
16-16 with Subsection (d) is excessively burdensome; or
16-17 (4) liability is imposed on the partner by law
16-18 independently of the person's status as a partner.
16-19 Sec. 3.06. FALSE REPRESENTATION OF PARTNERSHIP.
16-20 (a) REPRESENTATION OF PARTNERSHIP. A representation or other
16-21 conduct indicating that a person is a partner with another person,
16-22 if that is not the case, does not of itself create a partnership.
16-23 (b) REPRESENTATION OF MEMBERSHIP IN PARTNERSHIP. A
16-24 representation or other conduct indicating that a person is a
16-25 partner in an existing partnership, if that is not the case, does
16-26 not of itself make that person a partner in the partnership.
16-27 (c) CREDITOR'S RIGHTS GOVERNED BY OTHER LAW. The rights of
17-1 a person extending credit in reliance on a representation described
17-2 by Subsection (a) or (b) are determined by law other than this Act,
17-3 including the law of estoppel, agency, negligence, fraud, and
17-4 unjust enrichment.
17-5 (d) LEGAL STATUS OF PERSON MAKING MISREPRESENTATION. The
17-6 rights and duties of a person held liable under Subsection (c) are
17-7 also determined by law other than this Act, including the law of
17-8 estoppel, agency, negligence, fraud, and unjust enrichment.
17-9 Sec. 3.07. LIABILITY OF INCOMING PARTNER. A person admitted
17-10 as a partner into an existing partnership does not have personal
17-11 liability under Section 3.04 for an obligation of the partnership
17-12 that:
17-13 (1) arose before the partner's admission to the
17-14 partnership;
17-15 (2) relates to an action taken or omissions occurring
17-16 before the partner's admission to the partnership; or
17-17 (3) arises before or after the partner's admission
17-18 under a contract or commitment entered into before the partner's
17-19 admission to the partnership.
17-20 Sec. 3.08. LIABILITY IN AND REGISTRATION OF REGISTERED
17-21 LIMITED LIABILITY PARTNERSHIP. (a) LIABILITY OF PARTNER. (1) A
17-22 partner in a registered limited liability partnership is not
17-23 individually liable for debts and obligations of the partnership
17-24 arising from errors, omissions, negligence, incompetence, or
17-25 malfeasance committed while the partnership is a registered limited
17-26 liability partnership and in the course of the partnership business
17-27 by another partner or a representative of the partnership not
18-1 working under the supervision or direction of the first partner
18-2 unless the first partner:
18-3 (A) was directly involved in the specific
18-4 activity in which the errors, omissions, negligence, incompetence,
18-5 or malfeasance were committed by the other partner or
18-6 representative; or
18-7 (B) had notice or knowledge of the errors,
18-8 omissions, negligence, incompetence, or malfeasance by the other
18-9 partner or representative at the time of occurrence and then failed
18-10 to take reasonable steps to prevent or cure the errors, omissions,
18-11 negligence, incompetence, or malfeasance.
18-12 (2) Subsection (a)(1) does not affect:
18-13 (A) the joint and several liability of a partner
18-14 for debts and obligations of the partnership arising from a cause
18-15 other than the causes specified by Subsection (a)(1);
18-16 (B) the liability of a partnership to pay its
18-17 debts and obligations out of partnership property; or
18-18 (C) the persons on whom citation or other civil
18-19 process may be served in an action against a partnership.
18-20 (3) In this subsection, "representative" includes an
18-21 agent, servant, or employee of a registered limited liability
18-22 partnership.
18-23 (b) REGISTRATION. (1) In addition to complying with
18-24 Subsections (c) and (d)(1), to become a registered limited
18-25 liability partnership, a partnership must file with the secretary
18-26 of state an application stating:
18-27 (A) the name of the partnership;
19-1 (B) the federal tax identification number of the
19-2 partnership;
19-3 (C) the street address of the partnership's
19-4 principal office in this state and outside this state, as
19-5 applicable;
19-6 (D) the number of partners at the date of
19-7 application; and
19-8 (E) in brief, the partnership's business.
19-9 (2) The application must be executed by a
19-10 majority-in-interest of the partners or by one or more partners
19-11 authorized by a majority-in-interest of the partners.
19-12 (3) Two copies of the application must be filed,
19-13 accompanied by a fee of $200 for each partner.
19-14 (4) A partnership is registered as a registered
19-15 limited liability partnership on filing a completed initial or
19-16 renewal application, in duplicate with the required fee, or on a
19-17 later date specified in the application. A registration is not
19-18 affected by later changes in the partners of the partnership.
19-19 (5) An initial application filed under this subsection
19-20 and registered by the secretary of state expires one year after the
19-21 date of registration or later effective date unless earlier
19-22 withdrawn or revoked or unless renewed in accordance with
19-23 Subdivision (7).
19-24 (6) A registration may be withdrawn by filing in
19-25 duplicate with the secretary of state a written withdrawal notice
19-26 executed by a majority-in-interest of the partners or by one or
19-27 more partners authorized by a majority-in-interest of the partners.
20-1 A withdrawal notice must include the name of the partnership, the
20-2 federal tax identification number of the partnership, the date of
20-3 registration of the partnership's last application under this
20-4 section, and a current street address of the partnership's
20-5 principal office in this state and outside this state, if
20-6 applicable. A withdrawal notice terminates the status of the
20-7 partnership as a registered limited liability partnership as of the
20-8 date of filing the notice or a later date specified in the notice,
20-9 but not later than the expiration date under Subdivision (5).
20-10 (7) An effective registration may be renewed before
20-11 its expiration by filing in duplicate with the secretary of state
20-12 an application containing current information of the kind required
20-13 in an initial application and the most recent date of registration
20-14 of the partnership. The renewal application must be accompanied by
20-15 a fee of $200 for each partner on the date of renewal. A renewal
20-16 application filed under this section continues an effective
20-17 registration for one year after the date the effective registration
20-18 would otherwise expire.
20-19 (8) The secretary of state may remove from its active
20-20 records the registration of a partnership whose registration has
20-21 been withdrawn or revoked or has expired and not been renewed.
20-22 (9) The secretary of state may revoke the filing of a
20-23 document filed under this subsection if the secretary of state
20-24 determines that the filing fee for the document was paid by an
20-25 instrument that was dishonored when presented by the state for
20-26 payment. The secretary of state shall return the document and give
20-27 notice of revocation to the filing party by regular mail. Failure
21-1 to give or receive notice does not invalidate the revocation. A
21-2 revocation of a filing does not affect an earlier filing.
21-3 (10) The secretary of state may provide forms for
21-4 application for or renewal of registration.
21-5 (11) A document filed under this subsection may be
21-6 amended or corrected by filing in duplicate with the secretary of
21-7 state articles of amendment executed by a majority-in-interest of
21-8 the partners or by one or more partners authorized by a
21-9 majority-in-interest of the partners. The articles of amendment
21-10 must contain the name of the partnership, the tax identification
21-11 number of the partnership, the identity of the document being
21-12 amended, the date on which the document being amended was filed,
21-13 the part of the document being amended, and the amendment or
21-14 correction. Two copies of the articles of amendment must be filed,
21-15 accompanied by a fee of $10 plus, if the amendment increases the
21-16 number of partners, $200 for each partner added by amendment of the
21-17 number of partners.
21-18 (12) A document filed under this subsection may be a
21-19 photographic, facsimile, or similar reproduction of a signed
21-20 document. A signature on a document filed under this section may
21-21 be a facsimile.
21-22 (13) A person commits an offense if the person signs a
21-23 document the person knows is false in any material respect with the
21-24 intent that the document be delivered on behalf of a partnership to
21-25 the secretary of state for filing. An offense under this
21-26 subdivision is a Class A misdemeanor.
21-27 (14) The secretary of state is not responsible for
22-1 determining if a partnership is in compliance with the requirements
22-2 of Subsection (d)(1).
22-3 (15) The secretary of state may adopt procedural rules
22-4 on filing documents under this subsection.
22-5 (c) NAME. A registered limited liability partnership's name
22-6 must contain the words "registered limited liability partnership"
22-7 or the abbreviation "L.L.P." as the last words or letters of its
22-8 name.
22-9 (d) INSURANCE OR FINANCIAL RESPONSIBILITY. (1) A
22-10 registered limited liability partnership must:
22-11 (A) carry at least $100,000 of liability
22-12 insurance of a kind that is designed to cover the kinds of errors,
22-13 omissions, negligence, incompetence, or malfeasance for which
22-14 liability is limited by Subsection (a)(1); or
22-15 (B) provide $100,000 of funds specifically
22-16 designated and segregated for the satisfaction of judgments against
22-17 the partnership based on the kinds of errors, omissions,
22-18 negligence, incompetence, or malfeasance for which liability is
22-19 limited by Subsection (a)(1) by:
22-20 (i) deposit in trust or in bank escrow of
22-21 cash, bank certificates of deposit, or United States Treasury
22-22 obligations; or
22-23 (ii) a bank letter of credit or insurance
22-24 company bond.
22-25 (2) If the registered limited liability partnership is
22-26 in compliance with Subdivision (1), the requirements of this
22-27 subsection shall not be admissible or in any way be made known to
23-1 the jury in determining an issue of liability for or extent of the
23-2 debt or obligation or damages in question.
23-3 (3) If compliance with Subdivision (1) is disputed:
23-4 (A) compliance must be determined separately
23-5 from the trial or proceeding to determine the partnership debt or
23-6 obligation in question, its amount, or partner liability for the
23-7 debt or obligation; and
23-8 (B) the burden of proof of compliance is on the
23-9 person claiming limitation of liability under Subsection (a)(1).
23-10 (e) LIMITED PARTNERSHIP. A limited partnership may become a
23-11 registered limited liability partnership by complying with
23-12 applicable provisions of the Texas Revised Limited Partnership Act
23-13 (Article 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
23-14 amendments.
23-15 ARTICLE IV. RELATIONS OF PARTNERS TO EACH OTHER AND TO PARTNERSHIP
23-16 Sec. 4.01. PARTNER'S RIGHTS AND DUTIES. (a) CAPITAL
23-17 CREDITS AND CHARGES. Each partner is credited with an amount equal
23-18 to the cash plus the value of property the partner contributes to a
23-19 partnership and the partner's share of the partnership's profits.
23-20 Each partner is charged with an amount equal to the cash plus the
23-21 value of other property distributed by the partnership to the
23-22 partner and the partner's share of the partnership's losses.
23-23 (b) PROFITS AND LOSSES. Each partner is credited with an
23-24 equal share of the profits of a partnership. Each partner is
23-25 charged with a share of the losses, whether capital or operating,
23-26 of the partnership in proportion to the partner's share of the
23-27 profits.
24-1 (c) DISPROPORTIONATE PAYMENT OR ADVANCE. A partner who, in
24-2 the proper conduct of the business of the partnership or for the
24-3 preservation of its business or property, reasonably makes a
24-4 payment or advance beyond the amount the partner agreed to
24-5 contribute, or who reasonably incurs a liability, is entitled to be
24-6 repaid and to receive interest from the date of the payment or
24-7 advance or the incurrence of the liability.
24-8 (d) PARTICIPATION IN MANAGEMENT. Each partner has equal
24-9 rights in the management and conduct of the business of a
24-10 partnership. A partner's right to participate in the management
24-11 and conduct of the business is not community property.
