SB566: Bill Text

SB566,112,6 179.0405 Actions against partnership and partners. (1) To the extent not inconsistent with s. 179.0404, a general partner may be joined in an action against the limited partnership or named in a separate action.

SB566,112,9 (2) A judgment against a limited partnership is not by itself a judgment against a general partner. A judgment against a partnership may not be satisfied from a general partner's assets unless there is also a judgment against the general partner.

SB566,112,13 (3) A judgment creditor of a general partner may not levy execution against the assets of the general partner to satisfy a judgment based on a claim against the limited partnership unless the partner is personally liable for the claim under s. 179.0404 and any of the following is true:

SB566,112,16 (a) A judgment based on the same claim has been obtained against the limited partnership and a writ of execution on the judgment has been returned unsatisfied in whole or in part.

SB566,112,17 (b) The partnership is a debtor in bankruptcy.

SB566,112,19 (c) The general partner has agreed that the creditor need not exhaust partnership assets.

SB566,112,24 (d) A court grants permission to the judgment creditor to levy execution against the assets of a general 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.

SB566,113,2 (e) Liability is imposed on the general partner by law or contract independent of the existence of the partnership.

SB566,113,8 179.0406 Management rights of general partner. (1) Each general partner has equal rights in the management and conduct of the limited partnership's activities and affairs. Except as otherwise provided in this chapter, any matter relating to the activities and affairs of the partnership is decided exclusively by the general partner or, if there is more than one general partner, by a majority of the general partners.

SB566,113,10 (2) The affirmative vote or consent of all the partners is required to do any of the following:

SB566,113,11 (a) Amend the partnership agreement.

SB566,113,13 (b) Amend the certificate of limited partnership to add or delete a statement that the limited partnership is a limited liability limited partnership.

SB566,113,16 (c) Sell, lease, exchange, or otherwise dispose of all, or substantially all, of the limited partnership's property, with or without the good will, other than in the usual and regular course of the limited partnership's activities and affairs.

SB566,114,4 (2m) Unless otherwise provided in the partnership agreement, any action that is to be voted on or consented to by some or all of the general partners may be taken without a meeting of the general partners entitled to vote or consent if all of such partners consent to the action. The consent shall be evidenced by one or more written consents describing the action, signed by each of such partners, and delivered to the partnership for inclusion in the partnership records. Unless otherwise provided in the partnership agreement, if a person, whether or not then a general partner, so consenting directs, whether through instruction to an agent or otherwise, that such consent will be effective at a future time, including a time determined upon the happening of an event, then the person shall be deemed to have consented as a partner at this future time so long as the person is then a general partner and did not revoke the consent prior to that time. Any such consent shall be revocable prior to its becoming effective.

SB566,114,7 (3) A limited partnership shall reimburse a general partner for an advance to the partnership beyond the amount of capital the general partner agreed to contribute.

SB566,114,11 (4) A payment or advance made by a general partner which gives rise to an obligation of the limited partnership under sub. (3) or s. 179.0408 (1) constitutes a loan to the limited partnership which accrues interest from the date of the payment or advance.

SB566,114,14 (5) Unless authorized by the partnership agreement or otherwise in accordance with this chapter, a general partner is not entitled to remuneration for services performed for the partnership.

SB566,114,18 179.0407 Rights to information of general partner and person dissociated as general partner. (1) A general partner may inspect and copy required information during regular business hours in the limited partnership's principal office, without having any particular purpose for seeking the information.

SB566,114,24 (2) On reasonable notice, a general partner may inspect and copy during regular business hours, at a reasonable location specified by the limited partnership, any record maintained by the partnership regarding the partnership's activities, affairs, financial condition, and other circumstances, to the extent the information is material to the general partner's rights and duties under the partnership agreement or this chapter.

