Senate Bill No. 165
(By Senators Grubb and Jackson)
____________
[Introduced January 24, 1995; referred to the Committee
on Interstate Cooperation; and then to the Committee on
the Judiciary.]
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A BILL to repeal article eight-a, chapter forty-seven of the code
of West Virginia, one thousand nine hundred thirty-one, as
amended; and to amend said code by adding thereto a new
chapter, designated chapter forty-seven-b, relating to
adopting the uniform partnership act; general provisions;
nature of partnership; relations of partners to persons
dealing with partnership; relations of partners to each
other and to partnership; transferees and creditors of
partner; partner's dissociation; partner's dissociation when
business not wound up; winding up partnership business;
conversions and mergers; and miscellaneous provisions.
Be it enacted by the Legislature of West Virginia:
That article eight-a, chapter forty-seven, of the code of
West Virginia, one thousand nine hundred thirty-one, as amended,
be repealed; and that said code be amended by adding thereto a
new chapter, designated chapter forty-seven-b, to read as
follows:
CHAPTER 47B. UNIFORM PARTNERSHIP ACT.
ARTICLE 1. GENERAL PROVISIONS.
§47B-1-1. Definitions.
In this chapter:
(1) "Business" includes every trade, occupation and
profession.
(2) "Debtor in bankruptcy" means a person who is the subject
of:
(i) An order for relief under Title 11 of the United States
Code or a comparable order under a successor statute of general
application; or
(ii) A comparable order under federal, state or foreign law
governing insolvency.
(3) "Distribution" means a transfer of money or other
property from a partnership to a partner in the partner's
capacity as a partner or to the partner's transferee.
(4) "Partnership" means an association of two or more
persons to carry on as coowners a business for profit formed
under section two, article two of this chapter, predecessor law,
or comparable law of another jurisdiction.
(5) "Partnership agreement" means the agreement, whether
written, oral or implied, among the partners concerning the
partnership, including amendments to the partnership agreement.
(6) "Partnership at will" means a partnership in which the
partners have not agreed to remain partners until the expiration
of a definite term or the completion of a particular undertaking.
(7) "Partnership interest" or "partner's interest in the
partnership" means all of a partner's interests in the
partnership, including the partner's transferable interest and
all management and other rights.
(8) "Person" means an individual, corporation, business
trust, estate, trust, partnership, association, joint venture,
government, governmental subdivision, agency or instrumentality,
or any other legal or commercial entity.
(9) "Property" means all property, real, personal or mixed,
tangible or intangible, or any interest therein.
(10) "State" means a state of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or any
territory or insular possession subject to the jurisdiction of
the United States.
(11) "Statement" means a statement of partnership authority
under section three, article three of this chapter, a statement
of denial under section four, article three of this chapter, a
statement of dissociation under section four, article seven of
this chapter, a statement of dissolution under section five,
article eight of this chapter, a statement of merger under
section seven, article nine of this chapter, or an amendment or
cancellation of any of the foregoing.
(12) "Transfer" includes an assignment, conveyance, lease,
mortgage, deed and encumbrance.
§47B-1-2. Knowledge and notice.
(a) A person knows a fact if the person has actual knowledge of it.
(b) A person has notice of a fact if the person:
(1) Knows of it;
(2) Has received a notification of it; or
(3) Has reason to know it exists from all of the facts known
to the person at the time in question.
(c) A person notifies or gives a notification to another by
taking steps reasonably required to inform the other person in
ordinary course, whether or not the other person learns of it.
(d) A person receives a notification when the notification:
(1) Comes to the person's attention; or
(2) Is duly delivered at the person's place of business or
at any other place held out by the person as a place for
receiving communications.
(e) Except as otherwise provided in subsection (f) of this
section, a person other than an individual knows, has notice, or
receives a notification of a fact for purposes of a particular
transaction when the individual conducting the transaction knows,
has notice, or receives a notification of the fact, or in any
event when the fact would have been brought to the individual's
attention if the person had exercised reasonable diligence. The
person exercises reasonable diligence if it maintains reasonable
routines for communicating significant information to the
individual conducting the transaction and there is reasonable
compliance with the routines. Reasonable diligence does not
require an individual acting for the person to communicate information unless the communication is part of the individual's
regular duties or the individual has reason to know of the
transaction and that the transaction would be materially affected
by the information.
(f) A partner's knowledge, notice or receipt of a
notification of a fact relating to the partnership is effective
immediately as knowledge by, notice to, or receipt of a
notification by the partnership, except in the case of a fraud on
the partnership committed by or with the consent of that partner.
§47B-1-3. Effect of partnership agreement; nonwaivable
provisions.
(a) Except as otherwise provided in subsection (b) of this
section, relations among the partners and between the partners
and the partnership are governed by the partnership agreement.
To the extent the partnership agreement does not otherwise
provide, this chapter governs relations among the partners and
between the partners and the partnership.
(b) The partnership agreement may not:
(1) Vary the rights and duties under section five, article
one of this chapter except to eliminate the duty to provide
copies of statements to all of the partners;
(2) Unreasonably restrict the right of access to books and
records under subsection (b), section three, article four of this
chapter;
(3) Eliminate the duty of loyalty under subsection (b), section four, article four, or subdivision (3) subsection (b),
section three, article six of this chapter, but:
(i) The partnership agreement may identify specific types or
categories of activities that do not violate the duty of loyalty,
if not manifestly unreasonable; or
(ii) All of the partners or a number or percentage specified
in the partnership agreement may authorize or ratify, after full
disclosure of all material facts, a specific act or transaction
that otherwise would violate the duty of loyalty;
(4) Unreasonably reduce the duty of care under subsection
(c), section four, article four or subdivision (3), subsection
(b), section three, article six of this chapter;
(5) Eliminate the obligation of good faith and fair dealing
under subsection (d), section four, article four of this chapter,
but the partnership agreement may prescribe the standards by
which the performance of the obligation is to be measured, if the
standards are not manifestly unreasonable;
(6) Vary the power to dissociate as a partner under
subsection (a), section two, article six of this chapter, except
to require the notice under subsection (1), section one, article
six of this chapter to be in writing;
(7) Vary the right of a court to expel a partner in the
events specified in subsection (5), section one, article six of
this chapter;
(8) Vary the requirement to wind up the partnership business
in cases specified in subsections (4), (5) or (6), section one, article eight of this chapter; or
(9) Restrict rights of third parties under this chapter.
§47B-1-4. Supplemental principles of law.
(a) Unless displaced by particular provisions of this
chapter, the principles of law and equity supplement this
chapter.
(b) If an obligation to pay interest arises under this
chapter and the rate is not specified, the rate is that specified
in section thirty-one, article six, chapter fifty-six of this
code.
§47B-1-5. Execution, filing and recording of statements.
(a) A statement may be filed in the office of the secretary
of state. A certified copy of a statement that is filed in an
office in another state may be filed in the office of the
secretary of state. Either filing has the effect provided in
this chapter with respect to partnership property located in or
transactions that occur in this state.
(b) A certified copy of a statement that has been filed in
the office of the secretary of state and recorded in the office
for recording transfers of real property has the effect provided
for recorded statements in this chapter. A recorded statement
that is not a certified copy of a statement filed in the office
of the secretary of state does not have the effect provided for
recorded statements in this chapter.
(c) A statement filed by a partnership must be executed by
at least two partners. Other statements must be executed by a
partner or other person authorized by this chapter. An
individual who executes a statement as, or on behalf of, a
partner or other person named as a partner in a statement shall
personally declare under penalty of perjury that the contents of
the statement are accurate.
(d) A person authorized by this chapter to file a statement
may amend or cancel the statement by filing an amendment or
cancellation that names the partnership, identifies the
statement, and states the substance of the amendment or
cancellation.
(e) A person who files a statement pursuant to this section
shall promptly send a copy of the statement to every nonfiling
partner and to any other person named as a partner in the
statement. Failure to send a copy of a statement to a partner or
other person does not limit the effectiveness of the statement as
to a person not a partner.
(f) The secretary of state may collect a fee for filing or
providing a certified copy of a statement. The clerk of the
county commission of any county may collect a fee for recording
a statement.
§47B-1-6. Law governing internal relations.
The law of the jurisdiction in which a partnership has its
chief executive office governs relations among the partners and
between the partners and the partnership.
§47B-1-7. Partnership subject to amendment or repeal of chapter.
A partnership governed by this chapter is subject to any
amendment to or repeal of this chapter.
ARTICLE 2. NATURE OF PARTNERSHIP.
§47B-2-1. Partnership as entity.
A partnership is an entity distinct from its partners.
§47B-2-2. Formation of partnership.
(a) Except as otherwise provided in subsection (b) of this
section, the association of two or more persons to carry on as
coowners a business for profit forms a partnership, whether or
not the persons intend to form a partnership.
(b) An association formed under a statute other than this
chapter, a predecessor statute, or a comparable statute of
another jurisdiction is not a partnership under this chapter.
(c) In determining whether a partnership is formed, the
following rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the
entireties, joint property, common property, or part ownership
does not by itself establish a partnership, even if the coowners
share profits made by the use of the property.
(2) The sharing of gross returns does not by itself
establish a partnership, even if the persons sharing them have a
joint or common right or interest in property from which the
returns are derived.
(3) A person who receives a share of the profits of a
business is presumed to be a partner in the business, unless the
profits were received in payment:
(i) Of a debt by installments or otherwise;
(ii) For services as an independent contractor or of wages
or other compensation to an employee;
(iii) Of rent;
(iv) Of an annuity or other retirement or health benefit to
a beneficiary, representative or designee of a deceased or
retired partner;
(v) Of interest or other charge on a loan, even if the
amount of payment varies with the profits of the business,
including a direct or indirect present or future ownership of the
collateral, or rights to income, proceeds or increase in value
derived from the collateral; or
(vi) For the sale of the goodwill of a business or other
property by installments or otherwise.
§47B-2-3. Partnership property.
Property acquired by a partnership is property of the
partnership and not of the partners individually.
§47B-2-4. When property is partnership property.
(a) Property is partnership property if acquired in the name
of:
(1) The partnership; or
(2) One or more partners with an indication in the
instrument transferring title to the property of the person's
capacity as a partner or of the existence of a partnership but
without an indication of the name of the partnership.
(b) Property is acquired in the name of the partnership by
a transfer to:
(1) The partnership in its name; or
(2) One or more partners in their capacity as partners in
the partnership, if the name of the partnership is indicated in
the instrument transferring title to the property.
(c) Property is presumed to be partnership property if
purchased with partnership assets, even if not acquired in the name of the partnership or of one or more partners with an
indication in the instrument transferring title to the property
of the person's capacity as a partner or of the existence of a
partnership.
(d) Property acquired in the name of one or more of the
partners, without an indication in the instrument transferring
title to the property of the person's capacity as a partner or of
the existence of a partnership and without use of partnership
assets, is presumed to be separate property, even if used for
partnership purposes.
ARTICLE
3. RELATIONS OF PARTNERS TO PERSONS DEALING WITH
PARTNERS
HIP.
§47B-3-1. Partner agent of partnership.
Subject to the effect of a statement of partnership
authority under section three, article three of this chapter:
(1) Each partner is an agent of the partnership for the
purpose of its business. An act of a partner, including the
execution of an instrument in the partnership name, for
apparently carrying on in the ordinary course the partnership
business or business of the kind carried on by the partnership
binds the partnership, unless the partner had no authority to act
for the partnership in the particular matter and the person with
whom the partner was dealing knew or had received a notification
that the partner lacked authority.
(2) An act of a partner which is not apparently for carrying on in the ordinary course the partnership business or business of
the kind carried on by the partnership binds the partnership only
if the act was authorized by the other partners.
§47B-3-2. Transfer of partnership property.
(a) Partnership property may be transferred as follows:
(1) Subject to the effect of a statement of partnership
authority under section three, article three of this chapter,
partnership property held in the name of the partnership may be
transferred by an instrument of transfer executed by a partner in
the partnership name.
(2) Partnership property held in the name of one or more
partners with an indication in the instrument transferring the
property to them of their capacity as partners or of the
existence of a partnership, but without an indication of the name
of the partnership, may be transferred by an instrument of
transfer executed by the persons in whose name the property is
held.
(3) Partnership property held in the name of one or more
persons other than the partnership, without an indication in the
instrument transferring the property to them of their capacity as
partners or of the existence of a partnership, may be transferred
by an instrument of transfer executed by the persons in whose
name the property is held.
(b) A partnership may recover partnership property from a
transferee only if it proves that execution of the instrument of
initial transfer did not bind the partnership under section one, article three of this chapter, and:
(1) As to a subsequent transferee who gave value for
property transferred under subdivisions (1) and (2), subsection
(a) of this section, proves that the subsequent transferee knew
or had received a notification that the person who executed the
instrument of initial transfer lacked authority to bind the
partnership; or
(2) As to a transferee who gave value for property
transferred under subdivision (3), subsection (a) of this
section, proves that the transferee knew or had received a
notification that the property was partnership property and that
the person who executed the instrument of initial transfer lacked
authority to bind the partnership.
(c) A partnership may not recover partnership property from
a subsequent transferee if the partnership would not have been
entitled to recover the property, under subsection (b) of this
section, from any earlier transferee of the property.
(d) If a person holds all of the partners' interests in the
partnership, all of the partnership property vests in that
person. The person may execute a document in the name of the
partnership to evidence vesting of the property in that person
and may file or record the document.
§47B-3-3. Statement of partnership authority.
(a) A partnership may file a statement of partnership
authority, which:
(1) Must include:
(i) The name of the partnership;
(ii) The street address of its chief executive office and of
one office in this state, if there is one;
(iii) The names and mailing addresses of all of the partners
or of an agent appointed and maintained by the partnership for
the purpose of subsection (b) of this section; and
(iv) The names of the partners authorized to execute an
instrument transferring real property held in the name of the
partnership; and
(2) May state the authority, or limitations on the
authority, of some or all of the partners to enter into other
transactions on behalf of the partnership and any other matter.
(b) If a statement of partnership authority names an agent,
the agent shall maintain a list of the names and mailing
addresses of all of the partners and make it available to any
person on request for good cause shown.
(c) If a filed statement of partnership authority is
executed pursuant to subsection (c), section five, article one of
this chapter and states the name of the partnership but does not
contain all of the other information required by subsection (a)
of this section, the statement nevertheless operates with respect
to a person not a partner as provided in subsections (d) and (e)
of this section.