24-12 (e) PARTNERSHIP PROPERTY. A partner may use or possess
24-13 partnership property only on behalf of the partnership.
24-14 (f) COMPENSATION. A partner is not entitled to compensation
24-15 for services performed for a partnership other than reasonable
24-16 compensation for services rendered in winding up the business of
24-17 the partnership.
24-18 (g) NEW PARTNER. A person may become a partner only with
24-19 the consent of all partners.
24-20 (h) MAJORITY DECISION ON ORDINARY MATTER. A difference
24-21 arising as to a matter in the ordinary course of the business of
24-22 the partnership may be decided by a majority-in-interest of the
24-23 partners. An act outside the ordinary course of business of a
24-24 partnership may be undertaken only with the consent of all
24-25 partners.
24-26 (i) AMENDMENT OF AGREEMENT. An amendment to a partnership
24-27 agreement may be effected only with the consent of all partners.
25-1 (j) PARTNERSHIP OBLIGATION. This section does not limit a
25-2 partnership's obligation to another person under Section 3.02.
25-3 (k) PARTNER TRANSACTION OF BUSINESS WITH PARTNERSHIP. A
25-4 partner may lend money to or transact other business with a
25-5 partnership and, subject to other applicable law, has the same
25-6 rights and obligations with respect to that matter as a person who
25-7 is not a partner.
25-8 (l) CLASSES OR GROUPS OF PARTNERS. A written partnership
25-9 agreement may establish classes or groups of one or more partners
25-10 having certain expressed relative rights, powers, and duties,
25-11 including voting rights, and may provide for the future creation of
25-12 additional classes or groups of partners having certain relative
25-13 rights, powers, and duties, including voting rights, expressed in
25-14 the partnership agreement or at the time of creation of the class
25-15 or group. The rights, powers, or duties of a class or group may be
25-16 senior to those of one or more existing classes or groups of
25-17 partners.
25-18 (m) VOTING RIGHTS. A written partnership agreement that
25-19 grants or provides for granting to a partner a right to vote may
25-20 contain provisions relating to:
25-21 (1) giving notice of the time, place, or purposes of a
25-22 meeting at which a matter is to be voted on by the partners;
25-23 (2) waiver of notice;
25-24 (3) action by consent without a meeting;
25-25 (4) the establishment of a record date;
25-26 (5) quorum requirements;
25-27 (6) voting in person or by proxy; or
26-1 (7) any other matter relating to the exercise of the
26-2 right to vote.
26-3 (n) NOTICE OF NONUNANIMOUS ACTION. (1) Prompt notice of
26-4 the taking of an action under an agreement that requires consent of
26-5 fewer than all of the partners and that may be taken without a
26-6 meeting shall be given to the partners who have not consented in
26-7 writing to the action.
26-8 (2) For the purposes of this section, the taking of an
26-9 action includes amending the partnership agreement or creating,
26-10 under provisions of the partnership agreement, a class of partner
26-11 that did not previously exist.
26-12 Sec. 4.02. DISTRIBUTION IN KIND. A partner does not have a
26-13 right to receive, and may not be required to accept, a distribution
26-14 in kind.
26-15 Sec. 4.03. INFORMATION REGARDING A PARTNERSHIP. (a) BOOKS
26-16 AND RECORDS AT CHIEF EXECUTIVE OFFICE. A partnership shall keep
26-17 its books and records, if any, at its chief executive office.
26-18 (b) ACCESS TO BOOKS AND RECORDS. A partnership shall
26-19 provide access to its books and records to partners and their
26-20 agents and attorneys. The partnership shall provide former
26-21 partners and their agents and attorneys access to books and records
26-22 pertaining to the period during which the former partners were
26-23 partners or for any other proper purpose with respect to another
26-24 period. The right of access includes the opportunity to inspect
26-25 and copy books and records during ordinary business hours. A
26-26 partnership may impose a reasonable charge, covering the costs of
26-27 labor and material, for copies of documents furnished.
27-1 (c) INFORMATION CONCERNING THE PARTNERSHIP. Each partner
27-2 and the partnership shall furnish, on request and to the extent
27-3 just and reasonable, to a partner, the legal representative of a
27-4 deceased partner or a partner under legal disability, or an
27-5 assignee, complete and accurate information concerning the
27-6 partnership. A legal representative of a deceased partner or a
27-7 partner under legal disability and an assignee are subject to the
27-8 same duties as a partner with respect to information made
27-9 available.
27-10 Sec. 4.04. GENERAL STANDARDS OF PARTNER'S CONDUCT.
27-11 (a) DUTIES. A partner owes to the partnership and the other
27-12 partners:
27-13 (1) a duty of loyalty; and
27-14 (2) a duty of care.
27-15 (b) LOYALTY. A partner's duty of loyalty includes:
27-16 (1) accounting to the partnership and holding for it
27-17 any property, profit, or benefit derived by the partner in the
27-18 conduct and winding up of the partnership business or from use by
27-19 the partner of partnership property;
27-20 (2) refraining from dealing with the partnership on
27-21 behalf of a party having an interest adverse to the partnership;
27-22 and
27-23 (3) refraining from competing with the partnership or
27-24 dealing with the partnership in a manner adverse to the
27-25 partnership.
27-26 (c) CARE. A partner's duty of care to the partnership and
27-27 the other partners is to act in the conduct and winding up of the
28-1 partnership business with the care an ordinarily prudent person
28-2 would exercise in similar circumstances. An error in judgment does
28-3 not by itself constitute a breach of this duty of care. A partner
28-4 is presumed to satisfy this duty if the partner acts on an informed
28-5 basis and in compliance with Subsection (d).
28-6 (d) METHOD OF DISCHARGE. A partner shall discharge the
28-7 partner's duties to the partnership and the other partners under
28-8 this Act or under the partnership agreement, and exercise any
28-9 rights and powers in the conduct or winding up of the partnership
28-10 business:
28-11 (1) in good faith; and
28-12 (2) in a manner the partner reasonably believes to be
28-13 in the best interest of the partnership.
28-14 (e) EFFECT OF PARTNER BENEFIT. A partner does not violate a
28-15 duty or obligation under this Act or under the partnership
28-16 agreement merely because the partner's conduct furthers the
28-17 partner's own interest.
28-18 (f) TRUSTEE STANDARD INAPPLICABLE. A partner, in that
28-19 capacity, is not a trustee and is not held to the same standards as
28-20 a trustee.
28-21 (g) APPLICATION TO NONPARTNER WINDING UP. This section
28-22 applies to a person winding up the partnership business as the
28-23 personal or legal representative of the last surviving partner as
28-24 if the person were a partner.
28-25 Sec. 4.05. PARTNER'S LIABILITY TO PARTNERSHIP. A partner is
28-26 liable to a partnership and the other partners for a breach of the
28-27 partnership agreement or for a violation of a duty to the
29-1 partnership or the other partners under this Act that causes harm
29-2 to the partnership or the other partners.
29-3 Sec. 4.06. REMEDIES OF PARTNERSHIP AND PARTNERS.
29-4 (a) ACTION BY PARTNERSHIP. A partnership may maintain an action
29-5 against a partner for a breach of the partnership agreement or for
29-6 the violation of a duty to the partnership causing harm to the
29-7 partnership.
29-8 (b) ACTION BY PARTNER. A partner may maintain an action
29-9 against the partnership or another partner for legal or equitable
29-10 relief, including an accounting as to partnership business, to:
29-11 (1) enforce a right under the partnership agreement;
29-12 (2) enforce a right under this Act, including:
29-13 (A) the partner's rights under Sections 4.01,
29-14 4.03, and 4.04;
29-15 (B) the partner's right on withdrawal to have
29-16 the partner's interest in the partnership redeemed under Section
29-17 7.01 or enforce any other right under Article 6 or 7; and
29-18 (C) the partner's rights under Article 8; or
29-19 (3) enforce the rights and otherwise protect the
29-20 interests of the partner, including rights and interests arising
29-21 independently of the partnership relationship.
29-22 (c) ACCRUAL OF ACTION. The accrual of and a time limitation
29-23 on a right of action for a remedy under this section is governed by
29-24 other law.
29-25 (d) NO REVIVAL BY ACCOUNTING. A right to an accounting does
29-26 not revive a claim barred by law.
29-27 Sec. 4.07. CONTINUATION OF PARTNERSHIP. (a) CONTINUATION
30-1 BY EXPRESS AGREEMENT. If all the partners in a partnership for a
30-2 definite term or a particular undertaking or for which the
30-3 partnership agreement provides for winding up on a specified event
30-4 agree to continue the business of the partnership despite the
30-5 expiration of the term, the completion of the undertaking, or the
30-6 occurrence of the event, other than the withdrawal of a partner,
30-7 the partnership agreement is considered amended to provide that the
30-8 expiration, the completion, or the occurrence of the event did not
30-9 result in an event requiring the winding up of the partnership
30-10 business.
30-11 (b) CONTINUATION BY ACTION. A continuation of the business
30-12 for 90 days by the partners or those who habitually acted in the
30-13 business during the term or undertaking or preceding the event,
30-14 without a settlement or liquidation of the partnership business and
30-15 without objection from a partner, is prima facie evidence of
30-16 agreement by all partners to continue the business.
30-17 ARTICLE V. TRANSFEREE OF PARTNER
30-18 Sec. 5.01. PARTNER'S INTEREST IN PARTNERSHIP PROPERTY NOT
30-19 TRANSFERABLE. A partner is not a co-owner of partnership property
30-20 and does not have an interest that can be transferred, either
30-21 voluntarily or involuntarily, in partnership property.
30-22 Sec. 5.02. NATURE OF PARTNER'S PARTNERSHIP INTEREST.
30-23 (a) PERSONAL PROPERTY. A partner's partnership interest is
30-24 personal property for all purposes. A partner's partnership
30-25 interest may be community property under applicable law.
30-26 (b) CERTIFICATE EVIDENCING INTEREST. A written partnership
30-27 agreement may:
31-1 (1) provide that a partner's partnership interest may
31-2 be evidenced by a certificate of partnership interest issued by the
31-3 partnership;
31-4 (2) provide for the assignment or transfer of a
31-5 partnership interest represented by the certificate; and
31-6 (3) make other provisions with respect to the
31-7 certificate.
31-8 Sec. 5.03. TRANSFER OF PARTNER'S PARTNERSHIP INTEREST.
31-9 (a) ACT OF TRANSFER. A transfer of a partner's partnership
31-10 interest:
31-11 (1) is permissible, in whole or in part;
31-12 (2) is not an event of withdrawal;
31-13 (3) does not by itself cause a winding up of the
31-14 partnership business; and
31-15 (4) does not, as against the other partners or the
31-16 partnership, entitle the transferee, during the continuance of the
31-17 partnership, to participate in the management or conduct of the
31-18 partnership business.
31-19 (b) BASIC RIGHTS OF TRANSFEREE. A transferee of a partner's
31-20 partnership interest is entitled to receive, to the extent
31-21 transferred, distributions to which the transferor otherwise would
31-22 be entitled. After transfer, the transferor continues to have the
31-23 rights and duties of a partner other than the interest transferred.
31-24 Until a transferee becomes a partner, the transferee does not have
31-25 liability as a partner solely as a result of the transfer. For a
31-26 proper purpose the transferee may require reasonable information or
31-27 an account of partnership transactions and make reasonable
32-1 inspection of the partnership books.
