1-1 By: Harris of Dallas S.B. No. 909
1-2 (In the Senate - Filed March 11, 1993; March 15, 1993, read
1-3 first time and referred to Committee on Jurisprudence;
1-4 April 6, 1993, reported favorably, as amended, by the following
1-5 vote: Yeas 7, Nays 0; April 6, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Henderson x
1-9 Harris of Tarrant x
1-10 Brown x
1-11 Harris of Dallas x
1-12 Luna x
1-13 Parker x
1-14 West x
1-15 COMMITTEE AMENDMENT NO. 1 By: Harris of Dallas
1-16 Amend S.B. No. 909 by adding after line 46 and before line 47, of
1-17 page 6 a new paragraph (c) to read as follows:
1-18 (c) Conveyance of Real Property. A conveyance of real
1-19 property by a partner on behalf of the partnership not otherwise
1-20 binding on the partnership does bind the partnership if the
1-21 partnership real property has been conveyed by the grantee or a
1-22 person claiming through the grantee to a holder for value without
1-23 knowledge that the partner, in making the conveyance, has exceeded
1-24 that partner's authority.
1-25 A BILL TO BE ENTITLED
1-26 AN ACT
1-27 relating to partnerships and the regulation of limited partnership
1-28 interests as securities; adopting the Texas Revised Partnership
1-29 Act; providing penalties.
1-30 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-31 SECTION 1. The Texas Revised Partnership Act is enacted to
1-32 read as follows:
1-33 TEXAS REVISED PARTNERSHIP ACT
1-34 ARTICLE I. GENERAL PROVISIONS
1-35 Sec. 1.01. GENERAL DEFINITIONS. In this Act:
1-36 (1) "Business" means a trade, occupation, profession,
1-37 or other commercial activity.
1-38 (2) "Capital account" means the amount of a partner's
1-39 original contribution to a partnership, which consists of cash and
1-40 the agreed value of any other contribution to the partnership,
1-41 increased by the amount of additional contributions made by that
1-42 partner and by allocations to that partner of profits, and
1-43 decreased by the amount of distributions to that partner and by
1-44 allocations to that partner of partnership losses.
1-45 (3) "Court" means a court and judge having
1-46 jurisdiction in the case.
1-47 (4) "Debtor in bankruptcy" means a person who is the
1-48 subject of:
1-49 (A) an order for relief under Title 11 of the
1-50 United States Code or a comparable order under a successor statute
1-51 of general application; or
1-52 (B) a comparable order under federal or state
1-53 law governing insolvency.
1-54 (5) "Distribution" means a transfer of cash or other
1-55 property from a partnership to:
1-56 (A) a partner in the partner's capacity as a
1-57 partner; or
1-58 (B) the partner's transferee.
1-59 (6) "Event of withdrawal" or "withdrawal" means an
1-60 event specified by Section 6.01(b).
1-61 (7) "Event requiring a winding up" means an event
1-62 specified by Section 8.01.
1-63 (8) "Foreign limited partnership" means a partnership
1-64 formed under the laws of another state and having as partners one
1-65 or more general partners and one or more limited partners.
1-66 (9) "Majority-in-interest" means, as to all of or a
1-67 specified group of partners, partners owning more than 50 percent
1-68 of the current interest in the profits of the partnership owned by
2-1 all of the partners or by the partners in the specified group, as
2-2 appropriate.
2-3 (10) "Partnership" means an entity created as
2-4 described by Section 2.02(a). The term includes a registered
2-5 limited liability partnership formed under Section 3.08 or under
2-6 the Texas Uniform Partnership Act (Article 6132b, Vernon's Texas
2-7 Civil Statutes) and its subsequent amendments.
2-8 (11) "Partnership agreement" means an agreement,
2-9 written or oral, of the partners concerning a partnership.
2-10 (12) "Partnership interest" means a partner's interest
2-11 in a partnership, including the partner's share of profits and
2-12 losses or similar items, and the right to receive distributions. A
2-13 partnership interest does not include a partner's right to
2-14 participate in management.
2-15 (13) "Person" includes an individual, corporation,
2-16 business trust, estate, trust, custodian, trustee, executor,
2-17 administrator, nominee, partnership (including a registered limited
2-18 liability partnership and a limited partnership), association,
2-19 limited liability company, government, governmental subdivision,
2-20 governmental agency, governmental instrumentality, and any other
2-21 legal or commercial entity, in its own or representative capacity.
2-22 (14) "Property" means all property, real, personal, or
2-23 mixed, tangible or intangible, or an interest in that property.
2-24 (15) "Registered limited liability partnership" means
2-25 a partnership registered under Section 3.08(b) and complying with
2-26 Sections 3.08(c) and (d)(1).
2-27 (16) "State" means a state of the United States, the
2-28 District of Columbia, the Commonwealth of Puerto Rico, or any
2-29 territory or insular possession subject to the jurisdiction of the
2-30 United States.
2-31 (17) "Transfer" includes:
2-32 (A) an assignment;
2-33 (B) a conveyance;
2-34 (C) a lease;
2-35 (D) a mortgage;
2-36 (E) a deed;
2-37 (F) an encumbrance; and
2-38 (G) the creation of a security interest.
2-39 (18) "Withdrawn partner" means a partner with respect
2-40 to whom an event of withdrawal has occurred. A partner withdraws
2-41 if an event of withdrawal has occurred with respect to that partner
2-42 under Section 6.01.
2-43 Sec. 1.02. KNOWLEDGE AND NOTICE. (a) DEFINITION OF
2-44 KNOWLEDGE. "Knowledge" means actual knowledge. A person knows of
2-45 a fact only if the person has knowledge of it.
2-46 (b) HAVING NOTICE. A person has notice of a fact if the
2-47 person:
2-48 (1) knows of the fact;
2-49 (2) has received a communication of the fact as
2-50 provided by Subsection (d); or
2-51 (3) reasonably should have concluded, from all facts
2-52 known to that person at the time in question, that the fact exists.
2-53 (c) GIVING NOTICE. A person notifies or gives a notice to
2-54 another person of a fact by taking steps reasonably required to
2-55 inform the other person of the fact in the ordinary course of
2-56 business, whether the other person actually comes to know of the
2-57 fact.
2-58 (d) RECEIVING NOTICE. A person is notified or receives a
2-59 notice of a fact when the fact is communicated to:
2-60 (1) the person;
2-61 (2) the person's place of business; or
2-62 (3) another place held out by the person as the place
2-63 for receipt of communications.
2-64 (e) NOTICE TO PARTNER AS NOTICE TO PARTNERSHIP. Receipt of
2-65 notice by a partner of a fact relating to the partnership is
2-66 effective immediately as notice to the partnership except in the
2-67 case of fraud on the partnership committed by or with the consent
2-68 of the partner receiving the notice.
2-69 Sec. 1.03. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE AND
2-70 VARIABLE PROVISIONS. (a) PARTNERSHIP AGREEMENT CONTROLS. Except
3-1 as provided by Subsection (b), a partnership agreement governs the
3-2 relations of the partners and between the partners and the
3-3 partnership. To the extent that the partnership agreement does not
3-4 otherwise provide, this Act governs the relations of the partners
3-5 and between the partners and the partnership.
3-6 (b) STATUTORY PROVISIONS THAT MAY NOT BE VARIED BY
3-7 AGREEMENT. A partnership agreement or the partners may not:
3-8 (1) unreasonably restrict a partner's right of access
3-9 to books and records under Section 4.03(b);
3-10 (2) eliminate the duty of loyalty under
3-11 Section 4.04(b), but the partners may by agreement identify
3-12 specific types or categories of activities that do not violate the
3-13 duty of loyalty, if not manifestly unreasonable;
3-14 (3) eliminate the duty of care under Section 4.04(c),
3-15 but the partners may by agreement determine the standards by which
3-16 the performance of the obligation is to be measured, if the
3-17 standards are not manifestly unreasonable;
3-18 (4) eliminate the obligation of good faith under
3-19 Section 4.04(d), but the partners may by agreement determine the
3-20 standards by which the performance of the obligation is to be
3-21 measured, if the standards are not manifestly unreasonable;
3-22 (5) vary the power to withdraw as a partner under
3-23 Section 6.01(b)(1), (7), or (8), except to require the notice to be
3-24 in writing;
3-25 (6) vary the right to expel a partner by a court in
3-26 the events specified by Section 6.01(b)(5);
3-27 (7) vary the requirement to wind up the partnership
3-28 business in the events specified by Section 8.01(c), (d), or (e);
3-29 (8) restrict rights of third parties under this Act;
3-30 or
3-31 (9) select a governing law not permitted under
3-32 Section 1.05(a)(1).
3-33 Sec. 1.04. SUPPLEMENTAL PRINCIPLES OF LAW.
3-34 (a) SUPPLEMENTED BY LAW AND EQUITY. Unless displaced by a
3-35 particular provision of this Act, the principles of law and equity
3-36 supplement this Act.
3-37 (b) STRICT CONSTRUCTION NOT APPLICABLE. The rule that a
3-38 statute in derogation of the common law is to be strictly construed
3-39 does not apply to this Act.
3-40 (c) INTEREST RATE. If an obligation to pay interest arises
3-41 under this Act and the rate is not specified, the rate is the rate
3-42 specified by Article 1.03, Title 79, Revised Statutes (Article
3-43 5069-1.03, Vernon's Texas Civil Statutes), and its subsequent
3-44 amendments, or a successor statute.
3-45 Sec. 1.05. LAW GOVERNING INTERNAL AFFAIRS AND PARTNER'S
3-46 LIABILITY. (a) INTERNAL AFFAIRS. A partnership's internal
3-47 affairs and the relations of the partners to one another are
3-48 governed by:
3-49 (1) the law of the state chosen by the partners to
3-50 govern if that state bears a reasonable relation to the partners or
3-51 to the partnership business and affairs under principles that apply
3-52 to a contract among the partners other than the partnership
3-53 agreement; or
3-54 (2) if the partners do not choose a governing law
3-55 under Subdivision (1), the law of the state in which the
3-56 partnership has its chief executive office.
3-57 (b) LIABILITY TO THIRD PARTIES. The law governing a
3-58 partnership's internal affairs also governs the liability of its
3-59 partners to third parties.
3-60 Sec. 1.06. PARTNERSHIP SUBJECT TO AMENDMENT OR REPEAL OF
3-61 ACT. A partnership governed by this Act is subject to an amendment
3-62 or repeal of this Act.
3-63 ARTICLE II. NATURE OF PARTNERSHIP
3-64 Sec. 2.01. PARTNERSHIP AS ENTITY. A partnership is an
3-65 entity distinct from its partners.
3-66 Sec. 2.02. PARTNERSHIP DEFINED; APPLICATION TO JOINT VENTURE
3-67 AND LIMITED PARTNERSHIP; CAPACITY AS PARTNER. (a) ASSOCIATION TO
3-68 CARRY ON BUSINESS FOR PROFIT. Except as provided by Subsections
3-69 (b) and (c), an association of two or more persons to carry on a
3-70 business for profit as owners creates a partnership, whether the
4-1 persons intend to create a partnership and whether the association
4-2 is called a "partnership," "joint venture," or other name. A
4-3 partnership may be created under:
4-4 (1) this Act;
4-5 (2) the Texas Uniform Partnership Act (Article 6132b,
4-6 Vernon's Texas Civil Statutes) and its subsequent amendments;
4-7 (3) the Texas Revised Limited Partnership Act (Article
4-8 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
4-9 amendments; or
4-10 (4) a statute of another jurisdiction comparable to
4-11 this Act or the Texas Revised Limited Partnership Act (Article
4-12 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
4-13 amendments.
4-14 (b) ENTITY NOT A PARTNERSHIP. An association or entity
4-15 created under a law other than the laws described in Subsection (a)
4-16 is not a partnership.
4-17 (c) PERSON WITH CAPACITY AS PARTNER. A person may be a
4-18 partner unless the person lacks capacity apart from this Act.
4-19 Sec. 2.03. RULES FOR DETERMINING IF PARTNERSHIP IS CREATED.
4-20 (a) FACTORS INDICATING CREATION OF PARTNERSHIP. Factors
4-21 indicating that persons have created a partnership include their:
4-22 (1) receipt or right to receive a share of profits of
4-23 the business;
4-24 (2) expression of an intent to be partners in the
4-25 business;
4-26 (3) participation or right to participate in control
4-27 of the business;
4-28 (4) sharing or agreeing to share:
4-29 (A) losses of the business; or
4-30 (B) liability for claims by third parties
4-31 against the business; and
4-32 (5) contributing or agreeing to contribute money or
4-33 property to the business.
4-34 (b) FACTORS NOT INDICATING CREATION OF PARTNERSHIP. One of
4-35 the following circumstances, by itself, does not indicate that a
4-36 person is a partner in the business:
4-37 (1) the receipt or right to receive a share of
4-38 profits:
4-39 (A) as repayment of a debt, by installments or
4-40 otherwise;
4-41 (B) as payment of wages or other compensation to
4-42 an employee or independent contractor;
4-43 (C) as payment of rent;
4-44 (D) as payment to a former partner, surviving
4-45 spouse or representative of a deceased or disabled partner, or
4-46 transferee of a partnership interest;
4-47 (E) as payment of interest or other charge on a
4-48 loan, regardless of whether the amount of payment varies with the
4-49 profits of the business, and including a direct or indirect present
4-50 or future ownership interest in collateral or rights to income,
4-51 proceeds, or increase in value derived from collateral; or
4-52 (F) as payment of consideration for the sale of
4-53 a business or other property by installments or otherwise;
4-54 (2) co-ownership of property, whether in the form of
4-55 joint tenancy, tenancy in common, tenancy by the entireties, joint
4-56 property, community property, or part ownership, whether combined
4-57 with sharing of profits from the property;
4-58 (3) sharing or having a right to share gross returns
4-59 or revenues, regardless of whether the persons sharing the gross
4-60 returns or revenues have a common or joint interest in the property
4-61 from which the returns or revenues are derived; or
4-62 (4) ownership of mineral property under a joint
4-63 operating agreement.
4-64 (c) ADDITIONAL RULES. An agreement to share losses by the
4-65 owners of a business is not necessary to create a partnership.
4-66 Except as provided by Sections 3.06 and 7.03, a person who is not a
4-67 partner in a partnership under Section 2.02 is not a partner as to
4-68 a third person and is not liable to a third person under this Act.
4-69 Sec. 2.04. PARTNERSHIP PROPERTY NOT PROPERTY OF PARTNERS.