(d) Except as otherwise provided in subsection (g) of this
section, a filed statement of partnership authority supplements
the authority of a partner to enter into transactions on behalf of the partnership as follows:
(1) Except for transfers of real property, a grant of
authority contained in a filed statement of partnership authority
is conclusive in favor of a person who gives value without
knowledge to the contrary, so long as and to the extent that a
limitation on that authority is not then contained in another
filed statement. A filed cancellation of a limitation on
authority revives the previous grant of authority.
(2) A grant of authority to transfer real property held in
the name of the partnership contained in a certified copy of a
filed statement of partnership authority recorded in the office
for recording transfers of that real property is conclusive in
favor of a person who gives value without knowledge to the
contrary, so long as and to the extent that a certified copy of
a filed statement containing a limitation on that authority is
not then of record in the office for recording transfers of that
real property. The recording in the office for recording
transfers of that real property of a certified copy of a filed
cancellation of a limitation on authority revives the previous
grant of authority.
(e) A person not a partner is deemed to know of a limitation
on the authority of a partner to transfer real property held in
the name of the partnership if a certified copy of the filed
statement containing the limitation on authority is of record in
the office for recording transfers of that real property.
(f) Except as otherwise provided in subsections (d) and (e) of this section and section four, article seven and section five,
article eight of this chapter, a person not a partner is not
deemed to know of a limitation on the authority of a partner
merely because the limitation is contained in a filed statement.
(g) Unless earlier canceled, a filed statement of
partnership authority is canceled by operation of law five years
after the date on which the statement, or the most recent
amendment, was filed with the secretary of state.
§47B-3-4. Statement of denial.
A partner or other person named as a partner in a filed
statement of partnership authority or in a list maintained by an
agent pursuant to subsection (b), section three, article three of
this chapter may file a statement of denial stating the name of
the partnership and the fact that is being denied, which may
include denial of a person's authority or status as a partner.
A statement of denial is a limitation on authority as provided in
subsections (d) and (e), section three, article three of this
chapter.
§47B-3-5. Partnership liable for partner's actionable conduct.
(a) A partnership is liable for loss or injury caused to a
person, or for a penalty incurred, as a result of a wrongful act
or omission, or other actionable conduct, of a partner acting in
the ordinary course of business of the partnership or with
authority of the partnership.
(b) If, in the course of the partnership's business or while
acting with authority of the partnership, a partner receives or causes the partnership to receive money or property of a person
not a partner, and the money or property is misapplied by a
partner, the partnership is liable for the loss.
§47B-3-6. Partner's liability.
(a) Except as otherwise provided in subsection (b) of this
section, all partners are liable jointly and severally for all
obligations of the partnership unless otherwise agreed by the
claimant or provided by law.
(b) A person admitted as a partner into an existing
partnership is not personally liable for any partnership
obligation incurred before the person's admission as a partner.
§47B-3-7. Actions by and against partnership and partners.
(a) A partnership may sue and be sued in the name of the
partnership.
(b) An action may be brought against the partnership and any
or all of the partners in the same action or in separate actions.
(c) A judgment against a partnership is not by itself a
judgment against a partner. A judgment against a partnership may
not be satisfied from a partner's assets unless there is also a
judgment against the partner.
(d) A judgment creditor of a partner may not levy execution
against the assets of the partner to satisfy a judgment based on
a claim against the partnership unless:
(1) A judgment based on the same claim has been obtained
against the partnership and a writ of execution on the judgment
has been returned unsatisfied, in whole or in part;
(2) The partnership is a debtor in bankruptcy;
(3) The partner has agreed that the creditor need not
exhaust partnership assets;
(4) A court grants permission to the judgment creditor to
levy execution against the assets of a partner based on a finding
that partnership assets subject to execution are clearly
insufficient to satisfy the judgment, that exhaustion of
partnership assets is excessively burdensome, or that the grant
of permission is an appropriate exercise of the court's equitable
powers; or
(5) Liability is imposed on the partner by law or contract
independent of the existence of the partnership.
(e) This section applies to any partnership liability or
obligation resulting from a representation by a partner or
purported partner under section eight, article three of this
chapter.
§47B-3-8. Liability of purported partner.
(a) If a person, by words or conduct, purports to be a
partner, or consents to being represented by another as a
partner, in a partnership or with one or more persons not
partners, the purported partner is liable to a person to whom the
representation is made, if that person, relying on the
representation, enters into a transaction with the actual or
purported partnership. If the representation, either by the
purported partner or by a person with the purported partner's
consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even
if the purported partner is not aware of being held out as a
partner to the claimant. If partnership liability results, the
purported partner is liable with respect to that liability as if
the purported partner were a partner. If no partnership
liability results, the purported partner is liable with respect
to that liability jointly and severally with any other person
consenting to the representation.
(b) If a person is thus represented to be a partner in an
existing partnership, or with one or more persons not partners,
the purported partner is an agent of persons consenting to the
representation to bind them to the same extent and in the same
manner as if the purported partner were a partner, with respect
to persons who enter into transactions in reliance upon the
representation. If all of the partners of the existing
partnership consent to the representation, a partnership act or
obligation results. If fewer than all of the partners of the
existing partnership consent to the representation, the person
acting and the partners consenting to the representation are
jointly and severally liable.
(c) A person is not liable as a partner merely because the
person is named by another in a statement of partnership
authority.
(d) A person does not continue to be liable as a partner
merely because of a failure to file a statement of dissociation
or to amend a statement of partnership authority to indicate the partner's dissociation from the partnership.
(e) Except as otherwise provided in subsections (a) and (b)
of this section, persons who are not partners as to each other
are not liable as partners to other persons.
ARTICLE 4. RELATIONS OF PARTNERS TO EACH OTHER AND TO
PARTNERSHIP.
§47B-4-1. Partner's rights and duties.
(a) Each partner is deemed to have an account that is:
(1) Credited with an amount equal to the money plus the
value of any other property, net of the amount of any
liabilities, the partner contributes to the partnership and the
partner's share of the partnership profits; and
(2) Charged with an amount equal to the money plus the value
of any other property, net of the amount of any liabilities,
distributed by the partnership to the partner and the partner's
share of the partnership losses.
(b) Each partner is entitled to an equal share of the
partnership profits and is chargeable with a share of the
partnership losses in proportion to the partner's share of the
profits.
(c) A partnership shall reimburse a partner for payments
made and indemnify a partner for liabilities incurred by the
partner in the ordinary course of the business of the partnership
or for the preservation of its business or property.
(d) A partnership shall reimburse a partner for an advance
to the partnership beyond the amount of capital the partner agreed to contribute.
(e) A payment or advance made by a partner which gives rise
to a partnership obligation under subsection (c) or (d) of this
section constitutes a loan to the partnership which accrues
interest from the date of the payment or advance.
(f) Each partner has equal rights in the management and
conduct of the partnership business.
(g) A partner may use or possess partnership property only
on behalf of the partnership.
(h) A partner is not entitled to remuneration for services
performed for the partnership, except for reasonable compensation
for services rendered in winding up the business of the
partnership.
(i) A person may become a partner only with the consent of
all of the partners.
(j) A difference arising as to a matter in the ordinary
course of business of a partnership may be decided by a majority
of the partners. An act outside the ordinary course of business
of a partnership and an amendment to the partnership agreement
may be undertaken only with the consent of all of the partners.
(k) This section does not affect the obligations of a
partnership to other persons under section one, article three of
this chapter.