32-2 (c) RIGHTS OF TRANSFEREE ON WINDING UP. If an event
32-3 requires a winding up of partnership business under Section 8.01, a
32-4 transferee is entitled to receive, to the extent transferred, the
32-5 net amount otherwise distributable to the transferor. In a winding
32-6 up a transferee may require an accounting only from the date of the
32-7 latest account agreed to by all of the partners.
32-8 (d) NOTICE TO PARTNERSHIP. Until receipt of notice of a
32-9 transfer, a partnership does not have a duty to give effect to a
32-10 transferee's rights under this section.
32-11 (e) NO EFFECT IF PROHIBITED. A partnership does not have a
32-12 duty to give effect to a transfer, assignment, or grant of a
32-13 security interest prohibited by a partnership agreement.
32-14 Sec. 5.04. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
32-15 INTEREST. (a) DIVORCE. On the divorce of a partner, the
32-16 partner's spouse, to the extent of the spouse's partnership
32-17 interest, shall be regarded for purposes of this Act as a
32-18 transferee of the partnership interest from the partner.
32-19 (b) DEATH OF PARTNER. On the death of a partner, the
32-20 partner's surviving spouse, if any, and the partner's heirs,
32-21 legatees, or personal representative, to the extent of their
32-22 respective partnership interests, shall be regarded for purposes of
32-23 this Act as transferees of the partnership interests from the
32-24 partner.
32-25 (c) DEATH OF PARTNER'S SPOUSE. On the death of a partner's
32-26 spouse, the spouse's heirs, legatees or personal representative, to
32-27 the extent of their respective partnership interests, shall be
33-1 regarded for purposes of this Act as transferees of the partnership
33-2 interest from the partner.
33-3 (d) EVENT INVOLVING PARTNER'S SPOUSE NOT WITHDRAWAL. An
33-4 event of the type described in Section 6.01 occurring with respect
33-5 to a partner's spouse is not an event of withdrawal.
33-6 (e) NO IMPAIRMENT OF PURCHASE RIGHTS. This Act does not
33-7 impair an agreement for the purchase or sale of a partnership
33-8 interest at the time of death of the owner of the partnership
33-9 interest or at any other time.
33-10 ARTICLE VI. EVENTS OF WITHDRAWAL
33-11 Sec. 6.01. EVENTS OF WITHDRAWAL. (a) NO LONGER A
33-12 PARTNER. A person ceases to be a partner on the occurrence of an
33-13 event of withdrawal.
33-14 (b) EVENT OF WITHDRAWAL. An event of withdrawal of a
33-15 partner occurs on:
33-16 (1) receipt by the partnership of notice of the
33-17 partner's express will to withdraw as a partner on the date of
33-18 receipt of the notice or on a later date specified in the notice;
33-19 (2) an event specified in the partnership agreement as
33-20 causing the partner's withdrawal;
33-21 (3) the partner's expulsion as provided in the
33-22 partnership agreement;
33-23 (4) the partner's expulsion by the vote of a
33-24 majority-in-interest of the other partners if:
33-25 (A) it is unlawful to carry on the partnership
33-26 business with that partner;
33-27 (B) there has been a transfer of all or
34-1 substantially all of that partner's partnership interest, other
34-2 than:
34-3 (i) a transfer for security purposes that
34-4 has not been foreclosed; or
34-5 (ii) the substitution of a successor
34-6 trustee or successor personal representative;
34-7 (C) within 90 days after the date the
34-8 partnership notifies a corporate partner that it will be expelled
34-9 because it has filed a certificate of dissolution or the
34-10 equivalent, its charter has been revoked, or its right to conduct
34-11 business has been suspended by the jurisdiction of its
34-12 incorporation, the certificate of dissolution is not revoked or
34-13 its charter or its right to conduct business is not reinstated; or
34-14 (D) an event requiring a winding up has occurred
34-15 with respect to a partnership that is a partner;
34-16 (5) application by the partnership or another partner
34-17 for the partner's expulsion by judicial decree because:
34-18 (A) the partner engaged in wrongful conduct that
34-19 adversely and materially affected the partnership business;
34-20 (B) the partner wilfully or persistently
34-21 committed a material breach of the partnership agreement or of a
34-22 duty owed to the partnership or the other partners under Section
34-23 4.04; or
34-24 (C) the partner engaged in conduct relating to
34-25 the partnership business that made it not reasonably practicable to
34-26 carry on the business in partnership with that partner;
34-27 (6) the partner:
35-1 (A) becoming a debtor in bankruptcy;
35-2 (B) executing an assignment for the benefit of
35-3 creditors;
35-4 (C) seeking, consenting to, or acquiescing in
35-5 the appointment of a trustee, receiver, or liquidator of that
35-6 partner or of all or substantially all of that partner's property;
35-7 or
35-8 (D) failing, within 90 days after the
35-9 appointment, to have vacated or stayed the appointment of a
35-10 trustee, receiver, or liquidator of the partner or of all or
35-11 substantially all of the partner's property obtained without the
35-12 partner's consent or acquiescence, or failing within 90 days after
35-13 the date of expiration of a stay to have the appointment vacated;
35-14 (7) in the case of a partner who is an individual:
35-15 (A) the partner's death;
35-16 (B) the appointment of a guardian or general
35-17 conservator for the partner; or
35-18 (C) a judicial determination that the partner
35-19 has otherwise become incapable of performing the partner's duties
35-20 under the partnership agreement;
35-21 (8) termination of a partner's existence;
35-22 (9) in the case of a partner that has transferred all
35-23 of the partner's partnership interest, redemption of the
35-24 transferee's interest under Sections 7.01(n)-(r); or
35-25 (10) an agreement to continue the partnership under
35-26 Section 8.01(g) if the partnership has received a notice from the
35-27 partner under Section 8.01(g) requesting that the partnership be
36-1 wound up.
36-2 Sec. 6.02. WRONGFUL WITHDRAWAL. (a) POWER TO WITHDRAW. A
36-3 partner at any time before the occurrence of an event requiring a
36-4 winding up may withdraw from the partnership and cease to be a
36-5 partner as provided by Section 6.01.
36-6 (b) WRONGFUL WITHDRAWAL. A partner's withdrawal is wrongful
36-7 only if:
36-8 (1) it is in breach of an express provision of the
36-9 partnership agreement;
36-10 (2) in the case of a partnership for a definite term
36-11 or particular undertaking or for which the partnership agreement
36-12 provides for winding up on a specified event, before the expiration
36-13 of the term, the completion of the undertaking, or the occurrence
36-14 of the event:
36-15 (A) the partner withdraws by express will; or
36-16 (B) in the case of a partner that is not an
36-17 individual, a trust other than a business trust, or an estate, the
36-18 partner is expelled or otherwise withdraws because the partner
36-19 wilfully terminated; or
36-20 (3) the partner is expelled by judicial decree under
36-21 Subsection (b)(5).
36-22 (c) LIABILITY FOR DAMAGES. A wrongfully withdrawing partner
36-23 is liable to the partnership and to the other partners for damages
36-24 caused by the withdrawal, in addition to other liability of the
36-25 partner to the partnership or to the other partners.
36-26 ARTICLE VII. PARTNER'S WITHDRAWAL IF BUSINESS NOT WOUND UP
36-27 Sec. 7.01. REDEMPTION OF WITHDRAWING PARTNER OR TRANSFEREE'S
37-1 INTEREST IF PARTNERSHIP NOT WOUND UP. (a) REDEMPTION. If an
37-2 event of withdrawal occurs under Sections 6.01(b)(1)-(9) and an
37-3 event requiring a winding up does not occur within 60 days after
37-4 the date of the withdrawal, or on a partner's withdrawal under
37-5 Section 6.01(b)(10), the partnership interest of the withdrawn
37-6 partner automatically is redeemed by the partnership as of the date
37-7 of withdrawal in accordance with this section.
37-8 (b) REDEMPTION PRICE. (1) The redemption price of a
37-9 withdrawn partner's partnership interest is the fair value of the
37-10 interest as of the date of withdrawal, except that the redemption
37-11 price of the partnership interest of a partner who wrongfully
37-12 withdraws before the expiration of a definite term, the completion
37-13 of a particular undertaking, or the occurrence of a specified event
37-14 requiring a winding up is the lesser of:
37-15 (A) the fair value of the withdrawn partner's
37-16 partnership interest as of the date of withdrawal; or
37-17 (B) the amount that the withdrawn partner would
37-18 have received if an event requiring a winding up had occurred at
37-19 the time of the partner's withdrawal.
37-20 (2) Interest is payable on the amount owed under this
37-21 subsection.
37-22 (c) CONTRIBUTIONS FROM WRONGFULLY WITHDRAWING PARTNER. If a
37-23 wrongfully withdrawing partner would have been liable to make
37-24 contributions to the partnership under Section 8.06(b) or (c) if an
37-25 event requiring winding up had occurred at the time of withdrawal,
37-26 the withdrawn partner is liable to the partnership to make
37-27 contributions in that amount to the partnership, plus interest on
38-1 the amount owed.
38-2 (d) SETOFF. The partnership may set off the damages for
38-3 wrongful withdrawal under Section 6.02(b) and all other amounts
38-4 owed by the withdrawn partner to the partnership, whether currently
38-5 due, including interest, against the redemption price payable to
38-6 the withdrawn partner.
38-7 (e) INTEREST. Interest owed under Subsection (b), (c), or
38-8 (d) accrues from the date of the withdrawal to the date of payment.
38-9 (f) INDEMNITY. (1) A partnership shall indemnify a
38-10 withdrawn partner against a partnership liability incurred before
38-11 the withdrawal except a liability:
38-12 (A) then unknown to the partnership; or
38-13 (B) incurred by an act of the withdrawn partner
38-14 under Section 7.02.
38-15 (2) For purposes of this subsection, a liability not
38-16 known to a partner other than the withdrawn partner is not known to
38-17 the partnership.
38-18 (g) TENDER OF REDEMPTION PRICE. If a deferred payment is
38-19 not authorized under Subsection (k) and an agreement on the
38-20 redemption price of a withdrawn partner's interest is not reached
38-21 within 120 days after the date of a written demand for payment by
38-22 either party, within 30 days after the expiration of the 120-day
38-23 period the partnership shall:
38-24 (1) pay in cash to the withdrawn partner the amount
38-25 the partnership estimates to be the redemption price plus accrued
38-26 interest, reduced by any setoffs and accrued interest under
38-27 Subsection (d); or
39-1 (2) make written demand for payment of its estimate of
39-2 the amount owed by the withdrawn partner, net of amounts owed to
39-3 the partner, to the partnership.
39-4 (h) WRITTEN OFFER TO PAY OR DEMAND FOR PAYMENT. If a
39-5 deferred payment is authorized under Subsection (k) or a
39-6 contribution or other amount is owed by the withdrawn partner to
39-7 the partnership, the partnership may tender a written offer to pay
39-8 or deliver a written statement of demand for the amount that it
39-9 estimates to be the net amount owed to it, stating the amount and
39-10 other terms and conditions of the obligation.
39-11 (i) EXPLANATORY STATEMENT ACCOMPANYING OR FOLLOWING TENDER.
39-12 On request of the other party, the payment, tender, or demand
39-13 required or allowed by Subsection (g) or (h) must be accompanied or
39-14 followed promptly by:
39-15 (1) a statement of partnership property and
39-16 liabilities as of the date of the partner's withdrawal and the
39-17 latest available partnership balance sheet and income statement, if
39-18 any, if payment, tender, or demand is made or delivered by the
39-19 partnership; and
39-20 (2) an explanation of the computation of the estimated
39-21 payment obligation.
39-22 (j) TENDER IN FULL SATISFACTION. The terms of a payment or
39-23 tender under Subsection (g) or (h) govern a redemption if:
39-24 (1) the payment or tender is accompanied by written
39-25 notice that:
39-26 (A) the payment or tendered amount, if made, is
39-27 in full satisfaction of a party's obligations relating to the
40-1 redemption of the withdrawn partner's partnership interest; and
40-2 (B) an action to determine the redemption price,
40-3 a contribution obligation or setoff under Subsection (c) or (d), or
40-4 other terms of the redemption obligation must be commenced within
40-5 one year after the later of:
40-6 (i) the date the written notice is given;
40-7 or
40-8 (ii) the date of delivery of the
40-9 information required by Subsection (i); and
40-10 (2) the party receiving the payment or tender does not
40-11 commence an action within that one-year period.
40-12 (k) DEFERRAL OF PAYMENT TO WRONGFULLY WITHDRAWING PARTNER.
40-13 A partner who wrongfully withdraws before the expiration of a
40-14 definite term, the completion of a particular undertaking, or the
40-15 occurrence of a specified event requiring a winding up is not
40-16 entitled to receive any portion of the redemption price until the
40-17 expiration of the term, the completion of the undertaking, or the
40-18 occurrence of the specified event unless the partner establishes to
40-19 the satisfaction of a court that earlier payment will not cause
40-20 undue hardship to the partnership. A deferred payment bears
40-21 interest. The withdrawn partner may seek to demonstrate to the
40-22 satisfaction of the court that security for a deferred payment is
40-23 appropriate.
40-24 (l) ACTION TO DETERMINE REDEMPTION TERMS. A withdrawn
40-25 partner or the partnership may maintain an action against the other
40-26 party under Section 4.06 to determine the terms of redemption of
40-27 that partner's interest, including a contribution obligation or
41-1 setoff under Subsection (c) or (d) or other terms of the redemption
41-2 obligations of either party. The action must be commenced within
41-3 one year after the later of the date of delivery of information
41-4 required by Subsection (j) or the date written notice is given
41-5 under Subsection (j). The court shall determine the terms of the
41-6 redemption of the withdrawn partner's interest, any contribution
41-7 obligation or setoff due under Subsection (c) or (d), and accrued
41-8 interest and enter judgment for an additional payment or refund.
41-9 If deferred payment is authorized under Subsection (k), the court
41-10 shall also determine the security for payment if requested to
41-11 consider whether security is appropriate. If the court finds that
41-12 a party acted arbitrarily, vexatiously, or not in good faith,
41-13 including failure to tender payment or make an offer to pay or to
41-14 comply with the requirements of Subsection (i), the court may
41-15 assess damages against the party, including if appropriate a share
41-16 of the profits of the continuing business, reasonable attorney's
41-17 fees, and the fees and expenses of appraisers or other experts for
41-18 a party to the action, in amounts the court finds equitable.
41-19 (m) DEFERRAL OF PAYMENT ON OCCURRENCE OF EVENT REQUIRING
41-20 WINDING UP. If a partner withdraws under Section 6.01 and an event
41-21 occurs within 60 days of the date of withdrawal that requires a
41-22 winding up of the partnership under Section 8.01:
41-23 (1) the partnership may defer paying the redemption
41-24 price to the withdrawn partner until the partnership first makes a
41-25 winding up distribution to the remaining partners; and
41-26 (2) the redemption price or contribution obligation is
41-27 the amount the withdrawn partner would have received or contributed
42-1 if the event requiring a winding up had occurred at the time of the
42-2 partner's withdrawal.
42-3 (n) OBLIGATION TO REDEEM TRANSFEREE. A partnership must
42-4 redeem the partnership interest of a transferee for its fair value
42-5 if:
42-6 (1) the interest was transferred when:
42-7 (A) the partnership was for a definite term not
42-8 then expired or a particular undertaking not then completed; or
42-9 (B) the partnership agreement provided for
42-10 winding up on a specified event that has not yet occurred;
42-11 (2) the definite term has expired, the particular
42-12 undertaking has been completed, or the specified event has
42-13 occurred; and
42-14 (3) the transferee makes a written demand for
42-15 redemption.
42-16 (o) PAYMENT TO TRANSFEREE. If an agreement for the
42-17 redemption price of a transferee's interest is not reached within
42-18 120 days after the date of a written demand for redemption, within
42-19 30 days after the expiration of the 120-day period the partnership
42-20 must pay in cash to the transferee the amount the partnership
42-21 estimates to be the redemption price, plus accrued interest from
42-22 the date of demand.
42-23 (p) INFORMATION TO TRANSFEREE. On request of the
42-24 transferee, the payment required by Subsection (o) must be
42-25 accompanied or followed by:
42-26 (1) a statement of partnership property and
42-27 liabilities as of the date of the demand for redemption;
43-1 (2) the latest available partnership balance sheet and
43-2 income statement, if any; and
43-3 (3) an explanation of the computation of the estimated
43-4 payment obligation.
43-5 (q) PRICE FOR TRANSFEREE. If payment required by Subsection
43-6 (n) is accompanied by written notice that the payment is in full
43-7 satisfaction of the partnership's obligations relating to the
43-8 redemption of the transferee's interest, the payment, less
43-9 interest, is the redemption price unless the transferee within one
43-10 year after the date of the written notice commences an action to
43-11 determine the redemption price.
43-12 (r) SUIT BY TRANSFEREE. A transferee may maintain an action
43-13 against a partnership to determine the redemption price of the
43-14 transferee's interest. The court shall determine the redemption
43-15 price of the transferee's interest and accrued interest and enter
43-16 judgment for payment or refund. If the court finds that the
43-17 partnership acted arbitrarily, vexatiously, or not in good faith,
43-18 including failure to make payment, the court may assess reasonable
43-19 attorney's fees and the fees and expenses of appraisers or other
43-20 experts for a party to the action, in amounts the court finds
43-21 equitable, against the partnership.
43-22 (s) DEFERRAL OF TRANSFEREE REDEMPTION. The redemption of a
43-23 transferee's interest under Subsections (n) and (o) may be deferred
43-24 as determined by the court if the partnership establishes to the
43-25 satisfaction of the court that failure to defer redemption will
43-26 cause undue hardship to the business of the partnership.
43-27 Sec. 7.02. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.
44-1 (a) POWER TO BIND FOR ONE YEAR. The action of a withdrawn partner
44-2 within one year after the date of the person's withdrawal binds the
44-3 partnership if the transaction is one that would bind the
44-4 partnership before the person's withdrawal and the other party to
44-5 the transaction:
44-6 (1) does not have notice of the person's withdrawal as
44-7 a partner;
44-8 (2) had done business with the partnership within one
44-9 year preceding the date of withdrawal; and
44-10 (3) reasonably believed that the withdrawn partner was
44-11 a partner at the time of the transaction.
44-12 (b) WITHDRAWN PARTNER'S LIABILITY FOR LOSS. A withdrawn
44-13 partner is liable to the partnership for loss caused to the
44-14 partnership arising from an obligation incurred by the withdrawn
44-15 partner after withdrawal and for which the partnership is liable
44-16 under Subsection (a).
44-17 Sec. 7.03. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
44-18 LIABILITY. (a) WITHDRAWAL DOES NOT DISCHARGE LIABILITY.
44-19 Withdrawal of a partner does not of itself discharge the partner's
44-20 liability for an obligation of the partnership incurred before
44-21 withdrawal.
44-22 (b) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
44-23 deceased partner is liable for an obligation of the partnership
44-24 incurred while the deceased was a partner to the same extent that a
44-25 withdrawn partner is liable for an obligation of the partnership
44-26 incurred before withdrawal.
44-27 (c) DISCHARGE OF WITHDRAWN PARTNER BY AGREEMENT OF CREDITOR.
45-1 A withdrawn partner is discharged from liability incurred before
45-2 the withdrawal by an agreement to that effect between the partner
45-3 and a partnership creditor.
45-4 (d) MATERIAL ALTERATION OF OBLIGATION WITHOUT CONSENT
45-5 DISCHARGES WITHDRAWN PARTNER. If a creditor of a partnership has
45-6 notice of a partner's withdrawal and without the consent of the
45-7 withdrawn partner agrees to a material alteration in the nature or
45-8 time of payment of an obligation of the partnership incurred before
45-9 the withdrawal, the withdrawn partner is discharged from the
45-10 obligation.
45-11 (e) LIABILITY OF WITHDRAWN PARTNER TO CREDITOR. A person
45-12 who withdraws as a partner in a circumstance that does not
45-13 constitute an event requiring a winding up under Section 8.01 is
45-14 liable as a partner to another party in a transaction entered into
45-15 by the partnership or a surviving partnership under Chapter 9,
45-16 Business & Commerce Code, within two years after the date of the
45-17 partner's withdrawal only if the other party to the transaction:
45-18 (1) does not have notice of the partner's withdrawal;
45-19 and
45-20 (2) reasonably believed that the withdrawn partner was
45-21 a partner at the time of the transaction.
45-22 ARTICLE VIII. WINDING UP PARTNERSHIP BUSINESS
45-23 Sec. 8.01. EVENTS REQUIRING WINDING UP OF PARTNERSHIP.
45-24 (a) EXPRESS WILL OF MAJORITY-IN-INTEREST IN CERTAIN PARTNERSHIPS.
45-25 In a partnership that is not for a definite term or a particular
45-26 undertaking or in which the partnership agreement does not provide
45-27 for winding up on a specified event, the express will of a
46-1 majority-in-interest of the partners who have not assigned their
46-2 interests requires a winding up of the partnership.
46-3 (b) TERM OR UNDERTAKING. In a partnership for a definite
46-4 term or particular undertaking, winding up is required on:
46-5 (1) the express will of all the partners; or
46-6 (2) the expiration of the term or the completion of
46-7 the undertaking, unless otherwise continued under Section 4.07.
46-8 (c) AGREEMENT ON SPECIFIED EVENT. Unless otherwise
46-9 continued under Section 4.07, the occurrence of an event specified
46-10 in the partnership agreement as requiring the winding up of the
46-11 partnership business or the express will of all the partners
46-12 requires a winding up of the partnership.
46-13 (d) ILLEGAL TO CONTINUE. An event that makes it illegal for
46-14 all or substantially all of the business of the partnership to be
46-15 continued requires a winding up of a partnership, but a cure of
46-16 illegality within 90 days after the date of notice to the
46-17 partnership of the event is effective retroactively to the date of
46-18 the event for purposes of this subsection.
46-19 (e) JUDICIAL DECREE. Application by a partner requires a
46-20 winding up if a judicial decree determines that:
46-21 (1) the economic purpose of the partnership is likely
46-22 to be unreasonably frustrated;
46-23 (2) another partner has engaged in conduct relating to
46-24 the partnership business that makes it not reasonably practicable
46-25 to carry on the business in partnership with that partner; or
46-26 (3) it is not otherwise reasonably practicable to
46-27 carry on the partnership business in conformity with the
47-1 partnership agreement.