4-70 Partnership property is not property of the partners. Neither a
5-1 partner nor a partner's spouse has an interest in partnership
5-2 property.
5-3 Sec. 2.05. PARTNERSHIP PROPERTY. (a) ACQUISITION IN
5-4 CERTAIN NAMES. Property is partnership property if acquired:
5-5 (1) in the name of the partnership; or
5-6 (2) in the name of one or more partners with an
5-7 indication in the instrument transferring title to the property of
5-8 the person's capacity as a partner or of the existence of a
5-9 partnership, regardless of whether the name of the partnership is
5-10 indicated.
5-11 (b) PROPERTY IN PARTNERSHIP NAME. Property is acquired in
5-12 the name of the partnership by a transfer to:
5-13 (1) the partnership in its name; or
5-14 (2) one or more partners in their capacity as partners
5-15 in the partnership, if the name of the partnership is indicated in
5-16 the instrument transferring title to the property.
5-17 (c) PROPERTY ACQUIRED WITH PARTNERSHIP PROPERTY. Property
5-18 is presumed to be partnership property if acquired with partnership
5-19 property, whether acquired in the name of the partnership or of one
5-20 or more partners with an indication in the instrument transferring
5-21 title to the property of the person's capacity as a partner or of
5-22 the existence of a partnership.
5-23 (d) PROPERTY ACQUIRED IN PARTNER'S NAME. Property acquired
5-24 in the name of one or more of the partners, without an indication
5-25 in the instrument transferring title to the property of the
5-26 person's capacity as a partner or of the existence of a
5-27 partnership, and without use of partnership property, is presumed
5-28 to be the partner's property, regardless of whether the property is
5-29 used for partnership purposes.
5-30 Sec. 2.06. PARTNERSHIP CONTINUES UNTIL TERMINATED.
5-31 (a) CONTINUATION OF PARTNERSHIP AFTER EVENT OF WITHDRAWAL. A
5-32 partnership continues after an event of withdrawal, but the event
5-33 of withdrawal affects the relationships among the withdrawn
5-34 partner, the partnership, and the continuing partners as provided
5-35 by Sections 6.02, 7.01, 7.02, and 7.03.
5-36 (b) EFFECT OF OCCURRENCE OF EVENT REQUIRING A WINDING UP.
5-37 On the occurrence of an event requiring a winding up of a
5-38 partnership under Section 8.01, the partnership continues as
5-39 provided by Section 8.03, but the relationship among the partners
5-40 is changed as provided by Sections 8.02, 8.03, 8.04, 8.05, and
5-41 8.06.
5-42 (c) EFFECT OF WITHDRAWAL ON RELATION BETWEEN CREDITOR AND
5-43 PARTNERSHIP. Relationships between a partnership and its creditors
5-44 are not affected by the withdrawal of a partner or by the addition
5-45 of a new partner.
5-46 ARTICLE III. RELATIONS OF PARTNERS TO PERSONS
5-47 DEALING WITH PARTNERSHIP
5-48 Sec. 3.01. GENERAL POWERS OF PARTNERSHIP. Unless restricted
5-49 by applicable law, a partnership has the same powers as an
5-50 individual or corporation to do all things necessary or convenient
5-51 to carry out its business and affairs, including the power to:
5-52 (1) sue and be sued, complain, and defend in its
5-53 partnership name;
5-54 (2) purchase, receive, lease, or otherwise acquire,
5-55 and own, hold, improve, use, and otherwise deal with, real or
5-56 personal property, or any legal or equitable interest in property,
5-57 wherever located;
5-58 (3) sell, convey, mortgage, pledge, lease, exchange,
5-59 and otherwise dispose of all or any part of its property;
5-60 (4) purchase, receive, subscribe for, or otherwise
5-61 acquire; own, hold, vote, use, sell, mortgage, lend, pledge, or
5-62 otherwise dispose of; and deal in and with shares or other
5-63 interests in, or obligations of, any other entity;
5-64 (5) make contracts and guarantees, incur liabilities,
5-65 borrow money, issue its notes, bonds, and other obligations, which
5-66 may be convertible into or include the option to purchase other
5-67 securities of the partnership, and secure its obligations by
5-68 mortgage or pledge of its property, franchises, or income;
5-69 (6) lend money, invest, and reinvest its funds, and
5-70 receive and hold real and personal property as security for
6-1 repayment;
6-2 (7) be a promoter, partner, member, associate, or
6-3 manager of a partnership, joint venture, trust, or other entity;
6-4 (8) conduct its business, locate offices, and exercise
6-5 the powers granted by this Act within or outside this state;
6-6 (9) appoint employees and agents of the partnership,
6-7 define their duties, fix their compensation, and lend them money or
6-8 credit;
6-9 (10) pay pensions and establish pension plans, pension
6-10 trusts, profit sharing plans, share bonus plans, share option
6-11 plans, and benefit or incentive plans for any or all of its current
6-12 or former partners, employees, and agents;
6-13 (11) make donations for the public welfare or for
6-14 charitable, scientific, or educational purposes;
6-15 (12) transact any lawful business that will aid
6-16 governmental policy;
6-17 (13) make payments or donations, or do any other act,
6-18 not inconsistent with law, that furthers the business and affairs
6-19 of the partnership;
6-20 (14) enter into mergers and similar transactions to
6-21 the extent permitted by applicable law; and
6-22 (15) indemnify a person who was, is, or is threatened
6-23 to be made a defendant or respondent in a proceeding and to
6-24 purchase and maintain liability insurance for the person.
6-25 Sec. 3.02. BINDING EFFECT OF PARTNER'S ACT. (a) PARTNER
6-26 AGENT OF PARTNERSHIP AS TO PARTNERSHIP BUSINESS. Each partner is an
6-27 agent of the partnership for the purpose of its business. Unless
6-28 the partner does not have authority to act for the partnership in
6-29 the particular matter and the person with whom the partner is
6-30 dealing knows that the partner lacks authority, an act of a
6-31 partner, including the execution of an instrument in the
6-32 partnership name, binds the partnership if the act is for
6-33 apparently carrying on in the usual way:
6-34 (1) the partnership business; or
6-35 (2) business of the kind carried on by the
6-36 partnership.
6-37 (b) ACT OUTSIDE SCOPE OF BUSINESS. An act of a partner does
6-38 not bind the partnership unless authorized by the other partners if
6-39 the act is not apparently for carrying on in the usual way:
6-40 (1) the partnership business; or
6-41 (2) business of the kind carried on by the
6-42 partnership.
6-43 Sec. 3.03. PARTNERSHIP LIABLE FOR PARTNER'S ACTIONABLE
6-44 CONDUCT. (a) A partnership is liable for loss or injury to a
6-45 person, including a partner, or for a penalty caused by or incurred
6-46 as a result of a wrongful act or omission or other actionable
6-47 conduct of a partner acting:
6-48 (1) in the ordinary course of business of the
6-49 partnership; or
6-50 (2) with the authority of the partnership.
6-51 (b) A partnership is liable for the loss of money or
6-52 property of a person not a partner that is received in the course
6-53 of the partnership's business and misapplied by a partner while in
6-54 the custody of the partnership.
6-55 Sec. 3.04. NATURE OF PARTNER'S LIABILITY PARTNERSHIP.
6-56 Except as provided by Section 3.08(a) for a registered limited
6-57 liability partnership, all partners are liable jointly and
6-58 severally for all debts and obligations of the partnership unless
6-59 otherwise agreed by the claimant or provided by law.
6-60 Sec. 3.05. ENFORCEMENT OF PARTNERSHIP AND PARTNER LIABILITY.
6-61 (a) PARTNERSHIP AS PARTY. A partnership may sue and be sued in
6-62 the name of the partnership.
6-63 (b) ACTION AGAINST PARTNERSHIP AND PARTNERS. An action may
6-64 be brought against a partnership and any or all of the partners in
6-65 the same action or in separate actions.
6-66 (c) JUDGMENT AGAINST PARTNER. A judgment against a
6-67 partnership is not by itself a judgment against a partner, but a
6-68 judgment may be entered against a partner who has been served with
6-69 process in a suit against the partnership.
6-70 (d) LIMITATION ON CREDITOR'S PURSUIT OF PARTNER'S PROPERTY.
7-1 Except as provided by Subsection (e), a creditor may proceed
7-2 against one or more partners or their property to satisfy a
7-3 judgment based on a claim that could have been successfully
7-4 asserted against the partnership only if:
7-5 (1) a judgment is also obtained against the partner;
7-6 and
7-7 (2) a judgment based on the same claim is obtained
7-8 against the partnership that:
7-9 (A) has not been reversed or vacated; and
7-10 (B) remains unsatisfied for 90 days after:
7-11 (i) the date of entry of the judgment; or
7-12 (ii) the date of expiration or termination
7-13 of the stay, if the judgment is contested by appropriate
7-14 proceedings and execution on the judgment has been stayed.
7-15 (e) CREDITOR'S DIRECT PURSUIT OF PARTNER'S PROPERTY.
7-16 Subsection (d) does not prohibit a creditor from proceeding
7-17 directly against one or more partners or their property without
7-18 first seeking satisfaction from partnership property if:
7-19 (1) the partnership is a debtor in bankruptcy;
7-20 (2) the creditor and the partnership agreed that the
7-21 creditor is not required to comply with Subsection (d);
7-22 (3) a court orders otherwise, based on a finding that
7-23 partnership property subject to execution within the state is
7-24 clearly insufficient to satisfy the judgment or that compliance
7-25 with Subsection (d) is excessively burdensome; or
7-26 (4) liability is imposed on the partner by law
7-27 independently of the person's status as a partner.
7-28 Sec. 3.06. FALSE REPRESENTATION OF PARTNERSHIP.
7-29 (a) REPRESENTATION OF PARTNERSHIP. A representation or other
7-30 conduct indicating that a person is a partner with another person,
7-31 if that is not the case, does not of itself create a partnership.
7-32 (b) REPRESENTATION OF MEMBERSHIP IN PARTNERSHIP. A
7-33 representation or other conduct indicating that a person is a
7-34 partner in an existing partnership, if that is not the case, does
7-35 not of itself make that person a partner in the partnership.
7-36 (c) CREDITOR'S RIGHTS GOVERNED BY OTHER LAW. The rights of
7-37 a person extending credit in reliance on a representation described
7-38 by Subsection (a) or (b) are determined by law other than this Act,
7-39 including the law of estoppel, agency, negligence, fraud, and
7-40 unjust enrichment.
7-41 (d) LEGAL STATUS OF PERSON MAKING MISREPRESENTATION. The
7-42 rights and duties of a person held liable under Subsection (c) are
7-43 also determined by law other than this Act, including the law of
7-44 estoppel, agency, negligence, fraud, and unjust enrichment.
7-45 Sec. 3.07. LIABILITY OF INCOMING PARTNER. A person admitted
7-46 as a partner into an existing partnership does not have personal
7-47 liability under Section 3.04 for an obligation of the partnership
7-48 that:
7-49 (1) arose before the partner's admission to the
7-50 partnership;
7-51 (2) relates to an action taken or omissions occurring
7-52 before the partner's admission to the partnership; or
7-53 (3) arises before or after the partner's admission
7-54 under a contract or commitment entered into before the partner's
7-55 admission to the partnership.
7-56 Sec. 3.08. LIABILITY IN AND REGISTRATION OF REGISTERED
7-57 LIMITED LIABILITY PARTNERSHIP. (a) LIABILITY OF PARTNER. (1) A
7-58 partner in a registered limited liability partnership is not
7-59 individually liable for debts and obligations of the partnership
7-60 arising from errors, omissions, negligence, incompetence, or
7-61 malfeasance committed while the partnership is a registered limited
7-62 liability partnership and in the course of the partnership business
7-63 by another partner or a representative of the partnership not
7-64 working under the supervision or direction of the first partner
7-65 unless the first partner:
7-66 (A) was directly involved in the specific
7-67 activity in which the errors, omissions, negligence, incompetence,
7-68 or malfeasance were committed by the other partner or
7-69 representative; or
7-70 (B) had notice or knowledge of the errors,
8-1 omissions, negligence, incompetence, or malfeasance by the other
8-2 partner or representative at the time of occurrence and then failed
8-3 to take reasonable steps to prevent or cure the errors, omissions,
8-4 negligence, incompetence, or malfeasance.
8-5 (2) Subsection (a)(1) does not affect:
8-6 (A) the joint and several liability of a partner
8-7 for debts and obligations of the partnership arising from a cause
8-8 other than the causes specified by Subsection (a)(1);
8-9 (B) the liability of a partnership to pay its
8-10 debts and obligations out of partnership property; or
8-11 (C) the persons on whom citation or other civil
8-12 process may be served in an action against a partnership.
8-13 (3) In this subsection, "representative" includes an
8-14 agent, servant, or employee of a registered limited liability
8-15 partnership.
8-16 (b) REGISTRATION. (1) In addition to complying with
8-17 Subsections (c) and (d)(1), to become a registered limited
8-18 liability partnership, a partnership must file with the secretary
8-19 of state an application stating:
8-20 (A) the name of the partnership;
8-21 (B) the federal tax identification number of the
8-22 partnership;
8-23 (C) the street address of the partnership's
8-24 principal office in this state and outside this state, as
8-25 applicable;
8-26 (D) the number of partners at the date of
8-27 application; and
8-28 (E) in brief, the partnership's business.
8-29 (2) The application must be executed by a
8-30 majority-in-interest of the partners or by one or more partners
8-31 authorized by a majority-in-interest of the partners.
8-32 (3) Two copies of the application must be filed,
8-33 accompanied by a fee of $200 for each partner.
8-34 (4) A partnership is registered as a registered
8-35 limited liability partnership on filing a completed initial or
8-36 renewal application, in duplicate with the required fee, or on a
8-37 later date specified in the application. A registration is not
8-38 affected by later changes in the partners of the partnership.
8-39 (5) An initial application filed under this subsection
8-40 and registered by the secretary of state expires one year after the
8-41 date of registration or later effective date unless earlier
8-42 withdrawn or revoked or unless renewed in accordance with
8-43 Subdivision (7).
8-44 (6) A registration may be withdrawn by filing in
8-45 duplicate with the secretary of state a written withdrawal notice
8-46 executed by a majority-in-interest of the partners or by one or
8-47 more partners authorized by a majority-in-interest of the partners.
8-48 A withdrawal notice must include the name of the partnership, the
8-49 federal tax identification number of the partnership, the date of
8-50 registration of the partnership's last application under this
8-51 section, and a current street address of the partnership's
8-52 principal office in this state and outside this state, if
8-53 applicable. A withdrawal notice terminates the status of the
8-54 partnership as a registered limited liability partnership as of the
8-55 date of filing the notice or a later date specified in the notice,
8-56 but not later than the expiration date under Subdivision (5).
8-57 (7) An effective registration may be renewed before
8-58 its expiration by filing in duplicate with the secretary of state
8-59 an application containing current information of the kind required
8-60 in an initial application and the most recent date of registration
8-61 of the partnership. The renewal application must be accompanied by
8-62 a fee of $200 for each partner on the date of renewal. A renewal
8-63 application filed under this section continues an effective
8-64 registration for one year after the date the effective registration
8-65 would otherwise expire.
8-66 (8) The secretary of state may remove from its active
8-67 records the registration of a partnership whose registration has
8-68 been withdrawn or revoked or has expired and not been renewed.
8-69 (9) The secretary of state may revoke the filing of a
8-70 document filed under this subsection if the secretary of state
9-1 determines that the filing fee for the document was paid by an
9-2 instrument that was dishonored when presented by the state for
9-3 payment. The secretary of state shall return the document and give
9-4 notice of revocation to the filing party by regular mail. Failure
9-5 to give or receive notice does not invalidate the revocation. A
9-6 revocation of a filing does not affect an earlier filing.
9-7 (10) The secretary of state may provide forms for
9-8 application for or renewal of registration.
9-9 (11) A document filed under this subsection may be
9-10 amended or corrected by filing in duplicate with the secretary of
9-11 state articles of amendment executed by a majority-in-interest of
9-12 the partners or by one or more partners authorized by a
9-13 majority-in-interest of the partners. The articles of amendment
9-14 must contain the name of the partnership, the tax identification
9-15 number of the partnership, the identity of the document being
9-16 amended, the date on which the document being amended was filed,
9-17 the part of the document being amended, and the amendment or
9-18 correction. Two copies of the articles of amendment must be filed,
9-19 accompanied by a fee of $10 plus, if the amendment increases the
9-20 number of partners, $200 for each partner added by amendment of the
9-21 number of partners.
9-22 (12) A document filed under this subsection may be a
9-23 photographic, facsimile, or similar reproduction of a signed
9-24 document. A signature on a document filed under this section may
9-25 be a facsimile.
9-26 (13) A person commits an offense if the person signs a
9-27 document the person knows is false in any material respect with the
9-28 intent that the document be delivered on behalf of a partnership to
9-29 the secretary of state for filing. An offense under this
9-30 subdivision is a Class A misdemeanor.
9-31 (14) The secretary of state is not responsible for
9-32 determining if a partnership is in compliance with the requirements
9-33 of Subsection (d)(1).
9-34 (15) The secretary of state may adopt procedural rules
9-35 on filing documents under this subsection.
9-36 (c) NAME. A registered limited liability partnership's name
9-37 must contain the words "registered limited liability partnership"
9-38 or the abbreviation "L.L.P." as the last words or letters of its
9-39 name.
9-40 (d) INSURANCE OR FINANCIAL RESPONSIBILITY. (1) A
9-41 registered limited liability partnership must:
9-42 (A) carry at least $100,000 of liability
9-43 insurance of a kind that is designed to cover the kinds of errors,
9-44 omissions, negligence, incompetence, or malfeasance for which
9-45 liability is limited by Subsection (a)(1); or
9-46 (B) provide $100,000 of funds specifically
9-47 designated and segregated for the satisfaction of judgments against
9-48 the partnership based on the kinds of errors, omissions,
9-49 negligence, incompetence, or malfeasance for which liability is
9-50 limited by Subsection (a)(1) by:
9-51 (i) deposit in trust or in bank escrow of
9-52 cash, bank certificates of deposit, or United States Treasury
9-53 obligations; or
9-54 (ii) a bank letter of credit or insurance
9-55 company bond.
9-56 (2) If the registered limited liability partnership is
9-57 in compliance with Subdivision (1), the requirements of this
9-58 subsection shall not be admissible or in any way be made known to
9-59 the jury in determining an issue of liability for or extent of the
9-60 debt or obligation or damages in question.
9-61 (3) If compliance with Subdivision (1) is disputed:
9-62 (A) compliance must be determined separately
9-63 from the trial or proceeding to determine the partnership debt or
9-64 obligation in question, its amount, or partner liability for the
9-65 debt or obligation; and
9-66 (B) the burden of proof of compliance is on the
9-67 person claiming limitation of liability under Subsection (a)(1).
9-68 (e) LIMITED PARTNERSHIP. A limited partnership may become a
9-69 registered limited liability partnership by complying with
9-70 applicable provisions of the Texas Revised Limited Partnership Act
10-1 (Article 6132a-1, Vernon's Texas Civil Statutes) and its subsequent
10-2 amendments.
10-3 ARTICLE IV. RELATIONS OF PARTNERS TO EACH OTHER AND TO PARTNERSHIP
10-4 Sec. 4.01. PARTNER'S RIGHTS AND DUTIES. (a) CAPITAL
10-5 CREDITS AND CHARGES. Each partner is credited with an amount equal
10-6 to the cash plus the value of property the partner contributes to a
10-7 partnership and the partner's share of the partnership's profits.
10-8 Each partner is charged with an amount equal to the cash plus the
10-9 value of other property distributed by the partnership to the
10-10 partner and the partner's share of the partnership's losses.
10-11 (b) PROFITS AND LOSSES. Each partner is credited with an
10-12 equal share of the profits of a partnership. Each partner is
10-13 charged with a share of the losses, whether capital or operating,
10-14 of the partnership in proportion to the partner's share of the
10-15 profits.
10-16 (c) DISPROPORTIONATE PAYMENT OR ADVANCE. A partner who, in
10-17 the proper conduct of the business of the partnership or for the
10-18 preservation of its business or property, reasonably makes a
10-19 payment or advance beyond the amount the partner agreed to
10-20 contribute, or who reasonably incurs a liability, is entitled to be
10-21 repaid and to receive interest from the date of the payment or
10-22 advance or the incurrence of the liability.
10-23 (d) PARTICIPATION IN MANAGEMENT. Each partner has equal
10-24 rights in the management and conduct of the business of a
10-25 partnership. A partner's right to participate in the management
10-26 and conduct of the business is not community property.
10-27 (e) PARTNERSHIP PROPERTY. A partner may use or possess
10-28 partnership property only on behalf of the partnership.
10-29 (f) COMPENSATION. A partner is not entitled to compensation
10-30 for services performed for a partnership other than reasonable
10-31 compensation for services rendered in winding up the business of
10-32 the partnership.
10-33 (g) NEW PARTNER. A person may become a partner only with
10-34 the consent of all partners.
10-35 (h) MAJORITY DECISION ON ORDINARY MATTER. A difference
10-36 arising as to a matter in the ordinary course of the business of
10-37 the partnership may be decided by a majority-in-interest of the
10-38 partners. An act outside the ordinary course of business of a
10-39 partnership may be undertaken only with the consent of all
10-40 partners.
10-41 (i) AMENDMENT OF AGREEMENT. An amendment to a partnership
10-42 agreement may be effected only with the consent of all partners.
10-43 (j) PARTNERSHIP OBLIGATION. This section does not limit a
10-44 partnership's obligation to another person under Section 3.02.
10-45 (k) PARTNER TRANSACTION OF BUSINESS WITH PARTNERSHIP. A
10-46 partner may lend money to or transact other business with a
10-47 partnership and, subject to other applicable law, has the same
10-48 rights and obligations with respect to that matter as a person who
10-49 is not a partner.
10-50 (l) CLASSES OR GROUPS OF PARTNERS. A written partnership
10-51 agreement may establish classes or groups of one or more partners
10-52 having certain expressed relative rights, powers, and duties,
10-53 including voting rights, and may provide for the future creation of
10-54 additional classes or groups of partners having certain relative
10-55 rights, powers, and duties, including voting rights, expressed in
10-56 the partnership agreement or at the time of creation of the class
10-57 or group. The rights, powers, or duties of a class or group may be
10-58 senior to those of one or more existing classes or groups of
10-59 partners.
10-60 (m) VOTING RIGHTS. A written partnership agreement that
10-61 grants or provides for granting to a partner a right to vote may
10-62 contain provisions relating to:
10-63 (1) giving notice of the time, place, or purposes of a
10-64 meeting at which a matter is to be voted on by the partners;
10-65 (2) waiver of notice;
10-66 (3) action by consent without a meeting;
10-67 (4) the establishment of a record date;
10-68 (5) quorum requirements;
10-69 (6) voting in person or by proxy; or
10-70 (7) any other matter relating to the exercise of the
11-1 right to vote.
11-2 (n) NOTICE OF NONUNANIMOUS ACTION. (1) Prompt notice of
11-3 the taking of an action under an agreement that requires consent of
11-4 fewer than all of the partners and that may be taken without a
11-5 meeting shall be given to the partners who have not consented in
11-6 writing to the action.
11-7 (2) For the purposes of this section, the taking of an
11-8 action includes amending the partnership agreement or creating,
11-9 under provisions of the partnership agreement, a class of partner
11-10 that did not previously exist.
11-11 Sec. 4.02. DISTRIBUTION IN KIND. A partner does not have a
11-12 right to receive, and may not be required to accept, a distribution
11-13 in kind.
11-14 Sec. 4.03. INFORMATION REGARDING A PARTNERSHIP. (a) BOOKS
11-15 AND RECORDS AT CHIEF EXECUTIVE OFFICE. A partnership shall keep
11-16 its books and records, if any, at its chief executive office.
11-17 (b) ACCESS TO BOOKS AND RECORDS. A partnership shall
11-18 provide access to its books and records to partners and their
11-19 agents and attorneys. The partnership shall provide former
11-20 partners and their agents and attorneys access to books and records
11-21 pertaining to the period during which the former partners were
11-22 partners or for any other proper purpose with respect to another
11-23 period. The right of access includes the opportunity to inspect
11-24 and copy books and records during ordinary business hours. A
11-25 partnership may impose a reasonable charge, covering the costs of
11-26 labor and material, for copies of documents furnished.
11-27 (c) INFORMATION CONCERNING THE PARTNERSHIP. Each partner
11-28 and the partnership shall furnish, on request and to the extent
11-29 just and reasonable, to a partner, the legal representative of a
11-30 deceased partner or a partner under legal disability, or an
11-31 assignee, complete and accurate information concerning the
11-32 partnership. A legal representative of a deceased partner or a
11-33 partner under legal disability and an assignee are subject to the
11-34 same duties as a partner with respect to information made
11-35 available.
11-36 Sec. 4.04. GENERAL STANDARDS OF PARTNER'S CONDUCT.
11-37 (a) DUTIES. A partner owes to the partnership and the other
11-38 partners:
11-39 (1) a duty of loyalty; and
11-40 (2) a duty of care.
11-41 (b) LOYALTY. A partner's duty of loyalty includes:
11-42 (1) accounting to the partnership and holding for it
11-43 any property, profit, or benefit derived by the partner in the
11-44 conduct and winding up of the partnership business or from use by
11-45 the partner of partnership property;
11-46 (2) refraining from dealing with the partnership on
11-47 behalf of a party having an interest adverse to the partnership;
11-48 and
11-49 (3) refraining from competing with the partnership or
11-50 dealing with the partnership in a manner adverse to the
11-51 partnership.
11-52 (c) CARE. A partner's duty of care to the partnership and
11-53 the other partners is to act in the conduct and winding up of the
11-54 partnership business with the care an ordinarily prudent person
11-55 would exercise in similar circumstances. An error in judgment does
11-56 not by itself constitute a breach of this duty of care. A partner
11-57 is presumed to satisfy this duty if the partner acts on an informed
11-58 basis and in compliance with Subsection (d).
11-59 (d) METHOD OF DISCHARGE. A partner shall discharge the
11-60 partner's duties to the partnership and the other partners under
11-61 this Act or under the partnership agreement, and exercise any
11-62 rights and powers in the conduct or winding up of the partnership
11-63 business:
11-64 (1) in good faith; and
11-65 (2) in a manner the partner reasonably believes to be
11-66 in the best interest of the partnership.
11-67 (e) EFFECT OF PARTNER BENEFIT. A partner does not violate a
11-68 duty or obligation under this Act or under the partnership
11-69 agreement merely because the partner's conduct furthers the
11-70 partner's own interest.
12-1 (f) TRUSTEE STANDARD INAPPLICABLE. A partner, in that
12-2 capacity, is not a trustee and is not held to the same standards as
12-3 a trustee.
12-4 (g) APPLICATION TO NONPARTNER WINDING UP. This section
12-5 applies to a person winding up the partnership business as the
12-6 personal or legal representative of the last surviving partner as
12-7 if the person were a partner.
12-8 Sec. 4.05. PARTNER'S LIABILITY TO PARTNERSHIP. A partner is
12-9 liable to a partnership and the other partners for a breach of the
12-10 partnership agreement or for a violation of a duty to the
12-11 partnership or the other partners under this Act that causes harm
12-12 to the partnership or the other partners.
12-13 Sec. 4.06. REMEDIES OF PARTNERSHIP AND PARTNERS.
12-14 (a) ACTION BY PARTNERSHIP. A partnership may maintain an action
12-15 against a partner for a breach of the partnership agreement or for
12-16 the violation of a duty to the partnership causing harm to the
12-17 partnership.
12-18 (b) ACTION BY PARTNER. A partner may maintain an action
12-19 against the partnership or another partner for legal or equitable
12-20 relief, including an accounting as to partnership business, to:
12-21 (1) enforce a right under the partnership agreement;
12-22 (2) enforce a right under this Act, including:
12-23 (A) the partner's rights under Sections 4.01,
12-24 4.03, and 4.04;
12-25 (B) the partner's right on withdrawal to have
12-26 the partner's interest in the partnership redeemed under Section
12-27 7.01 or enforce any other right under Article 6 or 7; and
12-28 (C) the partner's rights under Article 8; or
12-29 (3) enforce the rights and otherwise protect the
12-30 interests of the partner, including rights and interests arising
12-31 independently of the partnership relationship.
12-32 (c) ACCRUAL OF ACTION. The accrual of and a time limitation
12-33 on a right of action for a remedy under this section is governed by
12-34 other law.
12-35 (d) NO REVIVAL BY ACCOUNTING. A right to an accounting does
12-36 not revive a claim barred by law.