SB566,115,2 (3) A limited partnership shall furnish to each general partner all of the following:

SB566,115,8 (a) Without demand, any information concerning the partnership's activities, affairs, financial condition, and other circumstances which the partnership knows and is material to the proper exercise of the general partner's rights and duties under the partnership agreement or this chapter, except to the extent the partnership can establish that it reasonably believes the general partner already knows the information.

SB566,115,12 (b) On demand, any other information concerning the partnership's activities, affairs, financial condition, and other circumstances, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.

SB566,115,15 (4) The duty to furnish information under sub. (3) also applies to each general partner on whom a demand is made to the extent the general partner knows any of the information described in sub. (2).

SB566,115,19 (5) On 10 days' demand made in a record received by a limited partnership, a person dissociated as a general partner may have access to the information and records described in subs. (1) and (2) at the locations specified in those subsections if all of the following apply:

SB566,115,21 (a) The information or record pertains to the period during which the person was a general partner.

SB566,115,22 (b) The person seeks the information or record in good faith.

SB566,115,24 (c) The person satisfies the requirements imposed on a limited partner by s. 179.0304 (2).

SB566,116,2 (6) A limited partnership shall respond to a demand made pursuant to sub. (5) in the manner provided in s. 179.0304 (3).

SB566,116,4 (7) A limited partnership may charge a person that makes a demand under this section the reasonable costs of copying, limited to the costs of labor and material.

SB566,116,9 (8) A general partner or person dissociated as a general partner may exercise the rights under this section through an agent or, in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the partnership agreement or under sub. (10) applies both to the agent or legal representative and to the general partner or person dissociated as a general partner.

SB566,116,11 (9) (a) Subject to pars. (b) and (c), the rights under this section do not extend to a person as transferee.

SB566,116,12 (b) If a general partner dies, s. 179.0704 applies.

SB566,116,15 (c) If an individual dissociates as a general partner under s. 179.0603 (6) (b) or (c), the legal representative of the individual may exercise the rights under sub. (5) of a person dissociated as a general partner.

SB566,116,22 (10) In addition to any restriction or condition stated in its partnership agreement, a limited partnership, as a matter within the ordinary course of its activities and affairs, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient. In a dispute concerning the reasonableness of a restriction under this subsection, the partnership has the burden of proving reasonableness.

SB566,117,2 179.0408 Reimbursement; indemnification; advancement; and insurance. (1) A limited partnership shall reimburse a general partner for any payment made by the general partner in the course of the general partner's activities on behalf of the partnership, if the general partner complied with ss. 179.0406, 179.0409, and 179.0504 in making the payment.

SB566,117,7 (2) A limited partnership shall indemnify and hold harmless a person with respect to any claim or demand against the person and any debt, obligation, or other liability incurred by the person by reason of the person's former or present capacity as a general partner, if the claim, demand, debt, obligation, or other liability does not arise from the person's breach of s. 179.0406, 179.0409, or 179.0504.

SB566,117,13 (3) In the ordinary course of its activities and affairs, a limited partnership may advance reasonable expenses, including attorney fees and costs, incurred by a person in connection with a claim or demand against the person by reason of the person's former or present capacity as a general partner, if the person promises to repay the partnership if the person ultimately is determined not to be entitled to be indemnified under sub. (2).

SB566,117,18 (4) A limited partnership may purchase and maintain insurance on behalf of a general partner against liability asserted against or incurred by the general partner in that capacity or arising from that status even if, under s. 179.0105 (3) (h), the partnership agreement could not eliminate or limit the person's liability to the partnership for the conduct giving rise to the liability.

SB566,117,21 179.0409 Standards of conduct for general partners. (1) A general partner owes to the limited partnership and, subject to s. 179.0901, the other partners the duties of loyalty and care stated in subs. (2) and (3).

SB566,117,23 (2) The fiduciary duty of loyalty of a general partner includes all of the following duties:

SB566,118,3 (a) The duty to account to the limited partnership and hold as trustee for it any property, profit, or benefit derived by the general partner in or from any of the following:

SB566,118,4 1. The conduct or winding up of the partnership's activities and affairs.