47-2 (f) SALE OF PROPERTY. The sale of all or substantially all
47-3 of the property of the partnership outside the ordinary course of
47-4 business requires a winding up of a partnership.
47-5 (g) NOTICE FROM PARTNER IF NO TERM OR UNDERTAKING; OPTION TO
47-6 CONTINUE. If a partnership is not for a definite term or a
47-7 particular undertaking and its partnership agreement does not
47-8 provide for a specified event requiring a winding up, a request for
47-9 winding up the partnership from a partner, other than a partner who
47-10 has agreed not to withdraw, requires a winding up within 60 days
47-11 after the date of the partnership's receipt of notice of the
47-12 request or at a later date as specified by the notice, unless a
47-13 majority-in-interest of the partners agree to continue the
47-14 partnership. The continuation of the business by the other
47-15 partners or by those who habitually acted in the business before
47-16 the notice, other than the partner giving the notice, without any
47-17 settlement or liquidation of the partnership business, is prima
47-18 facie evidence of an agreement to continue the partnership.
47-19 Sec. 8.02. PARTNERSHIP CONTINUES AFTER OCCURRENCE OF EVENT
47-20 REQUIRING WINDING UP. A partnership continues after the occurrence
47-21 of an event requiring winding up until the winding up of its
47-22 business is completed, at which time the partnership is terminated.
47-23 Sec. 8.03. CONDUCT OF WINDING UP. (a) PERSONS AUTHORIZED
47-24 TO WIND UP. After the occurrence of an event requiring a winding
47-25 up:
47-26 (1) the partners who have not withdrawn may wind up a
47-27 partnership's business;
48-1 (2) the legal representative of the last surviving
48-2 partner may wind up a partnership's business; or
48-3 (3) on application of a partner, a partner's legal
48-4 representative or transferee, or a withdrawn partner whose interest
48-5 is not redeemed under Section 7.01(k), a court, for good cause, may
48-6 appoint a person to carry out the winding up and may make an order,
48-7 direction, or inquiry that the circumstances require.
48-8 (b) AUTHORIZED ACTIONS. To the extent appropriate for
48-9 winding up, as soon as reasonably practicable, and in the name of
48-10 and for and on behalf of the partnership, a person winding up a
48-11 partnership's business may:
48-12 (1) prosecute and defend civil, criminal, or
48-13 administrative suits;
48-14 (2) settle and close the partnership's business;
48-15 (3) dispose of and convey the partnership's property;
48-16 (4) satisfy or provide for the satisfaction of the
48-17 partnership's liabilities;
48-18 (5) distribute to the partners any remaining property
48-19 of the partnership; and
48-20 (6) perform any other necessary act.
48-21 (c) CONTINUATION TO PRESERVE VALUE. A person winding up a
48-22 partnership's business may continue the business of the partnership
48-23 in whole or in part, including delaying the disposition of
48-24 partnership property, only for the limited period necessary to
48-25 avoid unreasonable loss of the partnership's property or business.
48-26 Sec. 8.04. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
48-27 OCCURRENCE OF EVENT REQUIRING WINDING UP. (a) LIABILITY OF ALL
49-1 PARTNERS FOR LOSSES. Except as provided by Subsection (b), after
49-2 occurrence of an event requiring winding up the losses with respect
49-3 to which a partner must contribute under Section 8.06(c) include
49-4 losses from any liabilities incurred under Section 8.05.
49-5 (b) INDIVIDUAL LIABILITY OF ACTING PARTNER FOR LOSSES. A
49-6 partner who, with notice that an event requiring a winding up has
49-7 occurred, incurs a partnership liability under Section 8.05(2) by
49-8 an act that is not appropriate for winding up the partnership
49-9 business is liable to the partnership for a loss caused to the
49-10 partnership arising from that liability.
49-11 Sec. 8.05. PARTNER'S POWER TO BIND PARTNERSHIP AFTER
49-12 OCCURRENCE OF EVENT REQUIRING WINDING UP. After the occurrence of
49-13 an event requiring winding up, a partnership is bound by a
49-14 partner's act that:
49-15 (1) is appropriate for winding up the partnership
49-16 business; or
49-17 (2) would bind the partnership under Section 3.02
49-18 before the occurrence of the event requiring winding up, if the
49-19 other party to the transaction does not have notice that an event
49-20 requiring winding up has occurred.
49-21 Sec. 8.06. RULES FOR DISTRIBUTION ON WINDING UP.
49-22 (a) APPLICATION OF PROPERTY TO OBLIGATIONS. In winding up a
49-23 partnership business, the property of the partnership must be
49-24 applied to discharge its obligations to creditors, including
49-25 partners who are creditors other than in their capacities as
49-26 partners. A surplus must be applied to pay in cash the net amount
49-27 distributable to partners in accordance with their right to
50-1 distributions under Subsection (b).
50-2 (b) SETTLEMENT OF ACCOUNTS AMONG PARTNERS. Each partner is
50-3 entitled to a settlement of all partnership accounts on winding up
50-4 the partnership business. In settling accounts among the partners,
50-5 the partnership interest of a withdrawn partner that is not
50-6 redeemed under Section 7.01 is credited with a share of any profits
50-7 for the period after the partner's withdrawal but is charged with a
50-8 share of losses for that period only to the extent of profits
50-9 credited for that period, and the profits and losses that result
50-10 from the liquidation of the partnership property must be credited
50-11 and charged to the partners' capital accounts. The partnership
50-12 shall make a distribution to a partner in an amount equal to that
50-13 partner's positive balance in the partner's capital account. A
50-14 partner shall contribute to the partnership an amount equal to that
50-15 partner's negative balance in the partner's capital account.
50-16 (c) CONTRIBUTION TO SATISFY OBLIGATIONS. To the extent not
50-17 taken into account in settling the accounts among partners under
50-18 Subsection (b), each partner must contribute, in the proportion in
50-19 which the partner shares partnership losses, the amount necessary
50-20 to satisfy partnership obligations, excluding liabilities that
50-21 creditors have agreed may be satisfied only with partnership
50-22 property without recourse to individual partners. If a partner
50-23 fails to contribute, the other partners shall contribute, in the
50-24 proportions in which the partners share partnership losses, the
50-25 additional amount necessary to satisfy the partnership obligations.
50-26 A partner or partner's legal representative may enforce or recover
50-27 from the other partners, or from the estate of a deceased partner,
51-1 contributions the partner or estate makes to the extent the amount
51-2 contributed exceeds that partner's or the estate's share of the
51-3 partnership obligations.
51-4 (d) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
51-5 deceased partner is liable for the partner's obligation to
51-6 contribute to the partnership.
51-7 (e) ENFORCEMENT OF OBLIGATION OF ESTATE OF DECEASED PARTNER.
51-8 The partnership, an assignee for the benefit of creditors of a
51-9 partnership or a partner, or a person appointed by a court to
51-10 represent creditors of a partnership or a partner may enforce the
51-11 obligation of a partner or the estate of a deceased partner to
51-12 contribute to a partnership.
51-13 ARTICLE IX. PARTNERSHIP CONVERSIONS, MERGERS,
51-14 AND EXCHANGES
51-15 Sec. 9.01. CONVERSIONS. (a) GENERAL TO LIMITED
51-16 PARTNERSHIP. A partnership that is not a limited partnership may
51-17 convert, with the consent of a majority-in-interest of the
51-18 partners, to a domestic or foreign limited partnership by properly
51-19 filing a certificate of limited partnership in the state in which
51-20 the limited partnership is to be formed. If the limited
51-21 partnership is formed under the law of this state, in addition to
51-22 other matters required, the certificate must state:
51-23 (1) that the partnership is converting from a
51-24 partnership that is not a limited partnership to a limited
51-25 partnership;
51-26 (2) the name or names of the partnership before the
51-27 conversion to a limited partnership;
52-1 (3) the names of the general partners before the
52-2 conversion;
52-3 (4) the state in which the partnership was organized
52-4 before conversion;
52-5 (5) the change in name required, if any, in connection
52-6 with the operation of the partnership as a limited partnership in
52-7 this state; and
52-8 (6) the effective date of the conversion if different
52-9 from the date the certificate is filed.
52-10 If a partnership that is not a limited partnership converts
52-11 to a limited partnership, a partner who did not consent to the
52-12 conversion is considered to be a partner who has withdrawn from the
52-13 partnership effective immediately before the effective date of the
52-14 conversion unless, within 60 days after the later of the effective
52-15 date of the conversion or the date the partner receives actual
52-16 notice of the conversion, the partner notifies the partnership in
52-17 writing of the partner's desire not to withdraw. A withdrawal
52-18 under the described circumstances is not a wrongful withdrawal.
52-19 (b) LIMITED TO GENERAL. A domestic or foreign limited
52-20 partnership may convert, on the affirmative vote of a
52-21 majority-in-interest of the partners, to a partnership that is not
52-22 a limited partnership by:
52-23 (1) cancelling its certificate of limited partnership
52-24 in the state of formation or otherwise complying with the
52-25 provisions of that state's law as of the date that partnership's
52-26 existence terminated;
52-27 (2) amending its partnership agreement to reflect its
53-1 change in status and any change in name required to comply with
53-2 this Act; and
53-3 (3) stating the effective date of the conversion in
53-4 the partnership agreement if different from the date of the
53-5 cancellation of the limited partnership certificate.
53-6 If a limited partnership converts to a partnership that is
53-7 not a limited partnership, a partner who did not consent to the
53-8 conversion is considered to be a partner who has withdrawn from the
53-9 limited partnership effective immediately before the effective date
53-10 of the conversion unless, within 60 days after the later of the
53-11 effective date of the conversion or the date the partner receives
53-12 actual notice of the conversion, the partner notifies the
53-13 partnership in writing of the partner's desire not to withdraw. A
53-14 withdrawal under the described circumstances is not a wrongful
53-15 withdrawal.
53-16 (c) LIABILITY OF FORMER LIMITED PARTNER. A limited partner
53-17 who remains in a partnership that results from the conversion of a
53-18 limited partnership to a partnership that is not a limited
53-19 partnership is treated as an incoming partner in the partnership as
53-20 of the effective date of the conversion for purposes of determining
53-21 the partner's liability:
53-22 (1) to the partners of the partnership; and
53-23 (2) for the debts and obligations of the partnership.
53-24 (d) LIABILITY OF GENERAL PARTNER IN CONVERTED LIMITED
53-25 PARTNERSHIP. If a partnership that is not a limited partnership
53-26 converts to a limited partnership, a partner who converts to a
53-27 limited partner continues to be liable to the partners of the
54-1 partnership and for a debt or obligation of the partnership
54-2 incurred before the date of conversion on the same basis as a
54-3 withdrawn partner remains liable to the partners or for a debt or
54-4 obligation of a partnership incurred before withdrawal under
54-5 Section 7.03.
54-6 (e) AUTHORITY OF FORMER GENERAL PARTNER WHO IS LIMITED
54-7 PARTNER IN CONVERTED LIMITED PARTNERSHIP. If a partnership that is
54-8 not a limited partnership converts to a limited partnership, an
54-9 action of a partner who converts to a limited partner that is taken
54-10 within one year after the effective date of the conversion binds
54-11 the partnership to a transaction for which the former general
54-12 partner no longer has authority to bind the partnership if:
54-13 (1) the transaction is one in which the partner's
54-14 action would bind the partnership before the effective date of the
54-15 conversion; and
54-16 (2) the other party to the transaction:
54-17 (A) does not have notice of the person's
54-18 conversion to a limited partner;
54-19 (B) has done business with the partnership
54-20 within one year preceding the effective date of the conversion; and
54-21 (C) reasonably believed that the partner who
54-22 converted was a partner with authority to bind the partnership to
54-23 the transaction at the time of the transaction.