12-37 Sec. 4.07. CONTINUATION OF PARTNERSHIP. (a) CONTINUATION
12-38 BY EXPRESS AGREEMENT. If all the partners in a partnership for a
12-39 definite term or a particular undertaking or for which the
12-40 partnership agreement provides for winding up on a specified event
12-41 agree to continue the business of the partnership despite the
12-42 expiration of the term, the completion of the undertaking, or the
12-43 occurrence of the event, other than the withdrawal of a partner,
12-44 the partnership agreement is considered amended to provide that the
12-45 expiration, the completion, or the occurrence of the event did not
12-46 result in an event requiring the winding up of the partnership
12-47 business.
12-48 (b) CONTINUATION BY ACTION. A continuation of the business
12-49 for 90 days by the partners or those who habitually acted in the
12-50 business during the term or undertaking or preceding the event,
12-51 without a settlement or liquidation of the partnership business and
12-52 without objection from a partner, is prima facie evidence of
12-53 agreement by all partners to continue the business.
12-54 ARTICLE V. TRANSFEREE OF PARTNER
12-55 Sec. 5.01. PARTNER'S INTEREST IN PARTNERSHIP PROPERTY NOT
12-56 TRANSFERABLE. A partner is not a co-owner of partnership property
12-57 and does not have an interest that can be transferred, either
12-58 voluntarily or involuntarily, in partnership property.
12-59 Sec. 5.02. NATURE OF PARTNER'S PARTNERSHIP INTEREST.
12-60 (a) PERSONAL PROPERTY. A partner's partnership interest is
12-61 personal property for all purposes. A partner's partnership
12-62 interest may be community property under applicable law.
12-63 (b) CERTIFICATE EVIDENCING INTEREST. A written partnership
12-64 agreement may:
12-65 (1) provide that a partner's partnership interest may
12-66 be evidenced by a certificate of partnership interest issued by the
12-67 partnership;
12-68 (2) provide for the assignment or transfer of a
12-69 partnership interest represented by the certificate; and
12-70 (3) make other provisions with respect to the
13-1 certificate.
13-2 Sec. 5.03. TRANSFER OF PARTNER'S PARTNERSHIP INTEREST.
13-3 (a) ACT OF TRANSFER. A transfer of a partner's partnership
13-4 interest:
13-5 (1) is permissible, in whole or in part;
13-6 (2) is not an event of withdrawal;
13-7 (3) does not by itself cause a winding up of the
13-8 partnership business; and
13-9 (4) does not, as against the other partners or the
13-10 partnership, entitle the transferee, during the continuance of the
13-11 partnership, to participate in the management or conduct of the
13-12 partnership business.
13-13 (b) BASIC RIGHTS OF TRANSFEREE. A transferee of a partner's
13-14 partnership interest is entitled to receive, to the extent
13-15 transferred, distributions to which the transferor otherwise would
13-16 be entitled. After transfer, the transferor continues to have the
13-17 rights and duties of a partner other than the interest transferred.
13-18 Until a transferee becomes a partner, the transferee does not have
13-19 liability as a partner solely as a result of the transfer. For a
13-20 proper purpose the transferee may require reasonable information or
13-21 an account of partnership transactions and make reasonable
13-22 inspection of the partnership books.
13-23 (c) RIGHTS OF TRANSFEREE ON WINDING UP. If an event
13-24 requires a winding up of partnership business under Section 8.01, a
13-25 transferee is entitled to receive, to the extent transferred, the
13-26 net amount otherwise distributable to the transferor. In a winding
13-27 up a transferee may require an accounting only from the date of the
13-28 latest account agreed to by all of the partners.
13-29 (d) NOTICE TO PARTNERSHIP. Until receipt of notice of a
13-30 transfer, a partnership does not have a duty to give effect to a
13-31 transferee's rights under this section.
13-32 (e) NO EFFECT IF PROHIBITED. A partnership does not have a
13-33 duty to give effect to a transfer, assignment, or grant of a
13-34 security interest prohibited by a partnership agreement.
13-35 Sec. 5.04. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
13-36 INTEREST. (a) DIVORCE. On the divorce of a partner, the
13-37 partner's spouse, to the extent of the spouse's partnership
13-38 interest, shall be regarded for purposes of this Act as a
13-39 transferee of the partnership interest from the partner.
13-40 (b) DEATH OF PARTNER. On the death of a partner, the
13-41 partner's surviving spouse, if any, and the partner's heirs,
13-42 legatees, or personal representative, to the extent of their
13-43 respective partnership interests, shall be regarded for purposes of
13-44 this Act as transferees of the partnership interests from the
13-45 partner.
13-46 (c) DEATH OF PARTNER'S SPOUSE. On the death of a partner's
13-47 spouse, the spouse's heirs, legatees or personal representative, to
13-48 the extent of their respective partnership interests, shall be
13-49 regarded for purposes of this Act as transferees of the partnership
13-50 interest from the partner.
13-51 (d) EVENT INVOLVING PARTNER'S SPOUSE NOT WITHDRAWAL. An
13-52 event of the type described in Section 6.01 occurring with respect
13-53 to a partner's spouse is not an event of withdrawal.
13-54 (e) NO IMPAIRMENT OF PURCHASE RIGHTS. This Act does not
13-55 impair an agreement for the purchase or sale of a partnership
13-56 interest at the time of death of the owner of the partnership
13-57 interest or at any other time.
13-58 ARTICLE VI. EVENTS OF WITHDRAWAL
13-59 Sec. 6.01. EVENTS OF WITHDRAWAL. (a) NO LONGER A PARTNER.
13-60 A person ceases to be a partner on the occurrence of an event of
13-61 withdrawal.
13-62 (b) EVENT OF WITHDRAWAL. An event of withdrawal of a
13-63 partner occurs on:
13-64 (1) receipt by the partnership of notice of the
13-65 partner's express will to withdraw as a partner on the date of
13-66 receipt of the notice or on a later date specified in the notice;
13-67 (2) an event specified in the partnership agreement as
13-68 causing the partner's withdrawal;
13-69 (3) the partner's expulsion as provided in the
13-70 partnership agreement;
14-1 (4) the partner's expulsion by the vote of a
14-2 majority-in-interest of the other partners if:
14-3 (A) it is unlawful to carry on the partnership
14-4 business with that partner;
14-5 (B) there has been a transfer of all or
14-6 substantially all of that partner's partnership interest, other
14-7 than:
14-8 (i) a transfer for security purposes that
14-9 has not been foreclosed; or
14-10 (ii) the substitution of a successor
14-11 trustee or successor personal representative;
14-12 (C) within 90 days after the date the
14-13 partnership notifies a corporate partner that it will be expelled
14-14 because it has filed a certificate of dissolution or the
14-15 equivalent, its charter has been revoked, or its right to conduct
14-16 business has been suspended by the jurisdiction of its
14-17 incorporation, the certificate of dissolution is not revoked or
14-18 its charter or its right to conduct business is not reinstated; or
14-19 (D) an event requiring a winding up has occurred
14-20 with respect to a partnership that is a partner;
14-21 (5) application by the partnership or another partner
14-22 for the partner's expulsion by judicial decree because:
14-23 (A) the partner engaged in wrongful conduct that
14-24 adversely and materially affected the partnership business;
14-25 (B) the partner wilfully or persistently
14-26 committed a material breach of the partnership agreement or of a
14-27 duty owed to the partnership or the other partners under Section
14-28 4.04; or
14-29 (C) the partner engaged in conduct relating to
14-30 the partnership business that made it not reasonably practicable to
14-31 carry on the business in partnership with that partner;
14-32 (6) the partner:
14-33 (A) becoming a debtor in bankruptcy;
14-34 (B) executing an assignment for the benefit of
14-35 creditors;
14-36 (C) seeking, consenting to, or acquiescing in
14-37 the appointment of a trustee, receiver, or liquidator of that
14-38 partner or of all or substantially all of that partner's property;
14-39 or
14-40 (D) failing, within 90 days after the
14-41 appointment, to have vacated or stayed the appointment of a
14-42 trustee, receiver, or liquidator of the partner or of all or
14-43 substantially all of the partner's property obtained without the
14-44 partner's consent or acquiescence, or failing within 90 days after
14-45 the date of expiration of a stay to have the appointment vacated;
14-46 (7) in the case of a partner who is an individual:
14-47 (A) the partner's death;
14-48 (B) the appointment of a guardian or general
14-49 conservator for the partner; or
14-50 (C) a judicial determination that the partner
14-51 has otherwise become incapable of performing the partner's duties
14-52 under the partnership agreement;
14-53 (8) termination of a partner's existence;
14-54 (9) in the case of a partner that has transferred all
14-55 of the partner's partnership interest, redemption of the
14-56 transferee's interest under Sections 7.01(n)-(r); or
14-57 (10) an agreement to continue the partnership under
14-58 Section 8.01(g) if the partnership has received a notice from the
14-59 partner under Section 8.01(g) requesting that the partnership be
14-60 wound up.
14-61 Sec. 6.02. WRONGFUL WITHDRAWAL. (a) POWER TO WITHDRAW. A
14-62 partner at any time before the occurrence of an event requiring a
14-63 winding up may withdraw from the partnership and cease to be a
14-64 partner as provided by Section 6.01.
14-65 (b) WRONGFUL WITHDRAWAL. A partner's withdrawal is wrongful
14-66 only if:
14-67 (1) it is in breach of an express provision of the
14-68 partnership agreement;
14-69 (2) in the case of a partnership for a definite term
14-70 or particular undertaking or for which the partnership agreement
15-1 provides for winding up on a specified event, before the expiration
15-2 of the term, the completion of the undertaking, or the occurrence
15-3 of the event:
15-4 (A) the partner withdraws by express will; or
15-5 (B) in the case of a partner that is not an
15-6 individual, a trust other than a business trust, or an estate, the
15-7 partner is expelled or otherwise withdraws because the partner
15-8 wilfully terminated; or
15-9 (3) the partner is expelled by judicial decree under
15-10 Subsection (b)(5).
15-11 (c) LIABILITY FOR DAMAGES. A wrongfully withdrawing partner
15-12 is liable to the partnership and to the other partners for damages
15-13 caused by the withdrawal, in addition to other liability of the
15-14 partner to the partnership or to the other partners.
15-15 ARTICLE VII. PARTNER'S WITHDRAWAL IF BUSINESS NOT WOUND UP
15-16 Sec. 7.01. REDEMPTION OF WITHDRAWING PARTNER OR TRANSFEREE'S
15-17 INTEREST IF PARTNERSHIP NOT WOUND UP. (a) REDEMPTION. If an
15-18 event of withdrawal occurs under Sections 6.01(b)(1)-(9) and an
15-19 event requiring a winding up does not occur within 60 days after
15-20 the date of the withdrawal, or on a partner's withdrawal under
15-21 Section 6.01(b)(10), the partnership interest of the withdrawn
15-22 partner automatically is redeemed by the partnership as of the date
15-23 of withdrawal in accordance with this section.
15-24 (b) REDEMPTION PRICE. (1) The redemption price of a
15-25 withdrawn partner's partnership interest is the fair value of the
15-26 interest as of the date of withdrawal, except that the redemption
15-27 price of the partnership interest of a partner who wrongfully
15-28 withdraws before the expiration of a definite term, the completion
15-29 of a particular undertaking, or the occurrence of a specified event
15-30 requiring a winding up is the lesser of:
15-31 (A) the fair value of the withdrawn partner's
15-32 partnership interest as of the date of withdrawal; or
15-33 (B) the amount that the withdrawn partner would
15-34 have received if an event requiring a winding up had occurred at
15-35 the time of the partner's withdrawal.
15-36 (2) Interest is payable on the amount owed under this
15-37 subsection.
15-38 (c) CONTRIBUTIONS FROM WRONGFULLY WITHDRAWING PARTNER. If a
15-39 wrongfully withdrawing partner would have been liable to make
15-40 contributions to the partnership under Section 8.06(b) or (c) if an
15-41 event requiring winding up had occurred at the time of withdrawal,
15-42 the withdrawn partner is liable to the partnership to make
15-43 contributions in that amount to the partnership, plus interest on
15-44 the amount owed.
15-45 (d) SETOFF. The partnership may set off the damages for
15-46 wrongful withdrawal under Section 6.02(b) and all other amounts
15-47 owed by the withdrawn partner to the partnership, whether currently
15-48 due, including interest, against the redemption price payable to
15-49 the withdrawn partner.
15-50 (e) INTEREST. Interest owed under Subsection (b), (c), or
15-51 (d) accrues from the date of the withdrawal to the date of payment.
15-52 (f) INDEMNITY. (1) A partnership shall indemnify a
15-53 withdrawn partner against a partnership liability incurred before
15-54 the withdrawal except a liability:
15-55 (A) then unknown to the partnership; or
15-56 (B) incurred by an act of the withdrawn partner
15-57 under Section 7.02.
15-58 (2) For purposes of this subsection, a liability not
15-59 known to a partner other than the withdrawn partner is not known to
15-60 the partnership.
15-61 (g) TENDER OF REDEMPTION PRICE. If a deferred payment is
15-62 not authorized under Subsection (k) and an agreement on the
15-63 redemption price of a withdrawn partner's interest is not reached
15-64 within 120 days after the date of a written demand for payment by
15-65 either party, within 30 days after the expiration of the 120-day
15-66 period the partnership shall:
15-67 (1) pay in cash to the withdrawn partner the amount
15-68 the partnership estimates to be the redemption price plus accrued
15-69 interest, reduced by any setoffs and accrued interest under
15-70 Subsection (d); or
16-1 (2) make written demand for payment of its estimate of
16-2 the amount owed by the withdrawn partner, net of amounts owed to
16-3 the partner, to the partnership.
16-4 (h) WRITTEN OFFER TO PAY OR DEMAND FOR PAYMENT. If a
16-5 deferred payment is authorized under Subsection (k) or a
16-6 contribution or other amount is owed by the withdrawn partner to
16-7 the partnership, the partnership may tender a written offer to pay
16-8 or deliver a written statement of demand for the amount that it
16-9 estimates to be the net amount owed to it, stating the amount and
16-10 other terms and conditions of the obligation.
16-11 (i) EXPLANATORY STATEMENT ACCOMPANYING OR FOLLOWING TENDER.
16-12 On request of the other party, the payment, tender, or demand
16-13 required or allowed by Subsection (g) or (h) must be accompanied or
16-14 followed promptly by:
16-15 (1) a statement of partnership property and
16-16 liabilities as of the date of the partner's withdrawal and the
16-17 latest available partnership balance sheet and income statement, if
16-18 any, if payment, tender, or demand is made or delivered by the
16-19 partnership; and
16-20 (2) an explanation of the computation of the estimated
16-21 payment obligation.
16-22 (j) TENDER IN FULL SATISFACTION. The terms of a payment or
16-23 tender under Subsection (g) or (h) govern a redemption if:
16-24 (1) the payment or tender is accompanied by written
16-25 notice that:
16-26 (A) the payment or tendered amount, if made, is
16-27 in full satisfaction of a party's obligations relating to the
16-28 redemption of the withdrawn partner's partnership interest; and
16-29 (B) an action to determine the redemption price,
16-30 a contribution obligation or setoff under Subsection (c) or (d), or
16-31 other terms of the redemption obligation must be commenced within
16-32 one year after the later of:
16-33 (i) the date the written notice is given;
16-34 or
16-35 (ii) the date of delivery of the
16-36 information required by Subsection (i); and
16-37 (2) the party receiving the payment or tender does not
16-38 commence an action within that one-year period.
16-39 (k) DEFERRAL OF PAYMENT TO WRONGFULLY WITHDRAWING PARTNER.
16-40 A partner who wrongfully withdraws before the expiration of a
16-41 definite term, the completion of a particular undertaking, or the
16-42 occurrence of a specified event requiring a winding up is not
16-43 entitled to receive any portion of the redemption price until the
16-44 expiration of the term, the completion of the undertaking, or the
16-45 occurrence of the specified event unless the partner establishes to
16-46 the satisfaction of a court that earlier payment will not cause
16-47 undue hardship to the partnership. A deferred payment bears
16-48 interest. The withdrawn partner may seek to demonstrate to the
16-49 satisfaction of the court that security for a deferred payment is
16-50 appropriate.
16-51 (l) ACTION TO DETERMINE REDEMPTION TERMS. A withdrawn
16-52 partner or the partnership may maintain an action against the other
16-53 party under Section 4.06 to determine the terms of redemption of
16-54 that partner's interest, including a contribution obligation or
16-55 setoff under Subsection (c) or (d) or other terms of the redemption
16-56 obligations of either party. The action must be commenced within
16-57 one year after the later of the date of delivery of information
16-58 required by Subsection (j) or the date written notice is given
16-59 under Subsection (j). The court shall determine the terms of the
16-60 redemption of the withdrawn partner's interest, any contribution
16-61 obligation or setoff due under Subsection (c) or (d), and accrued
16-62 interest and enter judgment for an additional payment or refund.
16-63 If deferred payment is authorized under Subsection (k), the court
16-64 shall also determine the security for payment if requested to
16-65 consider whether security is appropriate. If the court finds that
16-66 a party acted arbitrarily, vexatiously, or not in good faith,
16-67 including failure to tender payment or make an offer to pay or to
16-68 comply with the requirements of Subsection (i), the court may
16-69 assess damages against the party, including if appropriate a share
16-70 of the profits of the continuing business, reasonable attorney's
17-1 fees, and the fees and expenses of appraisers or other experts for
17-2 a party to the action, in amounts the court finds equitable.
17-3 (m) DEFERRAL OF PAYMENT ON OCCURRENCE OF EVENT REQUIRING
17-4 WINDING UP. If a partner withdraws under Section 6.01 and an event
17-5 occurs within 60 days of the date of withdrawal that requires a
17-6 winding up of the partnership under Section 8.01:
17-7 (1) the partnership may defer paying the redemption
17-8 price to the withdrawn partner until the partnership first makes a
17-9 winding up distribution to the remaining partners; and
17-10 (2) the redemption price or contribution obligation is
17-11 the amount the withdrawn partner would have received or contributed
17-12 if the event requiring a winding up had occurred at the time of the
17-13 partner's withdrawal.
17-14 (n) OBLIGATION TO REDEEM TRANSFEREE. A partnership must
17-15 redeem the partnership interest of a transferee for its fair value
17-16 if:
17-17 (1) the interest was transferred when:
17-18 (A) the partnership was for a definite term not
17-19 then expired or a particular undertaking not then completed; or
17-20 (B) the partnership agreement provided for
17-21 winding up on a specified event that has not yet occurred;
17-22 (2) the definite term has expired, the particular
17-23 undertaking has been completed, or the specified event has
17-24 occurred; and
17-25 (3) the transferee makes a written demand for
17-26 redemption.
17-27 (o) PAYMENT TO TRANSFEREE. If an agreement for the
17-28 redemption price of a transferee's interest is not reached within
17-29 120 days after the date of a written demand for redemption, within
17-30 30 days after the expiration of the 120-day period the partnership
17-31 must pay in cash to the transferee the amount the partnership
17-32 estimates to be the redemption price, plus accrued interest from
17-33 the date of demand.
17-34 (p) INFORMATION TO TRANSFEREE. On request of the
17-35 transferee, the payment required by Subsection (o) must be
17-36 accompanied or followed by:
17-37 (1) a statement of partnership property and
17-38 liabilities as of the date of the demand for redemption;
17-39 (2) the latest available partnership balance sheet and
17-40 income statement, if any; and
17-41 (3) an explanation of the computation of the estimated
17-42 payment obligation.
17-43 (q) PRICE FOR TRANSFEREE. If payment required by Subsection
17-44 (n) is accompanied by written notice that the payment is in full
17-45 satisfaction of the partnership's obligations relating to the
17-46 redemption of the transferee's interest, the payment, less
17-47 interest, is the redemption price unless the transferee within one
17-48 year after the date of the written notice commences an action to
17-49 determine the redemption price.
17-50 (r) SUIT BY TRANSFEREE. A transferee may maintain an action
17-51 against a partnership to determine the redemption price of the
17-52 transferee's interest. The court shall determine the redemption
17-53 price of the transferee's interest and accrued interest and enter
17-54 judgment for payment or refund. If the court finds that the
17-55 partnership acted arbitrarily, vexatiously, or not in good faith,
17-56 including failure to make payment, the court may assess reasonable
17-57 attorney's fees and the fees and expenses of appraisers or other
17-58 experts for a party to the action, in amounts the court finds
17-59 equitable, against the partnership.
17-60 (s) DEFERRAL OF TRANSFEREE REDEMPTION. The redemption of a
17-61 transferee's interest under Subsections (n) and (o) may be deferred
17-62 as determined by the court if the partnership establishes to the
17-63 satisfaction of the court that failure to defer redemption will
17-64 cause undue hardship to the business of the partnership.
17-65 Sec. 7.02. WITHDRAWN PARTNER'S POWER TO BIND PARTNERSHIP.
17-66 (a) POWER TO BIND FOR ONE YEAR. The action of a withdrawn partner
17-67 within one year after the date of the person's withdrawal binds the
17-68 partnership if the transaction is one that would bind the
17-69 partnership before the person's withdrawal and the other party to
17-70 the transaction:
18-1 (1) does not have notice of the person's withdrawal as
18-2 a partner;
18-3 (2) had done business with the partnership within one
18-4 year preceding the date of withdrawal; and
18-5 (3) reasonably believed that the withdrawn partner was
18-6 a partner at the time of the transaction.
18-7 (b) WITHDRAWN PARTNER'S LIABILITY FOR LOSS. A withdrawn
18-8 partner is liable to the partnership for loss caused to the
18-9 partnership arising from an obligation incurred by the withdrawn
18-10 partner after withdrawal and for which the partnership is liable
18-11 under Subsection (a).
18-12 Sec. 7.03. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
18-13 LIABILITY. (a) WITHDRAWAL DOES NOT DISCHARGE LIABILITY.
18-14 Withdrawal of a partner does not of itself discharge the partner's
18-15 liability for an obligation of the partnership incurred before
18-16 withdrawal.
18-17 (b) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
18-18 deceased partner is liable for an obligation of the partnership
18-19 incurred while the deceased was a partner to the same extent that a
18-20 withdrawn partner is liable for an obligation of the partnership
18-21 incurred before withdrawal.
18-22 (c) DISCHARGE OF WITHDRAWN PARTNER BY AGREEMENT OF CREDITOR.
18-23 A withdrawn partner is discharged from liability incurred before
18-24 the withdrawal by an agreement to that effect between the partner
18-25 and a partnership creditor.
18-26 (d) MATERIAL ALTERATION OF OBLIGATION WITHOUT CONSENT
18-27 DISCHARGES WITHDRAWN PARTNER. If a creditor of a partnership has
18-28 notice of a partner's withdrawal and without the consent of the
18-29 withdrawn partner agrees to a material alteration in the nature or
18-30 time of payment of an obligation of the partnership incurred before
18-31 the withdrawal, the withdrawn partner is discharged from the
18-32 obligation.
18-33 (e) LIABILITY OF WITHDRAWN PARTNER TO CREDITOR. A person
18-34 who withdraws as a partner in a circumstance that does not
18-35 constitute an event requiring a winding up under Section 8.01 is
18-36 liable as a partner to another party in a transaction entered into
18-37 by the partnership or a surviving partnership under Chapter 9,
18-38 Business & Commerce Code, within two years after the date of the
18-39 partner's withdrawal only if the other party to the transaction:
18-40 (1) does not have notice of the partner's withdrawal;
18-41 and
18-42 (2) reasonably believed that the withdrawn partner was
18-43 a partner at the time of the transaction.
18-44 ARTICLE VIII. WINDING UP PARTNERSHIP BUSINESS
18-45 Sec. 8.01. EVENTS REQUIRING WINDING UP OF PARTNERSHIP.
18-46 (a) EXPRESS WILL OF MAJORITY-IN-INTEREST IN CERTAIN PARTNERSHIPS.
18-47 In a partnership that is not for a definite term or a particular
18-48 undertaking or in which the partnership agreement does not provide
18-49 for winding up on a specified event, the express will of a
18-50 majority-in-interest of the partners who have not assigned their
18-51 interests requires a winding up of the partnership.
18-52 (b) TERM OR UNDERTAKING. In a partnership for a definite
18-53 term or particular undertaking, winding up is required on:
18-54 (1) the express will of all the partners; or
18-55 (2) the expiration of the term or the completion of
18-56 the undertaking, unless otherwise continued under Section 4.07.
18-57 (c) AGREEMENT ON SPECIFIED EVENT. Unless otherwise
18-58 continued under Section 4.07, the occurrence of an event specified
18-59 in the partnership agreement as requiring the winding up of the
18-60 partnership business or the express will of all the partners
18-61 requires a winding up of the partnership.
18-62 (d) ILLEGAL TO CONTINUE. An event that makes it illegal for
18-63 all or substantially all of the business of the partnership to be
18-64 continued requires a winding up of a partnership, but a cure of
18-65 illegality within 90 days after the date of notice to the
18-66 partnership of the event is effective retroactively to the date of
18-67 the event for purposes of this subsection.
18-68 (e) JUDICIAL DECREE. Application by a partner requires a
18-69 winding up if a judicial decree determines that:
18-70 (1) the economic purpose of the partnership is likely
19-1 to be unreasonably frustrated;
19-2 (2) another partner has engaged in conduct relating to
19-3 the partnership business that makes it not reasonably practicable
19-4 to carry on the business in partnership with that partner; or
19-5 (3) it is not otherwise reasonably practicable to
19-6 carry on the partnership business in conformity with the
19-7 partnership agreement.
19-8 (f) SALE OF PROPERTY. The sale of all or substantially all
19-9 of the property of the partnership outside the ordinary course of
19-10 business requires a winding up of a partnership.
19-11 (g) NOTICE FROM PARTNER IF NO TERM OR UNDERTAKING; OPTION TO
19-12 CONTINUE. If a partnership is not for a definite term or a
19-13 particular undertaking and its partnership agreement does not
19-14 provide for a specified event requiring a winding up, a request for
19-15 winding up the partnership from a partner, other than a partner who
19-16 has agreed not to withdraw, requires a winding up within 60 days
19-17 after the date of the partnership's receipt of notice of the
19-18 request or at a later date as specified by the notice, unless a
19-19 majority-in-interest of the partners agree to continue the
19-20 partnership. The continuation of the business by the other
19-21 partners or by those who habitually acted in the business before
19-22 the notice, other than the partner giving the notice, without any
19-23 settlement or liquidation of the partnership business, is prima
19-24 facie evidence of an agreement to continue the partnership.
19-25 Sec. 8.02. PARTNERSHIP CONTINUES AFTER OCCURRENCE OF EVENT
19-26 REQUIRING WINDING UP. A partnership continues after the occurrence
19-27 of an event requiring winding up until the winding up of its
19-28 business is completed, at which time the partnership is terminated.
19-29 Sec. 8.03. CONDUCT OF WINDING UP. (a) PERSONS AUTHORIZED
19-30 TO WIND UP. After the occurrence of an event requiring a winding
19-31 up:
19-32 (1) the partners who have not withdrawn may wind up a
19-33 partnership's business;
19-34 (2) the legal representative of the last surviving
19-35 partner may wind up a partnership's business; or
19-36 (3) on application of a partner, a partner's legal
19-37 representative or transferee, or a withdrawn partner whose interest
19-38 is not redeemed under Section 7.01(k), a court, for good cause, may
19-39 appoint a person to carry out the winding up and may make an order,
19-40 direction, or inquiry that the circumstances require.
19-41 (b) AUTHORIZED ACTIONS. To the extent appropriate for
19-42 winding up, as soon as reasonably practicable, and in the name of
19-43 and for and on behalf of the partnership, a person winding up a
19-44 partnership's business may:
19-45 (1) prosecute and defend civil, criminal, or
19-46 administrative suits;
19-47 (2) settle and close the partnership's business;
19-48 (3) dispose of and convey the partnership's property;
19-49 (4) satisfy or provide for the satisfaction of the
19-50 partnership's liabilities;
19-51 (5) distribute to the partners any remaining property
19-52 of the partnership; and
19-53 (6) perform any other necessary act.
19-54 (c) CONTINUATION TO PRESERVE VALUE. A person winding up a
19-55 partnership's business may continue the business of the partnership
19-56 in whole or in part, including delaying the disposition of
19-57 partnership property, only for the limited period necessary to
19-58 avoid unreasonable loss of the partnership's property or business.
19-59 Sec. 8.04. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
19-60 OCCURRENCE OF EVENT REQUIRING WINDING UP. (a) LIABILITY OF ALL
19-61 PARTNERS FOR LOSSES. Except as provided by Subsection (b), after
19-62 occurrence of an event requiring winding up the losses with respect
19-63 to which a partner must contribute under Section 8.06(c) include
19-64 losses from any liabilities incurred under Section 8.05.
19-65 (b) INDIVIDUAL LIABILITY OF ACTING PARTNER FOR LOSSES. A
19-66 partner who, with notice that an event requiring a winding up has
19-67 occurred, incurs a partnership liability under Section 8.05(2) by
19-68 an act that is not appropriate for winding up the partnership
19-69 business is liable to the partnership for a loss caused to the
19-70 partnership arising from that liability.
20-1 Sec. 8.05. PARTNER'S POWER TO BIND PARTNERSHIP AFTER
20-2 OCCURRENCE OF EVENT REQUIRING WINDING UP. After the occurrence of
20-3 an event requiring winding up, a partnership is bound by a
20-4 partner's act that:
20-5 (1) is appropriate for winding up the partnership
20-6 business; or
20-7 (2) would bind the partnership under Section 3.02
20-8 before the occurrence of the event requiring winding up, if the
20-9 other party to the transaction does not have notice that an event
20-10 requiring winding up has occurred.
20-11 Sec. 8.06. RULES FOR DISTRIBUTION ON WINDING UP.
20-12 (a) APPLICATION OF PROPERTY TO OBLIGATIONS. In winding up a
20-13 partnership business, the property of the partnership must be
20-14 applied to discharge its obligations to creditors, including
20-15 partners who are creditors other than in their capacities as
20-16 partners. A surplus must be applied to pay in cash the net amount
20-17 distributable to partners in accordance with their right to
20-18 distributions under Subsection (b).
20-19 (b) SETTLEMENT OF ACCOUNTS AMONG PARTNERS. Each partner is
20-20 entitled to a settlement of all partnership accounts on winding up
20-21 the partnership business. In settling accounts among the partners,
20-22 the partnership interest of a withdrawn partner that is not
20-23 redeemed under Section 7.01 is credited with a share of any profits
20-24 for the period after the partner's withdrawal but is charged with a
20-25 share of losses for that period only to the extent of profits
20-26 credited for that period, and the profits and losses that result
20-27 from the liquidation of the partnership property must be credited
20-28 and charged to the partners' capital accounts. The partnership
20-29 shall make a distribution to a partner in an amount equal to that
20-30 partner's positive balance in the partner's capital account. A
20-31 partner shall contribute to the partnership an amount equal to that
20-32 partner's negative balance in the partner's capital account.
20-33 (c) CONTRIBUTION TO SATISFY OBLIGATIONS. To the extent not
20-34 taken into account in settling the accounts among partners under
20-35 Subsection (b), each partner must contribute, in the proportion in
20-36 which the partner shares partnership losses, the amount necessary
20-37 to satisfy partnership obligations, excluding liabilities that
20-38 creditors have agreed may be satisfied only with partnership
20-39 property without recourse to individual partners. If a partner
20-40 fails to contribute, the other partners shall contribute, in the
20-41 proportions in which the partners share partnership losses, the
20-42 additional amount necessary to satisfy the partnership obligations.
20-43 A partner or partner's legal representative may enforce or recover
20-44 from the other partners, or from the estate of a deceased partner,
20-45 contributions the partner or estate makes to the extent the amount
20-46 contributed exceeds that partner's or the estate's share of the
20-47 partnership obligations.
20-48 (d) LIABILITY OF DECEASED PARTNER'S ESTATE. The estate of a
20-49 deceased partner is liable for the partner's obligation to
20-50 contribute to the partnership.
20-51 (e) ENFORCEMENT OF OBLIGATION OF ESTATE OF DECEASED PARTNER.
20-52 The partnership, an assignee for the benefit of creditors of a
20-53 partnership or a partner, or a person appointed by a court to
20-54 represent creditors of a partnership or a partner may enforce the
20-55 obligation of a partner or the estate of a deceased partner to
20-56 contribute to a partnership.
20-57 ARTICLE IX. PARTNERSHIP CONVERSIONS, MERGERS,
20-58 AND EXCHANGES
20-59 Sec. 9.01. CONVERSIONS. (a) GENERAL TO LIMITED
20-60 PARTNERSHIP. A partnership that is not a limited partnership may
20-61 convert, with the consent of a majority-in-interest of the
20-62 partners, to a domestic or foreign limited partnership by properly
20-63 filing a certificate of limited partnership in the state in which
20-64 the limited partnership is to be formed. If the limited
20-65 partnership is formed under the law of this state, in addition to
20-66 other matters required, the certificate must state:
20-67 (1) that the partnership is converting from a
20-68 partnership that is not a limited partnership to a limited
20-69 partnership;
20-70 (2) the name or names of the partnership before the
21-1 conversion to a limited partnership;
21-2 (3) the names of the general partners before the
21-3 conversion;
21-4 (4) the state in which the partnership was organized
21-5 before conversion;
21-6 (5) the change in name required, if any, in connection
21-7 with the operation of the partnership as a limited partnership in
21-8 this state; and
21-9 (6) the effective date of the conversion if different
21-10 from the date the certificate is filed.
21-11 If a partnership that is not a limited partnership converts
21-12 to a limited partnership, a partner who did not consent to the
21-13 conversion is considered to be a partner who has withdrawn from the
21-14 partnership effective immediately before the effective date of the
21-15 conversion unless, within 60 days after the later of the effective
21-16 date of the conversion or the date the partner receives actual
21-17 notice of the conversion, the partner notifies the partnership in
21-18 writing of the partner's desire not to withdraw. A withdrawal
21-19 under the described circumstances is not a wrongful withdrawal.
21-20 (b) LIMITED TO GENERAL. A domestic or foreign limited
21-21 partnership may convert, on the affirmative vote of a
21-22 majority-in-interest of the partners, to a partnership that is not
21-23 a limited partnership by:
21-24 (1) cancelling its certificate of limited partnership
21-25 in the state of formation or otherwise complying with the
21-26 provisions of that state's law as of the date that partnership's
21-27 existence terminated;
21-28 (2) amending its partnership agreement to reflect its
21-29 change in status and any change in name required to comply with
21-30 this Act; and
21-31 (3) stating the effective date of the conversion in
21-32 the partnership agreement if different from the date of the
21-33 cancellation of the limited partnership certificate.
21-34 If a limited partnership converts to a partnership that is
21-35 not a limited partnership, a partner who did not consent to the
21-36 conversion is considered to be a partner who has withdrawn from the
21-37 limited partnership effective immediately before the effective date
21-38 of the conversion unless, within 60 days after the later of the
21-39 effective date of the conversion or the date the partner receives
21-40 actual notice of the conversion, the partner notifies the
21-41 partnership in writing of the partner's desire not to withdraw. A
21-42 withdrawal under the described circumstances is not a wrongful
21-43 withdrawal.
21-44 (c) LIABILITY OF FORMER LIMITED PARTNER. A limited partner
21-45 who remains in a partnership that results from the conversion of a
21-46 limited partnership to a partnership that is not a limited
21-47 partnership is treated as an incoming partner in the partnership as
21-48 of the effective date of the conversion for purposes of determining
21-49 the partner's liability:
21-50 (1) to the partners of the partnership; and
21-51 (2) for the debts and obligations of the partnership.
21-52 (d) LIABILITY OF GENERAL PARTNER IN CONVERTED LIMITED
21-53 PARTNERSHIP. If a partnership that is not a limited partnership
21-54 converts to a limited partnership, a partner who converts to a
21-55 limited partner continues to be liable to the partners of the
21-56 partnership and for a debt or obligation of the partnership
21-57 incurred before the date of conversion on the same basis as a
21-58 withdrawn partner remains liable to the partners or for a debt or
21-59 obligation of a partnership incurred before withdrawal under
21-60 Section 7.03.
21-61 (e) AUTHORITY OF FORMER GENERAL PARTNER WHO IS LIMITED
21-62 PARTNER IN CONVERTED LIMITED PARTNERSHIP. If a partnership that is
21-63 not a limited partnership converts to a limited partnership, an
21-64 action of a partner who converts to a limited partner that is taken
21-65 within one year after the effective date of the conversion binds
21-66 the partnership to a transaction for which the former general
21-67 partner no longer has authority to bind the partnership if:
21-68 (1) the transaction is one in which the partner's
21-69 action would bind the partnership before the effective date of the
21-70 conversion; and
22-1 (2) the other party to the transaction:
22-2 (A) does not have notice of the person's
22-3 conversion to a limited partner;
22-4 (B) has done business with the partnership
22-5 within one year preceding the effective date of the conversion; and
22-6 (C) reasonably believed that the partner who
22-7 converted was a partner with authority to bind the partnership to
22-8 the transaction at the time of the transaction.
22-9 (f) EFFECTIVE DATE OF CONVERSION. A conversion of a
22-10 partnership that is not a limited partnership to a limited
22-11 partnership or a conversion of a limited partnership to a
22-12 partnership that is not a limited partnership is effective on the
22-13 later of the date specified in a written agreement concerning the
22-14 conversion between the partners or the date all actions required by
22-15 this section have been completed.
22-16 Sec. 9.02. MERGERS. (a) ADOPTION OF PLAN. A partnership
22-17 may adopt a plan of merger and one or more partnerships may merge
22-18 with one or more domestic or foreign partnerships or other entities
22-19 if each domestic or foreign partnership that is a party to the plan
22-20 of merger approves the plan of merger in the manner prescribed for
22-21 mergers in its partnership agreement or constituent documents or by
22-22 applicable law. If one or more foreign partnerships or other
22-23 entities is a party to the merger or is to be created by the terms
22-24 of the plan of merger:
22-25 (1) the merger must be permitted by:
22-26 (A) the laws under which each foreign
22-27 partnership and each other entity that is a party to the merger is
22-28 formed or organized; or
22-29 (B) the partnership agreement or other
22-30 constituent documents of the foreign partnership or other entity
22-31 not inconsistent with those laws; and
22-32 (2) each foreign partnership or other entity that is a
22-33 party to the merger must comply with the laws or documents in
22-34 effecting the merger.
22-35 (b) CONTENTS OF PLAN OF MERGER. If a partnership merges
22-36 with one or more domestic or foreign limited partnerships or other
22-37 entities, other than another partnership formed under this Act, a
22-38 plan of merger must be adopted. The plan must include:
22-39 (1) the name and state of organization of:
22-40 (A) each domestic or foreign partnership or
22-41 other entity that is a party to the merger;
22-42 (B) each domestic or foreign partnership or
22-43 other entity, if any, that will survive the merger, which may be
22-44 one or more of the domestic or foreign partnerships or other
22-45 entities who are a party to the merger; and
22-46 (C) each new domestic or foreign partnership or
22-47 other entity, if any, that may be created by the terms of the plan
22-48 of merger;
22-49 (2) the terms and conditions of the merger, including,
22-50 if more than one domestic or foreign partnership or other entity is
22-51 to survive or to be created by the terms of the plan of merger, the
22-52 manner and basis of:
22-53 (A) allocating and vesting the real estate and
22-54 other property of each domestic or foreign partnership and of each
22-55 other entity that is a party to the merger among one or more of the
22-56 surviving or new domestic or foreign partnerships or other
22-57 entities; and
22-58 (B) allocating all liabilities and obligations
22-59 of each domestic or foreign partnership and other entity that is a
22-60 party to the merger, or making adequate provision for the payment
22-61 and discharge of the liabilities and obligations, among one or more
22-62 of the surviving or new domestic or foreign partnerships or other
22-63 entities;
22-64 (3) the manner and basis of converting any of the
22-65 partnership interests or other evidences of ownership of each
22-66 domestic or foreign partnership and other entity that is a party to
22-67 the merger into:
22-68 (A) partnership interests, shares, obligations,
22-69 evidences of ownership, rights to purchase securities, or other
22-70 securities of one or more of the surviving or new domestic or
23-1 foreign partnerships or other entities;
23-2 (B) cash; or
23-3 (C) other property, including shares,
23-4 obligations, evidences of ownership, rights to purchase securities,
23-5 or other securities of another person or entity; or
23-6 (D) any combination of those items;
23-7 (4) the certificate of limited partnership, articles
23-8 of incorporation, articles of organization, or other organizational
23-9 documents of each other entity that is to be created or will act as
23-10 a surviving entity by the terms of the plan of merger;
23-11 (5) the names of the principal officer of the
23-12 surviving entities and the registered officer and registered agent
23-13 of the surviving entities if a registered officer or agent is
23-14 required by the laws under which the surviving entities are formed;
23-15 (6) a statement describing whether the surviving
23-16 entity is a partnership, limited partnership, corporation, limited
23-17 liability company, or other entity; and
23-18 (7) other provisions relating to the merger.
23-19 (c) CERTIFICATE OF MERGER. After a plan of merger has been
23-20 approved by each of the partnerships or other entities that is a
23-21 party to the plan of merger and a partnership merges with one or
23-22 more domestic or foreign limited partnerships or other entities, a
23-23 certificate of merger shall be executed on behalf of each
23-24 partnership or other entity by at least one general partner of each
23-25 partnership that is a party to the plan of merger and by an
23-26 authorized officer, agent, or other representative of each other
23-27 entity that is a party to the plan of merger. The certificate must
23-28 include:
23-29 (1) the plan of merger; and
23-30 (2) for each domestic or foreign partnership or other
23-31 entity that is a party to the plan of merger, a statement that the
23-32 plan of merger was authorized by all actions required by the laws
23-33 under which it was formed or organized and by its constituent
23-34 documents.
23-35 (d) FILING. The original of the certificate of merger and a
23-36 number of copies of the certificate equal to the number of
23-37 surviving and new domestic or foreign partnerships and other
23-38 entities that are a party to the plan of merger or that will be
23-39 created by the terms of the plan must be delivered to the authority
23-40 with which the surviving entity files merger documents.
23-41 (e) EFFECTIVE DATE OF MERGER. If a certificate of merger is
23-42 delivered to the secretary of state, the merger is effective on the
23-43 date of the issuance of the certificate of merger by the secretary
23-44 of state or on a later date stated in the certificate of merger.
23-45 If a certificate of merger is not required to be filed with the
23-46 secretary of state, the merger is effective on the date agreed to
23-47 by the parties to the merger as set out in the plan of merger or as
23-48 otherwise agreed to by the parties.
23-49 (f) EFFECT OF MERGER. (1) A partner of a partnership that
23-50 is a party to a merger does not become personally liable as a
23-51 result of the merger for a liability or obligation of another
23-52 person that is a party to the merger unless the partner consents to
23-53 becoming personally liable by action taken in connection with the
23-54 specific plan of merger approved by the partner. A partner who
23-55 remains in or enters a domestic or foreign partnership or other
23-56 entity that survives a merger or that enters a domestic or foreign
23-57 partnership or other entity created by the terms of the plan of
23-58 merger shall be treated as an incoming partner in the new or
23-59 surviving partnership as of the effective date of the merger for
23-60 the purpose of determining the partner's liability for a debt or
23-61 obligation of the other partnerships or entities that are parties
23-62 to the merger and in which the partner was not associated.