SB566,118,5 2. A use by the general partner of the partnership's property.

SB566,118,6 3. The appropriation of a partnership opportunity.

SB566,118,9 (b) The duty to refrain from dealing with the partnership in the conduct or winding up of the partnership's activities and affairs as or on behalf of a person having an interest adverse to the partnership.

SB566,118,11 (c) The duty to refrain from competing with the partnership in the conduct or winding up of the partnership's activities and affairs.

SB566,118,15 (3) The duty of care of a general partner in the conduct or winding up of the limited partnership's activities and affairs is to refrain from engaging in grossly negligent or reckless conduct or in conduct for which relief or exoneration from liability is not permitted under s. 179.0105 (3) (h).

SB566,118,18 (4) A general partner shall discharge the duties and obligations under this chapter or under the partnership agreement and exercise any rights thereunder consistently with the contractual obligation of good faith and fair dealing.

SB566,118,21 (5) A general partner does not violate a duty or obligation under this chapter or under the partnership agreement solely because the general partner's conduct furthers the general partner's own interest.

SB566,118,25 (6) All the partners of a limited partnership, or one or more disinterested partners with authority to act in the matter, may authorize or ratify, after full disclosure of all material facts, a specific act or transaction by a general partner that otherwise would violate the duty of loyalty.

SB566,119,2 (7) It is a defense to a claim under sub. (2) (b) and any comparable claim in equity or at common law that the transaction was fair to the limited partnership.

SB566,119,6 (8) If, as permitted by sub. (6) or the partnership agreement, a general partner enters into a transaction with the limited partnership which otherwise would be prohibited by sub. (2) (b), the general partner's rights and obligations arising from the transaction are the same as those of a person that is not a general partner.

SB566,119,7 subchapter V

SB566,119,8 CONTRIBUTIONS AND DISTRIBUTIONS

SB566,119,12 179.0501 Form of contribution. A contribution may consist of money or other property transferred to, services performed for, or another benefit provided to the limited partnership or an agreement to transfer money or property to, perform services for, or provide another benefit to the partnership.

SB566,119,15 179.0502 Liability for contribution. (1) A person's obligation to make a contribution to a limited partnership is not excused by the person's death, disability, termination, or other inability to perform personally.

SB566,119,19 (2) If a person does not fulfill an obligation to make a contribution other than money, the person is obligated at the option of the limited partnership to contribute money equal to the value, as stated in the required information, of the part of the contribution which has not been made.

SB566,119,24 (3) The obligation of a person to make a contribution may be compromised only by the affirmative vote or consent of all the partners. If a creditor of a limited partnership extends credit or otherwise acts in reliance on an obligation described in sub. (1) without knowledge or notice of a compromise under this subsection, the creditor may enforce the obligation.

SB566,120,7 179.0503 Sharing of and right to distributions before dissolution. (1) Any distribution made by a limited partnership before its dissolution and winding up must be shared among the partners on the basis of the value, as stated in the required information when the limited partnership decides to make the distribution, of the contributions the limited partnership has received from each partner, except to the extent necessary to comply with a transfer effective under s. 179.0702 or charging order in effect under s. 179.0703.

SB566,120,10 (2) A person has a right to a distribution before the dissolution and winding up of a limited partnership only if the partnership decides to make an interim distribution. A person's dissociation does not entitle the person to a distribution.

SB566,120,15 (3) A person does not have a right to demand or receive a distribution from a limited partnership in any form other than money. Except as otherwise provided in s. 179.0810 (5), a partnership may distribute an asset in kind only if each part of the asset is fungible with each other part and each person receives a percentage of the asset equal in value to the person's share of distributions.

SB566,120,21 (4) If a partner or transferee becomes entitled to receive a distribution, the partner or transferee has the status of, and is entitled to all remedies available to, a creditor of the limited partnership with respect to the distribution. However, the partnership's obligation to make a distribution is subject to offset for any amount owed to the partnership by the partner or a person dissociated as a partner on whose account the distribution is made.