54-24 (f) EFFECTIVE DATE OF CONVERSION. A conversion of a
54-25 partnership that is not a limited partnership to a limited
54-26 partnership or a conversion of a limited partnership to a
54-27 partnership that is not a limited partnership is effective on the
55-1 later of the date specified in a written agreement concerning the
55-2 conversion between the partners or the date all actions required by
55-3 this section have been completed.
55-4 Sec. 9.02. MERGERS. (a) ADOPTION OF PLAN. A partnership
55-5 may adopt a plan of merger and one or more partnerships may merge
55-6 with one or more domestic or foreign partnerships or other entities
55-7 if each domestic or foreign partnership that is a party to the plan
55-8 of merger approves the plan of merger in the manner prescribed for
55-9 mergers in its partnership agreement or constituent documents or by
55-10 applicable law. If one or more foreign partnerships or other
55-11 entities is a party to the merger or is to be created by the terms
55-12 of the plan of merger:
55-13 (1) the merger must be permitted by:
55-14 (A) the laws under which each foreign
55-15 partnership and each other entity that is a party to the merger is
55-16 formed or organized; or
55-17 (B) the partnership agreement or other
55-18 constituent documents of the foreign partnership or other entity
55-19 not inconsistent with those laws; and
55-20 (2) each foreign partnership or other entity that is a
55-21 party to the merger must comply with the laws or documents in
55-22 effecting the merger.
55-23 (b) CONTENTS OF PLAN OF MERGER. If a partnership merges
55-24 with one or more domestic or foreign limited partnerships or other
55-25 entities, other than another partnership formed under this Act, a
55-26 plan of merger must be adopted. The plan must include:
55-27 (1) the name and state of organization of:
56-1 (A) each domestic or foreign partnership or
56-2 other entity that is a party to the merger;
56-3 (B) each domestic or foreign partnership or
56-4 other entity, if any, that will survive the merger, which may be
56-5 one or more of the domestic or foreign partnerships or other
56-6 entities who are a party to the merger; and
56-7 (C) each new domestic or foreign partnership or
56-8 other entity, if any, that may be created by the terms of the plan
56-9 of merger;
56-10 (2) the terms and conditions of the merger, including,
56-11 if more than one domestic or foreign partnership or other entity is
56-12 to survive or to be created by the terms of the plan of merger, the
56-13 manner and basis of:
56-14 (A) allocating and vesting the real estate and
56-15 other property of each domestic or foreign partnership and of each
56-16 other entity that is a party to the merger among one or more of the
56-17 surviving or new domestic or foreign partnerships or other
56-18 entities; and
56-19 (B) allocating all liabilities and obligations
56-20 of each domestic or foreign partnership and other entity that is a
56-21 party to the merger, or making adequate provision for the payment
56-22 and discharge of the liabilities and obligations, among one or more
56-23 of the surviving or new domestic or foreign partnerships or other
56-24 entities;
56-25 (3) the manner and basis of converting any of the
56-26 partnership interests or other evidences of ownership of each
56-27 domestic or foreign partnership and other entity that is a party to
57-1 the merger into:
57-2 (A) partnership interests, shares, obligations,
57-3 evidences of ownership, rights to purchase securities, or other
57-4 securities of one or more of the surviving or new domestic or
57-5 foreign partnerships or other entities;
57-6 (B) cash; or
57-7 (C) other property, including shares,
57-8 obligations, evidences of ownership, rights to purchase securities,
57-9 or other securities of another person or entity; or
57-10 (D) any combination of those items;
57-11 (4) the certificate of limited partnership, articles
57-12 of incorporation, articles of organization, or other organizational
57-13 documents of each other entity that is to be created or will act as
57-14 a surviving entity by the terms of the plan of merger;
57-15 (5) the names of the principal officer of the
57-16 surviving entities and the registered officer and registered agent
57-17 of the surviving entities if a registered officer or agent is
57-18 required by the laws under which the surviving entities are formed;
57-19 (6) a statement describing whether the surviving
57-20 entity is a partnership, limited partnership, corporation, limited
57-21 liability company, or other entity; and
57-22 (7) other provisions relating to the merger.
57-23 (c) CERTIFICATE OF MERGER. After a plan of merger has been
57-24 approved by each of the partnerships or other entities that is a
57-25 party to the plan of merger and a partnership merges with one or
57-26 more domestic or foreign limited partnerships or other entities, a
57-27 certificate of merger shall be executed on behalf of each
58-1 partnership or other entity by at least one general partner of each
58-2 partnership that is a party to the plan of merger and by an
58-3 authorized officer, agent, or other representative of each other
58-4 entity that is a party to the plan of merger. The certificate must
58-5 include:
58-6 (1) the plan of merger; and
58-7 (2) for each domestic or foreign partnership or other
58-8 entity that is a party to the plan of merger, a statement that the
58-9 plan of merger was authorized by all actions required by the laws
58-10 under which it was formed or organized and by its constituent
58-11 documents.
58-12 (d) FILING. The original of the certificate of merger and a
58-13 number of copies of the certificate equal to the number of
58-14 surviving and new domestic or foreign partnerships and other
58-15 entities that are a party to the plan of merger or that will be
58-16 created by the terms of the plan must be delivered to the authority
58-17 with which the surviving entity files merger documents.
58-18 (e) EFFECTIVE DATE OF MERGER. If a certificate of merger is
58-19 delivered to the secretary of state, the merger is effective on the
58-20 date of the issuance of the certificate of merger by the secretary
58-21 of state or on a later date stated in the certificate of merger.
58-22 If a certificate of merger is not required to be filed with the
58-23 secretary of state, the merger is effective on the date agreed to
58-24 by the parties to the merger as set out in the plan of merger or as
58-25 otherwise agreed to by the parties.
58-26 (f) EFFECT OF MERGER. (1) A partner of a partnership that
58-27 is a party to a merger does not become personally liable as a
59-1 result of the merger for a liability or obligation of another
59-2 person that is a party to the merger unless the partner consents to
59-3 becoming personally liable by action taken in connection with the
59-4 specific plan of merger approved by the partner. A partner who
59-5 remains in or enters a domestic or foreign partnership or other
59-6 entity that survives a merger or that enters a domestic or foreign
59-7 partnership or other entity created by the terms of the plan of
59-8 merger shall be treated as an incoming partner in the new or
59-9 surviving partnership as of the effective date of the merger for
59-10 the purpose of determining the partner's liability for a debt or
59-11 obligation of the other partnerships or entities that are parties
59-12 to the merger and in which the partner was not associated.
59-13 (2) The separate existence of every domestic
59-14 partnership or other entity that is a party to a merger, except a
59-15 surviving or new domestic partnership or other entity, ceases when
59-16 a merger takes effect.
59-17 (3) All rights, title, and interest to all real estate
59-18 and other property owned by each domestic or foreign partnership
59-19 and by each other entity that is a party to the merger is allocated
59-20 to and vested in one or more of the surviving or resulting entities
59-21 as provided in a plan of merger without reversion or impairment,
59-22 without further act or deed, and without any transfer or assignment
59-23 having occurred, but subject to any existing liens or other
59-24 encumbrances on the property, when a merger takes effect.
59-25 (4) When a merger takes effect, all liabilities and
59-26 obligations of each domestic or foreign partnership and other
59-27 entity that is a party to the merger are allocated to one or more
60-1 of the surviving or new domestic or foreign partnerships or other
60-2 entities in the manner prescribed by the plan of merger, and each
60-3 surviving or new domestic or foreign partnership or other entity to
60-4 which a liability or obligation is allocated under the plan of
60-5 merger becomes the primary obligor for the liability or obligation.
60-6 Except as otherwise provided by the plan of merger or by law or
60-7 contract, a party to the merger, other than a surviving domestic or
60-8 foreign partnership or other entity with liability at the time of
60-9 the merger, or another domestic or foreign partnership or other
60-10 entity created by the merger does not become liable for the debt or
60-11 obligation.
60-12 (5) After a merger, a proceeding pending by or against
60-13 a domestic or foreign partnership or another entity that is a party
60-14 to the merger may be continued as if the merger did not occur and
60-15 the partnership or other entity that has been allocated the
60-16 liabilities, obligations, asset, or rights associated with the
60-17 proceeding under the terms of the plan of merger remains the
60-18 primary obligor, or the surviving or new domestic or foreign
60-19 partnership or other entity or entities to which the liability,
60-20 obligation, asset, or right associated with the proceeding is
60-21 allocated to and vested in under the plan of merger may be
60-22 substituted in the proceeding.
60-23 (6) The partnership agreement, certificate of limited
60-24 partnership, and other constituent documents of each other entity
60-25 that will act as a surviving entity by the terms of a plan of
60-26 merger is considered amended to the extent provided in the plan of
60-27 merger when the merger takes effect.
61-1 (7) Each new domestic partnership named in a plan of
61-2 merger under Subsection (b)(1), each new domestic limited
61-3 partnership for which a certificate of limited partnership is
61-4 included in a plan of merger under Subsection (b)(4), and each
61-5 other entity to be formed or organized under the laws of this state
61-6 for which organizational documents are included in a plan of merger
61-7 under Subsection (b)(4) are formed or organized as provided in the
61-8 plan of merger on:
61-9 (A) delivering an executed copy of the
61-10 certificate of merger to, or filing the certificate with, the
61-11 governmental entity with which organizational documents of the
61-12 partnership or other entity are required to be delivered or filed,
61-13 if any; and
61-14 (B) meeting additional requirements, if any, of
61-15 law for its formation or organization.
61-16 (8) The partnership interest of each domestic or
61-17 foreign partnership and the interest, shares, or evidences of
61-18 ownership in each other entity that is a party to the merger that
61-19 are to be converted or exchanged, in whole or in part, into (i)
61-20 partnership interests, shares, obligations, evidences of ownership,
61-21 rights to purchase securities, or other securities of one or more
61-22 of the surviving or new domestic or foreign partnerships or other
61-23 entities, (ii) cash, or (iii) other property, including shares,
61-24 obligations, evidences of ownership, rights to purchase securities,
61-25 or other securities of any other person or entity, or into any
61-26 combination of those items, are converted and exchanged when a
61-27 merger takes effect. After the merger the former partners of each
62-1 domestic partnership and owners of shares or evidences of ownership
62-2 in each other domestic entity that is a party to the merger are
62-3 entitled only to the rights provided in the plan of merger.
62-4 (9) If a plan of merger fails to provide for the
62-5 allocation and vesting of the right, title, and interest in a
62-6 particular item of real estate or other property or for the
62-7 allocation of a liability or obligation of a party to the merger,
62-8 when the merger takes effect the item of real estate or other
62-9 property shall be owned in undivided interests by, or the liability
62-10 or obligation shall be a joint and several liability and obligation
62-11 of, each of the surviving and new domestic and foreign partnerships
62-12 and other entities, pro rata to the total number of surviving and
62-13 new domestic and foreign partnerships and other entities resulting
62-14 from the merger.
62-15 (10) If a domestic or foreign partnership merges with
62-16 another domestic or foreign partnership or other entity and through
62-17 the merger process no longer exists, a person who becomes a member
62-18 of the surviving domestic or foreign partnership or other entity,
62-19 for a period of one year after the effective date of the merger,
62-20 may bind the surviving entity to a transaction for which it no
62-21 longer has authority to bind the entity if the transaction is one
62-22 in which the partner's actions would bind the foreign or domestic
62-23 partnership before the effective date of the merger and the other
62-24 party to the transaction:
62-25 (A) does not have notice of the merger;
62-26 (B) had done business with the partnership which
62-27 no longer exists within one year preceding the effective date of
63-1 the merger; and
63-2 (C) reasonably believes that the partner who was
63-3 previously a member of the partnership which was merged into the
63-4 surviving entity and is now a partner of the surviving entity was a
63-5 partner with authority to bind the partnership to the transaction
63-6 at the time of the transaction.
63-7 (g) DEFINITION OF "OTHER ENTITY." For purposes of this
63-8 section, the term "other entity" means any entity, whether
63-9 organized for profit or not, that is a corporation, limited
63-10 partnership, other than a domestic or foreign limited partnership,
63-11 limited liability company, joint venture, joint stock company,
63-12 cooperative, association, bank, insurance company, or other legal
63-13 entity organized under the laws of this state or another state or
63-14 country to the extent the laws or the constituent documents of that
63-15 entity, not inconsistent with law, permit that entity to enter into
63-16 a merger or partnership interest exchange as permitted by this
63-17 section.
63-18 Sec. 9.03. EXCHANGE. (a) One or more domestic or foreign
63-19 partnerships may adopt a plan of exchange by which a domestic or
63-20 foreign partnership or other entity acquires all of the outstanding
63-21 partnership interests of one or more domestic partnerships in
63-22 exchange for cash or securities of the acquiring domestic or
63-23 foreign partnership or other entity, if:
63-24 (1) each domestic or foreign partnership, the
63-25 partnership interests of which are to be acquired under the plan of
63-26 exchange, approves the plan of exchange in the manner prescribed in
63-27 its partnership agreement; and
64-1 (2) each acquiring domestic or foreign partnership or
64-2 other entity takes all action that may be required by the laws of
64-3 the state under which it was formed or incorporated and as required
64-4 by its partnership agreement or other constituent documents in
64-5 order to effect the exchange.
64-6 (b) Filing with the secretary of state is not necessary to
64-7 evidence or effect an interest exchange under this section for a
64-8 domestic partnership that is a party to the interest exchange.
64-9 When an interest exchange takes effect as provided in the plan of
64-10 exchange:
64-11 (1) the partnership interest of each domestic
64-12 partnership that is to be acquired under the plan of exchange is
64-13 considered exchanged as provided in the plan of exchange;
64-14 (2) the former holders of the partnership interests
64-15 exchanged under the plan of exchange are entitled only to the
64-16 exchange rights provided in the plan of exchange; and
64-17 (3) the acquiring domestic or foreign partnership or
64-18 other entity or entities are entitled to all rights, title, and
64-19 interest with respect to the partnership interests so acquired and
64-20 exchanged, subject to the provisions in the plan of exchange.
64-21 (c) For purposes of this section, the term "other entity"
64-22 means any entity, whether organized for profit or not, that is a
64-23 corporation, limited partnership, partnership, other than a
64-24 domestic or foreign limited partnership, limited liability company,
64-25 joint venture, joint stock company, cooperative, association, bank,
64-26 insurance company, or other legal entity organized under the laws
64-27 of this state or another state or country to the extent the laws or
65-1 the constituent documents of that entity, not inconsistent with
65-2 law, permit that entity to enter into a merger or partnership
65-3 interest exchange as permitted by this section.
65-4 Sec. 9.04. LAW GOVERNING LIMITED PARTNERSHIP. A limited
65-5 partnership's participation in a merger or exchange is governed by
65-6 Section 2.11, Texas Revised Limited Partnership Act (Article
65-7 6132a-1, Vernon's Texas Civil Statutes), and its subsequent
65-8 amendments, not Section 9.02 or 9.03 of this Act.
65-9 ARTICLE X. MISCELLANEOUS PROVISIONS
65-10 Sec. 10.01. SHORT TITLE. This Act may be cited as the
65-11 "Texas Revised Partnership Act."
65-12 Sec. 10.02. SEVERABILITY. If a provision of this Act or its
65-13 application to a person or circumstance is held invalid, the
65-14 invalidity does not affect other provisions or applications of this
65-15 Act that can be given effect without the invalid provision or
65-16 application, and to this end the provisions of this Act are
65-17 severable.
65-18 Sec. 10.03. APPLICATION. (a) BEFORE JANUARY 1, 1999.
65-19 Except as provided by Subsection (b), before January 1, 1999, this
65-20 Act applies only to a partnership formed:
65-21 (1) on or after January 1, 1994, unless that
65-22 partnership is continuing the business of a dissolved partnership
65-23 under Section 41, Texas Uniform Partnership Act (Article 6132b,
65-24 Vernon's Texas Civil Statutes), and its subsequent amendments; and
65-25 (2) before January 1, 1994, that elects, as provided
65-26 by Subsection (d), to be governed by this Act.
65-27 (b) REGISTERED LIMITED LIABILITY PARTNERSHIP. Section 3.08
66-1 of this Act, including the fee provisions, applies to a registered
66-2 limited liability partnership, regardless of the date of formation
66-3 and regardless of whether the partnership elects to be governed by
66-4 this Act, except that a registered limited liability partnership
66-5 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
66-6 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
66-7 Vernon's Texas Civil Statutes), for purposes of determining
66-8 liability for errors, omissions, negligence, incompetence, or
66-9 malfeasance occurring before January 1, 1994.
66-10 (c) AFTER DECEMBER 31, 1998. After December 31, 1998, this
66-11 Act applies to all partnerships.
66-12 (d) VOLUNTARY APPLICATION EARLY. Before January 1, 1999, a
66-13 partnership formed before January 1, 1994, voluntarily may elect,
66-14 by complying with the procedures provided in its partnership
66-15 agreement for amending the partnership agreement, to adopt this
66-16 Act. The provisions of this Act relating to the liability of the
66-17 partnership's partners to third parties apply to limit those
66-18 partners' liability to a third party who had done business with the
66-19 partnership within one year preceding the partnership's election to
66-20 adopt this Act only if the partnership gives notice to the third
66-21 party of the partnership's election to adopt this Act.
66-22 Sec. 10.04. APPLICATION TO EXISTING RELATIONSHIPS. (a)
66-23 This Act does not impair the obligations of a contract existing
66-24 when this Act takes effect or affect an action or proceeding begun
66-25 or right accrued before this Act takes effect.
66-26 (b) A judgment against a partnership or a partner in an
66-27 action commenced before the effective date of this Act may be
67-1 enforced in the same manner as a judgment rendered before the
67-2 effective date of this Act.
67-3 SECTION 2. Part VII, Texas Uniform Partnership Act (Article
67-4 6132b, Vernon's Texas Civil Statutes), is amended by adding Section
67-5 47 to read as follows:
67-6 Sec. 47. APPLICATION; EXPIRATION. (a) Except as provided
67-7 by Section 10.03(b), Texas Revised Partnership Act, this Act does
67-8 not apply to a partnership to which the Texas Revised Partnership
67-9 Act applies.
67-10 (b) This Act expires January 1, 1999.
67-11 SECTION 3. Subsection A, Section 4, The Securities Act
67-12 (Article 581-4, Vernon's Texas Civil Statutes), is amended to read
67-13 as follows:
67-14 A. The term "security" or "securities" shall include any
67-15 limited partner interest in a limited partnership, share, stock,
67-16 treasury stock, stock certificate under a voting trust agreement,
67-17 collateral trust certificate, equipment trust certificate,
67-18 preorganization certificate or receipt, subscription or
67-19 reorganization certificate, note, bond, debenture, mortgage
67-20 certificate or other evidence of indebtedness, any form of
67-21 commercial paper, certificate in or under a profit sharing or
67-22 participation agreement, certificate or any instrument representing
67-23 any interest in or under an oil, gas or mining lease, fee or title,
67-24 or any certificate or instrument representing or secured by an
67-25 interest in any or all of the capital, property, assets, profits or
67-26 earnings of any company, investment contract, or any other
67-27 instrument commonly known as a security, whether similar to those
68-1 herein referred to or not. Provided, however, that this definition
68-2 shall not apply to any insurance policy, endowment policy, annuity
68-3 contract, optional annuity contract, or any contract or agreement
68-4 in relation to and in consequence of any such policy or contract,
68-5 issued by an insurance company subject to the supervision or
68-6 control of the State Board of Insurance when the form of such
68-7 policy or contract has been duly filed with the Board as now or
68-8 hereafter required by law.
68-9 SECTION 4. Section 1.03, Texas Revised Limited Partnership
68-10 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
68-11 read as follows:
68-12 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
68-13 2.14(a)(3) of this Act, the <The> name of a limited partnership as
68-14 stated in its certificate of limited partnership, a reserved or
68-15 registered name, or the name under which a foreign limited
68-16 partnership is permitted to register to do business in Texas as
68-17 contained in its application for registration as a foreign limited
68-18 partnership must contain the words "Limited Partnership,"
68-19 "Limited," or the abbreviation "L.P." or "Ltd." as the last words
68-20 or letters of its name and may not:
68-21 (1) contain the name of a limited partner unless:
68-22 (A) that name is also the name of a general
68-23 partner; or
68-24 (B) the business of the limited partnership or
68-25 foreign limited partnership had been carried on under that name
68-26 before the admission of that limited partner;
68-27 (2) contain a word or phrase indicating or implying
69-1 that it is organized other than for a purpose stated in its
69-2 partnership agreement;
69-3 (3) be the same as or deceptively similar to the name
69-4 of a corporation or limited partnership that exists under the laws
69-5 of Texas, that has a certificate of authority to transact business
69-6 as a foreign corporation in Texas, or that is registered as a
69-7 foreign limited partnership in Texas, or a name that has been
69-8 reserved or registered for a corporation, limited partnership, or
69-9 foreign limited partnership under the laws of Texas, except that a
69-10 limited partnership or foreign limited partnership may adopt,
69-11 reserve, or register, as appropriate, a name that is similar if
69-12 written consent is obtained from the corporation, limited
69-13 partnership, or foreign limited partnership having the name
69-14 considered similar or from the person for whom the name considered
69-15 similar is reserved or registered in the office of the secretary of
69-16 state; or
69-17 (4) contain a word or phrase indicating or implying
69-18 that it is a corporation.
69-19 SECTION 5. Article 2, Texas Revised Limited Partnership Act
69-20 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
69-21 adding Section 2.14 to read as follows:
69-22 Sec. 2.14. LIMITED PARTNERSHIP AS REGISTERED LIMITED
69-23 LIABILITY PARTNERSHIP. (a) A limited partnership is a registered
69-24 limited liability partnership as well as a limited partnership if
69-25 it:
69-26 (1) registers as a registered limited liability
69-27 partnership as provided by Section 3.08(b), Texas Revised
70-1 Partnership Act, as permitted by its partnership agreement or, if
70-2 its partnership agreement does not include provisions for becoming
70-3 a registered limited liability partnership, with the consent of
70-4 partners required to amend its partnership agreement;
70-5 (2) complies with Section 3.08(d), Texas Revised
70-6 Partnership Act; and
70-7 (3) has as the last words or letters of its name the
70-8 words "Limited Partnership" or the abbreviation "Ltd." followed by
70-9 the words "registered limited liability partnership" or the
70-10 abbreviation "L.L.P."