23-63 (2) The separate existence of every domestic
23-64 partnership or other entity that is a party to a merger, except a
23-65 surviving or new domestic partnership or other entity, ceases when
23-66 a merger takes effect.
23-67 (3) All rights, title, and interest to all real estate
23-68 and other property owned by each domestic or foreign partnership
23-69 and by each other entity that is a party to the merger is allocated
23-70 to and vested in one or more of the surviving or resulting entities
24-1 as provided in a plan of merger without reversion or impairment,
24-2 without further act or deed, and without any transfer or assignment
24-3 having occurred, but subject to any existing liens or other
24-4 encumbrances on the property, when a merger takes effect.
24-5 (4) When a merger takes effect, all liabilities and
24-6 obligations of each domestic or foreign partnership and other
24-7 entity that is a party to the merger are allocated to one or more
24-8 of the surviving or new domestic or foreign partnerships or other
24-9 entities in the manner prescribed by the plan of merger, and each
24-10 surviving or new domestic or foreign partnership or other entity to
24-11 which a liability or obligation is allocated under the plan of
24-12 merger becomes the primary obligor for the liability or obligation.
24-13 Except as otherwise provided by the plan of merger or by law or
24-14 contract, a party to the merger, other than a surviving domestic or
24-15 foreign partnership or other entity with liability at the time of
24-16 the merger, or another domestic or foreign partnership or other
24-17 entity created by the merger does not become liable for the debt or
24-18 obligation.
24-19 (5) After a merger, a proceeding pending by or against
24-20 a domestic or foreign partnership or another entity that is a party
24-21 to the merger may be continued as if the merger did not occur and
24-22 the partnership or other entity that has been allocated the
24-23 liabilities, obligations, asset, or rights associated with the
24-24 proceeding under the terms of the plan of merger remains the
24-25 primary obligor, or the surviving or new domestic or foreign
24-26 partnership or other entity or entities to which the liability,
24-27 obligation, asset, or right associated with the proceeding is
24-28 allocated to and vested in under the plan of merger may be
24-29 substituted in the proceeding.
24-30 (6) The partnership agreement, certificate of limited
24-31 partnership, and other constituent documents of each other entity
24-32 that will act as a surviving entity by the terms of a plan of
24-33 merger is considered amended to the extent provided in the plan of
24-34 merger when the merger takes effect.
24-35 (7) Each new domestic partnership named in a plan of
24-36 merger under Subsection (b)(1), each new domestic limited
24-37 partnership for which a certificate of limited partnership is
24-38 included in a plan of merger under Subsection (b)(4), and each
24-39 other entity to be formed or organized under the laws of this state
24-40 for which organizational documents are included in a plan of merger
24-41 under Subsection (b)(4) are formed or organized as provided in the
24-42 plan of merger on:
24-43 (A) delivering an executed copy of the
24-44 certificate of merger to, or filing the certificate with, the
24-45 governmental entity with which organizational documents of the
24-46 partnership or other entity are required to be delivered or filed,
24-47 if any; and
24-48 (B) meeting additional requirements, if any, of
24-49 law for its formation or organization.
24-50 (8) The partnership interest of each domestic or
24-51 foreign partnership and the interest, shares, or evidences of
24-52 ownership in each other entity that is a party to the merger that
24-53 are to be converted or exchanged, in whole or in part, into (i)
24-54 partnership interests, shares, obligations, evidences of ownership,
24-55 rights to purchase securities, or other securities of one or more
24-56 of the surviving or new domestic or foreign partnerships or other
24-57 entities, (ii) cash, or (iii) other property, including shares,
24-58 obligations, evidences of ownership, rights to purchase securities,
24-59 or other securities of any other person or entity, or into any
24-60 combination of those items, are converted and exchanged when a
24-61 merger takes effect. After the merger the former partners of each
24-62 domestic partnership and owners of shares or evidences of ownership
24-63 in each other domestic entity that is a party to the merger are
24-64 entitled only to the rights provided in the plan of merger.
24-65 (9) If a plan of merger fails to provide for the
24-66 allocation and vesting of the right, title, and interest in a
24-67 particular item of real estate or other property or for the
24-68 allocation of a liability or obligation of a party to the merger,
24-69 when the merger takes effect the item of real estate or other
24-70 property shall be owned in undivided interests by, or the liability
25-1 or obligation shall be a joint and several liability and obligation
25-2 of, each of the surviving and new domestic and foreign partnerships
25-3 and other entities, pro rata to the total number of surviving and
25-4 new domestic and foreign partnerships and other entities resulting
25-5 from the merger.
25-6 (10) If a domestic or foreign partnership merges with
25-7 another domestic or foreign partnership or other entity and through
25-8 the merger process no longer exists, a person who becomes a member
25-9 of the surviving domestic or foreign partnership or other entity,
25-10 for a period of one year after the effective date of the merger,
25-11 may bind the surviving entity to a transaction for which it no
25-12 longer has authority to bind the entity if the transaction is one
25-13 in which the partner's actions would bind the foreign or domestic
25-14 partnership before the effective date of the merger and the other
25-15 party to the transaction:
25-16 (A) does not have notice of the merger;
25-17 (B) had done business with the partnership which
25-18 no longer exists within one year preceding the effective date of
25-19 the merger; and
25-20 (C) reasonably believes that the partner who was
25-21 previously a member of the partnership which was merged into the
25-22 surviving entity and is now a partner of the surviving entity was a
25-23 partner with authority to bind the partnership to the transaction
25-24 at the time of the transaction.
25-25 (g) DEFINITION OF "OTHER ENTITY." For purposes of this
25-26 section, the term "other entity" means any entity, whether
25-27 organized for profit or not, that is a corporation, limited
25-28 partnership, other than a domestic or foreign limited partnership,
25-29 limited liability company, joint venture, joint stock company,
25-30 cooperative, association, bank, insurance company, or other legal
25-31 entity organized under the laws of this state or another state or
25-32 country to the extent the laws or the constituent documents of that
25-33 entity, not inconsistent with law, permit that entity to enter into
25-34 a merger or partnership interest exchange as permitted by this
25-35 section.
25-36 Sec. 9.03. EXCHANGE. (a) One or more domestic or foreign
25-37 partnerships may adopt a plan of exchange by which a domestic or
25-38 foreign partnership or other entity acquires all of the outstanding
25-39 partnership interests of one or more domestic partnerships in
25-40 exchange for cash or securities of the acquiring domestic or
25-41 foreign partnership or other entity, if:
25-42 (1) each domestic or foreign partnership, the
25-43 partnership interests of which are to be acquired under the plan of
25-44 exchange, approves the plan of exchange in the manner prescribed in
25-45 its partnership agreement; and
25-46 (2) each acquiring domestic or foreign partnership or
25-47 other entity takes all action that may be required by the laws of
25-48 the state under which it was formed or incorporated and as required
25-49 by its partnership agreement or other constituent documents in
25-50 order to effect the exchange.
25-51 (b) Filing with the secretary of state is not necessary to
25-52 evidence or effect an interest exchange under this section for a
25-53 domestic partnership that is a party to the interest exchange.
25-54 When an interest exchange takes effect as provided in the plan of
25-55 exchange:
25-56 (1) the partnership interest of each domestic
25-57 partnership that is to be acquired under the plan of exchange is
25-58 considered exchanged as provided in the plan of exchange;
25-59 (2) the former holders of the partnership interests
25-60 exchanged under the plan of exchange are entitled only to the
25-61 exchange rights provided in the plan of exchange; and
25-62 (3) the acquiring domestic or foreign partnership or
25-63 other entity or entities are entitled to all rights, title, and
25-64 interest with respect to the partnership interests so acquired and
25-65 exchanged, subject to the provisions in the plan of exchange.
25-66 (c) For purposes of this section, the term "other entity"
25-67 means any entity, whether organized for profit or not, that is a
25-68 corporation, limited partnership, partnership, other than a
25-69 domestic or foreign limited partnership, limited liability company,
25-70 joint venture, joint stock company, cooperative, association, bank,
26-1 insurance company, or other legal entity organized under the laws
26-2 of this state or another state or country to the extent the laws or
26-3 the constituent documents of that entity, not inconsistent with
26-4 law, permit that entity to enter into a merger or partnership
26-5 interest exchange as permitted by this section.
26-6 Sec. 9.04. LAW GOVERNING LIMITED PARTNERSHIP. A limited
26-7 partnership's participation in a merger or exchange is governed by
26-8 Section 2.11, Texas Revised Limited Partnership Act (Article
26-9 6132a-1, Vernon's Texas Civil Statutes), and its subsequent
26-10 amendments, not Section 9.02 or 9.03 of this Act.
26-11 ARTICLE X. MISCELLANEOUS PROVISIONS
26-12 Sec. 10.01. SHORT TITLE. This Act may be cited as the
26-13 "Texas Revised Partnership Act."
26-14 Sec. 10.02. SEVERABILITY. If a provision of this Act or its
26-15 application to a person or circumstance is held invalid, the
26-16 invalidity does not affect other provisions or applications of this
26-17 Act that can be given effect without the invalid provision or
26-18 application, and to this end the provisions of this Act are
26-19 severable.
26-20 Sec. 10.03. APPLICATION. (a) BEFORE JANUARY 1, 1999.
26-21 Except as provided by Subsection (b), before January 1, 1999, this
26-22 Act applies only to a partnership formed:
26-23 (1) on or after January 1, 1994, unless that
26-24 partnership is continuing the business of a dissolved partnership
26-25 under Section 41, Texas Uniform Partnership Act (Article 6132b,
26-26 Vernon's Texas Civil Statutes), and its subsequent amendments; and
26-27 (2) before January 1, 1994, that elects, as provided
26-28 by Subsection (d), to be governed by this Act.
26-29 (b) REGISTERED LIMITED LIABILITY PARTNERSHIP. Section 3.08
26-30 of this Act, including the fee provisions, applies to a registered
26-31 limited liability partnership, regardless of the date of formation
26-32 and regardless of whether the partnership elects to be governed by
26-33 this Act, except that a registered limited liability partnership
26-34 formed before January 1, 1994, is subject to Sections 2, 15(2)-(4),
26-35 45-A, 45-B, and 45-C, Texas Uniform Partnership Act (Article 6132b,
26-36 Vernon's Texas Civil Statutes), for purposes of determining
26-37 liability for errors, omissions, negligence, incompetence, or
26-38 malfeasance occurring before January 1, 1994.
26-39 (c) AFTER DECEMBER 31, 1998. After December 31, 1998, this
26-40 Act applies to all partnerships.
26-41 (d) VOLUNTARY APPLICATION EARLY. Before January 1, 1999, a
26-42 partnership formed before January 1, 1994, voluntarily may elect,
26-43 by complying with the procedures provided in its partnership
26-44 agreement for amending the partnership agreement, to adopt this
26-45 Act. The provisions of this Act relating to the liability of the
26-46 partnership's partners to third parties apply to limit those
26-47 partners' liability to a third party who had done business with the
26-48 partnership within one year preceding the partnership's election to
26-49 adopt this Act only if the partnership gives notice to the third
26-50 party of the partnership's election to adopt this Act.
26-51 Sec. 10.04. APPLICATION TO EXISTING RELATIONSHIPS.
26-52 (a) This Act does not impair the obligations of a contract
26-53 existing when this Act takes effect or affect an action or
26-54 proceeding begun or right accrued before this Act takes effect.
26-55 (b) A judgment against a partnership or a partner in an
26-56 action commenced before the effective date of this Act may be
26-57 enforced in the same manner as a judgment rendered before the
26-58 effective date of this Act.
26-59 SECTION 2. Part VII, Texas Uniform Partnership Act (Article
26-60 6132b, Vernon's Texas Civil Statutes), is amended by adding Section
26-61 47 to read as follows:
26-62 Sec. 47. APPLICATION; EXPIRATION. (a) Except as provided
26-63 by Section 10.03(b), Texas Revised Partnership Act, this Act does
26-64 not apply to a partnership to which the Texas Revised Partnership
26-65 Act applies.
26-66 (b) This Act expires January 1, 1999.
26-67 SECTION 3. Subsection A, Section 4, The Securities Act
26-68 (Article 581-4, Vernon's Texas Civil Statutes), is amended to read
26-69 as follows:
26-70 A. The term "security" or "securities" shall include any
27-1 limited partner interest in a limited partnership, share, stock,
27-2 treasury stock, stock certificate under a voting trust agreement,
27-3 collateral trust certificate, equipment trust certificate,
27-4 preorganization certificate or receipt, subscription or
27-5 reorganization certificate, note, bond, debenture, mortgage
27-6 certificate or other evidence of indebtedness, any form of
27-7 commercial paper, certificate in or under a profit sharing or
27-8 participation agreement, certificate or any instrument representing
27-9 any interest in or under an oil, gas or mining lease, fee or title,
27-10 or any certificate or instrument representing or secured by an
27-11 interest in any or all of the capital, property, assets, profits or
27-12 earnings of any company, investment contract, or any other
27-13 instrument commonly known as a security, whether similar to those
27-14 herein referred to or not. Provided, however, that this definition
27-15 shall not apply to any insurance policy, endowment policy, annuity
27-16 contract, optional annuity contract, or any contract or agreement
27-17 in relation to and in consequence of any such policy or contract,
27-18 issued by an insurance company subject to the supervision or
27-19 control of the State Board of Insurance when the form of such
27-20 policy or contract has been duly filed with the Board as now or
27-21 hereafter required by law.