§47B-4-2. Distributions in kind.
A partner has no right to receive, and may not be required
to accept, a distribution in kind.
§47B-4-3. Partner's rights and duties with respect to
information.
(a) A partnership shall keep its books and records, if any,
at its chief executive office.
(b) A partnership shall provide partners and their agents
and attorneys access to its books and records. It shall provide
former partners and their agents and attorneys access to books
and records pertaining to the period during which they were
partners. The right of access provides the opportunity to
inspect and copy books and records during ordinary business
hours. A partnership may impose a reasonable charge, covering
the costs of labor and material, for copies of documents
furnished.
(c) Each partner and the partnership shall furnish to a
partner, and to the legal representative of a deceased partner or
partner under legal disability:
(1) Without demand, any information concerning the
partnership's business and affairs reasonably required for the
proper exercise of the partner's rights and duties under the
partnership agreement or this chapter; and
(2) On demand, any other information concerning the
partnership's business and affairs, except to the extent the
demand or the information demanded is unreasonable or otherwise
improper under the circumstances.
§47B-4-4. General standards of partner's conduct.
(a) The only fiduciary duties a partner owes to the partnership and the other partners are the duty of loyalty and
the duty of care set forth in subsections (b) and (c) of this
section.
(b) A partner's duty of loyalty to the partnership and the
other partners is limited to the following:
(1) To account to the partnership and hold as trustee for it
any property, profit or benefit derived by the partner in the
conduct and winding up of the partnership business or derived
from a use by the partner of partnership property, including the
appropriation of a partnership opportunity;
(2) To refrain from dealing with the partnership in the
conduct or winding up of the partnership business as or on behalf
of a party having an interest adverse to the partnership; and
(3) To refrain from competing with the partnership in the
conduct of the partnership business before the dissolution of the
partnership.
(c) A partner's duty of care to the partnership and the
other partners in the conduct and winding up of the partnership
business is limited to refraining from engaging in grossly
negligent or reckless conduct, intentional misconduct, or a
knowing violation of law.
(d) A partner shall discharge the duties to the partnership
and the other partners under this chapter or under the
partnership agreement and exercise any rights consistently with
the obligation of good faith and fair dealing.
(e) A partner does not violate a duty or obligation under this chapter or under the partnership agreement merely because
the partner's conduct furthers the partner's own interest.
(f) A partner may lend money to and transact other business
with the partnership, and as to each loan or transaction the
rights and obligations of the partner are the same as those of a
person who is not a partner, subject to other applicable law.
(g) This section applies to a person winding up the
partnership business as the personal or legal representative of
the last surviving partner as if the person were a partner.
§47B-4-5. Actions by partnership and partners.
(a) A partnership may maintain an action against a partner
for a breach of the partnership agreement, or for the violation
of a duty to the partnership, causing harm to the partnership.
(b) A partner may maintain an action against the partnership
or another partner for legal or equitable relief, with or without
an accounting as to partnership business, to:
(1) Enforce the partner's rights under the partnership
agreement;
(2) Enforce the partner's rights under this chapter,
including:
(i) The partner's rights under sections one, three or four,
article four of this chapter;
(ii) The partner's right on dissociation to have the
partner's interest in the partnership purchased pursuant to
section one, article seven of this chapter or enforce any other
right under article six or seven;
(iii) The partner's right to compel a dissolution and
winding up of the partnership business under section one, article
eight of this chapter or enforce any other right under article
eight; or
(3) Enforce the rights and otherwise protect the interests
of the partner, including rights and interests arising
independently of the partnership relationship.
(c) The accrual of, and any time limitation on, a right of
action for a remedy under this section is governed by other law.
A right to an accounting upon a dissolution and winding up does
not revive a claim barred by law.
§47B-4-6. Continuation
of partnership beyond definite term or
particular undertaking.
(a) If a partnership for a definite term or particular
undertaking is continued, without an express agreement, after the
expiration of the term or completion of the undertaking, the
rights and duties of the partners remain the same as they were at
the expiration or completion, so far as is consistent with a
partnership at will.
(b) If the partners, or those of them who habitually acted
in the business during the term or undertaking, continue the
business without any settlement or liquidation of the
partnership, they are presumed to have agreed that the
partnership will continue.
ARTICLE 5. TRANSFEREES AND CREDITORS OF PARTNER.
§47B-5-1. Partner not coowner of partnership property.
A partner is not a coowner of partnership property and has
no interest in partnership property which can be transferred,
either voluntarily or involuntarily.
§47B-5-2. Partner's transferable interest in partnership.
The only transferable interest of a partner in the
partnership is the partner's share of the profits and losses of
the partnership and the partner's right to receive distributions.
The interest is personal property.
§47B-5-3. Transfer of partner's transferable interest.
(a) A transfer, in whole or in part, of a partner's
transferable interest in the partnership:
(1) Is permissible;
(2) Does not by itself cause the partner's dissociation or
a dissolution and winding up of the partnership business; and
(3) Does not, as against the other partners or the
partnership, entitle the transferee, during the continuance of
the partnership, to participate in the management or conduct of
the partnership business, to require access to information
concerning partnership transactions, or to inspect or copy the
partnership books or records.
(b) A transferee of a partner's transferable interest in the
partnership has a right:
(1) To receive, in accordance with the transfer,
distributions to which the transferor would otherwise be
entitled;
(2) To receive upon the dissolution and winding up of the partnership business, in accordance with the transfer, the net
amount otherwise distributable to the transferor; and
(3) To seek under subsection (6), section one, article eight
of this chapter a judicial determination that it is equitable to
wind up the partnership business.
(c) In a dissolution and winding up, a transferee is
entitled to an account of partnership transactions only from the
date of the latest account agreed to by all of the partners.
(d) Upon transfer, the transferor retains the rights and
duties of a partner other than the interest in distributions
transferred.
(e) A partnership need not give effect to a transferee's
rights under this section until it has notice of the transfer.
(f) A transfer of a partner's transferable interest in the
partnership in violation of a restriction on transfer contained
in the partnership agreement is ineffective as to a person having
notice of the restriction at the time of transfer.
§47B-5-
4. Partner's transferable interest subject to charging
order.
(a) On application by a judgment creditor of a partner or of
a partner's transferee, a court having jurisdiction may charge
the transferable interest of the judgment debtor to satisfy the
judgment. The court may appoint a receiver of the share of the
distributions due or to become due to the judgment debtor in
respect of the partnership and make all other orders, directions,
accounts, and inquiries the judgment debtor might have made or which the circumstances of the case may require.
(b) A charging order constitutes a lien on the judgment
debtor's transferable interest in the partnership. The court may
order a foreclosure of the interest subject to the charging order
at any time. The purchaser at the foreclosure sale has the
rights of a transferee.
(c) At any time before foreclosure, an interest charged may
be redeemed:
(1) By the judgment debtor;
(2) With property other than partnership property, by one or
more of the other partners; or
(3) With partnership property, by one or more of the other
partners with the consent of all of the partners whose interests
are not so charged.
(d) This chapter does not deprive a partner of a right under
exemption laws with respect to the partner's interest in the
partnership.
(e) This section provides the exclusive remedy by which a
judgment creditor of a partner or partner's transferee may
satisfy a judgment out of the judgment debtor's transferable
interest in the partnership.
ARTICLE 6. PARTNER'S DISSOCIATION.
§47B-6-1. Events causing partner's dissociation.
A partner is dissociated from a partnership upon the
occurrence of any of the following events:
(1) The partnership's having notice of the partner's express
will to withdraw as a partner or on a later date specified by the
partner;
(2) An event agreed to in the partnership agreement as
causing the partner's dissociation;
(3) The partner's expulsion pursuant to the partnership
agreement;
(4) The partner's expulsion by the unanimous vote of the
other partners if:
(i) It is unlawful to carry on the partnership business with
that partner;
(ii) There has been a transfer of all or substantially all
of that partner's transferable interest in the partnership, other
than a transfer for security purposes, or a court order charging
the partner's interest, which has not been foreclosed;
(iii) Within ninety days after the partnership notifies a
corporate partner that it will be expelled because it has filed
a certificate of dissolution or the equivalent, its charter has
been revoked, or its right to conduct business has been suspended
by the jurisdiction of its incorporation, there is no revocation
of the certificate of dissolution or no reinstatement of its
charter or its right to conduct business; or
(iv) A partnership that is a partner has been dissolved and
its business is being wound up;
(5) On application by the partnership or another partner,
the partner's expulsion by judicial determination because:
(i) The partner engaged in wrongful conduct that adversely
and materially affected the partnership business;
(ii) The partner willfully or persistently committed a
material breach of the partnership agreement or of a duty owed to
the partnership or the other partners under section four, article
four of this chapter; or
(iii) The partner engaged in conduct relating to the
partnership business which makes it not reasonably practicable to
carry on the business in partnership with the partner;
(6) The partner's:
(i) Becoming a debtor in bankruptcy;
(ii) Executing an assignment for the benefit of creditors;
(iii) Seeking, consenting to, or acquiescing in the
appointment of a trustee, receiver, or liquidator of that partner
or of all or substantially all of that partner's property; or
(iv) Failing, within ninety days after the appointment, to
have vacated or stayed the appointment of a trustee, receiver, or
liquidator of the partner or of all or substantially all of the
partner's property obtained without the partner's consent or
acquiescence, or failing within ninety days after the expiration
of a stay to have the appointment vacated;
(7) In the case of a partner who is an individual:
(i) The partner's death;
(ii) The appointment of a guardian or general conservator
for the partner; or
(iii) A judicial determination that the partner has
otherwise become incapable of performing the partner's duties
under the partnership agreement;
(8) In the case of a partner that is a trust or is acting as
a partner by virtue of being a trustee of a trust, distribution
of the trust's entire transferable interest in the partnership,
but not merely by reason of the substitution of a successor
trustee;
(9) In the case of a partner that is an estate or is acting
as a partner by virtue of being a personal representative of an
estate, distribution of the estate's entire transferable interest
in the partnership, but not merely by reason of the substitution
of a successor personal representative; or
(10) Termination of a partner who is not an individual,
partnership, corporation, trust or estate.
§47B-6-2. Partner's power to dissociate; wrongful dissociation.
(a) A partner has the power to dissociate at any time,
rightfully or wrongfully, by express will pursuant to subsection
(1), section one, article six of this chapter.
(b) A partner's dissociation is wrongful only if:
(1) It is in breach of an express provision of the
partnership agreement; or
(2) In the case of a partnership for a definite term or
particular undertaking, before the expiration of the term or the
completion of the undertaking:
(i) The partner withdraws by express will, unless the
withdrawal follows within ninety days after another partner's
dissociation by death or otherwise under subsections (6) through
(10), section one, article six of this chapter or wrongful
dissociation under this subsection;
(ii) The partner is expelled by judicial determination under
subsection (5), section one, article six of this chapter;
(iii) The partner is dissociated by becoming a debtor in
bankruptcy; or
(iv) In the case of a partner who is not an individual,
trust other than a business trust, or estate, the partner is
expelled or otherwise dissociated because it willfully dissolved
or terminated.
(c) A partner who wrongfully dissociates is liable to the
partnership and to the other partners for damages caused by the
dissociation. The liability is in addition to any other
obligation of the partner to the partnership or to the other
partners.
§47B-6-3. Effect of partner's dissociation.
(a) If a partner's dissociation results in a dissolution and
winding up of the partnership business, article eight of this
chapter applies; otherwise, article seven of this chapter
applies.
(b) Upon a partner's dissociation:
(1) The partner's right to participate in the management and
conduct of the partnership business terminates, except as
otherwise provided in section three, article eight of this
chapter;
(2) The partner's duty of loyalty under subsection (3),
section four, article four of this chapter terminates; and
(3) The partner's duty of loyalty under subsections (1) and
(2), section four (b), article four of this chapter, and duty of
care under subsection (c), section four, article four of this
chapter continue only with regard to matters arising and events
occurring before the partner's dissociation, unless the partner
participates in winding up the partnership's business pursuant to
section three, article eight of this chapter.
ARTICLE 7. PARTNER'S DISSOCIATION WHEN BUSINESS NOT WOUND UP.
§47B-7-1. Purchase of dissociated partner's interest.
(a) If a partner is dissociated from a partnership without
resulting in a dissolution and winding up of the partnership
business under section one, article eight of this chapter, the
partnership shall cause the dissociated partner's interest in the
partnership to be purchased for a buyout price determined
pursuant to subsection (b) of this section.
(b) The buyout price of a dissociated partner's interest is
the amount that would have been distributable to the dissociating
partner under subsection (b), section seven, article eight of
this chapter if, on the date of dissociation, the assets of the
partnership were sold at a price equal to the greater of the
liquidation value or the value based on a sale of the entire
business as a going concern without the dissociated partner and
the partnership were wound up as of that date. Interest must be paid from the date of dissociation to the date of payment.
(c) Damages for wrongful dissociation under subsection (b),
section two, article six of this chapter, and all other amounts
owing, whether or not presently due, from the dissociated partner
to the partnership, must be offset against the buyout price.
Interest must be paid from the date the amount owed becomes due
to the date of payment.
(d) A partnership shall indemnify a dissociated partner
whose interest is being purchased against all partnership
liabilities, whether incurred before or after the dissociation,
except liabilities incurred by an act of the dissociated partner
under section two, article seven of this chapter.
(e) If no agreement for the purchase of a dissociated
partner's interest is reached within one hundred twenty days
after a written demand for payment, the partnership shall pay, or
cause to be paid, in cash to the dissociated partner the amount
the partnership estimates to be the buyout price and accrued
interest, reduced by any offsets and accrued interest under
subsection (c) of this section.
(f) If a deferred payment is authorized under subsection (h)
of this section, the partnership may tender a written offer to
pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under subsection (c) of this
section, stating the time of payment, the amount and type of
security for payment, and the other terms and conditions of the
obligation.
(g) The payment or tender required by subsection (e) or (f)
of this section must be accompanied by the following:
(1) A statement of partnership assets and liabilities as of
the date of dissociation;
(2) The latest available partnership balance sheet and
income statement, if any;
(3) An explanation of how the estimated amount of the
payment was calculated; and
(4) Written notice that the payment is in full satisfaction
of the obligation to purchase unless, within one hundred twenty
days after the written notice, the dissociated partner commences
an action to determine the buyout price, any offsets under
subsection (c) of this section, or other terms of the obligation to purchase.