70-11 (b) In applying Section 3.08(b), Texas Revised Partnership
70-12 Act, to a limited partnership:
70-13 (1) an application to become a registered limited
70-14 liability partnership or to withdraw a registration must be
70-15 executed by at least one general partner; and
70-16 (2) all other references to partners mean general
70-17 partners only.
70-18 (c) If a limited partnership is a registered limited
70-19 liability partnership, Section 3.08(a), Texas Revised Partnership
70-20 Act, applies to its general partners and to any of its limited
70-21 partners who, under other provisions of this Act, are liable for
70-22 the debts or obligations of the limited partnership.
70-23 SECTION 6. Section 11.13, Texas Revised Limited Partnership
70-24 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
70-25 read as follows:
70-26 Sec. 11.13. LIMITS ON A CONTRACTUAL INDEMNIFICATION. A
70-27 provision for a limited partnership to indemnify or to advance
71-1 expenses to a general partner who was, is, or is threatened to be
71-2 made a named defendant or respondent in a proceeding, whether
71-3 contained in the limited partnership agreement, a resolution of
71-4 the general partners or the limited partners, an agreement, or
71-5 otherwise, except in accordance with Section 11.18 of this Act, is
71-6 valid only to the extent that it is consistent with this article or
71-7 with the applicable reimbursement provisions of the Texas Uniform
71-8 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes), or
71-9 the Texas Revised Partnership Act as limited by the limited
71-10 partnership agreement, if such a limitation exists.
71-11 SECTION 7. Section 13.03, Texas Revised Limited Partnership
71-12 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
71-13 read as follows:
71-14 Sec. 13.03. CASES NOT PROVIDED FOR BY THIS ACT. (a) In any
71-15 case not provided for by this Act, the applicable statute governing
71-16 partnerships that are not limited partnerships <Texas Uniform
71-17 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes)> and
71-18 the rules of law and equity, including the law merchant, govern.
71-19 (b) Before January 1, 1999:
71-20 (1) the Texas Uniform Partnership Act (Article 6132b,
71-21 Vernon's Texas Civil Statutes) applies to a limited partnership
71-22 formed or a foreign partnership registered in this state before
71-23 January 1, 1994, that does not elect, as provided by Subsection
71-24 (b), to have the Texas Revised Partnership Act apply as its
71-25 supplemental law; and
71-26 (2) the Texas Revised Partnership Act applies to a
71-27 limited partnership formed or a foreign limited partnership
72-1 registered in this state:
72-2 (A) on or after January 1, 1994; and
72-3 (B) before January 1, 1994, that elects, as
72-4 provided by Subsection (d), to have the Texas Revised Partnership
72-5 Act apply as its supplemental law.
72-6 (c) After December 31, 1998, the applicable statute
72-7 governing a partnership that is not a limited partnership is the
72-8 Texas Revised Partnership Act for all limited partnerships and
72-9 foreign limited partnerships registered in this state.
72-10 (d) Before January 1, 1999, a limited partnership formed or
72-11 foreign limited partnership registered in this state before January
72-12 1, 1994, voluntarily may elect, by complying with the procedures in
72-13 its partnership agreement for amending the partnership agreement,
72-14 to have the Texas Revised Partnership Act apply as its supplemental
72-15 law. The election is made effective by amending its certificate of
72-16 limited partnership or amending its application for registration to
72-17 state that it has so elected.
72-18 SECTION 8. Article 13, Texas Revised Limited Partnership Act
72-19 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
72-20 adding Sections 13.05-13.09 to read as follows:
72-21 Sec. 13.05. PERIODIC REPORT BY LIMITED PARTNERSHIP. (a)
72-22 The secretary of state may require a domestic limited partnership
72-23 or a foreign limited partnership authorized to transact business in
72-24 this state to file a report as required by this section. The
72-25 report may not be required to be filed more than once every four
72-26 years. The report must include:
72-27 (1) the name of the limited partnership and the state
73-1 or territory under the laws of which it is organized;
73-2 (2) the address of the registered office of the
73-3 limited partnership in this state and the name of the registered
73-4 agent at that address;
73-5 (3) the address of the principal office in the United
73-6 States where records are to be kept or made available under Section
73-7 1.07 of this Act; and
73-8 (4) the name, mailing address, and street address of
73-9 the business or residence of each general partner.
73-10 (b) The report must be made on a form adopted by the
73-11 secretary of state for that purpose, and the information contained
73-12 in the report must be given as of the date of the execution of the
73-13 report. The report must be signed on behalf of the limited
73-14 partnership by at least one general partner. The filing fee for
73-15 the report is $50.
73-16 (c) The report must be delivered to the secretary of state
73-17 not later than the 30th day after the date on which notice is
73-18 mailed by the secretary of state stating that the report is due.
73-19 The notice shall be addressed to the limited partnership and mailed
73-20 to:
73-21 (1) the registered office of the limited partnership;
73-22 (2) the last known address of the limited partnership
73-23 as it appears on record in the office of the secretary of state; or
73-24 (3) any other known place of business of the limited
73-25 partnership.
73-26 (d) Along with the notice that the report is due, the
73-27 secretary of state shall mail to the limited partnership copies of
74-1 a report form to be prepared and filed as provided by this section.
74-2 Two copies of the report shall be delivered to the secretary of
74-3 state. If the secretary of state finds that the report complies
74-4 with this section, the secretary shall:
74-5 (1) endorse on the report the word "Filed" and the
74-6 month, day, and year of filing;
74-7 (2) notify the limited partnership of the filing of
74-8 the report; and
74-9 (3) update the records of the secretary of state's
74-10 office to reflect:
74-11 (A) address changes reported for the registered
74-12 office, principal office, and the business or residence address of
74-13 a general partner; and
74-14 (B) a reported change in the name of the
74-15 registered agent.
74-16 (e) The filing of a report under this section does not
74-17 relieve the limited partnership of the requirement to file an
74-18 amendment to the certificate of limited partnership required under
74-19 Section 2.02 of this Act, except that the limited partnership is
74-20 not required to file an amendment to change the registered office
74-21 or agent.
74-22 (f) The secretary of state shall mail each limited
74-23 partnership subject to this Act its first notice under Subsection
74-24 (c) of this section on or before September 1, 1997. This
74-25 subsection expires September 2, 1997.
74-26 Sec. 13.06. FORFEITURE OF RIGHT TO TRANSACT BUSINESS FOR
74-27 FAILURE TO FILE PERIODIC REPORT. (a) A domestic or foreign
75-1 limited partnership that fails to file a report required under
75-2 Section 13.05 of this Act when due forfeits its right to transact
75-3 business in this state.
75-4 (b) A forfeiture under this section takes effect without
75-5 judicial ascertainment. The secretary of state shall enter on the
75-6 record kept in the secretary's office relating to the limited
75-7 partnership a notation that the right to transact business has been
75-8 forfeited together with the date of forfeiture. Notice of the
75-9 forfeiture shall be mailed to the limited partnership at:
75-10 (1) the registered office of the limited partnership;
75-11 (2) the last known address of the limited partnership;
75-12 or
75-13 (3) any other place of business of the limited
75-14 partnership.
75-15 (c) Unless the right of the limited partnership to transact
75-16 business is revived in accordance with Section 13.07 of this Act,
75-17 the limited partnership may not maintain an action, suit, or
75-18 proceeding in a court of this state, and a successor or assignee of
75-19 the limited partnership may not maintain an action, suit, or
75-20 proceeding in a court of this state on a right, claim, or demand
75-21 arising out of the transaction of business by the limited
75-22 partnership in this state. The forfeiture of the right to transact
75-23 business in this state does not impair the validity of a contract
75-24 or act of the limited partnership and does not prevent the limited
75-25 partnership from defending an action, suit, or proceeding in a
75-26 court of this state.
75-27 (d) This section does not affect the liability of a limited
76-1 partner in the limited partnership.
76-2 Sec. 13.07. REVIVAL OF RIGHT TO TRANSACT BUSINESS AFTER
76-3 FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) A limited
76-4 partnership that forfeits the right to transact business in this
76-5 state as provided by Section 13.06 of this Act may be relieved from
76-6 the forfeiture by filing the required report not later than the
76-7 120th day after the date of mailing of the notice of forfeiture
76-8 under Section 13.06(b) of this Act, together with:
76-9 (1) the filing fee; and
76-10 (2) a late fee in an amount equal to the lesser of:
76-11 (A) $25 for each month or fractional part of a
76-12 month that has elapsed since the date of the notice of forfeiture;
76-13 or
76-14 (B) $100.
76-15 (b) If a limited partnership complies with Subsection (a) of
76-16 this section, the secretary of state shall revive the right of the
76-17 limited partnership to transact business in this state, cancelling
76-18 the notation regarding the forfeiture and noting the revival and
76-19 the date of revival on the record kept in the secretary's office
76-20 relating to the limited partnership.
76-21 Sec. 13.08. CANCELLATION OF CERTIFICATE OR REGISTRATION
76-22 AFTER FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) The
76-23 secretary of state may cancel the certificate of a limited
76-24 partnership, or the registration of a foreign limited partnership,
76-25 if the limited partnership forfeits its right to transact business
76-26 in this state under Section 13.06 of this Act and fails to revive
76-27 that right under Section 13.07 of this Act. The cancellation takes
77-1 effect without judicial ascertainment. The secretary of state
77-2 shall enter on the record kept in the secretary's office relating
77-3 to the limited partnership a notation of the cancellation and the
77-4 date of cancellation.
77-5 (b) On cancellation, the status of the limited partnership
77-6 is changed to inactive according to the records of the secretary of
77-7 state. The change to inactive status does not affect the liability
77-8 of a limited partner of the limited partnership.
77-9 Sec. 13.09. REINSTATEMENT OF CERTIFICATE OR REGISTRATION
77-10 AFTER CANCELLATION FOR FAILURE TO FILE PERIODIC REPORT. (a) A
77-11 limited partnership whose certificate or registration has been
77-12 canceled as provided by Section 13.08 of this Act may be relieved
77-13 of the cancellation by filing the report required by Section 13.05,
77-14 together with the filing fee for the report, a late fee of $100,
77-15 and a reinstatement fee of $100.
77-16 (b) If the limited partnership complies with the fees
77-17 required by Subsection (a) of this section, the secretary of state
77-18 shall reinstate the certificate or registration of the limited
77-19 partnership without judicial ascertainment. The secretary shall
77-20 change the status of the limited partnership to active and note the
77-21 reinstatement on the record kept in the secretary's office relating
77-22 to the limited partnership. If the name of the limited partnership
77-23 is not available at the time of reinstatement, the secretary shall
77-24 require the limited partnership to file an amendment to its
77-25 certificate or application or adopt an assumed name for use in this
77-26 state as a precondition to reinstatement.
77-27 SECTION 9. This Act takes effect January 1, 1994.
78-1 SECTION 10. The importance of this legislation and the
78-2 crowded condition of the calendars in both houses create an
78-3 emergency and an imperative public necessity that the
78-4 constitutional rule requiring bills to be read on three several
78-5 days in each house be suspended, and this rule is hereby suspended.