27-22 SECTION 4. Section 1.03, Texas Revised Limited Partnership
27-23 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
27-24 read as follows:
27-25 Sec. 1.03. PARTNERSHIP NAME. Except as provided by Section
27-26 2.14(a)(3) of this Act, the <The> name of a limited partnership as
27-27 stated in its certificate of limited partnership, a reserved or
27-28 registered name, or the name under which a foreign limited
27-29 partnership is permitted to register to do business in Texas as
27-30 contained in its application for registration as a foreign limited
27-31 partnership must contain the words "Limited Partnership,"
27-32 "Limited," or the abbreviation "L.P." or "Ltd." as the last words
27-33 or letters of its name and may not:
27-34 (1) contain the name of a limited partner unless:
27-35 (A) that name is also the name of a general
27-36 partner; or
27-37 (B) the business of the limited partnership or
27-38 foreign limited partnership had been carried on under that name
27-39 before the admission of that limited partner;
27-40 (2) contain a word or phrase indicating or implying
27-41 that it is organized other than for a purpose stated in its
27-42 partnership agreement;
27-43 (3) be the same as or deceptively similar to the name
27-44 of a corporation or limited partnership that exists under the laws
27-45 of Texas, that has a certificate of authority to transact business
27-46 as a foreign corporation in Texas, or that is registered as a
27-47 foreign limited partnership in Texas, or a name that has been
27-48 reserved or registered for a corporation, limited partnership, or
27-49 foreign limited partnership under the laws of Texas, except that a
27-50 limited partnership or foreign limited partnership may adopt,
27-51 reserve, or register, as appropriate, a name that is similar if
27-52 written consent is obtained from the corporation, limited
27-53 partnership, or foreign limited partnership having the name
27-54 considered similar or from the person for whom the name considered
27-55 similar is reserved or registered in the office of the secretary of
27-56 state; or
27-57 (4) contain a word or phrase indicating or implying
27-58 that it is a corporation.
27-59 SECTION 5. Article 2, Texas Revised Limited Partnership Act
27-60 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
27-61 adding Section 2.14 to read as follows:
27-62 Sec. 2.14. LIMITED PARTNERSHIP AS REGISTERED LIMITED
27-63 LIABILITY PARTNERSHIP. (a) A limited partnership is a registered
27-64 limited liability partnership as well as a limited partnership if
27-65 it:
27-66 (1) registers as a registered limited liability
27-67 partnership as provided by Section 3.08(b), Texas Revised
27-68 Partnership Act, as permitted by its partnership agreement or, if
27-69 its partnership agreement does not include provisions for becoming
27-70 a registered limited liability partnership, with the consent of
28-1 partners required to amend its partnership agreement;
28-2 (2) complies with Section 3.08(d), Texas Revised
28-3 Partnership Act; and
28-4 (3) has as the last words or letters of its name the
28-5 words "Limited Partnership" or the abbreviation "Ltd." followed by
28-6 the words "registered limited liability partnership" or the
28-7 abbreviation "L.L.P."
28-8 (b) In applying Section 3.08(b), Texas Revised Partnership
28-9 Act, to a limited partnership:
28-10 (1) an application to become a registered limited
28-11 liability partnership or to withdraw a registration must be
28-12 executed by at least one general partner; and
28-13 (2) all other references to partners mean general
28-14 partners only.
28-15 (c) If a limited partnership is a registered limited
28-16 liability partnership, Section 3.08(a), Texas Revised Partnership
28-17 Act, applies to its general partners and to any of its limited
28-18 partners who, under other provisions of this Act, are liable for
28-19 the debts or obligations of the limited partnership.
28-20 SECTION 6. Section 11.13, Texas Revised Limited Partnership
28-21 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
28-22 read as follows:
28-23 Sec. 11.13. LIMITS ON A CONTRACTUAL INDEMNIFICATION. A
28-24 provision for a limited partnership to indemnify or to advance
28-25 expenses to a general partner who was, is, or is threatened to be
28-26 made a named defendant or respondent in a proceeding, whether
28-27 contained in the limited partnership agreement, a resolution of
28-28 the general partners or the limited partners, an agreement, or
28-29 otherwise, except in accordance with Section 11.18 of this Act, is
28-30 valid only to the extent that it is consistent with this article or
28-31 with the applicable reimbursement provisions of the Texas Uniform
28-32 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes), or
28-33 the Texas Revised Partnership Act as limited by the limited
28-34 partnership agreement, if such a limitation exists.
28-35 SECTION 7. Section 13.03, Texas Revised Limited Partnership
28-36 Act (Article 6132a-1, Vernon's Texas Civil Statutes), is amended to
28-37 read as follows:
28-38 Sec. 13.03. CASES NOT PROVIDED FOR BY THIS ACT. (a) In any
28-39 case not provided for by this Act, the applicable statute governing
28-40 partnerships that are not limited partnerships <Texas Uniform
28-41 Partnership Act (Article 6132b, Vernon's Texas Civil Statutes)> and
28-42 the rules of law and equity, including the law merchant, govern.
28-43 (b) Before January 1, 1999:
28-44 (1) the Texas Uniform Partnership Act (Article 6132b,
28-45 Vernon's Texas Civil Statutes) applies to a limited partnership
28-46 formed or a foreign partnership registered in this state before
28-47 January 1, 1994, that does not elect, as provided by Subsection
28-48 (b), to have the Texas Revised Partnership Act apply as its
28-49 supplemental law; and
28-50 (2) the Texas Revised Partnership Act applies to a
28-51 limited partnership formed or a foreign limited partnership
28-52 registered in this state:
28-53 (A) on or after January 1, 1994; and
28-54 (B) before January 1, 1994, that elects, as
28-55 provided by Subsection (d), to have the Texas Revised Partnership
28-56 Act apply as its supplemental law.
28-57 (c) After December 31, 1998, the applicable statute
28-58 governing a partnership that is not a limited partnership is the
28-59 Texas Revised Partnership Act for all limited partnerships and
28-60 foreign limited partnerships registered in this state.
28-61 (d) Before January 1, 1999, a limited partnership formed or
28-62 foreign limited partnership registered in this state before January
28-63 1, 1994, voluntarily may elect, by complying with the procedures in
28-64 its partnership agreement for amending the partnership agreement,
28-65 to have the Texas Revised Partnership Act apply as its supplemental
28-66 law. The election is made effective by amending its certificate of
28-67 limited partnership or amending its application for registration to
28-68 state that it has so elected.
28-69 SECTION 8. Article 13, Texas Revised Limited Partnership Act
28-70 (Article 6132a-1, Vernon's Texas Civil Statutes), is amended by
29-1 adding Sections 13.05-13.09 to read as follows:
29-2 Sec. 13.05. PERIODIC REPORT BY LIMITED PARTNERSHIP.
29-3 (a) The secretary of state may require a domestic limited
29-4 partnership or a foreign limited partnership authorized to transact
29-5 business in this state to file a report as required by this
29-6 section. The report may not be required to be filed more than once
29-7 every four years. The report must include:
29-8 (1) the name of the limited partnership and the state
29-9 or territory under the laws of which it is organized;
29-10 (2) the address of the registered office of the
29-11 limited partnership in this state and the name of the registered
29-12 agent at that address;
29-13 (3) the address of the principal office in the United
29-14 States where records are to be kept or made available under Section
29-15 1.07 of this Act; and
29-16 (4) the name, mailing address, and street address of
29-17 the business or residence of each general partner.
29-18 (b) The report must be made on a form adopted by the
29-19 secretary of state for that purpose, and the information contained
29-20 in the report must be given as of the date of the execution of the
29-21 report. The report must be signed on behalf of the limited
29-22 partnership by at least one general partner. The filing fee for
29-23 the report is $50.
29-24 (c) The report must be delivered to the secretary of state
29-25 not later than the 30th day after the date on which notice is
29-26 mailed by the secretary of state stating that the report is due.
29-27 The notice shall be addressed to the limited partnership and mailed
29-28 to:
29-29 (1) the registered office of the limited partnership;
29-30 (2) the last known address of the limited partnership
29-31 as it appears on record in the office of the secretary of state; or
29-32 (3) any other known place of business of the limited
29-33 partnership.
29-34 (d) Along with the notice that the report is due, the
29-35 secretary of state shall mail to the limited partnership copies of
29-36 a report form to be prepared and filed as provided by this section.
29-37 Two copies of the report shall be delivered to the secretary of
29-38 state. If the secretary of state finds that the report complies
29-39 with this section, the secretary shall:
29-40 (1) endorse on the report the word "Filed" and the
29-41 month, day, and year of filing;
29-42 (2) notify the limited partnership of the filing of
29-43 the report; and
29-44 (3) update the records of the secretary of state's
29-45 office to reflect:
29-46 (A) address changes reported for the registered
29-47 office, principal office, and the business or residence address of
29-48 a general partner; and
29-49 (B) a reported change in the name of the
29-50 registered agent.
29-51 (e) The filing of a report under this section does not
29-52 relieve the limited partnership of the requirement to file an
29-53 amendment to the certificate of limited partnership required under
29-54 Section 2.02 of this Act, except that the limited partnership is
29-55 not required to file an amendment to change the registered office
29-56 or agent.
29-57 (f) The secretary of state shall mail each limited
29-58 partnership subject to this Act its first notice under Subsection
29-59 (c) of this section on or before September 1, 1997. This
29-60 subsection expires September 2, 1997.
29-61 Sec. 13.06. FORFEITURE OF RIGHT TO TRANSACT BUSINESS FOR
29-62 FAILURE TO FILE PERIODIC REPORT. (a) A domestic or foreign
29-63 limited partnership that fails to file a report required under
29-64 Section 13.05 of this Act when due forfeits its right to transact
29-65 business in this state.
29-66 (b) A forfeiture under this section takes effect without
29-67 judicial ascertainment. The secretary of state shall enter on the
29-68 record kept in the secretary's office relating to the limited
29-69 partnership a notation that the right to transact business has been
29-70 forfeited together with the date of forfeiture. Notice of the
30-1 forfeiture shall be mailed to the limited partnership at:
30-2 (1) the registered office of the limited partnership;
30-3 (2) the last known address of the limited partnership;
30-4 or
30-5 (3) any other place of business of the limited
30-6 partnership.
30-7 (c) Unless the right of the limited partnership to transact
30-8 business is revived in accordance with Section 13.07 of this Act,
30-9 the limited partnership may not maintain an action, suit, or
30-10 proceeding in a court of this state, and a successor or assignee of
30-11 the limited partnership may not maintain an action, suit, or
30-12 proceeding in a court of this state on a right, claim, or demand
30-13 arising out of the transaction of business by the limited
30-14 partnership in this state. The forfeiture of the right to transact
30-15 business in this state does not impair the validity of a contract
30-16 or act of the limited partnership and does not prevent the limited
30-17 partnership from defending an action, suit, or proceeding in a
30-18 court of this state.
30-19 (d) This section does not affect the liability of a limited
30-20 partner in the limited partnership.
30-21 Sec. 13.07. REVIVAL OF RIGHT TO TRANSACT BUSINESS AFTER
30-22 FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) A limited
30-23 partnership that forfeits the right to transact business in this
30-24 state as provided by Section 13.06 of this Act may be relieved from
30-25 the forfeiture by filing the required report not later than the
30-26 120th day after the date of mailing of the notice of forfeiture
30-27 under Section 13.06(b) of this Act, together with:
30-28 (1) the filing fee; and
30-29 (2) a late fee in an amount equal to the lesser of:
30-30 (A) $25 for each month or fractional part of a
30-31 month that has elapsed since the date of the notice of forfeiture;
30-32 or
30-33 (B) $100.
30-34 (b) If a limited partnership complies with Subsection (a) of
30-35 this section, the secretary of state shall revive the right of the
30-36 limited partnership to transact business in this state, cancelling
30-37 the notation regarding the forfeiture and noting the revival and
30-38 the date of revival on the record kept in the secretary's office
30-39 relating to the limited partnership.
30-40 Sec. 13.08. CANCELLATION OF CERTIFICATE OR REGISTRATION
30-41 AFTER FORFEITURE FOR FAILURE TO FILE PERIODIC REPORT. (a) The
30-42 secretary of state may cancel the certificate of a limited
30-43 partnership, or the registration of a foreign limited partnership,
30-44 if the limited partnership forfeits its right to transact business
30-45 in this state under Section 13.06 of this Act and fails to revive
30-46 that right under Section 13.07 of this Act. The cancellation takes
30-47 effect without judicial ascertainment. The secretary of state
30-48 shall enter on the record kept in the secretary's office relating
30-49 to the limited partnership a notation of the cancellation and the
30-50 date of cancellation.
30-51 (b) On cancellation, the status of the limited partnership
30-52 is changed to inactive according to the records of the secretary of
30-53 state. The change to inactive status does not affect the liability
30-54 of a limited partner of the limited partnership.
30-55 Sec. 13.09. REINSTATEMENT OF CERTIFICATE OR REGISTRATION
30-56 AFTER CANCELLATION FOR FAILURE TO FILE PERIODIC REPORT. (a) A
30-57 limited partnership whose certificate or registration has been
30-58 canceled as provided by Section 13.08 of this Act may be relieved
30-59 of the cancellation by filing the report required by Section 13.05,
30-60 together with the filing fee for the report, a late fee of $100,
30-61 and a reinstatement fee of $100.
30-62 (b) If the limited partnership complies with the fees
30-63 required by Subsection (a) of this section, the secretary of state
30-64 shall reinstate the certificate or registration of the limited
30-65 partnership without judicial ascertainment. The secretary shall
30-66 change the status of the limited partnership to active and note the
30-67 reinstatement on the record kept in the secretary's office relating
30-68 to the limited partnership. If the name of the limited partnership
30-69 is not available at the time of reinstatement, the secretary shall
30-70 require the limited partnership to file an amendment to its
31-1 certificate or application or adopt an assumed name for use in this
31-2 state as a precondition to reinstatement.
31-3 SECTION 9. This Act takes effect January 1, 1994.
31-4 SECTION 10. The importance of this legislation and the
31-5 crowded condition of the calendars in both houses create an
31-6 emergency and an imperative public necessity that the
31-7 constitutional rule requiring bills to be read on three several
31-8 days in each house be suspended, and this rule is hereby suspended.
31-9 * * * * *
31-10 Austin,
31-11 Texas
31-12 April 6, 1993
31-13 Hon. Bob Bullock
31-14 President of the Senate
31-15 Sir:
31-16 We, your Committee on Jurisprudence to which was referred S.B. No.
31-17 909, have had the same under consideration, and I am instructed to
31-18 report it back to the Senate with the recommendation that it do
31-19 pass, as amended, and be printed.
31-20 Henderson,
31-21 Chairman
31-22 * * * * *
31-23 WITNESSES
31-24 FOR AGAINST ON
31-25 ___________________________________________________________________
31-26 Name: Robert Sneed x
31-27 Representing: Tx Land Title Assoc
31-28 City: Austin
31-29 -------------------------------------------------------------------
31-30 Name: Alan Kailer x
31-31 Representing: Tx Business Law Foundation
31-32 City: Dallas
31-33 -------------------------------------------------------------------
31-34 Name: John C. Ale x
31-35 Representing: Tx Business Law Foundation
31-36 City: Houston
31-37 -------------------------------------------------------------------