(h) A partner who wrongfully dissociates before the
expiration of a definite term or the completion of a particular
undertaking is not entitled to payment of any portion of the
buyout price until the expiration of the term or completion of
the undertaking, unless the partner establishes to the
satisfaction of the court that earlier payment will not cause
undue hardship to the business of the partnership. A deferred
payment must be adequately secured and bear interest.
(i) A dissociated partner may maintain an action against the
partnership, pursuant to paragraph (ii), subdivision (2),
subsection (b), section five, article four of this chapter, to
determine the buyout price of that partner's interest, any
offsets under subsection (c) of this section, or other terms of
the obligation to purchase. The action must be commenced within
one hundred twenty days after the partnership has tendered
payment or an offer to pay or within one year after written
demand for payment if no payment or offer to pay is tendered.
The court shall determine the buyout price of the dissociated
partner's interest, any offset due under subsection (c) of this
section, and accrued interest, and enter judgment for any
additional payment or refund. If deferred payment is authorized
under subsection (h) of this section, the court shall also
determine the security for payment and other terms of the obligation to purchase. The court may assess reasonable
attorney's fees and the fees and expenses of appraisers or other
experts for a party to the action, in amounts the court finds
equitable, against a party that the court finds acted
arbitrarily, vexatiously, or not in good faith. The finding may
be based on the partnership's failure to tender payment or an
offer to pay or to comply with subsection (g) of this section.
§47B-7-2. Dissociated partner's power to bind and liability to
partnership.
(a) For two years after a partner dissociates without
resulting in a dissolution and winding up of the partnership
business, the partnership, including a surviving partnership
under article nine of this chapter, is bound by an act of the
dissociated partner which would have bound the partnership under
section one, article three of this chapter before dissociation
only if at the time of entering into the transaction the other
party:
(1) Reasonably believed that the dissociated partner was
then a partner;
(2) Did not have notice of the partner's dissociation; and
(3) Is not deemed to have had knowledge under subsection
(e), section three, article three or notice under subsection (c),
section four, article seven of this chapter.
(b) A dissociated partner is liable to the partnership for
any damage caused to the partnership arising from an obligation
incurred by the dissociated partner after dissociation for which the partnership is liable under subsection (a) of this section.
§47B-7-3. Dissociated partner's liability to other persons.
(a) A partner's dissociation does not of itself discharge
the partner's liability for a partnership obligation incurred
before dissociation. A dissociated partner is not liable for a
partnership obligation incurred after dissociation, except as
otherwise provided in subsection (b) of this section.
(b) A partner who dissociates without resulting in a
dissolution and winding up of the partnership business is liable
as a partner to the other party in a transaction entered into by
the partnership, or a surviving partnership under article nine of
this chapter, within two years after the partner's dissociation,
only if at the time of entering into the transaction the other
party:
(1) Reasonably believed that the dissociated partner was
then a partner;
(2) Did not have notice of the partner's dissociation; and
(3) Is not deemed to have had knowledge under subsection
(e), section three, article three or notice under subsection (c),
section four, article seven, both of this chapter.
(c) By agreement with the partnership creditor and the
partners continuing the business, a dissociated partner may be
released from liability for a partnership obligation.
(d) A dissociated partner is released from liability for a
partnership obligation if a partnership creditor, with notice of
the partner's dissociation but without the partner's consent, agrees to a material alteration in the nature or time of payment
of a partnership obligation.
§47B-7-4. Statement of dissociation.
(a) A dissociated partner or the partnership may file a
statement of dissociation stating the name of the partnership and
that the partner is dissociated from the partnership.
(b) A statement of dissociation is a limitation on the
authority of a dissociated partner for the purposes of
subsections (d) and (e), section three, article three of this
chapter.
(c) For the purposes of subdivision (3), subsection (a),
section two, and subdivision (3), subsection (b) of section
three, article seven of this chapter, a person not a partner is
deemed to have notice of the dissociation ninety days after the
statement of dissociation is filed.
§47B-7-5. Continued use of partnership name.
Continued use of a partnership name, or a dissociated
partner's name as part thereof, by partners continuing the
business does not of itself make the dissociated partner liable
for an obligation of the partners or the partnership continuing
the business.
ARTICLE 8. WINDING UP PARTNERSHIP BUSINESS.
§47B-8-1. Events causing dissolution and winding up of
partnership business.
A partnership is dissolved, and its business must be wound
up, only upon the occurrence of any of the following events:
(1) In a partnership at will, the partnership's having
notice from a partner, other than a partner who is dissociated
under subsections (2) through (10), section one, article six of
this chapter, of that partner's express will to withdraw as a
partner, or on a later date specified by the partner;
(2) In a partnership for a definite term or particular
undertaking:
(i) The expiration of ninety days after a partner's
dissociation by death or otherwise under subsections (6) through
(10), section one, article six, or wrongful dissociation under
subsection (b), section two, article six, both of this chapter,
unless before that time a majority in interest of the remaining
partners, including partners who have rightfully dissociated
pursuant to paragraph (i), subdivision (2), subsection (b),
section two, article six of this chapter, agree to continue the
partnership;
(ii) The express will of all of the partners to wind up the
partnership business; or
(iii) The expiration of the term or the completion of the
undertaking;
(3) An event agreed to in the partnership agreement
resulting in the winding up of the partnership business;
(4) An event that makes it unlawful for all or substantially
all of the business of the partnership to be continued, but a
cure of illegality within ninety days after notice to the
partnership of the event is effective retroactively to the date of the event for purposes of this section;
(5) On application by a partner, a judicial determination
that:
(i) The economic purpose of the partnership is likely to be
unreasonably frustrated;
(ii) Another partner has engaged in conduct relating to the
partnership business which makes it not reasonably practicable to
carry on the business in partnership with that partner; or
(iii) It is not otherwise reasonably practicable to carry on
the partnership business in conformity with the partnership
agreement; or
(6) On application by a transferee of a partner's
transferable interest, a judicial determination that it is
equitable to wind up the partnership business:
(i) After the expiration of the term or completion of the
undertaking, if the partnership was for a definite term or
particular undertaking at the time of the transfer or entry of
the charging order that gave rise to the transfer; or
(ii) At any time, if the partnership was a partnership at
will at the time of the transfer or entry of the charging order
that gave rise to the transfer.
§47B-8-2. Partnership continued after dissolution.
(a) Subject to subsection (b) of this section, a partnership
continues after dissolution only for the purpose of winding up
its business. The partnership is terminated when the winding up
of its business is completed.
(b) At any time after the dissolution of a partnership and
before the winding up of its business is completed, all of the
partners, including any dissociating partner other than a
wrongfully dissociating partner, may waive the right to have the
partnership's business wound up and the partnership terminated.
In that event:
(1) The partnership resumes carrying on its business as if
dissolution had never occurred, and any liability incurred by the
partnership or a partner after the dissolution and before the
waiver is determined as if dissolution had never occurred; and
(2) The rights of a third party accruing under subsection
(1), section four, article eight of this chapter or arising out
of conduct in reliance on the dissolution before the third party
knew or received a notification of the waiver may not be
adversely affected.
§47B-8-3. Right to wind up partnership business.
(a) After dissolution, a partner who has not wrongfully
dissociated may participate in winding up the partnership's
business, but on application of any partner, partner's legal
representative, or transferee, the circuit court or judge thereof
in vacation, for good cause shown, may order judicial supervision
of the winding up.
(b) The legal representative of the last surviving partner
may wind up a partnership's business.
(c) A person winding up a partnership's business may
preserve the partnership business or property as a going concern for a reasonable time, prosecute and defend actions and
proceedings, whether civil, criminal or administrative, settle
and close the partnership's business, dispose of and transfer the
partnership's property, discharge the partnership's liabilities,
distribute the assets of the partnership pursuant to section
seven, article eight of this chapter, settle disputes by
mediation or arbitration, and perform other necessary acts.
§47B-8-4. Partner's power to bind partnership after dissolution.
Subject to section five, article eight of this chapter, a
partnership is bound by a partner's act after dissolution that:
(1) Is appropriate for winding up the partnership business;
or
(2) Would have bound the partnership under section one,
article three of this chapter before dissolution, if the other
party to the transaction did not have notice of the dissolution.
§47B-8-5. Statement of dissolution.
(a) After dissolution, a partner who has not wrongfully
dissociated may file a statement of dissolution stating the name
of the partnership and that the partnership has dissolved and is
winding up its business.
(b) A statement of dissolution cancels a filed statement of
partnership authority for the purposes of subsection (d), section
three, article three of this chapter and is a limitation on
authority for the purposes of subsection (e), section three, article three of this chapter.
(c) For the purposes of section one, article three and
section four, article eight, both of this chapter, a person not
a partner is deemed to have notice of the dissolution and the
limitation on the partners' authority as a result of the
statement of dissolution ninety days after it is filed.
(d) After filing and, if appropriate, recording a statement
of dissolution, a dissolved partnership may file and, if
appropriate, record a statement of partnership authority which
will operate with respect to a person not a partner as provided
in subsections (d) and (e), section three, article three of this
chapter in any transaction, whether or not the transaction is
appropriate for winding up the partnership business.
§47B-8-6. Partner's liability to other partners after
dissolution.
(a) Except as otherwise provided in subsection (b) of this
section, after dissolution a partner is liable to the other
partners for the partner's share of any partnership liability
incurred under section four, article eight of this chapter.
(b) A partner who, with knowledge of the dissolution, incurs
a partnership liability under subsection (2), section four,
article eight of this chapter by an act that is not appropriate
for winding up the partnership business is liable to the
partnership for any damage caused to the partnership arising from the liability.
§47B-8-7. Settlement of accounts and contributions among
partners.
(a) In winding up a partnership's business, the assets of
the partnership, including the contributions of the partners
required by this section, must be applied to discharge its
obligations to creditors, including, to the extent permitted by
law, partners who are creditors. Any surplus must be applied to
pay in cash the net amount distributable to partners in
accordance with their right to distributions under subsection (b)
of this section.
(b) Each partner is entitled to a settlement of all
partnership accounts upon winding up the partnership business. In
settling accounts among the partners, the profits and losses that
result from the liquidation of the partnership assets must be
credited and charged to the partners' accounts. The partnership
shall make a distribution to a partner in an amount equal to any
excess of the credits over the charges in the partner's account.
A partner shall contribute to the partnership an amount equal to
any excess of the charges over the credits in the partner's
account.
(c) If a partner fails to contribute, all of the other
partners shall contribute, in the proportions in which those
partners share partnership losses, the additional amount necessary to satisfy the partnership obligations. A partner or
partner's legal representative may recover from the other
partners any contributions the partner makes to the extent the
amount contributed exceeds that partner's share of the
partnership obligations.
(d) After the settlement of accounts, each partner shall
contribute, in the proportion in which the partner shares
partnership losses, the amount necessary to satisfy partnership
obligations that were not known at the time of the settlement.
(e) The estate of a deceased partner is liable for the
partner's obligation to contribute to the partnership.
(f) An assignee for the benefit of creditors of a
partnership or a partner, or a person appointed by a court to
represent creditors of a partnership or a partner, may enforce a
partner's obligation to contribute to the partnership.
ARTICLE 9. CONVERSIONS AND MERGERS.
§47B-9-1. Definitions.
In this article:
(1) "General partner" means a partner in a partnership and
a general partner in a limited partnership.
(2) "Limited partner" means a limited partner in a limited
partnership.
(3) "Limited partnership" means a limited partnership
created under section one, et seq., article nine, chapter forty-seven of this code, predecessor law, or comparable law of
another jurisdiction.
(4) "Partner" includes both a general partner and a limited
partner.
§47B-9-2. Conversion of partnership to limited partnership.
(a) A partnership may be converted to a limited partnership
pursuant to this section.
(b) The terms and conditions of a conversion of a
partnership to a limited partnership must be approved by all of
the partners or by a number or percentage specified for
conversion in the partnership agreement.
(c) After the conversion is approved by the partners, the
partnership shall file a certificate of limited partnership in
the jurisdiction in which the limited partnership is to be
formed. The certificate must include:
(1) A statement that the partnership was converted to a
limited partnership from a partnership;
(2) Its former name; and
(3) A statement of the number of votes cast by the partners
for and against the conversion and, if the vote is less than
unanimous, the number or percentage required to approve the
conversion under the partnership agreement.
(d) The conversion takes effect when the certificate of
limited partnership is filed or at any later date specified in the certificate.
(e) A general partner who becomes a limited partner as a
result of the conversion remains liable as a general partner for
an obligation incurred by the partnership before the conversion
takes effect. If the other party to a transaction with the
limited partnership reasonably believes when entering the
transaction that the limited partner is a general partner, the
limited partner is liable for an obligation incurred by the
limited partnership within ninety days after the conversion takes
effect. The limited partner's liability for all other
obligations of the limited partnership incurred after the
conversion takes effect is that of a limited partner as provided
in section one et seq., article nine, chapter forty-seven of this
code.
§47B-9-3. Conversion of limited partnership to partnership.
(a) A limited partnership may be converted to a partnership
pursuant to this section.
(b) Notwithstanding a provision to the contrary in a limited
partnership agreement, the terms and conditions of a conversion
of a limited partnership to a partnership must be approved by all
of the partners.
(c) After the conversion is approved by the partners, the
limited partnership shall cancel its certificate of limited
partnership.
(d) The conversion takes effect when the certificate of
limited partnership is canceled.
(e) A limited partner who becomes a general partner as a
result of the conversion remains liable only as a limited partner
for an obligation incurred by the limited partnership before the
conversion takes effect. The partner is liable as a general
partner for an obligation of the partnership incurred after the
conversion takes effect.
§47B-9-4. Effect of conversion; entity unchanged.
(a) A partnership or limited partnership that has been
converted pursuant to this article is for all purposes the same
entity that existed before the conversion.
(b) When a conversion takes effect:
(1) All property owned by the converting partnership or
limited partnership remains vested in the converted entity;
(2) All obligations of the converting partnership or limited
partnership continue as obligations of the converted entity; and
(3) An action or proceeding pending against the converting
partnership or limited partnership may be continued as if the
conversion had not occurred.
§47B-9-5. Merger of partnerships.
(a) Pursuant to a plan of merger approved as provided in
subsection (c) of this section, a partnership may be merged with
one or more partnerships or limited partnerships.
(b) The plan of merger must set forth:
(1) The name of each partnership or limited partnership that
is a party to the merger;
(2) The name of the surviving entity into which the other
partnerships or limited partnerships will merge;
(3) Whether the surviving entity is a partnership or a
limited partnership and the status of each partner;
(4) The terms and conditions of the merger;
(5) The manner and basis of converting the interests of each
party to the merger into interests or obligations of the
surviving entity, or into money or other property, in whole or
part; and
(6) The street address of the surviving entity's chief
executive office.
(c) The plan of merger must be approved:
(1) In the case of a partnership that is a party to the
merger, by all of the partners, or a number or percentage
specified for merger in the partnership agreement; and
(2) In the case of a limited partnership that is a party to
the merger, by the vote required for approval of a merger by the
law of the state or foreign jurisdiction in which the limited
partnership is organized and, in the absence of such a
specifically applicable law, by all of the partners,
notwithstanding a provision to the contrary in the partnership agreement.
(d) After a plan of merger is approved and before the merger
takes effect, the plan may be amended or abandoned as provided in
the plan.
(e) The merger takes effect on the later of:
(1) The approval of the plan of merger by all parties to the
merger, as provided in subsection (c) of this section;
(2) The filing of all documents required by law to be filed
as a condition to the effectiveness of the merger; or
(3) Any effective date specified in the plan of merger.
§47B-9-6. Effect of merger.
(a) When a merger takes effect:
(1) The separate existence of every partnership or limited
partnership that is a party to the merger, other than the
surviving entity, ceases;
(2) All property owned by each of the merged partnerships or
limited partnerships vests in the surviving entity;
(3) All obligations of every partnership or limited
partnership that is a party to the merger become the obligations
of the surviving entity; and
(4) An action or proceeding pending against a partnership or
limited partnership that is a party to the merger may be
continued as if the merger had not occurred, or the surviving
entity may be substituted as a party to the action or proceeding.
(b) The secretary of state of this state is the agent for
service of process in an action or proceeding against a surviving
foreign partnership or limited partnership to enforce an
obligation of a domestic partnership or limited partnership that
is a party to a merger. The surviving entity shall promptly
notify the secretary of state of the mailing address of its chief
executive office and of any change of address. Upon receipt of
process, the secretary of state shall mail a copy of the process
to the surviving foreign partnership or limited partnership.
(c) A partner of the surviving partnership or limited
partnership is liable for:
(1) All obligations of a party to the merger for which the
partner was personally liable before the merger;
(2) All other obligations of the surviving entity incurred
before the merger by a party to the merger, but those obligations
may be satisfied only out of property of the entity; and
(3) All obligations of the surviving entity incurred after
the merger takes effect, but those obligations may be satisfied
only out of property of the entity if the partner is a limited
partner.
(d) If the obligations incurred before the merger by a party
to the merger are not satisfied out of the property of the
surviving partnership or limited partnership, the general
partners of that party immediately before the effective date of the merger shall contribute the amount necessary to satisfy that
party's obligations to the surviving entity, in the manner
provided in section seven, article eight of this chapter or in
the limited partnership act of the jurisdiction in which the
party was formed, as the case may be, as if the merged party were
dissolved.
(e) A partner of a party to a merger who does not become a
partner of the surviving partnership or limited partnership is
dissociated from the entity, of which that partner was a partner,
as of the date the merger takes effect. The surviving entity
shall cause the partner's interest in the entity to be purchased
under section one, article seven of this chapter or another
statute specifically applicable to that partner's interest with
respect to a merger. The surviving entity is bound under section
two, article seven of this chapter by an act of a general partner
dissociated under this subsection, and the partner is liable
under section three, article seven of this chapter for
transactions entered into by the surviving entity after the
merger takes effect.
§47B-9-7. Statement of merger.
(a) After a merger, the surviving partnership or limited
partnership may file a statement that one or more partnerships or
limited partnerships have merged into the surviving entity.
(b) A statement of merger must contain:
(1) The name of each partnership or limited partnership that
is a party to the merger;
(2) The name of the surviving entity into which the other
partnerships or limited partnership were merged;
(3) The street address of the surviving entity's chief
executive office and of an office in this state, if any; and
(4) Whether the surviving entity is a partnership or a
limited partnership.
(c) Except as otherwise provided in subsection (d) of this
section, for the purposes of section two, article three of this
chapter, property of the surviving partnership or limited
partnership which before the merger was held in the name of
another party to the merger is property held in the name of the
surviving entity upon filing a statement of merger.
(d) For the purposes of section two, article three of this
chapter, real property of the surviving partnership or limited
partnership which before the merger was held in the name of
another party to the merger is property held in the name of the
surviving entity upon recording a certified copy of the statement
of merger in the office for recording transfers of that real
property.
(e) A filed and, if appropriate, recorded statement of
merger, executed and declared to be accurate pursuant to
subsection (c), section five, article one of this chapter, stating the name of a partnership or limited partnership that is
a party to the merger in whose name property was held before the
merger and the name of the surviving entity, but not containing
all of the other information required by subsection (b) of this
section, operates with respect to the partnerships or limited
partnerships named to the extent provided in subsections (c) and
(d) of this section.
§47B-9-8. Nonexclusive.
This article is not exclusive. Partnerships or limited
partnerships may be converted or merged in any other manner
provided by law.
ARTICLE 10. MISCELLANEOUS PROVISIONS.
§47B-10-1. Uniformity of application and construction.
This chapter shall be applied and construed to effectuate
its general purpose to make uniform the law with respect to the
subject of this chapter among states enacting it.
§47B-10-2. Short title.
This chapter may be cited as the Uniform Partnership Act.
§47B-10-3. Severability clause.
If any provision of this chapter or its application to any
person or circumstance is held invalid, the invalidity does not
affect other provisions or applications of this chapter which can
be given effect without the invalid provision or application, and
to this end the provisions of this chapter are severable.
§47B-10-4. Applicability.
(a) Before the first day of July, one thousand nine hundred
ninety-five, this chapter governs only a partnership formed:
(1) After the effective date of this chapter, unless that
partnership is continuing the business of a dissolved partnership
under section forty-one, article eight-a, chapter forty-seven of
this code; and
(2) Before the effective date of this chapter, that elects,
as provided by subsection (c) of this section, to be governed by
this chapter.
(b) After the first day of July, one thousand nine hundred
ninety-five, this chapter governs all partnerships.
(c) Before the first day of July, one thousand nine hundred
ninety-five, a partnership voluntarily may elect, in the manner
provided in its partnership agreement or by law for amending the
partnership agreement, to be governed by this chapter. The
provisions of this chapter relating to the liability of the
partnership's partners to third parties apply to limit those
partners' liability to a third party who had done business with
the partnership within one year preceding the partnership's
election to be governed by this chapter, only if the third party
knows or has received a notification of the partnership's
election to be governed by this chapter.
§47B-10-5. Savings clause.
This chapter does not affect an action or proceeding
commenced or right accrued before this chapter takes effect.
NOTE: The purpose of this bill is to revise the Uniform
Partnership Act of 1914 (§47-8a-1 et seq.). The revised act
establishes a partnership as a separate legal entity, and not
merely as an aggregate of partners. It recognizes the primacy of
the partnership agreement over statutory rules, except for
specific rules protecting specific partner interests in the
partnership. The revised act explicitly addresses the fiduciary
responsibilities of partners to each other, providing for express
obligations of loyalty, due care and good faith.
Chapter forty-seven-b is new; therefore, strike-throughs and
underscoring have been omitted.
This bill was recommended by the Commission on Interstate
Cooperation for passage at this session.