SB566,120,24 179.0504 Limitations on distributions. (1) A limited partnership may not make a distribution, including a distribution under s. 179.0810, if after the distribution any of the following applies:

SB566,121,2 (a) The partnership would not be able to pay its debts as they become due in the ordinary course of the partnership's activities and affairs.

SB566,121,7 (b) The partnership's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the partnership were to be dissolved and wound up at the time of the distribution, to satisfy the preferential rights upon dissolution and winding up of partners and transferees whose preferential rights are superior to the rights of persons receiving the distribution.

SB566,121,9 (2) A limited partnership may base a determination that a distribution is not prohibited under sub. (1) on any of the following:

SB566,121,11 (a) Financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances.

SB566,121,13 (b) A fair valuation or other method that is reasonable under the circumstances.

SB566,121,15 (3) Except as otherwise provided in sub. (5), the effect of a distribution under sub. (1) is measured as follows:

SB566,121,17 (a) In the case of a distribution as described in s. 179.0102 (4) (a) 1. and 2., as of the earlier of the following:

SB566,121,19 1. The date money or other property is transferred or debt is incurred by the limited partnership.

SB566,121,21 2. The date the person entitled to the distribution ceases to own the interest or rights being acquired by the partnership in return for the distribution.

SB566,121,23 (b) In the case of any distribution of indebtedness other than one under par. (a), as of the date the indebtedness is distributed.

SB566,121,24 (c) In all cases other than those under par. (a) or (b), as of the following:

SB566,122,2 1. The date the distribution is authorized, if the payment occurs not later than 120 days after that date.

SB566,122,4 2. The date the payment is made, if the payment occurs more than 120 days after the distribution is authorized.

SB566,122,8 (4) A limited partnership's indebtedness to a partner or transferee incurred by reason of a distribution made in accordance with this section is at parity with the partnership's indebtedness to its general, unsecured creditors, except to the extent subordinated by agreement.

SB566,122,15 (5) A limited partnership's indebtedness, including indebtedness issued as a distribution, is not a liability for purposes of sub. (1) if the terms of the indebtedness provide that payment of principal and interest is made only if and to the extent that a payment of a distribution could then be made under this section. If the indebtedness is issued as a distribution, each payment of principal or interest is treated as a distribution, the effect of which is measured on the date the payment is made.

SB566,122,18 (6) In measuring the effect of a distribution under s. 179.0810, the liabilities of a dissolved limited partnership do not include any claim that has been disposed of under s. 179.0806, 179.0807, or 179.0808.

SB566,122,23 179.0505 Liability for improper distributions. (1) If a general partner consents to a distribution made in violation of s. 179.0504 and in consenting to the distribution fails to comply with s. 179.0409, the general partner is personally liable to the limited partnership for the amount of the distribution which exceeds the amount that could have been distributed without the violation of s. 179.0504.

SB566,123,2 (2) A person that receives a distribution knowing that the distribution violated s. 179.0504 is personally liable to the limited partnership but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under s. 179.0504.

SB566,123,5 (3) A general partner against which an action is commenced because the general partner is liable under sub. (1) with respect to a distribution may do any of the following:

SB566,123,7 (a) Implead any other person that is liable under sub. (1) with respect to the distribution and seek to enforce a right of contribution from the person.

SB566,123,10 (b) Implead any person that received the distribution in violation of sub. (2) and seek to enforce a right of contribution from the person in the amount the person received in violation of sub. (2).

SB566,123,12 (4) An action under this section is barred unless commenced not later than 2 years after the distribution.

SB566,123,13 subchapter VI

SB566,123,14 DISSOCIATION

SB566,123,17 179.0601 Dissociation as limited partner. (1) A person does not have a right to dissociate as a limited partner before the completion of the winding up of the limited partnership.

SB566,123,19 (2) A person is dissociated as a limited partner when any of the following applies: