Free Ebook On Limited Liability Partnership - 2005

1
- AUROBINDO SAXENA
2
PREFACE

This book aims to cogitate the raison d'tre, which beget the evolution of the limited
liability partnership (LLP) form of business structure. It discusses the LLP Statutes in
United States of America, Channel Island of Jersey, United Kingdom, Canada, Dubai
International Financial Centre, Singapore and Australia. It further draws a
comparison of the limited liability partnership laws prevalent in these places and
identifies the best practices, which with apposite adaptations can be made a part of a
similar legislation in India.

It is felt that the concept of Limited Liability Partnerships can be better understood in
the light of the laws already in place in other countries. The book being a first edition
aims to develop a scalable framework for future research work in the area.

METHODOLOGY

This book adopts a desk research method, which involves Internet research,
literature review and analysis, and correspondence with the relevant authorities in
the places studied.
3

ACKNOWLEDGEMENTS

I would like to acknowledge the valuable contributions made by a number of people
who helped me in the development and refinement of this text. First I would like to
thank Prof. Prem Sikka, Professor of Accounting, Department of Accounting, Finance
and Management, University of Essex, United Kingdom for his guidance on the
subject. Second I would like to thank James J. Tucker III, Associate Professor of
Accounting and Taxation, Widener University, United States of America.

My heartiest thanks also goes to Mr. Angelo Veljanovski, Lecturer, School of Law,
Victoria University of Technology, Australia, whose work on limited liability
partnership inspired me to write this book. I would also like to thank David Forde
from the Companies Office Information Service, New Zealand for replying to my
queries.

Special thanks go to Ms. Toh Wee San, Senior Assistant Registrar ACRA, Singapore
who gave my queries a patient listening and guided me in understanding the most
technical issues of the subject.

Aurobindo Saxena
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CONTENTS

S. No. Particulars Page No.
1. Chapter 1: Introduction 5
2. Chapter 2: Limited liability partnership laws in the
United States of America
49
Channel Island of Jersey
204
United Kingdom
243
5. Chapter 5: Limited liability partnership laws in
Canada
441
6. Chapter 6: Limited liability partnership laws in Dubai
International Financial Centre
456
Singapore
464
Australia
558
9. Chapter 9: Analysis 685
10. References 718
11. Internet Support 720

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CHAPTER 1: INTRODUCTION

1.0 INTRODUCTION
The inclination to collaborate to accomplish certain commercial objectives has a long
history. The commercial magnetism of such collaborations and a need to govern their
business ultimately led to the codification of corporate and partnership laws.

Corporations and Partnerships have been a primary form of business structure for a
long time now. For more than a century, partnership law has offered an all-
embracing and lucid alternative to corporate law. Although, the two bodies of law
have much in common, historically they differed sharply on the role of the contract
and private ordering in structuring the firm.

Partnership law encourages private ordering through bargaining by providing a set of
statutory default norms that, with only a few exceptions, yield to agreements
negotiated by partners. In contrast, corporate law historically has provided a
mandatory framework for firm structure highly resistant to shareholders attempts to
define their relationships through bargaining
1
. Proponents of private ordering within
firms prefer the freedoms of partnership law to the mandates of corporate law, and
over time they have enjoyed success in extending the bargaining model from
partnership law to corporate law.

However, the inherent limitations of both these forms of businesses have made them
unsuitable for certain businesses and ultimately hybrid forms of business structures
such as limited partnerships, limited liability partnership, limited liability limited
partnerships etc. evolved.

1.1 GENESIS AND DEVELOPMENT OF PARTNERSHIP LAWS
Partnership laws around the world have evolved over a period of time in consonance
with the changing business requirements. Broadly, the partnership laws can be
classified in three generations
2
viz. General Partnership Laws (First Generation),
Limited Partnership Laws (Second Generation) and Limited Liability Partnership Laws
(Third Generation).

1.1.0 First Generation
The UK Partnership Act, 1890 is an archetypal example of first generation of
partnership laws. A general partnership firm is not a separate legal entity. A partner
is considered as the agent of the firm and of other partners for the purpose of the
business of the firm. Further, every partner is liable, jointly and severally with all the
other partners, for all acts of the firm done while he is a partner. Where, by the
wrongful act or omission of a partner acting in the ordinary course of the business of
a firm, or with the authority of his partners, loss or injury is caused to any third
party, or any penalty is incurred, the firm is liable therefore to the same extent as
the partner.

General partnership is regarded by the public as the type of business structure
providing the optimal protection to members of the public, because partners are not

1
Robert W. Hillman, The Bargain in the Firm: Partnership Law, Corporate Law, and Private Ordering
Within Closely-Held Business Associations.
2
This concept has been developed by Aurobindo Saxena.
6
protected by limited liability and the claimants can always go after the personal
assets of each partner to meet his or her claim.
3

However, the characteristic of "unlimited liability" ensures that the partners maintain
a direct interest in the affairs of the partnership and conduct of its partners,
especially in small practices where the partners are likely to work in the same
location. For large practices, they may have offices in several places, and thus
partners may not be able to keep track of all aspects and transactions of the
partnership. Nonetheless, under a general partnership, partners still have to share
the liabilities for the negligence of those partners whom they may barely know or
meet.
4

The advantage of this structure is that its business affairs are entirely private. A
partnership agreement is also a private confidential document providing the flexibility
in which the partners can determine how the internal structure and relationship
between partners and between partners and the partnership are governed.
5

1.1.1 Second Generation
The UK Limited Partnership Act, 1907 is an archetypal example of second generation
of partnership laws. A limited partnership is different from a general partnership to
the extent that it classifies the partners into two classes: a general partner and a
limited partner. Limited partnerships must have at least one general and one limited
partner. The essence of a limited partnership is that it bestows on the partnership
the benefit of limited liability to a certain extent. In a limited partnership, the liability
of the limited partner is limited to the amount of his contribution. He is like an
investor and usually does not take part in the management or day-to-day running of
the firm.

However, if a limited partner takes part in the management, he can be held liable for
all debts and obligations of the firm incurred while he so takes part in the
management, as though he were a general partner. As against this, the general
partner is responsible for the management of the firm and has unlimited liability.
Further, limited partnerships do not specifically deal with the issue of joint and
several liabilities. Partners can still be held liable for the wrongful acts or omissions
of their fellow partners. For tax purposes, a limited partnership is not considered as a
taxable entity and its income and capital transactions flow through to the partners.
Limited Partnerships are increasingly being used for private equity and fund
investment businesses.

1.1.2 Third Generation
The UK Limited Liability Partnership Act, 2000 is an archetypal example of third
generation of partnership laws. A limited liability partnership (LLP) is an alternative
corporate business vehic le that not only provides the benefits of limited liability but
also allows its partners the flexibility of organizing their internal structure as a
general partnership. The limited liability partnership is a separate legal entity and,
while the LLP itself will be liable for the full extent of its assets, the liability of the
partners will be limited. In LLP, each partner is the agent of the LLP but not of other
partners.

3
Kitty LAM, Limited Liability Partnership and Liability Capping Legislation for the Practice of Law in
Selected Places.
4
Ibid.
5
Ibid.
7

1.2 GLOBAL SCENARIO
The limited liability partnership structure has gained importance in the last one and a
half decade and is now available in United States of America, Channel Island of
Jersey, United Kingdom, Canada, Dubai International Financial Centre, Singapore
and Australia.

The push for the creation of limited liability partners hip grew from several factors,
such as general increase in the incidence of litigation for professionals negligence
and the size of claims; the risk to a partner's personal assets, when the claim
exceeds the sum of the assets and insurance cover of the partnership; the growth in
the size of partnerships; increase in specialization among partners and the coming
together of different professions within a partnership.

There are also concerns about the shifting of the business structure of a firm from a
general partnership to an LLP, albeit there is no empirical data supporting them. One
of the concerns is about the impact upon the culture of a law firm. For instance, the
practice of law in high-risk areas often yields high rewards commensurate with the
increased risk of liability. Partners in a general partnership usually share both the
risk and risk-related gains with their fellow partners. If a shift to an LLP causes a
member/partner to shoulder a higher risk of liability than others, he or she may
demand a larger share of the rewards. Similarly, the risk of some members/partners
may increase where the legislation provides that members/partners of LLPs have to
be liable for the acts of those under their direct supervision; in particular, if some
members/partners have to supervise less experienced staff.
6

Some consider that shifting from the general partnership status to the LLP status
may result in less incentive for members/partners to monitor and control the quality
of work by other members/partners of the firm, as they are no longer liable for the
acts of their fellow members/partners. The breakdown of internal procedures at
Arthur Andersen, the accounting firm operating as an LLP, in connection with the
collapse of the Enron Corporation, is often quoted as an example of such
disincentive.
7

However, the level of protection that an LLP affords partners of a LLP is an important
factor in why LLP is fast becoming the preferred structure for major professional
services firms.

1.3 INDIAN SCENARIO
In India, businesses mainly operate as companies, sole proprietorships and
partnerships. Each of these business structures has its own advantages and
shortcomings and is subject to different regulatory and tax regimes. The idea that
there should be the opportunity in India to organize as an LLP emerged out of the
Report of the Naresh Chandra Committee on Regulation of Private Companies and
Partnership and Report of the Dr. J. J. Irani Expert Committee on Company Law.

Acting on the recommendations of the reports of these committees the Ministry of
Company Affairs on November 2, 2005 released a concept paper on limited liability
partnership (See Annexure 1), which will be kept open for public comments till
December 31, 2005. The concept paper comprises of sixteen chapters and five

6
Johnson, J. (1995).
7
Hamilton, Robert W. and Macey, Jonathan R. (2003).
8
schedules. A closer look into the provisions of the paper reveal that it is based on the
Singapore LLP Act, 2005, UK LLP Act, 2000, Companies Act, 1956 and certain LLP
statutes prevalent in US like the Delaware Code.

1.4 ISSUES FOR CONSIDERATION
It is anticipated that the paper will provoke critical examination by all chambers of
commerce, business organizations, professional bodies, academicians and persons
connected with corporate sector.

However, some of the important issues that need in-depth analysis, debate,
discussion and deliberations are as under:
1. Whether LLP form of business structure should be made available to
Professionals only?
2. Whether LLP Agreement should be made mandatory to be filed with the
Registrar?
3. What contents of the LLP agreement should be filed with the Registrar?
4. Whether foreign individuals should be allowed to be a partner or not?
5. Whether LLPs should be allowed to have one general partner with unlimited
liability or not?
6. Whether manager should be a partner of LLP or not?
7. Whether LLP should have a limit on the number of partners it can have?
8. What should be the extent of liability of a partner?
9. How should the LLPs be taxed?
10. What should be the disclosure requirements for an LLP?
11. What should be the procedure for existing firms, private companies and
unlisted public companies to convert to LLP?
12. How should the Act deal with foreign LLPs?
13. What should be the procedure for the merger, amalgamation and demerger of
LLPs?
14. What should be the procedure for the winding up and dissolution of LLPs?
15. What provisions of the Companies Act, 1956 should be applicable to LLPs?
16. What other legislations, rules, regulations and procedures need to be
amended for facilitating a smooth entry of LLPs?
17. What all provisions should form part of the default provisions?
18. What can be the various forms of contribution?
19. Whether a partner can bring his share of contribution in installments?
20. For how long an LLP should be allowed to carry on business with less than two
partners?
21. Should the audit of financial records be made mandatory for all LLPs?
22. Should LLPs be required to file an annual report with the Registrar?
23. What should be the period of claw back?
24. What should be the disqualifications of a partner and manager?
25. Who should regulate and administer the LLPs?

1.5 CONCLUSION
Following international trends, predominantly those in the United States of America,
United Kingdom, Jersey, Canada, Dubai International Financial Centre, Australia and
Singapore, India has recently undertaken the introduction of Limited Liability
Partnership (LLP) structure. This structure is recognized as the worlds best
practice structure, designed to not only attract venture capital from offshore
institutional investors but also to retain domestic investment. Some of the
advantages of this form of business structure include low cost of incorporation,
9
unlimited capacity, limited individual liability, flexible management structure, tax
benefits and less audit and filing requirements.

However, at the same time this form of business structure is susceptible to abuse as
well. Especially, after the Enron collapse, it is felt that limited liability has a degree of
correlation with professional lapses and malpractices. The OECD also identifies
limited liability partnership as being a corporate vehicle, which is vulnerable to
misuse, principally for the reason that it is less regulated than corporations.

The limited liability partnership form of business structure is keenly awaited in India.
However, such introduction will require amendments in several legislations and
Regulations for example the SEBI Regulations, Tax Laws, Banking Regulations, the
parent Acts of Statutory Bodies like ICSI, ICAI and ICWAI and their respective Rules
and Regulations etc. Therefore, an in-depth understanding of the concept is
inexorable.

The following chapters will discuss and analyse the limited liability partnership laws
around the world and attempt to find solutions to the issues under consideration
stated above.
10
ANNEXURE 1

CONCEPT PAPER ON LIMITED LIABILITY PARTNERSHIPS

Chapter I
Preliminary

1. Short title, commencement and extent.

(1) This Act may be called the Limited Liability Partnerships Act, 2006.
(2) It shall come into force on such date as the Central Government may, by
notification in the Official Gazette, appoint.
(3) It extends to the whole of India.

2. Definitions.

In this Act, unless the context otherwise requires,-

(1) "address" in relation to a partner of a limited liability partnership,
means-
(a) if an individual, his usual residential address, and
(b) if a body corporate , address of its registered office;
(2) Appellate Tribunal means the National Company Law Appellate
Tribunal constituted under the Companies Act, 1956;
(3) body corporate means a company as defined in section 3 of the
Companies Act, 1956 and includes:
(a) a limited liability partnership registered under this Act;
(b) a limited liability partnership incorporated outside India; and
(c) a company incorporated outside India
but does not include-
(i) a corporation sole;
(ii) a co-operative society registered under any law relating to co-
operative societies; and
(iii) any other body corporate (not being a company as defined above),
which the Central Government may, by notification in the Official
Gazette, specify in this behalf;
(4) "business" includes every trade, profession and occupation;
(5) chartered accountant means a chartered accountant as defined in
clause (b) of sub-section (1) of section 2 of the Chartered
Accountants Act, 1949 and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act;
(6) company secretary means a company secretary as defined in
clause (b) of sub-section (1) of section 2 of the Company
Secretaries Act, 1980 and who has obtained a certificate of practice
under sub-section (1) of section 6 of that Act;
(7) "court" means court as defined under the Companies Act, 1956;
(8) "economic rights" means the rights of the partner to a share of
the profits and losses of the partnership and to receive
distributions in accordance with the limited liability partnership
agreement;
(9) financial year means in relation to a limited liability partnership, the
period in respect of which any profit and loss account of the limited
11
liability partnership is made up, and shall not be less than six months
but not exceed fifteen months.
(10) foreign limited liability partnership" means a partnership that is
(a) formed, registered or incorporated outside India
which, after the commencement of this Act,
establishes a place of business within India; and
(b) formed, registered or incorporated outside India
which have, before the commencement of this Act,
established a place of business within India and
continue to have an established place of business
within India at the commencement of this Act; and
(c) which if incorporated in India, would be a limited
liability partnership within the meaning of this Act.
(11) "incorporation document" shall be construed in accordance with
section 8;
(12) "limited liability partnership" has the meaning given to it by
section 3;
(13) "limited liability partnership agreement" means any written
agreement of the partners as to the affairs of a limited liability
partnership and the conduct of its business;
(14) manager in relation to a limited liability partnership, means any
person (whether or not a partner of the limited liability
partnership) who is concerned in or takes part in the management
of the limited liability partnership;
(15) "modification" shall include the making of additions and omissions;
(16) "name" in relation to a partner of a limited liability partnership,
means-
(a) if an individual, his forename, middlename and surname, and
(b) if a body corporate, its registered name;
(17) "partner" in relation to a limited liability partnership, means any
person who has been admitted as a partner in the limited liability
partnership in accordance with the li mited liability partnership
agreement;
(18) register means any register kept and maintained under this Act;
(19) "Registrar" means Registrar as defined in the
Companies Act, 1956;
(20) Tribunal means the National Company Law Tribunal constituted
under the Companies Act, 1956.

Chapter II
Applicability

3. Limited Liability Partnership.

(1) A limited liability partnership is a body corporate which is formed by
being incorporated under this Act and which has legal entity separate
from that of its partners.

(2) A limited liability partnership shall have perpetual succession.

12
(3) Any change in the partners of a limited liability partnership shall not
affect the existence, rights or liabilities of the limited liability
partnership.

4. Non-applicability of partnership law.
Except as otherwise provided by this Act or any other enactment, the law
relating to partnerships shall not apply to a limited liability partnership.

5. Partners.
Any individual or body corporate may be a partner in a limited liability
partnership.

6. Minimum and Maximum Number of Partners.
(1) Every limited liability partnership shall have at least two partners.
(2) If at any time the number of partners of a limited liability partnership,
is reduced, below two, and the limited liability partnership carries on
business for more than six months while the number is so reduced, a
person who is a partner of the limited liability partnership during the
time that it so carries on business after those six months and is
cognizant of the fact that it is carrying on business with fewer than two
partners shall be liable jointly and severally with the limited liability
partnership for the obligations of the limited liability partnership
incurred during that period.
(3) A limited liability partnership has unlimited capacity.

7. Manager.
(1) Every limited liability partnership shall have a manager who is an
individual and is resident in India.

(2) For the purpose of sub-section (1), resident in India includes a person
who has been staying in India for a continuous period of not less than
twelve months immediately preceding the date of his appointment as a
manager and who has come to stay in India, -
(a) for taking up employment in India, or
(b) for carrying on a business or vocation in India.

(3) Every limited liability partnership shall within 30 days ensure that the
particulars of every person who acts as manager of the limited liability
partnership, his consent to act as such and any change of manager are
lodged with the Registrar in such ma nner and form as may be
prescribed.

(4) If the incorporation document specifies who is to be a manager -
(a) that person shall be the manager on incorporation, and
(b) if no manager is appointed, each partner resident in India shall
be deemed to be a manager.

(5) Every limited liability partnership shall appoint a person as manager
within sixty days from the date on which a person ceases to be a
manager.

(6) A manager shall be
13
(a) answerable for the doing of all acts, matters and things, as are
required to be done by the limited liability partnership; and
(b) personally liable to all penalties imposed on the limited liability
partnership for any contravention of those sections unless he
satisfies the Tribunal that he should not be so liable.

(7) If a limited liability partnership contravenes any sub-section of this
section, the limited liability partnership and every partner of the
limited liability partnership shall be punishable under the Act.

Chapter III
Incorporation

8. Incorporation Document.

(1) For a limited liability partnership to be incorporated-
(a) two or more persons associated for carrying on a lawful business
with a view to profit must have subscribed their names to an
incorporation document,
(b) there must have been delivered to the Registrar of the State in
which the registered office of the limited liability partnership is
to be situate, the incorporation document in a manner as may
be prescribed, and
(c) there must have been so delivered a statement in the prescribed
form, made by either an advocate, or a Company Secretary,
or, a Chartered Accountant, who is engaged in the formation of
the limited liability partnership and by anyone who subscribed
his name to the incorporation document, that all the
requirements of this Act and Regulations thereunder have been
complied with, in respect of incorporation and matters
precedent and incidental thereto.

(2) The incorporation document must-

(a) be in a form as may be prescribed,
(b) state the name of the limited liability partnership,
(c) state the proposed business of the limited liability partnership;
(d) state the address of the registered office of the limited liability
partnership,
(e) state the name and address of each of the persons who are to be
partners of the limited liability partnership on incorporation,
(f) state the name and address of the person (s) who is/are to be
manager (s) of the limited liability partnership on incorporation;
(g) be accompanied by the photographs of the persons who are to be
partners and manager(s) of the limited liability partnership.

(3) If a person makes a statement under sub-section (1)(c) which he-
(a) knows to be false, or
(b) does not believe to be true,
he shall be punishable under the Act.
14

9. Incorporation by Registration.

(1) When the requirements imposed by clause (b) and (c) of sub-section (1)
of section 8 have been complied with, the Registrar shall retain the
incorporation document and, unless the requirement imposed by
clause (a) of that sub-section has not been complied with, he shall
within a period of 14 days-
(a) register the incorporation document, and
(b) give a certificate that the limited liability partnership is
incorporated by the name specified in the incorporation
document.

(2) The Registrar may accept the statement delivered under clause (c) of
sub-section (1) of section 8 as sufficient evidence that the requirement
imposed by clause (a) of that sub-section has been complied with.

(3) The certificate shall be signed by the Registrar and authenticated by his
official seal.

(4) The certificate is conclusive evidence that the requirements of sub-section
2 of section 8 are complied with and that the limited liability
partnership is incorporated by the name specified in the incorporation
document.

10. Registered Office.
(1) Every limited liability partnership shall have a registered office to
which all communications and notices may be addressed and where
they shall be received.

(2) A document may be served on a limited liability partnership or a
partner or manager thereof by sending it by post under a certificate of
posting or by registered post or by any other mode, which may be
prescribed, or by leaving at its registered office.

(3) A limited liability partnership may change the address of its registered
office by lodging with the Registrar notice of such change in such
manner and form as may be prescribed and any such change shall
take effect only upon such lodgment.

(4) A person guilty of an offence under sub-section (3) shall be punishable
under the Act.

11. Powers.
A limited liability partnership shall, by its name have the power of-
(a) suing and being sued;
(b) acquiring, owning, holding and developing or disposing of
property, both movable and immovable;
(c) having a common seal; and
(d) doing and suffering such other acts and things as bodies
corporate may lawfully do and suffer.

12. Names of limited liability partnerships.
15

(1) Every limited liability partnership shall have either the words limited
liability partnership or the acronym LLP as the last words of its
name.

(2) No limited liability partnership shall be registered by a name which, in
the opinion of the Central Government is -
(a) undesirable;
(b) identical or too nearly resembles to that of any other limited
liability partnership or body corporate or to a registered trade
mark, or a trade mark which is subject of an application for
registration, of any other person under the Trade Marks Act,
1999.

(3) A person may apply in the prescribed manner to the Registrar for the
reservation of a name set out in the application as
(a) the name of a proposed limited liability partnership; or
(b) the name to which a limited liability partnership proposes to
change its name.

(4) Upon receipt of an application under sub-section (3) and on payment
of the prescribed fee, the Registrar may, if he is satisfied that the
name to be reserved is not one which may be rejected on any ground
referred to in sub-section (2), reserve the name for a period of three
months from the date of intimation by the Registrar.

(5) Notwithstanding anything contained in this section, where the Central
Government is satisfied that a limited liability partnership has been
registered (whether through inadvertence or otherwise and whether
originally or by a change of name) under a name which
(a) is a name referred to in sub-section (2); or
(b) so nearly resembles the name of any other limited liability
partnership or body corporate or other name as to be likely to
be mistaken for it, the Central Government may direct the
limited liability partnership to change its name, and the limited
liability partnership shall comply with the direction within three
months after the date of the direction or such longer period as
the Central Government may allow.

(6) Any person may apply, in a manner as may be prescribed, to the
Registrar to give a direction to any limited liability partnership, on a
ground referred to in sub-section (5), to change its name.

(7) The Registrar shall not consider any application under sub-section (6)
to give a direction to a limited liability partnership on the ground
referred to in sub-section (5) (b) unless the Registrar receives the
application within twelve months from the date of registration of the
limited liability partnership under that name.

(8) Any limited liability partnership which fails to comply with a direction
given under sub-section (5) shall be punishable under the Act.

16
(9) Any limited liability partnership may change its name by lodging with
the Registrar notice of such change in such manner and form as may
be prescribed.

13. Publication of name and limited liability.
(1) Every limited liability partnership shall ensure that its invoices and
official correspondence bear the following:
(a) the name and registration number of the limited liability
partnership; and
(b) a statement that it is registered with limited liability.

(2) Any limited liability partnership which contravenes sub-section (1)
shall be punishable under the Act.

Chapter IV
Partnership

14. Partner.

(1) On the incorporation of a limited liability partnership its partners are
the persons who subscribed their names to the incorporation
document.

(2) Any other person may become a partner of a limited liability
partnership by and in accordance with an agreement with the existing
partners.

15. Relationship of Partners.

(1) Except as far as otherwise provided by this Act or any other enactment,
the mutual rights and duties of the partners of a limited liability
partnership, and the mutual rights and duties of a limited liability
partnership and its partners, shall be governed by agreement
between the partners, or between the limited liability partnership and
its partners.

(2) The contents as may be prescribed in Regulations and form part of
limited liability partnership agreement and any changes made therein
shall be filed with the Registrar in the manner and form as may be
prescribed.

(3) An agreement in writing made before the incorporation of a limited
liability partnership between the persons who subscribe their names to
the incorporation document may impose obligations on the limited
liability partnership as a pre-incorporation agreement, provided such
agreement is ratified by all the partners after the incorporation of the
limited liability partnership.

(4) In the absence of agreement as to any matter, the mutual rights and
duties of the partners and the mutual rights and duties of the limited
liability partnership and the partners shall be determined by any
provision relating to that matter as is set out in the First Schedule.

17
16. Cessation of partnership interest.

(1) A person may cease to be a partner of a limited liability partnership in
accordance with an agreement with the other partners or, in the absence of
agreement with the other partners as to cessation of being a partner, by
giving 30 days notice to the other partners of his intention to resign as
partner.

(2) A person may also cease to be a partner of a limited liability partnership by
his death or by dissolution of the limited liability partnership firm.

(3) Where a person has ceased to be a partner of a limited liability
partnership, the former partner i s to be regarded (i n rel ati on to any
person dealing with the limited liability partnership) as still being a
partner of the limited liability partnership unless-

(a) the person has notice that the former partner has ceased to be
a partner of the limited liability partnership, or
(b) notice that the former partner has ceased to be a partner of the
limited liability partnership has been delivered to the Registrar.

(4) A partner's disassociation from the limited liability partnership does not by
itself discharge the partner from any obligation to the limited liability
partnership or to the other partners which he incurred while being a partner.

(5) Where a partner of a limited liability partnership ceases to be a partner,
unless otherwise provided in the limited liability partnership agreement, the
former partner or a person entitled to his share in consequence of the death
or insolvency of the former partner, shall be entitled to receive from the
limited liability partnership an amount
(a) equal to the former partners capital contribution to the limited
liability partnership and his right to share in the accumulated
profits of the limited liability partnership after the deduction of
losses of the limited liability partnership; and
(b) determined as at the date the former partner ceased to be a
partner.

(6) For the avoidance of doubt, a former partner or a person entitled to his
share in consequence of the death or insolvency of the former partner
shall not interfere in the management of the limited liability
partnership.

17. Registration of changes in partners.

(1) A limited liability partnership must ensure that-
(a) where a person becomes or ceases to be a partner, notice is
delivered to the Registrar within 30 days, and
(b) where there is any change in the name or address of a partner,
notice is delivered to the Registrar within 30 days.

(2) A notice delivered under sub-section (1)-
(a) shall be in a form as may be prescribed, and
18
(b) shall be signed by the manager of the limited liability
partnership and authenticated in a manner as may be
prescribed, and,
(c) if it relates to admission of partner, shall contain a statement
by the incoming partner that he consents to becoming a
partner, signed by him and authenticated in a manner as may
be prescribed.

(3) If a limited liability partnership fails to comply with sub-section (1),
the manager shall be punishable under the Act.

(4) Any person who ceases to be a partner of a limited liability partnership
may himself lodge with the Registrar the statement referred to in sub-
section (2) if he has reasonable cause to believe that the limited
liability partnership will not lodge the statement with the Registrar.

Chapter V
Extent and Limitation of Liability

18. Partner as agent.

Every partner of a limited liability partnership is the agent of the limited
liability partnership, but not of other partners.

19. Extent of liability of the limited liability partnership.

(1) A limited liability partnership is not bound by anything done by a partner
in dealing with a person if-

(a) the partner in fact has no authority to act for the limited liability
partnership in doing a particular act, and
(b) the person knows that he has no authority or does not know or
believe him to be a partner of the limited liability partnership.

(2) The limited liability partnership is liable if a partner of a limited liability
partnership is liable to any person as a result of a wrongful act or
omission on his part in the course of the business of the limited
liability partnership or with its authority.

(3) An obligation of the limited liability partnership whether arising in
contract or otherwise, is solely the obligation of the limited liability
partnership.

(4) The liabilities of the limited liability partnership shall be met out of the
property of the limited liability partnership.

20 Extent of liability of a partner.

(1) A partner is not personally liable, directly or indirectly for an obligation
referred to in sub-section (3) of section 19 solely by reason of being a
partner of the limited liability partnership.

19
(2) Sub-section (3) of section 19 and sub-section (1) of this section shall
not affect the personal liability of a partner for his own wrongful act or
omission, but a partner shall not be personally liable for the wrongful
act or omission of any other partner of the limited liability partnership.

21. Unlimited liability in case of fraud.

(1) In the event of an act carried out by a limited liability partnership, or
any of its partners, with intent to defraud creditors of the limited
liability partnership or any other person, or for any fraudulent
purpose, the liability of the parties shall be unlimited for all or any of
the debts or other liabilities of the limited liability partnership.

(2) Where any business is carried on with such intent or for such purpose
as mentioned in sub-section (1), every person who was knowingly a
party to the carrying on of the business in the manner aforesaid shall
be punishable under the Act.

22. Liability for personal acts.

A partner shall have unlimited liability for his or her personal acts which are
not done for and on behalf of the limited liability partnership, and were
committed in his or her personal capacity.

Chapter VI
Duties and Standards of Conduct

23. Duties of Partners.

A partner shall discharge his duties to the limited liability partnership and the
other partners under this Act or under the partnership agreement and
exercise any right consistent with the obligation of good faith.

24. General Standards of Partner's Conduct.

(1) The fiduciary duties that a partner has to the limited liability
partnership and the other partners are the duties of loyalty and due
care as specified under sub-section (2) and (3).

(2) A partner's duty of loyalty to the limited liability partnership shall
include:
(a) to account to the limited liability partnership and hold as
trustee for it any property, profit, or benefit derived by the
partner in the conduct and winding up of the limited liability
partnership's activities or derived from a use by the partner
of limited liability partnership property, including the
appropriation of a limited liability partnership opportunity;
(b) to refrain from competing with the limited liability partnership
in the conduct or winding up of the limited liability
partnership's activities; and
20
(c) refrain from dealing with the limited liability partnership in the
conduct or winding up of the limited liability partnership's
activities as or on behalf of a party having an interest adverse
to the limited liability partnership.

(3) A partners duty of due care to the limited liability partnership and
the other partners in the conduct and winding up of the limited
liability partnership's activities is to refrain from engaging in grossly
negligent or reckless conduct and from contravening any of the
provisions of this Act and any other law for the time being in force.

Chapter VII
Contributions

25. Form of Contribution.
A contribution of a partner may consist of tangible or intangible property or
other benefit to the limited liability partnership, including money, services
performed, promissory notes, other agreements to contribute cash or
property, and contracts for services performed or to be performed.

26. Liability for Contribution.

(1) A partner's obligation to contribute money or other property or other
benefit or to perform services for a limited liability partnership shall be
as per the partnership agreement.

(2) A creditor of a limited liability partnership, which extends credit or
otherwise acts in reliance on an obligation described in that agreement,
without notice of any compromise under t hi s sub-section, may enforce
the original obligation against such partner.

Chapter VIII
Financial Disclosures

27. Maintenance of records.

(1) The limited liability partnership shall maintain proper books of accounts
relating to its affair for each year of its existence on accrual basis and
according to the double entry system of accounting, and shall maintain the
same at its registered office for a period as may be prescribed.

(2) If default is made in complying with sub-section (1), the manager shall be
punishable under the Act.

28. Annual declaration of solvency.
(1) Every limited liability partnership shall lodge with the Registrar a
declaration by its manager that in his opinion, the limited liability
partnership either
(a) appears as at that date to be able to pay its debts as they
become due in the normal course of business; or
(b) does not appear as at that date to be able to pay its debts as
they become due in the normal course of business.
21

(2) The declaration referred to in sub-section (1) shall be lodged not later
than 15 months after the registration of the limited liability partnership
and subsequently once in every financial year at intervals of not more
than 15 months.

(3) Notwithstanding sub-section (2), the Registrar may, on application by
a limited liability partnership and if he thinks fit, grant an extension of
time for the lodging of the declaration referred to in sub-section (1).

(4) If a limited liability partnership fails to lodge the declaration referred to
in sub-section (1) within the time or extended time referred to in sub-
sections (2) and (3), the manager shall be punishable under the Act.

(5) A manager who makes a declaration referred to in sub-section (1) (a)
without having reasonable grounds for his opinion, shall be punishable
under the Act; and

(6) Any person who, in connection with a declaration made under this
section, makes a statement or furnishes information (whether directly
or indirectly) to a manager that is false or misleading in a material
particular, when he knows or ought reasonably to have known that the
statement or information is false or misleading in a material particular,
shall be punishable under the Act .

(7) If an offence under this section is committed with an intent to defraud
creditors of the limited liability partnership or for a fraudulent purpose,
the offender shall be punishable under the Act .

29. Power of Registrar to obtain further information.
(1) In order to obtain such information as the Registrar may consider
necessary for the purposes of carrying out the provisions of this Act,
the Registrar may
(a) require any present or former partner or manager of a limited
liability partnership to answer any question in writing which the
Registrar may consider necessary to ask for the purposes
specified in this sub-section; or
(b) summon that person to appear before him or an inspector or
any other public officer whom the Registrar may designate to
answer any such question orally.

(2) The Registrar may further require the person referred to in sub-section
(1) to make such further declaration or supply such further particulars
as the Registrar may require.

(3) Any person who, without lawful excuse, fails to comply with any
summons or requisition of the Registrar under this section shall be

30. Penalty for providing false information to the Registrar.

Any person who makes any statement or furnishes any information to the
Registrar under the provisions of this Act which is false in any material
22
particular or by reason of the omission of any material particular and which
he either knows or has reason to believe is false, shall be punishable under
the Act.

31. Composition of offences.
(1) The Central Government may, compound any offence under this Act
which is prescribed as a compoundable offence by collecting from a
person reasonably suspected of having committed the offence a sum
which may extend to the amount of the maximum fine that is
prescribed for the offence, or a sum prescribed under the Act,
whichever is lower.

(2) The Central Government may make regulations to prescribe the
offences which may be compounded.

32. Destruction of old records.

The Registrar may destroy any document lodged, filed or registered with the
Registrar and which has been microfilmed or converted to electronic form if in
his opinion it is no longer necessary or desirable to retain the document.

33. Enforcement of duty to make returns.

(1) If any person is in default in complying with
(a) any provision of this Act or of any other law which requires the
lodging or filing in any manner with the Registrar of any return,
account or other document or the giving of notice to him of any
matter; or
(b) any request of the Registrar to amend or complete and resubmit
any document or to submit a fresh document, and fails to make
good the default within 14 days after the service on the person of
a notice requiring it to be done, Tribunal may, on application by
the Registrar, make an order directing that person or (if that
person is a corporation) any officer of the body corporate to
make good the default within such time as is specified in the
order.

(2) Any such order may provide that all the costs of and incidental to the
application shall be borne by that person or by any officer of the body
corporate who is responsible for the default if that person is a body
corporate.

(3) Nothing in this section shall limit the operation of any other provision
of this Act or any written law imposing penalties (in respect of any
default referred to in this section) on that person or an officer of a
body corporate if that person is a body corporate.

34. Keeping of limited liability partnership records.

(1) A limited liability partnership shall take reasonable precautions to maintain
the records it is required to maintain under sub-section (1) of section 27
in such a manner so as to
(a) prevent loss or destruction thereof;
23
(b) prevent falsification of entries;
(c) facilitate detection and correction of inaccuracies.

(2) If a default is made in complying with sub-section (1), the manager shall be

Chapter IX
Taxation

35. Income Tax and Capital Gains.

(1) For the purposes of taxation, any activity carried on by a limited
liability partnership with a view to profit shall be treated as carried
on in partnership by its partners (and not by the limited liability
partnership as such) and, accordingly, the property of the limited
liability partnership shall be treated for those purposes as property of
the partners.

(2) Where a limited liability partnership carries on a trade or business with
a view to profit-
(a) assets held by the limited liability partnership shall be
treated for the purposes of tax in respect of capital gains
as held by its partners; and
(b) any dealings by the limited liability partnership shall be
treated for those purposes as dealings by its partners in
partnership (and not by the limited liability partnership as
such), in respect of capital gains accruing to the partners
of the limited liability partnership on the disposal of any of
its assets shall be assessed and charged on them
separately.

Chapter X
Assignment and Transfer of Partnership Rights

36. Partner's transferable interest.

A partner's economic rights in the limited liability partnership are freely
transferable in accordance with section 37. Non-economic rights of a partner
are not transferable unless specified by the limited liability partnership
agreement.

37. Transfer of partner's transferable interest.

A transfer in whole or in part of a partner's transferable interest is permissible
and does not by itself cause the partner's disassociation or a dissolution and
winding up of the limited liability partnership's activities and does not entitle
the assignee to participate in the management or conduct of the limited
liability partnership's activities, nor access information concerning the
limited liability partnership's transactions.

Chapter XI
Investigation

24
38. Investigation of the affairs of a limited liability partnership.
(1) The Central Government may appoint one or more inspectors to
investigate the affairs of an LLP and to report on them in such manner
as it may direct.

(2) The appointment shall be made if, Tribunal, either suo moto, or on an
application received from not less than one fifth partners of LLP, by
order, declares that the affairs of LLP ought to be investigated;

(3) The appointment may be made:-

(a) on the basis of the report of the Registrar to the effect that the
affairs of LLP ought to be investigated;

(b) on the application (alongwith supporting evidence and security
amount as may be prescribed) of not less than one fifth of
total number of partners of LLP;

(c) if LLP, by a resolution passed, declares that the affairs of the
LLP ought to be investigated; and

(d) if in the opinion of the Central Government/Tribunal, there are
circumstances suggesting

(i) that the business of the limited liability
partnership is being conducted with an intent
to defraud its creditors, partners or any other
persons, or otherwise for a fraudulent or
unlawful purpose, or in a manner oppressive or
unfairly prejudicial to some or any of its
partners, or that the limited liability
partnership was formed for any fraudulent or
unlawful purpose;
(ii) that the partners of LLP have been guilty of
fraud, misfeasance or other misconduct
towards the limited liability partnership or
towards any of its partners; or
(iii) that the partners of the limited liability
partnership have not been given all the
information with respect to its affairs which
they might reasonably expect, including
information relating to the remuneration
payable to a manager of the limited liability
partnership.
39. Application by partners to be supported by evidence and power to
call for security.
An application by partners of the limited liability partnership shall be
supported by such evidence as the Tribunal may require for the purpose
of showing that the applicants have good reason for requiring the
investigation; and the Central Government may, before appointing an
25
inspector, require the applicants to give security, for such amount as may
be prescribed, for payment of the costs of the investigation.
40. Firm, body corporate or association not to be appointed as
inspector.
No firm, body corporate or other association shall be appointed as an
inspector.
41. Power of inspectors to carry investigation into affairs of related
entities, etc.
(1) If an inspector appointed by the Central Government to investigate
the affairs of the limited liability partnership thinks it necessary for
the purposes of his investigation to investigate also the affairs of
an entity which has been associated in the past or is presently
associated with the limited liability partnership or any present or
former partner or manager of the limited liability partnership, the
inspector shall have the power to do so and shall report on the
affairs of the other entity or partner or manager, so far as he
thinks that the results of his investigation thereof are relevant to
the investigation of the affairs of the limited liability partnership.

(2) In the case of any entity or partner or manager referred to in sub-
section (1), the inspector shall not exercise his power of
investigating into, and reporting on, its or his affairs without first
having obtained the prior approval of the Central Government
thereto:

Provided that before according approval under this sub-section,
the Central Government shall give the entity or partner or
manager a reasonable opportunity to show cause why such
approval should not be accorded.

42. Production of documents and evidence.
(1) It shall be the duty of the manager and partners of the limited
liability partnership, -
(a) to preserve and to produce to an inspector or any person
authorised by him in this behalf with the previous approval
of the Central Government, all books and papers of, or
relating to, the limited liability partnership or, as the case
may be, or of relating to the other entity, which are in their
custody or power; and
(b) otherwise to give to the inspector all assistance in
connection with the investigation which they are reasonably
able to give.

(2) The inspector may, with the previous approval of the Central
Government, require any entity other than an entity referred to in
sub-section (1) to furnish such information to, or produce such
books and papers before, him or any person authorised by him in
this behalf with the previous approval of that Government as he
may consider necessary if the furnishing of such information or the
26
production of such books and papers is relevant or necessary for
the purposes of his investigation.

(3) The inspector may keep in his custody any books and papers
produced under sub-section (1) or sub-section (2) for six months
and thereafter shall return the same to the limited liability
partnership, other entity or individual by whom or on whose behalf
the books and papers are produced:

Provided that the inspector may call for the books and papers if
they are needed again:

Provided further that if certified copies of the books and papers
produced under sub-section (2) are furnished to the inspector, he
shall return those books and papers to the entity or person
concerned.

(4) An inspector may examine on oath
(a) any of the persons referred to in sub-section (1) ; and
(b) with the previous approval of the Central Government, any
other person, in relation to the affairs of the LLP, as the
case may be ; and may administer an oath accordingly and
for that purpose may require any of those persons to
appear before him personally.

(5) If any person fails without reasonable cause or refuses
(a) to produce to an inspector or any person authorised by him
in this behalf with the previous approval of the Central
Government any book or paper which it is his duty under
sub-section (1) or sub-section (2) to produce ; or
(b) to furnish any information which it is his duty under sub-
section (2) to furnish ; or
(c) to appear before the inspector personally when required to
do so under sub-section (4) or to answer any question
which is put to him by the inspector in pursuance of that
sub-section ; or
(d) to sign the notes of any examination,

he shall be punishable under the Act.

(6) Notes of any examination under sub-section (4) shall be taken
down in writing and shall be read over to or by, and signed by, the
person examined, and may thereafter be used in evidence against
him.

43. Seizure of documents by inspector.
(1) Where in the course of investigation, the inspector has reasonable
ground to believe that the books and papers of, or relating to,
limited liability partnership or other entity or partner or manager
of such limited liability partnership may be destroyed, mutilated,
altered, falsified or secreted, the inspector may make an
application to the Magistrate of First Class or, as the case may be,
27
the Metropolitan Magistrate, having jurisdiction for an order for the
seizure of such books and papers.

(2) After considering the application and hearing the inspector, if
necessary, the Magistrate may by order authorise the inspector
(a) to enter, with such assistance, as may be required, the place
or places where such books and papers are kept ;
(b) to search that place or those places in the manner specified in
the order ; and
(c) to seize books and papers he considers necessary for the
purposes of his investigation.

(3) The inspector shall keep in his custody the books and papers
seized under this section for such period not later than the
conclusion of the investigation as he considers necessary and
thereafter shall return the same to the concerned entity or person
from whose custody or power they were seized and inform the
Magistrate of such return:

Provided that the inspector may, before returning such books and
papers as aforesaid, place identification marks on them or any part
thereof.

(4) Save as otherwise provided in this section, every search or seizure
made under this section shall be carried out in accordance with the
provisions of the Code of Criminal Procedure, 1898, relating to
searches or seizures made under that Code.

44. Inspectors' report.
(1) The inspectors may, and if so directed by the Central Government
shall, make interim reports to that Government, and on the
conclusion of the investigation, shall make a final report to the
Central Government. Any such report shall be written or printed,
as the Central Government may direct.

(2) The Central Government
(a) shall forward a copy of any report (other than an interim
report) made by the inspectors to the limited liability partnership
at its registered office, and also to any other entity or person dealt
with or related to the report;
(b) may, if it thinks fit, furnish a copy thereof, on request and on
payment of the prescribed fee, to any person or entity related to
or affected by the report;
(c) may also cause the report to be published.
45. Prosecution.
If, from the report it appears to the Central Government that any person
in relation to the limited liability partnership or in relation to any other
entity whose affairs have been investigated, been guilty of any offence for
which he is liable, the Central Government may, after taking such legal
advice as it thinks fit, prosecute such person(s) for the offence; and it
shall be the duty of all partners, manager and other employees and
28
agents of the limited liability partnership or other entity, as the case may
be, to give the Central Government all assistance in connection with the
prosecution which they are reasonably able to give.
46. Application for winding up of limited liability partnership or other
entity.

If any such limited liability partnership or other entity is liable to be
wound up under this Act or any other legislation for the time being in
force, and it appears to the Central Government from any such report as
aforesaid that it is expedient to do so by reason of any such
circumstances as are referred to in sub-clause (i) or (ii) of clause (d) of
sub-section (3) of section 38, the Central Government may, unless the
limited liability partnership or entity is already being wound up by the
Tribunal cause to be presented to the Tribunal by any person authorised
by the Central Government in this behalf, a petition for the winding up of
the limited liability partnership or entity on the ground that it is just and
equitable that it should be wound up.

47. Proceedings for recovery of damages or property.

(1) If from any such report as aforesaid, it appears to the Central
Government that proceedings ought, in the public interest, to be
brought by the limited liability partnership or any entity whose
affairs have been investigated,
(a) for the recovery of damages in respect of any fraud,
misfeasance or other misconduct in connection with the promotion
or formation, or the management of the affairs, of such li mited
liability partnership or such other entity; or
(b) for the recovery of any property of such limited liability or such
other entity, which has been misapplied or wrongfully retained;
the Central Government may itself bring proceedings for that
purpose in the name of such limited liability partnership or such
other entity.

(2) The Central Government shall indemnify such limited liability
partnership or such other entity against any costs or expenses
incurred by it in, or in connection with, any proceedings brought
by virtue of sub-section (1).

48. Expenses of investigation.

(1) The expenses of and incidental to an investigation by an inspector
appointed by the Central Government under this Act shall be
defrayed in the first instance by the Central Government; but the
following persons shall, to the extent mentioned below, be liable to
reimburse the Central Government in respect of such expenses:
(a) any person who is convicted on a prosecution, or who is
ordered to pay damages or restore any property in
proceedings brought by virtue of section 47, may, in the
same proceedings, be ordered to pay the said expenses to
such extent as may be specified by the Tribunal convicting
29
such person, or ordering him to pay such damages or
restore such property, as the case may be;
(b) any entity in whose name proceedings are brought as
aforesaid shall be liable, to the extent of the amount or
value of any sums or property recovered by it as a result of
the proceedings ; and
(c) unless, as a result of the investigation, a prosecution is
instituted in pursuance of section 45,
(i) any entity, a partner or manager or any other
person dealt with by the report of the inspector shall
be liable to reimburse the Central Government in
respect of the whole of the expenses, unless and
except in so far as, the Central Government
otherwise directs; and
(ii) the applicants for the investigation, where the
inspector was appointed in pursuance of the
provisions of sub-section (2) of section 38, shall be
liable to such extent, if any, as the Central
Government may direct.

(2) Any amount for which a limited liability partnership or other entity
is liable by virtue of clause (b) of sub-section (1) shall be a first
charge on the sums or property mentioned in that clause.
(3) The amount of expenses in respect of which any limited liability
partnership, entity, a partner or manager or any other person is
liable under sub-clause (i) of clause (c) of sub-section (1) to
reimburse the Central Government shall be recoverable as an
arrear of land revenue.

(4) For the purposes of this section, any costs or expenses incurred by
the Central Government or in connection with proceedings brought
by virtue of section 47 (including expenses incurred by virtue of
sub-section (2) thereof) shall be treated as expenses of the
investigation giving rise to the proceedings.

49. Inspectors' report to be evidence.
A copy of any report of any inspector or inspectors appointed under this
Act, authenticated in such manner, if any, as may be prescribed, shall be
admissible in any legal proceeding as evidence of the opinion of the
inspector or inspectors in relation to any matter contained in the report.

Chapter XII
Conversion to Limited Liability Partnership

50. Conversion from firm to limited liability partnership.
The provisions of the Second Schedule shall apply to the conversion from
firm to a limited liability partnership.

51. Conversion from private company to limited liability partnership.
The provisions of the Third Schedule shall apply to the conversion from
private company and unlisted public company to a limited liability
partnership.

30
52. Conversion from unlisted public company to limited liability
partnership.
The provisions of the Fourth Schedule shall apply to the conversion from
unlisted public company to a limited liability partnership.

Chapter XIII
Foreign Limited Liability Partnership

53. Foreign Limited Liability Partnership.
Regulations shall make provision regarding a foreign limited liability
partnership.

Chapter XIV
Amalgamation, Merger and Demerger of Limited Liability Partnerships

54. Amalgamation, Merger and Demerger of Limited Liability
Partnerships.
Regulations shall make provision about the amalgamation, merger and
demerger of limited liability partnerships.

Chapter XV
Winding Up and Dissolution

55. Winding Up and Dissolution.

(1) The winding up of a limited liability partnership may be either
voluntary or by the Tribunal.

(2) Regulations shall make provision about the winding up and dissolution
of limited liability partnerships.

(2) Regulations may make other provisions about the winding up and
dissolution of limited liability partnerships, and provision about the
winding up and dissolution of foreign limited liability partnerships.

Chapter XVI
Miscellaneous

56. Business Transactions of Partner with Partnership.

A partner may lend money to and transact other business with the limited
liability partnership and has the same rights and obligations with respect to
the loan or other transactions as a person who is not a partner.

57. Application of Company Law etc.

The Central Government may direct that any of the provisions of the
Companies Act, 1956 or any other enactment as may be prescribed: -

(a) shall apply to any limited liability partnership; or
(b) shall apply to any limited liability partnership with such
exception, modification and adaptation as may be prescribed.
31

58. Electronic filing service.

(1) The Registrar may require any document to be lodged under this Act
to be filed electronically with the Registrar using the service provided
by the Registrar whereby documents under this Act may be filed with
or submitted to the Registrar electronically.

(2) Where any document is required to be filed with or submitted to the
Registrar electronically by any person using the service referred to in
sub-section (1), the Registrar may allow the document to be filed or
submitted by a prescribed person on behalf of the first-mentioned
person, subject to such conditions as may be imposed from time to
time by the Registrar on the prescribed person.

(3) Where the Registrar provides a service whereby documents required
under this Act may be filed electronically with the Registrar, the
Registrar and its officers or employees shall not be liable for any loss
or damage suffered by any person by reason of any error or omission
of whatever nature or however caused appearing in any document
obtained by any person under the service, if the error or omission
(a) is made in good faith and in the ordinary course of the discharge of
the duties of such officers or employees; or
(b) has occurred or arisen as a result of any defect or breakdown in
the service or in any of the equipment used for the service.

(4) A copy of or an extract from any document electronically filed with or
submitted to the Registrar using the service referred to in sub-section
(1) which is supplied or issued by the Registrar and certified through
digital signature to be a true copy of or extract from such document
shall, in any proceedings, be admissible in evidence as of equal validity
with the original document.

(5) Any information supplied by the Registrar that is certified by the
Registrar through digital signature to be a true extract from any
document filed or lodged with or submitted to the Registrar using the
service referred to in sub-section (1) shall, in any proceedings, be
admissible in evidence and be presumed, unless evidence to the
contrary is adduced, to be a true extract from such document.

(6) Sub-sections (4) and (5) shall have effect notwithstanding the
provisions of any other written law.

59. Penalty.

Penalty for the violation of various provisions of this Act shall be as specified
in the Fifth Schedule.

60. Application of other laws not barred.

The provisions of this Act shall be in addition to, and not in derogation of, the
provisions of any other law for the time being in force.

32
61. Power to make Regulations.

(1) The Central Government may, by notification, make regulations consistent
with this Act in order to carry out the purposes of the Act.

(2) Every regulation made under this Act shall be laid, as soon as may be
after it is made, before each House of Parliament, while it is in session, for
a total period of thirty days which may be comprised in one session or in
two or more successive sessions, and if, before the expiry of the session
immediately following the session or the successive sessions aforesaid,
both Houses agree in making any modification in the regulation, or both
Houses agree that the regulation should not be made, the regulation shall
thereafter have effect only in such modified form or be of no effect, as the
case may be; so, however that any such modification shall be without
prejudice to the validity of anything previously done under that
regulation.

62. Power to remove difficulties.

(1) If any difficulty arises in giving effect to the provisions of this Act,
the Central Government may, by order published in the Official
Gazette, make such provisions, not inconsistent with the provisions of
this Act as may appear to it to be necessary for removing the difficulty.

(2) Every order made under this section shall be laid, as soon as may be after
it is made, before each House of Parliament.

63. Power of Registrar to strike defunct limited liability partnership off
register.
(1) Where the Registrar has reasonable cause to believe that a limited liability
partnership is not carrying on business or in operation, he shall write a letter
to the limited liability partnership inquiring whether the limited liability
partnership is carrying on business or in operation.
(2) If the Registrar does not within one month of sending the letter receive any
answer thereto, he shall, within fourteen days after the expiry of the month,
send to the limited liability partnership by post a registered letter referring to
the first letter, and stating that no answer thereto has been received and
that, if an answer is not received to the second letter within one month from
the date thereof, a notice will be published in the Official Gazette with a view
to striking the name of the limited liability partnership off the register.
(3) If the Registrar either receives an answer from the limited liability partnership
to the effect that it is not carrying on business or in operation, or does not
within one month after sending the second letter receive any answer, he may
publish in the Official Gazette, and send to the limited liability partnership by
registered post, a notice that, at the expiration of three months from the date
of that notice, the name of the limited liability partnership mentioned therein
will, unless cause is shown to the contrary, be struck off the register and the
limited liability partnership will be dissolved.
(4) If, in any case where a limited liability partnership is being wound-up, the
Registrar has reasonable cause to believe either that no liquidator is acting, or
that the affairs of the limited liability partnership have been completely
33
wound-up, and any returns required to be made by the liquidator have not
been made for a period of six consecutive months, the Registrar shall publish
in the Official Gazette and send to the limited liability partnership or the
liquidator, if any, a like notice as is provided in sub-section (3).
(5) At the expiry of the time mentioned in the notice referred to in sub-section
(3) or (4), the Registrar may, unless cause to the contrary is previously
shown by the limited liability partnership, strike its name off the register, and
shall publish notice thereof in the Official Gazette; and on the publication in
the Official Gazette of this notice, the limited liability partnership shall stand
dissolved.
(6) If a limited liability partnership, or any partner, manager or creditor thereof,
feels aggrieved by the limited liability partnership having been struck off the
register, the Tribunal, on an application made by the limited liability
partnership, partner, manager or creditor before the expiry of twenty years
from the publication in the Official Gazette of the notice aforesaid, may, if
satisfied that the limited liability partnership was, at the time of the striking
off, carrying on business or in operation or otherwise that it is just that the
limited liability partnership be restored to the register, order the name of the
limited liability partnership to be restored to the register; and the Tribunal
may, by the order, give such directions and make such provisions as seem
just for placing the limited liability partnership and all other persons in the
same position as nearly as may be as if the name of the limited liability
partnership had not been struck off.
(7) Upon a certified copy of the order under sub-section (6) being delivered to
the Registrar for registration, the limited liability partnership shall be deemed
to have continued in existence as if its name had not been struck off.

64. Offences by limited liability partnerships.

Where an offence under this Act committed by a limited liability partnership is
proved
(a) to have been committed with the consent or connivance of a
partner(s) or manager of the limited liability partnership; or
(b) to be attributable to any neglect on the part of the partner(s) or
manager of that limited liability partnership, the partner(s) or manager
of the limited liability partnership (as the case may be) as well as that
limited liability partnership shall be guilty of the offence and shall be
liable to be proceeded against and punished accordingly.

65. Jurisdiction of the Tribunal.

Notwithstanding any provision to the contrary in any Act for the time being in
force, the Tribunal shall have jurisdiction to try any offence under this Act and
shall have power to impose the penalty or punishment in respect of the
offence.

66. General penalties.

Any person guilty of an offence under this Act for which no penalty is
expressly provided shall be liable to a fine which may extend to a sum as may
be prescribed under the Act.
34
FIRST SCHEDULE DEFAULT PROVISIONS FOR LIMITED LIABILITY
PARTNERSHIPS

1. The mutual rights and duties of the partners and the mutual rights and duties
of the limited liability partnership and the partners shall be determined,
subject to the terms of any limited liability partnership agreement, by the
provisions in this Schedule.
2. All the partners of a limited liability partnership are entitled to share equally
in the capital, profits and losses of the limited liability partnership.
3. The limited liability partnership must indemnify each partner in respect of
payments made and personal liabilities incurred by him
(a) in the ordinary and proper conduct of the business of the limited liability
partnership; or
(b) in or about anything necessarily done for the preservation of the business
or property of the limited liability partnership.
4. Every partner may take part in the management of the limited liability
partnership.
5. No partner shall be entitled to remuneration for acting in the business or
management of the limited liability partnership.
6. No person may be introduced as a partner without the consent of all existing
partners.
7. Any matter or issue relating to the limited liability partnership shall be
decided by resolution passed by a majority in number of the partners, and for
this purpose, each partner shall have one vote. However, no change may be
made in the nature of business of the limited liability partnership without the
consent of all the members.
8. Each partner shall render true accounts and full information of all things
affecting the limited liability partnership to any partner or his legal
representatives.
9. If a partner, without the consent of the limited liability partnership, carries on
any business of the same nature as and competing with the limited liability
partnership, he must account for and pay over to the limited liability
partnership all profits made by him in that business.
10. Every partner must account to the limited liability partnership for any benefit
derived by him without the consent of the limited liability partnership from
any transaction concerning the limited liability partnership, or from any use
by him of the property, name or any business connection of the limited
liability partnership.
11. No majority of the partners can expel any partner unless a power to do so has
been conferred by express agreement between the partners.

35
SECOND SCHEDULE - CONVERSION FROM FIRM TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) A firm may convert to a limited liability partnership by complying with
the requirements as to the conversion set out in this Schedule.

(2) Upon such conversion, the partners of the firm shall be bound by the
provisions of this schedule that are applicable to them.

(3) The Central Government may, by order published in the Gazette,
amend, add to or vary the provisions of this Schedule.

(4) In this paragraph, convert, in relation to a firm converting to a
limited liability partnership, means a transfer of the property, assets,
interests, rights, privileges, liabilities, obligations and the undertaking
of the firm to the limited liability partnership in accordance with the
provisions of this Schedule.

2. Eligibility for conversion.

A firm may apply to convert to a limited liability partnership in accordance
with this Schedule if and only if the partners of the limited liability partnership
to which the firm is to be converted, comprises all the partners of the firm
and no one else.

3. Statements to be lodged.

A firm may apply to convert to a limited liability partnership by lodging with
the Registrar
(a) a statement by all of its partners in such medium and form as the
Registrar may prescribe containing the following particulars:
(i) the name and registration number (if applicable) of the firm; and
(ii) the date on which the firm was registered under the Partnership Act,
1932 or any written law (if applicable); and
(b) incorporation document and statement referred to in section 8.

4. Registration of conversion.

On receiving the documents referred to in paragraph 3, the Registrar shall
subject to the provisions of this Act, register the documents and issue a
certificate of registration in such form as the Registrar may determine stating
that the limited liability partnership is, on and from the date specified in the
certificate, registered under this Act.

5. Registrar may refuse to register.

(1) Nothing in this Schedule shall be construed to require the Registrar to
register any limited liability partnership if he is not satisfied with the
particulars or other information furnished under the provisions of this
Act.
36

(2) The Registrar may, in any particular case, require the documents
referred to in paragraph 3 to be verified in such manner as the Registrar
considers fit.

6. Effect of registration.

On and from the date of registration specified in the certificate of registration
issued under paragraph 4
(a) there shall be a limited liability partnership by the name specified in the
certificate of registration registered under this Act;
(b) all movable and immovable property vested in the firm, all assets,
interests, rights, privileges, liabilities, obligations relating to the firm and
the whole of the undertaking of the firm shall be transferred to and shall
vest in the limited liability partnership without further assurance, act or
deed; and
(c) the firm shall be deemed to be dissolved and if earlier registered under
the Partnership Act, 1932 removed from the records maintained under
that Act.

7. Registration in relation to property.

If any property to which paragraph 6 (b) applies is registered with any
authority, the limited liability partnership shall as soon as practicable after the
date of registration, take all necessary steps as required by the relevant
authority to notify the authority of the conversion and of the particulars of the
limited liability partnership in such medium and form as the authority may
prescribe.

8. Pending proceedings.

All proceedings by or against the firm which are pending on the date of
registration may be continued, completed and enforced by or against the

9. Continuance of conviction, ruling, order or judgment.

Any conviction, ruling, order or judgment in favour of or against the firm may
be enforced by or against the limited liability partnership.

10. Existing agreements.

Every agreement to which the firm was a party immediately before the date
of registration, whether or not of such nature that the rights and liabilities
thereunder could be assigned, shall have effect as from that day as if
(a) the limited liability partnership were a party to such an agreement instead
of the firm; and
(b) for any reference to the firm, there were substituted in respect of
anything to be done on or after the date of registration a reference to the

37
11. Existing contracts, etc.
All deeds, contracts, schemes, bonds, agreements, applications, instruments
and arrangements subsisting immediately before the date of registration
relating to the firm or to which the firm is a party, shall continue in force on
and after that date as if they relate to the limited liability partnership and
shall be enforceable by or against the limited liability partnership as if the
limited liability partnership were named therein or were a party thereto
instead of the firm.

12. Continuance of employment.
Every contract of employment to which paragraph 10 or 11 applies shall
continue in force on or after the date of registration as if the limited liability
partnership were the employer thereunder instead of the firm.

13. Existing appointment, authority or power.
(1) Every appointment of the firm in any role or capacity which is in force
immediately before the date of registration shall take effect and
operate from that date as if the limited liability partnership were
appointed.
(2) Any authority or power conferred on the firm which is in force
immediately before the date of registration shall take effect and
operate from that date as if it were conferred on the limited liability
partnership.

14. Application of paragraphs 6 to 13.
Paragraphs 6 to 13 shall not apply to any approval, permit or licence issued
under any written law to the firm which is in force immediately before the
date of registration of the limited liability partnership.

15. Partner liable for liabilities and obligations of firm before conversion.

(1) Notwithstanding paragraphs 6 to 13, every partner of a firm that has
converted to a limited liability partnership shall continue to be
personally liable (jointly and severally with the limited liability
partnership) for the liabilities and obligations of the firm which were
incurred prior to the conversion or which arose from any contract
entered into prior to the conversion.

(2) If any such partner discharges any liability or obligation referred to in
sub-paragraph (1), he shall be entitled (subject to any agreement with
the limited liability partnership to the contrary) to be fully indemnified
by the limited liability partnership in respect of such liability or
obligation.

16. Notice of conversion in correspondence.

(1) The limited liability partnership shall ensure that for a period of 12
months commencing not later than 14 days after the date of
registration, every official correspondence of the limited liability
partnership bears the following:
(a) a statement that it was, as from the date of registration, converted
from a firm to a limited liability partnership; and
38
(b) the name and registration number (if applicable) of the firm from
which it was converted.

(2) Any limited liability partnership which contravenes sub-paragraph (1)
39
THIRD SCHEDULE

CONVERSION FROM PRIVATE COMPANY TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) In this Schedule
(a) "company" means a private company as defined under Section 3
(1) (iii) of the Companies Act, 1956;
(b) "convert" in relation to a private company converting to a limited
liability partnership, means a transfer of the property, assets,
interests, rights, privileges, liabilities, obligations and the
undertaking of the private company to the limited liability
partnership in accordance with this Schedule.

(2) A private company may convert to a limited liability partnership by
complying with the requirements as to the conversion set out in this
Schedule.

(3) Upon such conversion, the private company, its shareholders, the
limited liability partnership to which the private company has
converted and the partners of that limited liability partnership shall be
bound by the provisions of this Schedule that are applicable to them.


A company may apply to convert to a limited liability partnership in
accordance with this Schedule if and only if
(a) there is no security interest in its assets subsisting or in force at the time
of application; and
(b) the partners of the limited liability partnership to which it converts
comprises all the shareholders of the company and no one else.

A company may apply to convert to a limited liability partnership by lodging
with the Registrar
(a) a statement by all its shareholders in such medium and form as the
(i) the name and registration number of the company; and
(ii) the date on which the company was incorporated under the
Companies Act, 1956; and


40

5. Registrar may refuse to Register.
Act.

considers fit.

On and from the date of registration specified in the notice of registration
(a) there shall be a limited liability partnership by the name specified in the
certificate of registration registered under this Act;
(b) all movable and immovable property vested in the company, all assets,
interests, rights, privileges, liabilities, obligations relating to the
company and the whole of the undertaking of the company shall be
transferred to and shall vest in the limited liability partners hip without
further assurance, act or deed; and
(c) the company shall be deemed to be dissolved and removed from the
records of the Registrar of Companies.

determine.

All proceedings by or against the company which are pending on the date of

Any conviction, ruling, order or judgment in favour of or against the company
may be enforced by or against the limited liability partnership.

Every agreement to which the company was a party immediately before the
date of registration, whether or not of such nature that the rights and
liabilities thereunder could be assigned, shall have effect as from that day as
if
(a) the limited liability partnership were a party to such an agreement instead
of the company; and
(b) for any reference to the company, there were substituted in respect of
anything to be done on or after the date of registration a reference to
the limited liability partnership.
41

relating to the company or to which the company is a party shall continue in
force on and after that date as if they relate to the limited liability partnership
and shall be enforceable by or against the limited liability partnership as if the
instead of the company.

partnership were the employer thereunder instead of the company.

(1) Every appointment of the company in any role or capacity which is in
force immediately before the date of registration shall take effect and
appointed.
(2) Any authority or power conferred on the company which is in force
immediately before the date of registration shall take effect and operate
from that date as if it were conferred on the limited liability partnership.

under any written law to the company which is in force immediately before
the date of registration of the limited liability partnership.

from a company to a limited liability partnership; and
(b) the name and registration number of the company from which it was
converted.

42
FOURTH SCHEDULE

CONVERSION FROM UNLISTED PUBLIC COMPANY TO LIMITED LIABILITY
PARTNERSHIP

1. Interpretation.

(1) In this Schedule
(a) "company" means an unlisted public company;
(b) "convert" in relation to a company converting to a limited liability
partnership, means a transfer of the property, assets, interests,
rights, privileges, liabilities, obligations and the undertaking of the
company to the limited liability partnership in accordance with this
Schedule;
(c) listed company means a listed company as defined in the SEBI
(Disclosure & Investor Protection) Guidelines, 2000.
(d) unlisted public company, means a company which is not a listed
company.

(2) A company may convert to a limited liability partnership by complying
with the requirements as to the conversion set out in this Schedule.

(3) Upon such conversion, the company, its shareholders, the limited
liability partnership to which the company has converted and the
partners of that limited liability partnership shall be bound by the
provisions of this Schedule that are applicable to them.


A company may apply to convert to a limited liability partnership in
accordance with this Schedule if and only if
(a) there is no security interest in its assets subsisting or in force at the time
of application; and
(b) the partners of the limited liability partnership to which it converts
comprises all the shareholders of the company and no one else.

A company may apply to convert to a limited liability partnership by lodging
with the Registrar
(a) a statement by all its shareholders in such medium and form as the
(ii) the date on which the company was incorporated under the
Companies Act, 1956; and

43

5. Registrar may refuse to Register.
Act.

considers fit.

On and from the date of registration specified in the notice of registration
(a) there shall be a limited liability partnership by the name specified in
the certificate of registration registered under this Act;
(b) all movable and immovable property vested in the company, all
assets, interests, rights, privileges, liabilities, obligations relating to
the company and the whole of the undertaking of the company shall
be transferred to and shall vest in the limited liability partnership
without further assurance, act or deed; and
(c) the company shall be deemed to be dissolved and removed from the
records of the Registrar of Companies.

determine.

All proceedings by or against the company which are pending on the date of

Any conviction, ruling, order or judgment in favour of or against the company

Every agreement to which the company was a party immediately before the
date of registration, whether or not of such nature that the rights and
liabilities thereunder could be assigned, shall have effect as from that day as
if
(a) the limited liability partnership were a party to such an agreement
instead of the company; and
(b) for any reference to the company, there were substituted in respect of
anything to be done on or after the date of registration a reference to
44

relating to the company or to which the company is a party shall continue in
force on and after that date as if they relate to the limited liability partnership
and shall be enforceable by or against the limited liability partnership as if the
instead of the company.


(1) Every appointment of the company in any role or capacity which is in
force immediately before the date of registration shall take effect and
appointed.
(2) Any authority or power conferred on the company which is in force
immediately before the date of registration shall take effect and operate
from that date as if it were conferred on the limited liability partnership.

under any written law to the company which is in force immediately before
the date of registration of the limited liability partnership.

from a company to a limited liability partnership; and
(b) the name and registration number of the company from which it
was converted.

45
FIFTH SCHEDULE
PENALTIES
Section General nature of
offence
Penalty Daily default
fine (where
applicable)
7 (1) Non-compliance with the
provision relating to
appointment of Manager
Fine which may
extend to Rupees
Five Lakh subject to
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
provision relating to filing
of particulars, consent
and change of manager.
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees Fifty.
8 (3) Making false statement
relating to incorporation
Imprisonment for a
term which may
extend to two years
and also with a fine
which may extend
to Rupees Five Lakh
subject to a
minimum of Rupees
Ten Thousand.

provisions relating change
of registered office
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees Fifty.
direction of the Central
Government for change of
name
Fine which may
extend to Rupees
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
provision relating to
Fine which may
extend to Rupees
Which may
extend to
46
publication of name and
limited liability
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.
Rupees Five
Hundred
subject to a
minimum of
Rupees Fifty.
provisions relating to
registration of changes in
partners
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees Fifty.
21 (2) Carrying on business with
fraudulent purposes
Imprisonment for a
term which may
extend to two years
and also with fine
which may extend
to Rupees Five Lakh
subject to a
minimum of Rupees
Fifty Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
27 (3) Failure to maintain
records
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.

28 (4) Failure to lodge the
declaration of solvency
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
28 (5) Making declaration
without reasonable
grounds
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.

28 (6) Furnishing false or
misleading information to
the manager
Fine which may
extend to Rupees
One Lakh subject to
a minimum of

47
Rupees Ten
Thousand.
28 (7) Declaration made with an
intent to defraud creditors
Fine which may
extend to Rupees
a minimum of
Rupees Fifty
Thousand.

29 (3) Failure to comply with any
summons or requisition of
the Registrar
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
30 Providing false
information to the
Registrar
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.

31 Composition of offence
34 (2) Failure to take reasonable
precautions to maintain
the records
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.

42 (5) Non-Compliance of
production of documents
and evidence
Fine which may
extend to Rupees
Twenty Five
Thousand subject to
a minimum of
Rupees Two
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
66 General Penalties Rupees Five Lakhs. Rupees One
Thousand.
Second
Schedule

Para 16 Non-Compliance with Fine which may Which may
48
notice of conversion in
correspondence
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
Third
Schedule

Para 15 Non-Compliance with
correspondence
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.
Fourth
Schedule

Para 15 Non-Compliance with
correspondence
Fine which may
extend to Rupees
One Lakh subject to
a minimum of
Rupees Ten
Thousand.
Which may
extend to
Rupees Five
Hundred
subject to a
minimum of
Rupees fifty.

LLP REGULATIONS.

49

CHAPTER 2: LIMITED LIABILITY PARTNERSHIP LAWS IN THE UNITED
STATES OF AMERICA

2.0 Introduction
A limited liability partnership in United States of America is considered as a special
type of partnership that requires a special filing with the State where the partners
operate. This partnership form offers all partners the right to participate in the
management and the operation of a partnership without subjecting themselves to
unlimited personal liability, as is the case in general partnerships
8
. However, if the
special laws governing it are not precisely followed, they can be held as general
partnership in a court of law. Moreover, i f the partners want, the old partnership
agreement can continue to govern the newly formed LLP. A partnership, especially a
limited liability partnership, transacting business in any state other than the state of
domicile is required to register with the Secretary of the foreign state as a foreign
partnership
9
.

The idea for the LLP has been credited to a twenty-odd person law firm from
Lubbock, Texas
10
. Their idea, which led to the enactment of the first LLP statute in
Texas in 1991, was a reaction to the legal fallout from an economic calamity. The
LLP was a direct outgrowth of the collapse of real estate and energy prices in the late
1980s, and the concomitant disaster that befell Texass banks and savings and loan
associations. Texas led the nation in bank and savings and loans failures during the
1980s
11
.

The US Federal Deposit Insurance Corporation (FDIC), having made huge payouts
to depositors, did its best to recover some of its losses from those who were (or
might arguably be) legally responsible for the losses. Of course, directors and
officers of the failed financial institutions were pursued, but their personal assets
were dwarfed by the size of the losses. Naturally, the FDIC looked in all directions for
defendants who could provide more meaningful compensation for its losses, and its
gaze fell on accountants and lawyers who had provided professional services to the
failed institutions. Large accounting firms and law firms that had a relationship with
the failed institutions were particularly inviting targets because, not only would they
have liability insurance, but the personal wealth of their many partners would be
available to help satisfy any judgment.

If the FDIC could show that one member of a professional firm was guilty of wrongful
conduct in their professional relationship with a failed financial institution, all
members of the firm would be personally liable. This gave the FDIC considerable
leverage in its negotiations with firms and their insurers where there was substantial
evidence that one or more members of the firm had fallen short in discharging their
professional duties or were parties to outright fraud.

The enactment of Texas legislation allowed members of certain professions who were
carrying on business as ordinary partnerships to register as LLPs. Once a firm was

8
Margaret Bartschi, Foundations of Business Organizations for Paralegals, p. 3.
9
Angela Schneeman, The Laws of Corporations, and other Business Organizations, p. 42.
10
Hamilton 1995 at 1073.
11
Hamilton 1995 at 1069.
50
registered as an LLP, each partner was shielded from personal liability claims against
the firm arising from any future malpractice of other members of the firm.

The Texas model for LLP legislation has two key characteristics. Firstly, its liability
shield only covers is professional malpractice claims. Secondly, the liability shield
does not protect a professional for personal malpractice, that is, where they are
personally involved in the wrongful conduct or have direct supervisory responsibility
over those who are personally involved in the wrongful conduct.

After Texas passed its LLP legislation, most other states quickly followed and today
all 51 states have passed laws that permit the formation of an LLP
12
. The following
table provides a birds eye view of the Statutes that contain provisions dealing with
the Limited Liability Partnerships in various US States.

S. No. Name of the State Statute
1 Alabama

Title 10 - Corporations, Partnerships and
Associations of the Code of Alabama 1975.
2 Alaska

Title 32 Partnership of the Alaska Statutes
2004.
3 Arizona

Title 29 Partnership of the Arizona Revised
Statutes.
4 Arkansas

Chapter 42 - Uniform Partnership Act of the
Arkansas Code.
5 California

Article 10 (Sec. 16951-16962) of Chapter 5
(Uniform Partnership Act of 1994) of the
California Corporations Code.
6 Colorado

Title 7 - Corporations and Associations of the
Colorado Revised Statutes.
7 Connecticut Title 34 of the Connecticut General Statutes.
8 Delaware

Chapter XV - Delaware Revised Uniform
Partnership Act of Title 6 on Commerce and
Trade of the Delaware Code.
9 District of Columbia

Subchapter X - Limited Liability Partnership of
Chapter 1 - Uniform partnerships of Division V -
Local Business Affairs of Title 33 Partnerships
of the District of Columbia Code 2001.
10 Florida

Part II - Revised Uniform Partnership Act of
Chapter 620 Partnership Laws of Title 36 of the
Florida Statutes 2005.
11 Georgia

Chapter 14 - Georgia Business Corporation Code
of the Georgia Code.
12 Hawaii

Part IV - Uniform Partnership Act of Chapter 25
Partnerships of the Hawaii Revised Statutes.
13 Idaho

Part 10 - Limited Liability Partnership of Chapter
3 - Uniform Partnership Act of Title 53
Partnership of the Idaho statutes.
14 Illinois

Uniform Partnership Act, Chapter 805 - Business
Organizations of the Illinois Compiled Statutes.

12
See Alan R. Bromberg & Larry E. Ribstein, Bromberg & Ribstein On Limited Liability Partnerships, The
Revised Uniform Partnership Act, And The Uniform Limited Partnership Act (2001) 15 (Aspen 2003)
(hereinafter Bromberg & Ribstein Limited Liability). Some states, including New York, California, Nevada
and Oregon, only offer LLP status to professional firms.
51
15 Indiana

Chapter 1 - Uniform Partnership Act of Article 4
Partnerships of Title 23 - Business and Other
Associations of the Indiana Code.
16 Iowa

Chapter 486A - Uniform Partnership Act of Article
10 - Limited Liability Partnership of Subtitle 1
Partnerships of Title XII - Business Entities of the
IOWA Code 2005.
17 Kansas

Article 10 - Limited Liability Partnership of
Chapter 56a - Kansas Uniform Partnership Act of
the Kansas Statutes.
18 Kentucky

Chapter 362 of the Kentucky Revised Statutes.
19 Louisiana

Title 9 - Civil code-ancillaries (RS 9:3431) of the
Louisiana Revised Statutes.
20 Maine

Chapter 15: Limited Liability Partnerships of Title
31: Partnerships and Associations of the Maine
Revised Statutes.
21 Maryland

Title 9A - Maryland Revised Uniform Partnership
Act of the Maryland Code.
22 Massachusetts

Chapter 108A of the General Laws of
Massachusetts.
23 Michigan

Chapter 449 Partnerships of the Michigan
Compiled Laws.
24 Minnesota

Chapter 323A: Uniform Partnership Act of 1994
of the Minnesota Statutes.
25 Mississippi

Chapter 12: Partnerships of Title 79
Corporations, Associations, And Partnerships of
the Mississippi Code.
26 Missouri

Chapter 358 - Uniform Partnership Law of the
Missouri Revised Statutes.
27 Montana

Chapter 10: Partnerships in General of Title 35:
Corporations, Partners hips, and Associations of
Montana Code.
28 Nebraska

Chapter 67: Partnerships of the Nebraska
Statutes.
29 Nevada

Chapter 87: Partnerships (Uniform Act) of
Nevada Revised Statues.
30 New Hampshire

Chapter 304-A: Uniform Partnership Act of Title
XXVIII: Partnerships of New Hampshire Revised
Statutes.
31 New Jersey

Title 42: Partnerships and Partnership
Associations of the New Jersey Statute.
32 New Mexico

Article 1A: Uniform Partnerships of Chapter 54:
Partnerships of New Mexico Statutes.
33 New York

Article 8-B: Registered limited liability
partnerships of Chapter 39 - Partnership Law of
the New York Consolidated Laws.
34 North Carolina

Chapter 59: Partnership of North Carolina
General Statutes.
35 North Dakota

Chapter 45-22: Limited Liability Partnerships of
Title 45: Partnerships of the North Dakota
Century Code
52
36 Ohio

Chapter 1775: Uniform Partnership Law of Title
XVII: Corporations Partnerships of Ohio
Revised Code.
37 Oklahoma

Title 54: Partnership of the Oklahoma Statutes.
38 Oregon

Title 7: Corporations And Partnerships of Chapter
67: Partnerships; Limited Liability Partnerships of
the Oregon Revised Statutes.
39 Pennsylvania

Chapter 82: Registered Limited Liability
Partnerships of Title 15: Corporations and
Unincorporated Associations of Pennsylvania
Consolidated Statutes.
40 Rhode Island

Chapter 7-12 of the General Laws of Rhode
Island.
41 South Carolina

Chapter 41: Uniform Partnership Act of Title 33:
Corporations, Partnerships and Associations of
South Carolina Code of Laws.
42 South Dakota

Chapter 48-7A: Uniform Partnership Act of Title
48: Partnerships of South Dakota Codified Laws.
43 Tennessee

Chapter 1: Revised Uniform Partnership Act of
Title 61: Partnerships of the Tennessee Code.
44 Texas

Title 4 Partnerships of Chapter 152 - General
Partnerships and Chapter 153 Limited
Partnerships of Business Organizations Code of
the Texas Statutes.
45 Utah

Chapter 1: General and Limited Liability
Partnerships of Title 48: Partnership of Utah
Code.
46 Vermont

Chapter 22: Partnerships of Title 11:
The Vermont Statutes.
47 Virginia

Chapter 2.2: Virginia Uniform Partnership Act of
Title 50: Partnerships of the Code of Virginia.
48 Washington

Chapter 25.05: Revised Uniform Partnership Act
of Title 25: Partnerships of the Revised Code Of
Washington.
49 West Virginia

Chapter 47B: Uniform Partnership Act of the
West Virginia Code.
50 Wisconsin Chapter 70 of the Wisconsin Statutes 2005.
51 Wyoming

Chapter 21: Uniform Partnership Act Of Title 17
Corporations, Partnerships And Associations of
Wyoming Statutes.

In US, there are three broad categories of protection that are afforded by a particular
LLP legislation:
(i) The protection (less than full shield) is provided against the tortuous acts
of other partners of the LLP.
(ii) The protection (less than full shield) is provided against acts whether
arising in tort or in contract.
(iii) The protection (full shield) is provided for any debt chargeable to the
partnership, whether arising in tort, contract, or otherwise.

53
The following table
13
provides a birds eye view of the liability shield provided by
various US LLP statutes.

Name of the State Full Shield or Less
Alabama Full Shield
Alaska Full Shield
Arizona Full Shield
Arkansas Full Shield
California Full Shield
Colorado Full Shield
Connecticut Full Shield
Delaware Full Shield
District of Columbia Full Shield
Florida Full Shield
Georgia Full Shield
Hawaii Full Shield
Idaho Full Shield
Illinois Full Shield
Indiana Full Shield
Iowa Full Shield
Kansas Full Shield
Kentucky Less than full shield
Louisiana Less than full shield
Maine Less than full shield
Maryland
Full Shield
Massachusetts Full Shield
Michigan Less than full shield
Minnesota Full Shield
Mississippi Full Shield
Missouri Full Shield
Montana Full Shield
Nebraska Full Shield
Nevada Full Shield
New Hampshire Full Shield
New Jersey Full Shield
New Mexico Full Shield
New York Full Shield
North Carolina Less than full shield
North Dakota Full Shield
Ohio Less than full shield
Oklahoma Full Shield
Oregon Full Shield
Pennsylvania
14
Less than full shield

13
Limit Practice Liability by Sandra K. Miller and James J. Tucker III.
14
The Pennsylvania legislature has introduced a proposal to extend a full shield to LLPs engaged in
accounting, law and medicine. Senate bill 392 (2005 PA SB 392) can be found online in the Pennsylvania
General Assembly Electronic Bill Room. Go to www.legis.state.pa.us/index.cfm, type S392 in the search
box and click on Go.

54
Rhode Island Full Shield
South Carolina Less than full shield
South Dakota Full Shield
Tennessee Less than full shield
Texas Full Shield
Utah Less than full shield
Vermont Full Shield
Virginia Full Shield
Washington Full Shield
West Virginia Less than full shield
Wisconsin Less than full shield
Wyoming Full Shield

2.1 LLP LAW IN NEW YORK
As earlier stated, Chapter 39 of the Partnership Law of the New York Consolidated
Laws (See Annexure 1) contain provisions relating to limited liability partnerships.
A partner can be an individual, a general partnership, an LLP, or a corporation. Each
partner has to be a licensed professional or a licensed professional firm (either
domestic or foreign), including an LLP, a professional service LLC or a professional
service corporation. An important feature of the New York law is that it restricts the
use of the limited liability partnership structure to professionals only.

Unlike general and limited partnerships, an LLP is characterized by limited personal
liability to all partners, making it an attractive alternative for professionals.
Specifically, partners of an LLP are not liable for debts and liabilities of the LLP or
those of other partners, arising in tort, contract, or otherwise solely by reason of
being a partner. Instead, the partners are liable only for their wrongful and negligent
acts, as well as any wrongful or negligent acts of an employee under that particular
partners direct supervision or control while rendering professional services on behalf
of the LLP.

To form an LLP, an eligible partnership must file a Certificate of Registration with
the Department of State. The name of the limited liability partnership must indicate
the fact that it is a limited liability partnership. After registering, a notice of its
registration should be published in two newspapers in the county where the principal
office of the LLP is located once a week for six consecutive weeks. An affidavit of
publication must then be filed with the Department of State. Thereafter, every five
years the LLP must file a Status Statement containing the following information with
the Department of the State to maintain its LLP status:
(a) the name of the LLP;
(b) the address of the principal office of the LLP; and
(c) a statement that it is eligible to register as an LLP.

In the event the LLP fails to comply with these requirements, it will be unable to
maintain any action or special proceeding in New York. Moreover, the LLP will not be
able to represent that it is duly organized and in good standing, potentially
jeopardizing credit applications and contractual relations. In comparison to the other
partnership forms, the costs to form an LLP are typically greater. The more extensive
filing and publication requirements, coupled with the drafting of a partnership
agreement results in the higher costs
15
.

15
Michael K de Chiara, Michael S Zetlin, New York Construction Law, p. 21
55

The NY Partnership Law
16
provides that an LLP, other than those authorized to
practice law, must be under the supervision of the Regents
17
of the University of the
State of New York
18
. These LLPs are subject to disciplinary proceedings and penalties
in the same manner and to the same extent as are provided with respect to
individuals and their licenses relating to the applicable profession. The Board of
Regents, which oversees the State Education Department and its Office of the
Professions (OP), licenses individuals in 44 professions defined in the Education Law
and takes final action on all professional disciplinary matters. OP investigates and
prosecutes professional misconduct in all professions except law and medicine
19
.

The Appellate Division of the New York State Supreme Court regulates and
disciplines lawyers in NY.
20
It has ultimate authority over lawyers' conduct in its
jurisdiction, and may impose discipline ranging from public censure to suspension of
the license to practice or even the permanent loss of the license if the charges are
sustained. All lawyers practising through LLPs or otherwise are expected to follow the
rules of ethics, known as the Code of Professional Responsibility, which have been
adopted by the Appellate Division.

The NY Partnership Law does not impose any financial disclosure requirement on
LLPs and does not require LLPs to keep or disclose any accounting records. Further,
the Law does not provide that the capital withdrawn by partners of an LLP while the
business is or is about to become insolvent may be clawed back in the event of
insolvency. However, in New York all LLPs that derive any income from the State of
New York are required to file an annual return and pay an annual fee based on the
number of partners
21
.

A LLP is treated as a partnership for tax purposes and income, gains, and losses of
the LLP flow through the LLP without taxation and are reported on the personal
income tax returns of the partners
22
.

A LLP may be dissolved if any partner turns bankrupt.
23
A court does not have the
authority to disqualify a certain partner of an LLP, but it may order the dissolution of
an LLP if, on application by any partner, the court is satisfied that
24
:
(a) a partner has been declared incompetent in any judicial proceeding or is
shown to be of unsound mind; or
(b) a partner becomes in any other way incapable of performing his or her part of
the partnership contract; or
(c) a partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business; or

16
Section 121-1500(m) of the NY Partnership Law
17
Established by the NY State Legislature, the Regents of the University of the State of New York are
responsible for the general supervision of all educational activities within the State, presiding over the
University and the New York State Education Department.
18
The University of the State of New York is a broad term encompassing all the institutions, both public
and private, offering education in the State.
19
A registered LLP authorized to practice medicine is subject to the pre-hearing procedures and hearing
procedures as are provided with respect to individual physicians and their licenses in the public health law.
20
Complaints against attorneys are directed to the Appellate Division's Attorney Grievance and
Disciplinary Committee in the county where the attorneys' offices are located.
21
See N.Y. Tax Law 658 (c) (requiring payment of an annual fee of $50 per partner, with a minimum fee
of $325 and a maximum fee of $10,000)
22
See IRS Tax Form 8832.
23
Section 62 of the NY Partnership Law
24
56
(d) a partner willfully or persistently commits a breach of the partnership
agreement, or otherwise so conducts himself or herself in matters relating to
the partnership business that it is not reasonably practicable to carry on the
business in partnership with him or her.
25

2.2 LLP LAW IN DELAWARE
As already stated, c hapter XV on Delaware Revised Uniform Partnership Act of Title 6
on Commerce and Trade of the Delaware Code contain provisions relating to limited
liability partnerships (See Annexure 2).

The Delaware Code unlike the New York laws does not restrict the use of limited
liability partnership structure to professionals only. The LLP structure is open to all
businesses. An LLP is for all purposes a general partnership. However, by converting
to an LLP, the partners of a Delaware general partnership are able to limit their
liability.

Section 15-1001 of the Act states that an LLP can be formed by filing of a statement
of qualification and by providing such other information as may be prescribed. The
Statement of Qualification must contain the name of the partnership, which must
include as the last words or letters of its name "Limited Liability Partnership," "L.L.P."
or "LLP", the address of the registered office and the name and address of the
registered agent for service of process, the number of partners, a statement that the
partnership elects to be a limited liability partnership and a specific, certain future
effective date or time if the Statement of Qualification if it is not to be effective upon
filing.

The Act provides that the contribution of a partner may be in cash, property or
services rendered, or a promissory note or other obligation to contribute cash or
property or to perform services. Further, a partner is obligated to the partnership to
perform any promise to contribute cash or property or to perform services. However,
if the partner is unable to perform any promise because of death, disability or any
other reason, the partner is obligated at the option of the partnership to contribute
cash equal to that portion of the value of the contribution that has not been made.
Most US states including New York, Texas and Florida have similar provisions.

The rights and duties of the partners are defined by the partnership agreement. The
partnership agreement may provide for classes or groups of partners having such
relative rights, powers and duties as the partnership agreement may provide, and
may make provision for the future creation in the manner provided in the partnership
agreement of additional classes or groups of partners having such relative rights,
powers and duties as may from time to time be established, including rights, powers
and duties senior to existing classes and groups of partners.

The partnership agreement may grant to all or certain identified partners or a
specified class or group of the partners the right to vote separately or with all or any
class or group of the partners on any matter. Voting by partners may be on a per
capita, number, financial interest, class, group or any other basis.

Further, a partnership agreement may set forth provisions relating to notice of the
time, place or purpose of any meeting at which any matter is to be voted on by any

25
The court may also decree a dissolution if the business of the partnership can only be carried on at a
loss or other circumstances render a dissolution equitable.
57
partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by proxy,
or any other matter with respect to the exercise of any such right to vote. Similar
provisions are there in other LLP Statutes in US.

The Act allows for a great amount of flexibility to modify the default provisions in a
partnership agreement. The partners, in the partnership agreement, may also modify
certain duties of partners to the partnership and other partners. Such flexibility
allows for partners in the partnership agreement to, among other things, specifically
address management of the partnership, distributions, voting rights and
indemnification, in order to appropriately reflect the intentions of the partners.

A limited liability partnership generally provides a full shield to its partners. An
obligation of a partnership incurred while the partnership is a LLP, whether arising in
contract, tort or otherwise, is solely the obligation of the partnership. A partner is not
personally liable, directly or indirectly, by way of indemnification, contribution,
assessment or otherwise, for such an obligation solely by reason of being or so
acting as partner. However, a partner may agree to be personally liable, directly or
indirectly, by way of indemnification, contribution, assessment or otherwise, for any
or all of the obligations of the partnership.

Sections 15-502 and 15-503 of the Act provide that a partnership interest is personal
property and that only a partners economic interest may be transferred. The
transferee only has the right to receive distributions but cannot participate in
management or inspect the LLPs books or records.

The Act does not impose any financial disclosure requirement. While the LLP is
required to file an Annual Report, the required information relates only to non-
financial items, such as the name, address and number of partners of the LLP. An
LLP is not required to make any filing, or amend a previous filing, due solely to
changes in the number of partners of the partnership
26
. The annual report must be
filed by June 1 of each year following the calendar year in which a statement of
qualification filed by a partnership becomes effective or a foreign partnership
becomes authorized to transact business in the State of Delaware.

The taxation of LLPs is very interesting, which regards LLPs primarily as partnerships
instead of treating them as companies.

In Delaware, a corporation or general partnership can easily convert to an LLP by
filing a certificate of conversion with the Secretary of State
27
. The terms and
conditions on which a partnership becomes limited liability partnership must be
approved by the vote necessary to amend the partnership agreement except, in the
case of a partnership agreement that expressly considers obligations to contribute to
the partnership, the vote necessary to amend those provisions. However, partner in
a general partnership cannot avoid his liability by simply converting the general
partnership to an LLP.

Further, withdrawals (excluding compensation for benefits or payments made in the
ordinary course of business pursuant to a bona fide retirement or benefits program)
made by the partners of the LLP during three years prior to the commencement of

26
Scott E. Waxman and Eric N. Feldman, Delaware Limited Liability Partnerships
27
Section 15-1001, Delaware Revised Uniform Partnership Act
58
winding up are subject to clawback. However, this is subject to the condition that the
member knew or had reasonable grounds to believe that the LLP was, or would be
unable to pay its debts at the time of withdrawal
28
.

28
Section 15-309(b) of the Delaware Code.
59
ANNEXURE 1

CHAPTER 39: PARTNERSHIP LAW OF THE NEW YORK CONSOLIDATED
LAWS
29

ARTICLE 1.
SHORT TITLE; DEFINITIONS; CONSTRUCTION.

Section 1. Short title.
2. General definitions.
3. Interpretation of knowledge and notice.
4. Rules of construction.
5. Rules for cases not provided for in this chapter.

Section 1. Short title.
This chapter shall be known as the "partnership law."

S 2. General definitions.
As used in this chapter "court" includes every court and judge having jurisdiction in
the case;

"Business" includes every trade, occupation, or profession;

"Person" includes individuals, partnerships, corporations, and other associations;

"Bankrupt" includes bankrupt under the federal bankruptcy act or insolvent under
any state insolvent act;

"Conveyance" includes every assignment, lease, mortgage, or encumbrance;

"Real property" includes land and any interest or estate in land.

"Foreign professional service corporation" has the meaning given to it in subdivision
(d) of section fifteen hundred twenty-five of the business corporation law.

"Foreign professional service limited liability company" has the meaning given to it in
subdivision (a) of section thirteen hundred one of the limited liability company law.

"Foreign limited liability partnership" means (i) any partnership without limited
partners operating under an agreement governed by the laws of any jurisdiction,
other than this state, each of whose partners is a professional authorized by law to
render a professional service within this state and who is or has been engaged in the
practice of such profession in such partnership or a predecessor entity, or will
engage in the practice of such profession in the foreign limited liability partnership
within thirty days of the date of the effectiveness of the notice provided for in
subdivision (a) of section 121-1502 of this chapter or each of whose partners is a
professional, at least one of whom is authorized by law to render a professional
service within this state and who is or has been engaged in the practice of such
profession in such partnership or a predecessor entity, or will engage in the practice
of such profession in the foreign limited liability partnership within thirty days of the
date of the effectiveness of the notice provided for in subdivision (a) of section 121-

29
http://public.leginfo.state.ny.us/menugetf.cgi
60
1502 of this chapter, (ii) any partnership without limited partners operating under an
agreement governed by the laws of any jurisdiction, other than this state, authorized
by, or holding a license, certificate, registration or permit issued by the licensing
authority pursuant to, the education law to render a professional service within this
stat e, which renders or intends to render professional services within this state and
which is denominated as a registered limited liability partnership or limited liability
partnership under such laws, regardless of any difference between such laws and the
laws of this state, or (iii) a foreign related limited liability partnership; except that all
partners of a foreign limited liability partnership that provides health, professional
engineering, land surveying, architectural and/or landscape architectural services in
this state shall be licensed in this state.

"Licensing authority" means the regents of the university of the state of New York or
the state education department, as the case may be, in the case of all professions
licensed under title eight of the education law, and the appropriate appellate division
of the supreme court in the case of the profession of law.

"New York registered foreign limited liability partnership" means a foreign limited
liability partnership which has filed a notice pursuant to subdivision (a) of section
121-1502 of this chapter that has not been withdrawn or revoked and which
complies with subdivision (1) of section 121-1502 of this chapter.

"Profession" includes any practice as an attorney and counsellor-at-law or as a
licensed physician, and those professions designated in title eight of the education
law.

"Professional" means an individual duly authorized to practice a profession, a
professional service corporation, a professional service limited liability company, a
foreign professional service limited liability company, a registered limited liability
partnership, a foreign limited liability partnership, a foreign professional service
corporation or a professional partnership.

"Professional partnership" means (1) a partnership without limited partners each of
whose partners is a professional authorized by law to render a professional service
within this state, (2) a partnership without limited partners each of whose partners is
a professional, at least one of whom is authorized by law to render a professional
service within this state or (3) a partnership without limited partners authorized by,
or holding a license, certificate, registration or permit issued by the licensing
authority pursuant to the education law to render a professional service within this
state; except that all partners of a professional partnership that provides medical
services in this state must be licensed pursuant to article 131 of the education law to
practice medicine in this state and all partners of a professional partnership that
provides dental services in this state must be licensed pursuant to article 133 of the
education law to practice dentistry in this state; and further except that all partners
of a professional partnership that provides professional engineering, land surveying,
architectural and/or landscape architectural services in this state must be licensed
pursuant to article 145, article 147 and/or article 148 of the education law to practice
one or more of such professions in this state.

"Professional service" means any type of service to the public that may be lawfully
rendered by a member of a profession within the purview of his or her profession.

61
"Professional service corporation" means (i) a corporation organized under article
fifteen of the business corporation law and (ii) any other corporation organized under
the business corporation law or any predecessor statute, which is authorized by, or
holds a license, certificate, registration or permit issued by, the licensing authority
pursuant to the education law to render professional services within this state.

"Professional service limited liability company" means a limited liability company
organized under article twelve of the limited liability company law.

"Registered limited liability partnership" means a partnership without limited
partners operating under an agreement governed by the laws of this state,
registered under section 121-1500 of this chapter and complying with section 121-
1501 of this chapter.

"Foreign related limited liability partnership" means a partnership without limited
partners operating under an agreement governed by the laws of any jurisdiction,
other than this state, which (i) is denominated as a limited liability partnership or
registered limited liability partnership under such laws, (ii) is not a foreign limited
liability partnership under clause (i) or (ii) of the paragraph defining foreign limited
liability partnership in this section, (iii) is affiliated with a professional service limited
liability company, foreign professional service limited liability company, professional
service corporation, foreign professional service corporation, registered limited
liability partnership that is a professional partnership under this section or a foreign
limited liability partnership under clause (i) or (ii) of the paragraph defining foreign
limited liability partnership in this section, and (iv) renders services related or
complementary to the professional services rendered by, or provides services or
facilities to, such professional service limited liability company, foreign professional
service limited liability company, professional service corporation, foreign
professional service corporation, registered limited liability partnership or foreign
limited liability partnership. For purposes of this paragraph, such a partnership is
affiliated with a professional service limited liability company, foreign professional
limited liability partnership if (1) at least a majority of partners in one partnership
are partners in the other partnership, (2) at least a majority of the partners in each
partnership also are partners, hold interests or are members in a limited liability
company or other business entity, and each partnership renders services pursuant to
an agreement with such limited liability company or other business entity, or (3) the
partnerships or the partnership and such professional service limited liability
company, such foreign professional service limited liability company, such
professional service corporation, or such foreign professional service corporation are
affiliates within the meaning of paragraph (a) of section nine hundred twelve of the
business corporation law.

"Related limited liability partnership" means a partnership without limited partners
operating under an agreement governed by the laws of this state, which (i) is not a
professional partnership under this section, (ii) is affiliated with a professional service
limited liability company, foreign professional service limited liability company,
professional service corporation, foreign professional service corporation, registered
limited liability partnership that is a professional partnership under this section or a
foreign limited liability partnership under clause (i) or (ii) of the paragraph defining
foreign limited liability partnership in this section, and (iii) renders services related or
complementary to the professional services rendered by, or provides services or
62
facilities to, such professional service limited liability company, foreign professional
limited liability partnership. For purposes of this paragraph, such a partnership is
affiliated with a professional service limited liability company, foreign professional
limited liability partnership if (1) at least a majority of partners in one partnership
are partners in the other partnership, (2) at least a majority of the partners in each
partnership also are partners, hold interests or are members in a limited liability
company or other business entity, and each partnership renders services pursuant to
an agreement with such limited liability company or other business entity, or (3) the
partnerships or the partnership and such professional service limited liability
company, such foreign professional service limited liability company, such
professional service corporation, or such foreign professional service corporation are
affiliates within the meaning of paragraph (a) of section nine hundred twelve of the
business corporation law.

S 3. Interpretation of knowledge and notice.
1. A person has "knowledge" of a fact within the meaning of this chapter not only
when he has actual knowledge thereof, but also when he has knowledge of such
other facts as in the circumstances shows bad faith.
2. A person has "notice" of a fact within the meaning of this chapter when the person
who claims the benefit of the notice:
(a) States the fact to such person, or
(b) Delivers through the mail, or by other means of communication, a written
statement of the fact to such person or to a proper person at his place of business or
residence.

S 4. Rules of construction.
1. The rule that statutes in derogation of the common law are to be strictly construed
shall have no application to this chapter.
2. The law of estoppel shall apply under this chapter.
3. The law of agency shall apply under this chapter.
4. This chapter shall be so interpreted and construed as to effect its general purpose
to make uniform the law of those states which enact it.
5. This chapter shall not be construed so as to impair the obligations of any contract
existing when the chapter goes into effect, nor to affect any action or proceedings
begun or right accrued before this chapter takes effect.

S 5. Rules for cases not provided for in this chapter. In any case not provided for in
this chapter the rules of law and equity, including the law merchant, shall govern.

ARTICLE 2.
NATURE OF A PARTNERSHIP.

Section 10. Partnership defined.
11. Rules for determining the existence of a partnership.
12. Partnership property.

S 10. Partnership defined.
63
1. A partnership is an association of two or more persons to carry on as co-owners a
business for profit and includes for all purposes of the laws of this state, a registered
2. But any association formed under any other statute of this state, or any statute
adopted by authority, other than the authority of this state, is not a partnership
under this chapter, unless such association would have been a partnership in this
state prior to the adoption of this chapter; but this chapter shall apply to limited
partnerships
except in so far as the statutes relating to such partnerships are inconsistent
herewith.

S 11. Rules for determining the existence of a partnership.
In determining whether a partnership exists, these rules shall apply:
1. Except as provided by section twenty-seven persons who are not partners as to
each other are not partners as to third persons.
2. Joint tenancy, tenancy in common, tenancy by the entireties, joint property,
common property, or part ownershi p does not of itself establish a partnership,
whether such co-owners do or do not share any profits made by the use of the
property.
3. The sharing of gross returns does not of itself establish a partnership, whether or
not the persons sharing them have a joint or common right or interest in any
property from which the returns are derived.
4. The receipt by a person of a share of the profits of a business is prima facie
evidence that he is a partner in the business, but no such inference shall be drawn if
such profits were received in payment:
(a) As a debt by installments or otherwise,
(b) As wages of an employee or rent to a landlord,
(c) As an annuity to a surviving spouse or representative of a deceased partner,
(d) As interest on a loan, though the amount of payment vary with the profits of the
business,
(e) As the consideration for the sale of the good-will of a business or other property
by installments or otherwise.

S 12. Partnership property.
1. All property originally brought into the partnership stock or subsequently acquired,
by purchase or otherwise, on account of the partnership is partnership property.
2. Unless the contrary intention appears, property acquired with partnership funds is
partnership property.
3. Any estate in real property may be acquired in the partnership name. Title so
acquired can be conveyed only in the partnership name.
4. A conveyance to a partnership in the partnership name, though without words of
inheritance, passes the entire estate of the grantor unless a contrary intent appears.

ARTICLE 3.
RELATIONS OF PARTNERS TO PERSONS DEALING WITH THE PARTNERSHIP.

Section 20. Partner agent of partnership as to partnership business.
21. Conveyance of real property of the partnership.
22. Partnership bound by admission of partner.
23. Partnership charged with knowledge of or notice to partner.
24. Partnership bound by partners wrongful act.
25. Partnership bound by partners breach of trust.
26. Nature of partners liability.
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27. Partner by estoppel.
28. Liability of incoming partner.

S 20. Partner agent of partnership as to partnership business.
1. Every partner is an agent of the partnership for the purpose of its business, and
the act of every partner, including the execution in the partnership name of any
instrument, for apparently carrying on in the usual way the business of the
partnership of which he is a member binds the partnership, unless the partner so
acting has in fact no authority to act for the partnership in the particular matter, and
the person with
whom he is dealing has knowledge of the fact that he has no such authority.
2. An act of a partner which is not apparently for the carrying on of the business of
the partnership in the usual way does not bind the partnership unless authorized by
the other partners.
3. Unless authorized by the other partners or unless they have abandoned the
business, one or more but less than all the partners have no authority to:
(a) Assign the partnership property in trust for creditors or on the assignees promise
to pay the debts of the partnership.
(b) Dispose of the good-will of the business.
(c) Do any other act which would make it impossible to carry on the ordinary
business of the partnership.
(d) Confess a judgment.
(e) Submit a partnership claim or liability to arbitration or reference.
4. No act of a partner in contravention of a restriction on his authority shall bind the
partnership to persons having knowledge of the restriction.

S 21. Conveyance of real property of the partnership.
1. Where title to real property is in the partnership name, any partner may convey
title to such property by a conveyance executed in the partnership name; but the
partnership may recover such property unless the partners act binds the partnership
under the provisions of subdivision one of section twenty, or unless such property
has been conveyed by the grantee or a person claiming through such grantee to a
holder for value without
knowledge that the partner, in making the conveyance, has exceeded his authority.
2. Where title to real property is in the name of the partnership, a conveyance
executed by a partner, in his own name, passes the equitable interest of the
partnership, provided the act is one within the authority of the partner under the
provisions of subdivision one of section twenty.
3. Where title to real property is in the name of one or more but not all the partners,
and the record does not disclose the right of the partnership, the partners in whose
name the title stands may convey title to such property, but the partnership may
recover such property if the partners act does not bind the partnership under the
provisions of subdivision one of section twenty, unless the purchaser or his assignee
is a holder for value, without knowledge.
4. Where the title to real property is in the name of one or more or all the partners,
or in a third person in trust for the partnership, a conveyance executed by a partner
in the partnership name, or in his own name, passes the equitable interest of the
partnership, provided the act is one within the authority of the partner under the
provisions of
subdivision one of section twenty.
5. Where the title to real property is in the names of all the partners a conveyance
executed by all the partners passes all their rights in such property.

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S 22. Partnership bound by admission of partner.
An admission or representation made by any partner concerning partnership affairs
within the scope of his authority as conferred by this chapter is evidence against the
partnership.

S 23. Partnership charged with knowledge of or notice to partner.
Notice to any partner of any matter relating to partnership affairs, and the
knowledge of the partner acting in the particular matter, acquired while a partner or
then present to his mind, and the knowledge of any other partner who reasonably
could and should have communicated it to the acting partner, operate as notice to or
knowledge of the partnership, except in the case of a fraud on the partnership
committed by or with the consent of that partner.

S 24. Partnership bound by partners wrongful act.
Where, by any wrongful act or omission of any partner acting in the ordinary course
of the business of the partnership, or with the authority of his copartners, loss or
injury is caused to any person, not being a partner in the partnership, or any penalty
is incurred, the partnership is liable therefor to the same extent as the partner so
acting or omitting
to act.

S 25. Partnership bound by partners breach of trust.
The partnership is bound to make good the loss:
1. Where one partner acting within the scope of his apparent authority receives
money or property of a third person and misapplies it; and
2. Where the partnership in the course of its business receives money or property of
a third person and the money or property so received is misapplied by any partner
while it is in the custody of the partnership.

S 26. Nature of partners liability.
(a) Except as provided in subdivision (b) of this section, all partners are liable:
1. Jointly and severally for everything chargeable to the partnership under sections
twenty-four and twenty-five.
2. Jointly for all other debts and obligations of the partnership; but any partner may
enter into a separate obligation to perform a partnership contract.
(b) Except as provided by subdivisions (c) and (d) of this section, no partner of a
partnership which is a registered limited liability partnership is liable or accountable,
directly or indirectly (including by way of indemnification, contribution or otherwise),
for any debts, obligations or liabilities of, or chargeable to, the registered limited
liability partnership or each other, whether arising in tort, contract or otherwise,
which are incurred, created or assumed by such partnership while such partnership is
a registered limited liability partnership, solely by reason of being such a partner or
acting (or omitting to act) in such capacity or rendering professional services or
otherwise participating (as an employee, consultant, contractor or otherwise) in the
conduct of the other business or activities of the registered limited liability
partnership.
(c) Notwithstanding the provisions of subdivision (b) of this section,
(i) each partner, employee or agent of a partnership which is a registered limited
liability partnership shall be personally and fully liable and accountable for any
negligent or wrongful act or misconduct committed by him or her or by any person
under his or her direct supervision and control while rendering professional services
on behalf of such registered limited liability partnership and (ii) each shareholder,
director, officer, member, manager, partner, employee and agent of a professional
66
service corporation, foreign professional service corporation, professional service
registered limited liability partnership, foreign limited liability partnership or
professional partnership that is a partner, employee or agent of a partnership which
is a registered limited liability partnership shall be personally and fully liable and
accountable for any negligent or wrongful act or misconduct committed by him or
her or by any person under his or her direct supervision and control while rendering
professional services in his or her capacity as a partner, employee or agent of such
registered limited liability partnership. The relationship of a professional to a
registered limited liability partnership with which such professional is associated,
whether as a partner, employee or agent, shall not modify or diminish the
jurisdiction over such professional of the licensing authority and in the case of an
attorney and counsellor-at-law or a professional service corporation, professional
service limited liability company, foreign professional service limited liability
company, registered limited liability partnership, foreign limited liability partnership,
foreign professional service corporation or professional partnership, engaged in the
practice of law, the other courts of this state.
(d) Notwithstanding the provisions of subdivision (b) of this section, all or specified
partners of a partnership which is a registered limited liability partnership may be
liable in their capacity as partners for all or specified debts, obligations or liabilities of
a registered limited liability partnership to the extent at least a majority of the
partners shall have agreed unless otherwise provided in any agreement between the
partners. Any such agreement may be modified or revoked to the extent at least a
majority of the partners shall have agreed, unless otherwise provided in any
agreement between the partners; provided, however, that (i) any such modification
or revocation shall not affect the liability of a partner for any debts, obligations or
liabilities of a registered limited liability partnership incurred, created or assumed by
such registered limited liability partnership prior to such modification or revocation
and (ii) a partner shall be liable for debts, obligations and liabilities of the registered
limited liability partnership incurred, created or assumed after such modification or
revocation only in accordance with this article and, if such agreement is further
modified, such agreement as so further modified but only to the extent not
inconsistent with subdivision (c) of this section. Nothing in this section shall in any
way affect or impair the ability of a partner to act as a guarantor or surety for,
provide collateral for or otherwise be liable for, the debts, obligations or liabilities of
a registered limited liability partnership.
(e) Subdivision (b) of this section shall not affect the liability of a registered limited
liability partnership out of partnership assets for partnership debts, obligations and
liabilities.
(f) Neither the withdrawal or revocation of a registered limited liability partnership
pursuant to subdivision (f) or (g), respectively, of section 121-1500 of this chapter
nor the dissolution, winding up or termination of a registered limited liability
partnership shall affect the applicability of the provisions of subdivision (b) of this
section for any debt, obligation or liability incurred, created or assumed while the
partnership was a registered limited liability partnership.

S 27. Partner by estoppel.
1. When a person, by words spoken or written or by conduct, represents himself, or
consents to another representing him to any one, as a partner in an existing
partnership or with one or more persons not actual partners, he is liable to any such
person to whom such representation has been made, who has, on the faith of such
representation, given credit to the actual or apparent partnership, and if he has
made such representation or consented to its being made in a public ma nner he is
67
liable to such person, whether the representation has or has not been made or
communicated to such person so giving credit by or with the knowledge of the
apparent partner making the representation or consenting to its being made.
(a) When a partnership liability results, he is liable as though he were an actual
member of the partnership.
(b) When no partnership liability results, he is liable jointly with the other persons, if
any, so consenting to the contract or representation as to incur liability, otherwise
separately.
2. When a person has been thus represented to be a partner in an existing
partnership, or with one or more persons not actual partners, he is an agent of the
persons consenting to such representation to bind them to the same extent and in
the same manner as though he were a partner in fact, with respect to persons who
rely upon the
representation. Where all the members of the existing partnership consent to the
representation, a partnership act or obligation results; but in all other cases it is the
joint act or obligation of the person acting and the persons consenting to the
representation.

S 28. Liability of incoming partner.
A person admitted as a partner into an existing partnership is liable for all the
obligations of the partnership arising before his admission as though he had been a
partner when such obligations were incurred, except that his liability shall be
satisfied only out of partnership property.

ARTICLE 4.
RELATIONS OF PARTNERS TO ONE ANOTHER.

Section 40. Rules determining rights and duties of partners.
41. Partnership books.
42. Duty of partners to render information.
43. Partner accountable as a fiduciary.
44. Right to an account.
45. Continuation of partnership beyond fixed term.

S 40. Rules determining rights and duties of partners.
The rights and duties of the partners in relation to the partnership shall be
determined, subject to any agreement between them, by the following rules:
1. Each partner shall be repaid his contributions, whether by way of capital or
advances to the partnership property and share equally in the profits and surplus
remaining after all liabilities, including those to partners, are satisfied; and except as
provided in subdivision (b) of section twenty-six of this chapter, each partner must
contribute toward the losses, whether of capital or otherwise, sustained by the
partnership according to his share in the profits.
2. Except as provided in subdivision (b) of section twenty-six of this chapter, the
partnership must indemnify every partner in respect of payments made and personal
liabilities reasonably incurred by him in the ordinary and proper conduct of its
business, or for the preservation of its business or property.
3. A partner, who in aid of the partnership makes any payment or advance beyond
the amount of capital which he agreed to contribute, shall be paid interest from the
date of the payment or advance.
4. A partner shall receive interest on the capital contributed by him only from the
date when repayment should be made.
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5. All partners have equal rights in the management and conduct of the partnership
business.
6. No partner is entitled to remuneration for acting in the partnership business,
except that a surviving partner is entitled to reasonable compensation for his
services in winding up the partnership affairs.
7. No person can become a member of a partnership without the consent of all the
partners.
8. Any difference arising as to ordinary matters connected with the partnership
business may be decided by a majority of the partners; but no act in contravention
of any agreement between the partners may be done rightfully without the consent
of all the partners.

S 41. Partnership books.
The partnership books shall be kept, subject to any agreement between the
partners, at the principal place of business of the partnership, and every partner
shall at all times have access to and may inspect and copy any of them.

S 42. Duty of partners to render information.
Partners shall render on demand true and full information of all things affecting the
partnership to any partner or the legal representative of any deceased partner or
partner under legal disability.

S 43. Partner accountable as a fiduciary.
1. Every partner must account to the partnership for any benefit, and hold as trustee
for it any profits derived by him without the consent of the other partners from any
transaction connected with the formation, conduct, or liquidation of the partnership
or from any use by him of its property.
2. This section applies also to the representatives of a deceased partner engaged in
the liquidation of the affairs of the partnership as the personal representatives of the
last surviving partner.

S 44. Right to an account.
Any partner shall have the right to a formal account as to partnership affairs:
1. If he is wrongfully excluded from the partnership business or possession of its
property by his copartners,
2. If the right exists under the terms of any agreement,
3. As provided by section forty-three,
4. Whenever other circumstances render it just and reasonable.

S 45. Continuation of partnership beyond fixed term.
1. When a partnership for a fixed term or particular undertaking is continued after
the termination of such term or particular undertaking without any express
agreement, the rights and duties of the partners remain the same as they were at
such termination, so far as is consistent with a partnership at will.
2. A continuation of the business by the partners or such of them as habitually acted
therein during the term, without any settlement or liquidation of the partnership
affairs, is prima facie evidence of a continuation of the partnership.

ARTICLE 5.
PROPERTY RIGHTS OF A PARTNER.

Section 50. Extent of property rights of a partner.
51. Nature of a partners right in specific partnership
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property.
52. Nature of partners interest in the partnership.
53. Assignment of partners interest.
54. Partners interest subject to c harging order.

S 50. Extent of property rights of a partner.
The property rights of a partner are (a) his rights in specific partnership property, (b)
his interest in the partnership, and (c) his right to participate in the management.

S 51. Nature of a partners right in specific partnership property.
1. A partner is co-owner with his partners of specific partnership property holding as
a tenant in partnership.
2. The incidents of this tenancy are such that:
(a) A partner, subject to the provisions of this chapter and to any agreement
between the partners, has an equal right with his partners to possess specific
partnership property for partnership purposes; but he has no right to possess such
property for any other purpose without the consent of his partners.
(b) A partners right in specific partnership property is not assignable except in
connection with the assignment of the rights of all the partners in the same property.
(c) A partners right in specific partnership property is not subject to attac hment or
execution, except on a claim against the partnership. When partnership property is
attached for a partnership debt the partners, or any of them, or the representatives
of a deceased partner, cannot claim any right under the homestead or exemption
laws.
(d) On the death of a partner his right in specific partnership property vests in the
surviving partner or partners, except where the deceased was the last surviving
partner, when his right in such property vests in his legal representative. Such
surviving partner or partners, or the legal representative of the last surviving
partner, has no right
to possess the partnership property for any but a partnership purpose.
(e) A partners right in specific partnership property is not subject to dower, curtesy,
or allowances to surviving spouses, heirs, or next of kin.

S 52. Nature of partners interest in the partnership.
A partners interest in the partnership is his share of the profits and surplus and the
same is personal property.

S 53. Assignment of partners interest.
1. A conveyance by a partner of his interest in the partnership does not of itself
dissolve the partnership, nor, as against the other partners in the absence of
agreement, entitle the assignee, during the continuance of the partnership, to
interfere in the management or administration of the partnership business or affairs,
or to require any information or account of partnership transactions, or to inspect the
partnership books; but it merely entitles the assignee to receive in accordance with
his contract the profits to which the assigning partner would otherwise be entitled.
2. In case of a dissolution of the partnership, the assignee is entitled to receive his
assignors interest and may require an account from the date only of the last account
agreed to by all the partners.

S 54. Partners interest subject to charging order.
1. On due application to a competent court by any judgment creditor of a partner,
the court which entered the judgment, order, or decree, or any other court, may
70
charge the interest of the debtor partner with payment of the unsatisfied amount of
such judgment debt with interest thereon. Upon
such application or upon the granting of an order attaching the interest of the debtor
partner before judgment, the court may then or later appoint a receiver of his share
of the profits, and of any other money due or to fall due to him in respect of the
partnership, and make all other orders, directions, accounts and inquiries which the
debtor partner might have made, or which the circumstances of the case may
require.
2. The interest charged may be redeemed at any time before foreclosure, or in case
of a sale being directed by the court may be purchased without thereby causing a
dissolution:
(a) With separate property, by any one or more of the partners, or
(b) With partnership property, by any one or more of the partners with the consent
of all the partners whose interests are not so charged or sold.
3. Nothing in this act shall be held to deprive a partner of his right, if any, under the
exemption laws, as regards his interest in the partnership.

ARTICLE 6.
DISSOLUTION AND WINDING UP.

Section 60. Dissolution defined.
61. Partnership not terminated by dissolution.
62. Causes of dissolution.
63. Dissolution by decree of court.
64. General effect of dissolution on authority of partner.
65. Right of partner to contribution from copartners after
dissolution.
66. Power of partner to bind partnership to third persons
after dissolution.
67. Effect of dissolution on partners existing liability.
68. Right to wind up.
69. Rights of partners to application of partnership property.
70. Rights where partnership is dissolved for fraud, or
misrepresentation.
71. Rules for distribution.
71-a. Payment of wages by receivers.
72. Liability of persons continuing the business in certain
cases.
73. Rights of retiring or estate of deceased partner when the
business is continued.
74. Accrual of actions.
75. Continuance of partnership business during action for
accounting.

S 60. Dissolution defined.
The dissolution of a partnership is the change in the relation of the partners caused
by any partner ceasing to be associated in the carrying on as distinguished from the
winding up of the business.

S 61. Partnership not terminated by dissolution.
On dissolution the partnership is not terminated, but continues until the winding up
of partnership affairs is completed.

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S 62. Causes of dissolution.
Dissolution is caused:
1. Without violation of the agreement between the partners,
(a) By the termination of the definite term or particular undertaking specified in the
agreement,
(b) By the express will of any partner when no definite term or particular
undertaking is specified,
(c) By the express will of all the partners who have not assigned their interests or
suffered them to be charged for their separate debts, either before or after the
termination of any specified term or particular undertaking,
(d) By the expulsion of any partner from the business bona fide in accordance with
such a power conferred by the agreement between the partners;
2. In contravention of the agreement between the partners, where the circumstances
do not permit a dissolution under any other provision of this section, by the express
will of any partner at any time;
3. By any event which makes it unlawful for the business of the partnership to be
carried on or for the members to carry it on in partnership;
4. By the death of any partner;
5. By the bankruptcy of any partner or the partnership;
6. By decree of court under section sixty-three.

S 63. Dissolution by decree of court.
The court shall decree a dissolution.
1. On application by or for a partner whenever:
(a) A partner has been declared incompetent in any judicial proceeding or is shown
to be of unsound mind,
(b) A partner becomes in any other way incapable of performing his part of the
partnership contract,
(c) A partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business,
(d) A partner wilfully or persistently commits a breach of the partnership agreement,
or otherwise so conducts himself in matters relating to the partnership business that
it is not reasonably practicable to carry on the business in partnership with him,
(e) The business of the partnership can only be carried on at a loss,
(f) Other circumstances render a dissolution equitable;

2. On the application of the purchaser of a partners interest under sections fifty-
three or fifty-four:
(a) After the termination of the specified term or particular undertaking,
(b) At any time if the partnership was a partnership at will when the interest was
assigned or when the charging order was issued.

S 64. General effect of dissolution on authority of partner.
Except so far as may be necessary to wind up partnership affairs or to complete
transactions begun but not then finished, dissolution terminates all authority of any
partner to act for the partnership,
1. With respect to the partners:
(a) When the dissolution is not by the act, bankruptcy or death of a partner; or
(b) When the dissolution is by such act, bankruptcy or death of a partner, in cases
where section sixty-five so requires.
2. With respect to persons not partners, as declared in section sixty-six.

S 65. Right of partner to contribution from copartners after dissolution.
72
Where the dissolution is caused by the act, death or bankruptcy of a partner, each
partner is liable to his copartners for his share of any liability created by any partner
acting for the
partnership as if the partnership had not been dissolved unless
1. The dissolution being by act of any partner, the partner acting for the partnership
had knowledge of the dissolution,
2. The dissolution being by the death or bankruptcy of a partner, the partner acting
for the partnership had knowledge or notice of the death or bankruptcy, or
3. The liability is for a debt, obligation or liability for which the partner is not liable as
provided in subdivision (b) of section twenty-six of this chapter.

S 66. Power of partner to bind part nership to third persons after dissolution.
(1) After dissolution a partner can bind the partnership except as provided in
subdivision three
(a) By any act appropriate for winding up partnership affairs or completing
transactions unfinished at dissolution;
(b) By any transaction which would bind the partnership if dissolution had not taken
place, provided the other party to the transaction
(I) Had extended credit to the partnership prior to dissolution and had no knowledge
or notice of the dissolution; or
(II) Though he had not so extended credit, had nevertheless known of the
partnership prior to the dissolution, and, having no knowledge or notice of
dissolution, the fact of dissolution had not been advertised in a newspaper of general
circulation in the place (or in each place if more than one) at which the partnership
business was regularly carried on.
2. The liability of a partner under subdivision one, paragraph (b), shall be satisfied
out of partnership assets alone when such partner had been prior to dissolution
(a) Unknown as a partner to the person with whom the contract is made; and
(b) So far unknown and inactive in partnership affairs that the business reputation of
the partnership could not be said to have been in any degree due to his connection
with it.
3. The partnership is in no case bound by any act of a partner after dissolution
(a) Where the partnership is dissolved because it is unlawful to carry on the
business, unless the act is appropriate for winding up partnership affairs; or
(b) Where the partner has become bankrupt; or
(c) Where the partner has no authority to wind up partnership affairs, except by a
transaction with one who
(I) Had extended credit to the partnership prior to dissolution and had no knowledge
or notice of his want of authority; or
(II) Had not extended credit to the partnership prior to dissolution, and, having no
knowledge or notice of his want of authority, the fact of his want of authority has not
been advertised in the manner provided for advertising the fact of dissolution in
subdivision one, paragraph (b), clause (II).
4. Nothing in this section shall affect the liability under section twenty-seven of any
person who after dissolution represents himself or consents to another representing
him as a partner in a partnership engaged in carrying on business.

S 67. Effect of dissolution on partners existing liability.
1. The dissolution of the partnership does not of itself discharge the existing liability
of any partner.
2. A partner is discharged from any existing liability upon dissolution of the
partnership by an agreement to that effect between himself, the partnership creditor
73
and the person or partnership continuing the business; and such agreement may be
inferred from the
course of dealing between the creditor having knowledge of the dissolution and the
person or partnership continuing the business.
3. Where a person agrees to assume the existing obligations of a dissolved
partnership, the partners whose obligations have been assumed shall be discharged
from any liability to any creditor of the partnership who, knowing of the agreement,
consents to a material alteration in the nature or time of payment of such
obligations.
4. The individual property of a deceased partner shall be liable for those obligations
of the partnership incurred while he was a partner and for which he was liable under
section twenty-six of this chapter but subject to the prior payment of his separate
debts.

S 68. Right to wind up.
Unless otherwise agreed the partners who have not wrongfully dissolved the
partnership or the legal representative of the last surviving partner, not bankrupt,
has the right to wind up the partnership affairs; provided, however, that any partner,
his legal representative, or his assignee, upon cause shown, may obtain winding up
by the court.

S 69. Rights of partners to application of partnership property
1. When dissolution is caused in any way, except in contravention of the partnership
agreement, each partner, as against his copartners and all persons claimi ng through
them in respect of their interest in the partnership, unless otherwise agreed, may
have the partnership property
applied to discharge its liabilities, and the surplus applied to pay in cash the net
amount owing to the respective partners. But if dissolution is caused by expulsion of
a partner, bona fide under the partnership agreement, and if the expelled partner is
discharged from all partnership liabilities, either by payment or agreement under
section sixty-seven, subdivision two, he shall receive in cash only the net amount
due him from the partnership.
2. When dissolution is caused in contravention of the partnership agreement the
rights of the partners shall be as follows:
(a) Each partner who has not caused dissolution wrongfully shall have,
(I) All the rights specified in subdivision one of this section, and
(II) The right, as against each partner who has caused the dissolution wrongfully, to
damages for breach of the agreement.
(b) The partners who have not caused the dissolution wrongfully, if they all desire to
continue the business in the same name, either by themselves or jointly with others,
may do so, during the agreed term for the partnership and for that purpose may
possess the partnership property, provided they secure the payment by bond
approved by the court, or pay to any partner who has caused the dissolution
wrongfully, the value of his interest in the partnership at the dissolution, less any
damages recoverable under clause (II) of paragraph (a) of subdivision two of this
section, and in like manner indemnify him against all present or future partnership
liabilities.
(c) A partner who has caused the dissolution wrongfully shall have:
(I) If the business is not continued under the provisions of paragraph (b) of
subdivision two of this section all the rights of a partner under subdivision (1),
subject to clause (II) of paragraph (a) of subdivision two, of this section.
(II) If the business is continued under paragraph (b) of subdivision two of this
section the right as against his copartners and all claiming through them in respect
74
of their interest in the partnership, to have the value of his interest in the
partnership, less any damages caused to his copartners by the dissolution,
ascertained and paid to him in cash, or the payment secured by bond approved by
the court, and to be released
from all existing liabilities of the partnership; but in ascertaining the value of the
partners interest the value of the good-will of the business shall not be considered.

S 70. Rights where partnership is dissolved for fraud, or misrepresentation.
Where a partnership contract is rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the party entitled to rescind is,
without prejudice to any other right, entitled,
(a) To a lien on, or right of retention of, the surplus of the partnership property after
satisfying the partnership liabilities to third persons for any sum of money paid by
him for the purchase of an interest in the partnership and for any capital or advances
contributed by him; and
(b) To stand, after all liabilities to third persons have been satisfied, in the place of
the creditors of the partnership for any payments made by him in respect of the
partnership liabilities; and
(c) To be indemnified by the person guilty of the fraud or making the representation
against all debts and liabilities of the partnership.

S 71. Rules for distribution.
In settling accounts between the partners after dissolution, the following rules shall
be observed, subject to any agreement to the contrary:
(a) The assets of the partnership are:
I. The partnership property,
II. The contributions of the partners specified in paragraph (d) of this subdivision.
(b) The liabilities of the partnership shall rank in order of payment, as follows:
I. Those owing to creditors other than partners,
II. Those owing to partners other than for capital and profits,
III. Those owing to partners in respect of capital,
IV. Those owing to partners in respect of profits.
(c) The assets shall be applied in the order of their declaration in clause (a) of this
paragraph to the satisfaction of the liabilities.
(d) Except as provided in subdivision (b) of section twenty-six of this section: (1)
partners shall contribute, as provided by section forty, subdivision one, the amount
necessary to satisfy the liabilities; and (2) if any, but not all, of the partners are
insolvent, or, not being subject to process, refuse to contribute, the other partners
shall contribute their share of the liabilities, and, in the relative proportions in which
they share the profits, the additional amount necessary to pay the liabilities.
(e) An assignee for the benefit of creditors or any person appointed by the court
shall have the right to enforce the contributions specified in paragraph (d) of this
subdivision.
(f) Any partner or his legal representative shall have the right to enforce the
contributions specified in paragraph (d) of this subdivision, to the extent of the
amount which he has paid in excess of his share of the liability.
(g) The individual property of a deceased partner shall be liable for the contributions
specified in paragraph (d) of this subdivision.
(h) When partnership property and the individual properties of the partners are in
the possession of a court for distribution, partnership creditors shall have priority on
partnership property and separate creditors on individual property, saving the rights
of lien or secured creditors as heretofore.
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(i) Where a partner has become bankrupt or his estate is insolvent the claims against
his separate property shall rank in the following order:
I. Those owing to separate creditors,
II. Those owing to partnership creditors,
III. Those owing to partners by way of contribution.

S 71-a. Payment of wages by receivers.
Upon the appointment of a receiver of a partnership the wages of the employees of
such partnership shall be preferred to every other debt or claim.

S 72. Liability of persons continuing the business in certain cases.
1. When any new partner is admitted into an existing partnership, or when any
partner retires and assigns (or the representative of the deceased partner assigns)
his rights in partnership property to two or more of the partners, or to one or more
of the partners and one or more third persons, if the business is continued without
liquidation of the partnership affairs, creditors of the first or dissolved partnership
are also creditors of the partnership so continuing the business.
2. When all but one partner retire and assign (or the representative of a deceased
partner assigns) their rights in partnership property to the remaining partner, who
continues the business without liquidation of partnership affairs, either alone or with
others, creditors of the dissolved partnership are also creditors of the person or
partnership so continuing the business.
3. When any partner retires or dies and the business of the dissolved partnership is
continued as set forth in subdivisions one and two of this section, with the consent of
the retired partners or the representative of the deceased partner, but without any
assignment of his right in partnership property, rights of creditors of the dissolved
partnership and of the creditors of the person or partnership continuing the business
shall be as if such assignment had been made.
4. When all the partners or their representatives assign their rights in partnership
property to one or more third persons who promise to pay the debts and who
continue the business of the dissolved partnership, creditors of the dissolved
partnership are also creditors of the person or partnership continuing the business.
5. When any partner wrongfully causes a dissolution and the remaining partners
continue the business under the provisions of section sixty-nine, paragraph (b) of
subdivision two, either alone or with others, and without liquidation of the
partnership affairs, creditors of the dissolved partnership are also creditors of the
person or partnership continuing the business.
6. When a partner is expelled and the remaining partners continue the business
either alone or with others, without liquidation of the partnership affairs, creditors of
the dissolved partnership are also creditors of the person or partnership continuing
the business.
7. The liability of a third person becoming a partner in the partnership continuing the
business under this section to the creditors of the dissolved partnership shall be
satisfied out of partnership property only.
8. When the business of a partnership after dissolution is continued under any
conditions set forth in this section the creditors of the dissolved partnership, as
against the separate creditors of the retiring or deceased partner or the
representative of the deceased partner, have a prior right to any claim of the retired
partner or the representative of the deceased partner against the person or
partnership continuing the business, on account of the retired or deceased partners
interest in the dissolved partnership or on account of any consideration promised
for such interest or for his right in partnership property.
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9. Nothing in this section shall be held to modify any right of creditors to set aside
any assignment on the ground of fraud.
10. The use by the person or partnership continuing the business of the partnership
name, or the name of a deceased partner as part thereof, shall not of itself make the
individual property of the deceased partner liable for any debts contracted by such
person or partnership.

S 73. Rights of retiring or estate of deceased partner when the business is
continued.
When any partner retires or dies, and the business is continued under any of the
conditions set forth in section seventy-two, subdivisions one, two, three, five and six,
or section sixty-nine, paragraph (b) of subdivision two, without any settlement of
accounts as between him or his estate and the person or partnership continuing the
business, unless otherwise agreed, he or his legal representative as against such
persons or partnership may have the value of his interest at the date of dissolution
ascertained, and shall receive as an ordinary creditor an amount equal to the value
of his interest in the dissolved partnership with interest, or, at his option or at the
option of his legal representative, in lieu of interest, the profits attributable to the
use of his right in the property of the dissolved partnership; provided that the
creditors of the dissolved partnership as against the separate creditors, or the
representative of the retired or deceased partner, shall have priority on any claim
arising under this section, as provided by section seventy-two, subdivision eight of
this chapter.

S 74. Accrual of actions.
The right to an account of his interest shall accrue to any partner, or his legal
representative, as against the winding up partners or the surviving partners or the
person or partnership continuing the business, at the date of dissolution, in the
absence of agreement to the contrary.

S 75. Continuance of partnership business during action for accounting.
In an action brought to dissolve a partnership, or for an accounting between
partners, or affecting the continued prosecution of the business, the court may, in its
discretion, by order, authorize the partnership business to be continued, during the
pendency of the action by one or more of the partners, upon their executing and
filing with the clerk an undertaking, in such a sum and with such sureties as the
order prescribes, to the effect that they will obey all orders of the court, in the
action, and perform all thi ngs which the judgment therein requires them to perform.
The court may impose such other conditions as it deems proper, and it may in its
discretion at any time thereafter require a new undertaking to be given. The court
may also ascertain the value of the partnership property, and of the interest of the
respective partners by a reference or otherwise, and may direct an accounting
between any of the partners; and the judgment may make such provision for the
payment to the retiring partners, for their interest, and with respect to the rights of
creditors, the title to the partnership property, and otherwise, as justice requires,
with or without the appointment of a receiver, or a sale of the partnership property.

ARTICLE 7.
BUSINESS AND PARTNERSHIP NAMES.

Section 80. When partnership or business name may be continued.
81. Certificate to be filed.
82. Fictitious firm names prohibited.
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S 80. When partnership or business name may be continued. The use of a
partnership or a business name may be continued in either of the following cases:
1. Where the business of any firm or partnership in this state, having business
relations with foreign countries or which has transacted business in this state or in
any other state or territory of the United States continues to be conducted by some
or any of the partners, their or any of their assignees, appointees or successors in
interest.
2. Where any partnership shall hereafter be formed under the laws of this state it
may use the firm or corporate name of any general or limited partnership or of any
corporation, domestic or foreign, which may theretofore have carried on its business
within this state, where said general or limited partnership or corporation has
discontinued or shall be about to discontinue its business within the state, and where
a majority of the partners, general or special, in either of such last mentioned
copartnerships or of the survivors thereof shall be members of the new
copartnership, or where a majority of the members of such copartnership theretofore
existing or of the surviving members thereof, or where stockholders holding a
majority of the stock of such corporation shall consent in writing to the use of such
firm or corporate name by such new copartnership; or
3. Where any resident of this state dies, who at the time of his death and for at least
five years immediately prior thereto, conducted and carried on in his sole name, any
business in this state, or who at the time of his death, so conducted and carried on
any business having relation with other states or foreign countries, the right to use
the name of such person, for the purpose of continuing and carrying on such
business, shall survive and pass and be disposed of and accounted for as a part of
the personal estate of such deceased person, and such business may be continued
and carried on under such name by any person who comes into the legal possession
thereof.

S 81. Certificate to be filed.
Whenever a partnership or business name continues to be used as provided by
section eighty, the person or persons using such name shall sign and acknowledge or
swear to a certificate, declaring the person or persons intending to deal under such
name, with their respective places of residence, and file the same in the clerks office
of the county where the principal place of business is located, and cause a copy of
such certificate to be published once in each week for four consecutive weeks in a
newspaper of the city or town in which such principal place of business is located, or
if none be published in such city or town, in the newspaper nearest thereto. A county
clerk with whom any such certificate is filed, shall keep a register in which shall be
entered in alphabetical order the name of every such partnership and of the partners
thereof, and every such business name of a deceased person and the names of the
person filing certificates therefor.

S 82. Fictitious firm names prohibited.
No person shall hereafter transact business in the name of a partner not interested
in his firm, and when the designation "and company," or "and Co." is used, it shall
represent an actual partner; but a violation of this section shall not be a defense in
an action or proceeding brought by an assignee for the benefit of creditors or by a
receiver of the property of or by an executor or administrator of a person who has
violated the same.

ARTICLE 8.
LIMITED PARTNERSHIPS.
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Section 90. Limited partnership defined.
91. Formation.
92. Business which may be carried on.
93. Character of limited partners contribution.
94. Name not to contain surname of limited partner;
exceptions.
95. Liability for false statements in certificate.
96. Limited partner not liable to creditors.
97. Admission of additional limited partners.
98. Rights, powers and liabilities of a general partner.
99. Rights of a limited partner.
100. Status of person erroneously believing himself a limited
partner.
101. One person both general and limited partner.
102. Loans and other business transactions with limited
partner.
103. Relation of limited partners inter se.
104. Compensation of limited partner.
105. Withdrawal or reduction of limited partners
contribution.
106. Liability of limited partner to partnership.
107. Nature of interest in partnership.
108. Assignment of interest.
109. Effect of retirement, death or insanity of a general
partner.
110. Death of limited partner.
111. Rights of creditors of limited partner.
112. Distribution of assets.
113. Certificate cancelled or amended.
114. Requirements for amendment or cancellation.
115. Parties to actions.
115-a. Limited partners derivative action brought in the right
of a limited partnership to procure a judgment in its
favor.
115-b. Security for expenses in limited partners derivative
action brought in the right of the limited partnership
to procure a judgment in its favor.
115-c. Indemnification of general partner in actions in the
right of a limited partnership to procure a judgment in
its favor.
116. Short title.
117. Rules of construction.
118. Rules for cases not covered.
119. Existing limited partnerships.

S 90. Limited partnership defined.
A limited partnership is a partnership formed by two or more persons under the
provisions of section ninety-one, having as members one or more general partners
and one or more limited partners. The limited partners as such shall not be bound by
the obligations of the partnership.

S 91. Formation.
(1) Two or more persons desiring to form a limited partnership shall
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(a) Sign and acknowledge or swear to a certificate, which shall state.
I. The name of the partnership.
II. The character of the business.
III. The location of the principal place of business.
IV. The name and place of residence of each member; general and limited partners
being respectively designated.
V. The term for which the partnership is to exist.
VI. The amount of cash and a description of and the agreed value of the other
property contributed by each limited partner.
VII. The additional contributions, if any, agreed to be made by each limited partner
and the times at which or events on the happening of which they shall be made.
VIII. The time, if agreed upon, when the contribution of each limited partner is to be
returned.
IX. The share of the profits or the other compensation by way of income which each
limited partner shall receive by reason of his contribution.
X. The right, if given, of a limited partner to substitute an assignee as contributor in
his place, and the terms and conditions of the substitution.
XI. The right, if given, of the partners to admit additional limited partners.
XII. The right, if given, of one or more of the limited partners to priority over other
limited partners, as to contributions or as to compensation by way of income, and
the nature of such priority.
XIII. The right, if given, of the remaining general partner or partners to continue the
business on the death, retirement or insanity of a general partner, and
XIV. The right, if given, of a limited partner to demand and receive property other
than cash in return for his contribution.
(b) File the certificate in the office of the county clerk of the county in which the
principal office of such partnership is located. Immediately after the filing of the
certificate, a copy of the same or a notice containing the substance thereof, shall be
published once in each week for six successive weeks, in two newspapers of the
county in which such original certificate is filed, to be designated by the county clerk,
one of which newspapers shall be a newspaper published in the city or town in which
the principal place of business is intended to be located, if a newspaper be published
therein; or, if no newspaper is published therein, in the newspaper nearest thereto,
and proof of such publication by the affidavit of the printer or publisher of each of
such newspapers must be filed with the original certificate.
(2) If there has been substantial compliance in good faith with the requirements of
paragraph (a) of subdivision one of this section, a limited partnership is formed and
may commence the transaction of business as such upon the filing of its certificate
as required by paragraph (b) of subdivision one of this section and the effectuation
of the first of the six successive weekly publications required by said paragraph (b);
provided, however, that the continued existence of a limited partnership as such
shall be conditioned upon completion of the publication requirement contained in said
paragraph (b).

S 92. Business which may be carried on.
A limited partnership may carry on any business which a partnership without limited
partners may carry on.

S 93. Character of limited partners contribution.
The contributions of a limited partner may be cash or other property, but not
services.

S 94. Name not to contain surname of limited partner; exceptions.
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(1) The surname of a limited partner shall not appear in the partnership
name, unless (a) It is also the surname of a general partner, or (b) Prior to the time
when the limited partner became such the business had been carried on under a
name in which his surname appeared.
(2) A limited partner whose name appears in a partnership name contrary to the
provisions of subdivision one of this section is liable as a general partner to
partnership creditors who extend credit to the partnership without actual knowledge
that he is not a general partner.

S 95. Liability for false statements in certificate.
If the certificate contains a false statement, one who suffers loss by reliance on such
statement may hold liable any party to the certificate who knew the statement to be
false
(a) At the time he signed the certificate, or
(b) Subsequently, but within a sufficient time before the statement
was relied upon to enable him to cancel or amend the certificate, or to file a petition
for its cancellation or amendment as provided in section one hundred and fourteen of
this article.

S 96. Limited partner not liable to creditors.
A limited partner shall not become liable as a general partner unless, in addition to
the exercise of his rights and powers as a limited partner, he takes part in the
control of the business; and the exercise of the rights and powers granted by
subdivision three of section ninety-nine of this chapter shall not constitute taking
part in the control of the business. The commencement of or other participation by a
limited partner in an action brought pursuant to section one hundred fifteen-a of this
article shall not be deemed to be a taking part in the control of the business within
the meaning of this section.

S 97. Admission of additional limited partners.
After the formation of a limited partnership, additional limited partners may be
admitted upon filing an amendment to the original certificate in accordance with the
requirements of section one hundred and fourteen.

S 98. Rights, powers and liabilities of a general partner.
(1) A general partner shall have all the rights and powers and be subject to all the
restrictions and liabilities of a partner in a partnership without limited partners,
except that without the written consent or ratification of the specific act by all the
limited partners, a general partner or all of the general partners have no authority to
(a) Do any act in contravention of the certificate.
(b) Do any act which would make it impossible to carry on the ordinary business of
the partnership.
(c) Confess a judgment against the partnership.
(d) Possess partnership property, or assign their rights in specific partnership
property, for other than a partnership purpose.
(e) Admit a person as a general partner.
(f) Admit a person as a limited partner, unless the right so to do is given in the
certificate.
(g) Continue the business with partnership property on the death, retirement or
insanity of a general partner, unless the right so to do is given in the certificate.

S 99. Rights of a limited partner.
(1) A limited partner shall have the same rights as a general partner to
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(a) Have the partnership books kept at the principal place of business of the
partnership, and at all times to inspect and copy any of them.
(b) Have on demand true and full information of all things affecting the partnership,
and a formal account of partnership affairs whenever circumstances render it just
and reasonable, and
(c) Have dissolution and winding up by decree of court.
(2) A limited partner shall have the right to receive a share of the profits or other
compensation by way of income, and to the return of his contribution as provided in
sections one hundred and four and one hundred and five of this article.
(3) When the limited partnership is qualified as an investment company under the
Investment Company Act of 1940, the limited partner shall have the right to vote:
(a) in the election of directors or trustees of the investment company; (b) to approve
or terminate investment advisory or underwriting contracts; (c) for approval of
auditors; and (d) any other matters that the Investment Company Act of 1940
requires to be approved by the holders of beneficial interests in the investment
company.

S 100. Status of person erroneously believing himself a limited partner.
A person who has contributed to the capital of a business conducted by a person or
partnership erroneously believing that he has become a limited partner in a limited
partnership is not, by reason of his exercise of the rights of a limited partner, a
general partner with the person or in the partnership carrying on the business, or
bound by the obligations of such person or partnership; provided that on
ascertaining the mistake he promptly renounces his interest in the profits of the
business, or other compensation by way of income.

S 101. One person both general and limited partner.
(1) A person may be a general partner and a limited partner in the same partnership
at the same time.
(2) A person who is a general, and also at the same time a limited partner, shall
have all the rights and powers and be subject to all the restrictions of a general
partner; except that, in respect to his contributions, he shall have the rights against
the other members which he would have had if he were not also a general partner.

S 102. Loans and other business transactions with limited partner.
(1) A limited partner also may loan money to and transact other business with the
partnership, and, unless he is also a general partner, receive on account of resulting
claims against the partnership, with general creditors, a pro rata share of the assets.
No limited partner shall in respect to any such claim
(a) Receive or hold as collateral security any partnership property,
or,
(b) Receive from a general partner or the partnership any payment, conveyance or
release from liability, if at the time the assets of the partnership are not sufficient to
discharge partnership liabilities to persons not claiming as general or limited
partners.
(2) The receiving of collateral security, or a payment, conveyance or release in
violation of the provisions of subdivision one is a fraud on the creditors of the
partnership.

S 103. Relation of limited partners inter se.
Where there are several limited partners the members may agree that one or more
of the limited partners shall have a priority over other limited partners as to the
return of their contributions, as to their compensation by way of income, or as to any
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other matter. If such an agreement is made it shall be stated in the certificate, and
in the absence of such a statement all the limited partners shall stand upon equal
footing.

S 104. Compensation of limited partner.
A limited partner may receive from the partnership the share of the profits or the
compensation by way of income stipulated for in the certificate; provided, that after
such payment is made, whether from the property of the partnership or that of a
general partner, the partnership assets are in excess of all liabilities of the
partnership except liabilities to limited partners on account of their contributions and
to general partners.

S 105. Withdrawal or reduction of limited partners contribution.
(1) A limited partner shall not receive from a general partner or out of partnership
property any part of his contribution until
(a) All liabilities of the partnership, except liabilities to general partners and to
limited partners on account of their contributions, have been paid or there remains
property of the partnership sufficient to pay them.
(b) The consent of all members is had, unless the return of the contribution may be
rightfully demanded under the provisions of subdivision two, and
(c) The certificate is cancelled or so amended as to set forth the withdrawal or
reduction.
(2) Subject to the provisions of subdivision one, a limited partner may rightfully
demand the return of his contribution
(a) On the dissolution of a partnership, or,
(b) When the date specified in the certificate for its return has arrived, or,
(c) After he has given six months notice in writing to all other members, if no time is
specified in the certificate either for the return of the contribution or for the
dissolution of the partnership.
(3) In the absence of any statement in the certificate to the contrary or the consent
of all members, a limited partner, irrespective of the nature of his contribution, has
only the right to demand and receive cash in return for his contribution.
(4) A limited partner may have the partnership dissolved and its affairs wound up
when
(a) He rightfully but unsuccessfully demands the return of his contribution, or,
(b) The other liabilities of the partnership have not been paid, or the partnership
property is insufficient for their payment and the limited partner would otherwise be
entitled to the return of his contribution.

S 106. Liability of limited partner to partnership.
(1) A limited partner is liable to the partnership
(a) For the difference between his contribution as actually made and that stated in
the certificate as having been made, and
(b) For any unpaid contributions which he agreed in the certificate to make in the
future at the time and on the conditions stated in the certificate.
(2) A limited partner holds as trustee for the partnership
(a) Specific property stated in the certificate as contributed by him, but which was
not contributed or which has been wrongfully returned, and
(b) Money or other property wrongfully paid or conveyed to him on account of his
contribution.
(3) The liabilities of a limited partner as set forth in this section can be waived or
compromised only by the consent of all members; but a waiver or compromise shall
not affect the right of a creditor of a partnership, who extended credit or whose claim
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arose after the filing and before a cancellation or amendment of the certificate, to
enforce such liabilities.
(4) When a contributor has rightfully received the return in whole or in part of the
capital of his contribution, he is nevertheless liable to the partnership for any sum,
not in excess of such return with interest, necessary to discharge its liabilities to all
creditors who extended credit or whose claims arose before such return.

S 107. Nature of interest in partnership.
A limited partners interest in the partnership is personal property.

S 108. Assignment of interest.
(1) A limited partners interest is assignable.
(2) A substituted limited partner is a person admitted to all the rights of a limited
partner who has died or has assigned his interest in a partnership.
(3) An assignee, who does not become a substituted limited partner, has no right to
require any information or account of the partnership transactions or to inspect the
partnership books; he is only entitled to receive the share of the profits or other
compensation by way of income, or the return of his contribution, to which his
assignor would otherwise be entitled.
(4) An assignee shall have the right to become a substituted limited partner if all the
members, except the assignor, consent thereto or if the assignor, being thereunto
empowered by the certificate, gives the assignee that right.
(5) An assignee becomes a substituted limited partner when the certificate is
appropriately amended in accordance with section one hundred and fourteen of this
article.
(6) The substituted limited partner has all the rights and powers, and is subject to all
the restrictions and liabilities of his assignor, except those liabilities of which he was
ignorant at the time he became a limited partner and which could not be ascertained
from the certificate.
(7) The substitution of the assignee as a limited partner does not release the
assignor from liability to the partnership under sections ninety-five and one hundred
and six.

S 109. Effect of retirement, death or insanity of a general partner.
The retirement, death or insanity of a general partner dissolves the partnership,
unless the business is continued by the remaining general partners
(a) Under a right so to do stated in the certificate, or,
(b) With the consent of all members.

S 110. Death of limited partner.
(1) On the death of a limited partner his executor or administrator shall have all the
rights of a limited partner for the purpose of settling his estate, and such power as
the deceased had to constitute his assignee a substituted limited partner.
(2) The estate of a deceased limited partner shall be liable for all his liabilities as a
limited partner.

S 111. Rights of creditors of limited partner.
(1) On due application to a court of competent jurisdiction by any judgment creditor
of a limited partner, the court may charge the interest of the indebted limited
partner with payment of the unsatisfied amount of the judgment debt; and may
appoint a receiver, and make all other orders, directions, and inquiries which the
circumstances of the case may require.
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(2) The interest may be redeemed with the separate property of any general partner,
but may not be redeemed with partnership property.
(3) The remedies conferred by subdivision one of this section shall not be deemed
exclusive of others which may exist.
(4) Nothing in this act shall be held to deprive a limited partner of his statutory
exemption.

S 112. Distribution of assets.
(1) In settling accounts after dissolution the liabilities of the partnership shall be
entitled to payment in the following order:
(a) Those to creditors, in the order of priority as provided by law, except those to
limited partners on account of their contributions, and to general partners.
(b) Those to limited partners in respect to their share of the profits and other
compensation by way of income on their contributions.
(c) Those to limited partners in respect to the capital of their contributions.
(d) Those to general partners other than for capital and profits.
(e) Those to general partners in respect to profits.
(f) Those to general partners in respect to capital.
(2) Subject to any statement in the certificate or to subsequent agreement, limited
partners share in the partnership assets in respect to their claims for capital, and in
respect to their claims for profits or for compensation by way of income on their
contributions respectively, in proportion to the respective amounts of such claims.

S 113. Certificate cancelled or amended.
(1) the certificate shall be cancelled when the partnership is dissolved or all limited
partners cease to be such.
(2) A certificate shall be amended when
(a) There is a change in the name of the partnership or in the amount or character of
the contribution of any limited partner,
(b) A person is substituted as a limited partner,
(c) An additional limited partner is admitted,
(d) A person is admitted as a general partner,
(e) A general partner retires, dies or becomes mentally ill, and the business is
continued under section one hundred and nine,
(f) There is a change in the character of the business of the partnership, or a change
in the location of the principal place of business,
(g) There is a false or erroneous statement in the certificate,
(h) There is a change in the time as stated in the certificate for the dissolution of the
partnership or for the return of a contribution,
(i) A time is fixed for the dissolution of the partnership, or the return of a
contribution, no time having been specified in the certificate, or,
(j) The members desire to make a change in any other statement in the certificate in
order that it shall accurately represent the agreement between them.

S 114. Requirements for amendment or cancellation.
(1) The writing to amend a certificate shall
(a) Conform to the requirements of subdivision one-a of section ninety-one of this
article, as far as necessary to set forth clearly the change in the certificate which it is
desired to make, and
(b) Be signed and acknowledged or sworn to by all members, except that a writing
making a change in the statement of the place of residence of any member shall be
signed and acknowledged by such member only. An amendment substituting a
limited partner or adding a limited or general partner shall be signed also by the
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member to be substituted or added, and when a limited partner is to be substituted,
the amendment shall also be signed by the assigning limited partner.
(2) The writing to cancel a certificate shall be signed by all members.
(3) A person desiring the cancellation or amendment of a certificate, if any person
designated in subdivisions one and two of this section as a person who must execute
the writing refuses to do so, may petition the supreme court to direct a cancellation
or amendment thereof.
(4) If the court finds that the petitioner has a right to have the writing executed by a
person who refuses to do so, it shall order the county clerk of the county where the
certificate is filed to file the cancellation or amendment of the certificate; and where
the certificate is to be amended, the court shall also cause to be filed in said office
a certified copy of its decree setting forth the amendment.
(5) A certificate is amended or cancelled when there is filed in the office of the
county clerk where the certificate is filed.
(a) A writing in accordance with the provisions of subdivisions one and two of this
section, or,
(b) A certified copy of the order of the court in accordance with the provisions of
subdivision four thereof
Provided, however, that in the case of an amendment made where there is a change
to another county of the location of the principal place of business, a certificate is not
amended until a certified copy of the certificate and certified copies of all writings or
certified copies of orders amending the certificate are also filed in the office of the
county clerk of the county to which the location of the principal place of business is
changed.
(6) After the certificate is duly amended in accordance with this section, the
amended certificate shall thereafter be for all purposes the certificate provided for by
this article, and when the certificate has been amended by reason of a change to
another county of the location of the principal place of business, the county in which
a certified copy of the amended certificate was last filed shall thereafter be deemed
to be the county where the certificate is filed.

S 115. Parties to actions.
A contributor, unless he is a general partner, is not a proper party to proceedings by
or against a partnership, except where the object is to enforce a limited partners
right against or liability to the partnership, and except in cases provided for in
section one hundred fifteen-a of this article.

S 115-a. Limited partners derivative action brought in the right of a limited
partnership to procure a judgment in its favor.
1. An action may be brought in the right of a limited partnership to procure a
judgment in its favor, by a limited partner, additional limited partner, or substituted
limited partner.
2. In any such action, it shall be made to appear that at least one plaintiff is such a
limited partner, additional limited partner or substituted limited partner at the time
of bringing the action, and that he was such at the time of the transaction of which
he complains, or that his status as substituted limited partner devolved upon him by
operation of law or pursuant to the terms of the certificate of limited partnership or
written partnership agreement in effect at the time of the transaction of which he
complains.
3. In any such action, the complaint shall set forth with particularity the efforts of
the plaintiff to secure the initiation of such action by the general partner or partners,
or the reasons for not making such effort.
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4. Such action shall not be discontinued, compromised or settled, without the
approval of the court having jurisdiction of the action. If the court shall determine
that the interests of the limited partners, additional limited partners or substituted
limited partners, will be substantially affected by such discontinuance, compromise
or settlement, the court, in its discretion, may direct that notice, by publication or
otherwise, shall be given to the limited, additional or substituted limited partners
whose interests it determines will be so affected; if notice is so directed to be given,
the court may determine which one or more of the parties to the action shall bear
the expense of giving the same, in such amount as the court shall determine and
find to be reasonable in the circumstances, and the amount of such expense shall be
awarded as special costs of the action and recoverable in the same manner as
statutory taxable costs.
5. If the action on behalf of the limited partnership was successful, in whole or in
part, or if anything was received by the plaintiff or plaintiffs or a claimant or
claimants as a result of a judgment, compromise or settlement of an action or claim,
the court may award the plaintiff or plaintiffs, claimant or claimants, reasonable
expenses, including reasonable attorneys fees, and shall direct him or them to
account to the partnership for the remainder of the proceeds so received by him or
them. This paragraph shall not apply to any judgment rendered for the benefit of
injured limited, additional or substituted limited partners only and limited to a
recovery of the loss or damage sustained by them.

S 115-b. Security for expenses in limited partners derivative action brought
in the right of the limited partnership to procure a judgment in its favor.
In any action specified in section one hundred fifteen-a of this article, unless the
contributions of or allocable to plaintiff or plaintiffs to partnership property amount to
five percent or more of the contributions of all limited partners, in their status as
limited partners, or such contributions of or allocable to such plaintiff or plaintiffs
have a fair value in excess of fifty thousand dollars, the limited partnership in whose
right such action is brought shall be entitled at any stage of the proceedings before
final judgment to require the plaintiff or plaintiffs to give security for the reasonable
expenses, including attorneys fees, which may be incurred by it in connection with
such action and by the other parties defendant in connection therewith for which the
limited partnership may become liable under this article under any contract or
otherwise under law, to which the limited partnership shall have recourse in such
amount as the court having jurisdiction of such action shall determine upon the
termination of such action. The amount of such security may thereafter from time to
time be increased or decreased in the discretion of the court having jurisdiction of
such action upon showing that the security provided has or may become inadequate
or excessive.

S 115-c. Indemnification of general partner in actions in the right of a
limited partnership to procure a judgment in its favor.
1. No provision made to indemnify general partners for the defense of any action
brought pursuant to section one hundred fifteen-a of this article, whether contained
in the articles of limited partnership, agreement or otherwise, nor any award of
indemnification by a court, shall be valid unless consistent with this section.
2. A limited partnership may indemnify any general partner, made a party to an
action in the right of a limited partnership to procure a judgment in its favor by
reason of the fact that he, his testator or intestate was a general partner in the
limited partnership, against the reasonable expenses, including attorneys fees,
actually and necessarily incurred by him in connection with the defense of such
action, or in connection with an appeal therein, except in relation to matters as to
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which such general partner is adjudged to have breached his duty to the limited
partnership.
3. The indemnification authorized under subdivision two of this section shall in no
case include
(a) amounts paid in settling or otherwise disposing of a threatened action, or
pending action with or without court approval, or
(b) expenses incurred in defending a threatened action, or pending action which is
settled or otherwise disposed of without court approval.
4. A general partner who has been wholly successful on the merits or otherwise in
the defense of an action of the character described in subdivision two of this section
shall be entitled to indemnification as authorized in subdivisions two and three of this
section.
5. Except as provided in subdivision four of this section, any indemnification under
subdivision two, unless ordered by a court under subdivision six, shall be made by
the limited partnership only if authorized in the specific case
(a) by a majority of all the general partners, excluding any partners who are parties
to such action, upon a finding that the general partner to be indemnified has met the
standard of conduct set forth in subdivision two, or,
(b) if a majority of general partners who are not parties to such action is not
obtainable with due diligence by the general partner or partners, upon the opinion of
independent legal counsel that indemnification is proper in the circumstances
because the standard of conduct set forth in subdivision two has been met by the
general partner to be indemnified.
6. (a) Notwithstanding the failure of the limited partnership to provide
indemnif ication, and despite any contrary determination by the general partners,
indemnification shall be awarded by a court to the extent authorized under
subdivisions two and four of this section.

Application therefor may be made, in every case, either
(i) in the action in which the expenses were incurred or other amounts were paid, or
(ii) to the supreme court in a separate proceeding, in which case the application shall
set forth the disposition of any previous application made to any court for the same
relief and also reasonable cause for the failure to make application for such relief in
the action in which the expenses were incurred or other amounts were paid.
(b) The application shall be made in such manner and form as may be required by
the applicable rules of court or, in the absence thereof, by direction of a court to
which it is made. Such application shall be on notice to the limited partnership, given
through a general partner, if any, other than the general partner making the
application. The court may also direct that notice be given at the expense of the
limited partnership, to the limited partners and such other persons as it may
designate in such manner as it may require. When there is no general partner other
than those making the application, notice shall be given, as herein provided, to the
limited partners.
(c) When indemnification is sought by judicial action, the court may allow a general
partner such reasonable expenses, including attorneys fees, during the pendency of
the litigation as are necessary in connection with his defense therein, if the court
shall find that the defendant has by his pleadings or during the course of the
litigation raised genuine issues of fact or law.
7. Expenses incurred in defending an action of the character described in subdivision
two of this section may be paid voluntarily by the limited partnership in advance of
the final disposition of such action if authorized under subdivision five of this section.
8. All expenses incurred in defending an action which are allowed by the court under
subdivisions six or seven of this section shall be repaid in case the general partner
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receiving such advancement or allowance is ultimately found, under the procedure
set forth in this section, not to be entitled to indemnification or, where
indemnification is granted, to the extent the expenses so advanced by the general
partnership or allowed by the court exceed the indemnification to which he is
entitled.
9. No indemnification, advancement or allowance shall be made under this section in
any circumstance where it appears
(a) that indemnification would be inconsistent with a provision of the certificate of
limited partnership, agreement, partnership resolution or other proper partnership
action, in effect at the time of accrual of the alleged cause of action asserted in the
threatened or pending action in which the expenses were incurred or other amounts
were paid, which prohibits or otherwise limits indemnification; or
(b) if there has been a settlement approved by the court, that the indemnification
would be inconsistent with any condition with respect to indemnification expressly
imposed by the court in approving the settlement.

S 116. Short title.
This article shall be known and may be cited as the uniform limited partnership act.

S 117. Rules of construction.
(1) The rule that statutes in derogation of the common law are to be strictly
construed shall have no application to this article.
(2) This article shall be so interpreted and construed as to effect its general purpose.
(3) This article shall not be so construed as to impair the obligations of any contract
existing when this article takes effect, nor to affect any action or proceeding begun
or right accrued before this article takes effect.

S 118. Rules for cases not covered.
In any case not provided for in this article the rules of law and equity, including the
law merchant, shall govern.

S 119. Existing limited partnerships.
(1) A limited partnership formed under any statute of this state prior to the adoption
of this article may become a limited partnership under this article by complying with
the provisions of section ninety-one, provided the certificate sets forth
(a) The amount of the original contribution of each limited partner, and the time
when the contribution was made, and
(b) That the property of the partnership exceeds the amount sufficient to discharge
its liabilities to persons not claiming as general or limited partners by an amount
greater than the sum of the contributions of its limited partners.
(2) The provisions of this article, or the repeal of article eight of this chapter, shall
not affect or impair any act done or right accrued, acquired or established by a
limited partnership formed under any statute of this state prior to its adoption, until
or unless it becomes a limited partnership in accordance with the provisions of this
article, and the same may be conducted in the same manner and to the same extent
as if this article had not been passed.

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ARTICLE 8-A
REVISED LIMITED PARTNERSHIP ACT

Section 121-101. Definitions.
121-102. Partnership name.
121-103. Reservation of partnership name.
121-104. Statutory designation of secretary of state as agent
for service of process.
121-104-A. Resignation for receipt of process.
121-105. Registered agent.
121-106. Records.
121-107. Nature of business.
121-108. Business transactions of partner with the
partnership.
121-109. Service of process on limited partnerships.
121-110. The partnership agreement.
121-201. Certificate of limited partnership.
121-202. Amendment of the certificate of limited partnership.
121-202-A. Certificate of change.
121-203. Cancellation of certificate.
121-204. Execution of certificates.
121-205. Execution, amendment or cancellation by judicial
act.
121-206. Filing with the department of state.
121-207. Liability for false statement in certificate.
121-208. Restated certificate of limited partnership.
121-301. Admission of limited partners.
121-302. Classes and voting by limited partners.
121-303. Liability to third parties.
121-304. Person erroneously believing himself a limited
partner.
121-401. Admission of additional general partners.
121-402. Events of withdrawal of a general partner.
121-403. General powers and liabilities.
121-404. Contributions by a general partner.
121-405. Classes and voting by general partners.
121-501. Form of contribution.
121-502. Liability for contributions.
121-503. Sharing of profits and losses.
121-504. Sharing of distributions.
121-601. Interim distributions.
121-602. Withdrawal of a general partner.
121-603. Withdrawal of a limited partner.
121-604. Right to distribution upon withdrawal.
121-605. Distribution in kind.
121-606. Right to distribution.
121-607. Limitations on distribution.
121-701. Nature of partnership interest.
121-702. Assignment of partnership interest.
121-703. Rights of creditor.
121-704. Right of assignee to become limited partner.
121-705. Liability upon assignment.
121-706. Power of estate of deceased or incompetent partner.
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121-801. Nonjudicial dissolution.
121-802. Judicial dissolution.
121-803. Winding up.
121-804. Distribution of assets.
121-901. Law governing.
121-902. Application for authority, contents.
121-903. Certificate of amendment.
121-903-A. Certificate of change.
121-904. Application for authority; effect.
121-905. Surrender of certificate of authority.
121-906. Termination of existence.
121-907. Doing business without certificate of authority.
121-908. Violations.
121-1001. Parties to actions.
121-1002. Limited partners derivative action.
121-1003. Security for expenses.
121-1004. Indemnification of general partner.
121-1101. Merger and consolidation of limited partnerships.
121-1102. Procedure for merger or consolidation.
121-1103. Certificate of merger or consolidation; contents.
121-1104. Effect of merger or consolidation.
121-1105. Payment for interest of dissenting limited partners.
121-1106. Mergers and consolidations involving other business
entities.
121-1201. Existing limited partnership.
121-1202. Adoption by previously formed limited partnerships.
121-1300. Fees.

S 121-101. Definitions.
As used in this article, unless the context otherwise requires:
(a) "Certificate of limited partnership" means the certificate referred to in section
121-201 of this article, and the certificate as amended.
(b) "Contribution" means any cash, property, services rendered, or a promissory
note or other binding obligation to contribute cash or property or to render services,
which a partner contributes to a limited partnership in his capacity as a partner.
(c) "Distribution" means the transfer of property by a limited partnership to one or
more of its partners in his capacity as a partner.
(d) "Event of withdrawal of a general partner" means an event that causes a person
to cease to be a general partner as provided in section 121-402 of this article.
(e) "Foreign limited partnership" means a partnership formed under the laws of any
jurisdiction, including any foreign country, other than the laws of this state and
having as partners one or more general partners and one or more limited partners.
(f) "General partner" means a person who has been admitted to a limited partnership
as a general partner in accordance with the partnership agreement and, if required
by the law of the jurisdiction under which the limited partnership or foreign limited
partnership, as the case may be, is organized, is so named in the certificate of
limited partnership or similar instrument.
(g) "Limited partner" means a person who has been admitted to a limited
partnership as a limited partner in accordance with the partnership agreement or as
otherwise provided by the law of the jurisdiction under which the limited partnership
or foreign limited partnership, as the case may be, is organized.
(h) "Limited partnership" and "domestic limited partnership" mean, unless the
context otherwise requires, a partnership (i) formed by two or more persons
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pursuant to this article or which complies with subdivision (a) of section 121-1202 of
this article and (ii) having one or more general partners and one or more limited
partners.
(i) "Majority in interest of the limited partners" and "two-thirds in interest of the
limited partners" mean limited partners whose aggregate share of the current profits
of the partnership constitute more than one-half or two-thirds, respectively, of the
aggregate shares of all limited partners.
(j) "Office of limited partnership" means the office of the location of which is stated
in the certificate of limited partnership of a domestic limited partnership, or in the
application for authority of a foreign limited partnership or any amendment thereof.
Such office need not be a place where business activities are conducted by such
limited partnership.
(j-1) "Other business entity" means any person other than a natural person, general
partnership (including any registered limited liability partnership or registered foreign
limited liability partnership) or domestic limited partnership.
(k) "Partner" means a limited or general partner.
(l) "Partnership agreement" means any written agreement of the partners as to the
affairs of a limited partnership and the conduct of its business.
(m) "Partnership interest" means a partners share of the profits and losses of a
limited partnership and right to receive distributions.
(n) "Person" means a natural person, partnership, limited partnership (domestic or
foreign), limited liability company (domestic or foreign), trust, estate, custodian,
nominee, association, corporation or any other individual or entity in its own or any
representative capacity.
(o) "Process" means judicial process and all orders, demands, notices or other
papers required or permitted by law to be personally served on a limited partnership
(domestic or foreign), for the purpose of acquiring jurisdiction of such limited
partnership in any action or proceeding, civil or criminal, whether judicial,
administrative, arbitrative or otherwise, in this state or in the federal courts sitting
in or for this state.
(p) "State" means a state, territory, or possession of the United States, the District
of Columbia, or the Commonwealth of Puerto Rico.

S 121-102. Partnership name.
The name of each limited partnership as set forth in its certificate of limited
partnership:
(a) (1) shall contain without abbreviation the words "Limited Partnership" or the
abbreviation "L.P.";
(2) shall be such as to distinguish it from the name of (i) any limited partnership as
defined in subdivision (h) of section 121-101 of this article, or (ii) any foreign limited
partnership authorized to do business as a foreign limited partnership in this state;
(3)(A) may not contain the following phrases or any abbreviation or derivative
thereof:
board of trade state trooper
chamber of commerce tenant relocation
community renewal urban development
state police urban relocation
(B) may not contain the following words, or any abbreviation or derivative thereof:
acceptance indemnity
annuity insurance
assurance investment
bank lawyer
benefit loan
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bond mortgage
casualty savings
doctor surety
endowment title
fidelity trust
finance underwriter
guaranty

unless the approval of the superintendent of banks or the superintendent of
insurance, as appropriate, is attached to the certificate of limited partnership; or
unless the word "doctor" or "lawyer" or an abbreviation or derivative thereof is
used in a context which clearly denotes a purpose other than the practice of law or
medicine.
(C) shall not, unless the approval of the state department of social services is
attached to the certificate of limited partnership or application for authority or
amendment thereof, contain the word "blind" or "handicapped". Such approval shall
be granted by the state department of social services if in its opinion the word
"blind" or "handicapped" as used in the limited partnership name proposed will not
tend to mislead or confuse the public into believing that the limited partnership is
organized for charitable or nonprofit purposes related to the blind or the
handicapped.
(D) shall not, unless the approval of the attorney general is attached to the
certificate of limited partnership or application for authority or amendment thereof,
contain the word "exchange" or any abbreviation or derivative thereof. Such
approval shall not be granted by the attorney general if in his or her opinion the use
of the word "exchange" in the proposed limited partnership name would falsely imply
that the limited partnership conducts its business at a place where trade is carried on
in securities or commodities by brokers, dealers or merchants.
(b) shall, unless the limited partnership or foreign limited partnership shall have
complied with the provisions of section one hundred thirty of the general business
law be the name used by the limited partnership in its conduct of business.
(c) notwithstanding paragraphs one and two of subdivision (a) of this section, a
limited partnership organized under the laws of this state prior to the effective date
of this article which shall file a certificate under section 121-1202 of this article
within one year of the effective date of this article may file under its name as
provided in its certificate of limited partnership on the effective date of this article
and thereafter may continue to use such name and a foreign limited partnership
which has been authorized to do business in this state prior to the effective date of
this article may continue to use the name under which it has heretofore done
business in this state.

S 121-103. Reservation of partnership name.
(a) Subject to section 121-102 of this article, the exclusive right to the use of a
name may be reserved by:
(1) Any person intending to organize a domestic limited partnership under this
article;
(2) Any domestic limited partnership or any foreign limited partnership authorized to
do business in this state intending to change its name;
(3) Any foreign limited partnership intending to apply for authority to do business in
this state and to adopt that name; and
(4) Any person intending to organize a foreign limited partnership and intending to
have it apply for authority to do business in this state.
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(b) A fictitious name for use pursuant to section 121-902 of this article may be
reserved by:
(1) Any foreign limited partnership intending to apply for authority to do business in
this state pursuant to subdivision (a) of section 121-902 of this article.
(2) Any authorized foreign limited partnership intending to change its fictitious name
under which it does business in this state.
(3) Any authorized foreign limited partnership which has changed its name in its
jurisdiction, such new name not being available in this state.
(c) Application to reserve a limited partnership name shall be delivered to the
department of state. It shall set forth the name and address of the applicant, the
name to be reserved, and a statement of the basis for the application under
subdivision (a) or (b) of this section. The secretary of state may require that there
be included in the application a statement as to the nature of the business to be
conducted by the limited partnership. If the name is available for limited partnership
use, the department of state shall reserve the name for the use of the applicant for a
period of sixty days and issue a certificate of reservation. The restrictions and
qualifications set forth in section 121-102 of this article are not waived by the
issuance of a certificate of reservation. The certificate of reservation shall include
the name of the applicant, the name reserved, and the date of reservation. The
certificate of reservation (or in lieu thereof an affidavit by the applicant or by his or
her agent or attorney that the certificate of reservation has been lost or destroyed)
shall accompany the certificate of limited partnership or the application for authority
when either is delivered to the department of state.
(d) The secretary of state may extend the reservation for additional periods of not
more than sixty days each, upon the written request of the applicant or his or her
attorney or agent delivered to the department of state, to be filed before expiration
of the reservation period then in effect. Such request shall have attached to it the
certificate of reservation of name. No more than two such extensions shall be
granted.

S 121-104. Statutory designation of secretary of state as agent for service
of process.
(a) The secretary of state shall be the agent for every domestic limited partnership
which has filed with the secretary of state a certificate making such designation and
every foreign limited partnership upon whom process may be served pursuant to this
article.
(b) No domestic or foreign limited partnership may be organized or authorized to do
business in this state under this article unless in its certificate of limited partnership
or application for authority it designates the secretary of state as such agent.
(c) Any designated post office address to which the secretary of state shall mail a
copy of process served upon him as agent of a domestic limited partnership or
foreign limited partnership shall continue until the filing of a certificate under this
article directing the mailing to a different post office address.
(d) The change authorized by subdivision (c) of this section may be accomplished by
filing a certificate pursuant to this chapter, which shall be executed by a general
partner.

S 121-104-A. Resignation for receipt of process.
(a) The party (or his/her legal representative) whose post office address has been
supplied by a domestic limited partnership or foreign limited partnership as its
address for process may resign. A certificate entitled "Certificate of Resignation for
Receipt of Process under Section 121-104-A of the Revised Limited Partnership Act"
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shall be signed by such party and delivered to the department of state. It shall set
forth:
(1) the name of the limited partnership and the date that its articles of organization
or application for authority was filed by the department of state.
(2) that the address of the party has been designated by the limited partnership as
the post office address to which the secretary of state shall mail a copy of any
process served on the secretary of state as agent for such limited partnership, and
that such party wishes to resign.
(3) that sixty days prior to the filing of the certificate of resignation with the
department of state the party has sent a copy of the certificate of resignation for
receipt of process by registered or certified mail to the address of the registered
agent of the designated limited partnership, if other than the party filing the
certificate of resignation, for receipt of process, or if the resigning limited partnership
has no registered agent, then to the last address of the designated limited
partnership, known to the party, specifying the address to which the copy was sent.
If there is no registered agent and no known address of the designating limited
partnership the party shall attach an affidavit to the certificate stating that a diligent
but unsuccessful search was made by the party to locate the limited partnership,
specifying what efforts were made.
(4) that the designated limited partnership is required to deliver to the department
of state a certificate of amendment or change providing for the designation by the
limited partnership of a new address and that upon its failure to file such certificate,
its authority to do business in this state shall be suspended.
(b) Upon the failure of the designating limited partnership to file a certificate of
amendment or change providing for the designation by the limited partnership of the
new address after the filing of a certificate of resignation for receipt of process with
the secretary of state, its authority to do business in this state shall be suspended.
(c) The filing by the department of state of a certificate of amendment or change
providing for a new address by a designating limited partnership shall annul the
suspension and its authority to do business in this state shall be restored and
continued as if no suspension had occured.
(d) The resignation for receipt of process shall become effective upon the filing by
the department of state of a certificate of resignation for receipt of process.
(e)(1) In any case in which a limited partnership suspended pursuant to this section
would be subject to the personal or other jurisdiction of the courts of this state under
article three of the civil practice law and rules, process against such limited
partnership may be served upon the secretary of state as its agent pursuant to this
section. Such process may be issued in any court in this state having jurisdiction of
the subject matter.
(2) Service of such process upon the secretary of state shall be made by personally
delivering to and leaving with him or his deputy, or with any person authorized by
the secretary of state to receive such service, at the office of the department of state
in the city of Albany, a copy of such process together with the statutory fee, which
fee shall be a taxable disbursement. Such service shall be sufficient if notice thereof
and a copy of the process are:
(i) delivered personally within or without this state to such limited partnership by a
person and in a manner authorized to serve process by law of the jurisdiction in
which service is made, or
(ii) sent by or on behalf of the plaintiff to such limited partnership by registered or
certified mail with return receipt requested to the last address of such limited
partnership known to the plaintiff.
(3)(i) Where service of a copy of process was effected by personal service, proof of
service shall be by affidavit of compliance with this section filed, together with the
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process, within thirty days after such service, with the clerk of the court in which the
action or special proceeding is pending. Service of process shall be complete ten
days after such papers are filed with the clerk of the court.
(ii) Where service of a copy of process was effected by mailing in accordance with
this section, proof of service shall be by affidavit of compliance with this section filed,
together with the process, within thirty days after receipt of the return receipt signed
by the limited partnership, or other official proof of delivery or of the original
envelope mailed. If a copy of the process is mailed in accordance with this section,
there shall be filed with the affidavit of compliance either the return receipt signed by
such limited partnership, or other official proof of delivery, if acceptance was refused
by it, the original envelope with a notation by the postal authorities that acceptance
was refused. If acceptance was refused a copy of the notice and process together
with notice of the mailing by registered or certified mail and refusal to accept shall be
promptly sent to such limited partnership at the same address by ordinary mail and
the affidavit of compliance shall so state. Service of process shall be complete ten
days after such papers are filed with the clerk of the court. The refusal to accept
delivery of the registered or certified mail or to sign the return receipt shall not affect
the validity of the service and such limited partnership refusing to accept such
registered or certified mail shall be charged with knowledge of the contents thereof.
(4) Service made as provided in this section without the state shall have the same
force as personal service made within this state.
(5) Nothing in this section shall affect the right to service process in any other
manner permitted by law.

S 121-105. Registered agent.
(a) In addition to the designation of the secretary of state, each limited partnership
or authorized foreign limited partnership may designate a registered agent upon
whom process against the limited partnership may be served. The agent must be (i)
a natural person who is a resident of this state or has a business address in this
stat e, or (ii) a domestic corporation or a foreign corporation authorized to do
(c) The registered agent of a limited partnership may resign as such agent. The
registered agent shall file a certificate with the department of state entitled,
"Certificate of resignation of registered agent of...(name of designating limited
partnership) under subdivision (c) of section 121-105 of the Revised Limited
Partnership Act" which shall be executed by such registered agent. It shall set forth:
(1) The name of the limited partnership, and if it has been changed, the name under
which it was organized. A foreign limited partnership must set forth its name and the
fictitious name the foreign limited partnership has agreed to use in this state
pursuant to section 121-902 of this article.
(2) The date the certificate of limited partnership or certificate of application for
authority of the limited partnership was filed by the department of state.
(3) That he resigns as registered agent for the limited partnership.
(4) That he has sent a copy of the certificate of resignation by registered mail to the
limited partnership at the post office address on file in the department of state
specified for the mailing of process or if such address is the address of the registered
agent, then to the office of the designating limited partnership and the jurisdiction of
its organization.
(d) The designation of a registered agent shall terminate thirty days after the filing
by the department of state of the certificate of resignation. A certificate designating a
new registered agent may be delivered to the department of state by the limited
partnership within the thirty days or thereafter.

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S 121-106. Records.
(a) Each domestic limited partnership shall maintain the following records, which
may, but need not, be maintained in this state:
(1) a current list of the full name and last known mailing address of each partner set
forth in alphabetical order together with the contribution and the share in profits and
losses of each partner or information from which such share can be readily derived;
(2) a copy of the certificate of limited partnership and all amendments thereto,
together with executed copies of any powers of attorney pursuant to which any
certificate or amendment has been executed;
(3) a copy of the partnership agreement, any amendments thereto and any amended
and restated partnership agreements; and
(4) a copy of the limited partnerships federal, state, and local income tax or
information returns and reports, if any, for the three most recent fiscal years.
(b) Any partner may, subject to reasonable standards as may be set forth in the
partnership agreement or otherwise established by the general partners, inspect and
copy at his own expense for any purpose reasonably related to the partners interest
as a partner the records referred to in subdivision (a) of this section, any financial
statements maintained by the limited partnership for the three most recent fiscal
years and other information regarding the affairs of the limited partnership as is just
and reasonable.

S 121-107. Nature of business.
A limited partnership may carry on any business that a partnership without limited
partners may carry on except as prohibited by law.

S 121-108. Business transactions of partner with the partnership.
Except as may be provided in the partnership agreement, a partner may lend money
to, borrow money from, act as a guarantor or surety for, provide collateral for the
obligations of, and transact other business with the limited partnership, and, subject
to other applicable law, has the same rights and obligations with respect thereto as a
person who is not a partner.

S 121-109. Service of process on limited partnerships.
(a) Service of process on the secretary of state as agent of a domestic or authorized
foreign limited partnership shall be made as follows:
(1) By personally delivering to and leaving with him or his deputy, or with any
person authorized by the secretary of state to receive such service, at the office of
the department of state in the city of Albany, duplicate copies of such process
together with the statutory fee, which fee shall be a taxable disbursement.
(2) The service on the limited partnership is complete when the secretary of state is
so served.
(3) The secretary of state shall promptly send one of such copies by certified mail,
return receipt requested, addressed to the limited partnership at the post office
address, on file in the department of state, specified for that purpose.
(b) In any case in which a non-domiciliary would be subject to the personal or other
jurisdiction of the courts of this state under article three of the civil practice law and
rules, a foreign limited partnership not authorized to do business in this state is
subject to a like jurisdiction. In any such case, process against such foreign limited
partnership may be served upon the secretary of state as its agent. Such process
may issue in any court in this state having jurisdiction of the subject matter. Service
of process upon the secretary of state shall be made by personally delivering to and
leaving with him or his deputy, or with any person authorized by the secretary of
state to receive such service, at the office of the department of state in the city of
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Albany, a copy of such process together with the statutory fee, which fee shall be a
taxable disbursement. Such service shall be sufficient if notice thereof and a copy of
the process are:
(1) Delivered personally without this state to such foreign limited partnership by a
person and in the manner authorized to serve process by law of the jurisdiction in
which service is made, or
(2) Sent by or on behalf of the plaintiff to such foreign limited partnership by
registered mail with return receipt requested, at the post office address specified for
the purpose of mailing process, on file in the department of state, or with any official
or body performing the equivalent function, in the jurisdiction of its creation, or if no
such address is specified, to its registered or other office there specified, or if no
such office is specified, to the last address of such foreign limited partnership known
to the plaintiff.
(3) Where service of a copy of process was effected by personal service, proof of
service shall be by affidavit of compliance with this section filed, together with the
process, within thirty days after such service with the clerk of the court in which the
(4) Where service of a copy of process was effected by mailing in accordance with
this section proof of service shall be by affidavit of compliance with this section filed,
by the foreign limited partnership, or other official proof of delivery or of the original
such foreign limited partnership or other official proof of delivery or, if acceptance
was refused by it, the original envelope with a notation by the postal authorities that
acceptance was refused. If acceptance was refused a copy of the notice and process
together with notice of the mailing by registered mail and refusal to accept shall be
promptly sent to such foreign limited partnership at the same address by ordinary
mail and the affidavit of compliance shall so state. Service of process shall be
complete ten days after such papers are filed with the clerk of the court. The refusal
to accept delivery of the registered mail or to sign the return receipt shall not affect
the validity of the service and such foreign limited partnership refusing to accept
such registered mail shall be charged with knowledge of the contents thereof.
(5) Service made as provided in this section shall have the same force as personal
service made within this state.
(c) The secretary of state shall keep a record of all process served upon him under
this section and shall record therein the date of such service and his action with
reference thereto.
(d) Nothing contained in this section shall limit or affect the right to serve any
process required or permitted by law to be served upon the limited partnership in
any other manner now or hereafter permitted by law or applicable rules of
procedure.

S 121-110. The partnership agreement.
(a) The partnership agreement shall be signed by all general partners, in person or
by attorneys in fact, and may, but need not, be signed by the limited partners.
(b) A limited partnership shall have a written partnership agreement. Except as
provided in sections 121-702 and 121-705 of this article, no person shall have any
rights, or be subject to the liabilities, of a general partner who has not signed the
partnership agreement in person or by attorney in fact.
(c) The partnership agreement of a limited partnership may be amended from time
to time as provided therein; provided, however, that, except as may be provided
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otherwise in the partnership agreement, without the written consent of each partner
adversely affected thereby, no amendment of the partnership agreement shall be
made which (i) increases the obligations of any limited partner to make
contributions, (ii) alters the allocation for tax purposes of any items of income, gain,
loss, deduction or credit, (iii) alters the manner of computing the distributions of any
partner, (iv) alters, except as provided in subdivision (a) of section 121-302 of this
article, the voting or other rights of any limited partner, (v) allows the obligation of a
partner to make a contribution to be compromised by consent of fewer than all
partners or (vi) alters the procedures for amendment of the partnership agreement.

S 121-201. Certificate of limited partnership.
(a) In order to form a limited partnership the general partners shall execute a
partnership agreement, and a certificate of limited partnership shall be executed in
accordance with section 121-204 of this article. The certificate, entitled "Certificate of
limited partnership of........................ (name of limited partnership) under section
121-201 of the Revised Limited Partnership Act," shall be filed with the department
of state in accordance with section 121-206 of this article and shall set forth:
(1) the name of the limited partnership;
(2) the county within this state, in which the office of the limited partnership is to be
located;
(3) a designation of the secretary of state as agent of the limited partnership upon
whom process against it may be served and the post office address within or without
this state to which the secretary of state shall mail a copy of any process against it
served upon him;
(4) if the limited partnership is to have a registered agent, his name and address
within this state and a statement that the registered agent is to be the agent of the
limited partnership upon whom process against it may be served;
(5) the name and the business or residence street address of each general partner;
(6) the latest date upon which the limited partnership is to dissolve; and
(7) any other matters the general partners determine to include therein.
(b) A limited partnership is formed at the time of the fili ng of the initial certificate of
limited partnership with the department of state or at any later time not to exceed
sixty days from the date of filing specified in the certificate of limited partnership.
The filing of the certificate shall, in the absence of actual fraud, be conclusive
evidence of the formation of the limited partnership as of the time of filing or
effective date if later, except in an action or special proceeding brought by the
attorney general.
(c) Within one hundred twenty days after the filing of the initial certificate, a copy of
the same or a notice containing the substance thereof shall be published once in
each week for six successive weeks, in two newspapers of the county in which the
office of the limited partnership is located, to be designated by the county clerk, one
of which newspapers shall be a newspaper published in the city or town in which the
principal place of business is intended to be located, if a newspaper be published
therein; or, if no newspaper is published therein, in the newspaper nearest thereto,
and proof of such publication by the affidavit of the printer or publisher of each of
such newspapers must be filed with the department of state. The notice shall
include:
(1) the name of the limited partnership; (2) the date of filing of the certificate of
limited partnership with the secretary of state; (3) the county within this state, in
which the office of the limited partnership is to be located; (4) a statement that the
secretary of state has been designated as agent of the limited partnership upon
whom process against it may be served and the post office address within or without
this state to which the secretary of state shall mail a copy of any process against it
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served upon him or her; (5) if the limited partnership is to have a registered agent,
his or her name and address within this state and a statement that the registered
agent is to be the agent of the limited partnership upon whom process against it may
be served; (6) a statement that the names and the business or residence street
address of each general partner is available from the secretary of state; (7) the
latest date upon which the limited partnership is to dissolve; and (8) the character or
purpose of the business of such partnership. Failure to cause such notice to be
published or to file such proof within one hundred twenty days of the filing of the
certificate shall prohibit the limited partnership from maintaining any action or
special proceeding in this state unless and until such limited partnership causes such
notice to be published and files such proof of publication. The failure of a limited
partnership to cause such notice to be published or to file proof of publication shall
not impair the validity of any contract or act of the limited partnership or the right of
any other party to the contract to maintain any action or special proceeding thereon,
and shall not prevent the limited partnership from defending any action or special
proceeding in this state.

S 121-202. Amendment of the certificate of limited partnership.
(a) A certificate of limited partnership is amended by filing with the department of
state a certificate of amendment thereto entitled "Certificate of amendment of the
certificate of limited partnership of... (name of limited partnership) under section
121-202 of the Revised Limited Partnership Act," and executed in accordance with
section 121-204 of this article. The certificate of amendment shall set forth:
(1) The name of the limited partnership and, if it has been changed, the name under
which it was formed;
(2) The date of filing its certificate of limited partnership;
(3) Each amendment effected thereby, setting forth the subject matter of each
provision of the certificate of limited partnership which is to be amended or
eliminated and the full text of the provision or provisions, if any, which are to be
substituted or added; and
(4) If the amendment reflects the admission or withdrawal of one or more general
partners, the name and business or residence street address of such general partner
or partners and the date or dates of admission or withdrawal.
(b) No later than ninety days after the happening of any of the following events, an
amendment to a certificate of limited partnership reflecting the occurrence of the
event or events shall be filed by a general partner:
(1) the admission of a general partner;
(2) the withdrawal of a general partner;
(3) the continuation of the partnership under section 121-801 of this article after an
event of withdrawal of a general partner; or
(4) a change in the name of the limited partnership, or a change in the post office
address to which the secretary of state shall mail a copy of any process against the
limited partnership served on him, or a change in the name or address of the
registered agent, if such change is made other than pursuant to section 121-104 or
121-105 of this article.
(c) A general partner who becomes aware that any statement in a certificate of
limited partnership was false in any material respect when made or that a matter
described has changed, making the certificate inaccurate in any material respect,
shall amend the certificate within ninety days of becoming aware of such fact.
(d) A certificate of limited partnership may be amended at any time for any other
proper purpose which the general partners may determine.
(e) Unless otherwise provided in this article, a certificate of amendment shall be
effective at the time of its filing with the department of state.
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S 121-202-A. Certificate of change.
(a) A certificate of limited partnership may be changed by filing with the department
of state a certificate of change entitled "Certificate of Change of ..... (name of limited
partnership) under Section 121-202-A of the Revised Limited Partnership Act" and
shall be signed and delivered to the department of state. A certificate of change may
(i) specify or change the location of the limited partnerships office; (ii) specify or
change the post office address to which the secretary of state shall mail a copy of
process against the limited partnership served upon him; and (iii) make, revoke or
change the designation of a registered agent, or to specify or change the address of
its registered agent. It shall set forth:
(1) the name of the limited partnership, and if it has been changed, the name under
(2) the date its certificate of limited partnership was filed by the department of
state; and
(3) each change effected thereby.
(b) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a limited partnership
served upon him or the address of the registered agent, provided such address being
changed is the address of a person, partnership or corporation whose address, as
agent, is the address to be changed or who has been designated as registered agent
for such limited partnership shall be signed and delivered to the department of state
by such agent. The certificate of change shall set forth the statements required
under subdivision (a) of this section; that a notice of the proposed change was
mailed to the domestic limited partnership by the party signing the certificate not
less than thirty days prior to the date of delivery to the department of state and that
such domestic limited partnership has not objected thereto; and that the party
signing the certificate is the agent of such limited partnership to whose address the
secretary of state is required to mail copies of process or the registered agent, if
such be the case. A certificate signed and delivered under this subdivision shall not
be deemed to effect a change of location of the office of the limited partnership in
whose behalf such certificate is filed.

S 121-203. Cancellation of certificate.
(a) Within ninety days following the dissolution and the commencement of winding
up of the limited partnership, or at any other time there are no limited partners, a
certificate of cancellation shall be filed with the department of state entitled,
"Certificate of cancellation of... (name of limited partnership) under section 121-203
of the Revised Limited Partnership Act" and executed in accordance with section 121-
204 of this article. The certificate of cancellation shall set forth:
(1) the name of the limited partnership; and if it has been changed, the name under
(2) the date of filing of its certificate of limited partnership and each subsequent
amendment thereto;
(3) the event giving rise to the filing of the certificate; and
(4) any other information the persons filing the certificate determine.
(b) The cancellation of the certificate of limited partnership is effective at the time of
the filing of the certificate of cancellation.
(c) The cancellation of the certificate of limited partnership shall not affect the
liability of the limited partners during the period of winding up and termination of the
partnership.

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S 121-204. Execution of certificates.
(a) Each certificate required by this article to be filed with the department of state
shall be executed in the following manner:
(1) an initial certificate of limited partnership must be signed by all general partners
named therein;
(2) a certificate of amendment must be signed by at least one general partner and
by each other general partner designated in the certificate of amendment as a new
general partner;
(3) a certificate of cancellation must be signed by all general partners or, if there is
no general partner, unless otherwise provided in the partnership agreement, by a
majority in interest of the limited partners; and
(4) all other certificates must be signed by at least one general partner.
(b) Any person may sign any certificate by an attorney in fact. Powers of attorney
relating to the signing of a certificate by an attorney in fact need not be filed with the
department of state nor provided as evidence of authority by the person filing, but
must be retained among the records of the partnership.
(c) Each certificate must be signed.
(d) Each certificate must include the name and capacity of each signer.

S 121-205. Execution, amendment or cancellation by judicial act.
(a) If a person required by section 121-204 of this article to execute a certificate fails
or refuses to do so, any partner, and any permitted assignee of a partnership
interest, who is adversely affected by the failure or refusal may petition the supreme
court in the judicial district in which the office of the limited partnership is located to
direct the execution of the certificate. If the court finds that the certificate should be
executed and that such person has failed or refused to execute the certificate, it shall
order such person to file an appropriate certificate.
(b) If a person contractually obligated to execute as a limited partner a partnership
agreement of an existing partnership, or any amendment thereto, fails or refuses to
do so, any partner, and any assignee of a partnership interest, who is adversely
affected by the failure or refusal may petition the supreme court in the judicial
district referred to in subdivision (a) of this section to direct the execution of the
partnership agreement or amendment. If the court finds that such person has
breached a contractual obligation binding upon him to execute the agreement or
amendment, it shall enter an order granting appropriate relief.

S 121-206. Filing with the department of state.
A signed certificate of limited partnership and any signed certificates of amendment
or other certificates filed pursuant to this article or of any judicial decree of
amendment or cancellation shall be delivered to the department of state. If the
instrument which is delivered to the department of state for filing complies as to
form with the requirements of law and the filing fee required by any statute of this
state in connection therewith has been paid, the instrument shall be filed and
indexed by the department of state.

S 121-207. Liability for false statement in certificate.
(a) If any certificate of limited partnership, certificate of amendment, or other
certificate filed pursuant to this article contains a materially false statement, one who
suffers loss by reasonable reliance on the statement may recover damages for the
loss from:
(1) any person who executes the certificate, or causes another to execute it on his
behalf, and knew, and any general partner who knew of the filing of such certificate
and who knew or should have known with the exercise of reasonable care and
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diligence, the statement to be false in any material respect at the time the certificate
was executed; and
(2) any general partner who thereafter knows of the filing of such certificate and who
knows or should have known with the exercise of reasonable care and diligence that
any arrangement or other fact described in the certificate has changed, making the
statement false in any material respect, if that general partner had ninety days to
amend or cancel the certificate, or to file a petition for its amendment or cancellation
before the statement was relied upon.
(b) No person shall have any liability for failing to cause the amendment or
cancellation of a certificate to be filed or failing to file a petition for its amendment or
cancellation, if the certificate or petition is filed within ninety days of the time when
that person knew or should have known that the statement in the certificate was
false in any material respect.

S 121-208. Restated certificate of limited partnership.
(a) A limited partnership may restate in a single certificate the text of its certificate
of limited partnership, without making any amendment thereby. Alternatively, a
limited partnership may restate in a single certificate the text of its certificate of
limited partnership and as amended thereby to effect any one or more of the
amendments authorized by this article.
(b) If the restated certificate of limited partnership merely restates and integrates
but does not amend or further amend the certificate of limited partnership, it shall be
executed by a general partner. If the restated certificate also amends or further
amends the certificate of limited partnership, it shall be executed in accordance with
section 121-204 of this article.
(c) The restated certificate shall be filed with the department of state in accordance
with section 121-206 of this article and shall set forth:
(1) the name of the limited partnership and, if it has been changed, the name under
(2) the date of filing of its certificate of limited partnership;
(3) if the restated certificate restates the text of the certificate of limited partnership
without making any amendments, then a statement that the text of the certificate of
limited partnership is thereby restated without amendment to read as therein set
forth in full; or
(4) if the restated certificate restates the text of the certificate of limited partnership,
and is amended thereby, then a statement that the certificate of limited partnership
is amended to effect one or more of the amendments authorized by this article,
specifying each such amendment and that the text of the certificate of limited
partnership is thereby restated as amended to read as therein set forth in full.
(d) Any amendments effected in connection with the restatement of the certificate of
limited partnership shall be subject to any other provision of this article which would
apply if a separate certificate of amendment were filed to effect such amendment.

S 121-301. Admission of limited partners.
(a) A person becomes a limited partner on the later of:
(1) the effective date of the original certificate of limited partnership; or
(2) the date as of which the person becomes a limited partner pursuant to the
partnership agreement; provided, however, that if such date is not ascertainable, the
date stated in the records of the limited partnership.
(b) After the effective date of a limited partnerships original certificate of limited
partnership, a person may be admitted as a limited partner:
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(1) in the case of a person acquiring a partnership interest directly from the limited
partnership, upon compliance with the partnership agreement or, if the partnership
agreement does not so provide, upon the written consent of all partners; and
(2) in the case of an assignee of a partnership interest of a partner who has the
power, as provided in section 121-704 of this article, to grant the assignee the right
to become a limited partner, upon the exercise of that power and compliance with
any conditions limiting the grant or exercise of the power.

S 121-302. Classes and voting by limited partners.
(a) A partnership agreement may provide for classes or groups of limited partners
having such relative rights and powers as the partnership agreement may provide,
and may make provision for the future creation in the manner provided in the
partnership agreement of additional classes of limited partners having such relative
rights and powers as may from time to time be established pursuant to the
partnership agreement including rights and duties senior to existing classes of
limited partners. The partnership agreement may grant to or withhold from all or one
or more classes of limited partners the right to vote, on a per capita, class or other
basis, upon any matter.
(b) A partnership agreement which grants a right to vote may set forth provisions
relating to notice of the time, place or purpose of any meeting at which any matter is
to be voted on by any limited partners, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy, or any other matter with respect to the exercise of any such
right to vote.

S 121-303. Liability to third parties.
(a) Except as provided in subdivision (d) of this section, a limited partner is not liable
for the contractual obligations and other liabilities of a limited partnership unless he
is also a general partner or, in addition to the exercise of his rights and powers as a
limited partner, he participates in the control of the business. However, if the limited
partner does participate in the control of the business, he is liable only to persons
who transact business with the limited partnership reasonably believing, based upon
the limited partners conduct, that the limited partner is a general partner.
(b) A limited partner does not participate in the control of the business within the
meaning of subdivision (a) of this section by virtue of doing one or more of the
following:
(1) being a contractor for or transacting business with, including being a contractor
for, or an agent or employee of the limited partnership or of a general partner or an
officer, director or shareholder of a corporate general partner, or a member,
manager or agent of a limited liability company that is a general partner of the
limited partnership, or a partner of a partnership that is a general partner of the
limited partnership, or a trustee, administrator, executor, custodian or other
fiduciary or beneficiary of an estate or trust which is a general partner, or a trustee,
officer, advisor, shareholder or beneficiary of a business trust which is a general
partner, or acting in such capacity;
(2) consulting with and advising or rendering professional services to a general
partner with respect to any matter, including the business of the limited partnership;
(3) acting as surety or endorser for the limited partnership, or guaranteeing or
providing security for or lending money to or assuming one or more debts of the
limited partnership;
(4) approving or disapproving an amendment to the partnership agreement, or
calling, requesting, or participating in any meeting of general and limited partners or
limited partners;
104
(5) taking any action to bring, prosecute, or terminate any derivative action brought
in the right of the limited partnership;
(6) proposing, approving, disapproving, or voting on any one or more of the
following matters:
(A) the amendment of the partnership agreement or certificate of limited
partnership;
(B) the dissolution and winding up of the limited partnership;
(C) the sale, exchange, lease, mortgage, assignment, pledge, or other transfer of, or
granting of a security interest in, any asset or assets of the limited partnership;
(D) the merger or consolidation of the limited partnership or election to continue the
business of the limited partnership;
(E) the incurrence, renewal, refinancing or payment or other discharge of
indebtedness by the limited partnership;
(F) a change in the nature of the business;
(G) the admission or removal of a partner;
(H) a transaction or other matter involving an actual or potential conflict of interest;
(I) in respect of a li mited partnership which is registered as an investment company
under an act of Congress entitled Investment Company Act of 1940, any matter
required by said Investment Company Act of 1940, or the rules and regulations
promulgated thereunder, to be approved by holders of beneficial interests in an
investment company;
(J) such other matters as are required for submission to limited partners by federal
or state securities laws or rules or regulations thereunder, or rules of self-regulatory
bodies governing the trading of limited partnership interests;
(K) the indemnification of any partner or other person; or
(L) such other matters as are stated in the partnership agreement to be subject to
approval, disapproval or vote by the limited partners;
(7) consulting with or advising, or being an officer, director, shareholder, partner,
member, manager, agent or employee of, or being a fiduciary for, any person in
which the limited partnership has an interest;
(8) winding up the limited partnership pursuant to section 121-803 of this article; or
(9) exercising any right or power permitted to limited partners under this article and
not specifically enumerated in this subdivision.
(c) The enumeration in subdivision (b) of this section does not mean that the
possession or exercise of any other powers by a limited partner constitutes
participation by him in the control of the business of the limited partnership.
(d) A limited partner who expressly consents in writing to his name being used in the
name of the limited partners hip is liable to creditors who extend credit to the limited
partnership without actual knowledge that the limited partner is not a general
partner.
(e) A limited partner does not participate in the control of the business within the
meaning of subdivision (a) of this section regardless of the nature, extent, scope,
number or frequency of the limited partners possessing or, regardless of whether or
not the limited partner has the rights or powers, exercising or attempting to exercise
one or more of the rights or powers or having or, regardless of whether or not the
limited partner has the rights or powers, acting or attempting to act in one or more
of the capacities which are permitted under this section.

S 121-304. Person erroneously believing himself a limited partner.
(a) Except as provided in subdivision (b) of this section, a person who makes a
contribution to a limited partnership and erroneously but in good faith believes that
he has become a limited partner in the limited partnership is not a general partner in
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the limited partnership and is not bound by its obligations by reason of making the
contribution, receiving distributions from the limited partnership or exercising any
rights of a limited partner, if, on ascertaining the mistake, he:
(1) causes an accurate certificate of limited partnership or a certificate of
amendment to be executed and filed; or
(2) withdraws from the partnership by executing and delivering to the limited
partnership a written notice declaring withdrawal under this section.
(b) A person who makes a contribution of the kind described in subdivision (a) of this
section is liable as a general partner to any third party who transacts business with
the limited partnership (i) before the person withdraws and an appropriate certificate
is filed to show withdrawal, or (ii) before an appropriate certificate is filed to show
that he is not a general partner, but in either case only if the third party reasonably
believed, based upon the limited partners conduct, that the limited partner was a
general partner and extended credit to the partnership in reasonable reliance on the
credit of such person.

S 121-401. Admission of additional general partners. After the effective date of the
original certificate of limited partnership, additional general partners may be
admitted as provided in the partnership agreement, or if the partnership agreement
does not provide for the admission of additional general partners, with the written
consent of all partners.

S 121-402. Events of withdrawal of a general partner.
A person ceases to be a general partner of a limited partnership upon the happening
of any of the following events:
(a) the general partner withdraws from the limited partnership as provided in section
121-602 of this article;
(b) the general partner ceases to be a general partner as provided in section 121-
702 of this article;
(c) the general partner is removed as a general partner as may be provided in the
partnership agreement;
(d) unless otherwise provided in the partnership agreement or approved by all
partners, the general partner (i) makes an assignment for the benefit of creditors,
(ii) is the subject of an order for relief under Title 11 of the United States Code, (iii)
files a petition or answer seeking for himself any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, (iv) files an answer or other pleading, admitting or failing
to contest the material allegations of a petition filed against hi m in any proceeding of
this nature, or (v) seeks, consents to, or acquiesces in the appointment of a trustee,
receiver, or liquidator of the general partner or of all or any substantial part of
his properties;
(e) unless otherwise provided in the partnership agreement or approved by all
partners, (i) if within one hundred twenty days after the commencement of any
proceeding against the general partner seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution, or similar relief under any
statute, law, or regulation, the proceeding has not been dismissed or stayed, or
within ninety days after the expiration of any such stay, the proceeding has not been
dismissed, or (ii) if within ninety days after the appointment without his consent or
acquiescence of a trustee, receiver, or liquidator of the general partner or of all or
any substantial part of his properties, the appointment is not vacated or stayed, or
within ninety days after the expiration of any such stay, the appointment is not
vacated;
106
(f) in the case of a general partner who is a natural person, (i) his death or (ii) the
entry of a judgment by a court of competent jurisdiction adjudicating him
incompetent to manage his person or his property;
(g) in the case of a general partner who is acting as a general partner by virtue of
being a trustee of a trust, the termination of the trust (but not merely the
substitution of a new trustee);
(h) in the case of a general partner that is a partnership, unless the partnership
agreement of such partnership provides for the right of any one or more of the
partners of such partnership to continue the business of such partnership and such
partnership is so continued, the dissolution and commencement of winding up of
such partnership;
(i) in the case of a general partner that is a corporation, the filing of a certificate of
dissolution, or its equivalent, for the corporation or the revocation of its charter;
(j) in the case of a general partner that is an estate, the distribution by the fiduciary
of the estates entire interest in the limited partnership; or
(k) in the case of a general partner that is a limited liability company, unless the
operating agreement of such limited liability company provides for the right of any
member of such limited liability company to continue the limited liability company
and such limited liability company is so continued, the dissolution and
commencement of winding up of such limited liability company.

S 121-403. General powers and liabilities.
(a) Except as provided in this article or in the partnership agreement, a general
partner of a limited partnership has the rights and powers and is subject to the
restrictions of a partner in a partnership without limited partners.
(b) Except as provided in this artic le, a general partner of a limited partnership has
the liabilities of a partner in a partnership without limited partners to persons other
than the limited partnership and the other partners.
(c) Except as provided in this article or in the partnership agreement, a general
partner of a limited partnership has the liabilities of a partner in a partnership
without limited partners to the limited partnership and to the other partners.

S 121-404. Contributions by a general partner.
A general partner of a limited partnership shall make contributions to the limited
partnership and share in the profits and losses of, and in distributions from, the
limited partnership as a general partner. A person who is a general partner also may
make contributions and share in profits, losses, and distributions as a limited
partner. A person who is both a general partner and a limited partner has the rights
and powers, and is subject to the restrictions and liabilities, of a general partner and,
except as provided in the partnership agreement, also has the rights and powers,
and is subject to the restrictions, of a limited partner to the extent of his
participation in the partnership as a limited partner.

S 121-405. Classes and voting by general partners.
(a) A partnership agreement may provide for classes or groups of general partners
having such relative rights and powers as the partnership agreement may provide,
and may make provision for the future creation in the manner provided in the
partnership agreement of additional classes of general partners having such relative
rights and powers as may from time to time be established pursuant to the
partnership agreement including rights and powers senior to existing classes of
general partners. The partnership agreement may grant to all or to one or more
classes of general partners the right to vote, on a per capita, class or other basis,
upon any matter.
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(b) A partnership agreement may set forth provisions relating to notice of the time,
place or purpose of any meeting at which any matter is to be voted on by any
general partners, waiver of any such notice, action by consent without a meeting,
the establishment of a record date, quorum requirements, voting in person or by
proxy, or any other matter with respect to the exercise of any such right to vote.

S 121-501. Form of contribution.
The contribution of a partner may be in cash, property, or services rendered, or a
promissory note or other obligation to contribute cash or property or to render
services.

S 121-502. Liability for contributions.
(a) Except as provided in the partnership agreement, a partner is obligated to
perform any promise, to contribute cash or property or to perform services which is
otherwise enforceable in accordance with applicable law, even if he is unable to
perform because of death, disability or any other reason. Except as provided in the
partnership agreement, if a partner does not make any required contribution of
property or services, he is obligated at the option of the limited partnership to
contribute cash equal to that portion of the value, as stated in the partnership
records if so stated, of the contribution that has not been made. The foregoing
option shall be in addition to, and not in lieu of, any other rights, including the right
to specific performance, that the limited partnership may have against such partner
under the partnership agreement or applicable law.
(b) Unless otherwise provided in the partnership agreement and except as provided
in section 121-705 of this article, the obligation of a partner to make a contribution
or to return money or other property paid or distributed in violation of this article
may be compromised only by consent of all the partners. Notwithstanding the
compromise, a creditor of a limited partnership who extends credit in reliance on that
obligation may enforce the original obligation to the extent he reasonably relied on
such obligation.
(c) A partnership agreement may provide that the interest of any partner who fails to
make any required contribution shall be subject to specified consequences of such
failure. Such consequences may take the form of reducing or eliminating the
defaulting partners interest in the limited partnership, subordinating his partnership
interest to that of non-defaulting partners, a forced sale of his partnership interest,
the lending by other partners of the amount necessary to meet his commitment, a
fixing of the value of his partnership interest by appraisal or by formula and
redemption or sale of his partnership interest at such value, or other consequences.

S 121-503. Sharing of profits and losses.
The profits and losses of a limited partnership shall be allocated among the partners,
and among the classes of partners, in the manner provided in the partnership
agreement. If the partnership agreement does not so provide, profits and losses
shall be allocated on the basis of the value, as stated in the records of the limited
partnership if so stated, of the contributions, but not including defaulted obligations
to make contributions, of each partner to the extent they have been received by or
promised to the limited partnership and have not been returned.

S 121-504. Sharing of distributions.
Distributions of cash or other assets of a limited partnership shall be allocated among
the partners, and among classes of partners, in the manner provided in the
partnership agreement which may, among other things, establish record dates for
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distributions. If the partnership agreement does not so provide, distributions shall
be allocated on the basis of the value, as stated in the records of the limited
partnership, if so stated, of the contributions, but not including defaulted obligations
to make contributions, of each partner to the extent they have been received by or
promised to the limited partnership and have not been returned.

S 121-601. Interim distributions.
Except as provided in this article, a partner is entitled to receive distributions from a
limited partnership before his withdrawal from the limited partnership and before the
dissolution and winding up thereof to the extent and at the times or upon the
happening of the events specified in the partnership agreement.

S 121-602. Withdrawal of a general partner.
A general partner may withdraw from a limited partnership at any time by giving
written notice to the other partners, but if the withdrawal violates the partnership
agreement, the limited partnership may recover from the withdrawing general
partner damages for breach of the partnership agreement, which may be determined
as set forth in the partnership agreement, and offset the damages against the
amount otherwise distributable to him.

S 121-603. Withdrawal of a limited partner.
(a) A limited partner may withdraw from a limited partnership at the time or upon
the happening of events specified in the partnership agreement and in accordance
with the partnership agreement. Notwithstanding anything to the contrary under
applicable law, unless a partnership agreement provides otherwise, a limited partner
may not withdraw from a limited partnership prior to the dissolution and winding up
of the limited partnership. Notwithstanding anything to the contrary under applicable
law, a partnership agreement may provide that a partnership interest may not be
assigned prior to the dissolution and winding up of the limited partnership.
(b) A limited partnership whose original certificate of limited partnership was filed
with the secretary of state and effective prior to the effective date of this subdivision
shall continue to be governed by this section as in effect on such date and shall not
be governed by this section, unless otherwise provided in the partnership
agreement.

S 121-604. Right to distribution upon withdrawal.
Except as provided in this article upon withdrawal any withdrawing partner is entitled
to receive any distribution to which he is entitled under the partnership agreement
and, if not otherwise provided in the partnership agreement, he is entitled to receive,
within a reasonable time after withdrawal, the fair value of his interest in the limited
partnership as of the date of withdrawal based upon his right to share in distributions
from the limited partnership.

S 121-605. Distribution in kind.
Except as provided in the partnership agreement, a partner, regardless of the nature
of his contribution, has no right to demand and receive any distribution from a
limited partnership in any form other than cash. Except as provided in the
partnership agreement, a partner may not be compelled to accept a distribution of
any asset in kind from a limited partnership to the extent that the percentage of the
asset distributed to him exceeds a percentage of that asset which is equal to the
percentage in which he shares in distributions from the limited partnership.

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S 121-606. Right to distribution.
Subject to sections 121-607 and 121-804 of this article, at the time a partner
becomes entitled to receive a distribution, he has the status of, and is entitled to all
remedies available to, a creditor of the limited partnership with respect to the
distribution.

S 121-607. Limitations on distribution.
(a) A limited partnership shall not make a distribution to a partner to the extent that,
at the time of the distribution, after giving effect to the distribution, all liabilities of
the limited partnership, other than liabilities to partners on account of their
partnership interests and liabilities for which recourse of creditors is limited to
specified property of the limited partnership, exceed the fair market value of the
assets of the limited partnership, except that the fair market value of property that
is subject to a liability for which the recourse of creditors is limited shall be included
in the assets of the limited partnership only to the extent that the fair value of that
property exceeds that liability.
(b) A limited partner who receives a distribution in violation of subdivision (a) of this
section, and who knew at the time of the distribution that the distribution violated
subdivision (a) of this section, shall be liable to the limited partnership for the
amount of the distribution. A limited partner who receives a distribution in violation
of subdivision (a) of this section, and who did not know at the time of the distribution
that the distribution violated subdivision (a) of this section, shall not be liable for the
amount of the distribution. Subject to subdivision (c) of this section, this subdivision
shall not affect any obligation or liability of a limited partner under a partnership
agreement or other applicable law for the amount of a distribution.
(c) Unless otherwise agreed, a limited partner who receives a wrongful distribution
from a limited partnership shall have no liability under this article or other applicable
law for the amount of the distribution after the expiration of three years from the
date of the distribution.

S 121-701. Nature of partnership interest.
An interest in a limited partnership is personal property and a partner has no interest
in specific partnership property.

S 121-702. Assignment of partnership interest.
(a) Except as provided in the partnership agreement,
(1) A partnership interest is assignable in whole or in part;
(2) An assignment of a partnership interest does not dissolve a limited partnership or
entitle the assignee to become or to exercise any rights or powers of a partner;
(3) The only effect of an assignment is to entitle the assignee to receive, to the
extent assigned, the distributions and allocations of profits and losses to which the
assignor would be entitled; and
(4) A partner ceases to be a partner and to have the power to exercise any rights or
powers of a partner upon assignment of all of his partnership interest. Unless
otherwise provided in the partnership agreement, the pledge of, or the granting of a
security interest, lien or other encumbrance in or against, any or all of the
partnership interest of a partner shall not cause the partner to cease to be a partner
or to have the power to exercise any rights or powers of a partner.
(b) The partnership agreement may provide that a limited partners interest may be
evidenced by a certificate issued by the partnership and may also provide for the
assignment or transfer of any of the interest represented by such a certificate. A
limited partners interest may be a certificated security or an uncertificated security
within the meaning of section 8--102 of the uniform commercial code if the
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requirements of section 8--103(c) are met, and if the requirements are not met shall
be deemed to be a general intangible.
(c) Unless otherwise provided in a partnership agreement and except to the extent
assumed by agreement, until an assignee of a partnership interest becomes a
partner, the assignee shall have no liability as a partner solely as a result of the
assignment.

S 121-703. Rights of creditor.
On application to a court of competent jurisdiction by any judgment creditor of a
partner, the court may charge the partnership interest of the partner with payment
of the unsatisfied amount of the judgment with interest. To the extent so charged,
the judgment creditor has only the rights of an assignee of the partnership interest.
This article does not deprive any partner of the benefit of any exemption laws
applicable to his partnership interest.

S 121-704. Right of assignee to become limited partner.
(a) An assignee of a partnership interest, including an assignee of a general partner,
may become a limited partner if (i) the assignor gives the assignee that right in
accordance with authority granted in the partnership agreement, or (ii) all partners
consent in writing, or (iii) to the extent that the partnership agreement so provides.
(b) An assignee who has become a limited partner has, to the extent assigned, the
rights and powers, and is subject to the restrictions and liabilities, of a limited
partner under the partnership agreement and this article. Notwithstanding the
foregoing, unless otherwise provided in the partnership agreement, an assignee who
becomes a limited partner is liable for the obligations of his assignor to make
contributions as provided in section 121-502 of this article, but shall not be liable for
the obligations of his assignor under sections 121-603 and 121-607 of this article.
However, the assignee is not obligated for liabilities, including the obligations of his
assignor to make contributions as provided in section 121-502 of this article,
unknown to the assignee at the time he becomes a limited partner.

S 121-705. Liability upon assignment.
(a) The assignor of a partnership interest is not released from any liabil ity under this
article or the partnership agreement, except liabilities which arise after the
effectiveness of the assignment and are pursuant to section 121-207 of this article,
section 121-607 of this article or, in the event the assignee becomes a limited
partner, unless otherwise provided in the partnership agreement, section 121-502 of
this article.
(b) An assignee who becomes a limited partner is liable for the obligations to make
contributions and return distributions as provided for in this article, provided,
however, that the assignee is not obligated for liabilities unknown to the assignee at
the time he became a limited partner and which could not be ascertained from the
partnership agreement and provided, further, that the assignee is not obligated for
any accrued liabilities of the assignor at the time of assignment unless the assignee
specifically assumes such liabilities.

S 121-706. Power of estate of deceased or incompetent partner.
Subject to subdivision (f) of section 121-402 of this article, if a partner who is an
individual dies or a court of competent jurisdiction adjudges him to be incompetent
to manage his person or his property, the partners executor, administrator,
guardian, conservator or other legal representative may exercise all of the partners
rights for the purpose of settling his estate or administering his property, including
any power under the partnership agreement of an assignee to become a limited
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partner. If a partner is a corporation, trust, or other entity and is dissolved or
terminated, the powers of that partner may be exercised by its legal representative
or successor.

S 121-801. Nonjudicial dissolution.
A limited partnership is dissolved and its affairs shall be wound up upon the
happening of the first to occur of the following:
(a) at the time, if any, provided in the certificate of limited partnership;
(b) at the time or upon the happening of events specified in the partnership
agreement;
(c) subject to any requirement in the partnership agreement requiring approval by
any greater or lesser percentage of limited partners and general partners, upon the
written consent (1) of all of the general partners and (2) of a majority in interest of
each class of limited partners;
(d) an event of withdrawal of a general partner unless (1) at the time there is at
least one other general partner and the partnership agreement permits the business
of the limited partnership to be carried on by the remaining general partner and that
partner does so, or (2) unless the partnership agreement provides otherwise, if
within ninety days after the withdrawal of the last general partner, not less than a
majority in interest of the limited partners agree in writing to continue the business
of the limited partnership and to the appointment, effective as of the date of
withdrawal, of one or more additional general partners if necessary or desired; or
(e) entry of a decree of judicial dissolution under section 121-802 of this article.
(f) a limited partnership whose original certificate of limited partnership was filed
agreement.

S 121-802. Judicial dissolution.
On application by or for a partner, the supreme court in the judicial district in which
the office of the limited partnership is located may decree dissolution of a limited
partnership whenever it is not reasonably practicable to carry on the business in
conformity with the partnership agreement. A certified copy of the order of
dissolution shall be filed by the applicant with the department of state within thirty
days of its issuance.

S 121-803. Winding up.
(a) In the event of a dissolution of a limited partnership, except for a dissolution
pursuant to section 121-802 of this article, unless otherwise provided in the
partnership agreement, the general partners who have not wrongfully dissolved a
limited partnership or, if none, the limited partners, may wind up the limited
partnerships affairs; upon cause shown, the supreme court in the judicial district in
which the office of the limited partnership is located may wind up the limited
partnerships affairs upon application of any partner, his legal representative, or
assignee, and in connection therewith may appoint a receiver or liquidating trustee.
(b) Upon dissolution of a limited partnership, the persons winding up the limited
partnerships affairs may, in the name of, and for and on behalf of, the limited
partnership prosecute and defend suits, whether civil, criminal or administrative,
settle and close the limited partnerships business, dispose of and convey the limited
partnerships property, discharge the limited partnerships liabilities, and distribute to
the partners any remaining assets of the limited partnership, all without affecting the
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liability of limited partners including limited partners participating in the winding up
of the limited partnerships affairs.

S 121-804. Distribution of assets.
Upon the winding up of a limited partnership, the assets shall be distributed as
follows:
(a) to creditors, including partners who are creditors, to the extent permitted by law,
in satisfaction of liabilities of the limited partnership, whether by payment or by
establishment of adequate reserves, other than liabilities for distributions to partners
under section 121-601 or 121-604 of this article;
(b) except as provided in the partnership agreement, to partners and former
partners in satisfaction of liabilities for distributions under section 121-601 or 121-
604 of this article; and
(c) except as provided in the partnership agreement, to partners first for the return
of their contributions, to the extent not previously returned, and secondly respecting
their partnership interests, in the proportions in which the partners share in
distributions in accordance with section 121-504 of this article.

S 121-901. Law governing.
Subject to the constitution of this state, the laws of the jurisdiction under which a
foreign limited partnership is organized govern its organization and internal affairs
and the liability of its limited partners.

S 121-902. Application for authority, contents.
(a) Before doing business in this state, a foreign limited partnership shall apply for
authority to do business in this state by submitting to the department of state (i) a
certificate of existence or, if no such certificate is issued by the jurisdiction of
organization, a certified copy of a restated certificate of limited partnership and all
subsequent amendments thereto or, if no restated certificate has been filed, a
certified copy of the certificate filed as its organizational basis and all amendments
thereto (if such certificate or certified copy is in a foreign language, a translation
thereof under oath of the translator shall be attached thereto) and (ii) an application
for authority as a foreign limited partnership entitled "Application for authority
of...(name of limited partnership) under Section 121-902 of the Revised Limited
Partnership Act," signed by a general partner and setting forth:
(1) the name of the foreign limited partnership and, if a foreign limited partnerships
name is not acceptable for authorization pursuant to section 121-102 of this article,
the fictitious name under which it proposes to apply for authority and do business in
this state, which name shall be in compliance with section 121-102 of this article and
shall be used by the foreign limited partnership in all its dealings with the
department of state and in the conduct of its business in this state. (The provisions
of section one hundred thirty of the general business law shall not apply to any
fictitious name filed by a foreign limited partnership pursuant to this section, and a
filing under section one hundred thirty of the general business law shall not
constitute the adoption of a fictitious name.);
(2) the jurisdiction and date of its organization;
(3) the county within this state in which the office of the limited partnership is to be
located;
(4) a designation of the secretary of state as its agent upon whom process against it
may be served and the post office address within or without this state to which the
secretary of state shall mail a copy of any process against it served upon him;
113
(5) if it is to have a registered agent, his name and address within the state and a
statement that the registered agent is to be its agent upon whom process may be
served;
(6) the address of the office required to be maintained in the jurisdiction of its
organization by the laws of that jurisdiction or, if not so required, of the principal
office of the foreign limited partnership;
(7) a list of the names and business or residence addresses of all general partners;
(8) a statement that the foreign limited partnership is in existence in the jurisdiction
of its organization at the time of the filing of such application; and
(9) the name and address of the authorized officer in its jurisdiction of its
organization where a copy of its certificate of limited partnership is filed and, if no
public filing of its certificate of limited partnership is required by the law of its
jurisdiction of organization, a statement that the limited partnership shall provide, on
request, a copy thereof with all amendments thereto (if such documents are in a
foreign language, a translation thereof under oath of the translator shall be attached
thereto), and the name and post office address of the person responsible for
providing such copies.
(b) Without excluding other activities which may not constitute doing business in this
state, a foreign limited partnership shall not be considered to be doing business in
this state for the purposes of this article, by reason of carrying on in this state any
one or more of the following activities:
(1) maintaining or defending any action or proceeding, whether judicial,
administrative, arbitrative or otherwise, or effecting settlement thereof or the
settlement of claims or disputes;
(2) holding meetings of its partners, general or limited;
(3) maintaining bank accounts; or
(4) maintaining offices or agencies only for the transfer, exchange and registration of
its partnership interests, or appointing and maintaining depositaries with relation to
its partnership interests.
(c) The specification in subdivision (b) of this section does not establish a standard
for activities which may subject a foreign limited partnership to service of process
under this article or any other statute of this state.
(d) Within one hundred twenty days after the filing of the application for authority, a
copy of the same or a notice containing the substance thereof shall be published
once in each week for six successive weeks, in two newspapers of the county within
this state in which the office of the limited partnership is located, to be designated by
the county clerk, one of which newspapers shall be a newspaper published in the city
or town in which the principal place of business is intended to be located, if a
newspaper be published therein; or, if no newspaper is published therein, in the
newspaper nearest thereto, and proof of such publication by the affidavit of the
printer or publisher of each of such newspapers must be filed with the department of
state. The notice shall include: (1) the name of the foreign limited partnership and
the fictitious name under which it applied for authority to do business in this state, if
any; (2) the date of filing of the application for authority with the secretary of state;
(3) the jurisdiction and date of its organization; (4) the county within this state in
which the office of the limited partnership is to be located; (5) a statement that the
secretary of state has been designated as its agent upon whom process against it
may be served and the post office address within or without this state to which the
secretary of state shall mail a copy of any process against it served upon him or her;
(6) if it has a registered agent, his or her name and address within the state and a
statement that the registered agent is its agent upon whom process may be served;
(7) the address of the office required to be maintained in the jurisdiction of its
organization by the laws of that jurisdiction or, if not so required, of the principal
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office of the foreign limited partnership; (8) a statement that the list of the names
and business or residence addresses of all general partners is available from the
secretary of state; (9) the name and address of the authorized officer in its
jurisdiction of organization where a copy of its certificate of limited partnership is
filed and, if no public filing of its certificate of limited partnership is required by the
law of its jurisdiction of organization, a statement that the limited partnership shall
provide, on request, a copy thereof with all amendments thereto (if such documents
are in a foreign language, a translation thereof under oath of the translator shall be
attached thereto), and the name and post office address of the person responsible
for providing such copies; and (10) the character or purpose of the business of such
partnership. Failure to cause such notice to be published or to file such proof within
one hundred twenty days of the filing of the application for authority shall prohibit
the limited partnership from maintaining any action or special proceeding in this
state unless and until such limited partnership causes such notice to be published
and files such proof of publication. The failure of a limited partnership to cause such
notice to be published or to file proof of publication shall not impair the validity of
any contract or act of the limited partnership or the right of any other party to the
contract to maintain any action or special proceeding thereon, and shall not prevent
the limited partnership from defending any action or special proceeding in this state.

S 121-903. Certificate of amendment.
(a) A foreign limited partnership may amend its application for authority from time to
time if the amendments contain only such provisions as might be lawfully contained
in an application for authority at the time of making such amendment. To
accomplish such amendment, a certificate, entitled "Certificate of amendment
of...(name of limited partnership) under section 121-903 of the Revised Limited
Partnership Act," shall be signed and delivered to the department of state. It shall
set forth:
(1) the name of the foreign organization as it appears on the index of names of
existing domestic and authorized foreign limited partnerships of any type or kind in
the department of state, and the fictitious name, if any, the foreign limited
partnership has agreed to use in this state pursuant to section 121-902 of this
article;
(2) the jurisdiction of its organization;
(3) the date it was authorized to do business in this state;
(4) each amendment effected thereby; and
(5) if the true name of the foreign limited partnership is to be changed, a statement
that the change of name has been effected under the laws of the jurisdiction of its
organization and the date the change was so effected.
(b) Every foreign limited partnership which has received a filing receipt evidencing
authority as provided herein, shall, within ninety days after it has changed its name
in the jurisdiction of its formation file an amendment to its application with the
department of state under subdivision (a) of this section.

S 121-903-A. Certificate of change.
(a) A foreign limited partnership may change its application for authority by filing
with the department of state a c ertificate of change entitled "Certificate of Change of
........ (name of limited partnership) under Section 121-903-A of the Revised Limited
Partnership Act" and shall be signed and delivered to the department of state. A
certificate of change may (i) change the location of the limited partnerships office;
(ii) change the post office address to which the secretary of state shall mail a copy of
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process against the limited partnership served upon him; and (iii) make, revoke or
change the designation of a registered agent, or to specify or change the address of
its registered agent. It shall set forth:
(1) the name of the foreign limited partnership and, if applicable, the fictitious name
the foreign limited partnership has agreed to use in this state pursuant to section
121-902 of this article;
(2) the date its application for authority was filed by the department of state; and
(3) each change effected thereby.
(b) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a foreign limited
partnership served upon him or the address of the registered agent, provided such
address being changed is the address of a person, partnership or corporation whose
address, as agent, is the address to be changed or who has been designated as
registered agent for such foreign limited partnership shall be signed and delivered to
the department of state by such agent. The certificate of change shall set forth the
statements required under subdivision (a) of this section; that a notice of the
proposed change was mailed to the foreign limited partnership by the party signing
the certificate not less than thirty days prior to the date of delivery to the
department of state and that such foreign limited partnership has not objected
thereto; and that the party signing the certificate is the agent of such foreign limited
partnership to whose address the secretary of state is required to mail copies of
process or the registered agent, if such be the case. A certificate signed and
delivered under this subdivision shall not be deemed to effect a change of location of
the office of the limited partnership in whose behalf such certificate is filed.

S 121-904. Application for authority; effect.
(a) Upon filing by the department of state of the application for authority the foreign
limited partnership shall be authorized to do business in this state. Such authority
shall continue so long as it retains its authority to do business in the jurisdiction of
its formation and its authority to do business has not been surrendered, suspended
or annulled in accordance with the law.
(b) A foreign limited partnership which has received a certificate of authority shall
have such powers to conduct business in this state as are permitted by the laws of
the jurisdiction in which it was organized but no greater than those of a domestic
limited partnership; provided, that this subdivision shall not affect the powers of the
foreign limited partnership outside this state.

S 121-905. Surrender of certificate of authority.
(a) A foreign limited partnership may surrender its certificate of authority by filing
with the department of state a certificate entitled, "Certificate of surrender of
authority of.... (name of limited partnership)" signed by a general partner, or by a
trustee, receiver or other person authorized by law to wind up such partnership. The
authority of the foreign limited partnership to do business in this state shall
terminate on such filing of the certificate of surrender of authority. A surrender shall
not terminate the authority of the secretary of state to accept service of process on
the foreign limited partnership with respect to causes of action arising out of doing
(b) The certificat e of surrender of authority shall state:
(1) the name of the foreign limited partnership as it appears on the index of names
of existing domestic and authorized foreign limited partnerships of any type or kind
in the department of state, and the fictitious name the foreign limited partnership
has agreed to use in this state pursuant to section 121-902 of this article;
(2) the jurisdiction where it was organized;
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(3) the date on which its certificate of authority to do business in this state was filed
with the department of state;
(4) that it surrenders its authority to do business in this state;
(5) that it revokes the authority of its registered agent, if any, previously designated,
and that it consents that process against it in any action or special proceeding based
upon any liability or obligation incurred by it within this state before the filing of the
certificate of surrender may be served on the secretary of state in the manner set
forth in section 121-109 of this article; and
(6) a post office address within or without this state to which the secretary of state
shall mail a copy of any process against it served upon him.

S 121-906. Termination of existence.
When a foreign limited partnership which has received a certificate of authority is
dissolved or its authority to conduct its business or existence is otherwise terminated
or cancelled in the jurisdiction of its organization or when such foreign limited
partnership is merged into or consolidated with another foreign limited partnership,
(i) a certificate of the secretary of state, or official performing the equivalent function
as to limited partnership records, in the jurisdiction of organization of such limited
partnership attesting to the occurrence of any such event, or (ii) a certified copy of
an order or decree of a court of such jurisdiction directing the dissolution of such
foreign limited partnership, the termination of its existence or the surrender of its
authority, shall be delivered to the department of state. The filing of the certificate,
order or decree shall have the same effect as the filing of a certificate of surrender of
authority under section 121-905 of this article. The secretary of state shall continue
as agent of the foreign limited partnership upon whom process against it may be
served in the manner set forth in section 121-109 of this article, in any action or
proceeding based upon any liability or obligation incurred by the foreign limited
partnership within this state prior to the filing of such certificate, order or decree.
The post office address may be changed by filing with the department of state a
certificate of amendment under section 121-903 or a certificate of change under
section 121-903-A of this article.

S 121-907. Doing business without certificate of authority.
(a) A foreign limited partnership doing business in this state without having received
a certificate of authority to do business in this state may not maintain any action,
suit or special proceeding in any court of this state unless and until such partnership
shall have received a certificate of authority in this state and shall have filed proof of
publication pursuant to section 121-902 of this article.
(b) The failure of a foreign limited partnership that is doing business in this state to
comply with the provision of this article does not impair the validity of any contract
or act of the foreign limited partnership or prevent the foreign limited partnership
from defending any action or special proceeding in any court of this state.
(c) A limited partner of a foreign limited partnership is not liable as a general partner
of the foreign limited partnership solely by reason of the limited partnerships doing
or having done business in this state without having received a certificate of
authority.
(d) A foreign limited partnership by doing business in this state without authority
appoints the secretary of state as its agent for service of process with respect to
causes of action arising out of doing business in this state. In any such case, process
against such foreign limited partnership may be served upon the secretary of state in
the manner set forth in section 121-109 of this article.

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S 121-908. Violations.
The attorney general shall, upon his own motion or upon the motion of proper
parties, bring an action to restrain a foreign limited partnership without a certificate
of authority from doing any business in this state in violation of this article, or from
doing any business in this state which is prohibited under the laws of this state. The
attorney general may bring an action or special proceeding to annul the authority of
a foreign limited partnership which is doing any business in this state which is
prohibited under the laws of this state. The attorney general shall deliver a certified
copy of the order of annulment to the department of state. Upon the filing thereof by
the department of state the certificate of authority of the foreign limited partnership
to do business in this state shall be annulled, and the provisions of section 121-906
of this article shall thereafter be applicable. The secretary of state shall continue as
agent of the foreign limited partnership upon whom process against it may be served
in any action, suit or special proceeding based upon any liability or obligation
incurred by the foregoing foreign limited partnership within the state prior to the
filing of the certified copy of the order of annulment by the department of state.

S 121-1001. Parties to actions.
A limited partner, unless he is also a general partner, is not a proper party to
proceedings by or against a partnership, except where the object is to enforce a
limited partners right against or liability to the partnership and except in cases
provided for in section 121-1002 of this article.

S 121-1002. Limited partners derivative action.
(a) A limited partner may bring an action in the right of a limited partnership to
recover a judgment in its favor if all general partners with authority to do so have
refused to bring the action or if an effort to cause those general partners to bring the
action is not likely to succeed.
(b) In a derivative action, at least one plaintiff must be a limited partner at the time
of bringing the action and (i) at the time of the transaction of which he complains, or
(ii) his status as a limited partner had devolved upon him by operation of law or in
accordance with the terms of the partnership agreement from a person who was a
partner at the time of the transaction of which he complains.
(c) In a derivative action, the complaint shall set forth with particularity the efforts of
the plaintiff to secure the initiation of such action by a general partner, or the
reasons for not making such effort.
(d) A derivative action shall not be discontinued, compromised or settled without the
approval of the court having jurisdiction of the action. If the court shall determine
that the interests of the limited partners will be substantially affected by such
discontinuance, compromise or settlement, the court, in its discretion, may direct
that notice, by publication or otherwise, shall be given to the limited partners whose
interests it determines will be so affected. If notice is so directed to be given, the
court may determine which one or more of the parties to the action shall bear the
expenses of giving the same, in such amount as the court shall determine and find to
be reasonable in the circumstances, and the amount of such expense shall be
awarded as special costs of the action and recoverable in the same manner as
statutory taxable costs.
(e) If the derivative action on behalf of the limited partnership is successful, in whole
or in part, or if anything is received by the plaintiff or plaintiffs or a claimant or
claimants as a result of a judgment, compromise or settlement of an action or claim,
the court may award the plaintiff or plaintiffs, claimant or claimants reasonable
expenses, including reasonable attorneys fees, and shall direct him or them to
account to the limited partnership for the remainder of the proceeds so received by
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him or them. This subdivision shall not apply to any judgment rendered for the
benefit of injured limited partners only and limited to a recovery of the loss or
damage sustained by them.

S 121-1003. Security for expenses.
In a derivative action, brought pursuant to section 121-1002 of this article, unless
the contributions of or allocable to the plaintiff or plaintiffs amount to five percent or
more of the contributions of all limited partners, in their status as limited partners, or
such contributions of or allocable to such plaintiff or plaintiffs have a fair value in
excess of fifty thousand dollars, the limited partnership in whose right such action is
brought shall be entitled at any stage of the proceedings before final judgment to
require the plaintiff or plaintiffs to give security for the reasonable expenses,
including attorneys fees, which may be incurred by it in connection with such action
and by the other parties defendant in connection therewith for which the limited
partnership may become liable under this article or under any contract or otherwise
under law. The limited partnership shall have recourse to such security in such
amount as the court having jurisdiction of such action shall determine upon the
termination of such action. Notwithstanding the first sentence of this section, the
amount of any security may from time to time be determined in the discretion of the
court having jurisdiction of such action, even if the five percent of contributions or
fifty thousand dollar value test is met, upon a showing of the need therefor.

S 121-1004. Indemnification of general partner.
(a) No provision made to indemnify general partners for the defense of a derivative
action, brought pursuant to section 121-1002 of this article, whether contained in
the partnership agreement or otherwise, nor any award of indemnification by a
court, shall be valid unless consistent with this section. Nothing contained in this
section shall affect any rights to indemnification to which limited partners, employees
and agents of the limited partnership who are not general partners may be entitled
by contract or otherwise under law.
(b) A limited partnership may indemnify, and may advance expenses to, any general
partner, including a general partner made a party to an action in the right of a
limited partnership to procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a general partner in the limited partnership,
provided that no indemnification may be made to or on behalf of any general partner
if a judgment or other final adjudication adverse to the general partner establishes
that his acts were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that he
personally gained in fact a financial profit or other advantage to which he was not
legally entitled.

S 121-1101. Merger and consolidation of limited partnerships.
One or more limited partnerships formed under this article or which complies with
subdivision (a) of section 121-1202 of this article may merge with, or consolidate
into, a limited partnership formed under this article or which complies with
subdivision (a) of such section or under the law of any other state. Whenever used in
this article, "merger" shall mean a procedure in which two or more limited
partnerships merge into a single limited partnership which shall be one of the
constituent limited partnerships and "consolidation" shall mean a procedure in which
two or more limited partnerships consolidate into a single limited partnership which
shall be a new limited partnership to be formed pursuant to the consolidation.

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S 121-1102. Procedure for merger or consolidation.
(a) The general partners of each constituent limited partnership shall adopt an
agreement of merger or consolidation, setting forth the partnership agreement of the
surviving or consolidated limited partnership and the terms and conditions of the
conversion of the interests of general and limited partners of the constituent limited
partnerships into general and limited partnership interests in the surviving or
resulting limited partnership or the cash or other consideration to be paid or
delivered in exchange for interests in a constituent limited partnership, or a
combination thereof. The agreement shall be submitted to the partners of each
constituent limited partnership at a regular or special meeting called on twenty days
notice or such greater notice as the partnership agreement may provide. Subject to
any requirement in the partnership agreement requiring approval by any greater or
lesser, which shall not be less than a majority in interest, percentage of limited
partners, the agreement shall be approved on behalf of each constituent limited
partnership (i) by such vote of general partners as shall be required by the
partnership agreement, or, if no provision is made, by all general partners, and (ii)
by limited partners representing a majority in interest of each class of limited
partners. Notwithstanding authorization by the partners, the plan of merger or
consolidation may be abandoned pursuant to a provision for such abandonment, if
any, contained in the plan of merger or consolidation.
(b) Any limited partner of a limited partnership which is a party to a proposed
merger or consolidation may, prior to that time of the meeting at which such merger
or consolidation is to be voted on, file with the limited partnership written notice of
dissent from the proposed merger or consolidation. Such notice of dissent may be
withdrawn by the dissenting limited partner at any time prior to the effective date of
the merger or consolidation and shall be deemed to be withdrawn if the limited
partner casts a vote in favor of the proposed merger or consolidation.
(c) Upon the effectiveness of the merger or consolidation the dissenting limited
partner of any constituent limited partnership shall not become or continue to be a
limited partner of the surviving or resulting limited partnership, but shall be entitled
to receive in cash from the surviving or resulting limited partnership the fair value of
his interest in the limited partnership as of the close of business of the day prior to
the effective date of the merger or consolidation in accordance with section 121-604
of this article, but without taking account of the effect of the merger or consolidation.
(d) A limited partner of a constituent limited partnership who has a right under this
article to demand payment for his partnership interest shall not have any right at law
or in equity under this article to attack the validity of the merger or consolidation, or
to have the merger or consolidation set aside or rescinded, except in an action or
contest with respect to compliance with the provisions of the partnership agreement
or subdivision (a) of this section.
(e) A limited partnership whose original certificate of limited partnership was filed
agreement.

S 121-1103. Certificate of merger or consolidation; contents.
(a) After adoption of the plan of merger or consolidation by the partners of each
constituent limited partnership, unless the merger or consolidation is abandoned in
accordance with subdivision (a) of section 121-1102 of this article, a certificate of
merger or consolidation, entitled "Certificate of merger (or consolidation) of........
and....... into.......... (names of limited partnership) under Section 121-1103 of the
Revised Limited Partnership Act", shall be signed on behalf of each constituent
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limited partnership and delivered to the department of state. The certificate of
merger or consolidation shall set forth:
(1) The name of each constituent limited partnership, and if the name has been
changed, the name under which it was formed; and the name of the surviving
limited partnership, or the name of the consolidated limited partnership;
(2) If a constituent is a domestic limited partnership, the date when its certificate of
limited partnership was filed with the department of state under this article, or the
date when and the county in which its original certificate of limited partnership was
filed under article eight of this chapter;
(3) If a constituent is a foreign limited partnership the jurisdiction and date of filing
of its original certificate of limited partnership and the date when its application for
authority was filed by the department of state or if no such application has been
filed, a statement to such effect and (if the constituent foreign limited partnership is
the survivor) that it is not to do business in this state until an application for such
authority shall have been filed by the department of state;
(4) If a domestic limited partnership is the surviving limited partnership, such
changes in its certificate of limited partnership as shall be necessary by reason of
merger;
(5) If a domestic limited partnership is the resulting limited partnership in a
consolidation, the matters required to be set forth under section 121-201 of this
article;
(6) If the surviving or resulting limited partnership is a foreign limited partnership:
An agreement that the surviving or consolidated foreign limited partnership may be
served with process in this state in any action or special proceeding for the
enforcement of any liability or obligation of any domestic limited partnership or of
any foreign limited partnership previously amenable to suit in this state which is a
constituent limited partnership in such merger or consolidation, and for the
enforcement as provided in this article, of the right of partners of any domestic
limited partnership to receive payment for their interest against the surviving or
consolidated limited partnership; and
(7) A designation of the secretary of state as its agent upon whom process against it
may be served in the manner set forth in section 121-109 of this article in any action
or special proceeding, and a post office address, within or without this state, to
which the secretary of state shall mail a copy of any process served upon him. Such
post office address shall supersede any prior address designated as the address to
which process shall be mailed.
(b) The merger or consolidation shall be effective upon the filing thereof by the
department of state of the certificate, or at such later date not more than thirty days
after the date of such filing as the certificates filed may provide.

S 121-1104. Effect of merger or consolidation.
When such merger or consolidation has been effected:
(a) all the property, real and personal, tangible and intangible, of each constituent
limited partnership shall vest in the surviving or resulting limited partnership;
(b) to the extent provided in the plan of merger or consolidation, the partners of
each constituent limited partnership shall continue or become partners in the
surviving or resulting limited partnership with such interest as the agreement of
merger or consolidation shall provide;
(c) the surviving or resulting limited partnership shall be liable for all debts,
obligations, liabilities and penalties of each constituent limited partnership as though
each such debt, obligation, liability or penalty had been originally incurred by such
surviving or resulting limited partnership; and
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(d) no action, suit or proceeding, civil or criminal, then pending by or against any
such constituent limited partnership in its common name shall abate or be
discontinued by reason of such merger or consolidation, but may be prosecuted by or
proceed against such surviving or resulting limited partnership.

S 121-1105. Payment for interest of dissenting limited partners.
(a) Within ten days after the occurrence of an event described in section 121-1102 of
this article, the surviving or resulting limited partnership shall send to each
dissenting former limited partner a written offer to pay in cash the fair value of such
former partners interest. Payment in cash shall be made to each former limited
partner accepting such offer within ten days after notice of such acceptance is
received by the surviving or resulting limited partnership.
(b) If a former limited partner and the surviving or resulting limited partnership fail
to agree on the price to be paid for the former limited partners partnership interest
within ninety days after the surviving or resulting limited partnership shall have
made the offer provided for in subdivision (a) of this section, or if the limited
partnership or surviving limited partnership shall fail to make such an offer within the
period provided for in subdivision (a) of this section, the procedure provided for in
paragraphs (h)-(k) of section six hundred twenty-three of the business corporation
law shall apply, as they may be amended from time to time.
(c) A payment under this section shall constitute a return of a partners contribution
for the purposes of section 121-607 of this article.

S 121-1106. Mergers and consolidations involving other business entities.
One or more domestic limited partnerships formed under this article or which comply
with subdivision (a) of section 121-1202 of this article may merge with, or
consolidate into, one or more other business entities formed under the law of this
state or the law of any other state, in each case with the surviving or resulting entity
being a limited partnership or a domestic or foreign other business entity; provided
that (i) any limited partnership so merging or consolidating complies with the
provisions of this chapter so far as applicable to it and as applicable to any surviving
or resulting limited partnership and (ii) any such other business entity so merging or
consolidating complies with the applicable provisions of the statute governing such
other business entity. With respect to adoption of an agreement of merger or
consolidation pursuant to section 121-1102 of this article, the general partners of
each constituent limited partnership shall adopt an agreement of merger or
consolidation (to be submitted to the partners of the limited partnership as provided
in subdivision (a) of section 121-1102) setting forth the terms and conditions of the
conversion of the interests of the general and limited partners of such constituent
limited partnerships into interests in the surviving or resulting entity or the cash or
other consideration to be paid or delivered in exchange for interests in such
constituent limited partnerships, or a combination thereof. The rights of any
dissenting limited partner of any constituent limited partnership shall be as provided
in this chapter whether the surviving or resulting entity is a limited partnership or a
domestic or foreign other business entity. The certificate of merger or consolidation
required pursuant to section 121-1103 of this article shall include the information
required by paragraphs one, two, three and six of subdivision (a) of such section (as
applicable) as to the constituent other business entities. The provisions of section
121-1104 of this article shall govern the effect of the merger or consolidation with
respect to the property of, debts, obligations, liabilities and penalties of, and actions,
suits and proceedings by or against, the constituent limited partnership if the
survivor or resultant entity therefrom is a limited partnership.

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S 121-1201. Existing limited partnership.
(a) All limited partnerships formed on or after the effective date of this article shall
be governed by this article.
(b) Except as provided in section 121-1202 of this article, all domestic limited
partnerships formed under the laws of this state prior to the effective date of this
article shall continue to be governed by article eight of this chapter, as amended, in
the same manner as if this article had not been enacted.
(c) All foreign limited partnerships which have authority to do business in New York
on such effective date shall be deemed to have received authority under this article
and such foreign limited partnerships shall not be required to take any action with
respect thereto.

S 121-1202. Adoption by previously formed limited partnerships.
(a) A limited partnership formed under the laws of this state prior to the effective
date of this article may adopt and thereafter be governed by this article by filing with
the department of state a certificate of limited partnership conforming to the
requirements of section 121-201 of this article. Such certificate (i) shall be entitled
"Certificate of adoption of Revised Limited Partnership Act of...(name of limited
partnership) under Section 121-1202 of the Revised Limited Partnership Act", and
(ii) shall state the date and the county in which its original certificate of limited
partnership was filed, as well as the name of the limited partnership as provided in
such original certificate, if different. Simultaneously, such limited partnership shall
file a notice with the county clerk of the county in which its prior certificate was filed
stating that it has filed a certificate under this article in the department of state.
(b) On and after the effective date of this article, any limited partnership formed
under the laws of the state prior to the effective date of this article which does not
elect to be governed by this article which would be required under article eight to
amend its certificate of limited partnership or wishes to amend its certificate of
limited partnership shall file such amendment with the department of state, together
with a certificate of adoption as described in subdivision (a) of this section. Such
amendment shall (i) contain a caption that such amendment is filed pursuant to this
subdivision and (ii) shall state (A) the date on which and the county in which its
original certificate of limited partnership was filed as well as the name of the limited
partnership as provided in such original certificate, if different; and (B) if the
principal place of business stated in such original certificate of limited partnership
has been changed to another county and an amendment thereto filed with the
county clerk of the county in which such principal place of business was changed, the
date on and the county in which such amendment was filed. Simultaneously, such
limited partnership shall file a notice with the county clerk of the county in which its
prior certificate was filed stating that it has filed an amendment to its certificate
under this section. Following the filing of an initial notice to such clerks of the county
no further notice of any additional amendments need be filed with such clerks of the
county.
(c) Notwithstanding the provisions of section 121-102 of this article, any limited
partnership not electing to be governed by this article may continue to use the name
under which it has heretofore done business in this state. A limited partnership
electing not to be governed by this article upon filing the amendments provided for
in subdivision (b) of this section shall thereafter be governed by this article and not
by the law previously applicable to it.
(d) Unless otherwise provided in the partnership agreement of the limited
partnership organized prior to the effective date of this article, the general partners
of such limited partnership shall have the power and authority to elect whether at
any time such limited partnership shall be governed by this article.
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S 121-1300 Fees.
Except as otherwise provided, the department of state shall collect the following fees
and deposit such fees in the corporations, state records and uniform commercial
code account pursuant to this article:
(a) For the reservation of a limited partnership name pursuant to section 121-103 of
this article, twenty dollars.
(d) For the resignation of a registered agent for service of process pursuant to
subdivision (c) of section 121-105 of this article, twenty dollars.
(e) For filing a certificate of limited partnership pursuant to section 121-201 of this
article, two hundred dollars.
(f) For filing an affidavit of publication pursuant to either section 121-201 or 121-902
of this article, twenty-five dollars.
(g) For filing a certificate of amendment pursuant to section 121-202 of this article,
sixty dollars.
(h) For filing a certificate of cancellation pursuant to section 121-203 of this article,
sixty dollars.
(i) For filing a restated certificate of limited partnership pursuant to section 121-208
of this article, sixty dollars.
(j) For filing a judicial dissolution pursuant to section 121-802 of this article, sixty
dollars.
(k) For filing an application for authority pursuant to section 121-902 of this article,
two hundred dollars.
(l) For filing an amendment to an application for authority pursuant to section 121-
903 of this article, sixty dollars.
(m) For filing a certificate of surrender of authority pursuant to section 121-905 of
this article, sixty dollars.
(n) For filing a certificate of termination of existence pursuant to section 121-906 of
(o) For filing a certificate of merger or consolidation pursuant to section 121-1103 of
(p) For filing a certificate of adoption purs uant to section 121-1202 of this article,
two hundred dollars.
(q) For filing a certificate of resignation for receipt for process pursuant to section
121-104-A of this article, ten dollars.
(r) For service of process on the secretary of state pursuant to section 121-104-A or
section 121-109 of this article, forty dollars. No fee shall be collected for process
served on behalf of a county, city, town or village or other political subdivision of the
state.
(s) For filing a certificate of change pursuant to subdivision (a) of section 121-202-A
or subdivision (a) of section 121-903-A of this article, thirty dollars, and for filing a
certificate of change pursuant to subdivision (b) of section 121-202-A or subdivision
(b) of section 121-903-A of this article, five dollars.

ARTICLE 8-B
REGISTERED LIMITED LIABILITY PARTNERSHIPS

Section 121-1500. Registered limited liability partnership.
121-1501. Name of registered limited liability partnership.
121-1502. New York registered foreign limited liability
partnership.
121-1503. Transaction of business outside the state.
121-1504. Foreign related limited liability partnership.
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121-1505. Service of process.
121-1506. Resignation for receipt of process.

S 121-1500. Registered limited liability partnership.
(a) Notwithstanding the education law or any other provision of law, (i) a partnership
without limited partners each of whose partners is a professional authorized by law
to render a professional service within this state and who is or has been engaged in
the practice of such profession in such partnership or a predecessor entity, or will
engage in the practice of such profession in the registered limited liability partnership
within thirty days of the date of the effectiveness of the registration provided for in
this subdivision or a partnership without limited partners each of whose partners is a
professional, at least one of whom is authorized by law to render a professional
service within this state and who is or has been engaged in the practice of such
profession in such partnership or a predecessor entity, or will engage in the practice
of such profession in the registered limited liability partnership within thirty days of
the date of the effectiveness of the registration provided for in this subdivision, (ii) a
partnership without limited partners authorized by, or holding a license, certificate,
registration or permit issued by the licensing authority pursuant to the education law
to render a professional service within this state, which renders or intends to render
professional services within this state, or (iii) a related limited liability partnership
may register as a registered limited liability partnership by filing with the department
of state a registration which shall set forth:
(1) the name of the registered limited liability partnership;
(2) the address of the principal office of the partnership without limited partners;
(3) the profession or professions to be practiced by such partnership without limited
partners and a statement that it is eligible to register as a registered limited liability
partnership pursuant to subdivision (a) of this section;
(4) a designation of the secretary of state as agent of the partnership without limited
partners upon whom process against it may be served and the post office address
within or without this state to which the secretary of state shall mail a copy of any
process against it or served upon it;
(5) if the partnership without limited partners is to have a registered agent, its name
and address in this state and a statement that the registered agent is to be the
agent of the partnership without limited partners upon whom process against it may
be served;
(6) that the partnership without limited partners is filing a registration for status as a
registered limited liability partnership;
(7) if the registration of the partnership without limited partners is to be effective on
a date later than the time of filing, the date, not to exceed sixty days from the date
of such filing, of such proposed effectiveness;
(8) if all or specified partners of the registered limited liability partnership are to be
liable in their capacity as partners for all or specified debts, obligations or liabilities of
the registered limited liability partnership as authorized pursuant to subdivision (d)
of section twenty-six of this chapter, a statement that all or specified partners are so
liable for such debts, obligations or liabilities in their capacity as partners of the
registered limited liability partnership as authorized pursuant to subdivision (d) of
section twenty-six of this chapter; and
(9) any other matters the partnership without limited partners determines to include
in the registration.

Within one hundred twenty days after the effective date of the registration, a copy of
the same or a notice containing the substance thereof shall be published once in
each week for six successive weeks, in two newspapers of the county in which the
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principal office of the registered limited liability partnership is located in this state, to
be designated by the county clerk, one of which newspapers shall be a newspaper
published in the city or town in which the principal office within this state is intended
to be located, if a newspaper be published therein; or, if no newspaper is published
therein, in the newspaper nearest thereto, and proof of such publication by the
affidavit of the printer or publisher of each of such newspapers must be filed, with a
fee of twenty-five dollars, with the department of state. The notice shall include: (1)
the name of the registered limited liability partnership; (2) the date of filing of the
registration with the secretary of state; (3) the county within this state, in which the
principal office of the registered limited liability partnership is to be located; (4) a
statement that the secretary of state has been designated as agent of the registered
limited liability partnership upon whom process against it may be served and the
post offic e address within or without this state to which the secretary of state shall
mail a copy of any process against it served upon him or her; (5) if the registered
limited liability partnership is to have a registered agent, his or her name and
address within this state and a statement that the registered agent is to be the agent
of the registered limited liability partnership upon whom process against it may be
served; (6) if the registered limited liability partnership is to have a specific date of
dissolution in addition to the events of dissolution set forth in section sixty-two of
this chapter, the latest date upon which the registered limited liability partnership is
to dissolve; and (7) the character or purpose of the business of such registered
limited liability partnership. Failure to cause such notice to be published or to file
such proof within one hundred twenty days of the effective date of the registration
shall prohibit the registered limited liability partnership from maintaining any action
or special proceeding in this state unless and until such registered limited liability
partnership causes such notice to be published and files such proof of publication.
The failure of a registered limited liability partnership to cause such notice to be
published or to file proof of publication shall not impair the validity of any contract or
act of the registered limited liability partnership or the right of any other party to the
contract to maintain any action or special proceeding thereon, and shall not prevent
the registered limited liability partnership from defending any action or special
proceeding in this state.
(b) The registration shall be executed by one or more partners of the partnership
without limited partners.
(c) The registration shall be accompanied by a fee of two hundred dollars.
(d) A partnership without limited partners is registered as a registered limited
liability partnership at the time of the payment of the fee required by subdivision (c)
of this section and the filing of a completed registration with the department of state
or at the later date, if any, specified in such registration, not to exceed sixty days
from the date of such filing. A partnership without limited partners that has been
registered as a registered limited liability partnership is for all purposes the same
entity that existed before the registration and continues to be a partnership without
limited partners under the laws of this state. The status of a partnership without
limited partners as a registered limited liability partnership shall not be affected by
changes in the information stated in the registration after the filing of the
registration. If a partnership without limited partners that is a registered limited
liability partnership dissolves, a partnership without limited partners which is the
successor to such registered limited liability partnership (i) shall not be required to
file a new registration and shall be deemed to have filed the registration filed by the
registered limited liability partnership pursuant to subdivision (a) of this section, as
well as any withdrawal notice filed pursuant to subdivision (f) of this section, any
statement or certificate of consent
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filed pursuant to subdivision (g) of this section or any certificate of amendment filed
pursuant to subdivision (j) of this section and (ii) shall be bound by any revocation of
registration pursuant to subdivision (g) of this section and any annulment thereof of
the dissolved partnership without limited partners that was a registered limited
liability partnership. For purposes of this section, a partnership without limited
partners is a successor to a partnership without limited partners that was a
registered limited liability partnership if a majority of the total interests in the current
profits of such successor partnership without limited partners are held by partners of
the predecessor partnership without limited partners that was a registered limited
liability partnership who were partners of such predecessor partnership immediately
prior to the dissolution of such predecessor partnership.
(e) If the signed registration delivered to the department of state for filing complies
as to form with the requirements of law and the filing fee required by any statute of
this state has been paid, the registration shall be filed and indexed by the
department of state.
(f) A registration may be withdrawn by filing with the department of state a written
withdrawal notice executed by one or more partners of the registered limited liability
partnership, with a filing fee of sixty dollars. A withdrawal notice must include: (i)
the name of the registered limited liability partnership (and if it has been changed
since registration, the name under which it was registered); (ii) the date the
registration was filed with the department of state pursuant to subdivision (a) of this
section; (iii) the address of the registered limited liability partnerships principal
office; (iv) if the withdrawal of the registered limited liability partnership is to be
effective on a date later than the time of filing, the date, not to exceed sixty days
from the date of such filing, of such proposed effectiveness; (v) a statement
acknowledging that the withdrawal terminates the partnerships status as a
registered limited liability partnership; and (vi) any other information determined by
the registered limited liability partnership.

A withdrawal notice terminates the status of the partnership as a registered limited
liability partnership as of the date of filing the notice or as of the later date, if any,
specified in the notice, not to exceed sixty days from the date of such filing. The
termination of registration shall not be affected by errors in the information stated in
the withdrawal notice. If a registered limited liability partnership is dissolved, it shall
within thirty days after the winding up of its affairs is completed file a withdrawal
notice pursuant to this subdivision.

(g) Each registered limited liability partnership shall, within sixty days prior to the
fifth anniversary of the effective date of its registration and every five years
thereafter, furnish a statement to the department of state setting forth: (i) the name
of the registered limited liability partnership, (ii) the address of the principal office of
the registered limited liability partnership, (iii) the post office address within or
without this state to which the secretary of state shall mail a copy of any process
accepted against it served upon him or her, which address shall supersede any
previous address on file with the department of state for this purpose, and (iv) a
statement that it is eligible to register as a registered limited liability partnership
pursuant to subdivision (a) of this section. The statement shall be executed by one
or more partners of the registered limited liability partnership. The statement shall
be accompanied by a fee of twenty dollars. If a registered limited liability partnership
shall not timely file the statement required by this subdivision, the department of
state may, upon sixty days notice mailed to the address of such registered limited
liability partnership as shown in the last registration or statement or certificate of
amendment filed by such registered limited liability partnership, make a
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proclamation declaring the registration of such registered limited liability partnership
to be revoked pursuant to this subdivision. The department of state shall file the
original proclamation in its office and shall publish a copy thereof in the state register
no later than three months following the date of such proclamation. Upon the
publication of such proclamation in the manner aforesaid, the registration of each
registered limited liability partnership named in such proclamation shall be deemed
revoked without further legal proceedings. Any registered limited liability partnership
whose registration was so revoked may file in the department of state a certificate of
consent certifying that either a statement required by this subdivision has been filed
or accompanies the certificate of consent and all fees imposed under this chapter on
the registered limited liability partnership have been paid. The filing of such
certificate of consent shall have the effect of annulling all of the proceedings
theretofore taken for the revocation of the registration of such registered limited
liability partnership under this subdivision and (1) the registered limited liability
partnership shall thereupon have such powers, rights, duties and obligations as it
had on the date of the publication of the proclamation, with the same force and
effect as if such proclamation had not been made or published and (2) such
publication shall not affect the applicability of the provisions of subdivision (b) of
section twenty-six of this chapter to any debt, obli gation or liability incurred, created
or assumed from the date of publication of the proclamation through the date of the
filing of the certificate of consent. The filing of a certificate of consent shall be
accompanied by a fee of fifty dollars and if accompanied by a statement, the fee
required by this subdivision. If, after the publication of such proclamation, it shall be
determined by the department of state that the name of any registered limited
liability partnership was erroneously included in such proclamation, the department
of state shall make appropriate entry on its records, which entry shall have the effect
of annulling all of the proceedings theretofore taken for the revocation of the
registration of such registered limited liability partnership under this subdivision and
(A) such registered limited liability partnership shall have such powers, rights, duties
and obligations as it had on the date of the publication of the proclamation, with the
same force and effect as if such proclamation had not been made or published and
(B) such publication shall not affect the applicability of the provisions of subdivision
(b) of section twenty-six of this chapter to any debt, obligation or liability incurred,
created or assumed from the date of publication of the proclamation through the
date of the making of the entry on the records of the department of state. Whenever
a registered limited liability partnership shall have filed a certificate of consent
pursuant to this subdivision or if the name of a registered limited liability partnership
was erroneously included in a proclamation and such proclamation was annulled, the
department of state shall publish a notice thereof in the state register.
(h) The filing of a withdrawal notice by a registered limited liability partnership
pursuant to subdivision (f) of this section, a revocation of registration pursuant to
subdivision (g) of this section and the filing of a certificate of amendment pursuant
to subdivision (j) of this section shall not affect the applicability of the provisions of
subdivision (b) of section twenty-six of this chapter to any debt, obligation or liability
incurred, created or assumed while the partnership was a registered limited liability
partnership. After a withdrawal or revocation of registration, the partnership without
limited partners shall for all purposes remain the same entity that existed during
registration and continues to be a partnership without limited partners under the
laws of this state.
(i) The department of state shall remove from its active records the registration of a
registered limited liability partnership whose registration has been withdrawn or
revoked.
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(j) A registration or statement filed with the department of state under this section
may be amended or corrected by filing with the department of state a certificate of
amendment executed by one or more partners of the registered limited liability
partnership. No later than ninety days after (i) a change in the name of the
registered limited liability partnership or (ii) a partner of the registered limited
liability partnership becomes aware that any statement in a registration or statement
was false in any material respect when made or that an event has occurred which
makes the registration or statement inaccurate in any material respect, the
registered limited liability partnership shall file a certificate of amendment. The filing
of a certificate of amendment shall be accompanied by a fee of sixty dollars. The
certificate of amendment shall set forth: (i) the name of the limited liability
partnership and, if it has been changed, the name under which it was registered and
(ii) the date of filing its initial registration or statement.
(j-1) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a registered limited
liability partnership served upon him or the address of the registered agent, provided
such address being changed is the address of a person, partnership or corporation
whose address, as agent, is the address to be changed or who has been designated
as registered agent for such registered limited liability partnership shall be signed
and delivered to the department of state by such agent. The certificate of change
shall set forth: (i) the name of the registered limited liability partnership and, if it
has been changed, the name under which it was originally filed with the department
of state; (ii) the date of filing of its initial registration or notice statement; (iii) each
change effected thereby; (iv) that a notice of the proposed change was mailed to the
limited liability partnership by the party signing the certificate not less than thirty
days prior to the date of delivery to the department of state and that such limited
liability partnership has not objected thereto; and (v) that the party signing the
certificate is the agent of such limited liability partnership to whose address the
secretary of state is required to mail copies of process or the registered agent, if
such be the case. A certificate signed and delivered under this subdivision shall not
be deemed to effect a change of location of the office of the limited liability
partnership in whose behalf such certificate is filed. The certificate of change shall be
accompanied by a fee of five dollars.
(k) The filing of a certificate of amendment pursuant to subdivision (j) of this section
with the department of state shall not alter the effective date of the registration
being amended or corrected.
(l) Except as otherwise provided in any agreement between the partners, the
decision of a partnership without limited partners to file, withdraw or amend a
registration pursuant to subdivision (a), (f) or (j), respectively, of this section is an
ordinary matter connected with partnership business under subdivision eight of
section forty of this chapter.
(m) A registered limited liability partnership, other than a registered limited liability
partnership authorized to practice law, shall be under the supervision of the regents
of the university of the state of New York and be subject to disciplinary proceedings
and penalties in the same manner and to the same extent as is provided with respect
to individuals and their licenses, certificates and registrations in title eight of the
education law relating to the applicable profession. Notwithstanding the provisions
of this subdivision, a registered limited liability partnership authorized to practice
medicine shall be subject to the pre-hearing procedures and hearing procedures as
are provided with respect to individual physicians and their licenses in title two-A of
article two of the public health law. In addition to rendering the professional service
or services the partners are authorized to practice in this state, a registered limited
liability partnership may carry on, or conduct or transact any other business or
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activities as to which a partnership without limited partners may be formed.
Notwithstanding any other provision of this section, a registered limited liability
partnership (i) authorized to practice law may only engage in another profession or
business or activities or (ii) which is engaged in a profession or other business or
activities other than law may only engage in the practice of law, to the extent not
prohibited by any other law of this state or any rule adopted by the appropriate
appellate division of the supreme court or the court of appeals. Any registered
limited liability partnership may invest its funds in real estate, mortgages, stocks,
bonds or any other types of investments.
(n) No registered limited liability partnership may render a professional service
except through individuals authorized by law to render such professional service as
individuals, provided, that nothing in this chapter shall authorize a registered limited
liability partnership to render a professional service in this state except through
individuals authorized by law to render such professional service as individuals in this
state.
(o) This section shall not repeal, modify or restrict any provision of the education law
or the judiciary law or any rules or regulations adopted thereunder regulating the
professions referred to in the education law or the judiciary law except to the extent
in conflict herewith.
(p) A certified copy of the registration and of each certificate of amendment shall be
filed by the registered limited liability partnership with the licensing authority within
thirty days after the filing of such registration or amendment with the department of
state.
* (q) Each partner of a registered limited liability partnership formed to provide
medical services in this state must be licensed pursuant to article 131 of the
education law to practice medicine in this state and each partner of a registered
limited liability partnership formed to provide dental services in this state must be
licensed pursuant to article 133 of the education law to practice dentistry in this
state. Each partner of a registered limited liability partnership formed to provide
veterinary services in this state shall be licensed pursuant to article 135 of the
education law to practice veterinary medicine in this state. Each partner of a
registered limited liability partnership formed to provide professional engineering,
land surveying, architectural and/or landscape architectural services in this state
must be licensed pursuant to article 145, article 147 and/or article 148 of the
education law to practice one or more of such professions in this state.
* NB Effective until September 1, 2004

veterinary services in this state must be licensed pursuant to article 135 of the
education law to practice one or more of such professions in this state. Each partner
of a registered limited liability partnership formed to provide licensed clinical social
work services in this state must be licensed pursuant to article 154 of the education
law to practice clinical social work in this state.

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* NB Effective September 1, 2004 until January 1, 2005

veterinary services in this state must be licensed pursuant to article 135 of the
education law to practice one or more of such professions in this state. Each partner
of a registered limited liability partnershi p formed to provide licensed clinical social
work services in this state must be licensed pursuant to article 154 of the education
law to practice clinical social work in this state. Each partner of a registered limited
liability partnership formed to provide creative arts therapy services in this state
must be licensed pursuant to article 163 of the education law to practice creative
arts therapy in this state. Each partner of a registered limited liability partnership
formed to provide marriage and family therapy services in this state must be
licensed pursuant to article 163 of the education law to practice marriage and family
therapy in this state. Each partner of a registered limited liability partnership formed
to provide mental health counseling services in this state must be licensed pursuant
to article 163 of the education law to practice mental health counseling in this state.
Each partner of a registered limited liability partnership formed to provide
psychoanalysis services in this state must be licensed pursuant to article 163 of the
education law to practice psychoanalysis in this state.
* NB Effective January 1, 2005

S 121-1501. Name of registered limited liability partnership.
The name of each registered limited liability partnership shall contain without
abbreviation the words "Registered Limited Liability Partnership" or "Limited Liability
Partnership" or the abbreviations "R.L.L.P.", "RLLP", "L.L.P." or "LLP"; provided,
however, the partnership may use any such words or abbreviation, without
limitation, in addition to its registered name.

S 121-1502. New York registered foreign limited liability partnership.
(a) In order for a foreign limited liability partnership to carry on or conduct or
transact business or activities as a New York registered foreign limited liability
partnership in this state, such foreign limited liability partnership shall file with the
department of state a notice which shall set forth:
(i) the name under which the foreign limited liability partnership intends to carry on
or conduct or transact business or activities in this state;
(ii) the date on which and the jurisdiction in which it registered as a limited liability
partnership;
(iii) the address of the principal office of the foreign limited liability partnership;
(iv) the profession or professions to be practiced by such foreign limited liability
partnership and a statement that it is a foreign limited liability partnership eligible to
file a notice under this chapter;
(v) a designation of the secretary of state as agent of the foreign limited liability
partnership upon whom process against it may be served and the post office address
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within or without this state to which the secretary of state shall mail a copy of any
process against it or served upon it;
(vi) if the foreign limited liability partnership is to have a registered agent, its name
and address in this state and a statement that the registered agent is to be the
agent of the foreign limited liability partnership upon whom process against it may
be served;
(vii) a statement that its registration as a limited liability partnership is effective in
the jurisdiction in which it registered as a limited liability partnership at the time of
the filing of such notice;
(viii) a statement that the foreign limited liability partnership is filing a notice in
order to obtain status as a New York registered foreign limited liability partnership;
(ix) if the registration of the foreign limited liability partnership is to be effective on a
date later than the time of filing, the date, not to exceed sixty days from the date of
filing, of such proposed effectiveness; and (x) any other matters the foreign limited
liability partnership determines to include in the notice. Such notice shall be
accompanied by either (1) a copy of the last registration or renewal registration (or
similar filing), if any, filed by the foreign limited liability partnership with the
jurisdiction where it registered as a limited liability partnership or (2) a certificate,
issued by the jurisdiction where it registered as a limited liability partnership,
substantially to the effect that such foreign limited liability partnership has filed a
registration as a limited liability partnership which is effective on the date of the
certificate (if such registration, renewal registration or certificate is in a foreign
language, a translation thereof under oath of the translator shall be attached
thereto). Such notice shall also be accompanied by a fee of two hundred fifty dollars.
(b) Without excluding other activities which may not constitute the carrying on or
conducting or transacting of business or activities in this state, for purposes of
determining whether a foreign limited liability partnership is required to file a notice
pursuant to subdivision (a) of this section, a foreign limited liability partnership shall
not be considered to be carrying on or conducting or transacting business or
activities in this state by reason of carrying on in this state any one or more of the
following activities:
(i) maintaining or defending any action or proceeding, whether judicial,
administrative, arbitrative or otherwise, or effecting settlement thereof or the
settlement of claims or disputes;
(ii) holding meetings of its partners; or
(iii) maintaining bank accounts.

The specification in this subdivision does not establish a standard for activities which
may subject a foreign limited liability partnership to service of process under this
article or any other statute of this state. The filing of a notice pursuant to subdivision
(a) of this section by a foreign limited liability partnership shall not by itself be
deemed to be evidence that such foreign limited liability partnership is carrying on or
conducting or transacting business or activities in this state.
(c) A notice shall be executed by one or more partners of the foreign limited liability
partnership.
(d) If a signed notice delivered to the department of state for filing complies as to
form with the requirements of law and the filing fee required by any statute of this
state has been paid, the notice shall be filed and indexed by the department of state.
If a foreign limited liability partnership that is a New York registered foreign limited
liability partnership dissolves, a foreign limited liability partnership which is the
successor to such New York registered foreign limited liability partnership (i) shall
not be required to file a new notice and shall be deemed to have filed the notice filed
by the New York registered foreign limited liability partnership pursuant to
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subdivision (a) of this section, as well as any withdrawal notice filed pursuant to
subdivision (e) of this section, any statement or certificate of consent filed pursuant
to subdivision (f) of this section and any notice of amendment filed pursuant to
subdivision (i) of this section and (ii) shall be bound by any revocation of status
pursuant to subdivision (f) of this section and any annulment thereof of the dissolved
foreign limited liability partnership that was a New York registered foreign limited
liability partnership. For purposes of this section, a foreign limited liability
partnership is a successor to a foreign limited liability partnership that was a New
York registered foreign limited liability partnership if a majority of the total interests
in the current profits of such successor foreign limited liability partnership are held
by partners of the predecessor foreign limited liability partnership that was a New
York registered foreign limited liability partnership who were partners of such
predecessor partnership immediately prior to the dissolution of such predecessor
partnership.
(e) A notice may be withdrawn by filing with the department of state a written
withdrawal notice executed by one or more partners of the New York registered
foreign limited liability partnership, with a filing fee of sixty dollars. A withdrawal
notice must include: (i) the name or names under which the New York registered
foreign limited liability partnership carried on or conducted or transacted business or
activities in this state (and if it has been changed since the filing of the notice, the
name under which it filed such notice); (ii) the date a notice was filed with the
department of state pursuant to subdivision (a) of this section; (iii) the address of
the New York registered foreign limited liability partnerships principal office and the
jurisdiction in which it is registered as a limited liability partnership; (iv) if the
withdrawal of the New York registered foreign limited liability partners hip is to be
effective on a date later than the time of such filing, the date, not to exceed sixty
days from the date of such filing, of such proposed effectiveness; (v) a statement
acknowledging that the withdrawal terminates the foreign limited liability
partnerships status as a New York registered foreign limited liability partnership;
and (vi) any other information determined by the New York registered foreign limited
liability partnership. A withdrawal notice terminates the status of the foreign limited
liability partnership as a New York registered foreign limited liability partnership as of
the date of filing of the notice or as of the later date, if any, specified in the notice,
not to exceed sixty days from the date of such filing. The termination of status shall
not be affected by errors in the information stated in the withdrawal notice. If a New
York registered foreign limited liability partnership ceases to be denominated as a
registered limited liability partnership or limited liability partnership under the laws of
the jurisdiction governing the agreement under which such New York registered
foreign limited liability partnership operates, it shall within thirty days after the
occurrence of such event file a withdrawal notice pursuant to this subdivision.
(f) Each New York registered foreign limited liability partnership shall, within sixty
days prior to the fifth anniversary of the effective date of its notice and every five
years thereafter, furnish a statement to the department of state setting forth: (i) the
name under which the New York registered foreign limited liability partnership is
carrying on or conducting or transacting business or activities in this state, (ii) the
address of the principal office of the New York registered foreign li mited liability
partnership, (iii) the post office address within or without this state to which the
secretary of state shall mail a copy of any process accepted against it served upon
him or her, which address shall supersede any previous address on file with the
department of state for this purpose, and (iv) a statement that it is a foreign limited
liability partnership. The statement shall be executed by one or more partners of the
New York registered foreign limited liability partnership. The statement shall be
accompanied by a fee of fifty dollars. If a New York registered foreign limited liability
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partnership shall not timely file the statement required by this subdivision, the
department of state may, upon sixty days notice mailed to the address of such New
York registered foreign limited liability partnership as shown in the last notice or
statement or certificate of amendment filed by such New York registered foreign
limited liability partnership, make a proclamation declaring the status of such New
York registered foreign limited liability partnership to be revoked pursuant to this
subdivision. The department of state shall file the original proclamation in its office
and shall publish a copy thereof in the state register no later than three months
following the date of such proclamation. Upon the publication of such proclamation in
the manner aforesaid, the status of each New York registered foreign limited liability
partnership named in such proclamation shall be deemed revoked without further
legal proceedings. Any New York registered foreign limited liability partnership whose
status was so revoked may file in the department of state a certificate of consent
certifying that either a statement required by this subdivision has been filed or
accompanies the certificate of consent and all fees imposed under this chapter on the
New York registered foreign limited liability partnership have been paid. The filing of
such certificate of consent shall have the effect of annulling all of the proceedings
theretofore taken for the revocation of the status of such New York registered foreign
limited liability partnership under this subdivision and (1) the New York registered
foreign limited liability partnership shall thereupon have such powers, rights, duties
and obligations as it had on the date of the publication of the proclamation, with the
same force and effect as if such proclamation had not been made or published and
(2) such publication shall not affect the applicability of the laws of the jurisdiction
governing the agreement under which such New York registered foreign limited
liability partnership is operating (including laws governing the liability of partners) to
any debt, obligation or liability incurred, created or assumed from the date of
publication of the proclamation through the date of the filing of the certificate of
consent. The filing of a certificate of consent shall be accompanied by a fee of fifty
dollars and if accompanied by a statement, the fee required by this subdivision. If,
after the publication of such proclamation, it shall be determined by the department
of state that the name of any New York registered foreign limited liability partnership
was erroneously included in such proclamation, the department of state shall make
appropriate entry on its records, which entry shall have the effect of annulling all of
the proceedings theretofore taken for the revocation of the status of such New York
registered foreign limited liability partnership under this subdivision and (1) such
New York registered foreign limited liability partnership shall have such powers,
rights, duties and obligations as it had on the date of the publication of the
proclamation, with the same force and effect as if such proclamation had not been
made or published and (2) such publication shall not affect the applicability of the
laws of the jurisdiction governing the agreement under which such New York
registered foreign limited liability partnership is operating (including laws governing
the liability of partners) to any debt, obligation or liability incurred, created or
assumed from the date of publication of the proclamation through the date of the
making of the entry on the records of the department of state. Whenever a New York
registered foreign limited liability partnership shall have filed a certificate of consent
pursuant to this subdivision or if the name of a New York registered foreign limited
liability partnership was erroneously included in a proclamation and such
proclamation was annulled, the department of state shall publish a notice thereof in
the state register.

Within one hundred twenty days after the effective date of the notice filed under
subdivision (a) of this section, a copy of the same or a notice containing the
substance thereof shall be published once in each week for six successive weeks, in
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two newspapers of the county within this state in which the principal office of the
foreign limited liability partnership is located, to be designated by the county clerk,
one of which newspapers shall be a newspaper published in the city or town in which
the principal office is intended to be located, if a newspaper be published therein; or,
if no newspaper is published therein, in the newspaper nearest thereto, and proof of
such publication by the affidavit of the printer or publisher of each of such
newspapers must be filed with the department of state, with a filing fee of twenty-
five dollars. The notice shall include: (l) the name of the foreign limited liability
partnership; (2) the date of filing of such notice with the secretary of state; (3) the
jurisdiction and date of its organization; (4) the county within this state, in which the
principal office of the foreign limited liability partnership is to be located; (5) a
statement that the secretary of state has been designated as agent of the foreign
limited liability partnership upon whom process against it may be served and the
post office address within or without this state to which the secretary of state shall
mail a copy of any process against it served upon him or her; (6) if the foreign
limited liability partnership is to have a registered agent, his or her name and
address within this state and a statement that the registered agent is to be the agent
of the foreign limited liability partnership upon whom process against it may be
served; (7) the address of the office required to be maintained in the jurisdiction of
its organization by the laws of that jurisdiction or, if not so required, of the principal
office of the foreign limited liability partnership; (8) the name and address of the
authorized officer in its jurisdiction in which it registered as a limited liability
partnership where a copy of its registration is filed or, if no public filing of its
registration is required by the law of its jurisdiction of organization, a statement that
the foreign limited liability partnership shall provide, on request, a copy thereof with
all amendments thereto (if such documents are in a foreign language, a translation
thereof under oath of the translator shall be attached thereto), and the name and
post office address of the person responsible for providing such copies; or (9) the
character or purpose of the business of such foreign limited liability partnership.
Failure to cause such notice to be publ ished or to file such proof within one hundred
twenty days of the effective date of such notice shall prohibit the foreign limited
liability partnership from maintaining any action or special proceeding in this state
unless and until such foreign limited liability partnership causes such notice to be
published and files such proof of publication. The failure of a foreign limited liability
partnership to cause such notice to be published or to file proof of publication shall
not impair the validity of any contract or act of the foreign limited liability
partnership or the right of any other party to the contract to maintain any action or
special proceeding thereon, and shall not prevent the foreign limited liability
partnership from defending any action or special proceeding in this state.
(g) The filing of a withdrawal notice by a New York registered foreign limited liability
partnership pursuant to subdivision (e) of this section, a revocation of status
pursuant to subdivision (f) of this section and the filing of a notice of amendment
pursuant to subdivision (i) of this section shall not affect the applicability of the laws
of the jurisdiction governing the agreement under which such foreign limited liability
partnership is operating (including laws governing the liability of partners) to any
debt, obligation or liability incurred, created or assumed while the foreign limited
liability partnership was a New York registered foreign limited liability partnership.
After a withdrawal or revocation of registration, the foreign limited liability
partnership shall for all purposes continue to be a foreign partnership without limited
partners under the laws of this state.
(h) The department of state shall remove from its active records the notice of any
New York registered foreign limited liability partnership whose notice has been
withdrawn or revoked.
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(i) A notice or statement filed with the department of state under this section may be
amended or corrected by filing with the department of state a notice of amendment
executed in accordance with subdivision (c) of this section. No later than ninety days
after (i) a change in the name of the New York registered foreign limited liability
partnership or (ii) a partner of the New York registered foreign limited liability
partnership becomes aware that any statement in a notice or statement was false in
any material respect when made or that an event has occurred which makes the
notice or statement inaccurate in any material respect, the New York registered
foreign limited liability partnership shall file a notice of amendment. The filing of a
notice of amendment shall be accompanied by a fee of sixty dollars. The certificate of
amendment shall set forth: (i) the name of the limited liability partnership and, if it
has been changed, the name under which it originally filed a notice under this
section and (ii) the date of filing its initial registration or statement.
(i-1) A certificate of change which changes only the post office address to which the
secretary of state shall mail a copy of any process against a New York registered
foreign limited liability partnership served upon him or the address of the registered
agent, provided such address being changed is the address of a person, partnership
or corporation whose address, as agent, is the address to be changed or who has
been designated as registered agent of such registered foreign limited liability
partnership shall be signed and delivered to the department of state by such agent.
The certificate of change shall set forth: (i) the name of the New York registered
foreign limited liability partnership; (ii) the date of filing of its initial registration or
notice statement; (iii) each change effected thereby; (iv) that a notice of the
proposed change was mailed to the limited liability partnership by the party signing
the certificate not less than thirty days prior to the date of delivery to the
department of state and that such limited liability partnership has not objected
thereto; and (v) that the party signing the certificate is the agent of such limited
liability partnership to whose address the secretary of state is required to mail copies
of process or the registered agent, if such be the case. A certificate signed and
delivered under this subdivision shall not be deemed to effect a change of location of
the office of the limited liability partnership in whose behalf such certificate is filed.
The certificate of change shall be accompanied by a fee of five dollars.
(j) The filing of a notice of amendment pursuant to subdivision (i) of this section with
the department of state shall not alter the effective date of the notice being
amended or corrected.
(k) Each foreign limited liability partnership carrying on or conducting or transacting
business or activities in this state shall use a name which contains without
abbreviation the words "Registered Limited Liability Partnership" or "Limited Liability
Partnership" or the abbreviations "R.L.L.P.", "RLLP", "P.L.L.", "PLL", "L.L.P." or "LLP";
provided, however, the partnership may use any such words or abbreviation, without
limitation, in addition to its registered name.
(l) Subject to the constitution of this state, the laws of the jurisdiction that govern a
foreign limited liability partnership shall determine its internal affairs and the liability
of partners for debts, obligations and liabilities of, or chargeable to, the foreign
limited liability partnership; provided that (i) each partner, employee or agent of a
foreign limited liability partnership who performs professional services in this state
on behalf of such foreign limited liability partnership shall be personally and fully
liable and accountable for any negligent or wrongful act or misconduct committed by
him or her or by any person under his or her direct supervision and control while
rendering such professional services in this state and shall bear professional
responsibility for compliance by such foreign limited liability partnership with all laws,
rules and regulations governing the practice of a profession in this state and (ii) each
shareholder,
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director, officer, member, manager, partner, employee or agent of a professional
service corporation, foreign professional service corporation, professional service
registered limited liability partnership, foreign limited liability partnership or
professional partnership that is a partner, employee or agent of a foreign limited
liability partnership who performs professional services in this state on behalf of such
foreign limited liability partnership shall be personally and fully liable and
accountable for any negligent or wrongful act or misconduct committed by him or
her or by any person under his or her direct supervision and control while rendering
professional services in this state in his or her capacity as a partner, employee or
agent of such foreign limited liability partnership and shall bear professional
responsibility for compliance by such foreign limited liability partnership with all laws,
rules and regulations governing the practice of a profession in this state. The
relationship of a professional to a foreign limited liability partnership with which such
professional is associated, whether as a partner, employee or agent, shall not modify
or diminish the jurisdiction over such professional of the licensing authority and, in
the case of an attorney and counsellor-at-law or a professional service corporation,
foreign professional service corporation, professional service limited liability
company, foreign professional service limited liability company, registered limited
liability partnership, foreign limited liability partnership or professional partnership
engaged in the practice of law, the courts of this state. A limited partnership formed
under the laws of any jurisdiction, other than this state, which is denominated as a
registered limited liability partnership or limited liability partnership under such laws
shall be recognized in this state as a foreign limited partnership but not as a foreign
limited liability partnership or a New York registered foreign limited liability
partnership. Except to the extent provided in article eight of the limited liability
company law, a partnership without limited partners operating under an agreement
governed by the laws of any jurisdiction, other than this state, which is denominated
as a registered limited liability partnership or a limited liability partnership under
such laws, but is not a foreign limited liability partnership, shall be recognized in this
state as a foreign partnership without limited partners, but not as a foreign limited
liability partnership or a New York registered foreign limited liability partnership.
(m) A foreign limited liability partnership carrying on or conducting or transacting
business or activities in this state without having filed a notice pursuant to
subdivision (a) of this section may not maintain any action, suit or special proceeding
in any court of this state unless and until such foreign limited liability partnership
shall have filed such notice and paid all fees that it would have been required to pay
had it filed a notice pursuant to subdivision (a) of this section before carrying on or
conducting or transacting business or activities as a New York registered foreign
limited liability partnership in this state and shall have filed proof of publication
pursuant to subdivision (f) of this section. The failure of a foreign limited liability
partnership that is carrying on or conducting or transacting business or activities in
this state to comply with the provisions of this section does not impair the validity of
any contract or act of the foreign limited liability partnership or prevent the foreign
limited liability partnership from defending any action or special proceeding in any
court of this state.
(n) A foreign limited liability partnership, other than a foreign limited liability
partnership authorized to practice law, shall be under the supervision of the regents
of the university of the stat e of New York and be subject to disciplinary proceedings
and penalties in the same manner and to the same extent as is provided with respect
to individuals and their licenses, certificates and registrations in title eight of the
education law relating to the applicable profession. Notwithstanding the provisions of
this subdivision, a foreign limited liability partnership authorized to practice medicine
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shall be subject to the pre-hearing procedures and hearing procedures as are
provided with respect to individual physicians and their licenses in title two-A of
article two of the public health law. No foreign limited liability partnership shall
engage in any profession or carry on, or conduct or transact any other business or
activities in this state other than the rendering of the professional services or the
carrying on, or conducting or transacting of any other business or activities for which
it is formed and is authorized to do business in this state; provided that such foreign
limited liability partnership may invest its funds in real estate, mortgages, stocks,
bonds or any other type of investments; provided, further, that a foreign limited
liability partnership (i) authorized to practice law may only engage in another
profession or other business or activities in this state or (ii) which is engaged in a
profession or other business or activities other than law may only engage in the
practice of law in this state, to the extent not prohibited by any other law of this
state or any rule adopted by the appropriate appellate division of the supreme court
or the court of appeals.
(o) No foreign limited liability partnership may render a professional service in this
state except through individuals authorized by law to render such professional
service as individuals in this state.
(p) This section shall not repeal, modify or restrict any provision of the education law
or the judiciary law or any rules or regulations adopted thereunder regulating the
professions referred to in the education law or the judiciary law except to the extent
in conflict herewith.
* (q) Each partner of a foreign limited liability partnership which provides medical
practice medicine in the state and each partner of a foreign limited liability
partnership which provides dental services in the state must be licensed pursuant to
article 133 of the education law to practice dentistry in this state. Each partner of a
foreign limited liability partnership which provides veterinary service in the state
shall be licensed pursuant to article 135 of the education law to practice veterinary
medicine in this state. Each partner of a foreign limited liability partnership which
provides professional engineering, land surveying, architectural and/or landscape
architectural services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or more of such
professions.
* NB Effective until January 1, 2005

* (q) Each partner of a foreign limited liability partnership which provides medical
practice medicine in the state and each partner of a foreign limited liability
partnership which provides dental services in the state must be licensed pursuant to
article 133 of the education law to practice dentistry in this state. Each partner of a
foreign limited liability partnership which provides veterinary service in the state
shall be licensed pursuant to article 135 of the education law to practice veterinary
medicine in this state. Each partner of a foreign limited liability partnership which
provides professional engineering, land surveying, architectural and/or landscape
architectural services in this state must be licensed pursuant to article 145, article
147 and/or article 148 of the education law to practice one or more of such
professions. Each partner of a foreign limited liability partnership which provides
creative arts therapy services in this state must be licensed pursuant to article 163
of the education law to practice creative arts therapy in this state. Each partner of a
foreign limited liability partnership which provides marriage and family therapy
practice marriage and family therapy in this state. Each partner of a foreign limited
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liability partnership which provides mental health counseling services in this state
must be licensed pursuant to article 163 of the education law to practice mental
health counseling in this state. Each partner of a foreign limited liability partnership
which provides psychoanalysis services in this state must be licensed pursuant to
article 163 of the education law to practice psychoanalysis in this state.
* NB Effective January 1, 2005

S 121-1503. Transaction of business outside the state.
(a) It is the intent of the legislature that the registration of a partnership without
limited partners as a registered limited liability partnership under this article shall be
recognized beyond the limits of this state and that such registered limited liability
partnership may conduct its business or activities, carry on its operations, and have
and exercise the powers granted by this article in any state, territory, district or
possession of the United States or in any foreign country and that, subject to any
reasonable registration requirements any such registered limited liability partnership
transacting business outside this state and the laws of this state governing such
registered limited liability partnership shall be granted the protection of full faith and
credit under section 1 of article IV of the Constitution of the United States.
(b) It is the policy of this state that the internal affairs of a partnership without
limited partners registered as a registered limited liability partnership under this
article and the liability of partners in a registered limited liability partnership for
debts, obligations and liabilities of, or chargeable to, the registered limited liability
partnership shall be subject to and governed by the laws of this state, including the
provisions of this article.

S 121-1504. Foreign related limited liability partnership.
Any foreign related limited liability partnership that has filed a certificate of authority
under and satisfied all the requirements of section eight hundred two of the limited
liability company law shall be deemed to have filed a notice pursuant to section 121-
1502 of this chapter until the fifth anniversary of filing its application for such
certificate of authority, at which time the foreign related limited liability partnership
shall file a notice pursuant to section 121-1502 of this chapter.

S 121-1505. Service of process.
(a) Service of process on the secretary of state as agent of a registered limited
liability partnership under this article shall be made by personally delivering to and
leaving with the secretary of state or a deputy, or with any person authorized by the
secretary of state to receive such service, at the office of the department of state in
the city of Albany, duplicate copies of such process together with the statutory fee,
which fee shall be a taxable disbursement. Service of process on such registered
limited liability partnership shall be complete when the secretary of state is so
served. The secretary of state shall promptly send one of such copies by certified
mail, return receipt requested, to such registered limited liability partnership, at the
post office address on file in the department of state specified for such purpose.
(b) As used in this article, process shall mean judicial process and all orders,
demands, notices or other papers required or permitted by law to be personally
served on a registered limited liability partnership, for the purpose of acquiring
jurisdiction of such registered limited liability partnership in any action or proceeding,
civil or criminal, whether judicial, administrative, arbitrative or otherwise, in this
state or in the federal courts sitting in or for this state.
(c) Nothing in this section shall affect the right to serve process in any other manner
permitted by law.

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S 121-1506. Resignation for receipt of process.
(a) A registered agent may resign as such agent. A certificate entitled "Certificate of
resignation of registered agent of ...... (name of limited liability partnership) under
section 121-1506 of the Partnership Law" shall be signed and delivered to the
department of state. It shall set forth:
(1) That he resigns as registered agent for the designated limited liability
partnership.
(2) The date the certificate of registration of the designated limited liability
partnership was filed by the department of state.
(3) That he has sent a copy of the certificate of resignation by registered mail to the
designating limited liability partnership at the post office address on file in the
department of state specified for the mailing of process or if such address is the
address of the registered agent, then to the office of the designating limited liability
partnership in the jurisdiction of its formation.
(b) The party (or the partys legal representative) whose post address has been
supplied by a limited liability partnership as its address for process may resign. A
certificate entitled "Certificate of Resignation for Receipt of Process under Section
121-1506(b) of the Partnership Law" shall be signed by such party and delivered to
the department of state. It shall set forth:
(1) The name of the limited liability partnership and the date that its certificate of
registration was filed by the department of state.
(2) That the address of the party has been designated by the limited liability
partnership as the post office address to which the secretary of state shall mail a
copy of any process served on the secretary of state as agent for such limited
liability partnership and that such party wishes to resign.
(3) That sixty days prior to the filing of the certificate of resignation with the
department of state the party has sent a copy of the certificate of resignation for
receipt of process by registered or certified mail to the address of the registered
agent of the designated limited liability partnership, if other than the party filing the
certificate of resignation, for receipt of process, or if the resigning limited liability
partnership has no registered agent, then to the last address of the designated
limited liability partnership, known to the party, specifying the address to which the
copy was sent. If there is no registered agent and no known address of the
designating limited liability partnership the party shall attach an affidavit to the
certificate stating that a diligent but unsuccessful search was made by the party to
locate the limited liability partnership, specifying what
efforts were made.
(4) That the designated limited liability partnership is required to deliver to the
department of state a certificate of amendment providing for the designation by the
limited liability partnership of a new address and that upon its failure to file such
certificate, its authority to do business in this state shall be suspended.
(c) Upon the failure of the designating limited liability partnership to file a certificate
of amendment providing for the designation by the limited liability partnership of the
new address after the filing of a certificate of resignation for receipt of process with
the secretary of state, its authority to do business in this state shall be suspended.
(d) The filing by the department of state of a certificate of amendment providing for
a new address by a designating limited liability partnership shall annul the
suspension and its authority to do business in this state shall be restored and
continued as if no suspension had occurred.
(e) The resignation for receipt of process shall become effective upon the filing by
the department of state of a certificate of resignation for receipt of process.
(f)(1) In any case in which a limited liability partnership suspended pursuant to this
section would be subject to the personal or other jurisdiction of the courts of this
140
state under article three of the civil practice law and rules, process against such
limited liability partnership may be served upon the secretary of state as its agent
pursuant to this section. Such process may be issued in any court in this state
having jurisdiction of the subject matter.
(2) Service of such process upon the secretary of state shall be made by personally
delivering to and leaving with him or his deputy, or with any person authorized by
the secretary of state to receive such service, at the office of the department of state
in the city of Albany, a copy of such process together with the statutory fee, which
fee shall be a taxable disbursement. Such servic e shall be sufficient if notice thereof
and a copy of the process are:
(i) delivered personally within or without this state to such limited liability
partnership by a person and in the manner authorized to serve process by law of the
jurisdiction in which service is made, or
(ii) sent by or on behalf of the plaintiff to such limited liability partnership by
registered or certified mail with return receipt requested to the last address of such
limited liability partnership known to the plaintiff.
(3)(i) Where service of a copy of process was effected by personal service, proof of
service shall be by an affidavit of compliance with this section filed, together with the
process, within thirty days after such service, with the clerk of the court in which the
(ii) Where service of a copy of process was effected by mailing in accordance with
this section, proof of servic e shall be by affidavit of compliance with this section filed,
by the limited liability partnership, or other official proof of delivery or of the original
such limited liability partnership or other official proof of delivery, if acceptance was
refused by it, the original envelope with a notation by the postal authorities that
acceptance was refused. If acceptance was refused a copy of the notice and process
together with notice of the mailing by registered or certified mail and refusal to
accept shall be promptly sent to such limited liability partnership at the same
address by ordinary mail and the affidavit of compliance shall so state. Service of
process shall be complete ten days after such papers are filed with the clerk of the
court. The refusal to accept delivery of the registered or certified mail or to sign the
return receipt shall not affect the validity of the service and such limited liability
partnership refusing to accept such registered or certified mail shall be charged with
knowledge of the contents thereof.
(4) Service made as provided in this section without the state shall have the same
force as personal service made within this state.
(5) Nothing in this section shall affect the right to serve process in any other manner
permitted by law.
(g) The filing of a certificate of resignation of a registered agent pursuant to
subdivision (a) of this section shall be accompanied by the fee of ten dollars, and the
filing of a certificate of resignation for receipt of process pursuant to subdivision (b)
of this section shall be accompanied by the fee of ten dollars.

***
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ANNEXURE 2

CHAPTER 15. DELAWARE REVISED UNIFORM PARTNERSHIP ACT
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Subchapter I. General Provisions
15-101. Definitions.
As used in this chapter unless the context otherwise requires:
(1) "Business" includes every trade, occupation and profession, the holding or
ownership of property and any other activity for profit.
(2) "Certificate" means a certificate of conversion to partnership under 15-901
of this title, a certificate of conversion to a non-Delaware entity under 15-
903 of this title, a certificate of merger or consolidation under 15-902 of
this title, a certificate of partnership domestication under 15-904 of this
title, a certificate of transfer and a certificate of transfer and continuance
under 15-905 of this title, a certificate of correction and a corrected
certificate under 15-118 of this title, and a certificate of termination of a
certificate with a future effective date or time and a certificate of amendment
of a certificate with a future effective date or time under 15-105(i) of this
title.
(3) "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 State of Delaware federal, state or foreign
law governing insolvency.
(4) "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 a transferee of all or a
part of a partner's economic interest.
(5) "Domestic partnership" means an association of two or more persons formed
under 15-202 of this title or predecessor law to carry on any lawful
business, purpose or activity.
(6) "Economic interest" means a partner's share of the profits and losses of a
partnership and the partner's right to receive distributions.
(7) "Foreign limited liability partnership" means a partnership that:
(i) is formed under laws other than the laws of the State of Delaware;
and
(ii) has the status of a limited liability partnership under those laws.
(8) "Limited liability partnership" means a domestic partnership that has filed a
statement of qualification under 15-1001 of this title.
(9) "Liquidating Trustee" means a person, other than a partner, carrying out the
winding up of a partnership.
(10) "Partner" means a person who has been admitted to a partnership as a
partner of the partnership.
(11) "Partnership" means an association of two or more persons formed under
15-202 of this title, predecessor law or comparable law of another jurisdiction
to carry on any business, purpose or activity.
(12) "Partnership agreement" means the agreement, whether written, oral or
implied, among the partners concerning the partnership, including
amendments to the partnership agreement. A partnership is not required to
execute its partnership agreement. A partnership is bound by its partnership
agreement whether or not the partnership executes the partnership

30
http://www.delcode.state.de.us/title6/c015/index.htm#P-1_0
142
agreement. A partnership agreement may provide rights to any person,
including a person who is not a party to the partnership agreement, to the
extent set forth therein. A partner of a partnership or a transferee of an
economic interest is bound by the partnership agreement whether or not the
partner or transferee executes the partnership agreement.
(13) "Partnership at will" means a partnership that is not a partnership for a
definite term or particular undertaking.
(14) "Partnership for a definite term or particular undertaking" means a
partnership in which the partners have agreed to remain partners until the
expiration of a definite term or the completion of a particular undertaking.
(15) "Partnership interest" or "partner's interest in the partnership" means all of a
partner's interests in the partnership, including the partner's economic
interest and all management and other rights.
(16) "Person" means a natural person, partnership, limited partnership, trust,
estate, limited liability company, association, corporation, custodian, nominee
or any other individual or entity in its own or any representative capacity, in
each case, whether domestic or foreign.
(17) "Property" means all property, real, personal or mixed, tangible or intangible,
or any interest therein.
(18) "State" means the District of Columbia or the Commonwealth of Puerto Rico
or any state, territory, possession or other jurisdiction of the United States
other than the State of Delaware.
(19) "Statement" means a statement of partnership existence under 15-303 of
this title, a statement of denial under 15-304 of this title, a statement of
dissociation under 15-704 of this title, a statement of dissolution under
15-805 of this title, a statement of qualification under 15-1001 of this title,
a statement of foreign qualification under 15-1102 of this title, and an
amendment or cancellation of any of the foregoing under 15-105 of this title
and a statement of correction and a corrected statement under 15-118 of
this title.
(20) "Transfer" includes an assignment, conveyance, lease, mortgage, deed, and
encumbrance. (72 Del. Laws, c. 151, 1; 73 Del. Laws, c. 85, 1-3; 73 Del.
Laws, c. 296, 1; 74 Del. Laws, c. 103, 1; 74 Del. Laws, c. 266, 1; 75
Del. Laws, c. 50, 1, 2.)

15-102. 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:
(1) if the person knows of it;
(2) if the person has received a notification of it;
(3) if the person has reason to know it exists from all of the facts known
to the person at the time in question; or
(4) by reason of a filing or recording of a statement or certificate to the
extent provided by and subject to the limitations set forth in this
chapter.
(c) A person notifies or gives a notification to another by taking steps reasonably
required to inform the other person in the ordinary course, whether or not the
other person obtains knowledge of it.
(d) A person receives a notification when the notification:
(1) comes to the person's attention; or
(2) is received at the person's place of business or at any other place held
out by the person as a place for receiving communications.
143
(e) Except as otherwise provided in subsection (f), 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. (72 Del. Laws,
c. 151, 1.)

15-103. Effect of partnership agreement; nonwaivable provisions.
(a) Except as otherwise provided in subsection (b), 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 15-105 except to eliminate the
duty to provide copies of statements to all of the partners;
(2) Restrict a partner's rights to obtain information as provided in 15-403
of this title, except as permitted by 15-403(f) of this title;
(3) Eliminate the implied contractual covenant of good faith and fair dealing;
(4) Vary the power to dissociate as a partner under Section 15-602(a),
except to require the notice under Section 15-601(1) to be in writing;
(5) Vary the right of a court to expel a partner in the events specified in
Section 15-601(5);
(6) Vary the requirement to wind up the partnership business in cases
specified in Section 15-801(4), (5) or (6); or
(7) Vary the law applicable to a limited liability partnership under Section
15-106(b).
(c) Notwithstanding anything to the contrary contained in this section, 15-201,
15-203 and 15-501 of this title may be modified only to the extent provided in
a statement of partnership existence and in a partnership agreement.
(d) It is the policy of this chapter to give maximum effect to the principle of
freedom of contract and to the enforceability of partnership agreements.
(e) A partner or other person shall not be liable to a partnership or to another
partner or to another person that is a party to or is otherwise bound by a
partnership agreement for breach of fiduciary duty for the partner's or other
person's good faith reliance on the provisions of the partnership agreement.
(f) A partnership agreement may provide for the limitation or elimination of any
and all liabilities for breach of contract and breach of duties (including
fiduciary duties) of a partner or other person to a partnership or to another
partner or to another person that is a party to or is otherwise bound by a
partnership agreement; provided, that a partnership agreement may not limit
144
or eliminate liability for any act or omission that constitutes a bad faith
violation of the implied contractual covenant of good faith and fair dealing. (72
Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 1-3; 73 Del. Laws, c. 85, 4;
74 Del. Laws, c. 266, 2-4.)

15-104. Supplemental principles of law.
(a) In any case not provided for in this chapter, the rules of law and equity,
including the law merchant, shall govern.
(b) No obligation of a partner to a partnership arising under a partnership
agreement or a separate agreement or writing, and no note, instruction or
other writing evidencing any such obligation of a partner, shall be subject to
the defense of usury, and no partner shall interpose the defense of usury with
respect to any such obligation in any action. If an obligation to pay interest
arises under this chapter and the rate is not specified, the rate is that
specified in 2301 of this title.
(c) Sections 9-406 and 9-408 of this title do not apply to any interest in a
domestic partnership, including all rights, powers and interests arising under
a partnership agreement or this chapter. This provision prevails over 9-
406 and 9-408 of this title. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390,
4; 73 Del. Laws, c. 223, 1.)

15-105. Execution, filing and recording of statements and certificates.
(a) A statement or certificate may be filed with the Secretary of State by delivery
to the Secretary of State of the signed copy of the statement or of the
certificate. A certified copy of a statement that is filed in an office in another
state may be filed with the Secretary of State. Either filing in the State of
Delaware has the effect provided in this chapter with respect to partnership
property located in or transactions that occur in the State of Delaware.
(b) Only a certified copy of a filed statement recorded in the office for recording
transfers of real property has the effect provided for recorded statements in
this chapter.
(c) A statement or certificate filed by a partnership must be executed by at least
one partner or by one or more authorized persons. Other statements must be
executed by a partner or other authorized person. The execution of a
statement or certificate by an individual as, or on behalf of, a partner or other
person named as a partner in a statement or certificate constitutes an oath or
affirmation, under the penalties of perjury in the third degree, that, to the
best of the individual's knowledge and belief, the facts stated therein are true.
A person who executes a statement or a certificate as an agent or fiduciary
need not exhibit evidence of his authority as a prerequisite to filing. Any
signature on any statement or certificate authorized to be filed with the
Secretary of State under any provision of this chapter may be a facsimile, a
conformed signature or an electronically transmitted signature. Upon delivery
of any statement or certificate, the Secretary of State shall record the date
and time of its delivery. Unless the Secretary of State finds that any
statement or certificate does not conform to law, upon receipt of all filing fees
required by law the Secretary of State shall:
(1) Certify that the statement or certificate has been filed with the
Secretary of State by endorsing upon the original statement or
certificate the word "Filed", and the date and time of the filing. This
endorsement is conclusive of the date and time of its filing in the
absence of actual fraud. Except as provided in subdivision (c)(5) or
(c)(6) of this section, such date and time of filing of a statement or
145
certificate shall be the date and time of delivery of the statement or
certificate;
(2) File and index the endorsed statement or certificate;
(3) Prepare and return to the person who filed it or the person's
representative a copy of the signed statement or certificate similarly
endorsed, and shall certify such copy as a true copy of the signed
statement or certificate; and
(4) Cause to be entered such information from the statement or certificate
as the Secretary of State deems appropriate into the Delaware
Corporation Information System or any system which is a successor
thereto in the office of the Secretary of State, and such information and
a copy of such statement or certificate shall be permanently maintained
as a public record on a suitable medium. The Secretary of State is
authorized to grant direct access to such system to registered agents
subject to the execution of an operating agreement between the
Secretary of State and such registered agent. Any registered agent
granted such access shall demonstrate the existence of policies to
ensure that information entered into the system accurately reflects the
content of statements or certificates in the possession of the registered
agent at the time of entry.
(5) Upon request made upon or prior to delivery, the Secretary of State
may, to the extent deemed practicable, establish as the date and time of
filing of a statement or certificate a date and time after its delivery. If
the Secretary of State refuses to file any statement or certificate due to
an error, omission or other imperfection, the Secretary of State may
hold such statement or certificate in suspension, and in such event,
upon delivery of a replacement statement or certificate in proper form
for filing and tender of the required fees within 5 business days after
notice of such suspension is given to the filer, the Secretary of State
shall establish as the date and time of filing of such statement or
certificate the date and time that would have been the date and time of
filing of the rejected statement or certificate had it been accepted for
filing. The Secretary of State shall not issue a certificate of good
standing with respect to any partnership with a statement or certificate
held in suspension pursuant to this subsection. The Secretary of State
may establish as the date and time of filing of a statement or certificate
the date and time at which information from such statement or
certificate is entered pursuant to subdivision (c)(4) of this section if such
statement or certificate is delivered on the same date and within 4 hours
after such information is entered.
(6) If:
a. Together with the actual delivery of a statement or certificate and
tender of the required fees, there is delivered to the Secretary of
State a separate affidavit (which in its heading shall be designated
as an affidavit of extraordinary condition) attesting, on the basis of
personal knowledge of the affiant or a reliable source of knowledge
identified in the affidavit, that an earlier effort to deliver such
statement or certificate and tender such fees was made in good
faith, specifying the nature, date and time of such good faith effort
and requesting that the Secretary of State establish such date and
time as the date and time of filing of such statement or certificate;
or
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b. Upon the actual delivery of a statement or certificate and
tender of the required fees, the Secretary of State in his or her
discretion provides a written waiver of the requirement for such
an affidavit stating that it appears to the Secretary of State that
an earlier effort to deliver such statement or certificate and
tender such fees was made in good faith and specifying the
date and time of such effort; and
c. The Secretary of State determines that an extraordinary
condition existed at such date and time, that such earlier effort
was unsuccessful as a result of the existence of such
extraordinary condition, and that such actual delivery and
tender were made within a reasonable period (not to exceed 2
business days) after the cessation of such extraordinary
condition, then the Secretary of State may establish such date
and time as the date and time of filing of such statement or
certificate. No fee shall be paid to the Secretary of State for
receiving an affidavit of extraordinary condition. For purposes
of this subsection, an extraordinary condition means: any
emergency resulting from an attack on, invasion or occupation
by foreign military forces of, or disaster, catastrophe, war or
other armed conflict, revolution or insurrection or rioting or civil
commotion in, the United States or a locality in which the
Secretary of State conducts its business or in which the good
faith effort to deliver the statement or certificate and tender the
required fees is made, or the immediate threat of any of the
foregoing; or any malfunction or outage of the electrical or
telephone service to the Secretary of State's office, or weather
or other condition in or about a locality in which the Secretary
of State conducts its business, as a result of which the
Secretary of State's office is not open for the purpose of the
filing of statements and certificates under this chapter or such
filing cannot be effected without extraordinary effort. The
Secretary of State may require such proof as it deems
necessary to make the determination required under this
subparagraph c. of this subdivision, and any such determination
shall be conclusive in the absence of actual fraud. If the
Secretary of State establishes the date and time of filing of a
statement or certificate pursuant to this subsection, the date
and time of delivery of the affidavit of extraordinary condition
or the date and time of the Secretary of State's written waiver
of such affidavit shall be endorsed on such affidavit or waiver
and such affidavit or waiver, so endorsed, shall be attached to
the filed statement or certificate to which it relates. Such filed
statement or certificate shall be effective as of the date and
time established as the date and time of filing by the Secretary
of State pursuant to this subsection, except as to those persons
who are substantially and adversely affected by such
establishment and, as to those persons, the statement or
certificate shall be effective from the date and time endorsed on
the affidavit of extraordinary condition or written waiver
attached thereto.
(d) A person authorized by this chapter to file a statement or certificate may
amend or cancel the statement or certificate by filing an amendment or
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cancellation that names the partnership, identifies the statement or
certificate, and states the substance of the amendment or cancellation. A
person authorized by this chapter to file a statement or certificate who
becomes aware that such statement or certificate was false when made, or
that any matter described in the statement or certificate has changed, making
the statement or certificate false in any material respect, shall promptly
amend the statement or certificate. Upon the filing of a statement or a
certificate amending or correcting a statement or a certificate (or judicial
decree of amendment) with the Secretary of State, or upon the future
effective date or time of a statement or a certificate amending or correcting a
statement or a certificate (or judicial decree thereof), as provided for therein,
the statement or the certificate being corrected or amended shall be corrected
or amended as set forth therein. Upon the filing of a statement of cancellation
(or judicial decree thereof), or a certificate of merger or consolidation which
acts as a statement of cancellation, or a certificate of transfer, or a certificate
of conversion to a non-Delaware entity, or upon the future effective date or
time of a statement of cancellation (or a judicial decree thereof) or of a
certificate of merger or consolidation which acts as a statement of
cancellation, or a certificate of transfer, or a certificate of conversion to a non-
Delaware entity, as provided for therein, or as specified in 15-111(d) of this
title, the statement of partnership existence is cancelled. A statement of
partnership existence shall be cancelled upon the dissolution and the
completion of winding up of the partnership, or as provided in 15-111(d) of
this title, or upon the filing of a certificate of merger or consolidation if the
domestic partnership is not the surviving or resulting entity in a merger or
consolidation, or upon the filing of a certificate of transfer, or upon the filing
of a certificate of conversion to a non-Delaware entity. A statement of
cancellation shall be filed with the Secretary of State to accomplish the
cancellation of a statement of partnership existence upon the dissolution and
the completion of winding up of a domestic partnership and shall set forth:
(1) The name of the partnership;
(2) The date of filing of its statement of partnership existence; and
(3) Any other information the person filing the statement of cancellation
determines.
Upon the filing of a certificate of partnership domestication, or upon the future
effective date or time of a certificate of partnership domestication, the entity
filing the certificate of partnership domestication is domesticated as a
partnership with the effect provided in 15-904 of this title. Upon the filing of
a certificate of conversion to partnership, or upon the future effective date or
time of a certificate of conversion to partnership, the entity filing the
certificate of conversion to partnership is converted to a partnership with the
effect provided in 15-901 of this title. Upon the filing of a certificate of
transfer and continuance, or upon the future effective date or time of a
certificate of transfer and continuance, as provided for therein, the partnership
filing the certificate of transfer and continuance shall continue to exist as a
partnership of the State of Delaware with the effect provided in 15-905 of
this title.
(e) A person who files a statement or certificate pursuant to this section shall
promptly send a copy of the statement or certificate to every nonfiling partner
and to any other person named as a partner in the statement or certificate.
Failure to send a copy of a statement or certificate to a partner or other
person does not limit the effectiveness of the statement or certificate as to a
person not a partner.
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(f) The filing of a statement of partnership existence under 15-303, a
statement of qualification under 15-1001 or a statement of foreign
qualification under 15-1102 with the Secretary of State shall make it
unnecessary to file any other document under Chapter 31 of this Title.
(g) A statement or certificate filed with the Secretary of State shall be effective if
there has been substantial compliance with the requirements of this chapter.
(h) A statement or certificate shall be effective at the time of its filing with the
Secretary of State or at any later date or time specified in the statement or
certificate.
(i) If any certificate filed in accordance with this chapter provides for a future
effective date or time and if, prior to such future effective date or time set
forth in such certificate, the transaction is terminated or its terms are
amended to change the future effective date or time or any other matter
described in such certificate so as to make such certificate false or inaccurate
in any respect, such certificate shall, prior to the future effective date or time
set forth in such certificate, be terminated or amended by the filing of a
certificate of termination or certificate of amendment of such certificate,
executed in the same manner as the certificate being terminated or amended
is required to be executed in accordance with this section, which shall identify
the certificate which has been terminated or amended and shall state that the
certificate has been terminated or the manner in which it has been amended.
Upon the filing of a certificate of amendment of a certificate with a future
effective date or time, the certificate identified in such certificate of
amendment is amended. Upon the filing of a certificate of termination of a
certificate with a future effective date or time, the certificate identified in such
certificate of termination is terminated.
(j) A fee as set forth in 15-1207 of this title shall be paid at the time of the
filing of a statement or a certificate.
(k) A fee as set forth in 15-1207 of this title shall be paid for a certified copy of
any paper on file as provided for by this chapter, and a fee as set forth in
15-1207 of this title shall be paid for each page copied. (72 Del. Laws, c. 151,
1; 70 Del. Laws, c. 186, 1; 72 Del. Laws, c. 390, 5-7; 73 Del. Laws, c.
85, 5, 6; 73 Del. Laws, c. 296, 2; 74 Del. Laws, c. 103, 2-8.)

15-106. Governing law.
(a) Except as otherwise provided in subsection (b), the law of the jurisdiction
governing a partnership agreement governs relations among the partners and
between the partners and the partnership.
(b) The law of the State of Delaware governs relations among the partners and
between the partners and the partnership and the liability of partners for an
obligation of a limited liability partnership.
(c) If (i) a partnership agreement provides for the application of the laws of the
State of Delaware, and (ii) the partnership files with the Secretary of State a
statement of partnership existence, then the partnership agreement shall be
governed by and construed under the laws of the State of Delaware. (72 Del.
Laws, c. 151, 1; 72 Del. Laws, c. 390, 8.)

15-107. Reserved power of State of Delaware to alter or repeal chapter.
All provisions of this chapter may be altered from time to time or repealed and all
rights of partners are subject to this reservation. Unless expressly stated to the
contrary in this chapter, all amendments of this chapter shall apply to partnerships
and partners whether or not existing at the time of the enactment of any such
amendment. (72 Del. Laws, c. 151, 1.)
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15-108. Name of partnership.
(a) The name of a partnership: (i) may contain the name of a partner and (ii)
may contain the following words: "Company," "Association," "Club,"
"Foundation," "Fund," "Institute," "Society," "Union," "Syndicate," "Trust" (or
abbreviations of like import).
(b) The name of a limited liability partnership shall contain as the last words or
letters of its name the words "Limited Liability Partnership," the abbreviation
"L.L.P." or the designation "LLP."
(c) The name of a partnership to be included in the statement of partnership
existence, statement of qualification or statement of foreign qualification filed
by such partnership must be such as to distinguish it upon the records of the
Secretary of State from the name on such records of any corporation,
partnership (including a limited liability partnership), limited partnership
(including a limited liability limited partnership), statutory trust or limited
liability company organized under the laws of the State of Delaware and
reserved, registered, formed or organized with the Secretary of State or
qualified to do business and registered as a foreign corporation, foreign
limited liability partnership, foreign limited partnership, foreign statutory trust
or foreign limited liability company in the State of Delaware; provided,
however, that a partnership may be registered under any name which is not
such as to distinguish it upon the records of the Secretary of State from the
name on such records of any domestic or foreign corporation, partnership
(including a limited liability partnership), limited partnership (including a
limited liability limited partnership), statutory trust or limited liability company
reserved, registered, formed or organized under the laws of the State of
Delaware with the written consent of the other corporation, partnership
(including a limited liability partnership), limited partnership (including a
limited liability limited partnership), statutory trust or limited liability
company, which written consent shall be filed with the Secretary of State. (72
Del. Laws, c. 151, 1; 73 Del. Laws, c. 296, 3; 73 Del. Laws, c. 329, 11.)

15-109. Reservation of name.
(a) The exclusive right to use of a specified name in a statement using the
specified name may be reserved by: (1) any person intending to organize a
partnership under this chapter and to adopt that name; (2) any partnership or
any foreign limited liability partnership registered in the State of Delaware
which, in either case, proposes to change its name; (3) any foreign limited
liability partnership intending to register in the State of Delaware and adopt
that name; and (4) any person intending to organize a foreign limited liability
partnership and intending to have it register in the State of Delaware and
adopt that name.
(b) The reservation of a specified name shall be made by filing with the Secretary
of State an application, executed by the applicant, specifying the name to be
reserved and the name and address of the applicant. If the Secretary of State
finds that the name is available for use, the Secretary shall reserve the name
for exclusive use of the applicant in a statement using the specified name for
a period of 120 days. Once having so reserved a name, the same applicant
may again reserve the same name for successive 120 day periods. The right
to the exclusive use of a reserved name in a statement using the specified
name may be transferred to any other person by filing with the Secretary of
State a notice of the transfer, executed by the applicant for whom the name
was reserved, specifying the name to be transferred and the name and
150
address of the transferee. The reservation of a specified name may be
canceled by filing with the Secretary of State a notice of cancellation,
executed by the applicant or transferee, specifying the name reservation to be
canceled and the name and address of the applicant or transferee. Unless the
Secretary of State finds that any application, notice of transfer or notice of
cancellation filed with the Secretary of State as required by this subsection
does not conform to law, upon receipt of all filing fees required by law, the
Secretary shall prepare and return to the person who filed such instrument a
copy of the filed instrument with a notation thereon of the action taken by the
Secretary of State.
(c) A fee as set forth in Section 15-1207 of this chapter shall be paid at the time
of the initial reservation of any name, at the time of the renewal of any such
reservation and at the time of the filing of a notice of the transfer or
cancellation of any such reservation. (72 Del. Laws, c. 151, 1; 72 Del. Laws,
c. 390, 9.)

15-110. Indemnification.
Subject to such standards and restrictions, if any, as are set forth in its partnership
agreement, a partnership may, and shall have the power to, indemnify and hold
harmless any partner or other person from and against any and all claims and
demands whatsoever. (72 Del. Laws, c. 151, 1.)

15-111. Registered office; registered agent.
(a) Each partnership that files a statement of partnership existence, a statement
of qualification or a statement of foreign qualification shall have and maintain
in the State of Delaware:
(1) A registered office, which may but need not be a place of its business in
the State of Delaware; and
(2) A registered agent for service of process on the partnership, which agent
may be either an individual resident of the State of Delaware whose
business office is identical with the partnership's registered office, or a
domestic corporation, or a domestic limited partnership, or a domestic
limited liability company, or a domestic statutory trust, or a domestic
limited liability partnership, or a foreign corporation, or a foreign limited
partnership, or a foreign limited liability company, or a foreign statutory
trust, or a foreign limited liability partnership authorized to do business
in the State of Delaware having a business office identical with such
registered office, which is generally open during normal business hours
to accept service of process and otherwise perform the functions of a
registered agent, or the partnership itself.
(b) A registered agent may change the address of the registered office of
the partnership(s) for which it is registered agent to another address in
the State of Delaware by paying a fee as set forth in 15-1207 of this
title and filing with the Secretary of State a certificate, executed by such
registered agent, setting forth the address at which such registered
agent has maintained the registered office for each of the partnerships
for which it is a registered agent, and further certifying to the new
address to which each such registered office will be changed on a given
day, and at which new address such registered agent will thereafter
maintain the registered office for each of the partnerships for which it is
a registered agent. Upon the filing of such certificate, the Secretary of
State shall furnish to the registered agent a certified copy of the same
under the Secretary's hand and seal of office, and thereafter, or until
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further change of address as authorized by law, the registered office in
the State of Delaware of each of the partnerships for which the agent is
a registered agent shall be located at the new address of the registered
agent thereof as given in the certificate. In the event of a change of
name of any person acting as a registered agent of a partnership, such
registered agent shall file with the Secretary of State a certificate,
executed by such registered agent, setting forth the new name of such
registered agent, the name of such registered agent before it was
changed and the address at which such registered agent has maintained
the registered office for each of the partnerships for which it is a
registered agent, and shall pay a fee as set forth in 15-1207 of this
title. Upon the filing of such certificate, the Secretary of State shall
furnish to the registered agent a certified copy of the certificate under
his or her hand and seal of office. A change of name of any person
acting as a registered agent of a partnership as a result of a merger or
consolidation of the registered agent, with or into another person which
succeeds to its assets and liabilities by operation of law, shall be deemed
a change of name for purposes of this section. Filing a certificate under
this section shall be deemed to be an amendment of the statement of
partnership existence, statement of qualification or statement of foreign
qualification of each partnership affected thereby and each such
partnership shall not be required to take any further action, with respect
thereto, to amend its statement of partnership existence, statement of
qualification or statement of foreign qualification under 15-105(d) of
this title. Any registered agent filing a certificate under this section shall
promptly, upon such filing, deliver a copy of any such certificate to each
partnership affected thereby.
(c) The registered agent of 1 or more partnerships may resign and appoint
a successor registered agent by paying a fee as set forth in 15-1207 of
this title and filing a certificate with the Secretary of State, stating the
name and address of the successor registered agent. There shall be
attached to such certificate a statement of each affected partnership
ratifying and approving such change of registered agent. Upon such
filing, the successor registered agent shall become the registered agent
of such partnerships as have ratified and approved such substitution and
the successor registered agent's address, as stated in such certificate,
shall become the address of each such partnership's registered office in
the State of Delaware. The Secretary of State shall then issue a
certificate that the successor registered agent has become the
registered agent of the partnerships so ratifying and approving such
change and setting out the names of such partnerships. Filing of such
certificate of resignation shall be deemed to be an amendment of the
statement of partnership existence, statement of qualification or
statement of foreign qualification of each partnership affected thereby
and each such partnership shall not be required to take any further
action with respect thereto to amend its statement of partnership
existence, statement of qualification or statement of foreign qualification
under 15-105(d) of this title.
(d) The registered agent of 1 or more partnerships may resign without
appointing a successor registered agent by paying a fee as set forth in
15-1207 of this title and filing a certificate of resignation with the
Secretary of State, but such resignation shall not become effective until
30 days after the certificate is filed. The certificate shall contain a
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statement that written notice of resignation was given to each affected
partnership at least 30 days prior to the filing of the certificate by
mailing or delivering such notice to the partnership at its address last
known to the registered agent and shall set forth the date of such
notice. After receipt of the notice of the resignation of its registered
agent, the partnership for which such registered agent was acting shall
obtain and designate a new registered agent to take the place of the
registered agent so resigning. If such partnership fails to obtain and
designate a new registered agent as aforesaid prior to the expiration of
the period of 30 days after the filing by the registered agent of the
certificate of resignation, the statement of partnership existence,
statement of qualification or statement of foreign qualification of such
partnership shall be deemed to be canceled. After the resignation of the
registered agent shall have become effective as provided in this section
and if no new registered agent shall have been obtained and designated
in the time and manner aforesaid, service of legal process against each
partnership for which the resigned registered agent had been acting
shall thereafter be upon the Secretary of State in accordance with 15-
113 of this title. (72 Del. Laws, c. 151, 1; 70 Del. Laws, c. 186, 1;
73 Del. Laws, c. 85, 7; 73 Del. Laws, c. 329, 12.)

15-112. Service of process on partnership filing a statement.
(a) Service of legal process upon any partnership which has filed a statement of
partnership existence, a statement of qualification or a statement of foreign
qualification shall be made by delivering a copy personally to any partner of
the partnership in the State of Delaware or any partner who signed a
statement of partnership existence, a statement of qualification or a
statement of foreign qualification or the registered agent of the partnership in
the State of Delaware or by leaving it at the dwelling house or usual place of
abode in the State of Delaware of any such partner or registered agent (if the
registered agent be an individual), or at the registered office or any place of
business of the partnership in the State of Delaware. Service by copy left at
the dwelling house or usual place of abode of a partner, registered agent, or
at the registered office or any place of business of the partnership in the State
of Delaware, to be effective, must be delivered thereat at least 6 days before
the return date of the process, and in the presence of an adult person, and
the officer serving the process shall distinctly state the manner of service in
the return thereto. Process returnable forthwith must be delivered personally
to the partner or registered agent.
(b) In case the officer whose duty it is to serve legal process cannot by due
diligence serve the process in any manner provided for by subsection (a) of
this section, it shall be lawful to serve the process against the partnership
upon the Secretary of State, and such service shall be as effectual for all
intents and purposes as if made in any of the ways provided for in subsection
(a) hereof. In the event that service is effected through the Secretary of State
in accordance with this subsection, the Secretary of State shall forthwith
notify the partnership by letter, certified mail, return receipt requested,
directed to the partnership at the address of any partner as it appears on the
records relating to such partnership on file with the Secretary of State or, if no
such address appears, at the last registered office. Such letter shall enclose a
copy of the process and any other papers served on the Secretary of State
pursuant to this subsection. It shall be the duty of the plaintiff in the event of
such service to serve process and any other papers in duplicate, to notify the
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Secretary of State that service is being effected pursuant to this subsection,
and to pay the Secretary of State the sum of $50 for the use of the State of
Delaware, which sum shall be taxed as part of the costs in the proceeding if
the plaintiff shall prevail therein. The Secretary of State shall maintain an
alphabetical record of any such service setting forth the name of the plaintiff
and defendant, the title, docket number and nature of the proceeding in which
process has been served upon him, the fact that service has been effected
pursuant to this subsection, the return date thereof, and the day and hour
when the service was made. The Secretary of State shall not be required to
retain such information for a period longer than 5 years from receipt of the
service of process. (72 Del. Laws, c. 151, 1; 70 Del. Laws, c. 186, 1.)

15-113. Service of process on a partnership not filing a statement.
(a) Service of legal process upon any partnership which has not filed a statement
of partnership existence, a statement of qualification or a statement of foreign
qualification and which is formed under the laws of the State of Delaware or
doing business in the State of Delaware shall be made by delivering a copy
personally to any partner doing business in the State of Delaware or by
leaving it at the dwelling house or usual place of abode in the State of
Delaware of a partner or at a place of business of the partnership in the State
of Delaware. Service by copy left at the dwelling house or usual place of
abode of a partner or at a place of business of the partnership in the State of
Delaware, to be effective, must be delivered thereat at least 6 days before the
return date of the process, and in the presence of an adult person, and the
officer serving the process shall distinctly state the manner of service in the
return thereto. Process returnable forthwith must be delivered personally to
the partner.
(b) In case the officer whose duty it is to serve legal process cannot by due
diligence serve the process in any manner provided for by subsection (a) of
this section, it shall be lawful to serve the process against the partnership
upon the Secretary of State, and such service shall be as effectual for all
intents and purposes as if made in any of the ways provided for in subsection
(a) hereof. In the event that service is effected through the Secretary of State
in accordance with this subsection, the Secretary of State shall forthwith
notify the partnership by letter, certified mail, return receipt requested,
directed to the partnership at the address of any partner or the partnership as
it is furnished to the Secretary State by the person desiring to make service.
Such letter shall enclose a copy of the process and any other papers served on
the Secretary of State pursuant to this subsection. It shall be the duty of the
plaintiff in the event of such service to serve process and any other papers in
duplicate, to notify the Secretary of State that service is being effected
pursuant to this subsection, and to pay the Secretary of State the sum of $50
for the use of the State of Delaware, which sum shall be taxed as part of the
costs on the proceeding if the plaintiff shall prevail therein. The Secretary of
State shall maintain an alphabetical record of any such service setting forth
the name of the plaintiff and defendant, the title, docket number and nature
of the proceeding in which process has been served upon the Secretary of
State, the fact that service has been effected pursuant to this subsection, the
return date thereof, and the day and hour when the service was made. The
Secretary of State shall not be required to retain such information for a period
longer than 5 years from the Secretary of State's receipt of the service of
process. (72 Del. Laws, c. 151, 1.)

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15-114. Service of process on a partner and liquidating trustee.
(a) A partner or a liquidating trustee of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware may
be served with process in the manner prescribed in this section in all civil
actions or proceedings brought in the State of Delaware involving or relating
to the business of the partnership or a violation by the partner or the
liquidating trustee of a duty to the partnership or any partner of the
partnership, whether or not the partner or the liquidating trustee is a partner
or a liquidating trustee at the time suit is commenced. A person who is at the
time of the effectiveness of this section or who becomes a partner or a
liquidating trustee of a partnership thereby consents to the appointment of
the registered agent of the partnership (or, if there is none, the Secretary of
State) as such person's agent upon whom service of process may be made as
provided in this section. Any process when so served shall be of the same
legal force and validity as if served upon such partner or liquidating trustee
within the State of Delaware and such appointment of the registered agent
(or, if there is none, the Secretary of State) shall be irrevocable.
(b) Service of process shall be effected by serving the registered agent (or, if
there is none, the Secretary of State) with 1 copy of such process in the
manner provided by law for service of writs of summons. In the event service
is made under this subsection upon the Secretary of State, the plaintiff shall
pay to the Secretary of State the sum of $50 for the use of the State of
Delaware, which sum shall be taxed as part of the costs of the proceeding if
the plaintiff shall prevail therein. In addition, the Prothonotary or the Register
in Chancery of the court in which the civil action or proceeding is pending
shall, within 7 days of such service, deposit in the United States mails, by
registered mail, postage prepaid, true and attested copies of the process,
together with a statement that service is being made pursuant to this section,
addressed to such partner or liquidating trustee at the partner's or liquidating
trustee's address furnished to the Prothonotary or Register in Chancery by the
person desiring to make service, which address shall be the partner's or the
liquidating trustee's address as the same appears in any statement of the
partnership or, if no such address appears, the partner's or the liquidating
trustees's last known address.
(c) In any action in which any such partner or liquidating trustee has been served
with process as hereinabove provided, the time in which a defendant shall be
required to appear and file a responsive pleading shall be computed from the
date of mailing by the Prothonotary or the Register in Chancery as provided in
subsection (b) of the section; however, the court in which such action has
been commenced may order such continuance or continuances as may be
necessary to afford such partner or liquidating trustee reasonable opportunity
to defend the action.
(d) In a written partnership agreement or other writing, a partner may consent to
be subject to the nonexclusive jurisdiction of the courts of, or arbitration in, a
specified jurisdiction, or the exclusive jurisdiction of the courts of the State of
Delaware, or the exclusivity of arbitration in a specified jurisdiction or the
State of Delaware, and to be served with legal process in the manner
prescribed in such partnership agreement or other writing.
(e) Nothing herein contained limits or affects the right to serve process in any
other manner now or hereafter provided by law. This section is an extension
of and not a limitation upon the right otherwise existing of service of legal
process upon nonresidents.
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(f) The Court of Chancery and the Superior Court may make all necessary rules
respecting the form of process, the manner of issuance and return thereof
and such other rules which may be necessary to implement this section and
are not inconsistent with this section. (72 Del. Laws, c. 151, 1; 72 Del.
Laws, c. 390, 10.)

15-115. Doing business.
A limited partnership, a partnership, a limited liability company, a business or other
trust or association, or a corporation formed or organized under the laws of any
foreign country or other foreign jurisdiction or the laws of any state shall not be
deemed to be doing business in the State of Delaware solely by reason of its being a
partner in a domestic partnership. (72 Del. Laws, c. 151, 1.)

15-116. Restated statement of partnership existence.
(a) A statement of partnership existence may be restated by integrating into a
single instrument all of the provisions of the statement of partnership
existence which are then in effect and operative as a result of there having
been theretofore filed 1 or more amendments pursuant to Section 15-105(d)
or other instruments having the effect of amending a statement of
partnership existence and the statement of partnership existence may be
amended or further amended by the filing of a restated statement of
partnership existence. The restated statement of partnership existence shall
be specifically designated as such in its heading and shall set forth:
(1) The present name of the partnership, and if it has been changed, the
name under which the partnership was originally formed;
(2) The date of filing of the original statement of partnership existence with
the Secretary of State;
(3) The information required to be included pursuant to Section 15-303(a);
and
(4) Any other information desired to be included therein.
(b) Upon the filing of the restated statement of partnership existence with the
Secretary of State, or upon the future effective date or time of a restated
statement of partnership existence as provided for therein, the initial
statement of partnership existence, as theretofore amended, shall be
superseded; thenceforth, the restated statement of partnership existence,
including any further amendment made thereby, shall be the statement of
partnership existence of the partnership, but the original date of formation of
the partnership shall remain unchanged.
(c) Any amendment effected in connection with the restatement of the statement
of partnership existence shall be subject to any other provision of this
chapter, not inconsistent with this section, which would apply if a separate
amendment were filed to effect such amendment. (72 Del. Laws, c. 151, 1.)

15-117. Execution, amendment or cancelation by judicial order.
(a) If a person required by this chapter to execute any statement or certificate
fails or refuses to do so, any other person who is adversely affected by the
failure or refusal, may petition the Court of Chancery to direct the execution of
the statement or certificate. If the Court finds that the execution of the
statement or certificate is proper and that any person so designated has failed
or refused to execute the statement or certificate, the Court shall order the
Secretary of State to file an appropriate statement or certificate.
(b) If a person required to execute a partnership agreement or amendment
thereof fails or refuses to do so, any other person who is adversely affected by
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the failure or refusal may petition the Court of Chancery to direct the
execution of the partnership agreement or amendment thereof. If the Court
finds that the partnership agreement or amendment thereof should be
executed and that any person so designated has failed or refused to do so, the
Court shall enter an order granting appropriate relief. (72 Del. Laws, c. 151,
1.)

15-118. Statement or certificate of correction; corrected statement or
certificate.
(a) Whenever any statement or certificate authorized to be filed with the
Secretary of State under any provision of this chapter has been so filed and is
an inaccurate record of the action therein referred to, or was defectively or
erroneously executed, such statement or certificate may be corrected by filing
with the Secretary of State a statement or certificate of correction of such
statement or certificate. The statement or certificate of correction shall specify
the inaccuracy or defect to be corrected, shall set forth the portion of the
statement or certificate in corrected form and shall be executed and filed as
required by this chapter. The statement or certificate of correction shall be
effective as of the date the original statement or certificate was filed, except
as to those persons who are substantially and adversely affected by the
correction, and as to those persons the statement or certificate of correction
shall be effective from the filing date.
(b) In lieu of filing a statement or certificate of correction, a statement or
certificate may be corrected by filing with the Secretary of State a corrected
statement or certificate which shall be executed and filed as if the corrected
statement or certificate were the statement or certificate being corrected, and
a fee equal to the fee payable to the Secretary of State if the statement or
certificate being corrected were then being filed shall be paid to and collected
by the Secretary of State for the use of the State of Delaware in connection
with the filing of the corrected statement or certificate. The corrected
statement or certificate shall be specifically designated as such in its heading,
shall specify the inaccuracy or defect to be corrected, and shall set forth the
entire statement or certificate in corrected form. A statement or certificate
corrected in accordance with this section shall be effective as of the date the
original statement or certificate was filed, except as to those persons who are
substantially and adversely affected by the correction and as to those persons
the statement or certificate as corrected shall be effective from the filing date.
(72 Del. Laws, c. 151, 1.)

15-119. Business transactions of partner with the partnership.
Except as provided in the partnership agreement, a partner may lend money to,
borrow money from, act as a surety, guarantor or endorser for, guarantee or assume
1 or more specific obligations of, provide collateral for and transact other business
with, the partnership and, subject to other applicable law, has the same rights and
obligations with respect thereto as a person who is not a partner. (72 Del. Laws, c.
151, 1.)

15-120. Contractual appraisal rights.
A partnership agreement or an agreement of merger or consolidation may provide
that contractual appraisal rights with respect to a partnership interest or another
interest in a partnership shall be available for any class or group of partners or
partnership interests in connection with any amendment of a partnership agreement,
any merger or consolidation in which the partnership is a constituent party to the
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merger or consolidation, any conversion of the partnership to another business form,
any transfer to or domestication in any jurisdiction by the partnership, or the sale of
all or substantially all of the partnership's assets. The Court of Chancery shall have
jurisdiction to hear and determine any matter relating to any such appraisal rights.
(72 Del. Laws, c. 151, 1; 73 Del. Laws, c. 296, 4.)

15-121. Contested matters relating to partners; contested votes.
(a) Upon application of any partner of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware, the
Court of Chancery may hear and determine the validity of any admission,
election, appointment or dissociation of a partner of the partnership, and the
right of any person to become or continue to be a partner of the partnership,
and to that end make such order or decree in any such case as may be just
and proper, with power to enforce the production of any books, papers and
records relating to the issue. In any such application, the partnership shall be
named as a party, and service of copies of the application upon the
partnership shall be deemed to be service upon the partnership and upon the
person or persons whose right to be a partner is contested and upon the
person or persons, if any, claiming to be a partner or claiming the right to be
a partner; and the person upon whom service is made shall forward
immediately a copy of the application to the partnership and to the person or
persons whose right to be a partner is contested and to the person or persons,
if any, claiming to be a partner or the right to be a partner, in a postpaid,
sealed, registered letter addressed to such partnership and such person or
persons at their post-office addresses last known to the person upon whom
service is made or furnished to the person upon whom service is made by the
applicant partner. The Court may make such order respecting further or other
notice of such application as it deems proper under the circumstances.
(b) Upon application of any partner of a partnership which is formed under the
laws of the State of Delaware or doing business in the State of Delaware, the
Court of Chancery may hear and determine the result of any vote of partners
upon matters as to which the partners of the partnership, or any class or
group of partners, have the right to vote pursuant to the partnership
agreement or other agreement or this chapter (other than the admission,
election, appointment or dissociation of partners). In any such application, the
partnership shall be named as a party, and service of the application upon the
person upon whom service is made shall be deemed to be service upon the
partnership, and no other party need be joined in order for the Court to
adjudicate the result of the vote. The Court may make such order respecting
further or other notice of such application as it deems proper under the
circumstances.
(c) Nothing herein contained limits or affects the right to serve process in any
other manner now or hereafter provided by law. This section is an extension
of and not a limitation upon the right otherwise existing of service of legal
process upon nonresidents. (72 Del. Laws, c. 151, 1.)

15-122. Interpretation and enforcement of partnership agreement.
Any action to interpret, apply or enforce the provisions of a partnership agreement of
a partnership which is formed under the laws of the State of Delaware or doing
business in the State of Delaware, or the duties, obligations or liabilities of such
partnership to the partners of the partnership, or the duties, obligations or liabilities
among partners or of partners to such partnership, or the rights or powers of, or
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restrictions on, such partnership or partners, including actions authorized by Section
15-405, may be brought in the Court of Chancery. (72 Del. Laws, c. 151, 1.)

Subchapter II. Nature of Partnership
15-201. Partnership as entity.
(a) A partnership is a separate legal entity which is an entity distinct from its
partners unless otherwise provided i n a statement of partnership existence
and in a partnership agreement.
(b) A limited liability partnership continues to be the same entity that existed
before the filing of a statement of qualification under Section 15-1001. (72
Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 11.)

15-202. Formation of partnership; powers.
(a) Except as otherwise provided in subsection (b), the association of two or more
persons (i) to carry on as co-owners a business for profit forms a partnership,
whether or not the persons intend to form a partnership, and (ii) to carry on
any purpose or activity not for profit, forms a partnership when the persons
intend to form a partnership. A limited liability partnership is for all purposes a
partnership.
(b) Subject to 15-1206 of this title, an association formed under a statute other
than (i) this chapter, (ii) a predecessor statute or (iii) a comparable statute of
another jurisdiction, is not a partnership under this chapter.
(c) In determining whether a partnership is formed under Section 15-202(a)(i),
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 co-owners 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 emp loyee;
(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.
(d) A partnership shall possess and may exercise all the powers and privileges
granted by this chapter or by any other law or by its partnership agreement,
together with any powers incidental thereto, including such powers and
privileges as are necessary or convenient to the conduct, promotion or
attainment of the business, purposes or activities of the partnership.
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(e) Notwithstanding any provision of this chapter to the contrary, without limiting
the general powers enumerated in subsection (d) of this section, a
partnership shall, subject to such standards and restrictions, if any, as are set
forth in its partnership agreement, have the power and authority to make
contracts of guaranty and suretyship and enter into interest rate, basis,
currency, hedge or other swap agreements or cap, floor, put, call, option,
exchange or collar agreements, derivative agreements, or other agreements
similar to any of the foregoing. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c.
390, 12; 73 Del. Laws, c. 296, 5.)

15-203. Partnership property.
Unless otherwise provided in a statement of partnership existence and in a
partnership agreement, property acquired by a partnership is property of the
partnership and not of the partners individually. (72 Del. Laws, c. 151, 1; 72 Del.
Laws, c. 390, 13.)

15-204. When property is partnership property.
(a) Property is partnership property if acquired in the name of:
(1) the partnership; or
(2) one or more persons 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 persons 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
persons 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 persons, 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. (72 Del. Laws, c. 151, 1.)

15-205. Admission without contribution or partnership interest.
Each person to be admitted as a partner to a partnership formed under either 15-
202(a)(i) or 15-202(a)(ii) of this title may be admitted as a partner and may
receive a partnership interest in the partnership without making a contribution or
being obligated to make a contribution to the partnership. Each person to be
admitted as a partner to a partnershi p formed under either 15-202(a)(i) or 15-
202(a)(ii) of this title may be admitted as a partner without acquiring an economic
interest in the partnership. Nothing contained in this section shall affect a partner's
liability under 15-306 of this title. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390,
14.)

15-206. Form of contribution.
The contribution of a partner may be in cash, property or services rendered, or a
promissory note or other obligation to contribute cash or property or to perform
services. (72 Del. Laws, c. 151, 1.)
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15-207. Liability for contribution.
(a) A partner is obligated to the partnership to perform any promise to contribute
cash or property or to perform services, even if the partner is unable to
perform because of death, disability or any other reason. If a partner does not
make the required contribution of property or services, the partner is
obligated at the option of the partnership to contribute cash equal to that
portion of the value of the contribution that has not been made. The foregoing
option shall be in addition to, and not in lieu of, any other rights, including the
right to specific performance, that the partnership may have against such
partner under the partnership agreement or applicable law.
(b) A partnership agreement may provide that the partnership interest of any
partner who fails to make any contribution that the partner is obligated to
make shall be subject to specified penalties for, or specified consequences of,
such failure. Such penalty or consequence may take the form of reducing or
eliminating the defaulting partner's interest in the partnership, subordinating
the partner's partnership interest to that of nondefaulting partners, a forced
sale of the partner's partnership interest, forfeiture of the partner's
partnership interest, the lending by other partners of the amount necessary to
meet the partner's commitment, a fixing of the value of the partner's
partnership interest by appraisal or by formula and redemption or sale of the
partner's partnership interest at such value, or other penalty or consequence.
(72 Del. Laws, c. 151, 1.)

Subchapter III. Relations of Partners to Persons Dealing with Partnership

15-301. Partner agent of partnership.
Subject to the effect of a statement of partnership existence under Section 15-303:
(1) Each partner is an agent of the partnership for the purpose of its business,
purposes or activities. 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's business, purposes or activities or business,
purposes or activities 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 had
notice that the partner lacked authority.
(2) An act of a partner which is not apparently for carrying on in the ordinary
course the partnership's business, purposes or activities or business,
purposes or activities of the kind carried on by the partnership binds the
partnership only if the act was authorized by the other partners. (72 Del.
Laws, c. 151, 1.)

15-302. Transfer of partnership property.
(a) Partnership property may be transferred as follows:
(1) Subject to the effect of a statement of partnership existence under
Section 15-303, 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
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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 15-301 and:
(1) as to a subsequent transferee who gave value for property transferred
under Section 15-302(a)(1) and (2), proves that the subsequent
transferee had notice 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
subsection (a)(3), proves that the transferee had notice 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 Section 15-302(b), 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. (72 Del. Laws, c. 151,
1.)

15-303. Statement of partnership existence.
(a) A partnership may file a statement of partnership existence, which:
(1) must include:
(i) the name of the partnership; and
(ii) the address of the registered office and the name and address
of the registered agent for service of process required to be
maintained by Section 15-111 of this title; and
(2) may state (i) the names of the partners authorized to execute an
instrument transferring real property held in the name of the
partnership, (ii) 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 (iii) any other matter.
(b) A statement of partnership existence 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
statement of partnership existence 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 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 statement of partnership
existence recorded in the office for recording transfers of that real
property is conclusive in favor of a person who gives value without
162
knowledge to the contrary, so long as and to the extent that a certified
copy of a 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 cancellation of a limitation on authority revives the
previous grant of authority.
(c) 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 statement containing the limitation on authority is of
record in the office for recording transfers of that real property.
(d) Except as otherwise provided in subsections (b) and (c) and Sections 15-704
and 15-805, 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
statement. (72 Del. Laws, c. 151, 1.)

15-304. Denial of status as partner.
If a person named in a statement of partnership existence is or may be adversely
affected by being so named, the person may petition the Court of Chancery to direct
the correction of the statement. If the Court finds that correction of the statement is
proper and that an authorized person has failed or refused to execute and file a
certificate of correction or a corrected statement, the Court shall order the Secretary
of State to file an appropriate correction. (72 Del. Laws, c. 151, 1.)

15-305. 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. (72 Del. Laws, c.
151, 1.)

15-306. Partner's liability.
(a) Except as otherwise provided in subsections (b) and (c), 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 obligation of the partnership incurred before the person's
admission as a partner.
(c) An obligation of a partnership incurred while the partnership is a limited
liability partnership, whether arising in contract, tort or otherwise, is solely the
obligation of the partnership. A partner is not personally liable, directly or
indirectly, by way of indemnification, contribution, assessment or otherwise,
for such an obligation solely by reason of being or so acting as a partner.
(d) The ability of an attorney-at-law, admitted to the practice of law in the State
of Delaware, to practice law in Delaware in a limited liability partnership, shall
be determined by the Rules of the Supreme Court of the State of Delaware.
(e) Notwithstanding the provisions of subsection (c) of this section, under a
partnership agreement or under another agreement, a partner may agree to
be personally liable, directly or indirectly, by way of indemnification,
contribution, assessment or otherwise, for any or all of the obligations of the
163
partnership incurred while the partnership is a limited liability partnership. (72
Del. Laws, c. 151, 1; 73 Del. Laws, c. 85, 8; 73 Del. Laws, c. 296, 6; 75
Del. Laws, c. 50, 3.)

15-307. 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, to the extent not
inconsistent with Section 15-306, 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 the
assets of a partner liable as provided in Section 15-306 for a partnership
obligation unless there is also a judgment against the partner for such
obligation.
(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) the claim is for an obligation of the partnership for which the partner is
liable as provided in Section 15-306 and either:
(i) 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;
(ii) the partnership is a debtor in bankruptcy;
(iii) the partner has agreed that the creditor need not exhaust
partnership assets; or
(iv) 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
(2) liability is imposed on the partner by law or contract independent of
the existence of the partnership.
(e) This section applies to any obligation of the partnership resulting from a
representation by a partner or purported partner under Section 15-308. (72
Del. Laws, c. 151, 1.)

15-308. 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 a partnership obligation results, the purported
partner is liable with respect to that obligation as if the purported partner
were a partner. If no partnership obligation results, the purported partner is
liable with respect to that obligation jointly and severally with any other
person consenting to the representation. In the case of a limited liability
164
partnership, a person's liability under Section 15-308(a) is subject to Section
15-306 as if the person were a partner in the limited liability partnership.
(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 existence.
(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 existence to indicate the partner's dissociation from the
partnership.
(e) Except as otherwise provided in subsections (a) and (b), persons who are not
partners as to each other are not liable as partners to other persons. (72 Del.
Laws, c. 151, 1.)

15-309. Limitations on distribution.
(a) A limited liability partnership shall not make a distribution to a partner to the
extent that at the time of the distribution, after giving effect to the
distribution, all liabilities of the limited liability partnership, other than
liabilities to partners on account of their economic interests and liabilities for
which the recourse of creditors is limited to specified property of the limited
liability partnership, exceed the fair value of the assets of the limited liability
partnership, except that the fair value of property that is subject to a liability
for which the recourse of creditors is limited shall be included in the assets of
the limited liability partnership only to the extent that the fair value of that
property exceeds that liability. For purposes of this subsection, the term
"distribution" shall not include amounts constituting reasonable compensation
for present or past services or reasonable payments made in the ordinary
course of business pursuant to a bona fide retirement plan or other benefits
program.
(b) A partner of a limited liability partnership who receives a distribution in
violation of subsection (a) of this section, and who knew at the time of the
distribution that the distribution violated subsection (a) of this section, shall
be liable to the partnership for the amount of the distribution. A partner of a
limited liability partnership who receives a distribution in violation of
subsection (a) of this section, and who did not know at the time of the
distribution that the distribution violated subsection (a) of this section, shall
not be liable for the amount of the distribution. Subject to subsection (c) of
this section, this subsection (b) shall not affect any obligation or liability of a
partner of a limited liability partnership under an agreement or other
applicable law for the amount of a distribution.
(c) Unless otherwise agreed, a partner of a limited liability partnership who
receives a distribution from a partnership shall have no liability under this
chapter or other applicable law for the amount of the distribution after the
expiration of three years from the date of the distribution. (72 Del. Laws, c.
151, 1; 72 Del. Laws, c. 390, 15.)
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Subchapter IV. Relations of Partners to Each Other and to Partnership
15-401. 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) In addition to indemnification under Section 15-110, 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; however, no
person shall be required as a consequence of any such indemnification to
make any payment to the extent that the payment is inconsistent with
Sections 15-306(b) or (c).
(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) 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 and affairs.
(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 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 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 15-301.
(l) A partner has the power and authority to delegate to one or more other
persons the partner's rights and powers to manage and control the business
and affairs of the partnership, including to delegate to agents, officers and
employees of the partner or the partnership, and to delegate by a
management agreement or other agreement with, or otherwise to, other
persons. Such delegation by a partner shall not cause the partner to cease to
be a partner of the partnership or cause the person to whom any such rights
and powers have been delegated to be a partner of the partnership.
(m) Unless otherwise provided in a partnership agreement or another agreement,
a partner shall have no preemptive right to subscribe to any additional issue
of partnership interests or another interest in a partnership. (72 Del. Laws, c.
151, 1; 73 Del. Laws, c. 296, 7, 8.)

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15-402. Distributions in kind.
A partner, regardless of the nature of the partner's contribution, has no right to
demand and receive any distribution from a partnership in kind. A partner may not
be compelled to accept a distribution of any asset in kind from a partnership to the
extent that the percentage of the asset distributed to the partner exceeds a
percentage of that asset which is equal to the percentage in which the partner shares
in distributions from the partnership. A partner may be compelled to accept a
distribution of any asset in kind from a partnership to the extent that the percentage
of the asset distributed to the partner is equal to a percentage of that asset which is
equal to the percentage in which the partner shares in distributions from the
partnership. (72 Del. Laws, c. 151, 1.)

15-403. Partner's rights and duties with respect to information.
(a) Each partner and the partnership shall provide partners, former partners and
the legal representative of a deceased partner or partner under a legal
disability and their agents and attorneys, access to the books and records of
the partnership and other information concerning the partnership's business
and affairs (in the case of former partners, only with respect to the period
during which they were partners) upon reasonable demand, for any purpose
reasonably related to the partner's interest as a partner in the partnership.
The right of access shall include access to:
(1) True and full information regarding the status of the business and
financial condition of the partnership;
(2) Promptly after becoming available, a copy of the partnership's federal,
state and local income tax returns for each year;
(3) A current list of the name and last known business, residence or mailing
address of each partner;
(4) A copy of any statement and written partnership agreement and all
amendments thereto, together with executed copies of any written
powers of attorney pursuant to which the statement or the partnership
agreement and any amendments thereto have been executed;
(5) True and full information regarding the amount of cash and a description
and statement of the agreed value of any other property or services
contributed by each partner and which each partner has agreed to
contribute in the future, and the date on which each partner became a
partner; and
(6) Other information regarding the affairs of the partnership as is just and
reasonable.
The right of access includes the right to examine and make extracts from books and
records and other information concerning the partnership's business and affairs. The
partnership agreement may provide for, and in the absence of such provision in the
partnership agreement, the partnership or the partner from whom access is sought
may impose, reasonable standards (including standards governing what information
and documents are to be furnished at what time and location and at whose expense)
with respect to exercise of the right of access.

(b) A partnership agreement may provide that the partnership shall have the right
to keep confidential from partners for such period of time as the partnership
deems reasonable, any information which the partnership reasonably believes
to be in the nature of trade secrets or other information the disclosure of
which the partnership in good faith believes is not in the best interest of the
partnership or could damage the partnership or its business or affairs or which
167
the partnership is required by law or by agreement with a third party to keep
confidential.
(c) A partnership and its partners may maintain the books and records and other
information concerning the partnership in other than a written form if such
form is capable of conversion into written form within a reasonable time.
(d) Any demand by a partner under this section shall be in writing and shall state
the purpose of such demand.
(e) Any action to enforce any right arising under this section shall be brought in
the Court of Chancery. If the partnership or a partner refuses to permit access
as described in subsection (a)(3) of this section or does not reply to a demand
that has been made within 5 business days after the demand has been made,
the demanding partner, former partner, or legal representative of a deceased
partner or partner under a legal disability may apply to the Court of Chancery
for an order to compel such disclosure. The Court of Chancery is hereby
vested with exclusive jurisdiction to determine whether or not the person
making the demand is entitled to the books and records or other information
concerning the partnership's business and affairs sought. The Court of
Chancery may summarily order the partnership or partner to permit the
demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability and their agents and attorneys to
provide access to the information described in subsection (a)(3) of this section
and to make copies or extracts therefrom; or the Court of Chancery may
summarily order the partnership or partner to furnish to the demandi ng
partner, former partner or legal representative of a deceased partner or
partner under a legal disability and their agents and attorneys the information
described in subsection (a)(3) of this section on the condition that the partner,
former partner or legal representative of a deceased partner or partner under
a legal disability first pay to the partnership or to the partner from whom
access is sought the reasonable cost of obtaining and furnishing such
information and on such other conditions as the Court of Chancery deems
appropriate. When a demanding partner, former partner or legal
representative of a deceased partner or partner under a legal disability seeks
to obtain access to information described in subsection (a)(3) of this section,
the demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability shall first establish (1) that the
demanding partner, former partner or legal representative of a deceased
partner or partner under a legal disability has complied with the provisions of
this section respecting the form and manner of making demand for obtaining
access to such information and (2) that the information the demanding
partner, former partner or legal representative of a deceased partner or
partner under a legal disability seeks is reasonably related to the partner's
interest as a partner in the partnership. The Court of Chancery may, in its
discretion, prescribe any limitations or conditions with reference to the access
to information, or award such other or further relief as the Court of Chancery
may deem just and proper. The Court of Chancery may order books,
documents and records, pertinent extracts therefrom, or duly authenticated
copies thereof, to be brought within the State of Delaware and kept in the
State of Delaware upon such terms and conditions as the order may prescribe.
(f) The rights of a partner to obtain information as provided in this section may
be restricted in an original partnership agreement or in any subsequent
amendment approved or adopted by all of the partners and in compliance with
any applicable requirements of the partnership agreement. (72 Del. Laws, c.
151, 1; 73 Del. Laws, c. 85, 9.)
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15-404. 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).
(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 or winding up of
the partnership business or affairs 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 or affairs 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 or affairs 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 or affairs is limited to
refraining from engaging in grossly negligent or reckless conduct, intentional
misconduct, or a knowing violation of law.
(d) A partner does not violate a duty or obligation under this chapter or under the
partnership agreement solely because the partner's conduct furthers the
partner's own interest.
(e) A partner may lend money to, borrow money from, act as a surety, guarantor
or endorser for, guarantee or assume 1 or more specific obligations of,
provide collateral for and transact other business with, the partnership and,
subject to other applicable law, has the same rights and obligations with
respect thereto as a person who is not a partner.
(f) This section applies to a person winding up the partnership business or affairs
as the personal or legal representative of the last surviving partner as if the
person were a partner. (72 Del. Laws, c. 151, 1; 74 Del. Laws, c. 266, 5.)

15-405. Actions by partnership and partners; derivative actions.
(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 15-401, 15-403 or 15-404;
(ii) the partner's right on dissociation to have the partner's interest
in the partnership purchased pursuant to Section 15-701 or
enforce any other right under Subchapter VI or VII; or
(iii) the partner's right to compel a dissolution and winding up of
the partnership business under Section 15-801 or enforce any
other right under Subchapter VIII; or
(3) enforce the rights and otherwise protect the interests of the partner,
including rights and interests arising independently of the partnership
relationship.
169
(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.
(d) A partner may bring a derivative action in the Court of Chancery in the right of
a partnership to recover a judgment in the partnership's favor.
(e) In a derivative action, the plaintiff must be a partner at the time of bringing
the action and:
(1) At the time of the transaction of which the partner complains; or
(2) The partner's status as a partner had devolved upon the partner by
operation of law or pursuant to the terms of the partnership
agreement from a person who was a partner at the time of the
transaction.
(f) In a derivative action, the complaint shall set forth with particularity the
effort, if any, of the plaintiff to secure initiation of the action by the
partnership or the reason for not making the effort.
(g) If a derivative action is successful, in whole or in part, as a result of a
judgment, compromise or settlement of any such action, the court may award
the plaintiff reasonable expenses, including reasonable attorney's fees, from
any recovery in any such action or from a partnership. (72 Del. Laws, c. 151,
1.)

15-406. 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 or
affairs during the term or undertaking, continue the business or affairs
without any settlement or liquidation of the partnership, they are presumed to
have agreed that the partnership will continue. (72 Del. Laws, c. 151, 1.)

15-407. Classes and voting.
(a) A partnership agreement may provide for classes or groups of partners having
such relative rights, powers and duties as the partnership agreement may
provide, and may make provision for the future creation in the manner
provided in the partnership agreement of additional classes or groups of
partners having such relative rights, powers and duties as may from time to
time be established, including rights, powers and duties senior to existing
classes and groups of partners. A partnership agreement may provide for the
taking of an action, including the amendment of the partnership agreement,
without the vote or approval of any partner or class or group of partners,
including an action to create under the provisions of the partnership
agreement a class or group of partnership interests that was not previously
outstanding. A partnership agreement may provide that any partner or class
or group of partners shall have no voting rights.
(b) The partnership agreement may grant to all or certain identified partners or a
specified class or group of the partners the right to vote separately or with all
or any class or group of the partners on any matter. Voting by partners may
be on a per capita, number, financial interest, class, group or any other basis.
(c) A partnership agreement may set forth provisions relating to notice of the
time, place or purpose of any meeting at which any matter is to be voted on
170
by any partners, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy, or any other matter with respect to the exercise of any
such right to vote.
(d) On any matter that is to be voted on, consented to or approved by partners,
the partners may take such action without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the partners having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all partners entitled to vote thereon were present and voted.
On any matter that is to be voted on by partners, the partners may vote in
person or by proxy, and such proxy may be granted in writing, by means of
electronic transmission or as otherwise permitted by applicable law. Unless
otherwise provided in a partnership agreement, a consent transmitted by
electronic transmission by a partner or by a person or persons authorized to
act for a partner shall be deemed to be written and signed for purposes of this
subsection (d). For purposes of this subsection (d), the term "electronic
transmission" means any form of communication not directly involving the
physical transmission of paper that creates a record that may be retained,
retrieved and reviewed by a recipient thereof and that may be directly
reproduced in paper form by such a recipient through an automated process.
(e) If a partnership agreement provides for the manner in which it may be
amended, including by requiring the approval of a person who is not a party
to the partnership agreement or the satisfaction of conditions, it may be
amended only in that manner or as otherwise permitted by law (provided that
the approval of any person may be waived by such person and that any such
conditions may be waived by all persons for whose benefit such conditions
were intended). If a partnership agreement does not provide for the manner
in which it may be amended, the partnership agreement may be amended
with the approval of all the partners or as otherwise permitted by law. (72
Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 16; 73 Del. Laws, c. 85, 10;
74 Del. Laws, c. 266, 6.)

15-408. Remedies for breach of partnership agreement.
A partnership agreement may provide that (i) a partner who fails to perform in
accordance with, or to comply with the terms and conditions of, the partnership
agreement shall be subject to specified penalties or specified consequences, and (ii)
at the time or upon the happening of events specified in the partnership agreement,
a partner shall be subject to specified penalties or specified consequences. Such
specified penalties or specified consequences may include and take the form of any
penalty or consequence set forth in 15-207(b) of this title. (72 Del. Laws, c. 151,
1; 72 Del. Laws, c. 390, 17; 73 Del. Laws, c. 85, 11.)

15-409. Reliance on reports and information by partner or liquidating
trustee.
(a) A liquidating trustee of a partnership (including a limited liability partnership)
shall be fully protected in relying in good faith upon the records of the
partnership and upon information, opinions, reports or statements presented
by a partner of the partnership, an officer or employee of the partnership,
another liquidating trustee, or committees of the partnership or partners, or
by any other person as to matters the liquidating trustee reasonably believes
are within such other person's professional or expert competence, including
information, opinions, reports or statements as to the value and amount of
171
assets, liabilities, profits or losses of the partnership, or the value and amount
of assets or reserves or contracts, agreements or other undertakings that
would be sufficient to pay claims and obligations of the partnership or to make
reasonable provision to pay such claims and obligations, or any other facts
pertinent to the existence and amount of assets from which distributions to
partners or creditors might properly be paid.
(b) A partner of a limited liability partnership shall be fully protected in relying in
good faith upon the records of the partnership and upon information, opinions,
reports or statements presented by another partner of the partnership, an
officer or employee of the partnership, a liquidating trustee, or committees of
the partnership or partners, or by any other person as to matters the partner
reasonably believes are within such other person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of assets, liabilities, profits or losses of the partnership, or
the value and amount of assets or reserves or contracts, agreements or other
undertakings that would be sufficient to pay claims and obligations of the
partnership or to make reasonable provision to pay such claims and
obligations, or any other facts pertinent to the existence and amount of assets
from which distributions to partners or creditors might properly be paid.
(c) A partner of a partnership that is not a limited liability partnership shall be
fully protected from liability to the partnership, its partners or other persons
party to or otherwise bound by the partnership agreement in relying in good
faith upon the records of the partnership and upon information, opinions,
reports or statements presented by another partner of the partnership, an
officer or employee of the partnership, a liquidating trustee, or committees of
the partnership or partners, or by any other person as to matters the partner
reasonably believes are within such other person's professional or expert
competence, including information, opinions, reports or statements as to the
value and amount of assets, liabilities, profits or losses of the partnership, or
the value and amount of assets or reserves or contracts, agreements or other
undertakings that would be sufficient to pay claims and obligations of the
partnership or to make reasonable provision to pay such claims and
obligations, or any other facts pertinent to the existence and amount of assets
from which distributions to partners or creditors might properly be paid. (75
Del. Laws, c. 50, 4.)

Subchapter V. Transferees and Creditors of Partner
15-501. Partner not co-owner of partnership property.
Unless otherwise provided in a statement of partnership existence and in a
partnership agreement, a partner is not a co-owner of partnership property and has
no interest in specific partnership property. (72 Del. Laws, c. 151, 1; 72 Del. Laws,
c. 390, 18.)

15-502. Partner's economic interest in partnership; personal property.
A partnership interest is personal property. Only a partner's economic interest may
be transferred. (72 Del. Laws, c. 151, 1.)

15-503. Transfer of partner's economic interest.
(a) A transfer, in whole or in part, of a partner's economic 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 or affairs; and
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(3) does not entitle the transferee to participate in the management or
conduct of the partnership business or affairs, 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 economic 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 or affairs, in accordance with the transfer, the net amount
otherwise distributable to the transferor; and
(3) to seek under Section 15-801(6) a judicial determination that it is
equitable to wind up the partnership business or affairs.
(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 economic interest transferred.
(e) A partnership need not give effect to a transferee's rights under this section
until it has notice of the transfer. Upon request of a partnership or a partner,
a transferee must furnish reasonable proof of a transfer.
(f) A transfer of a partner's economic interest in the partnership in violation of a
restriction on transfer contained in a partnership agreement is ineffective.
(g) Notwithstanding anything to the contrary under applicable law, a partnership
agreement may provide that a partner's economic interest may not be
transferred prior to the dissolution and winding up of the partnership.
(h) A partnership interest in a partnership may be evidenced by a certificate of
partnership interest issued by the partnership. A partnership agreement may
provide for the transfer of any partnership interest represented by such a
certificate and make other provisions with respect to such certificates.
(i) Except to the extent assumed by agreement, until a transferee of a
partnership interest becomes a partner, the transferee shall have no liability
as a partner solely as a result of the transfer.
(j) A partnership may acquire, by purchase, redemption or otherwise, any
partnership interest or other interest of a partner in the partnership. Any such
interest so acquired by the partnership shall be deemed canceled. (72 Del.
Laws, c. 151, 1; 73 Del. Laws, c. 85, 12.)

15-504. Partner's economic 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 economic interest of the judgment
debtor to satisfy the judgment. To the extent so charged, the judgment
creditor has only the right to receive any distribution or distributions to which
the judgment debtor would otherwise have been entitled in respect of such
economic interest.
(b) A charging order constitutes a lien on the judgment debtor's economic interest
in the partnership.
(c) This chapter does not deprive a partner or a partner's transferee of a right
under exemption laws with respect to the judgment debtor's economic interest
in the partnership.
(d) The entry of a charging order is the exclusive remedy by which a judgment
creditor of a partner or of a partner's transferee may satisfy a judgment out of
the judgment debtor's economic interest in the partnership.
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(e) No creditor of a partner or of a partner's transferee shall have any right to
obtain possession of, or otherwise exercise legal or equitable remedies with
respect to, the property of the partnership.
(f) The Court of Chancery shall have jurisdiction to hear and determine any
matter relating to any such charging order. (72 Del. Laws, c. 151, 1; 72 Del.
Laws, c. 390, 19; 75 Del. Laws, c. 50, 5-11.)

15-601. 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 on a later date specified by the partner in the notice or, if no later
date is specified, then upon receipt of notice;
(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 or affairs with that
partner; or
(ii) there has been a transfer of all or substantially all of that partner's
economic interest, other than a transfer for security purposes, or a
court order charging the partner's interest which, in either case, has
not been foreclosed;
(5) on application by or for the partnership or another partner to the Court of
Chancery, the partner's expulsion by determination by the Court of Chancery
because:
(i) the partner engaged in wrongful conduct that adversely and materially
affected the partnership business or affairs;
(ii) the partner willfully or persistently committed a material breach of
either the partnership agreement or of a duty owed to the partnership
or the other partners; or
(iii) the partner engaged in conduct relating to the partnership business or
affairs which makes it not reasonably practicable to carry on the
business or affairs in partnership with the partner;
(6) The partner's:
a. Making an assignment for the benefit of creditors;
b. Filing a voluntary petition in bankruptcy;
c. Being adjudged a bankrupt or insolvent, or having entered against that
partner an order for relief in any bankruptcy or insolvency proceeding;
d. Filing a petition or answer seeking for that partner any reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation;
e. Filing an answer or other pleading admitting or failing to contest the
material allegations of a petition filed against that partner in any
proceeding of this nature;
f. Seeking, consenting to or acquiescing in the appointment of a trustee,
receiver or liquidator of that partner or of all or any substantial part of
that partner's properties; or
g. Failing, within 120 days after its commencement, to have dismissed
any proceeding against that partner seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, or failing, withi n 90
days after the appointment without that partner's consent or
174
acquiescence, to have vacated or stayed the appointment of a trustee,
receiver or liquidator of that partner or of all or any substantial part of
that partner's properties, or failing, within 90 days after the expiration
of any such 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 economic interest,
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
economic interest, but not merely by reason of the substitution of a successor
personal representative;
(10) the expiration of 90 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 existence has been terminated or its certificate of incorporation
has been revoked, or its right to conduct business has been suspended by the
jurisdiction of its incorporation, if there is no revocation of the certificate of
dissolution or no reinstatement of its existence, its certificate of incorporation
or its right to conduct business;
(11) a partnership, a limited liability company, a trust or a limited partnership that
is a partner has been dissolved and its business is being wound up; or
(12) termination of a partner who is not an individual, partnership, corporation,
trust, limited partnership, limited liability company or estate. (72 Del. Laws,
c. 151, 1; 72 Del. Laws, c. 390, 20.)
15-602. 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 Section 15-601(1).
(b) A partner's dissociation is wrongful only if any of the following apply:
(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 if any of the following apply:
(i) the partner withdraws by express will, unless the withdrawal
follows within 90 days after another partner's dissociation by death
or otherwise under Section 15-601(6) through (12) or wrongful
dissociation under this subsection;
(ii) the partner is expelled by judicial determination under Section 15-
601(5);
(iii) the partner is dissociated under Section 15-601(6); or
(iv) in the case of a partner who is not an individual, trust (other
than a statutory trust), or estate, the partner is expelled or
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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. Such liability is in
addition to any other obligation of the partner to the partnership or to the
other partners. (72 Del. Laws, c. 151, 1; 73 Del. Laws, c. 329, 13.)
15-603. Effect of partner's dissociation.
(a) If a partner's dissociation results in a dissolution and winding up of the
partnership business, Subchapter VIII applies; otherwise, Subchapter VII 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 15-803;
(2) the partner's duty of loyalty under Section 15-404(b)(3) terminates; and
(3) the partner's duty of loyalty under Section 15-404(b)(1) and (2) and
duty of care under Section 15-404(c) 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 15-803. (72 Del. Laws, c. 151, 1.)

Subchapter VII. Partner's Dissociation When Business or Affairs Not Wound
Up

15-701. Purchase of dissociated partner's partnership interest.
(a) If a partner is dissociated from a partnership without resulting in a dissolution
and winding up of the partnership business or affairs under Section 15-801, the
partnership shall cause the dissociated partner's interest in the partnership to be
purchased for a buyout price determined pursuant to subsection (b).
(b) The buyout price of a dissociated partner's partnership interest is an amount
equal to the fair value of such partner's economic interest as of the date of
dissociation based upon such partner's right to share in distributions from the
partnership. Interest must be paid from the date of dissociation to the date of
payment.
(c) Damages for wrongful dissociation under Section 15-602(b), 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 partnership interest is
being purchased against all partnership obligations, whether incurred before or
after the dissociation, except partnership obligations incurred by an act of the
dissociated partner under Section 15-702.
(e) If no agreement for the purchase of a dissociated partner's partnership interest
is reached within 120 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).
(f) If a deferred payment is authorized under subsection (h), 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), stating the time of
payment, the amount and type of security for payment, and the other terms and
conditions of the obligation.
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(g) The payment or tender required by subsection (e) or (f) of this section must be
accompanied by the following:
(1) a written 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) a written explanation of how the estimated amount of the payment was
calculated; and
(4) written notice which shall state that the payment is in full satisfaction of
the obligation to purchase unless, within 120 days after the written
notice, the dissociated partner commences an action in the Court of
Chancery under (i) to determine the buyout price of that partner's
partnership interest, any offsets under subsection (c) 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
of Chancery that earlier payment will not cause undue hardship to the
business of the partnership. A deferred payment must bear interest and, to
the extent it would not cause undue hardship to the business of the
partnership, be adequately secured.
(i) A dissociated partner may maintain an action against the partnership,
pursuant to Section 15-405(b)(2)(ii), to determine the buyout price of that
partner's partnership interest, any offsets under subsection (c), or other terms
of the obligation to purchase. The action must be commenced within 120 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 of Chancery shall determine the buyout price of the
dissociated partner's partnership interest, any offset due under subsection (c),
and accrued interest, and enter judgment for any additional payment or
refund. If deferred payment is authorized under subsection (h), the Court of
Chancery shall also determine the security, if any, for payment and other
terms of the obligation to purchase. The Court of Chancery 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 of Chancery finds
equitable, against a party that the Court of Chancery 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). (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 21.)

15-702. Dissociated partner's power to bind and liability to partnership.
(a) For one year after a partner dissociates without resulting in a dissolution and
winding up of the partnership business, the partnership, including a surviving
partnership under Subchapter IX, is bound by an act of the dissociated
partner which would have bound the partnership under Section 15-301 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
and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the partner's dissociation; and
(3) is not deemed to have had knowledge under Section 15-303(c) or
notice under Section 15-704(c).
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(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). (72
Del. Laws, c. 151, 1.)

15-703. 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).
(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
Subchapter IX, within one year after the partner's dissociation, only if the
partner is liable for the obligation under Section 15-306 and at the time of
entering into the transaction the other party:
(1) reasonably believed that the dissociated partner was then a partner
and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the partner's dissociation; and
(3) is not deemed to have had knowledge under Section 15-303(c) or
notice under Section 15-704(c).
(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. (72 Del. Laws, c. 151, 1.)

15-704. Statement of dissociation.
(a) A dissociated partner or, after the filing by the partnership of a statement of
partnership existence, 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 Section 15-303(b) and (c).
(c) For the purposes of Sections 15-702(a)(3) and 15-703(b)(3), a person not a
partner is deemed to have notice of the dissociation 60 days after the
statement of dissociation is filed. (72 Del. Laws, c. 151, 1.)

15-705. 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. (72 Del. Laws, c.
151, 1.)

Subchapter VIII. Winding Up Partnership Business or Affairs
15-801. Events causing dissolution and winding up of partnership
business or affairs.
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 Section 15-601(2) through (12), of
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that partner's express will to withdraw as a partner, on a later date specified
by the partner in the notice or, if no later date is specified, then upon receipt
of notice;
(2) In a partnership for a definite term or particular undertaking:
(i) Within 90 days after a partner's dissociation by death or otherwise
under Section 15-601(6) through (12) or wrongful dissociation under
Section 15-602(b), at least half of the remaining partners express the
will to wind up the partnership business, for which purpose a partner's
rightful dissociation pursuant to Section 15-602(b)(2)(i) of this title
constitutes the expression of that partner's will to wind up the
partnership business;
(ii) The express will of all of the partners to wind up the partnership
business or affairs; 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 or affairs;
(4) An event that makes it unlawful for all or substantially all of the business or
affairs of the partnership to be continued, but a cure of such illegality within
90 days after the partnership has notice of the event is effective retroactively
to the date of the event for purposes of this section;
(5) On application by or for a partner to the Court of Chancery, the entry of a
decree of dissolution of a partnership by the Court of Chancery upon a
determination by the Court of Chancery that it is not reasonably practicable to
carry on the partnership business, purpose or activity in conformity with the
partnership agreement; or
(6) On application by a transferee of a partner's economic interest to the Court of
Chancery, a determination by the Court of Chancery that it is equitable to
wind up the partnership business or affairs:
(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. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 22.)

15-802. Partnership continues after dissolution.
(a) Subject to subsection (b), a partnership continues after dissolution only for
the purpose of winding up its business or affairs. The partnership is
terminated when the winding up of its business or affairs is completed.
(b) At any time after the dissolution of a partnership and before the winding up of
its business or affairs 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 or affairs wound up and the
partnership terminated. In that event:
(1) the partnership resumes carrying on its business or affairs 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 Section 15-804(1) 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.
(72 Del. Laws, c. 151, 1.)
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15-803. Right to wind up partnership business or affairs.
(a) A partner at the time of dissolution, including a partner who has dissociated
but not wrongfully, may participate in winding up the partnership's business
or affairs, but on application of any partner or a partner's legal representative
or transferee, the Court of Chancery 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 or affairs.
(c) The persons winding up the partnership's business or affairs may, in the name
of, and for and on behalf of, the partnership, prosecute and defend suits,
whether civil, criminal or administrative, gradually settle and close the
partnership's business or affairs, dispose of and convey the partnership's
property, discharge or make reasonable provision for the partnership's
liabilities, distribute to the partners pursuant to Section 15-807 any remaining
assets of the partnership, and perform other acts which are necessary or
convenient to the winding up of the partnership's business or affairs. (72 Del.
Laws, c. 151, 1.)

15-804. Partner's power to bind partnership after dissolution.
Subject to Section 15-805, a partnership is bound by a partner's act after dissolution
that:
(1) is appropriate for winding up the partnership business or affairs; or
(2) would have bound the partnership under Section 15-301 before dissolution, if
the other party to the transaction did not have notice of the dissolution. (72
Del. Laws, c. 151, 1.)

15-805. Statement of dissolution.
(a) After dissolution, a partnership may file a statement of dissolution stating the
name of the partnership and that the partnership has dissolved and is winding
up its business or affairs.
(b) A statement of dissolution cancels a filed statement of partnership existence
for the purposes of Section 15-303(b) and is a limitation on authority for the
purposes of Section 15-303(c).
(c) For the purposes of Sections 15-301 and 15-804, a person not a partner is
deemed to have notice of the dissolution and the limitation on the partners'
authority as a result of a statement of dissolution 60 days after it is filed.
(d) After filing a statement of dissolution, a dissolved partnership may file a
statement of partnership existence which will operate with respect to a person
not a partner as provided in Section 15-303(b) and (c) in any transaction,
whether or not the transaction is appropriate for winding up the partnership
(e) If a partnership which has dissolved fails or refuses to file a statement of
dissolution, any partner or dissociated partner who is or may be adversely
affected by the failure or refusal may petition the Court of Chancery to direct
the filing. If the Court finds that the statement of dissolution should be filed
and that the partnership has failed or refused to do so, it shall enter an order
granting appropriate relief. (72 Del. Laws, c. 151, 1.)

15-806. Partner's liability to other partners after dissolution.
(a) Except as otherwise provided in subsection (b) and Section 15-306, after
dissolution a partner is liable to the other partners for the partner's share of
any partnership obligation incurred under Section 15-804.
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(b) A partner who, with knowledge of the dissolution, causes the partnership to
incur an obligation under Section 15-804(2) by an act that is not appropriate
for winding up the partnership business or affairs is liable to the partnership
for any damage caused to the partnership arising from the obligation. (72 Del.
Laws, c. 151, 1.)

15-807. Settlement of accounts and contributions among partners.
(a) In winding up a partnership's business or affairs, the assets of the
partnership, including the contributions of the partners required by this
section, must be applied to pay or make reasonable provision to pay the
partnership's 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).
(b) Each partner is entitled to a settlement of all partnership accounts upon
winding up the partnership business or affairs. In settling accounts among the
partners, 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 but excluding from the calculation
charges attributable to an obligation for which the partner is not personally
liable under Section 15-306.
(c) After the settlement of accounts, each partner shall contribute, in the
proportion in which the partner shares partnership losses, the amount
necessary to pay or make reasonable provis ion to pay partnership obligations
that were not known at the time of the settlement and for which the partner is
personally liable under Section 15-306.
(d) 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 pay or make reasonable provision to pay the partnership
obligations for which they are personally liable under Section 15-306.
(e) 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 for
which the partner is personally liable under Section 15-306.
(f) The estate of a deceased partner is liable for the partner's obligation to
contribute to the partnership.
(g) 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.
(h) A limited liability partnership which has dissolved (i) shall pay or make
reasonable provision to pay all claims and obligations, including all contingent,
conditional or unmatured contractual claims, known to the limited liability
partnership, (ii) shall make such provision as will be reasonably likely to be
sufficient to provide compensation for any claim against the limited liability
partnership which is the subject of a pending action, suit or proceeding to
which the limited liability partnership is a party and (iii) shall make such
provision as will be reasonably likely to be sufficient to provide compensation
for claims that have not been made known to the limited liability partnership
or that have not arisen but that, based on facts known to the limited liability
partnership, are likely to arise or to become known to the limited liability
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partnership within 10 years after the date of dissolution. If there are sufficient
assets, such claims and obligations shall be paid in full and any such provision
for payment made shall be made in full. If there are insufficient assets, such
claims and obligations shall be paid or provided for according to their priority
and, among claims of equal priority, ratably to the extent of assets available
therefor. Unless otherwise provided in the partnership agreement, any
remaining assets shall be distributed as provided in this chapter. Any
liquidating trustee winding up a limited liability partnership's affairs who has
complied with this section shall not be personally liable to the claimants of the
dissolved limited liability partnership by reason of such person's actions in
winding up the limited liability partnership.
(i) A partner of a limited liability partnership who receives a distribution in
violation of subjection (h) of this section, and who knew at the time of the
distribution that the distribution violated subsection (h) of this section, shall
be liable to the limited liability partnership for the amount of the distribution.
For purposes of the immediately preceding sentence, the term "distribution"
shall not include amounts constituting reasonable compensation for present or
past services or reasonable payments made in the ordinary course of business
pursuant to a bona fide retirement plan or other benefits program. A partner
of a limited liability partnership who receives a distribution in violation of
subsection (h) of this section, and who did not know at the time of the
distribution that the distribution violated subsection (h) of this section, shall
not be liable for the amount of the distribution. Subject to subsection (j) of
this section, this subsection shall not affect any obligation or liability of a
partner of a limited liability partnership under an agreement or other
applicable law for the amount of a distribution.
(j) Unless otherwise agreed, a partner of a limited liability partnership who
receives a distribution from a limited liability partnership shall have no liability
under this chapter or other applicable law for the amount of the distribution
after the expiration of 3 years from the date of the distribution.
(k) Section 15-309 of this chapter shall not apply to a distribution to which this
section applies. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 23, 24.)

Subchapter IX. Conversion; Merger; Domestication; and Transfer
15-901. Conversion of certain entities to a domestic partnership.
(a) As used in this section, the term "other entity" means a corporation, a
statutory trust, a business trust or association, a real estate investment trust,
a commonlaw trust or any other unincorporated business, including a limited
partnership (including a limited liability limited partnership), a foreign
partnership or a limited liability company.
(b) Any other entity may convert to a domestic partnership (including a limited
liability partnership) by complying with subsection (h) of this section and filing
with the Secretary of State in accordance with 15-105 of this chapter:
(1) A certificate of conversion to partnership that has been executed in
accordance with 15-105 of this chapter;
(2) A statement of partnership existence that complies with 15-303 of this
chapter and has been executed in accordance with 15-105 of this
chapter; and
(3) In the case of a conversion to a limited liability partnership, a statement
of qualification in accordance with subsection (c) of 15-1001 of this
title.
(c) The certificate of conversion to partnership shall state:
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(1) The date on which and jurisdiction where the other entity was first
created, formed or otherwise came into being and, if it has changed, its
jurisdiction immediately prior to its conversion to a domestic
partnership;
(2) The name of the other entity immediately prior to the filing of the
certificate of conversion to partnership;
(3) The name of the partnership as set forth in its statement of partnership
existence filed in accordance with subsection (b) of this section;
(4) The future effective date or time (which shall be a date or time certain)
of the conversion to a partnership if it is not to be effective upon the
filing of the certificate of conversion to partnership and the statement of
partnership existence; and
(5) In the case of a conversion to a limited liability partnership, that the
partnership agreement of the partnership states that the partnership
shall be a limited liability partnership.
(d) Upon the filing with the Secretary of State of the certificate of conversion to
partnership, the statement of partnership existence and the statement of
qualification (if applicable), or upon the future effective date or time of the
certificate of conversion to partnership, the statement of partnership existence
and the statement of qualification (if applicable), the other entity shall be
converted into a domestic partnership (including a limited liability partnership,
if applicable) and the partnership shall thereafter be subject to all of the
provisions of this chapter, except that the existence of the partnership shall be
deemed to have commenced on the date the other entity commenced its
existence in the jurisdiction in which the other entity was first created,
formed, incorporated or otherwise came into being.
(e) The conversion of any other entity into a domestic partnership (including a
limited liability partnership) shall not be deemed to affect any obligations or
liabilities of the other entity incurred prior to its conversion to a domestic
partnership, or the personal liability of any person incurred prior to such
conversion.
(f) When any conversion shall have become effective under this section, for all
purposes of the laws of the State of Delaware, all of the rights, privileges and
powers of the other entity that has converted, and all property, real, personal
and mixed, and all debts due to such other entity, as well as all other things
and causes of action belonging to such other entity, shall remain vested in the
domestic partnership to which such other entity has converted and shall be
the property of such domestic partnership, and the title to any real property
vested by deed or otherwise in such other entity shall not revert or be in any
way impaired by reason of this chapter; but all rights of creditors and all liens
upon any property of such other entity shall be preserved unimpaired, and all
debts, liabilities and duties of the other entity that has converted shall remain
attached to the domestic partnership to which such other entity has
converted, and may be enforced against it to the same extent as if said debts,
liabilities and duties had originally been incurred or contracted by it in its
capacity as a domestic partnership. The rights, privileges, powers and
interests in property of the other entity, as well as the debts, liabilities and
duties of the other entity, shall not be deemed, as a consequence of the
conversion, to have been transferred to the domestic partnership to which
such other entity has converted for any purpose of the laws of the State of
Delaware.
(g) Unless otherwise agreed, for all purposes of the laws of the State of Delaware,
the converting other entity shall not be required to wind up its affairs or pay
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its liabilities and distribute its assets, the conversion shall not be deemed to
constitute a dissolution of such other entity, and the conversion shall
constitute a continuation of the existence of the converting other entity in the
form of a domestic partnership. When another entity has been converted to a
domestic partnership pursuant to this section, the domestic partnership shall,
for all purposes of the laws of the State of Delaware, be deemed to be the
same entity as the converting other entity.
(h) Prior to filing a certificate of conversion to partnership with the Secretary of
State, the conversion shall be approved in the manner provided for by the
document, instrument, agreement or other writing, as the case may be,
governing the internal affairs of the other entity and the conduct of its
business or by applicable law, as appropriate, and a partnership agreement
shall be approved by the same authorization required to approve the
conversion; provided, that in any event, such approval shall include the
approval of any person who, at the effective date or time of the conversion,
shall be a partner of the partnership.
(i) In connection with a conversion hereunder, rights or securities of, or interests
in, the other entity which is to be converted to a domestic partnership may be
exchanged for or converted into cash, property, rights or securities of or
interests in such domestic partnership or, in addition to or in lieu thereof, may
be exchanged for or converted into cash, property, rights or securities of or
interests in another domestic partnership or other entity or may be cancelled.
(j) In connection with the conversion of any other entity to a domestic
partnership (including a limited liability partnership), a person is admitted as a
partner of the partnership as provided in the partnership agreement. For the
purpose of subsection (b) of 15-306 of this title, a person who, at the
effective time or date of the conversion of any other entity to a domestic
partnership (including a limited liability partnership), is a partner of the
partnership, shall be deemed admitted as a partner of the partnership at the
effective date or time of such conversion.
(k) The provisions of this section shall not be construed to limit the
accomplishment of a change in the law governing, or the domicile of, an other
entity to the State of Delaware by any other means provided for in a
document, instrument, agreement or other writing, including by the
amendment of any such document, instrument, agreement or other writing, or
by applicable law. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 25-27;
73 Del. Laws, c. 85, 13; 73 Del. Laws, c. 329, 14; 74 Del. Laws, c. 103,
9; 74 Del. Laws, c. 266, 7; 75 Del. Laws, c. 50, 12-21.)

15-902. Merger or consolidation.
(a) As used in this section, "other business entity" means a corporation, a
statutory trust, a business trust or association, a real estate investment trust,
a common-law trust, or an unincorporated business, including a limited
liability company, a limited partnership (including a limited liability limited
partnership) and a foreign partnership, but excluding a domestic partnership.
(b) Pursuant to an agreement of merger or consolidation, 1 or more domestic
partnerships may merge or consolidate with or into 1 or more domestic
partnerships or 1 or more other business entities formed or organized under
the laws of the State of Delaware or any other state or the United States or
any foreign country or other foreign jurisdiction, or any combination thereof,
with such domestic partnership or other business entity as the agreement
shall provide being the surviving or resulting domestic partnership or other
business entity. Unless otherwise provided in the partnership agreement, a
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merger or consolidation shall be approved by each domestic partnership which
is to merge or consolidate by all of its partners. In connection with a merger
or consolidation hereunder, rights or securities of, or interests in, a domestic
partnership or other business entity which is a constituent party to the merger
or consolidation may be exchanged for or converted into cash, property, rights
or securities of, or interests in, the surviving or resulting domestic partnership
or other business entity or, in addition to or in lieu thereof, may be exchanged
for or converted into cash, property, rights or securities of, or interests in a
domestic partnership or other business entity which is not the surviving or
resulting domestic partnership or other business entity in the merger or
consolidation or may be cancelled. Notwithstanding prior approval, an
agreement of merger or consolidation may be terminated or amended
pursuant to a provision for such termination or amendment contained in the
agreement of merger or consolidation.
(c) If a domestic partnership is merging or consolidating under this section, (i) if
the domestic partnership has not filed a statement of partnership existence,
then the domestic partnership shall file a statement of partnership existence
and (ii) the domestic partnership or other business entity surviving or
resulting in or from the merger or consolidation shall file a certificate of
merger or consolidation executed by at least 1 partner on behalf of the
domestic partnership when it is the surviving or resulting entity with the
Secretary of State. The certificate of merger or consolidation shall state:
(1) The name and jurisdiction of formation or organization of each of the
domestic partnerships and other business entities which is to merge or
consolidate;
(2) That an agreement of merger or consolidation has been approved and
executed by each of the domestic partnerships and other business
entities which is to merge or consolidate;
(3) The name of the surviving or resulting domestic partnership or other
business entity;
(4) In the case of a merger in which a domestic partnership is the surviving
entity, such amendments, if any, to the statement of partnership
existence of the surviving domestic partnership (and in the case of a
surviving domestic partnership that is a limited liability partnership, to
the statement of qualification of such surviving domestic partnership) to
change its name as are desired to be effected by the merger;
of the merger or consolidation if it is not to be effective upon the filing of
the certificate of merger or consolidation;
(6) That the agreement of me rger or consolidation is on file at a place of
business of the surviving or resulting domestic partnership or other
business entity, and shall state the address thereof;
(7) That a copy of the agreement of merger or consolidation will be
furnished by the surviving or resulting domestic partnership or other
business entity, on request and without cost, to any partner of any
domestic partnership or any person holding an interest in any other
business entity which is to merge or consolidate; and
(8) If the surviving or resulting entity is not formed, organized or created
under the laws of the State of Delaware, a statement that such surviving
or resulting entity agrees that it may be served with process in the State
of Delaware in any action, suit or proceeding for the enforcement of any
obligation of any domestic partnership which is to merge or consolidate,
irrevocably appointing the Secretary of State as its agent to accept
185
service of process in any such action, suit or proceeding and specifying
the address to which a copy of such process shall be mailed to it by the
Secretary of State. In the event of service hereunder upon the Secretary
of State, the procedures set forth in Section 15-113(b) of this chapter
shall be applicable, except that the plaintiff in any such action, suit or
proceeding shall furnish the Secretary of State with the address
specified in the certificate of merger or consolidation provided for in this
section and any other address which the plaintiff may elect to furnish,
together with copies of each process as required by the Secretary of
State, and the Secretary of State shall notify such surviving or resulting
entity at all such addresses furnished by the plaintiff in accordance with
the procedures set forth in Section 15-113(b) of this chapter.
(d) Any failure to file a certificate of merger or consolidation in connection with a
merger or consolidation which occurred prior to the effective date of this
chapter shall not affect the validity or effectiveness of any such merger or
consolidation.
(e) Unless a future effective date or time is provided in a certificate of merger or
consolidation, in which event a merger or consolidation shall be effective at
any such future effective date or time, a merger or consolidation shall be
effective upon the filing with the Secretary of State of a certificate of merger
or consolidation.
(f) A certificate of merger or consolidation shall act as a certificate of cancellation
of the statement of partnership existence for a domestic partnership which is
not the surviving or resulting entity in the merger or consolidation. A
certificate of merger that sets forth any amendment in accordance with
subsection (c)(4) of this section shall be deemed to be an amendment to the
statement of partnership existence (and if applicable to the statement of
qualification) of the domestic partnership, and the domestic partnership shall
not be required to take any further action to amend its statement of
partnership existence (or if applicable its statement of qualification) under
15-105 of this title with respect to such amendments set forth in the
certificate of merger. Whenever this section requires the filing of a certificate
of merger or consolidation, such requirement shall be deemed satisfied by the
filing of an agreement of merger or consolidation containing the information
required by this section to be set forth in the certificate of merger or
consolidation.
(g) An agreement of merger or consolidation approved in accordance with
subsection (b) of this section may (1) effect any amendment to the
partnership agreement or (ii) effect the adoption of a new partnership
agreement for a domestic partnership if it is the surviving or resulting
partnership in the merger or consolidation. Any amendment to a partnership
agreement or adoption of a new partnership agreement made pursuant to the
foregoing sentence shall be effective at the effective time or date of the
merger or consolidation. The provisions of this subsection shall not be
construed to limit the accomplishment of a merger or of any of the matters
referred to herein by any other means provided for in a partnership
agreement or other agreement or as otherwise permitted by law, including
that the partnership agreement of any constituent domestic partnership to the
merger or consolidation (including a domestic partnership formed for the
purpose of consummating a merger or consolidation) shall be the partnership
agreement of the surviving or resulting domestic partnership.
(h) When any merger or consolidation shall have become effective under this
section, for all purposes of the laws of the State of Delaware, all of the rights,
186
privileges and powers of each of the domestic partnerships and other business
entities that have merged or consolidated, and all property, real, personal and
mixed, and all debts due to any of said domestic partnerships and other
business entities, as well as all other things and causes of action belonging to
each of such domestic partnerships and other business entities, shall be
vested in the surviving or resulting domestic partnership or other business
entity, and shall thereafter be the property of the surviving or resulting
domestic partnership or other business entity as they were of each of the
domestic partnerships and other business entities that have merged or
consolidated, and the title to any real property vested by deed or otherwise,
under the laws of the State of Delaware, in any of such domestic partnerships
and other business entities, shall not revert or be in any way impaired by
reason of this chapter; but all rights of creditors and all liens upon any
property of any of said domestic partnerships and other business entities shall
be preserved unimpaired, and all debts, liabilities and duties of each of the
said domestic partnerships and other business entities that have merged or
consolidated shall thenceforth attach to the surviving or resulting domestic
partnership or other business entity, and may be enforced against it to the
same extent as if said debts, liabilities and duties had been incurred or
contracted by it. Unless otherwise agreed, a merger or consolidation of a
domestic partnership, including a domestic partnership which is not the
surviving or resulting entity in the merger or consolidation, shall not require
such domestic partnership to wind up its affairs under Subchapter VIII or pay
its liabilities and distribute its assets under Subchapter VIII.
(i) Except as provided by agreement with a person to whom a partner of a
domestic partnership is obligated, a merger or consolidation of a domestic
partnership that has become effective shall not affect any obligation or liability
existing at the time of such merger or consolidation of a partner of a domestic
partnership which is merging or consolidating.
(j) If a domestic partnership is a constituent party to a merger or consolidation
that shall have become effective, but the domestic partnership is not the
surviving or resulting entity of the merger or consolidation, then a judgment
creditor of a partner of such domestic partnership may not levy execution
against the assets of the partner to satisfy a judgment based on a claim
against the surviving entity of the merger or consolidation unless:
(1) The claim is for an obligation of the domestic partnership for which the
partner is liable as provided in Section 15-306 and either:
(i) A judgment based on the same claim has been obtained against
the surviving or resulting entity of the merger or consolidation
and a writ of execution on the judgment has been returned
unsatisfied in whole or in part;
(ii) The surviving or resulting entity of the merger or consolidation
is a debtor in bankruptcy;
(iii) The partner has agreed that the creditor need not exhaust the
assets of the domestic partnership that was not the surviving or
resulting entity of the merger or consolidation;
(iv) The partner has agreed that the creditor need not exhaust the
assets of the surviving or resulting entity of the merger or
consolidation; or
(v) A court grants permission to the judgment creditor to levy
execution against the assets of the partner based on a finding
that the assets of the surviving or resulting entity of the merger
or consolidation that are subject to execution are clearly
187
insufficient to satisfy the judgment, that exhaustion of the
assets of the surviving or resulting entity of the merger or
consolidation is excessively burdensome, or that the grant of
permission is an appropriate exercise of the court's equitable
powers; or
(2) Liability is imposed on the partner by law or contract independent of
the existence of the surviving or resulting entity of the merger or
consolidation.
(k) A person is admitted as a partner of a surviving or resulting domestic
partnership pursuant to a merger or consolidation approved in accordance
with subsection (b) of this section as provided in the partnership agreement
of the surviving or resulting domestic partnership or in the agreement of
merger or consolidation, and in the event of any inconsistency, the terms of
the agreement of merger or consolidation shall control. A person is admitted
as a partner of a domestic partnership pursuant to a merger or consolidation
in which such domestic partnership is not the surviving or resulting domestic
partnership in the merger or consolidation as provided in the partnership
agreement of such domestic partnership. (72 Del. Laws, c. 151, 1; 72 Del.
Laws, c. 390, 28; 73 Del. Laws, c. 85, 14, 15; 73 Del. Laws, c. 329,
15; 74 Del. Laws, c. 103, 10; 74 Del. Laws, c. 266, 8-10; 75 Del. Laws,
c. 50, 22.)

15-903. Approval of conversion of a domestic partnership.
(a) Upon compliance with this section, a domestic partnership may convert to a
corporation, a statutory trust, a business trust or association, a real estate
investment trust, a common-law trust or any other unincorporated business,
including a limited partnership (including a limited liability limited
partnership), a foreign partnership or a limited liability company. If a domestic
partnership is converting under this section to another business form
organized, formed or created under the laws of a jurisdiction other than the
State of Delaware and has not filed a statement of partnership existence, then
the domestic partnership shall file a statement of partnership existence prior
to or at the time of the filing of the certificate of conversion to non-Delaware
entity.
(b) If the partnership agreement specifies the manner of authorizing a conversion
of the partnership, the conversion shall be authorized as specified in the
partnership agreement. If the partnership agreement does not specify the
manner of authorizing a conversion of the partnership and does not prohibit a
conversion of the partnership, the conversion shall be authorized in the same
manner as is specified in the partnership agreement for authorizing a merger
or consolidation that involves the partnership as a constituent party to the
merger or consolidation. If the partnership agreement does not specify the
manner of authorizing a conversion of the partnership or a merger or
consolidation that involves the partnership as a constituent party and does not
prohibit a conversion of the partnership, the conversion shall be authorized by
the approval by all the partners.
(c) Unless otherwise agreed, the conversion of a domestic partnership to another
business form pursuant to this section shall not require such partnership to
wind up its affairs under Subchapter VIII of this chapter or pay its liabilities
and distribute its assets under Subchapter VIII.
(d) In connection with a conversion of a domestic partnership to another business
form pursuant to this section, rights or securities of or interests in the
domestic partnership which is to be converted may be exchanged for or
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converted into cash, property, rights or securities of or interests in the
business form into which the domestic partnership is being converted or, in
addition to or in lieu thereof, may be exchanged for or converted into cash,
property, rights or securities of or interests in another business form or may
be cancelled.
(e) If a partnership shall convert in accordance with this section to another
business form organized, formed or created under the laws of a jurisdiction
other than the State of Delaware, a certificate of conversion to non-Delaware
entity executed in accordance with 15-105 of this title shall be filed in the
office of the Secretary of State in accordance with 15-105 of this title. The
certificate of conversion to non-Delaware entity shall state:
(1) The name of the partnership and, if it has been changed, the name
under which its statement of partnership existence was originally filed;
(2) The date of the filing of its original statement of partnership existence
with the Secretary of State;
(3) The jurisdiction in which the business form, to which the partnership
shall be converted, is organized, formed or created;
of the conversion if it is not to be effective upon the filing of the
certificate of conversion to non-Delaware entity;
(5) That the conversion has been approved in accordance with this section;
(6) The agreement of the partnership that it may be served with process in
the State of Delaware in any action, suit or proceeding for enforcement
of any obligation of the partnership arising while it was a partnership of
the State of Delaware, and that it irrevocably appoints the Secretary of
State as its agent to accept service of process in any such action, suit or
proceeding;
(7) The address to which a copy of the process referred to in subdivision
(e)(6) of this section shall be mailed to it by the Secretary of State. In
the event of service hereunder upon the Secretary of State, the
procedures set forth in 15-112(b) of this title shall be applicable,
except that the plaintiff in any such action, suit or proceeding shall
furnish the Secretary of State with the address specified in this
subdivision and any other address that the plaintiff may elect to furnish,
together with copies of such process as required by the Secretary of
State, and the Sec retary of State shall notify the partnership that has
converted out of the State of Delaware at all such addresses furnished
by the plaintiff in accordance with the procedures set forth in 15-
112(b) of this title.
(f) Upon the filing in the office of the Secretary of State of the certificate of
conversion to non-Delaware entity or upon the future effective date or time of
the certificate of conversion to non-Delaware entity and payment to the
Secretary of State of all fees prescribed in this chapter, the Secretary of State
shall certify that the partnership has filed all documents and paid all fees
required by this chapter, and thereupon the partnership shall cease to exist as
a partnership of the State of Delaware. Such certificate of the Secretary of
State shall be prima facie evidence of the conversion by such partnership out
of the State of Delaware.
(g) The conversion of a partnership out of the State of Delaware in accordance
with this section and the resulting cessation of its existence as a partnership
of the State of Delaware pursuant to a certificate of conversion to non-
Delaware entity shall not be deemed to affect any obligations or liabilities of
the partnership incurred prior to such conversion or the personal liability of
189
any person incurred prior to such conversion, nor shall it be deemed to affect
the choice of law applicable to the partnership with respect to matters arising
prior to such conversion.
(h) When a domestic partnership has been converted to another business form
pursuant to this section, the other business form shall, for all purposes of the
laws of the State of Delaware, be deemed to be the same entity as the
domestic partnership. When any conversion shall have become effective
under this section, for all purposes of the laws of the State of Delaware, all of
the rights, privileges and powers of the domestic partnership that has
converted, and all property, real, personal and mixed, and all debts due to
such partnership, as well as all other things and causes of action belonging to
such partnership, shall remain vested in the other business form to which
such partnership has converted and shall be the property of such other
business form, and the title to any real property vested by deed or otherwise
in such partnership shall not revert or be in any way impaired by reason of
this chapter; but all rights of creditors and all liens upon any property of such
partnership shall be preserved unimpaired, and all debts, liabilities and duties
of the domestic partnership that has converted shall remain attached to the
other business form to which such partnership has converted, and may be
enforced against it to the same extent as if said debts, liabilities and duties
had originally been incurred or contracted by it in its capacity as such other
business form. The rights, privileges, powers and interests in property of the
domestic partnership that has converted, as well as the debts, liabilities and
duties of such partnership, shall not be deemed, as a consequence of the
conversion, to have been transferred to the other business form to which
such partnership has converted for any purpose of the laws of the State of
Delaware. (72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 29; 73 Del.
Laws, c. 329, 16; 74 Del. Laws, c. 103, 11; 74 Del. Laws, c. 266, 11,
12.)

15-904. Domestication of non-United States entities.
(a) As used in this section, "non-United States entity" means a foreign limited
partnership (other than one formed under the laws of a state)(including a
foreign limited liability limited partnership (other than one formed under the
laws of a state)), or a corporation, a business trust or association, a real
estate investment trust, a common-law trust or any other unincorporated
business, including a general partnership (including a limited liability
partnership) or a limited liability company, formed, incorporated, created or
that otherwise came into being under the laws of any foreign country or other
foreign jurisdiction (other than any state).
(b) Any non-United States ent ity may become domesticated as a partnership in
the State of Delaware by complying with subsection (g) of this section and
filing with the Secretary of State in accordance with Section 15-105 of this
chapter:
(1) A certificate of partnership domestication that has been executed in
accordance with Section 15-105 of this chapter; and
(2) A statement of partnership existence that complies with Section 15-303
of this chapter and has been executed in accordance with Section 15-
105 of this chapter.
(c) The certificate of partnership domestication shall state:
(1) The date on which and jurisdiction where the non-United States entity
was first formed, incorporated, created or otherwise came into being;
190
(2) The name of the non-United States entity immediately prior to the filing
of the certificate of partnership domestication;
(3) The name of the partnership as set forth in the statement of partnership
existence filed in accordance with subsection (b) of this section;
of the domestication as a partnership if it is not to be effective upon the
filing of the certificate of partnership domestication and the statement of
partnership existence; and
(5) The jurisdiction that constituted the seat, siege social, or principal place
of business or central administration of the non-United States entity, or
any other equivalent thereto under applicable law, immediately prior to
the filing of the certificate of partnership domestication.
(d) Upon the filing with the Secretary of State of the certificate of partnership
domestication and the statement of partnership existence or upon the future
effective date or time of the certificate of partnership domestication and the
statement of partnership existence, the non-United States entity shall be
domesticated as a partnership in the State of Delaware and the partnership
shall thereafter be subject to all of the provisions of this chapter, provided
that the existence of the partnership shall be deemed to have commenced on
the date the non-United States entity commenced its existence in the
jurisdiction in which the non-United States entity was first formed,
incorporated, created or otherwise came into being.
(e) The domestication of any non-United States entity as a partnership in the
State of Delaware shall not be deemed to affect any obligations or liabilities of
the non-United States entity incurred prior to its domestication as a
partnership in the State of Delaware, or the personal liability of any person
therefor.
(f) The filing of a certificate of partnership domestication shall not affect the
choice of law applicable to the non-United States entity, except that from the
effective date or time of the domestication, the laws of the State of Delaware,
including the provisions of this chapter, shall apply to the non-United States
entity to the same extent as if the non-United States entity had been formed
as a partnership on that date.
(g) Prior to filing a certificate of partnership domestication with the Secretary of
State, the domestication shall be approved in the manner provided for by the
document, instrument, agreement or other writing, as the case may be,
governing the internal affairs of the non-United States entity and the conduct
of its business or by applicable non-Delaware law, as appropriate, and a
partnership agreement shall be approved by the same authorization required
to approve the domestication; provided that, in any event, such approval shall
include the approval of any person who, at the effective date or time of the
domestication, shall be a partner of the partnership.
(h) When any domestication shall have become effective under this section, for all
purposes of the laws of the State of Delaware, all of the rights, privileges and
powers of the non-United States entity that has been domesticated, and all
property, real, personal and mixed, and all debts due to such non-United
States entity, as well as all other things and causes of action belonging to
such non-United States entity, shall remain vested in the domestic partnership
to which such non-United States entity has been domesticated and shall be
the property of such domestic partnership, and the title to any real property
vested by deed or otherwise in such non-United States entity shall not revert
or be in any way impaired by reason of this chapter; but all rights of creditors
and all liens upon any property of such non-United States entity shall be
191
preserved unimpaired, and all debts, liabilities and duties of the non-United
States entity that has been domesticated shall remain attached to the
domestic partnership to which such non-United States entity has been
domesticated, and may be enforced against it to the same extent as if said
debts, liabilities and duties had originally been incurred or contracted by it in
its capacity as a domestic partnership. The rights, privileges, powers and
interests in property of the non-United States entity, as well as the debts,
liabilities and duties of the non-United States entity, shall not be deemed, as a
consequence of the domestication, to have been transferred to the domestic
partnership to which such non-United States entity has domesticated for any
purpose of the laws of the State of Delaware.
(i) When a non-United States entity has become domestic ated as a domestic
partnership pursuant to this section, the domestic partnership shall, for all
purposes of the laws of the State of Delaware, be deemed to be the same
entity as the domesticating non-United States entity. Unless otherwise
agreed, for all purposes of the laws of the State of Delaware, the
domesticating non-United States entity shall not be required to wind up its
affairs or pay its liabilities and distribute its assets, the domestication shall not
be deemed to constitute a dissolution of such non-United States entity, and
the domestication shall constitute a continuation of the existence of the
domesticating non-United States entity in the form of a domestic partnership.
If, following domestication, a non-United States entity that has become
domesticated as a domestic partnership continues its existence in the foreign
country or other foreign jurisdiction in which it was existing immediately prior
to domestication, the domestic partnership and such non-United States entity
shall, for all purposes of the laws of the State of Delaware, constitute a single
entity formed, incorporated, created or otherwise having come into being, as
applicable, and existing under the laws of the State of Delaware and the laws
of such foreign country or other foreign jurisdiction.
(j) In connection with a domestication hereunder, rights or securities of, or
interests in, the non-United States entity that is to be domesticated as a
domestic partnership may be exchanged for or converted into cash, property,
rights or securities of, or interests in, such domestic partnership or, in
addition to or in lieu thereof, may be exchanged for or converted into cash,
property, rights or securities of, or interests in, another domestic partnership
or other entity or may be cancelled.
(k) In connection with the domestication of a non-United States entity as a
domestic partnership (including a limited liability partnership), a person is
admitted as a partner of the partnership as provided in the partnership
agreement. For the purpose of subsection (b) of 15-306 of this title, a
person who, at the effective time or date of the domestication of any non-
United States entity as a domestic partnership (including a limited liability
partnership), is a partner of the partnership, shall be deemed admitted as a
partner of the partnership at the effective date or time of such domestication.
(72 Del. Laws, c. 151, 1; 72 Del. Laws, c. 390, 30, 31; 73 Del. Laws, c.
85, 16, 17; 74 Del. Laws, c. 103, 12; 74 Del. Laws, c. 266, 13; 75 Del.
Laws, c. 50, 23, 24.)

15-905. Transfer of continuance of domestic partnerships.
(a) Upon compliance with the provisions of this section, any domestic partnership
may transfer to or domesticate in any jurisdiction, other than any state, and,
in connection therewith, may elect to continue its existence as a partnership
in the State of Delaware. If a domestic partnership is transferring or
192
domesticating or continuing under this section and has not filed a statement
of partnership existence, then the domestic partnership shall file a statement
of partnership existence prior to or at the time of the filing of the certificate of
transfer or certificate of transfer and continuance.
(b) If the partnership agreement specifies the manner of authorizing a transfer or
domestication described in subsection (a) of this section, the transfer or
domestication shall be authorized as specified in the partnership agreement. If
the partnership agreement does not specify the manner of authorizing a
transfer or domestication described in subsection (a) of this section and does
not prohibit such a transfer or domestication, the transfer or domestication
shall be authorized in the same manner as is specified in the partnership
agreement for authorizing a merger or consolidation that involves the
partnership as a constituent party to the merger or consolidation. If the
partnership agreement does not specify the manner of authorizing a transfer
or domestication described in subsection (a) of this section or a merger or
consolidation that involves the partnership as a constituent party and does not
prohibit such a transfer or domestication, the transfer or domestication shall
be authorized by the approval by all the partners. If a transfer or
domestication described in subsection (a) of this section shall be authorized as
provided in this subsection (b), a certificate of transfer if the partnership's
existence as a partnership of the State of Delaware is to cease, or a certificate
of transfer and continuance if the partnership's existence as a partnership in
the State of Delaware is to continue, executed in accordance with Section 15-
105 of this chapter, shall be filed with the Secretary of State in accordance
with Section 15-105 of this chapter. The certificate of transfer or the
certificate of transfer and continuance shall state:
(1) The name of the partnership and, if it has been changed, the name
under which its statement of partnership existence was originally filed;
(2) The date of the filing of its original statement of partnership existence
with the Secretary of State;
(3) The jurisdiction to which the partnership shall be transferred or in which
it shall be domesticated;
of the transfer or domestic ation to the jurisdiction specified in subsection
(b)(3) of this section if it is not to be effective upon the filing of the
certificate of transfer or the certificate of transfer and continuance;
(5) That the transfer or domestication or continuance of the partnership has
been approved in accordance with the provisions of this section;
(6) In the case of a certificate of transfer, (i) that the existence of the
partnership as a partnership of the State of Delaware shall cease when
the certificate of transfer becomes effective and (ii) the agreement of
the partnership that it may be served with process in the State of
Delaware in any action, suit or proceeding for enforcement of any
obligation of the partnership arising while it was a partnership of the
State of Delaware, and that it irrevocably appoints the Secretary of
State as its agent to accept service of process in any such action, suit or
proceeding;
(7) The address to which a copy of the process referred to in subsection
(b)(6) of this section shall be mailed to it by the Secretary of State. In
the event of service hereunder upon the Secretary of State, the
procedures set forth in Section 15-113(b) of this chapter shall be
applicable, except that the plaintiff in any such action, suit or proceeding
shall furnish the Secretary of State with the address specified in this
193
subsection and any other address that the plaintiff may elect to furnish,
together with copies of such process as required by the Secretary of
State, and the Secretary of State shall notify the partnership that has
transferred or domesticated out of the State of Delaware at all such
addresses furnished by the plaintiff in accordance with the procedures
set forth in Section 15-113(b) of this chapter; and
(8) In the case of a certificate of transfer and continuance, that the
partnership will continue to exist as a partnership of the State of
Delaware after the certificate of transfer and continuance becomes
effective.
(c) Upon the filing with the Secretary of State of the certificate of transfer or upon
the future effective date or time of the certificate of transfer and payment to
the Secretary of State of all fees prescribed in this chapter, the Secretary of
State shall certify that the partnership has filed all documents and paid all
fees required by this chapter, and thereupon the partnership shall cease to
exist as a partnership of the State. Such certificate of the Secretary of State
shall be prima facie evidence of the transfer or domestication by such
partnership out of the State of Delaware.
(d) The transfer or domestication of a partnership out of the State of Delaware in
accordance with this section and the resulting cessation of its existence as a
partnership of the State of Delaware pursuant to a certificate of transfer shall
not be deemed to affect any obligations or liabilities of the partnership
incurred prior to such transfer or domestication or the personal liability of any
person incurred prior to such transfer or domestication, nor shall it be deemed
to affect the choice of law applicable to the partnership with respect to
matters arising prior to such transfer or domestication. Unless otherwise
agreed, the transfer or domestication of a partnership out of the State of
Delaware in accordance with this section shall not require such partnership to
wind up its affairs under subchapter VIII of this chapter or pay its liabilities
and distribute its assets under subchapter VIII.
(e) If a partnership files a certificate of transfer and continuance, after the time
the certificate of transfer and continuance becomes effective, the partnership
shall continue to exist as a partnership of the State of Delaware, and the laws
of the State of Delaware, including the provisions of this chapter, shall apply
to the partnership, to the same extent as prior to such time. So long as a
partnership continues to exist as a partnership of the State of Delaware
following the filing of a certificate of transfer and continuance, the continuing
domestic partnership and the entity formed, incorporated, created or that
otherwise came into being as a consequence of the transfer of the partnership
to, or its domestication in, a foreign country or other foreign jurisdiction shall,
for all purposes of the laws of the State of Delaware, constitute a single entity
formed, incorporated, created or otherwise having come into being, as
applicable, and existing under the laws of the State of Delaware and the laws
of such foreign country or other foreign jurisdiction.
(f) In connection with a transfer or domestication of a domestic partnership to or
in another jurisdiction pursuant to subsection (a) of this section, rights or
securities of, or interests in, such partnership may be exchanged for or
converted into cash, property, rights or securities of, or interests in, the
business form in which the partnership will exist in such other jurisdiction as a
consequence of the transfer or domestication or, in addition to or in lieu
thereof, may be exchanged for or converted into cash, property, rights or
securities of, or interests in, another business form or may be cancelled.
194
(g) When a domestic partnership has transferred or domesticated out of the State
of Delaware pursuant to this section, the transferred or domesticated
business form shall, for all purposes of the laws of the State of Delaware, be
deemed to be the same entity as the domestic partnership. When any
transfer or domestication of a domestic partnership out of the State of
Delaware shall have become effective under this section, for all purposes of
the laws of the State of Delaware, all of the rights, privileges and powers of
the domestic partnership that has transferred or domesticated, and all
property, real, personal and mixed, and all debts due to such partnership, as
well as all other things and causes of action belonging to such partnership,
shall remain vested in the transferred or domesticated business form and
shall be the property of such transferred or domesticated business form, and
the title to any real property vested by deed or otherwise in such partnership
shall not revert or be in any way impaired by reason of this chapter; but all
rights of creditors and all liens upon any property of such partnership shall be
preserved unimpaired, and all debts, liabilities and duties of the domestic
partnership that has transferred or domesticated shall remain attached to the
transferred or domesticated business form, and may be enforced against it to
the same extent as if said debts, liabilities and duties had originally been
incurred or contracted by it in its capacity as the transferred or domesticated
business form. The rights, privileges, powers and interests in property of the
domestic partnership that has transferred or domesticated, as well as the
debts, liabilities and duties of such partnership, shall not be deemed, as a
consequence of the transfer or domestication out of the State of Delaware, to
have been transferred to the transferred or domesticated business form for
any purpose of the laws of the State of Delaware. (72 Del. Laws, c. 151, 1;
72 Del. Laws, c. 390, 32, 33; 73 Del. Laws, c. 85, 18; 74 Del. Laws, c.
103, 13-16; 74 Del. Laws, c. 266, 14, 15; 75 Del. Laws, c. 50, 25.)

Subchapter X. Limited Liability Partnership
15-1001. Statement of qualification of a domestic partnership.
(a) A domestic partnership may be formed as, or may become, a limited liability
partnership pursuant to this section.
(b) In order to form a limited liability partnership, the original partnership
agreement of the partnership shall state that the partnership is formed as a
limited liability partnership, and the partnership shall file a statement of
qualification in accordance with subsection (c) of this section. In order for an
existing partnership to become a limited liability partnership, the terms and
conditions on which the partnership becomes a limited liability partnership
must be approved by the vote necessary to amend the partnership agreement
and, in the case of a partnership agreement that expressly considers
obligations to contribute to the partnershi p, also the vote necessary to amend
those provisions, and after such approval, the partnership shall file a
statement of qualification in accordance with subsection (c) of this section.
(c) The statement of qualification must contain:
(1) The name of the partnership;
(2) The address of the registered office and the name and address of the
registered agent for service of process required to be maintained by
Section 15-111 of this chapter;
(3) The number of partners of the partnership;
(4) A statement that the partnership elects to be a limited liability
partnership; and
195
(5) The future effective date or time (which shall be a date or time
certain) of the statement of qualification if it is not to be effective upon
the filing of the statement of qualification.
(d) The status of a partnership as a limited liability partnership is effective on the
later of the filing of the statement of qualification or a future effective date or
time specified in the statement of qualification. The status as a limited liability
partnership remains effective, regardless of changes in the partnership, until it
is canceled pursuant to Section 15-105(d) of this chapter or revoked pursuant
to Section 15-1003 of this chapter.
(e) A partnership is a limited liability partnership if there has been substantial
compliance with the requirements of this subchapter. The status of a
partnership as a limited liability partnership and the liability of its partners is
not affected by errors or later changes in the information required to be
contained in the statement of qualification under subsection (c).
(f) The filing of a statement of qualification establishes that a partnership has
satisfied all conditions precedent to the qualification of the partnership as a
(g) An amendment or cancellation of a statement of qualification is effective when
it is filed or on a future effective date or time specified in the amendment or
cancellation.
(h) If a person is included in the number of partners of a limited liability
partnership set forth in a statement of qualification, a statement of foreign
qualification or an annual report, the inclusion of such person shall not be
admissible as evidence in any action, suit or proceeding, whether civil,
criminal, administrative or investigative, for the purpose of determining
whether such person is liable as a partner of such limited liability partnership.
The status of a partnership as a limited liability partnership and the liability of
a partner of such limited liability partnership shall not be adversely affected if
the number of partners stated in a statement of qualification, a statement of
foreign qualification or an annual report is erroneously stated provided that
the statement of qualification, the statement of foreign qualification or the
annual report was filed in good faith.
(i) Notwithstanding anything in this chapter to the contrary, a domestic
partnership having, or that but for its election in accordance with 15-
1206(c) of this chapter, would have had, on December 31, 2001, the status of
a registered limited liability partnership under predecessor law, shall have the
status of a limited liability partnership under this chapter as of January 1,
2002, and to the extent such partnership has not filed a statement of
qualification pursuant to this section, the latest application or renewal
application filed by such partnership under such predecessor law shall
constitute a statement of qualification filed under this section. (72 Del. Laws,
c. 151, 1; 73 Del. Laws, c. 223, 2; 75 Del. Laws, c. 50, 26-29.)

15-1002. Name.
The name of a limited liability partnership shall comply with Section 15-108 of this
chapter. (72 Del. Laws, c. 151, 1.)

15-1003. Annual report.
(a) A limited liability partnership, and a foreign limited liability partnership
authorized to transact business in the State of Delaware, shall file an annual
report with the Secretary of State which contains:
196
(1) the name of the limited liability partnership and the state or other
jurisdiction under whose laws the foreign limited liability partnership is
formed and the number of partners of the partnership; and
(2) the address of the registered office and the name and address of the
Section 15-111 of this chapter.
(b) An annual report must be filed by June 1 of each year following the calendar
year in which a statement of qualification filed by a partnership becomes
effective or a foreign partnership becomes authorized to transact business in
the State of Delaware.
(c) On or before March 31 of each year, the Secretary of State shall mail to each
partnership at its registered office set forth in the last filed statement of
qualification or statement of foreign qualification or annual report a notice
specifying that the annual report together with applicable fees shall be due on
June 1 of the current year and stating that the statement of qualification or
statement of foreign qualification of the partnership shall be deemed to be
revoked unless such report is filed and such filing fee is paid on or before June
1 of the following year. The Secretary of State shall not issue a certificate of
good standing with respect to any partnership which has not filed an annual
report and paid the required filing fee pursuant to this section. The statement
of qualification or statement of foreign qualification of any such partnership
that fails to file such annual report or pay such required filing fee on or before
June 1 of the following year shall be deemed to be revoked.
(d) A revocation under subsection (c) only affects a partnership's status as a
limited liability partnership and is not an event of dissolution of the
partnership.
(e) A partnership whose statement of qualification or statement of foreign
qualification has been revoked pursuant to subsection (c) may apply to the
Secretary of State for reinstatement after the effective date of the revocation.
The application must state:
(1) the name of the partnership and the effective date of the revocation;
and
(2) that the ground for revocation either did not exist or has been corrected.
(f) A reinstatement under subsection (e) relates back to and takes effect as of
the effective date of the revocation, and the partnership's status as a limited
liability partnership continues as if the revocation had never occurred. (72
Del. Laws, c. 151, 1; 73 Del. Laws, c. 223, 3; 75 Del. Laws, c. 50, 30,
31.)

Subchapter XI. Foreign Limited Liability Partnership
15-1101. Law governing foreign limited liability partnership.
(a) The law under which a foreign limited liability partnership is formed governs
relations among the partners and between the partners and the partnership
and the liability of partners for obligations of the partnership.
(b) A foreign limited liability partnership may not be denied a statement of foreign
qualification by reason of any difference between the law under which the
partnership was formed and the law of the State of Delaware.
(c) A statement of foreign qualification does not authorize a foreign limited
liability partnership to engage in any business or exercise any power that a
partnership may not engage in or exercise in the State of Delaware as a
limited liability partnership. (72 Del. Laws, c. 151, 1.)

197
15-1102. Statement of foreign qualification.
(a) Before doing business in the State of Delaware, a foreign limited liability
partnership shall register with the Secretary of State by filing a statement of
foreign qualification. The statement of foreign qualification must contain:
(1) the name of the foreign limited liability partnership which satisfies the
requirements of the State or other jurisdiction under whose law it is
formed and ends with the words "Registered Limited Liability
Partnership" or "Limited Liability Partnership," the abbreviation
"R.L.L.P." or "L.L.P." or the designation "RLLP" or "LLP";
(2) the address of the registered office and the name and address of the
Section 15-111 of this chapter;
(3) the number of partners of the partnership; and
(4) the future effective date or time (which shall be a date or time certain)
of the statement of foreign qualification if it is not to be effective upon
the filing of the statement of foreign qualification.
(b) The status of a partnership as a foreign limited liability partnership is effective
on the later of the filing of the statement of foreign qualification or the future
effective date or time specified in the statement of foreign qualification. The
status remains effective, regardless of changes in the partnership, until it is
canceled pursuant to Section 15-105(d) of this chapter or revoked pursuant to
Section 15-1003 of this chapter.
(c) An amendment or cancellation of a statement of foreign qualification is
effective when it is filed or on the future effective date or time specified in the
amendment or cancellation. (72 Del. Laws, c. 151, 1.)

15-1103. Effect of failure to qualify.
(a) A foreign limited liability partnership doing business in the State of Delaware
may not maintain an action or proceeding in the State of Delaware until it has
in effect a statement of foreign qualification and has paid to the State of
Delaware all fees and penalties for the years or parts thereof during which it
did business in the State of Delaware without such qualification.
(b) The failure of a foreign limited liability partnership to have in effect a
statement of foreign qualification does not impair the validity of a contract or
act of the foreign limited liability partnership or preclude it from defending an
action or proceeding in the State of Delaware or does not impair the right of
any other party to a contract to maintain any action, suit or proceeding on the
contract.
(c) A limitation on personal liability of a partner is not waived solely by doing
business in the State of Delaware without a statement of foreign qualification
having been filed.
(d) If a foreign limited liability partnership does business in the State of Delaware
without a statement of foreign qualification having been filed, the Secretary of
State is its agent for service of process with respect to a right of action arising
out of the doing of business in the State of Delaware and service of process
may be made in accordance with the procedures set forth in Section 15-113
of this chapter. (72 Del. Laws, c. 151, 1.)

15-1104. Activities not constituting doing business.
(a) Activities of a foreign limited liability partnership in the State of Delaware
which do not constitute doing business for the purpose of this subchapter
include:
(1) Maintaining, defending or settling an action or proceeding;
198
(2) Holding meetings of its partners or carrying on any other activity
concerning its internal affairs;
(3) Maintaining bank accounts;
(4) Maintaining offices or agencies for the transfer, exchange or registration
of the partnership's own securities or maintaining trustees or
depositories with respect to those securities;
(5) Selling through independent contractors;
(6) Soliciting or obtaining orders, whether by mail or through employees or
agents or otherwise, if the orders require acceptance outside the State
of Delaware before they become contracts;
(7) Selling, by contract consummated outside the State of Delaware, and
agreeing, by the contract, to deliver into the State of Delaware,
machinery, plants or equipment, the construction, erection or
installation of which within the State of Delaware requires the
supervision of technical engineers or skilled employees performing
services not generally available, and as part of the contract of sale
agreeing to furnish such services, and such services only, to the vendee
at the time of construction, erection or installation;
(8) Creating, as borrower or lender, or acquiring indebtedness with or
without a mortgage or other security interest in property;
(9) Collecting debts or foreclosing mortgages or other security interests in
property securing the debts, and holding, protecting and maintaining
property so acquired;
(10) Conducting an isolated transaction that is not one in the course of
similar transactions;
(11) Doing business in interstate commerce; and
(12) Doing business in the State of Delaware as an insurance company.
(b) A person shall not be deemed to be doing business in the State of Delaware
solely by reason of being a partner in a partnership.
(c) This section does not apply in determining whether a foreign limited liability
partnership is subject to service of process, taxation or regulation under any
other law of the State of Delaware. (72 Del. Laws, c. 151, 1; 75 Del. Laws,
c. 50, 32-37.)

15-1105. Foreign limited liability partnerships doing business without
having qualified; injunctions.
(a) The Court of Chancery shall have jurisdiction to enjoin any foreign limited
liability partnership, or any agent thereof, from doing any business in the
State of Delaware if such foreign limited liability partnership has failed to
register under this subchapter or if such foreign limited liability partnership's
statement of foreign qualification contains false or misleading
representations. The Attorney General shall, upon his own motion or upon the
relation of proper parties, proceed for this purpose by complaint in any county
in which such foreign limited liability partnership is doing or has done
business.
(b) Any foreign limited liability partnership doing business in the State of
Delaware without first having registered shall pay to the Secretary of State a
fee of $200 for each year or part thereof during which the foreign limited
liability partnership failed to register in the State of Delaware. (72 Del. Laws,
c. 151, 1; 70 Del. Laws, c. 186, 1.)
199

Subchapter XII. Miscellaneous Provisions
15-1201. 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.
The rule that statutes in derogation of the common law are to be strictly construed
shall have no application to this chapter. (72 Del. Laws, c. 151, 1.)

15-1202. Short title.
This chapter may be cited as the Delaware Revised Uniform Partnership Act. (72 Del.
Laws, c. 151, 1.)

15-1203. 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. (72 Del. Laws, c. 151, 1.)

15-1204. Effective date.
This chapter takes effect January 1, 2000. (72 Del. Laws, c. 151, 1.)

15-1205. Repeals.
Except with respect to limited partnerships (see 6 Del. C. 17-1105), effective
January 1, 2002, the Delaware Uniform Partnership Law, 6 Del. C. 1501 -- 1553
is repealed. (72 Del. Laws, c. 151, 1.)

15-1206. Applicability.
(a) Before January 1, 2002, this chapter governs only a partnership formed:
(1) after the effective date of this chapter, except a partnership that is
continuing the business of a dissolved partnership under 6 Del. C.
1541; and
(2) before the effective date of this chapter, that elects, as provided by
subsection (c), to be governed by this chapter.
(b) On and after January 1, 2002, this chapter governs all partnerships.
(c) Before January 1, 2002, 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 before 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. (72 Del. Laws, c.
151, 1.)

15-1207. Fees.
(a) No document required to be filed under this chapter shall be effective until the
applicable fee required by this section is paid. The following fees shall be paid
to and collected by the Secretary of State for the use of the State of
Delaware:
(1) Upon the receipt for filing of any statement or certificate, a fee in the
amount of $100.00.
200
(2) Upon the receipt for filing of an application for reservation of name, an
application for renewal of reservation or a notice of transfer or
cancellation of reservation pursuant to Section 15-109 of this chapter, a
fee in the amount of $75.
(3) Upon the receipt for filing of a statement of qualification, a statement of
foreign qualification or an annual report for a limited liability partnership
or a foreign limited liability partnership, a fee in the amount of $200 for
each partner, but in no event shall the fee payable for any year with
respect to a limited liability partnership or a foreign limited liability
partnership under this section be more than $120,000.
(4) For certifying copies of any paper on file as provided for by this chapter,
a fee in the amount of $30 for each copy certified.
(5) The Secretary of State may issue photocopies or electronic image copies
of instruments on file, as well as instruments, documents and other
papers not on file, and for all such photocopies or electronic image
copies, whether certified or not, a fee of $10 shall be paid for the first
page and $2 for each additional page. The Secretary of State may also
issue microfiche copies of instruments on file as well as instruments,
documents and other papers not on file, and for each such microfiche a
fee of $2 shall be paid therefor. Notwithstanding the State of Delaware's
Freedom of Information Act Chapter 100 of Title 29| or other provision
of this Code granting access to public records, the Secretary of State
shall issue only photocopies, microfiche or electronic image copies of
records in exchange for the fees described above.
(6) Upon the receipt for filing of a certificate under Section 15-111(b) of this
chapter, a fee in the amount of $50, upon the receipt for filing of a
certificate under Section 15-111(c) of this chapter, a fee in the amount
of $50 and a further fee of $2 for each partnership affected by such
certificate, and upon the receipt for filing of a certificate under Section
15-111(d) of this chapter, a fee in the amount of $10.
(7) For preclearance of any document for filing, a fee in the amount of
$250.
(8) For preparing and providing a written report of a record search, a fee in
the amount of $30.
(9) For issuing any certificate of the Secretary of State, including but not
limited to a certificate of good standing, other than a certification of a
copy under paragraph (2) of this subsection, a fee in the amount of $30,
except that for issuing any certificate of the Secretary of State that
recites all of a partnership's filings with the Secretary of State, a fee of
$125 shall be paid for each such certificate.
(10) For receiving and filing and/or indexing any certificate, affidavit,
agreement or any other paper provided for by this chapter, for which no
different fee is specifically prescribed, a fee in the amount of $50.
(11) The Secretary of State may in the Secretary of State's discretion charge
a fee of $60 for each check received for payment of any fee that is
returned due to insufficient funds or the result of a stop payment order.
(b) In addition to those fees charged under subsection (a) of this section, there
shall be collected by and paid to the Secretary of State the following:
(1) For all services described in subsection (a) of this section that are
requested to be completed within 1 hour on the same day as the day of
the request, an additional sum of up to $1,000 and for all services
described in subsection (a) of this section that are requested to be
201
completed within 2 hours on the same day as the day of the request, an
additional sum of up to $500;
requested to be completed within the same day as the day of the
request, an additional sum of up to $200; and
requested to be completed within a 24-hour period from the time of the
request, an additional sum of up to $100.
The Secretary of State shall establish (and may from time to time
amend) a schedule of specific fees payable pursuant to this subsection.
(c) The Secretary of State may in the Secretary of State's discretion permit the
extension of credit for the fees required by this section upon such terms as
the Secretary of State shall deem to be appropriate.
(d) The Secretary of State shall retain from the revenue collected from the fees
required by this section a sum sufficient to provide at all times a fund of at
least $500, but not more than $1,500, from which the Secretary of State may
refund any payment made pursuant to this section to the extent that it
exceeds the fees required by this section. The funds shall be deposited in a
financial institution which is a legal depository of State of Delaware moneys to
the credit of the Secretary of State and shall be disbursable on order of the
Secretary of State.
(e) Except as provided in this section, the fees of the Secretary of State shall be
as provided in Section 2315 of Title 29. (72 Del. Laws, c. 151, 1; 74 Del.
Laws, c. 52, 5-11.)

15-1208. Annual tax of partnership.
(a) Every partnership that has filed a statement of partnership existence shall pay
an annual tax, for the use of the State of Delaware, in the amount of $200.
(b) The annual tax shall be due and payable on the first day of June following the
close of the calendar year or upon the cancellation of a statement of
partnership existence. The Secretary of State shall receive the annual tax and
pay over all taxes collected to the Department of Finance of the State of
Delaware. If the annual tax remains unpaid after the due date established by
subsection (d) of this section, the tax shall bear interest at the rate of 1 1/2%
for each month or portion thereof until fully paid.
(c) The Secretary of State shall, at least 60 days prior to the first day of June of
each year, cause to be mailed to each partnership required to comply with the
provisions of this section in care of its registered agent in the State of
Delaware an annual statement for the tax to be paid hereunder.
(d) In the event of neglect, refusal or failure on the part of any partnership to pay
the annual tax to be paid hereunder on or before the first day of June in any
year, such partnership shall pay the sum of $100 to be recovered by adding
that amount to the annual tax, and such additional sum shall become a part of
the tax and shall be collected in the same manner and subject to the same
penalties.
(e) In case any partnership shall fail to pay the annual tax due within the time
required by this section, and in case the agent in charge of the registered
office of any partnership upon whom process against such partnership may be
served shall die, resign, refuse to act as such, remove from the State of
Delaware or cannot with due diligence be found, it shall be lawful while default
continues to serve process against such partnership upon the Secretary of
State. Such service upon the Secretary of State shall be made in the manner
202
and shall have the effect stated in Section 15-113 of this chapter in the case
of a partnership and shall be governed in all respects by said sections.
(f) The annual tax shall be a debt due from a partnership to the State of
Delaware, for which an action at law may be maintained after the same shall
have been in arrears for a period of one month. The tax shall also be a
preferred debt in the case of insolvency.
(g) A partnership that neglects, refuses or fails to pay the annual tax when due
shall cease to be in good standing as a partnership in the State of Delaware.
(h) A partnership that has ceased to be in good standing by reason of the failure
to pay an annual tax shall be restored to and have the status of a partnership
in good standing in the State of Delaware upon the payment of the annual tax
and all penalties and interest thereon for each year for which such partnership
neglected, refused or failed to pay an annual tax.
(i) The Attorney General, either on his own motion or upon request of the
Secretary of State, whenever any annual tax due under this chapter from any
partnership shall have remained in arrears for a period of 3 months after the
tax shall have become payable, may apply to the Court of Chancery, by
petition in the name of the State of Delaware, on 5 days' notice to such
partnership, which notice may be served in such manner as the Court may
direct, for an injunction to restrain such partnership from the transaction of
any business within the State of Delaware or elsewhere, until the payment of
the annual tax, and all penalties and interest due thereon and the cost of the
application, which shall be fixed by the Court. The Court of Chancery may
grant the injunction, if a proper case appears, and upon granting and service
of the injunction, such partnership thereafter shall not transact any business
until the injunction shall be dissolved.
(j) A partnership that has ceased to be in good standing by reason of its neglect,
refusal or failure to pay an annual tax shall remain a partnership formed
under this chapter. The Secretary of State shall not accept for filing any
certificate (except a certificate of resignation of a registered agent when a
successor registered agent is not being appointed) required or permitted by
this chapter to be filed in respect of any partnership which has neglected,
refused or failed to pay an annual tax, and shall not issue any certificate of
good standing with respect to such partnership, unless and until such
partnership shall have been restored to and have the status of a partnership
in good standing in the State of Delaware.
(k) A partnership that has ceased to be in good standing in the State of Delaware
by reason of its neglect, refusal or failure to pay an annual tax may not
maintain any action, suit or proceeding in any court of the State of Delaware
until such partnership has been restored to and has the status of a
partnership in good standing in the State of Delaware. An action, suit or
proceeding may not be maintained in any court of the State of Delaware by
any successor or assignee of such partnership on any right, claim or demand
arising out of the transaction of business by such partnership after it has
ceased to be in good standing in the State of Delaware until such partnership,
or any person that has acquired all or substantially all of its assets, has paid
any annual tax then due and payable, together with penalties and interest
thereon.
(l) The neglect, refusal or failure of a partnership to pay an annual tax shall not
impair the validity of any contract, deed, mortgage, security interest, lien or
act of such partnership or prevent such partnership from defending any
action, suit, or proceeding in any court of the State of Delaware. (72 Del.
Laws, c. 151, 1; 70 Del. Laws, c. 186, 1; 74 Del. Laws, c. 52, 12.)
203

15-1209. Cancelation of statement of partnership existence for failure to
pay annual tax.
(a) The statement of partnership existence of a partnership shall be deemed to be
canceled if the partnership shall fail to pay the annual tax due under Section
15-1208 of this chapter for a period of three years from the date it is due,
such cancellation to be effective on the third anniversary of such due date.
(b) A list of those partnerships whose statement of partnership existence were
canceled on June 1 of such calendar year pursuant to 15-1209(a) of this
title shall be filed in the office of the Secretary of State. On or before October
31 of each calendar year, the Secretary of State shall publish such list on the
Internet or on a similar medium for a period of 1 week and shall advertise the
website or other address where such list can be accessed in at least 1
newspaper of general circulation in the State of Delaware.
(c) A partnership whose statement of partnership existence has been canceled
and has not been revived pursuant to 15-1210 of this title shall be deemed,
from the date such cancellation became effective, to be a partnership that has
not filed a statement of partnership existence. (72 Del. Laws, c. 151, 1; 73
Del. Laws, c. 296, 9; 75 Del. Laws, c. 50, 38.)

15-1210. Revival of statement of partnership existence.
(a) A statement of partnership existence that has been canceled pursuant to
Section 15-111(d) or Section 15-1209(a) of this chapter may be revived by
filing in the office of the Secretary of State a certificate of revival
accompanied by the payment of the fee required by Section 15-1207 of this
chapter and payment of the annual tax due under Section 15-1208 of this
chapter and all penalties and interest thereon for each year for which such
partnership neglected, refused or failed to pay such annual tax, including
each year between the cancellation of its statement of partnership existence
and its revival. The certificate of revival shall set forth:
(1) The name of the partnership at the time its statement of partnership
existence was canceled and, if such name is not available at the time of
revival, the name under which the partnership is to be revived;
(2) The date of filing of the original statement of partnership existence of
the partnership;
(3) The address of the partnership's registered office in the State of
Delaware and the name and address of the partnership's registered
agent in the State of Delaware;
(4) A statement that the certificate of revival is filed by one or more
partners of the partnership authorized to execute and file the certificate
of revival to revive the partnership; and
(5) Any other matters the partner or partners executing the certificate of
revival determine to include therein.
(b) The certificate of revival shall be deemed to be an amendment to the
statement of partnership existence of the partnership, and the partnership
shall not be required to take any further action to amend its statement of
partnership existence under Section 15-105 of this chapter with respect to the
matters set forth in the certificate of revival.
(c) Upon the filing of a certificate of revival, the statement of partnership
existence of the partnership shall be revived with the same force and effect as
if its statement of partnership existence had not been canceled pursuant to
Section 15-111(d) or Section 15-1209(a) of this chapter. (72 Del. Laws, c.
151, 1; 75 Del. Laws, c. 50, 39-41.)
204

CHAPTER 3: LIMITED LIABILITY PARTNERSHIP LAWS IN THE CHANNEL
ISLAND OF JERSEY

3.0 Introduction
Globalization has accelerated the race-to-the-bottom by freeing capital from the
prison of territorial boundaries. In pursuit of higher profits and lower social
obligations, capital roams the world to secure favourable trading conditions. Some
business enterprises have become so powerful that they make legislative and
political demands upon governments with the threat that if their demands are not
met they will cause social turbulence by uprooting and locating in other places. Such
tendencies have been further encouraged by the rise of the microstates, or Offshore
Financial Centres (OFCs) that provide secrecy, minimalist regulation, and a
willingness to enact laws with the sole purpose of getting around the laws of other
countries.
31

As a significant fraction of international capital, major accountancy firms also have
incentives to reduce costs, liabilities and social obligations. They can also use OFCs
to secure favourable trading conditions and squeeze concessions from major nation
states. However, little is known about such strategies.
32

The Channel Island of Jersey
33
is a British Crown Dependency
34
. In 1997, Jersey
enacted the Limited Liability Partnership (Jersey) Law 1997 (See Annexure 1). The
driving force that led to the codification of the legislation was that the major
Accountancy firms in UK were facing a number of high profile lawsuits arising out of
real/alleged audit failures. But even after their long campaign, they could not secure
liability concessions from the UK government. As a result they approached the Jersey
Authorities in mid 1990s to enact similar legislation
35
.

The Jersey LLP Bill was drafted by Ernst & Young and Price Waterhouse (now part of
PricewaterhouseCoopers), at a private cost of more than 1 million
36
and was
designed to dilute joint and several liability and reduce the redress available to
audit stakeholders
37
. To secure business, Ernst & Young and Price Waterhouse
portrayed themselves as fierce rivals, but in pursuit of lower liabilities and dilution of
third party rights they co-operated and developed a joint strategy. Jersey hoped to
financially gain from its LLP legislation in the hope that the lower liability obligations
would attract major firms to locate there and improve government finances by
paying annual registration levies.

31
Prem Sikka, Globalisation and its discontents: Accounting firms buy Limited Liability Partnership
Legislation in Jersey.
32
Ibid.
33
The Channel Islands consist of five islands. These are Jersey, Guernsey, Sark, Herm and Alderney.
Jersey is by the far the largest of these islands. Each island has its own government. Jersey is a
parliamentary democracy and a dependency of the British Crown. It is not part of the United Kingdom, nor
is it a colony. Her Majesty Queen Elizabeth II of the UK is the Head of State of Jersey. The Lieutenant
Governor represents the Sovereign in the Island. While Jersey makes its own laws, it has pledged
allegiance to the English Crown since 1066.
34
http://www.cia.gov/cia/publications/factbook/geos/je.html
35
Cousins et al, 1999.
36
The Accountant, November 1996, p. 5
37
Globalization and its discontents: Accounting firms buy limited liability partnership legislation in Jersey
by Prem Sikka, University of Essex
205
The Bill was championed by the Islands leading politicians
38
who also promised to
fast track it, effectively displacing the previously agreed legislative programme
39

persuading some to conclude that Jersey was offering its legislature for hire
40
to
enable major accountancy firms (or international capital) to hold other nation-states
(e.g. the UK) to ransom. The approach to Jersey was accompanied by a threat that if
the British government failed to match the liability concessions, the firms would
relocate their operations to Jersey
41
. The threat was sufficient to discipline the UK
government and it promised similar legislation within a week
42
. The UK
government eventually enacted the LLP legislation and the firms did not register in
Jersey.

A member of Jersey parliament described the externally drafted legislation as not
offshore tax avoidance, on which our finance industry is built, but offshore liability
avoidance
43
.

The Limited Liability Partnership (Jersey) Law 1997 extends the concept of limited
liability for partners to those partners who are actively involved in the business of
the partnership. It is considered that, Jersey incorporated Limited Liability
Partnerships (LLPs) appeal to substantial professional partnerships around the world,
and mitigates unlimited liability for losses arising from negligence claims against
their partnerships.
44

As per the Jersey Law, an LLP is required to pay a 10,000 as registration fee, which
makes it affordable only to businesses of stature. The Act classifies partners as
partners and designated partners. Every LLP must also have a registered office in
Jersey at which it must maintain those records specified in Article 8(4) of the law,
which shall be available for inspection by partners. The names and addresses of all
the partners of an LLP will be a matter of public record. However, LLPs will not be
required to file partnership agreement, accounts or to have their accounts audited;
they must, however, maintain proper accounting records.
On a closer look at the provisions of the law, one finds that the provisions are
somewhat similar to legislation in the State of Delaware (US). The law allows
partners to take an active part in the management of a partnership whilst retaining
their own individual limited liability. Every LLP is required to make a 5 million
provision for judgments against the partnership and to compensate creditors. This
financial provision against debts and liabilities of the partnership are required to be
maintained throughout the life of the partnership and not permitted to be made the
subject of a security or set-off
45
.
Despite actually having a separate legal personality, the Jersey limited liability
partnership is treated as a partnership for taxation purposes. It is rather fiscally
transparent i.e. tax is levied on the individual partners share of profits rather than
the overall partnership profit. In this respect the Jersey LLP is also similar to the
Scottish general partnership structure.

38
Financial Times, 26 September 1996, p. 7
39
Accountancy, September 1996, p. 29
40
Hampton and Christensen, 1999a
41
Cousins et al., 1998
42
Financial Times, 28 June 1996, p. 22; 24 July 1996, p. 9
43
Jersey Evening Post, 25 July 1996, p. 1
44
http://www.volaw.com/pg405.htm
45
http://www.volaw.com/pg405.htm
206
There will be no restrictions on the LLP making distributions to its partners. However,
each distribution will, of course, be repayable if the LLP is insolvent at the time that
the distribution is made or becomes insolvent as a result of the payment.
A partner will be able to contribute to the business of the partnership, provided that
he does so as an agent of the partnership (Article 15 (2)) rather than as agent of the
other partners, as is usual in a partnership structure. The law provides that partners
will not bind the partnership if they are acting outside the ordinary course of
business of the LLP and without express authority of the LLP. Since partners are not
deemed to be agents of the other partners, they are not liable for any loss caused by
another partners negligence.
There will be no limit to the number of persons that may be partners of an LLP. The
partnership will be open to any person who is willing to contribute effort and skill to
the business of the LLP. Equally companies and other limited liability vehicles may
become partners in an LLP.
The law provides that an LLP will be a distinct legal person separate from its
partners. Such identity will not be affected by the admission or retirement of a
partner. An LLP will be able to sue and be sued in its own name and will be able to
own and dispose of all forms of property. However, if the number of its partners falls
below two or the LLP is declared bankrupt it will automatically be dissolved.
Detailed provisions are included in the law for the winding-up of LLPs. An LLP may be
dissolved by an act of the partners or, on application by a partner, by the Royal
Court on the grounds that the conduct of another partner is prejudicial to the
carrying on of the partnerships business; or otherwise, in circumstances where it
would be just and equitable to do so. There is a provision in the draft law for
regulations to be made concerning the winding-up of insolvent LLPs.
Many professional partnerships in Jersey appear to believe that an LLP is a more
satisfactory way to deal with litigation risk than the alternative of incorporation as a
limited liability company. There is no doubt that operating a professional firm
through an LLP as opposed to a limited liability company requires fewer changes in
business culture and less disclosure of previously confidential information; yet at the
same time provide individual partners with protection of their assets against 'deep
pocket' style litigation.
46

46
http://www.volaw.com/pg405.htm accessed on September 29, 5005.
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ANNEXURE 1
JERSEY LAW 3/1997
LIMITED LIABILITY PARTNERSHIPS (JERSEY) LAW 1997
____________
ARRANGEMENT OF ARTICLES
____________
PART I
PRELIMINARY
1. Interpretation.
PART II
ESSENTIALS OF A LIMITED LIABILITY PARTNERSHIP
2. Limited liability partnership.
3. Limited liability partnership property.
4. Liability of a limited liability partnership.
5. Liability of a partner or former partner in a limited liability
partnership.
6. Requirement for and payment of financial provision.
7. Name of limited liability partnership.
8. Registered office.
9. Accounts and audit.
10. Keeping and form of limited liability partnership records.
PART III
RELATIONS OF PARTNERS IN A LIMITED LIABILITY PARTNERSHIP WITH ONE
ANOTHER AND THIRD PARTIES
11. Relations of partners to one another.
12. Dealings by partners with limited liability partnership.
13. Admission and retirement of partners.
14. Assignments, etc.
15. Agency of partner in a limited liability partnership.
PART IV
REGISTRATION OF A LIMITED LIABILITY PARTNERSHIP
16. Registration of a limited liability partnership.
208
17. Amendment of declaration.
18. Annual declaration.
19. Validity and proof of registration.
PART V
DISSOLUTION AND WINDING UP ETC.
20. Dissolution upon a change in the partners in a partnership.
21. Dissolution upon partnership ceasing to have two or more
partners.
22. Dissolution by act of partner or other occurrence.
23. Power of Court to order dissolution.
24. Continuation of partnership following dissolution.
25. Winding up.
26. Power of Court to give directions as to winding up.
27. Application of financial provision.
28. Settling accounts on winding up.
29. Completion of winding up.
30. Effect of declaration that a partnership is en dsastre.
31. Cancellation of registration following winding up etc.
PART VI
MISCELLANEOUS AND GENERAL
32. Recognition of proceedings in other jurisdictions.
33. Legal proceedings.
34. Service of documents.
35. Order for compliance.
36. Appointment and functions of registrar.
37. Fees and forms.
38. Inspection and production of documents kept by registrar.
39. Destruction of old records, etc.
40. Registration in the Public Registry.
41. Offences.
42. Aiders and abettors.
43. Penalty for offences.
44. Regulations relating to insolvent limited liability partnerships.
45. Regulations to amend Article 6.
46. Orders.
47. Rules of court.
48. Consequential amendments.
49. Customary Law.
50. Short title and commencement.
SCHEDULE - Amendment of enactments.

209
LIMITED LIABILITY PARTNERSHIPS (JERSEY) LAW 1997
____________
A LAW to make provision for the establishment, dissolution and winding up of
limited liability partnerships, for their registration and for connected
purposes, sanctioned by Order of Her Majesty in Council of the
19th day of NOVEMBER 1996
____________
(Registered on the 10th day of January 1997)
____________
STATES OF JERSEY
____________
The 24th day of September 1996
____________
THE STATES, subject to the sanction of Her Most Excellent Majesty in
Council, have adopted the following Law
PART I
PRELIMINARY
ARTICLE 1
Interpretation
(1) In this Law, unless the context otherwise requires
act includes omission;
annual declaration shall be construed in accordance with Article 18;
bank means a person registered under the Banking Business (Jersey) Law 1991
1
;
charge includes a security interest created in accordance with the Security
Interests (Jersey) Law 1983
2
, and cognate terms shall be construed accordingly;
the Committee means the Finance and Economics Committee;

210
the Court means the Royal Court;
debt includes obligation;
declaration means a declaration delivered to the registrar pursuant to Article 16
together with any statement delivered to the registrar pursuant to Article 17 or
paragraph (2) of Article 24 specifying a change in the information stated in it;
designated partner means, in relation to a limited liability partnership, any partner
identified as such in the declaration or, if none, the partner whose name first appears
in the statement of partners in the declaration;
insolvent shall be construed in accordance with paragraph (2);
insurance company means a company carrying on insurance business in
accordance with the requirements of the Insurance Business (Jersey) Law 1996;
3

limited liability partnership shall be construed in accordance with Article 2;
limited liability partnership property has the meaning given to it in paragraph (1) of
Article 3.
loss includes damage and injury;
partner means, in relation to a limited liability partnership, any person who is a
partner in that partnership and named as such in the declaration;
partnership agreement means any agreement of the partners as to the affairs of a
limited liability partnership and the rights and obligations of the partners among
themselves;
partnership interest means, in relation to a partner in a limited liability partnership,
his share of the profits and losses of the partnership and his right to receive
distributions of the limited liability partnership property, including any sum due to
him and for the time being retained in the partnership otherwise than by way of a
loan, together with any other benefit conferred by the partnership agreement other
than any liability of the partnership to him by way of loan;
prescribed means prescribed by Order made by the Committee;
property means land, money, goods, things in action, goodwill, and every valuable
thing, whether movable or immovable, and whether situated in the Island or
elsewhere, and also means obligations, servitudes, and every description of estate,
interest, and profit, present or future, vested or contingent, arising out of or incident
to property;

211
register means the register maintained pursuant to paragraph (2) of Article 36;
registrar shall be construed in accordance with paragraph (1) of Article 36 and his
seal in relation to the registrar means a seal prepared under that Article;
registration date means, in relation to a limited liability partnership, the date
specified in the certificate issued pursuant to paragraph (5) of Article 16;
retirement means any act or occurrence whereby a person ceases to be a partner
in a limited liability partnership, other than by, where the person is an individual, his
death or, where the person is not an individual, its ceasing to exist.
(2) For the purposes of this Law, a limited liability partnership is insolvent if it is
unable to discharge its debts, including any liability to a partner or former
partner by way of loan but excluding any liability to a partner or former
partner in respect of his partnership interest or otherwise, as they fall due.
(3) For the purposes of this Law, any reference to a loan includes any payment of
interest on the loan which has fallen due.
(4) In this Law, where a limited liability partnership has more than one
designated partner
(a) any thing that the designated partner is required by this Law to do may
be done by any one of the designated partners; and
(b) any thing which constitutes an offence by the designated partner under
this Law constitutes an offence by each of the designated partners.
(5) Where more than one person is responsible for winding up the affairs of a
limited liability partnership, paragraph (4) shall have effect in relation to the
persons responsible for winding up the affairs of the limited liability
partnership as it has effect in relation to designated partners.
(6) In this Law, except as provided in paragraph (8) of Article 6, any reference to
the person responsible for winding up the affairs of a limited liability
partnership shall be construed as a reference to the person so responsible by
virtue of paragraph (1) or (2) of Article 25 or paragraph (5) of Article 32.
(7) In this Law, any requirement to give the name and address of any person
shall be construed as a requirement to give
(a) where the person is an individual, his full name and an address for
service in the Island;
(b) where the person is a body corporate, its full name, the place where it is
incorporated, and its registered office;
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(c) where the person is a limited liability partnership, its name, as it appears
in its declaration, and its registered office; and
in any other case its full name and principal place of business.
(8) A reference in this Law to an Article by number only, and without further
identification, is a reference to the Article of that number contained in this Law.
(9) A reference in an Article or other division of this Law to a paragraph, sub-
paragraph or clause by number or letter only, and without further identification,
is a reference to the paragraph, sub-paragraph or clause of that number or letter
contained in the Article or other division of this Law in which the reference
occurs.
(10) A reference in this Law to an enactment is a reference to that enactment as
amended, and includes a reference to that enactment as extended or applied
by or under any other enactment, including any other provision of that
enactment.
PART II
ESSENTIALS OF A LIMITED LIABILITY PARTNERSHIP
ARTICLE 2
Limited liability partnership
(1) A limited liability partnership shall only have the benefit of this Law if and
for so long as it is registered in accordance with this Law.
(2) A limited liability partnership may be registered where persons who wish a
business to be carried on with a view of profit have agreed (with or without other
terms)
(a) that the business shall be carried on, following the registration
date, in the form of a limited liability partnership;
(b) that they shall each contribute effort and skill to the business as an
agent of the limited liability partnership but not of each other, in
accordance with Article 15; and
(c) that the profits of the business shall be divided between them and
that they shall each have an interest in the limited liability partnership
property to the extent described in paragraph (6).
213
(3) Registration of a limited liability partnership shall take effect upon its
registration date, and shall cease to have effect upon cancellation of its registration
pursuant to Article 31.
(4) Except as provided in paragraph (4) of Article 25, a limited liability
partnership is a legal person (other than a body corporate) distinct from the partners
of whom it is for the time being composed and accordingly (but without limitation)
(a) any contract which binds the limited liability partnership is made
only with that legal person; and
(b) any change in the limited liability partnership brought about by the
admission, retirement or death of a partner, or by a partner other than
an individual ceasing to exist, shall not affect the existence, rights or
liabilities of that legal person.
(5) Sub-paragraph (b) of paragraph (4) shall not be construed as limiting the
circumstances in which a limited liability partnership is or may be dissolved, whether
in accordance with the partnership agreement or otherwise.
(6) Notwithstanding paragraph (4), each partner in a limited liability
partnership has, subject to this Law and to the partnership agreement, an interest in
the profits of the limited liability partnership and, in accordance with Article 28, in
the limited liability partnership property.
(7) Any number of persons may be partners in a limited liability partnership.
(8) Any person may be a partner in a limited liability partnership.
ARTICLE 3
Limited liability partnership property
(1) The property of a limited liability partnership consists of all property
(a) brought into the partnership; or
(b) created or acquired by or acquired on account of the partnership
either in the course of the partnership business or with money of the
partnership.
(2) Limited liability partnership property
(a) shall be vested in the limited liability partnership or held by any
person on its behalf; and
(b) subject to the partnership agreement, and except as provided in
paragraph (4) of Article 25, shall continue to be so vested or held
214
notwithstanding any change in the persons who are partners in the
limited liability partnership for the time being.
ARTICLE 4
Liability of a limited liability partnership
(1) A limited liability partnership shall be liable for any debt or loss for which,
if the limited liability partnership were an ordinary partnership, the partners would
otherwise be liable, either jointly or jointly and severally.
(2) There shall be available to meet any liability of a limited liability
partnership its limited liability partnership property.
ARTICLE 5
Liability of a partner or former partner in a limited liability partnership
(1) Subject to paragraphs (2) to (4) of this Article and paragraph (4) of Article
6, a partner or former partner in a limited liability partnership shall not be liable for
any debt or loss to which paragraph (1) of Article 4 applies, including any debt of or
loss caused by the act of another partner in the partnership.
(2) Paragraph (1) shall not affect any liability of a partner or former partner in
a limited liability partnership for
(a) his personal debts; and
(b) any loss caused by him.
(3) Where any limited liability partnership property, including a share in the
partnership profits, is withdrawn by a partner at a time when the partnership is
unable to pay its debts, or if the partnership becomes unable to pay its debts as a
result of the withdrawal, he shall be liable for any debt or loss to which paragraph
(1) of Article 4 applies, but his liability shall be limited to an amount equal to the
value of the withdrawal, less any amount previously recovered from him by virtue of
this paragraph or paragraph (4).
(4) Where, during the period of six months preceding the time when a limited
liability partnership becomes unable to pay its debts, any limited liability partnership
property, including a share in the partnership profits, is withdrawn by a partner other
than in the ordinary course of the affairs of the partnership, he shall be liable for any
debt or loss to which paragraph (1) of Article 4 applies, but his liability shall be
limited to an amount equal to the value of the withdrawal, less any amount
previously recovered from him by virtue of this paragraph or paragraph (3).
215
(5) For the purposes of this Article, a limited liability partnership is unable to
pay its debts at any time when it is unable to pay its debts which have fallen due,
including any liability to a partner or former partner by way of loan, but excluding
(a) any liability to a partner or former partner in respect of his
partnership interest; and
(b) any debt to the extent that the partnership has bona fide grounds
on which to dispute it.
(6) In any proceedings the burden of proving that a limited liability
partnership had bona fide grounds on which to dispute a debt to any extent shall rest
with the person denying liability under paragraph (3) or (4).
(7) This Article shall continue to apply to a person who was a partner or
former partner in a limited liability partnership after that partnerships registration
has been cancelled in accordance with Article 31.
ARTICLE 6
Requirement for and payment of financial provision
(1) A limited liability partnership shall, throughout the relevant period,
maintain the financial provision described in paragraph (2).
(2) The financial provision
(a) shall require one or more banks or insurance companies, upon
dissolution of the limited liability partnership, to pay to the person
responsible for winding up the affairs of the limited liability partnership an
amount, or aggregate amount, as the case may be, which is not less than
the specified sum, without set-off or retention of any kind; and
(b) shall not be assigned, charged or otherwise encumbered by the
(3) No proceedings for enforcement of any judgment or act may be taken in
respect of the financial provision described in paragraph (2) by any creditor of the
limited liability partnership or of any partner in it.
(4) Subject to paragraphs (5) and (6), if a limited liability partnership is
dissolved and the payment described in sub-paragraph (a) of paragraph (2) is not
made, the following persons shall be liable to any creditor in the payment of whom
the payment described in paragraph (2) would have been applied by virtue of
paragraph (1) of Article 27 as if paragraph (1) of Article 5 did not apply
(a) the persons who were partners in the limited liability partnership
immediately before its dissolution; and
216
(b) where paragraph (1) was not complied with at the time when the
debt was incurred or arose or loss caused which gave rise to the
creditors claim, any person who was a partner at that time.
(5) For the purposes of paragraph (4), the payment described in sub-
paragraph (a) of paragraph (2) shall be deemed to have been made if, upon
dissolution of a limited liability partnership, an amount, or aggregate amount, which
is not less than the specified sum is paid to the person responsible for winding up the
affairs of the limited liability partnership from any source without set-off or retention
of any kind.
(6) For the purposes of sub-paragraph (b) of paragraph (4), a failure to
maintain the financial provision described in paragraph (2) which is not attributable
to the default of any of the partners and which is remedied within 28 days after the
day on which it arises shall not constitute a failure to comply with paragraph (1).
(7) In any proceedings, the burden of proving that the foregoing provisions of
this Article have been complied with shall rest with the person who claims the
limitation of liability conferred by paragraph (1) of Article 5.
(8) In this Article and in Article 27, in the case of a limited liability partnership
to which paragraph (1) of Article 30 applies, any reference to the person responsible
for winding up the affairs of the limited liability partnership means the Viscount.
(9) In this Article
the relevant period means, in relation to a limited liability partnership, the
period beginning upon its registration date and ending upon whichever shall
be the earlier of
(a) the payment described in sub-paragraph (a) of paragraph (2) or
paragraph (5) being made; or
(b) cancellation of its registration in accordance with Article 31;
specified sum means 5 million, or such other sum as may be prescribed.
ARTICLE 7
Name of limited liability partnership
(1) The name of a limited liability partnership shall end with the words
Limited Liability Partnership.
(2) Notwithstanding paragraph (1), a limited liability partnership may use the
abbreviation LLP or L.L.P. in place of the words Limited Liability Partnership.
217
(3) A change of name of a limited liability partnership shall not take effect
before a certificate in respect of it is issued by the registrar pursuant to paragraph
(3) of Article 17.
(4) Where the name to be registered in respect of a limited liability
partnership is, in the opinion of the registrar, in any way misleading or otherwise
undesirable, he may
(a) where the name is stated in a declaration delivered pursuant to
Article 16, refuse to register the limited liability partnership; and
(b) where the name is specified in a statement delivered pursuant to
paragraph (1) of Article 17, refuse to register the name and issue a
certificate in respect of it pursuant to paragraph (3) of that Article.
(5) A change of name of a limited liability partnership does not affect any
rights or obligations of the limited liability partnership or render defective any legal
proceedings by or against it and any legal proceedings that might have been
continued or commenced against it by its former name may be continued or
commenced against it by its new name.
(6) Where a limited liability partnership which has its name inscribed in the
Public Registry of Contracts as being the holder of, or having an interest in,
immovable property changes its name, the designated partner shall deliver to the
Judicial Greffier a copy of the certificate issued by the registrar pursuant to
paragraph (3) of Article 17 within 14 days after it is issued.
(7) Upon delivery to him of the copy referred to in paragraph (6), the Judicial
Greffier shall cause the new name to be registered in the Public Registry of
Contracts.
(8) If default is made in compliance with paragraph (6), the designated
partner is guilty of an offence.
(9) A limited liability partnership shall have its name, the number assigned to
it by the registrar on registration (if any) and the words registered as a limited
liability partnership in Jersey clearly stated on all its correspondence, invoices,
statements and other public documents.
ARTICLE 8
Registered office
(1) A limited liability partnership shall have a registered office in the Island.
(2) A change of the address of the registered office of a limited liability
partnership shall not take effect before the delivery to the registrar of a statement in
respect of it pursuant to paragraph (1) of Article 17.
218
(3) Where the change of address of a limited liability partnership is to take
effect before the expiry of the period of 14 days beginning on the day on which the
statement in respect of it is delivered to the registrar, a person may validly serve
any document on the partnership or on any of its partners, within that period, at the
partnerships previous registered office.
(4) A limited liability partnership shall keep at its registered office
(a) a list showing in alphabetical order the name and address of each
partner and indicating which of them is a designated partner;
(b) a copy of the declaration;
(c) a copy of the most recent annual declaration;
(d) a copy of any statement delivered to the registrar under this Law;
(e) a copy of any certificate issued by the registrar under this Law;
and
(f) if the partnership agreement has been reduced to writing, a copy
of that agreement and any amendment made to it.
(5) The records kept under paragraph (4) shall be
(a) prima facie evidence of the particulars which are by that paragraph
directed to be contained in them;
(b) available for inspection and copying without charge during ordinary
business hours at the request of a partner.
(6) The list kept under sub-paragraph (a) of paragraph (4) shall be amended
within 28 days after any change in the particulars contained in it.
(7) If default is made in compliance with this Article the designated partner is
guilty of an offence.
ARTICLE 9
Accounts and audit
(1) A limited liability partnership shall keep for 10 years accounting records
which are sufficient to show and explain its transactions and are such as to disclose
with reasonable accuracy at any time its financial position.
(2) Subject to the partnership agreement, it shall not be necessary for a
limited liability partnership to appoint an auditor or have its accounts audited.
219
(3) If default is made in compliance with paragraph (1) the designated
partner is guilty of an offence and liable to a fine or up to two years imprisonment or
to both a fine and such imprisonment.
ARTICLE 10
Keeping and form of limited liability partnership records
(1) A limited liability partnership shall take reasonable precautions
(a) to prevent loss or destruction of;
(b) to prevent falsification of entries in; and
(c) to facilitate detection and correction of inaccuracies in,
the records it is required by paragraph (4) of Article 8 and paragraph (1) of Article 9
to keep.
(2) The records referred to in paragraph (1) may be kept in the form of a
bound or loose-leaf book, or photographic film, or may be entered or recorded by a
system of mechanical or electronic data processing or any other information storage
device that is capable of reproducing any required information in intelligible written
form within a reasonable time.
partner is guilty of an offence and liable to a fine or up to two years imprisonment or
to both a fine and such imprisonment.
PART III
RELATIONS OF PARTNERS IN A LIMITED LIABILITY PARTNERSHIP WITH ONE
ANOTHER AND THIRD PARTIES
ARTICLE 11
Relations of partners to one another
(1) Subject to Parts I to V, the rights and duties of the partners in a limited
liability partnership shall, as between themselves, be determined by the partnership
agreement.
(2) Nothing in the partnership agreement may deprive the partners of the
benefit of paragraph (1) of Article 5.
220
(3) Paragraph (2) shall not be construed as limiting the ability of the partners
in a limited liability partnership, as between themselves, to indemnify any of them or
any former partner in respect of any debt or loss.
ARTICLE 12
Dealings by partners with limited liability partnership
A partner in a limited liability partnership may enter into any transaction with the
partnership, including lending money to and borrowing money from it.
ARTICLE 13
Admission and retirement of partners
(1) An additional partner shall not be admitted to a limited liability partnership
except in accordance with the partnership agreement.
(2) Except as described in paragraph (1) of Article 24, a partner may only
retire from a limited liability partnership in accordance with the partnership
agreement.
(3) No retirement shall have effect before a statement is delivered to the
registrar specifying the change pursuant to paragraph (1) of Article 17 or paragraph
(2) of Article 24, as the case may be.
ARTICLE 14
Assignments, etc
(1) A partner in a limited liability partnership may not assign the whole or
part of his partnership interest, except by way of charge.
(2) Notwithstanding paragraph (1), changes may be made in the partnership
interests in a limited liability partnership on the admission or retirement of a partner,
on the death of a partner who is an individual, on a partner who is not an individual
ceasing to exist, or in accordance with the partnership agreement.
(3) Subject to the partnership agreement, a partner in a limited liability
partnership may create a charge over his partnership interest.
ARTICLE 15
Agency of partner in a limited liability partnership
(1) A partner in a limited liability partnership is not an agent of the other
partners in that partnership.
221
(2) Every partner in a limited liability partnership is the agent of that
partnership and accordingly, but subject to paragraph (3), the acts of a partner in his
capacity as a partner shall bind the limited liability partnership.
(3) The acts of a partner in a limited liability partnership shall not bind that
partnership where
(a) he is not acting as a partner or is acting without authority; and
(b) the person with whom he is dealing knows or should know that to
be the position.
(4) A partner shall not be acting with authority unless he is acting
(a) in the ordinary course of the business of the limited liability
partnership; or
(b) with express authority conferred by or pursuant to the partnership
agreement.
(5) For the purposes of paragraph (3), no person is deemed to have notice of
any records by reason only that they are made available by the registrar for
inspection.
PART IV
REGISTRATION OF A LIMITED LIABILITY PARTNERSHIP
ARTICLE 16
Registration of limited liability partnership
(1) An application for registration as a limited liability partnership may be
made by persons to whom paragraph (2) of Article 2 applies.
(2) An application shall be in the form of a declaration, signed by any person
who is, on registration, to be a designated partner, delivered to the registrar.
(3) The declaration shall state
(a) that the persons by whom the application is made are persons to
whom paragraph (2) of Article 2 applies;
(b) the proposed name of the limited liability partnership, such name
to comply with paragraph (1) of Article 7;
222
(c) the intended address of the registered office of the limited liability
partnership;
(d) the name and address of each person who is to be a partner in the
limited liability partnership, indicating which of them is to be a designated
partner;
(e) the date on which it is proposed that registration should take
effect;
(f) the term, if any, for which the limited liability partnership is to
exist or, if for unlimited duration, a statement to that effect; and
(g) such other information as may be prescribed.
(4) The declaration shall be accompanied by such documents as may be
prescribed.
(5) Subject to paragraph (4) of Article 7, upon receipt of an application
complying with paragraphs (2) to (4), the registrar shall register the limited liability
partnership and issue a certificate specifying the date on which registration of the
limited liability partnership takes effect, being a date not earlier than the date on
which the certificate is issued.
ARTICLE 17
Amendment of declaration
(1) Subject to paragraph (2), within 28 days after any change in the
information stated in the declaration, there shall be delivered to the registrar a
statement signed by the designated partner specifying the nature of the change.
(2) No statement is required to be delivered under paragraph (1) in respect of
the retirement of a partner which is specified in a statement delivered pursuant to
paragraph (2) of Article 24.
(3) Subject to paragraph (4) of this Article and paragraph (4) of Article 7,
upon delivery of a statement pursuant to paragraph (1) the registrar shall register
the change specified in it and issue a certificate to that effect.
(4) A statement delivered to the registrar specifying the admission of an
additional partner to the limited liability partnership shall be deemed to be delivered
to the registrar on the day that the partner is so admitted, whether before or after
the day on which the statement is delivered.
223
ARTICLE 18
Annual Declaration
(1) Subject to paragraph (2), before the end of February, in every year
following the year in which a limited liability partnership is registered, the designated
partner shall deliver an annual declaration signed by him to the registrar stating the
name and address of every person who, on the first day of January in that year, was
a partner in the partnership.
(2) Paragraph (1) shall not apply to a limited liability partnership which is the
subject of a declaration made under Article 6 of the Bankruptcy Dsastre (Jersey)
Law 1990.
ARTICLE 19
Validity and proof of registration
(1) No error in the declaration delivered to the registrar pursuant to Article
16, the annual declaration delivered pursuant to Article 18 or any statement
delivered to the registrar pursuant to this Law, nor any default in the delivery of an
annual declaration, any such statement or any copy required to be delivered to the
registrar under this Law shall affect the validity of the registration of a limited liability
partnership.
(2) A certificate issued under paragraph (5) of Article 16 is conclusive
evidence as to the registration of a limited liability partnership.
PART V
DISSOLUTION AND WINDING UP, ETC
ARTICLE 20
Dissolution upon a change in the partners in a partnership
Subject to Article 21, a limited liability partnership shall not be dissolved by any
change in the persons who are partners in it if the partnership agreement so
provides.
ARTICLE 21
Dissolution upon partnership ceasing to have two or more partners
224
(1) Notwithstanding any provision, express or implied, of the partnership
agreement to the contrary, a limited liability partnership shall be dissolved
immediately upon there ceasing to be two or more partners in the partnership.
(2) Where the person responsible for winding up the affairs of the limited
liability partnership is the person who, at the time of dissolution, was the last
remaining partner he shall, within 28 days after the dissolution, deliver a statement
of dissolution signed by him to the registrar.
(3) Where the person responsible for winding up the affairs of the limited
liability partnership is not the person described in paragraph (2), he shall, within 28
days after the day on which he becomes the person so responsible, deliver a
statement of dissolution signed by him to the registrar.
(4) Upon delivery to him of a statement under paragraph (2) or (3), the
registrar shall register the statement and issue a certificate of dissolution.
(5) If default is made in compliance with paragraph (2), the person described
in that paragraph is guilty of an offence.
(6) If default is made in compliance with paragraph (3), the person described
in that paragraph is guilty of an offence.
ARTICLE 22
Dissolution by act of partner or other occurrence
(1) Where a limited liability partnership is dissolved by any act of a partner or
by any other occurrence, other than the occurrence described in paragraph (1) of
Article 21, the designated partner shall, within 28 days after the dissolution, deliver
to the registrar a statement of dissolution signed by him.
(2) Upon delivery to him of a statement under paragraph (1), the registrar
shall register the statement and issue a certificate of dissolution.
ARTICLE 23
Power of Court to order dissolution
(1) The Court may, on the application of any partner in a limited liability
partnership, order the dissolution of the partnership in any of the following cases
(a) when a partner, other than the partner making the application,
becomes in any way permanently incapable of performing his part of the
partnership contract;
225
(b) when a partner, other than the partner making the application, has
been guilty of such conduct as, in the opinion of the Court, regard being
had to the nature of the business, is calculated to prejudicially affect the
carrying on of the business;
(c) when a partner, other than the partner making the application,
wilfully or persistently commits a breach of the partnership agreement, or
otherwise so conducts himself in matters relating to the partnership
business that it is not reasonably practicable for the other partner or
partners to carry on the business in partnership with him;
(d) when the business of the partnership can only be carried on at a
loss; or
(e) whenever in any case circumstances have arisen which, in the
opinion of the Court, render it just and equitable that the partnership be
dissolved.
(2) Where the Court orders the dissolution of a limited liability partnership,
the partner making the application shall deliver a copy of the order to the registrar
within 28 days after it is made.
(3) Failure to comply with paragraph (2) is an offence.
ARTICLE 24
Continuation of partnership following dissolution
(1) Where, following dissolution of a limited liability partnership but before
completion of the winding up of its affairs, two or more of the partners are to acquire
the partnership interests of each of the remaining partners, either by agreement or
upon a direction of the Court pursuant to paragraph (2) of Article 26
(a) the affairs of the limited liability partnership shall not be wound up
and the partnership shall continue as if it had not been dissolved; and
(b) subject to paragraph (3) of Article 13, upon the acquisition taking
place, the partners whose interests are acquired shall be taken to retire
from it.
(2) One of the acquiring partners shall, within 28 days after the agreement or
direction described in paragraph (1), deliver to the registrar a statement of cessation
of dissolution signed by him specifying
(a) the date for acquisition of the retiring partners interests;
(b) the names of the acquiring partners and indicating which of them
is to be a designated partner; and
226
(c) the names of the retiring partners.
(3) Upon delivery to him of a statement made pursuant to paragraph (2) the
registrar shall register the statement and issue a certificate to that effect.
(4) With effect from the issue of the certificate described in paragraph (3),
Article 6 shall apply as if the limited liability partnership had not been dissolved.
(5) If default is made in compliance with paragraph (2), each of the acquiring
partners is guilty of an offence.
ARTICLE 25
Winding up
(1) Subject to paragraph (2) and Article 24
(a) in the event of the dissolution of a limited liability partnership in
the circumstances described in paragraph (1) of Article 21, its affairs shall
be wound up by the person who, at the time of dissolution, was the last
remaining partner or, if he is deceased, his personal representatives; and
(b) in the event of the dissolution of a limited liability partnership in
any other circumstances, its affairs shall be wound up by a person
appointed by the partners for the purpose or, if none, the designated
partner, or if more than one, all of the designated partners.
(2) The Court may appoint a person to wind up the affairs of a limited liability
partnership upon the application of
(a) a partner in the partnership;
(b) a creditor of the partnership; or
(c) where the partnership is dissolved by the death of a partner, the
personal representatives of that deceased partner.
(3) After the dissolution of a limited liability partnership, paragraphs (2) to (4)
of Article 15 shall only continue to apply so far as may be necessary or desirable to
achieve a beneficial winding up of its affairs or to such lesser extent as the
partnership agreement may provide.
(4) Upon the dissolution of a limited liability partnership in the circumstances
described in paragraph (1) of Article 21, or upon the limited liability partnership
ceasing to have two or more partners at any time during the winding up of its affairs
following its dissolution in any other circumstances
(a) the limited liability partnership shall cease to be a legal person;
227
(b) the limited liability partnership property vested in the limited
liability partnership and the beneficial interest of the limited liability
partnership in any limited liability partnership property held by any
person on its behalf, shall vest in the person responsible for winding up
the affairs of the limited liability partnership;
(c) any proceedings which might have been continued or commenced
against the limited liability partnership may be continued or commenced
against the person responsible for winding up the affairs of the limited
liability partnership in his capacity as such;
(d) any judgment obtained against the limited liability partnership
prior to its ceasing to have two or more partners and any judgment
obtained against the person responsible for winding up the affairs of the
partnership in his capacity as such in any proceedings continued or
commenced in accordance with sub-paragraph (c) shall only be
enforceable against the limited liability partnership property.
(5) Where the name of a limited liability partnership is inscribed in the Public
Registry of Contracts as the holder of or having an interest in immoveable property,
the person responsible for winding up the affairs of the limited liability partnership, in
whom that property or interest vests by virtue of sub-paragraph (b) of paragraph (4)
shall deliver to the Judicial Greffier notice of the name of the person responsible for
winding up the affairs of the limited liability partnership, in whom the property has
vested, within 28 days after the property so vests.
(6) If default is made in compliance with paragraph (5) the person responsible
for winding up the affairs of the limited liability partnership is guilty of an offence.
ARTICLE 26
Power of Court to give directions as to winding up
(1) The Court may give such directions as it thinks fit in the course of the
winding up of the affairs of a limited liability partnership upon the application of
(a) any partner in the partnership;
(b) any creditor of the partnership;
(c) the person responsible for winding up the affairs of the
partnership; or
(d) where the partnership is dissolved by the death of a partner, the
personal representatives of that deceased partner.
(2) Without prejudice to the discretion conferred by paragraph (1), on an
application by the relevant majority, the Court may give a direction that the
228
applicants purchase the partnership interest of each of the remaining partners at
such a price and otherwise upon such terms as it thinks fit.
(3) In paragraph (2), relevant ma jority in relation to a limited liability
partnership shall have the meaning assigned to it for the purposes of that paragraph
by the partnership agreement or, if no meaning is so assigned, shall mean a majority
of the partners of which such partnership was composed at the date of its
dissolution, being either
(a) a majority of the partners by number; or
(b) such number of partners as were at the date of dissolution
together entitled to a majority of the profits of the partnership.
(4) In paragraph (2),the reference to the partnership interest of each of the
remaining partners includes the partnership interest of any deceased partner and of
any partner other than an individual, which ceases to exist.
ARTICLE 27
Application of financial provision
(1) Notwithstanding Article 28 or any other enactment or law to the contrary,
the person responsible for winding up the affairs of a limited liability partnership shall
apply any payment made pursuant to paragraph (2) or (5) of Article 6 in the
payment of creditors to whom the limited liability partnership is liable by virtue of
paragraph (1) of Article 4, excluding any partner or former partner in the limited
liability partnership in respect of his partnership interest or in respect of any loan
made by him to the partnership for any purpose.
(2) A failure to comply with paragraph (1) shall be actionable at the suit of a
creditor of the limited liability partnership who suffers loss as a result of the failure,
subject to the defences and other incidents applying to actions for breach of
statutory duty.
(3) Any money remaining after payment of the creditors described in
paragraph (1) shall be distributed in accordance with Article 28.
ARTICLE 28
Settling accounts on winding up
(1) Where accounts are settled in the course of the winding up of the affairs
of a limited liability partnership, the liabilities of the partnership shall be paid in the
following order of priority
229
(a) liabilities to creditors, excluding any partner or former partner in
the limited liability partnership in respect of his partnership interest or in
respect of any loan made by him to the partnership for any purpose; then
(b) subject to the partnership agreement and to any agreement
between the partnership and the former partner in question
(i) liabilities to former partners in the limited liability partnership
in respect of any loans made by them to the partnership for any
purpose, then
(ii) liabilities to former partners in the limited liability partnership
in respect of their partnership interests or otherwise; then
(c) subject to the partnership agreement
(i) liabilities to partners in the limited liability partnership in
respect of any loans made by them to the partnership for any
purpose, then
(ii) liabilities to partners in the limited liability partnership in
respect of their partnership interests or otherwise.
(2) Subject to the partnership agreement, any limited liability partnership
property remaining after payment of the liabilities described in paragraph (1) shall
be distributed equally to the partners.
ARTICLE 29
Completion of winding up
(1) Within 28 days after the completion of the winding up of the affairs of a
limited liability partnership, a statement to that effect signed by the person
responsible for winding up the affairs of the limited liability partnership shall be
delivered to the registrar.
(2) If default is made in compliance with paragraph (1), the person
responsible for winding up the affairs of the limited liability partnership is guilty of an
offence.
ARTICLE 30
Effect of declaration that a partnership is en dsastre
(1) For the purposes of Articles 6 and 27, the making of a declaration in
respect of a limited liability partnership shall be deemed to be an order for its
dissolution and the winding up of its affairs.
230
(2) Where an order recalling a declaration is made in respect of a limited
liability partnership, Article 6 shall apply to the partnership, with effect from the
issue of a certificate under paragraph (4) in respect of the order, as if the declaration
had not been deemed to be an order for its dissolution and the winding up of its
affairs.
(3) Where a declaration, or an order recalling a declaration, is made in
respect of a limited liability partnership, the designated partner shall deliver a copy
of the declaration or order to the registrar within 28 days of its being made.
(4) Upon delivery to him of a copy of a declaration or of an order recalling a
declaration, the registrar shall register it and issue a certificate to that effect.
(6) In this Article
declaration shall have the same meaning as in the Bankruptcy (Dsastre)
(Jersey) Law 1990
4
; and
order recalling a declaration shall be construed in accordance with Article 7
of that Law.
ARTICLE 31
Cancellation of registration following winding up etc.
(1) Upon receipt of
(a) a statement delivered to him pursuant to Article 29; or
(b) notification under paragraph (3) of Article 36 of the Bankruptcy
(Dsastre) (Jersey) Law 1990
5
,
the registrar shall cancel the entry in the register relating to the limited liability
partnership and issue a certificate of cancellation to the person delivering the
statement to him or notifying him, as the case may be.
(2) A certificate issued under paragraph (1) is conclusive evidence as to the
cancellation of the registration of a limited liability partnership.
PART VI
MISCELLANEOUS AND GENERAL

231
ARTICLE 32
Recognition of proceedings in other jurisdictions
(1) This Article applies where an order is made by a court outside the Island
for the dissolution or winding up of the affairs of a limited liability partnership, and
references in this Article to an order shall be construed accordingly.
(2) For the purposes of this Law, a limited liability partnership shall not be
taken to be dissolved by an order until that order has been recognized by the Court,
but, once an order has been recognized by the Court, it shall be taken to be an order
for the dissolution and winding up of the affairs of the limited liability partnership.
(3) An application to the Court for recognition of an order may be made by
the person appointed under it to wind up the affairs of the limited liability partnership
or, if none, the person on whose application the order was made.
(4) In determining whether or not to recognize an order the Court shall have
regard to
(a) whether the grounds on which it is made would constitute grounds
for dissolution in the Island; and
(b) the arrangements made for compliance with Article 27.
(5) Where the Court decides to recognize an order, it may also appoint a
person to be responsible for winding up the affairs of the limited liability partnership
and give such directions as it thinks fit as to the winding up.
(6) Where the Court decides to recognize an order in respect of a limited
liability partnership, the designated partner shall deliver a copy of the decision of the
Court to the registrar within 28 days after it is made.
(7) Upon delivery to him of a copy of the decision referred to in paragraph
(6), the registrar shall register it and issue a certificate to that effect.
ARTICLE 33
Legal proceedings
(1) Except as provided in sub-paragraph (c) of paragraph (4) of Article 25,
legal proceedings by or against a limited liability partnership shall be instituted by or
against the limited liability partnership and any judgment shall be made in such
proceedings in favour of or against the limited liability partnership only in the
partnership name.
232
(2) Subject to paragraph (3) of this Article and except as provided in sub-
paragraph (d) of paragraph (4) of Article 25, no judgment shall be enforced against
any limited liability partnership property unless such judgment has been granted
against the limited liability partnership.
(3) Paragraph (2) shall not affect any right of a judgment creditor of a partner
in a limited liability partnership to enforcement against that partners partnership
interest and any sum due to him from the partnership by way of repayment of a
loan.
(4) Where a judgment creditor of a partner in a limited liability partnership
has a right to enforcement against any of the partners assets described in paragraph
(3), the other partner or partners in the limited liability partnership may prevent or
stop enforcement against those assets by paying to the creditor whichever is the
lesser of the amount for which enforcement is sought and an amount equal to the
value of the first mentioned partners partnership interest, and any sum due to him
from the partnership by way of repayment of a loan.
(5) Execution to enforce a judgment obtained against a limited liability
partnership pursuant to paragraph (1) or against the person responsible for winding
up the affairs of the limited liability partnership pursuant to sub-paragraph (d) of
paragraph (4) of Article 25 shall only be capable of being issued against and satisfied
out of the limited liability partnership property as at the date of such execution (no
account being taken of any changes in the partners composing the limited liability
partnership prior to such date).
(6) Any person shall have the right to join or otherwise institute proceedings
against
(a) one or more of the partners and any former partner of a limited
liability partnership who is liable by virtue of paragraph (3) or (4) of
Article 5; and
(b) any person holding limited liability partnership property on behalf
of a limited liability partnership for the purposes of enforcement against
that property.
ARTICLE 34
Service of documents
For the purposes of this Law
(a) service of a document on a limited liability partnership may be
effected by sending it by post or delivering it to the registered office of
the limited liability partnership; and
233
(b) service of a document on a partner in his capacity as such may be
effected by sending it by post or delivering it to him at the registered
office of the limited liability partnership or at the address for service
stated for him in the declaration.
ARTICLE 35
Order for compliance
(1) Where a person who is required by this Law to sign, deliver or permit
inspection or copying of, any document fails to do so, a person who is aggrieved by
the failure may apply to the Court for an order directing that person to comply with
the Law and upon such application the Court may make such order as it considers
appropriate in the circumstances.
(2) An application may be made under paragraph (1) notwithstanding the
imposition of a penalty in respect of the failure and in addition to any other rights the
applicant may have at law.
ARTICLE 36
Appointment and functions of registrar
(1) The registrar of companies appointed pursuant to Article 196 of the
Companies (Jersey) Law 1991
6
shall be the registrar of limited liability partnerships.
(2) The registrar shall maintain a register of limited liability partnerships and
record in it any declaration, statement or copy delivered to him and the issue of any
certificate by him pursuant to this Law.
(3) Any certificate issued by the registrar under this Law shall be signed by
him and sealed with his seal (if any).
(4) The Committee may direct a seal or seals to be prepared for the
authentication of documents required for or in connexion with the registration of
limited liability partnerships.
(5) Any functions of the registrar under this Law may, to the extent
authorized by him, be exercised by an officer on his staff.
(6) In paragraph (5), officer has the same meaning as in the Civil Service
(Administration) (Jersey) Law 1953
7
.

234
ARTICLE 37
Fees and forms
(1) The Committee may by Order require the payment to the registrar of such
fees as may be prescribed in respect of
(a) the performance by the registrar of such functions under this Law
as may be prescribed, including the receipt by him of any document
which is required to be delivered to him under this Law; and
(b) the inspection or copying of documents or other material held by
him under this Law.
(2) The registrar may charge a fee for any services provided by him otherwise
than in pursuance of an obligation imposed on him by this Law.
(3) Where a fee is provided for or charged under this Article for the discharge
of any function or the provision of any service by the registrar, no action need be
taken by him until the fee is paid, and where the fee is payable on the receipt by him
of a document required to be delivered to him he shall be deemed not to have
received it until the fee is paid.
(4) The Committee may prescribe forms to be used for any of the purposes of
this Law and the manner in which any document to be delivered to the registrar is to
be authenticated.
(5) Fees paid to the registrar shall form part of the annual income of the
States.
ARTICLE 38
Inspection and production of documents kept by registrar
(1) Any person may
(a) inspect any document delivered to the registrar under this Law and
kept by the registrar or, if the registrar thinks fit, a copy of it;
(b) obtain a copy of any certificate issued by the registrar under this
Law and of all or part of any document referred to in sub-paragraph (a).
(2) A copy of any document kept by the registrar or of any certificate issued
by him which is certified in writing by him (whose position it is unnecessary to prove)
to be an accurate copy of such document or certificate shall in all legal proceedings
be admissible in evidence as of equal validity with the original and as evidence of any
fact stated in it of which direct oral evidence would be admissible.
235
ARTICLE 39
Destruction of old records, etc
(1) The registrar may destroy any record or document relating to a
limited liability partnership which has been in his possession or under his control for
more than 30 years.
(2) Where any record or document has been in the possession of the
registrar or under his control for more than 30 years, no responsibility rests on any
person by reason of that record or document not being forthcoming to a person
claiming to be interested in it.
ARTICLE 40
Registration in the Public Registry
The Judicial Greffier shall register in the Public Registry of Contracts all Acts
and orders affecting immovable property made under this Law.
ARTICLE 41
Offences
(1) Any person who makes a statement in any document, material,
evidence or information which is required to be delivered to the registrar under this
Law that, at the time and in the light of the circumstances under which it is made, is
false or misleading with respect to any material fact, or that omits to state any
material fact the omission of which makes the statement false or misleading, shall be
guilty of an offence and liable to a fine or up to two years imprisonment, or to both
a fine and such imprisonment.
(2) A person shall not be guilty of an offence under paragraph (1) if he
did not know that the statement was false or misleading and with the exercise of
reasonable diligence could not have known that the statement was false or
misleading.
(3) Any persons who wilfully take or use any name, title, addition or
description implying that they are partners in a limited liability partnership when
they are not, or implying that they are partners in a partnership which is not a
limited liability partnership when they are, shall each be guilty of an offence and
liable to a fine or up to two years imprisonment or to both a fine and such
imprisonment.
(4) Where an offence under this Law committed by a body corporate is
proved to have been committed with the consent or connivance of, or to be
attributable to any neglect on the part of any director, manager, secretary, or other
similar officer of the body corporate, or any person purporting to act in any such
236
capacity, he, as well as the body corporate, shall be guilty of the same offence and
liable in the same manner to the penalty provided for that offence.
ARTICLE 42
Aiders and abettors
Any person who knowingly or wilfully aids, abets, counsels, causes, procures
or commands the commission of an offence punishable by this Law shall be liable to
be dealt with, tried and punished as a principal offender.
ARTICLE 43
Penalty for offences
Any person guilty of an offence under
(a) paragraph (8) of Article 7;
(b) paragraph (7) of Article 8;
(c) paragraph (5) of Article 17;
(d) paragraph (3) of Article 18;
(e) paragraph (5) or (6) of Article 21;
(f) paragraph (3) of Article 22;
(g) paragraph (3) of Article 23;
(h) paragraph (5) of Article 24;
(j) paragraph (6) of Article 25;
(k) paragraph (2) of Article 29;
(l) paragraph (5) of Article 30; or
(m) paragraph (8) of Article 32,
shall be liable to a fine not exceeding level 4 on the standard scale
8
and, in the case
of a continuing offence, to a further fine not exceeding level 2 on the standard scale
for each day on which the offence so continues.

237
ARTICLE 44
Regulations relating to insolvent limited liability partnerships
(1) The States may make Regulations modifying all or any of
paragraphs (3) to (6) of Article 5 and the provisions of Part V in their application to
insolvent limited liability partnerships.
(2) Regulations made under paragraph (1) may
(a) make different provision for different cases and contain such incidental,
supplemental and transitional provisions as appear to the States to be
necessary or expedient; and
(b) make a contravention of any of the provisions of the Regulations an
offence liable to a fine or up to two years imprisonment or to both a fine
and such imprisonment.
ARTICLE 45
Regulations to amend Article 6
(1) The States may by Regulations amend, substitute or repeal Article
6.
(2) Regulations made under paragraph (1) may make different
provision for different cases and contain such incidental, supplemental and
transitional provisions as appear to the States to be necessary or expedient.
ARTICLE 46
Orders
(1) The Committee may by Order make provision for the purpose of
carrying this Law into effect and in particular, but without prejudice to the generality
of the foregoing, for prescribing any matter which is to be prescribed under this Law.
(2) Any provision of an Order prescribing any matter for the purposes
of Article 6 shall not come into force until a period of not less than three months has
elapsed from the day on which the Order is made.
(3) An Order made under this Law may make different provision for
different cases and contain such incidental, supplemental and transitional provisions
as appear to the Committee to be necessary or expedient.
(4) The Subordinate Legislation (Jersey) Law 1960
9
shall apply to
Orders made under this Law.
238
ARTICLE 47
Rules of Court
The power to make Rules of Court under the Royal Court (Jersey) Law 1948
10

shall include a power to make Rules for the purposes of this Law.
ARTICLE 48
Consequential amendments
The enactments specified in the Schedule shall be amended in the manner set
out in it.
ARTICLE 49
Customary Law
The rules of customary law applicable to a partnership shall apply to a limited
liability partnership except in so far as they are inconsistent with the express
provisions of this Law.
ARTICLE 50
Short title and commencement
This Law may be cited as the Limited Liability Partnerships (Jersey) Law 1997
and shall come into force on such day as the States may by Act appoint and different
days may be appointed for different provisions or different purposes of this Law.
G.H.C. COPPOCK
Greffier of the States.

SCHEDULE
(Article 48)
AMENDMENT OF ENACTMENTS
Borrowing (Control) (Jersey) Law 1947
11

1. In the long title
(a) the word and following the words the issue of securities, shall be
deleted; and

239
(b) after the words sale or exchange, there shall be inserted the words
the creation of partnership interests and the registration of limited
liability partnerships.
2. In Article 1
(a) in paragraph (1), after the definition of issue there shall be inserted
the following definition
limited liability partnership has the meaning given to it by the Limited
Liability Partnerships (Jersey) Law 1997;.
(b) after paragraph (5) there shall be added the following paragraph
(6) For the purposes of this Law, the registration of a limited
liability partnership under the Limited Liability Partnerships (Jersey) Law
1997 shall be deemed to be the creation of a partnership interest for the
purposes of the limited liability partnership..
3. In Article 2
(a) at the end of paragraph (1AA) there shall be added the words and, in
relation to the creation of a partnership interest for the purposes of a
limited liability partnership, the Committee shall also have regard to the
size of the limited liability partnership and to the status of the applicant
or the holder of the consent, as the case may be;
(b) in paragraph (2A)
(i) after the words under a limited partnership where they first
appear there shall be inserted the words or a limited liability
partnership;
(ii) in sub-paragraph (a), the word limited shall be deleted; and
(iii) at the end of sub-paragraph (b) there shall be added the words or
under a limited liability partnership registered, or not registered, in
accordance with the Limited Liability Partnerships (Jersey) Law
1997.
Registration of Business Names (Jersey) Law 1956
12

1. In paragraph (1) of Article 1
(a) in the definition of firm after the words shall not include insert the
words a limited liability partnership or;
240
(b) after the definition of initials there shall be inserted the following
definition
limited liability partnership means a limited liability partnership
registered in accordance with the Limited liability Partnerships (Jersey)
Law 1997..
2. In Article 2 after sub-paragraph (e) insert the following sub-
paragraph
(f) every limited liability partnership carrying on business under a
business name which does not consist of the name under which it is
registered without any addition;.
Security Interests (Jersey) Law 1983
13

In Article 12 of the Security Interests (Jersey) Law 1983, in paragraph (2),
after the words domiciled in the Island there shall be inserted the words or, being
a limited liability partnership, registered under the Limited Liability Partnerships
(Jersey) Law 1997.
Collective Investment Funds (Jersey) Law 1988
14

In Article 4, in paragraph (2), after the words or the Companies (Jersey) Law
1991 there shall be inserted and no limited liability partnership registered under
the Limited Liability Partnerships (Jersey) Law 1997.
Bankruptcy (Dsastre) (Jersey) Law 1990
15

1. In Article 1, in paragraph (1)
(a) after the definition of insolvency there shall be inserted the following
definition
limited liability partnership has the meaning given to it in the Limited
Liability Partnerships (Jersey) Law 1997;;
(b) for the definition of registrar there shall be substituted the following
definition
registrar means
(a) in relation to a company, the registrar of companies appointed
pursuant to Article 196 of the Companies (Jersey) Law 1991; and
(b) in relation to a limited liability partnership, the registrar appointed
pursuant to Article 36 of the Limited Liability Partnerships (Jersey)
Law 1997;.
241
2. In Article 4, in paragraph (1)
(a) the word or following sub-paragraph (c) shall be deleted; and
(b) after sub-paragraph (d) there shall be inserted the following word and
sub-paragraph
or
(e) who is a limited liability partnership,.
3. In Article 36, after paragraph (2), there shall be added the
following paragraph
(3) Where the debtor is a limited liability partnership, the
Viscount shall notify the registrar in writing of the date of payment of the
final dividend..
Banking Business (Jersey) Law 1991
16

In Article 3, in sub-paragraph (b) of paragraph (3), after the words in the
Island there shall be inserted or a limited liability partnership registered under the
Limited Liability Partnerships (Jersey) Law 1997.
Companies (Jersey) Law 1991
17

In Article 1, after sub-paragraph (c) of paragraph (2), there shall be added
the following sub-paragraph
(d) do not include a limited liability partnership registered under the
Limited Liability Partnerships (Jersey) Law 1997..
Insurance Business (Jersey) Law 1996
18

In Article 4, in paragraph (6), after the words the Companies (Jersey) Law
1991 there shall be inserted the words or a limited liability partnership registered
under the Limited Liability Partnerships (Jersey) Law 1997.

1
Volume 19901991, page 477, and Volume 19921993, page 93.
2
3
Volume 1996-1997, page 81.
4
5
Page 551 of this Volume.
6
Volume 19901991, page 1054.
7
Tome VIII, page 319.
8
Volume 19921993, page 437.
9
Tome VIII, page 849.
242
10
10Tome VIII, page 502, Volume 19841985, page 175, Volume 19791981,
page 195, Volume 19901991, page 113, and Volume 19921993, page 461.
11
Tome VII, page 386, Volume 19861987, page 57, and Volume 19941995,
page 100.
12
Tome VIII, page 519, and Volume 19941995, page 100.
13
14
15
16
Volume 19901991, page 490.
17
Volume 19901991, page 890.
1
8 Volume 19961997, page 81.

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CHAPTER 4: LIMITED LIABILITY PARTNERSHIP LAWS IN THE UNITED
KINGDOM

4.0 INTRODUCTION
In the United Kingdom businesses used to operate in the main as limited companies,
sole traders or partnerships. Each of these is subject to different regulatory and tax
regimes reflecting their organisation and ownership.

The only option for many professions, in the past, was to operate as partnerships, as
either statute or the rules of their professional body denied them the ability to
incorporate. For example, accountancy firms have only been able to incorporate
since 1989. The fact that professional bodies were required to operate as
partnerships meant that they were subject to the particular rules relating to the
liability of partners.

The Partnership Act 1890 sets out special rules relating to the liability of partners to
persons dealing with them. First, every partner is liable jointly, and in Scotland
severally also, with his other partners for all the debts and obligations of the
partnership incurred during his membership. Second, every partner is jointly and
severally liable for any loss or damage arising from the wrongful acts or omissions of
any of his partners (as well as his own), which were done in the ordinary course of
the partnerships business or, with the authority of the partners. When the members
are liable jointly and severally for any loss or damage this has the effect that an
injured person may sue one or more of the members separately or all of them
together at his option.

These arrangements were generally appropriate when all partnerships were small
and the partners were of the same profession working closely one with another.
However, unlimited liability for partners has become an increasing cause for concern
in the light of:
(a) a general increase in the incidence of litigation for professional negligence and
in the size of claims;
(b) the growth in the size of partnerships (since in a very large partnership not all
the partners will be personally known to one another);
(c) the increase in specialisation among partners and the coming together of
different professions within a partnership; and
(d) the risk to a partner's personal assets when a claim exceeds the sum of the
assets and insurance cover of the partnership.

Although these concerns arise most acutely in very large professional partnerships
they are relevant to partnerships generally.

The limited liability partnership goes some way towards addressing these concerns.
Its members benefit from limited liability because the LLP is a separate legal person.
In general the LLP and not its members will be liable to third parties.

The idea that there should be the opportunity in Great Britain to organise as an LLP
emerged out of a review of the law of joint and several liabilities. In 1996 the DTI
published a feasibility investigation of joint and several liabilities carried out by the
Common Law Team of the Law Commission. The investigation focused particularly,
but not exclusively, on the joint and several liabilities of professional defendants,
seeking to ascertain whether there was an arguable case for replacing joint and
244
several liabilities by, for example, a system whereby each defendant might be liable
for only a proportionate share of the loss. Although the remit did not extend to the
question of joint and several liabilities within partnerships, the DTI took the
opportunity to consult on the distinct but related question whether to amend the law
in Great Britain to allow limited liability partnerships. This question was asked in the
knowledge that the concept of LLPs was well known in some overseas jurisdictions,
particularly the USA. Jersey too was working on implementing its own LLP legislation
in response to representations from the accountancy profession, with a view to
attracting offshore registrations.

In February 1997 the Department published a consultation paper "Limited Liability
Partnerships: A New Form of Business Association for Professions". The response to
the paper confirmed that there was a demand for the new vehicle across a wide
range of professions, and agreement in principle from those consultees who are
potential clients of and providers of capital to LLPs. The paper was followed by the
publication of a draft Bill and regulations in September 1998. Revised draft
regulations were published again for consultation, together with the draft Bill in July
1999. In February 2000 a further consultation document was published concerning
regulatory default provisions governing the relationship between members, and
revised regulatory default provisions were published in May 2000.

The UK Limited Liability Partnerships Act 2000 (See Annexure 1) came into force
on 6 April 2001
47
providing a limited liability partnership the organisational flexibility
and tax status of a partnership with limited liability for its members.

4.1.0 OVERVIEW OF THE LIMITED LIABILITY PARTNERSHIP

4.1.1 Separate legal entity
The limited liability partnership is a separate legal entity with unlimited capacity. This
means that an LLP can do anything that a natural person could do. It has the ability
to enter into contracts and hold property, and will continue in existence in spite of
any change in membership. The LLP's existence as a separate legal entity makes it
more closely akin to a company than to a partnership (except insofar as the internal
relations are governed by agreement between the members. The underlying
approach, therefore, was to draw on the principles enshrined in the legislative
treatment of companies.

The LLP's existence as a corporate entity means that the effect of the general law is
different in comparison with a partnership. For example, it is anticipated that a third
party will usually contract with the LLP itself rather than with an individual member
of the LLP whereas, in general, a partner contracts as principal and on behalf of the
other partners.

Should a partner be negligent in the work that he carries out for a client, there will
generally be two possible causes of action against that partner: contract and tort.
However, because the limited liability partnership will be a separate legal entity with
which the client has contracted, only one action (the tort action) is potentially
available against the member.

Should the courts consider the case of a negligent member of an LLP whose
conduct has resulted in economic loss for his client, the courts decision cannot be

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http://www.slogold.net/uk_limited_liability_partnership.html
245
forecast with certainty. But, recent case law suggests that in deciding whether
such a member was potentially liable to a client, the courts would have regard to
various factors including whether the member of the LLP assumed personal
responsibility for the advice, whether the client relied on the assumption of
responsibility and whether such reliance was reasonable.

4.1.2 Internal relations
As regards the management of the internal affairs of the LLP there is a parallel with
the system that operates for partnerships. Members will not be obliged to enter into
a formal agreement among them and there will be no obligation to publish any
agreement, which is entered into. As in the case of partnerships, however, there will,
in general, be clear advantages in having a formal written agreement between
members to regulate the affairs of the undertaking and to avoid disputes between
them. The formal procedures needed to establish an LLP, including the need for an
application to the registrar of companies, are likely to encourage the members to set
up a formal arrangement before the LLP commences business. However, we have
published regulatory default provisions governing the relationship between the
members, which would apply where no agreement existed, or the agreement did not
include provision to deal with a particular issue.

4.1.3 Taxation
The profits of the business of an LLP will be taxed as if the business were carried on
by partners in partnership, rather than by a body corporate. This ensures that the
commercial choice between using an LLP or a partnership is a tax neutral one.

The taxation clauses in the Act are expressed in broad terms so that the existing
rules for partnerships and partners will, in general, simply apply to LLPs, and
members of LLPs, which are carrying on businesses, as if these were partnerships
and partners respectively.

The transfer of an existing business to an LLP will only be treated for tax purposes as
giving rise to a cessation of the business of the partnership which is making the
transfer if in otherwise identical circumstances a transfer between one partnership
and another would do so.

The transfer of assets between a partnership and an LLP will only give rise to
chargeable gain or capital allowance consequences if, in otherwise identical
circumstances, a transfer of assets between one partnership and another would so
do.

Similarly, Inland Revenue Statements of Practic e and Extra Statutory Concessions
will apply to LLPs and members of LLPs as they apply to partnerships and to
partners.

4.2.0 SALIENT FEATURES OF THE ACT
The Act classifies partners into two categories namely members and designated
members. Members of an LLP can be an individual, another LLP, or a company but
not a limited partnership or a general partnership. An LLP must notify the Companies
House for any changes to its membership and its members' residential addresses.
48

A limited liability partnership must have at least two, formally appointed, designated

48
Selected Places
246
members at all times. Designated members are similar to executive or managing
directors and the company secretary of a company. If there are fewer than two
designated members then every member automatically becomes a designated
member. By virtue of section 24 of the UK Companies Act 1985, where a limited
liability partnership continues for more than six months with a single member, then
that member becomes liable jointly and severally with the LLP for the debts of the
firms contracted for during that period.
The management structure of a limited liability partnership is governed by its
agreement among members and LLP and members inter se. The agreement should
cover the sort of issues dealt within a normal partnership agreement. It is however
not mandatory to file the same with the Registrar. The First Schedule of the Act
provides for certain default provisions, which are applicable if the members
agreement is silent on a certain issue.

A limited liability partnership is also considered to be a 'Legal Person' in its own right,
and can operate in the same way as a company in most respects. However, one
important difference between an LLP and a limited company is the way in which the
profits are taxed, with each member of the partnership being taxed according to the
share of the profits that they receive rather than the LLP paying tax directly on its
profits.

A LLP is required to produce and publish financial accounts with a similar level of
details to a similar sized limited company and to submit accounts and an annual
return to the Registrar of Companies each year. This requirement is far more
demanding than the position for normal partnerships and some specific accounting
rules may lead to different profits from those of a normal partnership. Further, the
Act applies the provisions of company law and insolvency law, with appropriate
modifications, to LLPs.

The LLP Structure is open to all forms of businesses and is not just restricted to
professionals only. However, some professionals are required to satisfy certain
conditions set by their professional bodies to do so. If the rules of a profession
prevent its members from carrying on a business as employees or members of a
corporation, then an LLP business formed by them will not be lawful and the
Registrar of Companies will refuse its registration. For instance, architects who
practice through LLPs have to register with the Architects' Registration Board
49
.

There were 7056 LLPs registered in England and Wales as at 31 March 2004, but the
number of effective LLPs stood at 5279 after deducting those registered LLPs that
were either in liquidation or on the path to dissolution. The average number of
members per LLP was approximately four, although there were some LLPs with over
200 members.
50

4.3.0 COMMENTARY ON SECTIONS

4.3.1 Section 1: Limited liability partnerships
Subsections (1) to (3) An LLP is a legal person in its own right. It is a body
corporate, formed on incorporation (see section 3). It has unlimited capacity and

49
Blackett-Ord. (2002)
50
Selected Places.
247
will, therefore, be able to undertake the full range of business activities which a
partnership could undertake.

Subsection (4) While in law an LLP is separate from its members, its members may
be liable to contribute to its asset s if it is wound up. The extent of that potential
liability will be set out in regulations.

Subsection (5) As an LLP will be a body corporate, partnership law will not in general
apply to an LLP. Elements of partnership law may, however, be applied to LLPs by
regulations made under section 15(c), and section 5(1)(b) provides that regulations
under section 15(c) will apply in the absence of agreement as to any matter
concerning the mutual obligations of LLP members, or LLP members and the LLP.

4.3.2 Section 2: Incorporation document etc
Section 2 sets out the conditions, which must be met for an LLP to be incorporated.

Subsection (1) To form an LLP, there must at the outset be at least two people who
are associated for the carrying on of a lawful business with a view to profit and who
subscribe their names to a document called an "incorporation document". The
incorporation document must be delivered to the registrar. A statement must also be
delivered to the registrar that there has been compliance with the requirement that
at least two persons, associated for the purpose of carrying on a lawful business with
a view to profit, have subscribed their names to the incorporation document. The
statement must be made by a subscriber to the incorporation document or a solicitor
engaged in the formation of the LLP.

Subsection (2) The incorporation document must contain various items of
information: the name of the LLP, whether the registered office is to be situated in
England and Wales, in Wales or in Scotland, the address of the registered office, the
name and address of the persons who are to be members on incorporation and
whether some or all of the members are to be designated members.

Subsection (3) An offence is committed if a person makes a statement under
subsection (1)(c) that he knows to be false or does not believe to be true.

Subsection (4) Where a person is guilty of an offence under subsection (3) that
person will be liable on summary conviction to imprisonment for no longer than six
months or a fine that does not exceed the statutory maximum (currently 5,000) or
both. If the conviction is on indictment that person will be liable to imprisonment for
a period of not more than two years or a fine or both.

4.3.3 Section 3: Incorporation by registration
Subsection (1) When the registrar receives the incorporation document he will retain
and register it. Once the documents have been registered, the registrar will issue a
certificate that the LLP is incorporated by the name specified in the incorporation
document.

Subsection (2) A statement that is delivered under section 2(1)(c) may be accepted
by the registrar as sufficient evidence that the requirement in section 2(1)(a) has
been complied with.

248
Subsection (4) The certificate issued by the registrar is evidence that all
requirements have been complied with.

4.3.4 Section 4: Members
Subsection (1) The first members of an LLP are those who signed the incorporation
document.

Subsection (2) After incorporation, any person may become a member of an LLP by
agreement with the existing members.

Subsection (3) A person may cease to be a member by death, dissolution and in
accordance with any agreement with the other members of the LLP. Where there is
no agreement a member may cease to be a member by giving reasonable notice to
the other members.

Subsection (4) A member of an LLP will not be regarded as an employee of the
entity, unless, if he and the other members were partners in a partnership, he would
be regarded as an employee.

4.3.5 Section 5: Relationship of members etc
Subsection (1) deals with the relationship between members. The rights and duties
of the members of an LLP to one another and to the LLP are governed by the
provisions of any agreement between the members, subject to the provisions of any
enactment. The Act does not require an agreement to be entered into between the
members and there is no requirement to publish it. In the case where there is no
agreement on any matter the mutual rights and duties of the LLP and its members
will be governed by default regulations made under section 15(c). The default
regulations (see paragraph 12 above) will make provision concerning various
matters, including the entitlement of members to share equally in the capital and
profits of the business and that every member may take part in the management of
the LLP

Subsection (2) provides that when an LLP comes into being it is bound by the terms
of any agreement that is entered into by the subscribers to the incorporation
document.

4.3.6 Section 6: Members as agents
Subsection (1) Each member of the LLP is an agent of the LLP. Each member may,
therefore, represent and act on behalf of the LLP in all its business (subject to
subsection (2)).

Subsection (2) An LLP is not, however, bound by the actions of a member where that
member has no authority to act for the LLP, and the person dealing with the member
is aware of this or does not know or believe that the member was in fact a member
of the LLP.

Subsection (3) Transactions with a person who is no longer a member of an LLP are
still valid transactions with the LLP, unless the other party has been told that the
person is no longer a member, or the registrar has received a notice to that effect.
Subsection (4) ensures that where a member of an LLP is liable to a person (other
than another member of the LLP) for a wrongful act or omission in the course of
business of the LLP or with its authority, the LLP will be liable to the same extent as
the member.
249

4.3.7 Section 7: Ex-members
This concerns the situation where a person ceases to be a member of an LLP, or his
interest in the LLP is transferred to another person. A former member, the member's
personal representatives, the member's trustee in bankruptcy or liquidator or the
trustees under the trust deed for the benefit of his creditors or assignee may not
interfere with the management or administration of the LLP, but may receive any
amount to which they are entitled.

4.3.8 Section 8: Designated members
In general, the role of designated members is to perform the administrative and
filing duties of the LLP. However, some provisions of the Companies Act 1985 and
the Insolvency Act 1986, as intended to be applied by regulations under the Act, will
place on them tasks which go beyond the mere administrative and in the
performance of which they would be representing all the members of the LLP, for
example, the signing of the LLP's accounts.

Subsection (1) provides that, where the incorporation document specifies that
certain members are to be the designated members, then they will be the designated
members on incorporation. Other members may become designated members by
agreement with the members. A member may cease to be a designated member by
agreement with the other members.

Subsection (2) requires there to be at least two designated members and provides
that if no members or only one are designated then all members are designated
members.

Subsection (3) provides that if the incorporation document states that every person
who is a member of the LLP is a designated member then all persons who are from
time to time members are designated members.

Subsection (4) permits the LLP to notify the registrar that all members of the LLP are
designated members or that specified members will be designated. Where the LLP
notifies the registrar the effect will be as though it had been stated in the
incorporation document.

Subsection (6) explains that when a person ceases to be member of the LLP he will
also cease to be a designated member.

4.3.9 Section 9: Registration of membership changes
Subsection (1) provides that where a person becomes or ceases to be a member or a
designated member the registrar must be notified within fourteen days and that a
change in the name or address of a member must be notified within twenty eight
days.

Subsection (2) states that where all the members of an LLP are designated members
notification only needs to be given that a person has ceased to be a member and
there needs to be no separate notification that they have ceased to be a designated
member.

Subsection (4) provides that, where subsection (1) is not complied with, the LLP and
all designated members commit an offence.

250
Subsection (5) explains that a defence to subsection (4) is available for designated
members if they can prove that they took all reasonable steps to ensure that
subsection (1) was complied with.

Subsection (6) explains that where a person is guilty of an offence under subsection
(4) they would be liable on summary conviction to a fine not exceeding level 5 on the
standard scale (currently 5,000).

4.3.10 Section 10: Income tax and chargeable gains
This section ensures that the members of an LLP which is carrying on a business with
a view to profit are treated for the purposes of income tax and capital gains tax as if
they were partners carrying on a business in partnership, despite the fact that
section 1(2) of the Act establishes an LLP as a body corporate.

In subsection (1) the new section 118ZA of the Income and Corporation Taxes Act
1988 (ICTA) provides that, for the purposes of the Acts relating to income tax and
corporation tax, a trade, profession or business carried on with a view to profit by an
LLP shall be treated as carried on by the members of the LLP as partners carrying on
a trade profession or business in partnership. It also provides that the property of
the LLP shall be treated for those purposes as partnership property. This ensures
that, like partners, the members will be individually liable to tax on their shares of
the profits of the trade, profession or business carried on by the LLP.

The new section 118ZB ICTA operates to extend the provisions of sections 117 and
118 ICTA to members of LLPs that carry on a trade. The new section 118ZC will
establish the limit on the tax relief for interest and trading losses that members of an
LLP can claim against income other than from the LLP. The limit for relief claimed by
members of LLPs would be the amount they have subscribed to the LLP together with
any further amount that they have undertaken to contribute in the event that the
LLP is wound up. Subject to the further provisions of the new section 118ZC(3) the
amount subscribed will normally be the amount of the partner's investment in a
conventional partnership that becomes an LLP or the amount that he has invested in
the LLP when he became a member or founded the LLP. The further provisions set
out in this new provision ensure that the capital invested remains in the LLP and that
there are no other arrangements for extracting value from the LLP in some other
way. For example, there is a requirement that the investment in the LLP must
endure for a given period so that members cannot make capital contributions to give
them access to the tax relief and then, after having the relief, withdraw them.

The restriction on tax relief that is imposed by sections 117 and 118 of ICTA is only
against tax relief for interest and trading losses set against the members' income
other than that which they earn from the LLP. There will be no restriction on any
relief set against LLP income. This means that any balance of loss relief after the
restriction is applied can be carried forward and set against members' future shares
of their LLP profits.

The new section 118ZD is designed to ensure that tax relief can be obtained where a
member of an LLP who has had relief restricted to their capital contribution makes a
further capital contribution in a later chargeable period.

Subsection (3) inserts new section 59A in the Taxation of Chargeable Gains Act 1992
(TCGA). New section 59A(1) provides that the assets of the LLP shall be treated as
assets held by the members as partners for the purpose of taxing chargeable gains.
251
This ensures that the members of the LLP, rather than the LLP itself, will be liable to
tax for chargeable gains on the disposal of LLP assets. The section brings LLPs in line
with the approach adopted for partnerships in section 59 TCGA, which similarly
treats assets as held by the partners rather than by the partnership entity.

The new section 59A(2) sets out how the chargeable gains of an LLP will be taxed
when section 59A(1) ceases to apply (usually, when the LLP goes into liquidation).
This provides that the LLP (through its liquidator) will be taxed on disposals of assets
under the normal corporate insolvency rules. Chargeable gains on assets disposed of
in the liquidation period will be taxed as if the section 59A(1) partnership tax
treatment had never applied and the only capital asset, which the members will then
hold for tax purposes, will be their interest in the LLP. The proceeds of disposal of
members' interests will be based on the amount of the liquidator's capital
distributions (if any) to the members, after he has met the claims of the creditors of
the LLP. And in calculating the chargeable gain or allowable loss on that disposal,
each member's interest will be taken as acquired on the date they originally joined
the LLP and by reference to their capital cost of becoming a member.

Subsection (4) inserts new section 156A TCGA. This ensures that any gain on an LLP
asset which a member has postponed as a result of claiming business asset roll-over
relief (under sections 152 to 154 TCGA), and which has not subsequently come back
into charge on disposal of the replacement asset prior to liquidation of the LLP, will
be taxed on the member when that liquidation occurs. This section is required to
prevent deferred gains from falling out of charge when members cease to be taxed
as partners on the disposal of LLP assets. The reasons why such gains would
otherwise fail to be taxed are, firstly that there is no general occasion of charge on
members when the LLP's assets vest in a liquidator and, secondly, because a
member's previous roll-over relief claim cannot be taken into account where the
replacement asset is disposed of by, and taxed on, an LLP (through its liquidator) as
a separate taxable entity.

4.3.11 Section 11: Inheritance tax
This section inserts a new section in the Inheritance Tax Act 1984. This provides that
for inheritance tax purposes the members of an LLP are treated as if they were
partners in a partnership. This ensures that inheritance tax will be charged in respect
of members' interests in an LLP as it is in respect of partners' interests in a
partnership, and that business relief will be available on the same basis.

4.3.12 Section 12: Stamp duty
Subsection (1) provides for relief from stamp duty on an instrument transferring
property from a person to a newly incorporated LLP in connection with its
incorporation, subject to a time limit of one year from incorporation and to the
conditions in subsections (2) and (3).

Subsection (2) The first condition is that at the relevant time the person is either a
partner in a partnership of the persons who are or are to be members of the limited
liability partnership, or holds the property as nominee or bare trustee for one or
more of the partners.

Subsection (3) The second condition is that either the proportions of the property
transferred to which the persons referred to in subsection (2)(a) are entitled
immediately after the transfer are the same as at the relevant time, or none of the
differences in those proportions is attributable to tax avoidance.
252

Subsection (4) sets out the circumstances in which a person holds property as bare
trustee for the purpose of subsection (2).

Subsection (5) defines "relevant time" for the purpose of the section.

Subsection (6) provides the administrative procedure for relief under the section.

4.3.13 Section 13: Class 4 national insurance contributions
This section ensures that Class 4 national insurance contributions, which are
chargeable on partners' shares of partnership profit, are chargeable in the same way
on members of LLPs.

4.3.14 Section 14: Insolvency and winding up
Subsection (1) The Secretary of State is required to make regulations applying or
incorporating, with such modifications as appear appropriate, Parts I to IV, VI and
VII of the Insolvency Act 1986.

The Insolvency Act provides a comprehensive code of procedures relating to both
corporate and individual insolvency. This subsection ensures that the major
corporate insolvency and winding up procedures including company voluntary
arrangements, administration, receivership and voluntary and compulsory winding
up, will be applied to LLPs. Such procedures will be adapted as necessary to suit
LLPs.

Subsection (2) The Secretary of State may make regulations making other provision
about the winding up and insolvency of an LLP or an oversea limited liability
partnership by applying or incorporating with or without modifications, or
disapplying, any law relating to the insolvency or winding up of companies or other
corporations.

4.3.15 Section 15: Application of company law etc
Section 15 allows the Secretary of State to make regulations applying or
incorporating the law relating to corporations, companies and partnerships (with
appropriate modifications) to LLPs.

4.3.16 Section 16: Consequential amendments
This section allows for enactments, in particular those affecting companies, other
corporations or partnerships, to be amended in consequence of the provisions in the
Act or of any regulations, which may be made under it.

4.3.17 Section 17: General
This section makes general provision about regulations under the Act, and in
particular allows regulations to provide that failure to comply with their requirements
is a criminal offence. The section provides which of the regulations require the
affirmative resolution procedure and which the negative resolution procedure.

4.3.18 Section 19: Commencement, extent and short title
Subsection (3) is designed to enable the regulation- making functions relating to the
process of winding up of a Scottish LLP to be exercised by Scottish Ministers.
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4.3.19.0 SCHEDULE NAME AND REGISTERED OFFICE

4.3.19.1 Part I - Names
The name of an LLP must end with limited liability partnership, llp or LLP. Should the
incorporation document give the registered office as situated in Wales it must end
with either limited liability partnership, partneriaeth atebolrwydd cyfyngedig, llp, LLP,
pac or PAC.

An LLP cannot be registered by a name which has one of the above expressions or
abbreviations in it (unless it is at the end). Neither can it have a name that is already
used by a registered company or another LLP, nor where the Secretary of State
considers the use of the name would constitute a criminal offence or the name to be
offensive.

An LLP shall not be registered by a name that is likely to give the impression that it
is connected with HM Government or with a local authority.

An LLP can change its name at any time. However, where an LLP has been registered
by a name, which, in the opinion of the Secretary of State, is misleading, or the
same or very similar to one already used by a registered company or another LLP,
the Secretary of State may direct the LLP to change its name.

When an LLP changes its name it should notify the registrar. Once the registrar has
received notification and if the name is satisfactory a certificate of change of name
will be issued and the change will be effective from the date of issue.

Changing the name of the LLP will not affect any of its rights and obligations, or
make any difference to any legal proceedings by or against it.

Should a person carry on business using the expression "limited liability partnership"
or "partneriaeth atebolrwydd cyfyngedig" or an imitation of either expression at the
end of their name, the person who does so and is not an LLP or an oversea LLP will
be guilty of an offence.

4.3.19.2 Part II - Registered Offices
An LLP has to have a registered office at all times and this must be situated in either
England and Wales, Wales or Scotland. Details of the LLP's registered office must be
included in the incorporation document. Where the registered office is in Wales but
the incorporation document does not state that it is situated in Wales (as opposed to
England and Wales) the LLP can notify the registrar that the registered office is
situated in Wales.

An LLP can change its registered office by sending notification to the registrar.

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ANNEXURE 1
UK Limited Liability Partnerships Act 2000
51

Introductory
Limited liability partnerships.
1. (1) There shall be a new form of legal entity to be known as a limited liability
partnership.
(2) A limited liability partnership is a body corporate (with legal personality
separate from that of its members) which is formed by being incorporated
under this Act; and-
(a) in the following provisions of this Act (except in the phrase "oversea
limited liability partnership"), and
(b) in any other enactment (except where provision is made to the
contrary or the context otherwise requires),references to a limited
liability partnership are to such a body corporate.
(3) A limited liability partnership has unlimited capacity.
(4) The members of a limited liability partnership have such liability to
contribute to its assets in the event of its being wound up as is
provided for by virtue of this Act.
(5) Accordingly, except as far as otherwise provided by this Act or any
other enactment, the law relating to partnerships does not apply to a
(6) The Schedule (which makes provision about the names and registered
offices of limited liability partnerships) has effect.

Incorporation
Incorporation document etc.
2. - (1) For a limited liability partnership to be incorporated-

(a) two or more persons associated for carrying on a lawful business with a view to
profit must have subscribed their names to an incorporation document,

(b) there must have been delivered to the registrar either the incorporation
document or a copy authenticated in a manner approved by him, and

(c) there must have been so delivered a statement in a form approved by the
registrar, made by either a solicitor engaged in the formation of the limited liability
partnership or anyone who subscribed his name to the incorporation document, that
the requirement imposed by paragraph (a) has been complied with.

(2) The incorporation document must-

(a) be in a form approved by the registrar (or as near to such a form as
circumstances allow),

(b) state the name of the limited liability partnership,

(c) state whether the registered office of the limited liability partnership is to be
situated in England and Wales, in Wales or in Scotland,

(d) state the address of that registered office,

51
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255

(e) state the name and address of each of the persons who are to be members of the
limited liability partnership on incorporation, and

(f) either specify which of those persons are to be designated members or state that
every person who from time to time is a member of the limited liability partnership is
a designated member.

(3) If a person makes a false statement under subsection (1)(c) which he-

(a) knows to be false, or

(b) does not believe to be true,
he commits an offence.

(4) A person guilty of an offence under subsection (3) is liable-

(a) on summary conviction, to imprisonment for a period not exceeding six months
or a fine not exceeding the statutory maximum, or to both, or

(b) on conviction on indictment, to imprisonment for a period not exceeding two
years or a fine, or to both.

Incorporation by registration.
3. (1) When the requirements imposed by paragraphs (b) and (c) of subsection
(1) of section 2 have been complied with, the registrar shall retain the
incorporation document or copy delivered to him and, unless the requirement
imposed by paragraph (a) of that subsection has not been complied with, he
shall-

(a) register the incorporation document or copy, and

(b) give a certificate that the limited liability partnership is incorporated by
the name specified in the incorporation document.
(2) The registrar may accept the statement delivered under paragraph (c) of
subsection (1) of section 2 as sufficient evidence that the requirement
imposed by paragraph (a) of that subsection has been complied with.
(3) The certificate shall either be signed by the registrar or be authenticated
by his official seal.
(4) The certificate is conclusive evidence that the requirements of section 2
are complied with and that the limited liability partnership is incorporated by
the name specified in the incorporation document.

Membership

Membership Members.
4. (1) On the incorporation of a limited liability partnership its members are the
persons who subscribed their names to the incorporation document (other than any
who have died or been dissolved).
(2) Any other person may become a member of a limited liability partnership by and
in accordance with an agreement with the existing members.
(3) A person may cease to be a member of a limited liability partnership (as well as
by death or dissolution) in accordance with an agreement with the other members
256
or, in the absence of agreement with the other members as to cessation of
membership, by giving reasonable notice to the other members.
(4) A member of a limited liability partnership shall not be regarded for any purpose
as employed by the limited liability partnership unless, if he and the other members
were partners in a partnership, he would be regarded for that purpose as employed
by the partnership.

Relationship of members etc.
5. (1) Except as far as otherwise provided by this Act or any other enactment,
the mutual rights and duties of the members of a limited liability partnership,
and the mutual rights and duties of a limited liability partnership and its
members, shall be governed-

(a) by agreement between the members, or between the limited liability
partnership and its members, or

(b) in the absence of agreement as to any matter, by any provision made in
relation to that matter by regulations under section 15(c).

(2) An agreement made before the incorporation of a limited liability partnership
between the persons who subscribe their names to the incorporation document may
impose obligations on the limited liability partnership (to take effect at any time after
its incorporation).

Members as agents.
6. (1) Every member of a limited liability partnership is the agent of the limited
(2) But a limited liability partnership is not bound by anything done by a
member in dealing with a person if-

(a) the member in fact has no authority to act for the limited liability
partnership by doing that thing, and

(b) the person knows that he has no authority or does not know or believe
him to be a member of the limited liability partnership.
(3) Where a person has ceased to be a member of a limited liability
partnership, the former member is to be regarded (in relation to any person
dealing with the limited liability partnership) as still being a member of the
limited liability partnership unless-

(a) the person has notice that the former member has ceased to be a
member of the limited liability partnership, or

(b) notice that the former member has ceased to be a member of the limited
liability partnership has been delivered to the registrar.
(4) Where a member of a limited liability partnership is liable to any person
(other than another member of the limited liability partnership) as a result of
a wrongful act or omission of his in the course of the business of the limited
liability partnership or with its authority, the limited liability partnership is
liable to the same extent as the member.

257
Ex-members.
7. (1) This section applies where a member of a limited liability partnership has
either ceased to be a member or-

(a) has died,

(b) has become bankrupt or had his estate sequestrated or has been wound
up,

(c) has granted a trust deed for the benefit of his creditors, or

(d) has assigned the whole or any part of his share in the limited liability
partnership (absolutely or by way of charge or security).
(2) In such an event the former member or-

(a) his personal representative,

(b) his trustee in bankruptcy or permanent or interim trustee (within the
meaning of the Bankruptcy (Scotland) Act 1985) or liquidator,

(c) his trustee under the trust deed for the benefit of his creditors, or

(d) his assignee,
may not interfere in the management or administration of any business or
affairs of the limited liability partnership.

(3) But subsection (2) does not affect any right to receive an amount from
the limited liability partnershi p in that event.

Designated members.
8. (1) If the incorporation document specifies who are to be designated
members-

(a) they are designated members on incorporation, and

(b) any member may become a designated member by and in accordance
with an agreement with the other members, and a member may cease to be
a designated member in accordance with an agreement with the other
members.
(2) But if there would otherwise be no designated members, or only one,
every member is a designated member.
(3) If the incorporation document states that every person who from time to
time is a member of the limited liability partnership is a designated member,
every member is a designated member.
(4) A limited liability partnership may at any time deliver to the registrar-

(a) notice that specified members are to be designated members, or

(b) notice that every person who from time to time is a member of the limited
liability partnership is a designated member, and, once it is delivered,
subsection (1) (apart from paragraph (a)) and subsection (2), or subsection
(3), shall have effect as if that were stated in the incorporation document.

258
(5) A notice delivered under subsection (4)-

(a) shall be in a form approved by the registrar, and

(b) shall be signed by a designated member of the limited liability partnership
or authenticated in a manner approved by the registrar.
(6) A person ceases to be a designated member if he ceases to be a member.

Registration of membership changes.
9. (1) A limited liability partnership must ensure that-

(a) where a person becomes or ceases to be a member or designated
member, notice is delivered to the registrar within fourteen days, and

(b) where there is any change in the name or address of a member, notice is
delivered to the registrar within 28 days.
(2) Where all the members from time to time of a limited liability partnership
are designated members, subsection (1)(a) does not require notice that a
person has become or ceased to be a designated member as well as a
member.
(3) A notice delivered under subsection (1)-


or authenticated in a manner approved by the registrar, and, if it relates to a
person becoming a member or designated member, shall contain a statement
that he consents to becoming a member or designated member signed by
him or authenticated in a manner approved by the registrar.

(4) If a limited liability partnership fails to comply with subsection (1), the
partnership and every designated member commits an offence.

(5) But it is a defence for a designated member charged with an offence
under subsection (4) to prove that he took all reasonable steps for securing
that subsection (1) was complied with.

(6) A person guilty of an offence under subsection (4) is liable on summary
conviction to a fine not exceeding level 5 on the standard scale.

Taxation
Income tax and chargeable gains.
10. (1) In the Income and Corporation Taxes Act 1988, after section 118 insert-

"Limited liability partnerships
Treatment of
limited liability
partnerships.
118ZA. For the purposes of the Tax Acts, a trade, profession or
business carried on by a limited liability partnership with a view to
profit shall be treated as carried on in partnership by its members
(and not by the limited liability partnership as such); and,
accordingly, the property of the limited liability partnership shall
be treated for those purposes as partnership property.
259

Restriction on
relief.
118ZB. Sections 117 and 118 have effect in relation to a
member of a limited liability partnership as in relation to a limited
partner, but subject to sections 118ZC and 118ZD.

Member's
contribution to
trade.
118ZC. - (1) Subsection (3) of section 117 does not have effect
in relation to a member of a limited liability partnership.

(2) But, for the purposes of that section and section 118, such
a member's contribution to a trade at any time ("the relevant
time") is the greater of-

(a) the amount subscribed by him, and
(b) the amount of his liability on a winding up.
(3) The amount subscribed by a member of a limited liability
partnership is the amount which he has contributed to the limited
liability partnership as capital, less so much of that amount (if
any) as-

(a) he has previously, directly or indirectly, drawn out or
received back,
(b) he so draws out or receives back during the period of
five years beginning with the relevant time,
(c) he is or may be entitled so to draw out or receive back
at any time when he is a member of the limited liability
partnership, or
(d) he is or may be entitled to require another person to
reimburse to him.
(4) The amount of the liability of a member of a limited liability
partnership on a winding up is the amount which-

(a) he is liable to contribute to the assets of the limited
liability partnership in the event of its being wound up, and
(b) he remains liable so to contribute for the period of at
least five years beginning with the relevant time (or until it
is wound up, if that happens before the end of that
period).
Carry forward of
unrelieved losses.
118ZD. - (1) Where amounts relating to a trade carried on by a
member of a limited liability partnership are, in any one or more
chargeable periods, prevented from being given or allowed by
section 117 or 118 as it applies otherwise than by virtue of this
section (his "total unrelieved loss"), subsection (2) applies in each
subsequent chargeable period in which-

(a) he carries on the trade as a member of the limited
liability partnership, and
(b) any of his total unrelieved loss remains outstanding.
(2) Sections 380, 381, 393A(1) and 403 (and sections 117 and
260
118 as they apply in relation to those sections) shall have effect in
the subsequent chargeable period as if-

(a) any loss sustained or incurred by the member in the
trade in that chargeable period were increased by an
amount equal to so much of his total unrelieved loss as
remains outstanding in that period, or
(b) (if no loss is so sustained or incurred) a loss of that
amount were so sustained or incurred.
(3) To ascertain whether any (and, if so, how much) of a
member's total unrelieved loss remains outstanding in the
subsequent chargeable period, deduct from the amount of his
total unrelieved loss the aggregate of-

(a) any relief given under any provision of the Tax Acts
(otherwise than as a result of subsection (2)) in respect of
his total unrelieved loss in that or any previous chargeable
period, and
(b) any amount given or allowed in respect of his total
unrelieved loss as a result of subsection (2) in any
previous chargeable period (or which would have been so
given or allowed had a claim been made)."
(2) In section 362(2)(a) of that Act (loan to buy into partnership), after
"partner" insert "in a limited partnership registered under the Limited Partnerships
Act 1907".
(3) In the Taxation of Chargeable Gains Act 1992, after section 59 insert-

"Limited liability
partnerships.
59A. - (1) Where a limited liability partnership carries on a trade
or business with a view to profit-

(a) assets held by the limited liability partnership shall be
treated for the purposes of tax in respect of chargeable
gains as held by its members as partners, and
(b) any dealings by the limited liability partnership shall be
treated for those purposes as dealings by its members in
partnership (and not by the limited liability partnership as
such),
and tax in respect of chargeable gains accruing to the members of
the limited liability partnership on the disposal of any of its assets
shall be assessed and charged on them separately.

(2) Where subsection (1) ceases to apply in relation to a limited
liability partnership with the effect that tax is assessed and
charged-

(a) on the limited liability partnership (as a company) in
respect of chargeable gains accruing on the disposal of any
of its assets, and
(b) on the members in respect of chargeable gains accruing
261
on the disposal of any of their capital interests in the limited
liability partnership,
it shall be assessed and charged on the limited liability partnership
as if subsection (1) had never applied in relation to it.

(3) Neither the commencement of the application of subsection
(1) nor the cessation of its application in relation to a limited
liability partnership is to be taken as giving rise to the disposal of
any assets by it or any of its members."

(4) After section 156 of that Act insert-

"Cessation of
trade by limited
liability
partnership.
156A. - (1) Where, immediately before the time of cessation of
trade, a member of a limited liability partnership holds an asset,
or an interest in an asset, acquired by him for a consideration
treated as reduced under section 152 or 153, he shall be treated
as if a chargeable gain equal to the amount of the reduction
accrued to him immediately before that time.

(2) Where, as a result of section 154(2), a chargeable gain on
the disposal of an asset, or an interest in an asset, by a member
of a limited liability partnership has not accrued before the time
of cessation of trade, the member shall be treated as if the
chargeable gain accrued immediately before that time.

(3) In this section "the time of cessation of trade", in relation
to a limited liability partnership, means the time when section
59A(1) ceases to apply in relation to the limited liability
partnership."

Inheritance tax. 11. In the Inheritance Tax Act 1984, after section 267 insert-

"Limited liability
partnerships.
267A. For the purposes of this Act and any other enactments
relating to inheritance tax-

(a) property to which a limited liability partnership is
entitled, or which it occupies or uses, shall be treated as
property to which its members are entitled, or which they
occupy or use, as partners,
(b) any business carried on by a limited liability partnership
shall be treated as carried on in partnership by its
members,
(c) incorporation, change in membership or dissolution of a
limited liability partnership shall be treated as formation,
alteration or dissolution of a partnership, and
(d) any transfer of value made by or to a limited liability
partnership shall be treated as made by or to its members
in partnership (and not by or to the limited liability
partnership as such)."

262
Stamp duty.
12. (1) Stamp duty shall not be chargeable on an instrument by which property is
conveyed or transferred by a person to a limited liability partnership in
connection with its incorporation within the period of one year beginning with
the date of incorporation if the following two conditions are satisfied.

(2) The first condition is that at the relevant time the person-

(a) is a partner in a partnership comprised of all the persons who are or are
to be members of the limited liability partnership (and no-one else), or

(b) holds the property conveyed or transferred as nominee or bare trustee for
one or more of the partners in such a partnership.

(3) The second condition is that-

(a) the proportions of the property conveyed or transferred to which the
persons mentioned in subsection (2)(a) are entitled immediately after the
conveyance or transfer are the same as those to which they were entitled at
the relevant time, or

(b) none of the differences in those proportions has arisen as part of a
scheme or arrangement of which the main purpose, or one of the main
purposes, is avoidance of liability to any duty or tax.

(4) For the purposes of subsection (2) a person holds property as bare
trustee for a partner if the partner has the exclusive right (subject only to
satisfying any outstanding charge, lien or other right of the trustee to resort
to the property for payment of duty, taxes, costs or other outgoings) to direct
how the property shall be dealt with.

(5) In this section "the relevant time" means-

(a) if the person who conveyed or transferred the property to the limited
liability partnership acquired the property after its incorporation, immediately
after he acquired the property, and

(b) in any other case, immediately before its incorporation.

(6) An instrument in respect of which stamp duty is not chargeable by virtue
of subsection (1) shall not be taken to be duly stamped unless-

(a) it has, in accordance with section 12 of the Stamp Act 1891, been
stamped with a particular stamp denoting that it is not chargeable with any
duty or that it is duly stamped, or

(b) it is stamped with the duty to which it would be liable apart from that
subsection.

Class 4 national insurance contributions.
13. In section 15 of the Social Security Contributions and Benefits Act 1992 and
section 15 of the Social Security Contributions and Benefits (Northern Ireland) Act
263
1992 (Class 4 contributions), after subsection (3) insert-

"(3A) Where income tax is (or would be) charged on a member of a limited liability
partnership in respect of profits or gains arising from the carrying on of a trade or
profession by the limited liability partnership, Class 4 contributions shall be payable
by him if they would be payable were the trade or profession carried on in
partnership by the members."

Regulations

Insolvency and winding up.
14. - (1) Regulations shall make provision about the insolvency and winding up of
limited liability partnerships by applying or incorporating, with such modifications as
appear appropriate, Parts I to IV, VI and VII of the Insolvency Act 1986.

(2) Regulations may make other provision about the insolvency and winding up of
limited liability partnerships, and provision about the insolvency and winding up of
oversea limited liability partnerships, by-

(a) applying or incorporating, with such modifications as appear appropriate,
any law relating to the insolvency or winding up of companies or other
corporations which would not otherwise have effect in relation to them, or

(b) providing for any law relating to the insolvency or winding up of
companies or other corporations which would otherwise have effect in relation
to them not to apply to them or to apply to them with such modifications as
appear appropriate.

(3) In this Act "oversea limited liability partnership" means a body incorporated or
otherwise established outside Great Britain and having such connection with Great
Britain, and such other features, as regulations may prescribe.

Application of company law etc.
15. Regulations may make provision about limited liability partnerships and oversea
limited liability partnerships (not being provision about insolvency or winding up) by-

(a) applying or incorporating, with such modifications as appear appropriate,
any law relating to companies or other corporations which would not
otherwise have effect in relation to them,

(b) providing for any law relating to companies or other corporations which
would otherwise have effect in relation to them not to apply to them or to
apply to them with such modifications as appear appropriate, or

(c) applying or incorporating, with such modifications as appear appropriate,
any law relating to partnerships.

Consequential amendments.
16. - (1) Regulations may make in any enactment such amendments or repeals as
appear appropriate in consequence of this Act or regulations made under it.
(2) The regulations may, in particular, make amendments and repeals affecting
264
companies or other corporations or partnerships.

General.
17. - (1) In this Act "regulations" means regulations made by the Secretary of State
by statutory instrument.
(2) Regulations under this Act may in particular-

(a) make provision for dealing with non-compliance with any of the
regulations (including the creation of criminal offences),

(b) impose fees (which shall be paid into the Consolidated Fund), and

(c) provide for the exercise of functions by persons prescribed by the
regulations.
(3) Regulations under this Act may-

(a) contain any appropriate consequential, incidental, supplementary or
transitional provisions or savings, and

(b) make different provision for different purposes.
(4) No regulations to which this subsection applies shall be made unless a draft
of the statutory instrument containing the regulations (whether or not together with
other provisions) has been laid before, and approved by a resolution of, each House
of Parliament.
(5) Subsection (4) applies to-

(a) regulations under section 14(2) not consisting entirely of the application
or incorporation (with or without modifications) of provisions contained in or
made under the Insolvency Act 1986,

(b) regulations under section 15 not consisting entirely of the application or
incorporation (with or without modifications) of provisions contained in or
made under Part I, Chapter VIII of Part V, Part VII, Parts XI to XIII, Parts XVI
to XVIII, Part XX or Parts XXIV to XXVI of the Companies Act 1985,

(c) regulations under section 14 or 15 making provision about oversea limited
liability partnerships, and

(d) regulations under section 16.
(6) A statutory instrument containing regulations under this Act shall (unless a
draft of it has been approved by a resolution of each House of Parliament) be subject
to annulment in pursuance of a resolution of either House of Parliament.

Supplementary

Interpretation.
18. In this Act-

"address", in relation to a me mber of a limited liability partnership, means-

(a) if an individual, his usual residential address, and

265
(b) if a corporation or Scottish firm, its registered or principal office,

"business" includes every trade, profession and occupation,

"designated member" shall be construed in accordance with section 8,

"enactment" includes subordinate legislation (within the meaning of the
Interpretation Act 1978),

"incorporation document" shall be construed in accordance with section 2,

"limited liability partnership" has the meaning given by section 1(2),

"member" shall be construed in accordance with section 4,

"modifications" includes additions and omissions,

"name", in relation to a member of a limited liability partnership, means-

(a) if an individual, his forename and surname (or, in the case of a
peer or other person usually known by a title, his title instead of or in
addition to either or both his forename and surname), and

(b) if a corporation or Scottish firm, its corporate or firm name,

"oversea limited liability partnership" has the meaning given by section 14(3),

"the registrar" means-

(a) if the registered office of the limited liability partnership is, or is to
be, situated in England and Wales or in Wales, the registrar or other
officer performing under the Companies Act 1985 the duty of
registration of companies in England and Wales, and

(b) if its registered office is, or is to be, situated in Scotland, the
registrar or other officer performing under that Act the duty of
registration of companies in Scotland, and

"regulations" has the meaning given by section 17(1).

Commencement, extent and short title.
19. - (1) The preceding provisions of this Act shall come into force on such day as
the Secretary of State may by order made by statutory instrument appoint; and
different days may be appointed for different purposes.
(2) The Secretary of State may by order made by statutory instrument make
any transitional provisions and savings which appear appropriate in connection with
the coming into force of any provision of this Act.
(3) For the purposes of the Scotland Act 1998 this Act shall be taken to be a
pre-commencement enactment within the meaning of that Act.
(4) Apart from sections 10 to 13 (and this section), this Act does not extend to
Northern Ireland.
(5) This Act may be cited as the Limited Liability Partnerships Act 2000.

266

SCHEDULE
NAMES AND REGISTERED OFFICES
PART I NAMES

Index of names
1. In section 714(1) of the Companies Act 1985 (index of names), after paragraph
(d) insert-

"(da) limited liability partnerships incorporated under the Limited Liability
Partnerships Act 2000,".

Name to indicate status
2. - (1) The name of a limited liability partnership must end with-

(a) the expression "limited liability partnership", or

(b) the abbreviation "llp" or "LLP".
(2) But if the incorporation document for a limited liability partnership states
that the registered office is to be situated in Wales, its name must end with-

(a) one of the expressions "limited liability partnership" and "partneriaeth
atebolrwydd cyfyngedig", or

(b) one of the abbreviations "llp", "LLP", "pac" and "PAC".

Registration of names
3. - (1) A limited liability partnership shall not be registered by a name-

(a) which includes, otherwise than at the end of the name, either of the
expressions "limited liability partnership" and "partneriaeth atebolrwydd
cyfyngedig" or any of the abbreviations "llp", "LLP", "pac" and "PAC",

(b) which is the same as a name appearing in the index kept under section
714(1) of the Companies Act 1985,

(c) the use of which by the limited liability partnership would in the opinion of
the Secretary of State constitute a criminal offence, or

(d) which in the opinion of the Secretary of State is offensive.
(2) Except with the approval of the Secretary of State, a limited liability
partnership shall not be registered by a name which-

(a) in the opinion of the Secretary of State would be likely to give the
impression that it is connected in any way with Her Majesty's Government or
with any local authority, or

(b) includes any word or expression for the time being specified in regulations
under section 29 of the Companies Act 1985 (names needing approval),
and in paragraph (a) "local authority" means any local authority within the meaning
of the Local Government Act 1972 or the Local Government etc. (Scotland) Act 1994,
the Common Council of the City of London or the Council of the Isles of Scilly.
267

Change of name
4. - (1) A limited liability partnership may change its name at any time.
(2) Where a limited liability partnership has been registered by a name which-

(a) is the same as or, in the opinion of the Secretary of State, too like a name
appearing at the time of registration in the index kept under section 714(1) of
the Companies Act 1985, or

(b) is the same as or, in the opinion of the Secretary of State, too like a name
which should have appeared in the index at that time,
the Secretary of State may within twelve months of that time in writing direct the
limited liability partnership to change its name within such period as he may specify.
(3) If it appears to the Secretary of State-

(a) that misleading information has been given for the purpose of the
registration of a limited liability partnership by a particular name, or

(b) that undertakings or assurances have been given for that purpose and
have not been fulfilled,
he may, within five years of the date of its registration by that name, in writing
direct the limited liability partnership to change its name within such period as he
may specify.
(4) If in the Secretary of State's opinion the name by which a limited liability
partnership is registered gives so misleading an indication of the nature of its
activities as to be likely to cause harm to the public, he may in writing direct the
limited liability partnership to change its name within such period as he may specify.
(5) But the limited liability partnership may, within three weeks from the date
of the direction apply to the court to set it aside and the court may set the direction
aside or confirm it and, if it confirms it, shall specify the period within which it must
be complied with.
(6) In sub-paragraph (5) "the court" means-

(a) if the registered office of the limited liability partnership is situated in
England and Wales or in Wales, the High Court, and

(b) if it is situated in Scotland, the Court of Session.
(7) Where a direction has been given under sub-paragraph (2), (3) or (4)
specifying a period within which a limited liability partnership is to change its name,
the Secretary of State may at any time before that period ends extend it by a further
direction in writing.
(8) If a limited liability partnership fails to comply with a direction under this
paragraph-

(a) the limited liability partnership, and

(b) any designated member in default,
commits an offence.
(9) A person guilty of an offence under sub-paragraph (8) is liable on summary

268
Notification of change of name
5. - (1) Where a limited liability partnership changes its name it shall deliver notice
of the change to the registrar.
(2) A notice delivered under sub-paragraph (1)-


(3) Where the registrar receives a notice under sub-paragraph (2) he shall
(unless the new name is one by which a limited liability partnership may not be
registered)-

(a) enter the new name in the index kept under section 714(1) of the
Companies Act 1985, and

(b) issue a certificate of the change of name.
(4) The change of name has effect from the date on which the certificate is
issued.

Effect of change of name
6. A change of name by a limited liability partnership does not-

(a) affect any of its rights or duties,

(b) render defective any legal proceedings by or against it,
and any legal proceedings that might have been commenced or continued against it
by its former name may be commenced or continued against it by its new name.

Improper use of "limited liability partnership" etc.
7. - (1) If any person carries on a business under a name or title which includes as
the last words-

(a) the expression "limited liability partnership" or "partneriaeth atebolrwydd
cyfyngedig", or

(b) any contraction or imitation of either of those expressions,
that person, unless a limited liability partnership or oversea limited liability
partnership, commits an offence.
(2) A person guilty of an offence under sub-paragraph (1) is liable on summary

Similarity of names
8. In determining for the purposes of this Part whether one name is the same as
another there are to be disregarded-

(1) the definite article as the first word of the name,

(2) any of the following (or their Welsh equivalents or abbreviations of them
or their Welsh equivalents) at the end of the name-

"limited liability partnership",

269
"company",

"and company",

"company limited",

"and company limited",

"limited",

"unlimited",

"public limited company", and

"investment company with variable capital", and

(3) type and case of letters, accents, spaces between letters and punctuation
marks,
and "and" and "&" are to be taken as the same.

PART II REGISTERED OFFICES

Situation of registered office
9. - (1) A limited liability partnership shall-

(a) at all times have a registered office situated in England and Wales or in
Wales, or

(b) at all times have a registered office situated in Scotland,
to which communications and notices may be addressed.
(2) On the incorporation of a limited liability partnership the situation of its
registered office shall be that stated in the incorporation document.
(3) Where the registered office of a limited liability partnership is situated in
Wales, but the incorporation document does not state that it is to be situated in
Wales (as opposed to England and Wales), the limited liability partnership may
deliver notice to the registrar stating that its registered office is to be situated in
Wales.



Change of registered office
10. - (1) A limited liability partnership may change its registered office by delivering
notice of the change to the registrar.


270
ANNEXURE 2

Statutory Instrument 2001 No. 1090
Limited Liability Partnerships Regulations 2001

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271

STATUTORY INSTRUMENTS

2001 No. 1090

PARTNERSHIP

LIMITED LIABILITY PARTNERSHIPS

Limited Liability Partnerships Regulations 2001

Made 19th March 2001
Coming into force 6th April 2001

ARRANGEMENT OF REGULATIONS

PART I

Citation, Commencement and Interpretation
1. Citation and commencement.
2. Interpretation.

PART II

Accounts and Audit
3. Application of the accounts and audit provisions of the Companies Act 1985
to limited liability partnerships.

PART III

Companies Act 1985 and Company Directors Disqualification Act 1986
4. Application to limited liability partnerships of the remainder of the provisions
of the Companies Act 1985 and of the Company Directors Disqualification
Act 1986.

PART IV

Winding Up and Insolvency
5. Application of the Insolvency Act 1986 to limited liability partnerships.

PART V

Financial Services and Markets
6. Application of provisions contained in Parts XV and XXIV of the 2000 Act to
limited liability partnerships.

272
PART VI

Default Provision and Expulsion
7. Default provision for limited liability partnerships.
8. Expulsion.

PART VII

Miscellaneous
9. General and consequential amendments.
10. Application of subordinate legislation.

SCHEDULES

Schedule 1 - Modifications to Part VII of the Companies Act 1985.

Schedule 2 -

Part I Modifications to provisions of the Companies Act 1985 applied
to limited liability partnerships.

Part II Modifications to the Company Directors Disqualification Act
1986.

Schedule 3 - Modifications to the Insolvency Act 1986.

Schedule 4 - Application of provisions to Scotland.

Schedule 5 - General and consequential amendments in other legislation.

Schedule 6 - Subordinate legislation applied.

Whereas a draft of these Regulations has been approved by a resolution of each
House of Parliament pursuant to section 17(4) of the Limited Liability Partnerships
Act 2000[1];

Now, therefore, the Secretary of State, in exercise of the powers conferred on him
by sections 14, 15, 16 and 17 of the Limited Liability Partnerships Act 2000 and all
other powers enabling him in that behalf hereby makes the following Regulations:

273
PART I

CITATION, COMMENCEMENT AND INTERPRETATION

Citation and commencement
1. These Regulations may be cited as the Limited Liability Partnerships Regulations
2001 and shall come into force on 6th April 2001.

Interpretation
2. In these Regulations -
"the 1985 Act" means the Companies Act 1985[2];
"the 1986 Act" means the Insolvency Act 1986[3];
"the 2000 Act" means the Financial Services and Markets Act 2000[4];
"devolved", in relation to the provisions of the 1986 Act, means the provisions of the
1986 Act which are listed in Schedule 4 and, in their application to Scotland, concern
wholly or partly, matters which are set out in Section C.2 of Schedule 5 to the
Scotland Act 1998[5] as being exceptions to the reservations made in that Act in the
field of insolvency;
"limited liability partnership agreement", in relation to a limited liability partnership,
means any agreement express or implied between the members of the limited
liability partnership or between the limited liability partnership and the members of
the limited liability partnership which determines the mutual rights and duties of the
members, and their rights and duties in relation to the limited liability partnership;
"the principal Act" means the Limited Liability Partnerships Act 2000; and
"shadow member", in relation to limited liability partnerships, means a person in
accordance with whose directions or instructions the members of the limited liability
partnership are accustomed to act (but so that a person is not deemed a shadow
member by reason only that the members of the limited partnership act on advice
given by him in a professional capacity).

274
PART II

ACCOUNTS AND AUDIT

Application of the accounts and audit provisions of the 1985 Act to limited
liability partnerships
3. - (1) Subject to paragraph (2), the provisions of Part VII of the 1985 Act
(Accounts and Audit)[6] shall apply to limited liability partnerships.

(2) The enactments referred to in paragraph (1) shall apply to limited liability
partnerships, except where the context otherwise requires, with the following
modifications -
(a) references to a company shall include references to a limited liability partnership;

(b) references to a director or to an officer of a company shall include references to a
member of a limited liability partnership;

(c) references to other provisions of the 1985 Act and to provisions of the Insolvency
Act 1986 shall include references to those provisions as they apply to limited liability
partnerships in accordance with Parts III and IV of these Regulations;

(d) the modifications set out in Schedule 1 to these Regulations; and

(e) such further modifications as the context requires for the purpose of giving effect
to those provisions as applied by this Part of these Regulations.

275
PART III

COMPANIES ACT 1985 AND COMPANY DIRECTORS DISQUALIFICATION ACT
1986

Application of the remainder of the provisions of the 1985 Act and of the
provisions of the Company Directors Disqualification Act 1986 to limited
4. - (1) The provisions of the 1985 Act specified in the first column of Part I of
Schedule 2 to these Regulations shall apply to limited liability partnerships, except
where the context otherwise requires, with the following modifications -

(b) references to the Companies Acts shall include references to the principal Act and
regulations made thereunder;

(c) references to the Insolvency Act 1986 shall include references to that Act as it
applies to limited liability partnerships by virtue of Part IV of these Regulations;

(d) references in a provision of the 1985 Act to other provisions of that Act shall
include references to those other provisions as they apply to limited liability
partnerships by virtue of these Regulations;

(e) references to the memorandum of association of a company shall include
references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include
references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part I of Schedule 2
opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect
to that legislation as applied by these Regulations.
(2) The provisions of the Company Director Disqualification Act 1986[7] shall
apply to limited liability partnerships, except where the context otherwise
requires, with the following modifications -

(b) references to the Companies Acts shall include references to the principal Act and
regulations made thereunder and references to the companies legislation shall
include references to the principal Act, regulations made thereunder and to any
enactment applied by regulations to limited liability partnerships;

(d) references to the Insolvency Act 1986 shall include references to that Act as it
applies to limited liability partnerships by virtue of Part IV of these Regulations;

(e) references to the memorandum of association of a company shall include
276
references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include
references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part II of Schedule 2
opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect

277
PART IV

WINDING UP AND INSOLVENCY

Application of the 1986 Act to limited liability partnerships
5. - (1) Subject to paragraphs (2) and (3), the following provisions of the 1986 Act,
shall apply to limited liability partnerships -
(a) Parts I, II, III, IV, VI and VII of the First Group of Parts (company insolvency;
companies winding up),

(b) the Third Group of Parts (miscellaneous matters bearing on both company and
individual insolvency; general interpretation; final provisions)[8].
(2) The provisions of the 1986 Act referred to in paragraph (1) shall apply to
limited liability partnerships, except where the context otherwise requires,
with the following modifications -

(b) references to a director or to an officer of a company shall include references to a
member of a limited liability partnership;

(c) references to a shadow director shall include references to a shadow member;

(d) references to the 1985 Act, the Company Directors Disqualification Act 1986, the
Companies Act 1989[9] or to any provisions of those Acts or to any provisions of the
1986 Act shall include references to those Acts or provisions as they apply to limited
liability partnerships by virtue of the principal Act;

(e) references to the memorandum of association of a company and to the articles of
association of a company shall include references to the limited liability partnership
agreement of a limited liability partnership;

(f) the modifications set out in Schedule 3 to these Regulations; and

(g) such further modifications as the context requires for the purpose of giving effect
(3) In the application of this regulation to Scotland, the provisions of the
1986 Act referred to in paragraph (1) shall not include the provisions listed in
Schedule 4 to the extent specified in that Schedule.

278
PART V

FINANCIAL SERVICES AND MARKETS

Application of provisions contained in Parts XV and XXIV of the 2000 Act to
limited liability partnerships
6. - (1) Subject to paragraph (2), sections 215(3),(4) and (6), 356, 359(1) to
(4), 361 to 365, 367, 370 and 371 of the 2000 Act shall apply to limited liability
partnerships.

(2) The provisions of the 2000 Act referred to in paragraph (1) shall apply to
limited liability partnerships, except where the context otherwise requires, with the
following modifications -

(b) references to body shall include references to a limited liability partnership; and

(c) references to the 1985 Act, the 1986 Act or to any of the provisions of those Acts
shall include references to those Acts or provisions as they apply to limited liability
partnerships by virtue of the principal Act.

279
PART VI

DEFAULT PROVISION

Default provision for limited liability partnerships
7. The mutual rights and duties of the members and the mutual rights and duties
of the limited liability partnership and the members shall be determined, subject to
the provisions of the general law and to the terms of any limited liability partnership
agreement, by the following rules:

(1) All the members of a limited liability partnership are entitled to share equally
in the capital and profits of the limited liability partnership.

(2) The limited liability partnership must indemnify each member in respect of
payments made and personal liabilities incurred by him -
partnership; or

(b) in or about anything necessarily done for the preservation of the business or
(3) Every member may take part in the management of the limited

(4) No member shall be entitled to remuneration for acting in the business
or management of the limited liability partnership.

(5) No person may be introduced as a member or voluntarily assign an
interest in a limited liability partnership without the consent of all existing
members.

(6) Any difference arising as to ordinary matters connected with the
business of the limited liability partnership may be decided by a majority of
the members, but no change may be made in the nature of the business of
the limited liability partnership without the consent of all the members.

(7) The books and records of the limited liability partnership are to be
made available for inspection at the registered office of the limited liability
partnership or at such other place as the members think fit and every
member of the limited liability partnership may when he thinks fit have
access to and inspect and copy any of them.

(8) Each member shall render true accounts and full information of all
things affecting the limited liability partnership to any member or his legal
representatives.

(9) If a member, without the consent of the limited liability partnership,
carries on any business of the same nature as and competing with the
limited liability partnership, he must account for and pay over to the limited
liability partnership all profits made by him in that business.

(10) Every member must account to the limited liability partnership for
280
any benefit derived by him without the consent of the limited liability
partnership from any transaction concerning the limited liability partnership,
or from any use by him of the property of the limited liability partnership,
name or business connection.

Expulsion
8. No majority of the members can expel any member unless a power to
do so has been conferred by express agreement between the members.

281
PART VII

MISCELLANEOUS

General and consequential amendments
9. - (1) Subject to paragraph (2), the enactments mentioned in Schedule 5 shall
have effect subject to the amendments specified in that Schedule.

(2) In the application of this regulation to Scotland -
(a) paragraph 15 of Schedule 5 which amends section 110 of the 1986 Act shall not
extend to Scotland; and

(b) paragraph 22 of Schedule 5 which applies to limited liability partnerships the
culpable officer provisions in existing primary legislation shall not extend to Scotland
insofar as it relates to matters which have not been reserved by Schedule 5 to the
Scotland Act 1998.
Application of subordinate legislation
10. - (1) The subordinate legislation specified in Schedule 6 shall apply as from
time to time in force to limited liability partnerships and -
(a) in the case of the subordinate legislation listed in Part I of that Schedule with
such modifications as the context requires for the purpose of giving effect to the
provisions of the Companies Act 1985 which are applied by these Regulations;

(b) in the case of the subordinate legislation listed in Part II of that Schedule with
provisions of the Insolvency Act 1986 which are applied by these Regulations; and

(c) in the case of the subordinate legislation listed in Part III of that Schedule with
provisions of the Business Names Act 1985 and the Company Directors
Disqualification Act 1986 which are applied by these Regulations.
(2) In the case of any conflict between any provision of the subordinate
legislation applied by paragraph (1) and any provision of these Regulations, the
latter shall prevail.

Kim Howells,
Parliamentary Under-Secretary of State, for Consumers and Corporate Affairs,
Department of Trade and Industry

19th March 2001

282
SCHEDULE 1
Regulation 3

MODIFICATIONS TO PROVISIONS OF PART VII OF THE 1985 ACT APPLIEDBY THESE
REGULATIONS

Provision of Part VI I Modification
Section 222 (Where and for
how long accounting records to
be kept)[10]

subsection (5) In paragraph (a), omit the words "in the case of a
private company," and the word "and". Omit
paragraph (b).
Section 224 (accounting
reference periods and
accounting reference date)[11]

subsections (2) and (3) Omit subsections (2) and (3).
subsection (3A) Omit the words "incorporated on or after 1st April
1996".
Section 225 (alteration of
accounting reference date)[12]

subsection (5) For the words "laying and delivering accounts and
reports" substitute "delivering the accounts and the
auditors' report".
Section 228 (exemption for
parent companies included in
accounts of larger group)[13]
Omit subsection (4).
Section 231 (disclosure
required in notes to accounts:
related undertakings)[14]

subsection (3) Omit the words from "This subsection" to the end.
Section 232 (disclosure in notes
to accounts: emoluments etc of
directors and others)[15]
Omit section 232, save that Schedule 6 shall apply
for the purpose of paragraph 56A of Schedule 4, as
inserted by this Schedule.
Section 233 (approval and
signing of accounts)[16]

283
subsection (1) For subsection (1) substitute -

" (1) A limited liability partnership's annual
accounts shall be approved by the members, and
shall be signed on behalf of all the members by a
designated member.".
subsection (3) Omit the words from "laid before" to "otherwise",
and for the words "the board" substitute the
members of the limited liability partnership".
subsection (4) For the words the board by a director of the
company" substitute "the members by a
designated member".
subsection (6) In paragraph (a), omit the words "laid before the
company, or otherwise".
Sections 234 (duty to prepare
directors' report)[17] and 234A
(approval and signing of
directors' report)[18]
Omit sections 234 and 234A.
Section 235 (auditors'
report)[19]


" (1) The limited liability partnership's annual
accounts shall be submitted to its auditors, who
shall make a report on them to the members of the
limited liability partnership.".
subsection (3) Omit subsection (3).
Section 236 (signature of
auditors' report)[20]


" (2)

Every copy of the auditors' report which is
circulated, published or issued shall state the
names of the auditors.".
subsection (4) In paragraph (a) omit the words "laid before the
company, or otherwise".
Section 237 (duties of
auditors)[21]

284
Section 238 (persons entitled to
receive copies of accounts and
report)[22]


" (1) A copy of the limited liability partnership's
annual accounts, together with a copy of the
auditors' report on those accounts, shall be sent to
every member of the limited liability partnership
and to every holder of the limited liability
partnership's debentures, within one month of their
being signed in accordance with section 233(1) and
in any event not later than 10 months after the
end of the relevant accounting reference period."
subsection (2) (a) In paragraph (a), omit the words from "who is"
to "meetings and", and (b) in paragraph (b) and
(c), omit the words "shares or" in both places
where they occur.
subsection (4A) Omit the words ", of the directors' report".
subsections (4C) to (4E) Omit subsections (4C) to (4E).
Section 239 (right to demand
copies of accounts and
report)[23]

subsection (1) Omit the words "and directors' report".
subsection (2B) Omit subsection (2B).
Section 240 (requirements in
connection with publication of
accounts)[24]

subsection (1) Omit the words from "or, as the case may be," to
the end.
subsection (3) (a) In paragraph (c) omit the words from "and, if
no such report has been made," to "any financial
year",
285

(b) in paragraph (d), omit the words "or whether
any report made for the purposes of section
249A(2) was qualified", and

(c) omit the words "or any report made for the
purposes of section 249A(2)".
Section 241 (accounts and
report to be laid before general
meeting)[25]
Omit section 241.
Section 242 (accounts and
report to be delivered to
registrar)[26]

subsection (1) (a) For the words "The directors of a company"
substitute "The designated members of a limited
liability partnership",

(b) omit the words "a copy of the directors' report
for that year and",

(c) for the words "or reports" substitute "or that
report", and

(d) for the words "the directors shall annex"
substitute "the designated members shall annex".
subsection (2) (a) For the words "laying and delivering accounts
and reports", substitute "delivering the accounts
and the auditors' report", and

(b) for the word "director" substitute the words
"designated member".
subsection (3) For the words "the directors" in each place where
they occur substitute the words " the designated
members".
subsection (4) For the words "laying and delivering accounts and
reports", substitute "delivering the accounts and
the auditors' report".
Section 242A (civil penalty for
failure to deliver accounts)[27]

and reports" substitute "delivering the accounts
and the auditors' report", and

286
(b) for the words "the directors" substitute "the
designated members".
and reports" substitute "delivering the accounts
and the auditors' report",

(b) omit the words ", and whether the company is
a public or private company,",

(c) omit the heading "Public company" and all
entries under it, and

(d) for the heading "Private company" substitute
"Amount of penalty".
Section 242B (delivery and
publications of accounts in
euros)[28]

subsection (2) For the words "the directors of a company"
substitute "the designated members of a limited
liability partnership".
Section 243 (accounts of
subsidiary undertakings to be
appended in certain cases)[29]

subsection (4) For the words "the directors" substitute "the
designated members".
Section 244 (period allowed for
delivering accounts and
report)[30]

subsection (1) For subsection (1), substitute the following -

" (1) The period allowed for delivering the
accounts and the auditors' report is 10 months
after the end of the relevant accounting reference
period.

This is subject to the following provisions of this
section."
subsection (2) In paragraph (a), omit the words "or 7 months, as
the case may be,".
subsection (3) (a) For the words "the directors" substitute "the
designated members", and

287
(b) in paragraph (b), for the words "laying and
delivering accounts and reports" substitute
"delivering the accounts and the auditors' report".
subsection (4) For the words "laying and delivering accounts"
substitute "delivering the accounts and the
auditors' report".
Section 245 (voluntary revision
of accounts)[31]

subsection (1) Omit the words ", or any directors' report," and the
words "or a revised report".
subsection (2) (a) Omit the words " or report" in both places
where they occur, and

(b) omit the words "laid before the company in
general meeting or".
subsection (3) Omit the words "or a revised directors' report".
subsection (4) (a) In paragraph (a), omit the words "or report",

(b) in paragraph (b), omit the words "or reporting
accountant" and the words "or report", and

(c) in paragraph (c) -
(i) for the words "previous accounts or
report" substitute "previous accounts",

(ii) omit sub-paragraph (ii), and

(iii) omit the words from ",or where a
summary financial statement" to the end.
Section 245A (Secretary of
State's notice in respect of
annual accounts)[32]

subsection (1) For the words from "copies of" to "general meeting
or" substitute "a copy of a limited liability
partnership's annual accounts has been".
Section 245B (application to
court in respect of defective
accounts)[33]

subsection (3) Omit paragraph (b).
288
Section 246 special provisions
for small companies)[34]

subsection (3) Omit paragraph (a), and paragraph (b) (ii), (iii)
and (iv).
subsection (5) (a) For the words "the directors of the company"
substitute "the designated members of the limited
liability partnership", and

(b) omit paragraph (b).
subsection (6) Omit paragraphs (b) and (c).
subsection (8) Omit paragraph (b) and the words ", in the report"
and ", 234A".
Section 246A (special
provisions for medium-sized
companies)[35]

subsection (3) (a) For the words "The company" substitute "The
designated members", and

(b) for paragraph (a), substitute the following -

" (a) which includes a profit and loss account in
which the following items listed in the profit and
loss account formats set out in Part I of Schedule 4
are combined as one item under the heading
"gross profit or loss"" -

Items 1 to 3 and 6 in Format 1

Items 1 to 5 in Format 2.
Section 247 (qualification of
company as small or medium
sized)[36]

subsection (5) In paragraph (a), for the words "items A to D"
substitute "items B to D".
Section 247A (cases in which
special provisions do not
apply)[37]

subsection (1) Omit paragraphs (a)(i) and (ii).
289
Section 247B (special auditors'
report)[38]

subsection (1) (a) In paragraph (a), for the words "the directors
of a company" substitute "the designated members
of a limited liability partnership", and

(b) in paragraph (b) omit the words "or (2)".
Section 249A (exemptions from
audit)[39]

subsection (3A) Omit subsection (3A).
subsection (6) Omit the words "or gross income".
subsection (6A) Omit the words "or (2)".
subsection (7) Omit the words from ", and gross income'" to the
end.
Section 249AA (dormant
companies)[40]

subsection (1) For the words "section 249B(2) to (5)" substitute
"section 249B (4) and (5)".
subsection (2) In paragraph (a), for the words "section
247A(1)(a)(i) or (b)" substitute "section
247A(1)(b)".
subsection (3) Omit paragraph (a).
subsection (5) In paragraph (b), omit the words "(6) or".
subsection (7) In paragraph (a), for the words "section 28
(change of name)" substitute "paragraph 5 of the
Schedule to the Limited Liability Partnerships Act
2000".Omit paragraph (b).
290
Section 249B (cases where
audit exemption not
available)[41]

subsection (1) Omit the words "or (2)" and paragraphs (a) and
(b).
subsection (1C) For paragraph (b), substitute "that the group's
aggregate turnover in that year (calculated in
accordance with section 249) is not more than 1
million net (or 1.2 million gross),".
subsection (4) (a) Omit the words "or (2)" in both places where
they occur, and (b) omit paragraph (b).
Sections 249C (the report
required for the purposes of
section 249A(2))[42] and 249D
(the reporting accountant)[43]
Omit sections 249C and 249D.
Section 249E (effect of
exemption from audit)[44]

subsection (1) (a) In paragraph (b) omit the words from "or laid"
to the end, and

(b) omit paragraph (c).
Section 251 (provision of
summary financial statement
by listed public companies)[45]
Omit section 251.
Sections 252 and 253 (private
company election to dispense
with laying of accounts and
reports)[46]
Omit section 252 and 253.
Section 254 (exemption for
unlimited companies from
requirement to deliver accounts
and reports)[47]
Omit section 254.
Section 255 (special provisions
for banking and insurance
companies)[48]
Omit section 255.
Section 255A (special Omit section 255A.
291
provisions for banking and
insurance groups)[49]
Section 255B (modification of
disclosure requirements in
relation to banking company or
group)[50]
Omit section 255B.
Section 255D (power to apply
provisions to banking
partnerships)[51]
Omit section 255D.
Section 257 (power of
Secretary of State to alter
accounting requirements)[52]
Omit section 257.
Section 260 (participating
interests)[53]

subsection (6) For the words from ", Schedule 8A," to "Schedule
9A" substitute the words "and Schedule 8A".
Section 262 (minor
definitions)[54]

subsection (1) (a) Omit the definitions of "annual report", and
"credit institution", and

(b) insert the following definition at the appropriate
place -

" "limited liability partnership" means a limited
liability partnership formed and registered under
the Limited Liability Partnerships Act 2000;".
Section 262A (index of defined
expressions)[55]
In the index of defined expressions - (a) the
entries relating to "annual report" "credit
institution" and "reporting accountant", and all
entries relating to sections 255 and 255A and to
Schedules 9 and 9A, shall be omitted, and

(b) the following entry shall be inserted at the
appropriate place -

" "limited liability partnership" section 262".
Schedule 4 (form and content
of company accounts)[56]

Paragraph 1 In sub-paragraph (1)(b), for the words "any one
292
of" substitute "either of".
Paragraph 3[57] In sub-paragraph (2)(b), omit the words "shares
or".Omit sub-paragraph (7)(b) and (c).
Balance Sheet Format
1[58]
Omit the following items and the notes on the
balance sheet formats which relate to them - (a)
item A (called up share capital not paid),

(b) item B.III.7 (own shares),

(c) item C.II.5 (called up share capital not paid),
and

(d) item C.III.2 (own shares).

For item K (capital and reserves) substitute -
" K. Loans and other debts due to members (12)

L. Members' other interests
I Members' capital

II Revaluation reserve

III Other reserves."
Balance Sheet Format 2 Omit the following items and the notes on the
balance sheet format which relate to them - (a)
Assets item A (called up share capital not paid),

(b) Assets item B.III.7 (own shares),

(c) Assets item C.II.5 (called up share capital not
paid), and

(d) Assets item C.III.2 (own shares).
For Liabilities item A (capital and reserves)
substitute -
" A. Loans and other debts due to members (12)

AA. Members' other interests
I Members' capital


293
III Other reserves."
Notes on the balance
sheet formats

Note (12) Substitute the following as Note (12) - " (12)
Loans and other debts due to members

(Format 1, item K and Format 2, item A)

The following amounts shall be shown separately
under this item -
(a) the aggregate amount of money advanced to
the limited liability partnership by the members by
way of loan,

(b) the aggregate amount of money owed to
members by the limited liability partnership in
respect of profits,

(c) any other amounts."
Profit and Loss Account
Formats
In Format 1,[59] for item 20 (profit or loss for the
financial year) substitute "20. Profit or loss for the
financial year before members' remuneration and
profit shares"In Format 2, for item 22 (profit or
loss for the financial year) substitute "22. Profit or
loss for the financial year before members'
remuneration and profit shares"

Omit Profit and Loss Account Formats 3 and 4 and
the notes on the profit and loss account formats
which relate to them.
Notes on the profit and
loss account Formats

Note (15) (income from other
fixed asset investments: other
interest receivable and similar
income)
At the end of Note (15) insert the words "Interest
receivable from members shall not be included
under this item."
Note (16) (interest payable and
similar charges)
At the end of Note (16) insert "Interest payable to
members shall not be included under this item."
Accounting principles and
rules

Paragraph 12[60] In sub-paragraph (b) omit the words "on behalf of
the board of directors".
294
Paragraph 34[61] Omit sub-paragraph (3), (3A) and (3B).
Notes to the accounts
Paragraph 37 For the words "38 to 51" substitute the words "41
to 51(1)".
Insertion of new paragraph
after paragraph 37
Insert the following new paragraph after paragraph
37 -

" Loans and other debts due to members

37A. The following information shall be given -
(a) the aggregate amounts of loans and other
debts due to members as at the date of the
beginning of the financial year,

(b) the aggregate amounts contributed by
members during the financial year,

(c) the aggregate amounts transferred to or from
the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members
or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts
due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts
due to members that fall due after one year."
Paragraphs 38 to 40Paragraphs
49 and 51(2)

Paragraph 56[62]
Omit paragraphs 38 to 40.Omit paragraphs 49 and
51(2).

Insert the following paragraph after paragraph 56 -

" Particulars of members

56A. -

(1) Particulars shall be given of the average
number of members of the limited liability
partnership in the financial year, which number
shall be determined by dividing the relevant annual
number by the number of months in the financial
year.

(2) The relevant annual number shall be
determined by ascertaining for each month in the
295
financial year the number of members of the
limited liability partnership for all or part of that
month, and adding together all the monthly
numbers.

(3) Where the amount of the profit of the limited
liability partnership for the financial year before
members' remuneration and profit shares exceeds
200,000, there shall be disclosed the amount of
profit (including remuneration) which is
attributable to the member with the largest
entitlement to profit (including remuneration).

For the purpose of determining the amount to be
disclosed, "remuneration" includes any
emoluments specified in paragraph 1(1)(a), (c) or
(d) of Schedule 6 to this Act which are paid by or
receivable from -
(i) the limited liability partnership; and

(ii) the limited liability partnership's subsidiary
undertakings; and

(iii) any other person.".
Paragraph 58[63] Omit sub-paragraph (3)(c).
Special provisions where the
company is an investment
company

Paragraphs 71 to 73 Omit paragraphs 71 to 73.
Schedule 4A (form and
content of group
accounts)[64]

Paragraph 1[65] Omit sub-paragraph (3).
Paragraph 10 Omit sub-paragraph (1)(a) to (c).Omit sub-
paragraph (2).
Paragraph 11 For sub-paragraph (1), substitute -

" (1) Where a limited liability partnership adopts
the merger method of accounting, it must comply
with this paragraph, and with generally accepted
accounting principles or practice."

Omit sub-paragraphs (5) to (7).
296
Paragraph 17 (a) In sub-paragraph (2)(a), for the words "item K"
substitute "item L",

(b) in sub-paragraph (2)(b), for the words "item A"
substitute "item AA", and

(c) In sub-paragraphs (3) and (4), omit paragraphs
(c) and (d).
Paragraph 21 In sub-paragraph (3), omit paragraphs (c) and (d).
Schedule 5 (disclosure of
information: related
undertakings)[66]

Paragraph 6[67] Omit paragraph 6.
Paragraph 9A[68] Omit paragraph 9A.
Paragraph 20 Omit paragraph 20.
Paragraph 28A[69] Omit paragraph 28A.
Schedule 8 (form and
content of accounts
prepared by small
companies)[70]

Paragraph 1 In sub-paragraph (1)(b), for the words "any one
of" substitute "either of".
Paragraph 3 In sub-paragraph (2)(b), omit the words "shares
or".Omit sub-paragraph (7)(b).
Balance Sheet Format 1 Omit item A (called up share capital not paid) and
note (1) on the balance sheet format.For item K
(capital and reserves) substitute -

" K. Loans and other debts due to members(9)


I Members' capital


III Other reserves".
Balance Sheet Format 2 Omit Assets item A (called up share capital not
paid) and note (1) on the balance sheet format.For
Liabilities item A (capital and reserves) substitute -

297

" A. Loans and other debts due to members (9)


I Members' capital


Notes on the balance sheet
formats

Note (4) (Others: Other
investments)
Omit Note (4).
Note (9) Substitute the following as Note (9) -

" (9) Loans and other debts due to members

(Format 1, item K and Format 2, item A)

The following amounts shall be shown separately
under this item -
(a) the aggregate amount of money
advanced to the limited liability partnership
by the members by way of loan,

(b) the aggregate amount of money owed
to members by the limited liability
partnership in respect of profits,

(c) any other amounts.".
Profit and Loss Account
Formats
In Format 1, for item 20 (profit or loss for the
financial year) substitute "20. Profit or loss for the
financial year before members' remuneration and
profit shares"In Format 2, for item 22 (profit or
loss for the financial year) substitute "22. Profit or
loss for the financial year before members'
remuneration and profit shares"

Omit Profit and Loss Account Formats 3 and 4 and
the notes on the profit and loss account formats
which relate to them.
Notes on the profit and loss
account formats

298
Note (12) (income from other
fixed asset investments: other
interest receivable and similar
income)
At the end of Note (12) insert the words "Interest
receivable from members shall not be included
under this item."
Note (13) (interest payable and
similar charges)
At the end of Note (13) insert "Interest payable to
members shall not be included under this item.".
Accounting principles and
rules

Paragraph 12 In sub-paragraph (b), omit the words "on behalf of
the board of directors".
Paragraph 34 Omit sub-paragraphs (3), (4) and (5).
Paragraph 37 For the words "Paragraphs 38 to 47" substitute
"Paragraphs 40 to 47".
Insertion of new paragraph
after paragraph 37
Insert the following new paragraph after paragraph
37 -

" Loans and other debts due to members
37A. The following information shall be given -
(a) the aggregate amount of loans and other debts
due to members as at the date of the beginning of
the financial year,

(b) the aggregate amounts contributed by
members during the financial year,

(c) the aggregate amounts transferred to or from
the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members
or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts
due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts
due to members that fall due after one year."
Paragraphs 38 and 39 Omit paragraphs 38 and 39.
Paragraph 45 Omit paragraph 45.
Paragraph 51 Omit sub-paragraph (3)(c).
Schedule 8A (form and
content of abbreviated

299
accounts of small companies
delivered to registrar)[71]
Balance Sheet Format 1 Omit item A (called up share capital not paid).For
item K (capital and reserves) substitute -

" K. Loans and other debts due to members


I Members' capital


Balance Sheet Format 2 Omit Assets item A (called up share capital not
paid).For Liabilities item A (capital and reserves)
substitute -

" A. Loans and other debts due to members


I Members' capital


Paragraphs 5 and 6 Omit paragraphs 5 and 6.
Paragraph 9 Omit sub-paragraph (3)(c).

300
SCHEDULE 2
Regulation 4

PART I

MODIFICATIONS TO PROVISIONS OF THE 1985 ACT APPLIED TO LIMITED LIABILITY
PARTNERSHIPS

Provisions Modifications
Formalities of Carrying on Business
24 (minimum membership for carrying
on business)[72]
In the first paragraph omit the words ",
other than a private company limited by
shares or by guarantee,".
36 (company contracts England and
Wales)[73]

36A (execution of documents England
and Wales)
In subsection (4) for "a director and the
secretary of a company, or by two
directors of a company," substitute "two
members of a limited liability
partnership".In subsection (6) for "a
director and the secretary of a company, or
by two directors of the company"
substitute "two members of a limited
36C (pre-incorporation contracts, deeds
and obligations)

37 (bills of exchange and promissory
notes)

38 (execution of deeds abroad)[74]
39 (power of company to have official
seal for use abroad)[75]
In subsection (1), omit the words "whose
objects require or comprise the transaction
of business in foreign countries may, if
authorised by its articles" and before the
word "have" insert the word "may".
41 (authentication of documents)[76] For "director, secretary or other authorised
officer" substitute "member".
42 (events affecting a company's
status)

subsection (1) In subsection (1), for "other persons"
substitute "persons other than members of
the limited liability partnership".
301
subsection (1)(b) In subsection (1)(b) omit the words "or
articles".
subsection (1)(c) Omit subsection (1)(c).
Miscellaneous provisions about shares and debentures
183 (transfer and registration)[77]
subsection (1) Subsection (1), omit the words "shares in
or".For the words "company's articles"
substitute "limited liability partnership
agreement.".
subsection (2) Subsection (2), omit the words
"shareholder or" together with the words
"shares in or".
subsection (5) Omit the words "shares or".
184 (certification of transfers)[78]
subsection (1) Subsection (1), omit the words "shares in
or" together with the words "shares or".
185 (duty of company as to issue of
certificates)

subsection (1) Subsection (1), omit the words "shares," in
each of the four places that it occurs.
subsection (4) Omit the words "shares or" together with
the words "shares,".
Debentures
190 (register of debenture holders)
191 (right to inspect register)[79]
subsection (1) In subsection (1), paragraph (a), for the
words "or any holder of shares in the
company" substitute "or any member of
302
subsection (2) In subsection (2), delete "or holder of
shares".
subsection (6) In subsection (6), delete the words "in the
articles or".
192 (liability of trustees of debentures)
193 (perpetual debentures)
194 (power to re-issue redeemed
debentures)

subsection (1)(a) In subsection (1)(a), omit the words "in
the articles or".
subsection (1)(b) In subsection (1)(b), for "passing a
resolution" substitute "making a
determination".
195 (contract to subscribe for
debentures)

196 (payment of debts out of assets
subject to floating charge (England and
Wales))[80]

Officers and registered office
287 (registered office)[81] For section 287 there shall be substituted:

" (1) The change of registered office takes
effect upon the notice of c hange of
registered office (delivered to the registrar
in accordance with paragraph 10 of the
Schedule to the Limited Liability
Partnerships Act 2000), being registered by
the registrar, but until the end of the
period of 14 days beginning with the date
on which it is registered a person may
validly serve any document on the limited
liability partnership at its previous
registered office.

(2) Where a limited liability partnership
unavoidably ceases to perform at its
registered office any duty to keep at it s
registered office any register, index or
other document or to mention the address
of its registered office in any document in
circumstances in which it was not
practicable to give prior notice to the
registrar of a change in the situation of the
registered office, but -
303
(a) resumes performance of that duty at
other premises as soon as practicable, and

(b) gives notice accordingly to the registrar
of a change in the situation of its
registered office within 14 days of doing so
it shall not be treated as having
failed to comply with that duty".
288 (register of directors and
secretaries)[82]
For section 288 there shall be substituted:

" Where a person becomes a member or
designated member of a limited liability
partnership the notice to be delivered to
the registrar under section 9(1)(a) of the
Limited Liability Partnerships Act 2000 shall
contain the following particulars with
respect to that person:

(1) name, which
(a) in the case of an individual means his
forename and surname (or, in the case of a
peer or other person usually known by a
title, his title instead of or in addition to
either or both his forename and surname),
and

(b) if a corporation or a Scottish firm, its
corporate or firm name; and
(2) address, which
(a) in the case of an individual means his
usual residential address; and

(b) if a corporation or a Scottish firm, its
registered or principal office; and
(3) in the case of an individual, the
date of his birth."
Company Identification
348 (company name to appear outside
place of business)

349 (company's name to appear in its
correspondence)

304
350 (company seal)[83]
351 (particulars in correspondence
etc.)[84]
In subsection (1) for paragraph (c)
substitute the words "in the case of a
limited liability partnership, whose name
ends with the abbreviation "llp", "LLP",
"pac" or "PAC", the fact that it is a limited
liability partnership or a partneriaeth
atebolrwydd cyfyngedig."Also in subsection
(1) delete paragraph (d) and delete
subsection (2).
Annual Return
363 (duty to deliver annual
returns)[85]
Section 363 of the 1985 Act shall apply to
a limited liability partnership being
modified so as to read as follows: " (1)
Every limited liability partnership shall
deliver to the registrar successive annual
returns each of which is made up to a date
not later than the date which is from time
to time the "return date" of the limited
liability partnership, that is -
(a) the anniversary of the incorporation of
the limited liability partnership, or

(b) if the last return delivered by the
limited liability partnership in accordance
with this section was made up to a
different date, the anniversary of that date.
(2) Each return shall -
(a) be in a form approved by the registrar,

(b) contain the information required by
section 364, and

(c) be signed by a designated member of
(3) If a limited liability partnership
fails to deliver an annual return in
accordance with this section before
the end of the period of 28 days
after the return date, the limited
liability partnership is guilty of an
offence and liable on summary
conviction to a fine not exceeding
level 5 on the standard scale. The
305
contravention continues until such
time as an annual return made up
to that return date and complying
with the requirements of
subsection (2) (except as to date
of delivery) is delivered by the
limited liability partnership to the
registrar.

(4) Where a limited liability
partnership is guilty of an offence
under subsection (3) every
designated member of the limited
liability partnership is similarly
liable unless he shows that he took
all reasonable steps to avoid the
commission of or the continuance
of the offence."
364 (contents of annual return:
general)[86]
For section 364 substitute the following -

" Every annual return shall state the date
to which it is made up and shall contain the
following information -
(a) the address of the registered office of
the limited liability partnership,

(b) the names and usual residential
addresses of the members of the limited
liability partnership and, if some only of
them are designated members, which of
them are designated members, and

(c) if any register of debenture holders (or
a duplicate of any such register or a part of
it) is not kept at the registered office of the
limited liability partnership, the address of
the place where it is kept."
Auditors
384 (duty to appoint auditors)[87]
subsection (2) In subsection (2), for the words from
"(appointment at general meeting at which
accounts are laid)" to the end substitute
the words "(appointment of auditors)".
subsection (3) In subsection (3), omit the words from "or
385A(2)" to the end.
306
subsection (4) For subsection (4) substitute the following
subsection:

" (4) A person is eligible for appointment
by a limited liability partnership as auditor
only if, were the limited liability partnership
a company, he would be eligible under Part
II of the Companies Act 1989 for
appointment as a "company auditor"."
subsection (5) Insert a new subsection (5):

" (5) Part II of the Companies Act 1989
shall apply in respect of auditors of limited
liability partnerships as if the limited
liability partnerships were companies
formed and registered under this Act, and
references in Part II to an officer of a
company shall include reference to a
member of a limited liability partnership."
385 (appointment at general meeting
at which accounts laid)[88]

title to the section In the title to the section for the existing
wording substitute "Appointment of
auditors".
subsection (2) For subsection (2) substitute:

" (2) The designated members of a
limited liability partnership shall appoint
the auditors for the first financial year in
respect of which auditors are appointed
before the end of that financial year and
thereafter before the expiration of not
more than two months following the
approval of the accounts for the preceding
financial year in accordance with section
233.".

" (3) The auditor of a limited liability
partnership shall hold office until not later
than the expiration of two months following
the approval in accordance with section
233 of the accounts for the financial year in
307
respect of which the auditor was
appointed."

" (4) If the designated members fail to
exercise their powers under subsection (2),
the powers may be exercised by the
members of the limited liability partnership
in a meeting convened for the purpose".
387 (appointment by Secretary of State
in default of appointment by
company)[89]

subsection (1) In subsection (1), omit the words "re-
appointed or deemed to be re-appointed".
subsection (2) In subsection (2), for the word "officer"
substitute the words "designated member".
388 (filling of casual vacancies)[90]
subsection (1) In subsection (1), for "directors, or the
company in general meeting," substitute
"designated members".
388A (certain companies exempt from
obligation to appoint auditors)[91]


" (3) The designated members may
appoint auditors and the auditors so
appointed shall hold office until the
expiration of two months following the
approval in accordance with section 233 of
the accounts for the financial year in
respect of which the auditor was
appointed."

308
" (5) If the designated me mbers fail to
exercise their powers under subsection (3),
the powers may be exercised by the
in a meeting convened for the purpose."
389A (rights to information)[92]
390 (right to attend company
meetings)[93]

subsection (1) In paragraph (a), (b) and (c) of subsection
(1) omit the word "general" in each place
where it occurs.At the end of paragraph (a)
add the words "and where any part of the
business of the meeting concerns them as
auditors."

At the end of paragraph (b) add the words
"where any part of the business of the
meeting concerns them as auditors."
390A (remuneration of auditors)[94]
subsection (1) For subsection (1) substitute:" The
remuneration of auditors appointed by the
limited liability partnership shall be fixed by
the designated members or in such manner
as the members of the limited liability
partnership may determine".
subsection (2) In subsection (2), omit the words
"directors or the", in both places where
they occur, and omit the words "as the
case may be".
390B (remuneration of auditors or their
associates for non-audit work)[95]

391 (removal of auditors)[96]
subsection (1) In subsection (1), for the words "A
company may by ordinary resolution"
substitute "The designated members of a
limited liability partnership may" and for
the words "between it and" substitute
309
"with".
subsection (2) (a) In subsection (2), for the words "a
resolution removing an auditor is passed at
a general meeting of a company, the
company" substitute the words "the
designated members of the limited liability
partnership have made a determination to
remove an auditor, the designated
members".

(b) For the words "every officer of it who is
in default" substitute "every designated
member of it who is in default".
subsection (4) In subsection (4), omit the word "general".
391A (rights of auditors who are
removed or not re-appointed)[97]

subsection (1) For subsection (1) substitute" The
designated members shall give seven days'
prior written notice to
(a) any auditor whom it is proposed to
remove before the expiration of his term of
office; or

(b) a retiring auditor where it is proposed
to appoint as auditor a person other than
the retiring auditor."
subsection (3) In subsection (3), for the words "intended
resolution" substitute the word "proposal"
and omit the words "of the company".
subsection (4) Omit the words "(unless the
representations are received by it too late
for it to do so)".Omit subsection (4)(a).

In subsection (4)(b), for the words "of the
company to whom notice in writing of the
meeting is or has been sent." Substitute
"within twenty one days' of receipt.".
subsection (5) For subsection (5) substitute:" If a copy of
the representations is not sent out as
310
required by subsection (4), then unless
subsection (6) applies, the limited liability
partnership and any designated member in
default commits an offence. A person guilty
of an offence under this section is liable on
summary conviction to a fine not exceeding
level 3 on the standard scale."
subsection (6) In subsection (6), the words "and the
representations need not be read at the
meeting" shall be omitted.
392 (resignation of auditors)[98]
subsection (3) In the second paragraph of subsection (3)
for "and every officer of it who is in
default" substitute "and every designated
member of it who is in default".
392A (rights of resigning auditors)[99]
subsection (2) In subsection (2), for "directors" substitute
"designated members" and for "an
extraordinary general meeting of the
company" substitute "a meeting of the
members of the limited liability
partnership".
subsection (3) In subsection (3), omit ",or" from
paragraph (a) and omit paragraph (b).
subsection (5) In subsection (5), for "directors" substitute
"designated members" and for "director"
substitute "designated member".
subsection (8) In subsection (8), omit the word "general"
and the phrase "(a) or (b)".
394 (statement by person ceasing to
hold office as auditor)[100]

394A (offences of failing to comply with
section 394)[101]

Registration of charges
The following references are to sections of the 1985 Act which were replaced by
section 92 of the Companies Act 1989. They will apply to limited liability partnerships
until the said section 92 is commenced.
395 (certain charges void if not
registered)[102]

396 (charges which have to be
registered)[103]
In subsection (1) delete paragraphs (b)
and (g).
311
397 (formalities of registration
(debentures))
In subsection (1), paragraph (b) for the
word "resolutions" substitute
"determinations of the limited liability
partnership".
398 (verification of charge on property
outside United Kingdom)

399 (company's duty to register
charges it creates)

400 (charges existing on property
acquired)

401 (register of charges to be kept by
registrar of companies)

402 (endorsement of certificate on
debentures)

403 (entries of satisfaction and
release)[104]
In subsection (1A), after "of the company"
insert "or designated member,
administrator or administrative receiver of
404 (rectification of register of charges) In subsection (1), omit the words "or
shareholders".
405 (registration of enforcement of
security)

406 (companies to keep copies of
instruments creating charges)

407 (company's register of charges) In subsection (1), for "limited company"
substitute "company (including limited
liability partnership)".
408 (right to inspect instruments which
create charges etc.)
In subsection (1) delete "in general
meeting".
410 (charges void unless
registered)[105]
In subsection (4) delete paragraph (b) and
sub-paragraph (ii) of paragraph (c).In
subsection (5) for "an incorporated
company" substitute "a limited liability
partnership".
411 (charges on property outside the
United Kingdom)

412 (negotiable instrument to secure
book debts)

413 (charges associated with
debentures)
In subsection (2)(b), for the word
"resolutions" substitute "determinations of
312
414 (charge by way of ex facie absolute
disposition, etc.)

415 (company's duty to register
charges created by it)

416 (duty to register charges existing
on property acquired)

417 (register of charges to be kept by
registrar of companies)

418 (certificate of registration to be
issued)

419 (entries of satisfaction and
relief)[106]
In subsection (1A), after the words "of the
company" insert "or a designated member,
liquidator, receiver or administrative
receiver of the limited liability partnership".
420 (rectification of the register) Omit the words "or shareholders".
421 (copies of instruments creating
charges to be kept by the company)

422 (company's register of charges)
423 (right to inspect copies of
instruments, and the company's
register)
In subsection (1) delete "in general
meeting".
Arrangements and Reconstructions
425 (power of company to compromise
with creditors and members)[107]

subsection (3) Omit the words "and a copy of every such
order shall be annexed to every copy of the
company's memorandum issued after the
order has been made or, in the case of a
company not having a memorandum, of
every copy so issued of the instrument
constituting the company or defining its
constitution." For the semi-colon after the
word "registration" substitute a full stop.
426 (information as to compromise to
be circulated)[108]

subsection (2) Omit the words "as directors or".
313
427 (provisions for facilitating company
reconstruction or amalgamation)[109]

subsection (3) In paragraph (b) for the words "policies or
other like interests" substitute "policies,
other like interests or, in the case of a
limited liablity partnership, property or
interests in the limited liability
partnership".
subsection (6) For the words ""company" includes only a
company as defined in section 735(1)"
substitute ""company" includes only a
company as defined in section 735(1) or a
limited liability partnership".
Investigation of companies and their affairs: Requisition of documents
431 (investigation of a company on its
own application or that of its members)
For subsection (2) substitute the
following: " (2) - The appointment may
be made on the application of the limited
liability partnership or on the application of
not less than one-fifth in number of those
who appear from notifications made to the
registrar of companies to be currently
partnership."
432 (other company
investigations)[110]

subsection (4) For the words "but to
whom shares in the company have
been transferred or transmitted by
operation of law" substitute "but to
whom a member's share in the limited
liability partnership has been
transferred or transmitted by operation
of law."

433 (inspectors' powers during
investigation)[111]

434 (production of documents and
evidence to inspectors)[112]

436 (obstruction of inspectors treated
as contempt of court)[113]

437 (inspectors' reports)[114]
438 (power to bring civil proceedings
on company's behalf)[115]

314
439 (expenses of investigating a
company's affairs)[116]

subsection (5) Omit paragraph (b) together with the word
"or" at the end of paragraph (a).
441 (inspectors' report to be
evidence)[117]

447 (Secretary of State's power to
require production of documents)[118]

448 (entry and search of
premises)[119]

449 (provision for security of
information obtained)[120]

450 (punishment for destroying,
mutilating etc. company
documents)[121]
In subsection (1), omit the words ", or of
an insurance company to which Part II of
the Insurance Companies Act 1982
applies,".
451 (punishment for furnishing false
information)[122]

451A (disclosure of information by
Secretary of State or inspector)[123]
In subsection (1), for the words "sections
434 to 446" substitute "sections 434 to
441".Omit subsection (5).
452 (privileged information)[124] In subsection (1), for the words "sections
431 to 446" substitute "sections 431 to
441".In subsection (1A), for the words
"sections 434, 443 or 446" substitute
"section 434".
Fraudulent Trading
458 (punishment for fraudulent trading)
Protection of company's members against unfair prejudice
459 (order on application of company
member)[125]
At the beginning of subsection (1), insert
the words "Subject to subsection (1A),".
After subsection (1) insert as subsection
(1A):" The members of a limited liability
partnership may by unanimous agreement
exclude the right contained in subsection
459(1) for such period as shall be agreed.
The agreement referred to in this
subsection shall be recorded in writing."

315
Omit subsections (2) and (3).
460 (order on application of Secretary
of State)[126]
In subsection (1) omit the words "or,
section 43A or 44(2) to (6) of the
Insurance Companies Act 1982 . . .,".Omit
subsection (2).
461 (provisions as to orders and
petitions under this Part)[127]
In subsection (2)(d) for the words "the
shares of any members of the company by
other members or by the company itself
and, in the case of a purchase by the
company itself, the reduction of the
company's capital accordingly" substitute
the words "the shares of any members in
the limited liability partnership by other
members or by the limited liability
partnership itself.".In subsection (3) for the
words "memorandum or articles" substitute
the words "limited liability partnership
agreement".

For the existing words of subsection (4)
substitute the words "Any alteration in the
limited liability partnership agreement
made by virtue of an order under this Part
is of the same effect as if duly agreed by
the members of the limited liability
partnership and the provisions of this Act
apply to the limited liability partnership
agreement as so altered accordingly.".

Floating charges and Receivers (Scotland)
464 (ranking of floating charges)[128] In subsection (1), for the words "section
462" substitute "the law of Scotland".
466 (alteration of floating
charges)[129]
Omit subsections (1), (2), (3) and (6).
486 (interpretation for Part XVIII
generally)[130]
For the current definition of "company"
substitute" "company" means a limited
liability partnership;"

Omit the definition of "Register of Sasines".
487 (extent of Part XVIII)
Matters arising subsequent to winding up
316
651 (power of court to declare
dissolution of company void)[131]

652 (registrar may strike defunct
company off the register)
In subsection (6) paragraph (a) omit the
word "director".
652A (registrar may strike private
company off the register on
application)[132]
In this section the references to "a private
company" shall include a reference to "a
subsection (1) In subsection (1) the following shall be
substituted for the existing wording" On
application by two or more designated
members of a limited liability partnership,
the registrar of companies may strike the
limited liability partnership's name off the
register".

Omit subsection 2(a) and in subsection
2(b) after the word "be" insert the word
"made".

In subsection (6), omit the word "director".
652B (duties in connection with making
an application under section 652A)
In paragraph (a) of subsection (5) for "no
meetings are" substitute "no meeting is".In
paragraph (b) of subsection (5) for
"meetings summoned under that section
fail" substitute "the meeting summoned
under that section fails".

In paragraph (c) of subsection (5) for
"meetings" substitute "a meeting".

In paragraph (d) of subsection (5) for "at
previous meetings" substitute "at a
previous meeting".
652C (directors' duties following
application under section 652A)
In subsection (2), for the words "is a
director of the company" substitute "is a
designated member of the limited liability
partnership".In subsection (2) omit
paragraph (d).

In subsection (5) for the words "is a
director of the company" substitute "is a
designated member of the limited liability
partnership".

In subsection (6), omit paragraph (d).
317
652D (sections 652B and 652C:
supplementary provisions)

652E (sections 652B and 652C:
enforcement)

652F (other offences connected with
section 652A)

653 (objection to striking off by person
aggrieved)[133]

654 (property of dissolved company to
be bona vacantia)

655 (effect on section 654 of
company's revival after dissolution)

656 (crown disclaimer of property
vesting as bona vacantia)

657 (effect of crown disclaimer under
section 656)[134]

658 (liability for rentcharge on
company's land after dissolution)[135]

Oversea Limited Liability Partnerships
693 (obligation to state name and other
particulars)[136]
For the wording of subsection (1) there
shall be substituted the following words:"
Every oversea limited liability partnership
shall -
(a) in every prospectus inviting
subscriptions for its debentures in Great
Britain, state the country in which the
limited liability partnership is incorporated,

(b) conspicuously exhibit on every place
where it carries on business in Great
Britain the name of the limited liability
partnership and the country in which it is
incorporated,

(c) cause the name of the limited liability
partnership and the country in which it is
incorporated to be stated in legible
characters in all bill heads, letter paper,
and in all notices and other official
publications and communications of the
limited liability partnership."
For subsection (2) there shall be
318
substituted the following words
"For the purposes of this section
"oversea limited liability
partnership" means a body
incorporated or otherwise
established outside Great Britain
whose name under its law of
incorporation or establishment
includes the words "limited liability
partnership."".

Subsections (3) and (4) shall be
omitted.
The Registrar of Companies: His functions and offices
704 (registration offices)[137]
705 (companies' registered
numbers)[138]
706 (delivery to the registrar of
documents in legible form)[139]
In subsection (2)(a), omit the words from
"and, if the document is delivered" to the
end of that paragraph.
707A (the keeping of company records
by the registrar)[140]
707B (delivery to the registrar using
electronic communications)[141]
In subsection (3), omit the "or" at the end
of paragraph (a) and omit paragraph (b).
708 (fees payable to the
registrar)[142]

709 (inspection of records kept by the
registrar)[143]

710 (certificate of incorporation)[144]
710A (provision and authentication by
registrar of documents in non-legible
form)[145]

710B (documents relating to Welsh
companies)[146]
In subsection (7), omit the words "272(5)
and 273(7) and paragraph 7(3) of Part II
of Schedule 9".
711 (public notice by registrar of
receipt and issue of certain
documents)[147]
In subsection (1) delete "or articles" in
paragraph (b) and delete paragraphs (d) to
(j), (l), (m) and (s) to (z).
713 (enforcement of company's duty to
make returns)[148]
In subsection (1), in the penultimate line
for "any officer" substitute "any designated
member".In subsections (2) and (3) for
319
"officers" substitute "designated
members".
714 (registrar's index of company and
corporate names)[149]

715A (interpretation)[150]
Miscellaneous and supplementary provisions
721 (production and inspection of
books where offence suspected)
In subsection (2)(b), for the words "the
secretary of the company or such other"
substitute "such".
722 (form of company registers, etc.)
723 (use of computers for company
records)
723A (obligations of company as to
inspections of registers, & etc.)[151]

725 (service of documents) In subsection (2), for the words "other
head officer" substitute "a designated
member".
726 (costs and expenses in actions by
certain limited companies)
References to a "limited company" shall
include references to a "limited liability
partnership".
727 (power of court to grant relief in
certain cases)
In subsection (1) delete the words "an
officer of a company or" and "officer or".In
subsection (2), delete the words "officer
or".
728 (enforcement of High Court orders)
729 (annual report by Secretary of
State)

730 (punishment of offences)[152]
731 (summary proceedings)[153]
732 (prosecution by public authorities) Delete the references to sections 210, 324,
329 and 455.Omit subsection (2)
paragraphs (a) and (c). In subsection
(2)(b), for the words "either one of those
two persons" substitute "either the
Secretary of State, the Director of Public
Prosecutions".

320
733 (offences by bodies
corporate)[154]

subsection (1) In subsection (1), delete the references to
section 210 and 216(3).
subsection (2) In subsection (2), omit the word
"secretary".
734 (criminal proceedings against
unincorporated bodies)[155]

Interpretation
735A (relationship of this Act to the
Insolvency Act)[156]
In subsection (1), delete all the references
to provisions of the 1985 Act other than
the references to sections 425(6)(a),
460(2) and 728.
736 ("subsidiary", "holding company",
and "wholly-owned subsidiary")[157]

subsection (1) For subsection (1) there shall be
substituted the following words: " (1)
Subject to subsection (1A), a company is a
subsidiary of a limited liability partnership,
its "holding company", if that limited
liability partnership -
(a) holds a majority of the voting rights in
it, or

(b) is a member of it and has the right to
appoint or remove a majority of its board
of directors, or

(c) is a member of it and controls alone,
pursuant to an agreement with other
shareholders or members, a majority of
the voting rights in it,
or if it is a subsidiary of a company
or limited liability partnership
which is itself a subsidiary of that
other company."
subsection (1A) Insert as subsection (1A) - " (1A) A
limited liability partnership is a subsidiary
of a company or a subsidiary of another
limited liability partnership, (such company
321
or limited liability partnership being
referred to in this section as its "holding
company") if that company or limited
liability partnership -
(a) holds a majority of the voting rights in
it;

(b) is a member of it and has the right to
appoint or remove a majority of other
members; or

(c) is a member of it and controls, alone or
pursuant to an agreement with other
members, a majority of voting rights in it,
or if it is a subsidiary of a company
or limited liability partnership
which is itself a subsidiary of that
holding company".
subsection (2) For subsection (2) substitute "A company
or a limited liability partnership is a
"wholly-owned subsidiary" of another
company or limited liability partnership if it
has no members except that other and that
other's wholly-owned subsidiaries or
persons acting on behalf of that other or its
wholly-owned subsidiaries."
736A (provisions supplementing section
736)[158]
After subsection (1) insert a new
subsection (1A) in the following form - "
(1A) In section 736(1A)(a) and (c) the
references to the voting rights in a limited
liability partnership are to the rights
conferred on members in respect of their
interest in the limited liability partnership
to vote on those matters which are to be
decided upon by a vote of the members of
the limited liability partnership."

After subsection (2) insert the new
subsection (2A) in the following form -

" (2A) In section 736(1A)(b) the
reference to the right to appoint or remove
a majority of the members of the limited
liability partnership is to the right to
appoint or remove members holding a
majority of the voting rights referred to in
322
subsection (1A) and for this purpose -
(a) a person shall be treated as having the
right to appoint a member if
(i) a person's appointment as member
results directly from his appointment as a
director or member of the holding
company, or

(ii) the member of the limited liability
partnership is the company or limited
liability partnership which is the holding
company; and
(b) a right to appoint or remove
which is exercisable only with the
consent or concurrence of another
person shall be left out of account."
In subsection (7) after the words
"Rights attached to shares" insert
the words "or to a member's
interest in a limited liability
partnership".

"held by a company", in both
places where they occur, insert "or
a limited liability partnership".

"in the interest of company" insert
"or a limited liability partnership"
and after the words "that
company" in both places where
they occur insert "or limited liability
partnership".

"a company" insert the words "or a
limited liability partnership" and
after the words "by the company"
insert the words "or the limited

In subsection (12) for the existing
words substitute "In this section
"company" includes a body
corporate other than a limited
liability partnership."
323
739 ("non-cash asset")
740 ("body corporate" and
"corporation")

741 ("director" and "shadow
director")[159]
742 (expressions used in connection
with accounts)[160]

743A (meaning of "office copy" in
Scotland)[161]

744 (expressions used generally in this
Act)[162]
Delete the definitions of expressions not
used in provisions which apply to limited
liability partnerships and insert the
following definitions - " "limited liability
partnership" has the meaning given it in
section 1(2) of the Limited Liability
Partnerships Act 2000.".

"shadow member" has the same meaning
as it has in the Limited Liability
Partnerships Regulations 2000.
744A (index of defined
expressions)[163]
Delete the references to expressions not
used in provisions which apply to limited
liability partnerships including, in
particular, the following
expressions:Allotment (and related
expressions)

Section 738

Annual general meeting

Section 366

Authorised minimum

Section 118

Called up share capital

Section 737(1)

Capital redemption reserve

Section 170(1)

Elective resolution

324
Section 379A

Employees' share scheme

Section 743

Existing company

Section 735(1)

Extraordinary general meeting

Section 368

Extraordinary resolution

Section 378(1)

The former Companies Acts

Section 735(1)

The Joint Stock Companies Acts

Section 735(3)

Overseas branch register

Section 362

Paid up (and related expressions)

Section 738

Registered office (of a company)

Section 287

Resolution for reducing share capital

Section 135(3)

Share premium account

Section 130(1)

Share warrant

Section 188

Special notice (in relation to a resolution)

325
Section 379

Special resolution

Section 378(2)

Uncalled share capital

Section 737(2)

Undistributable reserves

Section 264(3)

Unlimited company

Section 1(2)

Unregistered company

Section 718
SCHEDULE 24 (PUNISHMENT OF
OFFENCES UNDER THIS ACT)
Delete the references to those sections
which are not applied to limited liability
partnerships including, in particular, the
following sections:Section 6(3) company
failing to deliver to the registrar notice or
other document, following alteration of its
objects;

Section 18(3) company failing to register
change in memorandum or articles;

Section 19(2) company failing to send to
one of its members a copy of the
memorandum or articles, when so required
by the member;

Section 20(2) where company's
memorandum altered, company issuing
copy of the memorandum without the
alteration;

Section 28(5) company failing to change
name on direction of Secretary of State;

Section 31(5) company altering its
memorandum or articles, so ceasing to be
exempt from having "limited" after its
name;

326
Section 31(6) company failing to change
name, on Secretary of State's direction, so
as to have "limited" (or Welsh equivalent)
at the end;

Section 32(4) company failing to comply
with the Secretary of State's direction to
change its name, on grounds that the
name is misleading;

Section 33 trading under misleading name
(use of "public limited company" or Welsh
equivalent when not so entitled);
purporting to be a private company;

Section 34 trading or carrying on business
with improper use of "limited" or
"cyfyngedig";

Section 54(10) public company failing to
give notice, or copy of court order, to
registrar, concerning application to re-
register as private company;

Section 80(9) directors exercising
company's power of allotment without the
authority required by section 80(1);

Section 81(2) private company offering
shares to the public, or allotting shares
with a view to their being so offered;

Section 82(5) allotting shares or
debentures before third day after issue of
prospectus;

Section 86(6) company failing to keep
money in separate bank account, where
received in pursuance of prospectus stating
that stock exchange listing is to be applied
for;

Section 87(4) offeror of shares for sale
failing to keep proceeds in separate bank
account;

Section 88(5) officer of company failing to
deliver return of allotments, etc. to the
registrar;

Section 95(6) knowingly or recklessly
authorising or permitting misleading, false
327
or deceptive material in statement by
directors under section 95(5);

Section 97(4) company failing to deliver to
registrar the prescribed form disclosing
amount or rate of share commission;

Section 110(2) making misleading, false or
deceptive statement in connection with
valuation under section 103 or 104;

Section 111(3) officer of company failing to
deliver copy of asset valuation report to
registrar;

Section 111(4) company failing to deliver
to registrar copy of resolution under
Section 104(4), with respect to transfer of
an asset as consideration for allotment;

Section 114 contravention of any of the
provisions of sections 99 to 104, 106;

Section 117(7) company doing business or
exercising borrowing powers contrary to
section 117;

Section 122(2) company failing to give
notice to registrar of reorganisation of
share capital;

notice to registrar of increase of share
capital;

Section 127(5) company failing to forward
to registrar copy of court order, when
application made to cancel resolution
varying shareholders' rights;

Section 128(5) company failing to send to
registrar statement or notice required by
section 128 (particulars of shares carrying
special rights);

Section 129(4) company failing to deliver
to registrar statement or notice required by
section 129 (registration of newly created
class rights);

Section 141 officer of company concealing
name of creditor entitled to object to
328
reduction of capital, or wilfully
misrepresenting the nature or amount of
debt or claim, etc.;

Section 142(2) director authorising or
permitting non-compliance with section
142 (requirement to convene company
meeting to consider serious loss of
capital);

Section 143(2) company acquiring its own
shares in breach of section 143;

Section 149(2) company failing to cancel
its own shares acquired by itself, as
required by section 146(2); or failing to
apply for re-registration as private
company as so required in the case there
mentioned;

Section 151(3) company giving financial
assistance towards acquisition of its own
shares;

statutory declaration under section 155;

Section 156(7) director making statutory
declaration under section 155, without
having reasonable grounds for opinion
expressed in it;

Section 169(6) default by company's
officer in delivering to registrar the return
required by section 169 (disclosure by
company of purchase of its own shares);

copy of contract, etc., at registered office;
refusal of inspection to person demanding
it;

Section 173(6) director making statutory
declaration under section 173 without
having reasonable grounds for the opinion
expressed in the declaration;

Section 175(7) refusal of inspection of
statutory declaration and auditor's report
under section 173, etc.;

329
notice to registrar of application to court
under section 176, or to register court
order;

Section 183(6) company failing to send
notice of refusal to register a transfer of
shares or debentures;

Section 185(5) company default in
compliance with section 185(1)
(certificates to be made ready following
allotment or transfer of shares, etc.);

Section 189(1) offences of fraud and
forgery in connection with share warrants
in Scotland;

Section 189(2) unauthorised making of, or
using or possessing apparatus for making
share warrants in Scotland;

Section 210(3) failure to discharge
obligation of disclosure under Part VI;
other forms of non-compliance with that
Part;

register of interests disclosed under Part
IV; other contraventions of section 211;

Section 214(5) company failing to exercise
powers under section 212, when so
required by the members;

compliance with section 215 (company
report of investigation of shareholdings on
members' requisition);

Section 216(3) failure to comply with
company notice under section 212;

Making false statement in response etc.;

Section 217(7) company failing to notify
a person that he has been named as a
shareholder; on removal of name from
register, failing to alter associated index;

Section 218(3) improper removal of entry
from register of interests disclosed;

330
company failing to restore entry improperly
removed;

register or report under Part VI; failure to
send copy when required;

Section 232(4) default by director or officer
of a company in giving notice of matters
relating to himself for purposes of Schedule
6 Part I;

Section 234(5) non-compliance with Part
VII as to directors' report and its content;

directors individually liable;

Section 234A(4) laying, circulating or
delivering directors' report without required
signature;

Section 241(2) failure to lay accounts and
reports before the company in general
meeting before the end of the period
allowed for doing this;

Section 251(6) failure to comply with
requirements in relation to summary
financial statements;

Section 288(4) default in complying with
section 288 (keeping register of directors
and secretaries, refusal of inspection);

Section 291(5) acting as director of a
company without having the requisite
share qualification;

Section 294(3) director failing to give
notice of his attaining retirement age;

acting as director under appointment
invalid due to his attaining it;

complying with section 305 (directors'
name to appear on company
correspondence, etc.);

Section 306(4) failure to state that liability
of proposed director or manager is
unlimited; failure to give notice of that fact
331
to person accepting office;

Section 314(3) director failing to comply
with section 314;

Section 317(7) director failing to disclose
interest in contract;

Section 318(8) company in default in
complying with section 318(1) or (5);

Section 322B(4) terms of unwritten
contract between sole member of a private
company limited by shares or by guarantee
and the company not set out in a written
memorandum or recorded in minutes of a
directors' meeting;

Section 323(2) director dealing in options
to buy or sell company's listed shares or
debentures;

Section 324(7) director failing to notify
interest in company's shares; making false
statement in purported notification;

Section 326(2), (3), (4) and (5) various
defaults in connection with company
register of directors' interests;

Section 328(6) director failing to notify
company that members of his family etc.
have or have exercised options to buy
shares or debentures; making false
statement in purported notification;

Section 329(3) company failing to notify
investment exchange of acquisition of its
securities by a director;

Section 342(1) director or relevant
company authorising or permitting
company to enter into transaction or
arrangement, knowing or suspecting it to
contravene section 330;

Section 342(2) relevant company entering
into transaction or arrangement for a
director in contravention of section 330;

Section 342(3) procuring a relevant
company to enter into transaction or
332
arrangement known to be contrary to
section 330;

Section 343(8) company failing to maintain
register of transactions etc. made with and
for directors and not disclosed in company
accounts; failing to make register available
at registered office or at company meeting;

complying with section 352 (requirement
to keep register of members and their
particulars);

Section 352A(3) company default in
complying with section 352A (statement
that company has only one member);

Section 353(4) company failing to send
notice to registrar as to place where
register of members is kept;

index of members;

members' register; failure to send copy on
requisition;

Section 364(4) company without share
capital failing to complete and register
annual return in due time;

Section 366(4) company default in holding
annual general meeting;

complying with Secretary of State's
direction to hold a company meeting;

resolution that meeting held under section
367 is to be its annual general meeting;

Section 372(4) failure to give notice, to
member entitled to vote at company
meeting, that he may do so by proxy;

Section 372(6) officer of company
authorising or permitting issue of irregular
invitations to appoint proxies;

333
Section 376(7) officer of company in
default as to circulation of members'
resolutions for company meeting;

Section 380(5) company failing to comply
with section 380 (copies of certain
resolutions etc. to be sent to registrar of
companies);

Section 380(6) company failing to include
copy of resolution to which section 380
applies in articles; failing to forward copy
to member on request;

Section 381B(2) director or secretary of
company failing to notify auditors of
proposed written resolution;

minutes of proceedings at company and
board meetings, etc.;

Section 382B(2) failure of sole member to
provide the company with a written record
of a decision;

minutes of general meeting; failure to send
copy of minutes on member's request;

Section 389(10) person acting as a
company auditor knowing himself to be
disqualified: failing to give notice vacating
office when he becomes disqualified;

Section 429(6) offeror failing to send
copy of notice or making statutory
declaration knowing it to be false etc.;

Section 430A(6) offeror failing to give
rights to minority shareholder;

Section 444(3) failing to give Secretary of
State, when required to do so, information
about interests in shares etc.; giving false
information;

Section 455(1) exercising a right to
dispose of, or vote in respect of, shares
which are subject to restrictions under Part
XV; failing to give notice in respect of
shares so subject; entering into agreement
334
void under section 454(2), (3);

Section 455(2) issuing shares in
contravention of restrictions under Part XV;

Section 461(5) failure to register office
copy of court order under Part XVII
altering, or giving leave to alter, company's
memorandum;

Section 697(1) oversea company failing to
comply with any of sections 691 to 693 or
696;

Section 697(2) oversea company
contravening section 694(6) (carrying on
business under its corporate name after
Secretary of State's direction);

comply with section 695A or Schedule 21A;

comply with requirements as to accounts
and reports;

Section 703D(5) oversea company failing
to deliver particulars of charge to registrar;

Section 703R(1) company failing to
register winding up or commencement of
insolvency proceedings etc.;

Section 703R(2) liquidator failing to
register appointment, termination of
winding up or striking off of company;

Section 720(4) insurance company etc.
failing to send twice yearly statement in
form of Schedule 23;

Schedule 14, Pt II, paragraph 1(3)
company failing to give notice of location of
overseas branch register, etc.;

Schedule 14, Pt II, paragraph 4(2)
company failing to transmit to its
registered office in Great Britain copies of
entries in overseas branch register or to
keep duplicate of overseas branch
register.;

335
Schedule 21C, Pt I, paragraph 7 credit or
financial institution failing to deliver
accounting documents;

Schedule 21C, Pt II, paragraph 15 credit or
financial institution failing to deliver
accounts and reports;

Schedule 21D, Pt I, paragraph 5 company
failing to deliver accounting documents;

Schedule 21D, Pt I, Paragraph 13 company
failing to deliver accounts and reports.

336
PART II

MODIFICATIONS TO THE COMPANY DIRECTORS DISQUALIFICATION ACT 1986

Part II of
Schedule I
After paragraph 8 insert - " 8A The extent of the member's and
shadow members' responsibility for events leading to a member or
shadow member, whether himself or some other member or shadow
member, being declared by the court to be liable to make a contribution
to the assets of the limited liability partnership under section 214A of
the Insolvency Act 1986."

SCHEDULE 3
Regulation 5

MODIFICATIONS TO THE 1986 ACT

Section 1 (those who may
propose an arrangement)

subsection (1) For "The directors of a company" substitute "A
limited liability partnership" and delete "to the
company and".
subsection (3) At the end add "but where a proposal is so made
it must also be made to the limited liability
partnership".
The following modifications to sections 2 to 7 apply where a proposal under section 1
has been made by the limited liability partnership.
Section 2 (procedure where the
nominee is not the liquidator or
administrator)

subsection (2) In paragraph (a) for "meetings of the company
and of it creditors" substitute "a meeting of the
creditors of the limited liability partnership";In
paragraph (b) for the first "meetings" substitute
"a meeting" and for the second "meetings"
substitute "meeting".
subsection (3) For "the person intending to make the proposal"
337
subsection (4) For "the person intending to make the proposal"
Section 3 (summoning of
meetings)

subsection (1) For "such meetings as are mentioned in section
2(2)" substitute "a meeting of creditors" and for
"those meetings" substitute "that meeting".
subsection (2) Delete subsection (2).
Section 4 (decisions of
meetings)

subsection (1) For "meetings" substitute "meeting".
subsection (5) For "each of the meetings" substitute "the
meeting".
new subsection (5A) Insert a new subsection (5A) as follows - " (5A)
If modifications to the proposal are proposed at
the meeting the chairman of the meeting shall,
before the conclusion of the meeting, ascertain
from the limited liability partnership whether or
not it accepts the proposed modifications; and if
at that conclusion the limited liability partnership
has failed to respond to a proposed modification it
shall be presumed not to have agreed to it."
subsection (6) For "either" substitute "the"; after "the result of
the meeting", in the first place where it occurs,
insert "(including, where modifications to the
proposal were proposed at the meeting, the
response to those proposed modifications made
by the limited liability partnership)"; and at the
end add "and to the limited liability partnership".
Section 5 (effect of approval)
subsection (1) For "each of the meetings" substitute "the
meeting" and for "with the same modifications"
substitute "with modifications agreed to by the
subsection (4) For "each of the reports" substitute "the report".
Section 6 (challenge of
decisions)

338
subsection (1) For "meetings" substitute "meeting" and for
"either of the meetings" substitute "the meeting".
subsection (2) For "either of the meetings" substitute "the
meeting" and after paragraph (a) add a new
paragraph (aa) as follows - " (aa) any member of
the limited liability partnership; and".

Omit the word "and" at the end of paragraph (b)
and omit paragraph (c).
subsection (3) For "each of the reports" substitute "the report".
subsection (4) For subsection (4) substitute the following - "
(4) Where on such an application the court is
satisfied as to either of the grounds mentioned in
subsection (1), it may do one or both of the
following, namely -
(a) revoke or suspend the approval given by the
meeting;

(b) give a direction to any person for the
summoning of a further meeting to consider any
revised proposal the limited liability partnership
may make or, in a case falling within subsection
(1)(b), a further meeting to consider the original
proposal.".
subsection (5) For the first "meetings" substitute "a meeting", for
the second "meetings" substitute "meeting" and
for "person who made the original proposal"
substitute "limited liability partnership".
Section 7 (implementation of
proposal)

subsection (1) For "meetings" substitute "meeting".
The following modifications to sections 2 and 3 apply where a proposal under section
1 has been made, where an administration order is in force in relation to the limited
liability partnership, by the administrator or, where the limited liability partnership is
being wound up, by the liquidator.
Section 2 (procedure where the
nominee is not the liquidator or
administrator)

subsection (2) In paragraph (a) for "meetings of the company"
substitute "meetings of the members of the
339
Section 3 (summoning of
meetings)

subsection (2) For "meetings of the company" substitute "a
meeting of the members of the limited liability
partnership".
Section 8 (power of court to
make order)[164]

Section 9 (application for
order)[165]

subsection (1) Delete ", or the directors".
Section 10 (effect of application)
subsection (1) In paragraph (a) for "no resolution may be
passed" to the end of the subsection substitute
"no determination may be made or order made
for the winding up of the limited liability
partnership.".
Section 11 (effect of order)
subsection (3) In paragraph (a) for "no resolution may be
passed" to the end of the subsection substitute
"no determination may be made or order made
for the winding up of the limited liability
partnership.".
Section 13 (appointment of
administrator)

subsection (3) In paragraph (c) delete "or the directors".
Section 14 (general powers)
subsection (2) For paragraph (a) substitute - " (a) to prevent any
person from taking part in the management of the
business of the limited liability partnership and to
appoint any person to be a manager of that
business, and";

and at the end add the following -

340
" Subsections (3) and (4) of section 92 shall apply
for the purposes of this subsection as they apply
for the purposes of that section."
Section 73 (alternative modes of
winding up)

subsection (1) Delete ",within the meaning given to that
expression by section 735 of the Companies Act,".
Section 74 (liability as
contributories of present and
past members)

For section 74 there shall be
substituted the following -

" 74. When a limited liability partnership is
wound up every present and past member of the
limited liability partnership who has agreed with
the other members or with the limited liability
partnership that he will, in circumstances which
have arisen, be liable to contribute to the assets
of the limited liability partnership in the event that
the limited liability partnership goes into
liquidation is liable, to the extent that he has so
agreed, to contribute to its assets to any amount
sufficient for payment of its debts and liabilities,
and the expenses of the winding up, and for the
adjustment of the rights of the contributories
among themselves.

However, a past member shall only be liable if the
obligation arising from such agreement survived
his ceasing to be a member of the limited liability
partnership."
Section 75 to 78 Delete sections 75 to 78.
Section 79 (meaning of
"contributory")

subsection (1) In subsection (1) for "every person" substitute"
(a) every present member of the limited liability
partnership and (b) every past member of the
subsection (2) After "section 214 (wrongful trading)" insert" or

214A (adjustment of withdrawals)".
341
Section 83 (companies
registered under Companies Act,
Part XXII, Chapter II)

Delete section 83.
Section 84 (circumstances in
which company may be wound
up voluntarily)

(1) A limited liability partnership may be wound
up voluntarily when it determines that it is to be
wound up voluntarily."
(3) Within 15 days after a limited liability
partnership has determined that it be wound up
there shall be forwarded to the registrar of
companies either a printed copy or else a copy in
some other form approved by the registrar of the
determination."
subsection (4) After subsection (3) insert a new subsection (4) -
" (4) If a limited liability partnership fails to
comply with this regulation the limited liability
partnership and every designated member of it
who is in default is liable on summary conviction
to a fine not exceeding level 3 on the standard
scale."
Section 85 (notice of resolution
to wind up)

(1) When a limited liability partnership has
determined that it shall be wound up voluntarily,
it shall within 14 days after the making of the
determination give notice of the determination by
advertisement in the Gazette."
Section 86 (commencement of
winding up)

Substitute the following new section - " 86. A
342
voluntary winding up is deemed to commence at
the time when the limited liability partnership
determines that it be wound up voluntarily.".
Section 87 (effect on business
and status of company)

subsection (2) In subsection (2), for "articles" substitute "limited
liability partnership agreement".
Section 88 (avoidance of share
transfers, etc. after winding-up
resolution)

For "shares" substitute "the interest of any
member in the property of the limited liability
partnership".
Section 89 (statutory declaration
of solvency)

For "director(s)" wherever it appears in section 89
substitute "designated member(s)";
subsection (2) For paragraph (a) substitute the following - " (a)
it is made within the 5 weeks immediately
preceding the date when the limited liability
partnership determined that it be wound up
voluntarily or on that date but before the making
of the determination, and".
subsection (3) For "the resolution for winding up is passed"
substitute "the limited liability partnership
determined that it be wound up voluntarily".
subsection (5) For "in pursuance of a resolution passed"
substitute "voluntarily".
Section 90 (distinction between
"members" and "creditors"
voluntary winding up)

For "directors'" substitute "designated members'".
liquidator)

subsection (1) Delete "in general meeting".
subsection (2) For the existing wording substitute " (2) On the
appointment of a liquidator the powers of the
members of the limited liability partnership shall
cease except to the extent that a meeting of the
343
summoned for the purpose or the liquidator
sanctions their continuance."

After subsection (2) insert -

" (3) Subsections (3) and (4) of section 92
shall apply for the purposes of this section as they
apply for the purposes of that section."
Section 92 (power to fill vacancy
in office of liquidator)

subsection (1) For "the company in general meeting" substitute
"a meeting of the members of the limited liability
partnership summoned for the purpose".
subsection (2) For "a general meeting" substitute "a meeting of
the members of the limited liability partnership".
subsection (3) In subsection (3), for "articles" substitute "limited
liability partnership agreement".
new subsection (4) Add a new subsection (4) as follows - " (4) The
quorum required for a meeting of the members of
the limited liability partnership shall be any
quorum required by the limited liability
partnership agreement for meetings of the
members of the limited liability partnership and if
no requirement for a quorum has been agreed
upon the quorum shall be 2 members."
Section 93 (general company
meeting at each year's end)

subsection (1) For "a general meeting of the company" substitute
partnership".
new subsection (4) Add a new subsection (4) as follows - " (4)
subsections (3) and (4) of section 92 shall apply
for the purposes of this section as they apply for
the purposes of that section."
Section 94 (final meeting prior
to dissolution)

partnership".
new subsection (5A) Add a new subsection (5A) as follows - " (5A)
344
Subsections (3) and (4) of section 92 shall apply
partnership".
Section 95 (effect of c ompany's
insolvency)

subsection (1) For "directors'" substitute "designated members'".
(7) In this section the relevant period' means the
period of 6 months immediately preceding the
date on which the limited liability partnership
determined that it be wound up voluntarily."
Section 96 (conversion to
creditors' voluntary winding up)

paragraph (a) For "directors'" substitute "designated members'".
paragraph (b) Substitute a new paragraph (b) as follows - " (b)
the creditors' meeting was the meeting mentioned
in section 98 in the next Chapter;".
Section 98 (meeting of
creditors)

cause a meeting of its creditors to be summoned
for a day not later than the 14th day after the day
on which the limited liability partnership
determines that it be wound up voluntarily;".
subsection (5) For "were sent the notices summoning the
company meeting at which it was resolved that
the company be wound up voluntarily" substitute
"the limited liability partnership determined that it
be wound up voluntarily".
Section 99 (directors to lay
statement of affairs before
creditors)

subsection (1) For "the directors of the company" substitute "the
designated members" and for "the director so
appointed" substitute "the designated member so
345
appointed".
subsection (2) For "directors" substitute "designated members".
subsection (3) For "directors" substitute "designated members"
and for "director" substitute "designated
member".
liquidator)

subsection (1) For "The creditors and the company at their
respective meetings mentioned in section 98"
substitute "The creditors at their meeting
mentioned in section 98 and the limited liability
partnership".
subsection (3) Delete "director,".
liquidation committee)

(2) If such a committee is appointed, the limited
liability partnership may, when it determines that
it be wound up voluntarily or at any time
thereafter, appoint such number of persons as
they think fit to act as members of the committee,
not exceeding 5."
Section 105 (meetings of
company and creditors at each
year's end)

partnership".
new subsection (5) Add a new subsection (5) as follows - " (5)
Section 106 (final meeting prior
to dissolution)

partnership".
new subsection (5A) After subsection (5) insert a new subsection (5A)
346
as follows - " (5A) Subsections (3) and (4) of
section 92 shall apply for the purposes of this
section as they apply for the purposes of that
section."
partnership".
Section 110 (acceptance of
shares, etc., as consideration for
sale of company property)

For the existing section substitute the
following: " (1) This section applies, in the case
of a limited liability partnership proposed to be, or
being, wound up voluntarily, where the whole or
part of the limited liability partnership's business
or property is proposed to be transferred or sold
to another company whether or not it is a
company within the meaning of the Companies
Act ("the transferee company") or to a limited
liability partnership ("the transferee limited
liability partnership").

(2) With the requisite sanction, the liquidator of
the limited liability partnership being, or proposed
to be, wound up ("the transferor limited liability
partnership") may receive, in compensation or
part compensation for the transfer or sale, shares,
policies or other like interests in the transferee
company or the transferee limited liability
partnership for distribution among the members
of the transferor limited liability partnership.

(3) The sanction required under subsection (2)
is -
(a) in the case of a members' voluntary winding
up, that of a determination of the limited liability
partnership at a meeting of the members of the
limited liability partnership conferring either a
general authority on the liquidator or an authority
in respect of any particular arrangement,
(subsections (3) and (4) of section 92 to apply for
this purpose as they apply for the purposes of
that section), and

(b) in the case of a creditor's voluntary winding
up, that of either court or the liquidation
committee.
347
(4) Alternatively to subsection (2), the
liquidator may (with the sanction) enter
into any other arrangement whereby the
members of the transferor limited liability
partnership may, in lieu of receiving cash,
shares, policies or other like interests (or
in addition thereto), participate in the
profits, or receive any other benefit from
the transferee company or the transferee

(5) A sale or arrangement in pursuance
of this section is binding on members of
the transferor limited liability partnership.

(6) A determination by the limited
liability partnership is not invalid for the
purposes of this section by reason that it
is made before or concurrently with a
determination by the limited liability
partnership that it be wound up
voluntarily or for appointing liquidators;
but, if an order is made within a year for
winding up the limited liability partnership
by the court, the determination by the
limited liability partnership is not valid
unless sanctioned by the court."
Section 111 (dissent from
arrangement under section 110)

subsections (1) - (3) For subsections (1)-(3) substitute the following -
" (1) This section applies in the case of a
voluntary winding up where, for the purposes of
section 110(2) or (4), a determination of the
limited liability partnership has provided the
sanction requisite for the liquidator under that
section.

(2) If a member of the transferor limited
liability partnership who did not vote in favour of
providing the sanction required for the liquidator
under section 110 expresses his dissent from it in
writing addressed to the liquidator and left at the
registered office of the limited liability partnership
within 7 days after the date on which that
sanction was given, he may require the liquidator
either to abstain from carrying the arrangement
so sanctioned into effect or to purchase his
interest at a price to be determined by agreement
or arbitration under this section.
348

(3) If the liquidator elects to purchase the
member's interest, the purchase money must be
paid before the limited liability partnership is
dissolved and be raised by the liquidator in such
manner as may be determined by the limited
liability partnership."
Section 117 (high court and
county court jurisdiction)

subsection (2) Delete "Where the amount of a company's share
capital paid up or credited as paid up does not
exceed 120,000, then (subject to this section)".
Section 120 (court of session
and sheriff court
jurisdiction)[166]

subsection (3) Delete "Where the amount of a company's share
capital paid up or credited as paid up does not
exceed 120,000,".
Section 122 (circumstances in
which company may be wound
up by the court)[167]

subsection (1) For subsection
(1) substitute the following -

" (1) A limited liability
partnership may be wound up by
the court if -
(a) the limited liability
partnership has
determined that the
limited liability
partnership be wound up
by the court,

(b) the limited liability
partnership does not
commence its business

349
within a year from its
incorporation or suspends
its business for a whole
year,

(c) the number of
members is reduced
below two,

(d) the limited liability
partnership is unable to
pay its debts, or

(e) the court is of the
opinion that it is just and
equitable that the limited
liability partnership
should be wound up."
Section 124 (application for
winding up)[168]

subsections (2), (3) and (4)(a) Delete these subsections.
Section 124A (petition for
winding-up on grounds of public
interest)[169]

Section 126 (power to stay or
restrain proceedings against
company)

Section 127 (avoidance of
property dispositions, etc.)

For "any transfer of shares" substitute "any
transfer by a member of the limited liability
partnership of his interest in the property of the
Section 129 (commencement of
winding up by the court)

subsection (1) For "a resolution has been passed by the
company" substitute "a determination has been
made" and for "at the time of the passing of the
resolution" substitute "at the time of that
350
determination".
Section 130 (consequences of
winding-up order)

Section 148 (settlement of list of
contributories and application of
assets)

subsection (1) Delete ", with power to rectify the register of
members in all cases where rectification is
required in pursuance of the Companies Act or
this Act,".
Section 149 (debts due from
contributory to company)

subsection (1) Delete "the Companies Act or".
subsection (3) Delete ", whether limited or unlimited,".
Section 160 (delegation of
powers to liquidator (England
and Wales))

subsection (1) In subsection (1)(b) delete "and the rectifying of
the register of members".
(2) But the liquidator shall not make any call
without the special leave of the court or the
sanction of the liquidation committee."
Section 165 (voluntary winding
up)

subsection (2) In paragraph (a) for "an extraordinary resolution
of the company" substitute "a determination by a
meeting of the members of the limited liability
partnership".
subsection (4) For paragraph (c) substitute the following - " (c)
summon meetings of the members of the limited
liability partnership for the purpose of obtaining
their sanction or for any other purpose he may
think fit."
351
Section 166 (creditors' voluntary
winding up)

subsection (5) In paragraph (b) for "directors" substitute
"designated members".
Section 171 (removal, etc.
(voluntary winding up))

in the case of a members' voluntary winding up,
by a meeting of the members of the limited
liability partnership summoned specially for that
purpose, or".
subsection (6) In paragraph (a) for "final meeting of the
company" substitute "final meeting of the
members of the limited liability partnership" and
in paragraph (b) for "final meetings of the
company" substitute "final meetings of the
new subsection (7) Insert a new subsection (7) as follows - " (7)
Subsections (3) and (4) of section 92 are to apply
Section 173 (release (voluntary
winding up))

subsection (2) In paragraph (a) for "a general meeting of the
company" substitute "a meeting of the members
of the limited liability partnership".
Section 183 (effect of execution
or attachment (England and
Wales))

subsection (2) Delete paragraph (a).
Section 184 (duties of sheriff
(England and Wales))[170]

subsection (1) For "a resolution for voluntary winding up has
been passed" substitute "the limited liability
partnership has determined that it be wound up
352
voluntarily".
subsection (4) Delete "or of a meeting having been called at
which there is to be proposed a resolution for
voluntary winding up," and "or a resolution is
passed (as the case may be)".
Section 187 (power to make
over assets to employees)

Delete section 187.
Section 194 (resolutions passed
at adjourned meetings)

After "contributories" insert "or of the members of
a limited liability partnership".
Section 195 (meetings to
ascertain wishes of creditors or
contributories)

subsection (3) Delete "the
Companies Act or".

Section 206 (fraud, etc. in
anticipation of winding up)[171]

subsection (1) For "passes a resolution for voluntary winding up"
substitute "makes a determination that it be
wound up voluntarily".
Section 207 (transactions in
fraud of creditors)

substitute "ma kes a determination that it be
wound up voluntarily".
Section 210 (material omissions
from statement relating to
company's affairs)

subsection (2) For "passed a resolution for voluntary winding up"
substitute "made a determination that it be wound
up voluntarily".
Section 214 (wrongful trading)
subsection (2) Delete from "but the court shall not" to the end of
the subsection.
After section 214
Insert the following new section 214A" 214A
353
Adjustment of withdrawals

(1) This section has effect in relation to a
person who is or has been a member of a limited
liability partnership where, in the course of the
winding up of that limited liability partnership, it
appears that subsection (2) of this section applies
in relation to that person.

(2) This subsection applies in relation to a
person if -
(a) within the period of two years ending with the
commencement of the winding up, he was a
member of the limited liability partnership who
withdrew property of the limited liability
partnership, whether in the form of a share of
profits, salary, repayment of or payment of
interest on a loan to the limited liability
partnership or any other withdrawal of property,
and

(b) it is proved by the liquidator to the satisfaction
of the court that at the time of the withdrawal he
knew or had reasonable ground for believing that
the limited liability partnership -
(i) was at the time of the withdrawal unable to
pay its debts within the meaning of section 123,
or

(ii) would become so unable to pay its debts after
the assets of the limited liability partnership had
been depleted by that withdrawal taken together
with all other withdrawals (if any) made by any
members contemporaneously with that withdrawal
or in contemplation when that withdrawal was
made.
(3) Where this section has effect in
relation to any person the court, on the
application of the liquidator, may declare
that that person is to be liable to make
such contribution (if any) to the limited
liability partnership's assets as the court
thinks proper.

(4) The court shall not make a
declaration in relation to any person the
amount of which exceeds the aggregate of
the amounts or values of all the
withdrawals referred to in subsection (2)
354
made by that person within the period of
two years referred to in that subsection.

(5) The court shall not make a
declaration under this section with respect
to any person unless that person knew or
ought to have concluded that after each
withdrawal referred to in subsection (2)
there was no reasonable prospect that the
limited liability partnership would avoid
going into insolvent liquidation.

(6) For the purposes of subsection (5)
the facts which a member ought to know
or ascertain and the conclusions which he
ought to reach are those which would be
known, ascertained, or reached by a
reasonably diligent person having both:
(a) the general knowledge, skill and experience
that may reasonably be expected of a person
carrying out the same functions as are carried out
by that member in relation to the limited liability
partnership, and

(b) the general knowledge, skill and experience
that that member has.
(7) For the purposes of this section a
limited liability partnership goes into
insolvent liquidation if it goes into
liquidation at a time when its assets are
insufficient for the payment of its debts
and other liabilities and the expenses of
the winding up.

(8) In this section "member" includes a
shadow member.

(9) This section is without prejudice to
section 214."
Section 215 (proceedings under
ss 213,214)

subsection (1) Omit the word "or" between the words "213" and
"214" and insert after "214" "or 214A".
subsection (2) For "either section" substitute "any of those
sections".
355
subsection (4) For "either section" substitute "any of those
sections".
subsection (5) For "Sections 213 and 214" substitute "Sections
213, 214 or 214A".
Section 218 (prosecution of
delinquent officers and members
of company)[172]

subsection (1) For "officer, or any member, of the company"
substitute "member of the limited liability
partnership".
subsections (3), (4) and (6) For "officer of the company, or any member of it,"
substitute "officer or member of the limited
Section 233 (supplies of gas,
water, electricity etc.)[173]

subsection (1) For paragraph (c) substitute the following - " (c) a
voluntary arrangement under Part I has taken
effect in accordance with section 5".
subsection (4) For paragraph (c) substitute the following - " (c)
the date on which the voluntary arrangement took
effect in accordance with section 5".
Section 247 ("insolvency" and
"go into liquidation")

substitute "makes a determination that it be
wound up voluntarily" and for "passing such a
resolution" substitute "making such a
determination".
Section 249 ("connected with a
company")
For the existing words substitute" For the
purposes of any provision in this Group of Parts, a
person is connected with a company (including a
limited liability partnership) if -
(a) he is a director or shadow director of a
company or an associate of such a director or
shadow director (including a member or a shadow
member of a limited liability partnership or an
associate of such a member or shadow member);
or

(b) he is an associate of the company or of the
356
Section 250 ("member" of a
company)

Delete section 250.
Section 251 (expressions used
generally)

Delete the word "and" appearing after the
definition of "the rules" and insert the word "and"
after the definition of "shadow director".After the
definition of "shadow director" insert the
following -

" "shadow member", in relation to a limited
liability partnership, means a person in
accordance with whose directions or instructions
the members of the limited liability partnership
are accustomed to act (but so that a person is not
deemed a shadow member by reason only that
the members of the limited liability partnership
act on advice given by him in a professional
capacity);".
Section 386 (categories of
preferential debts)[174]

subsection (1) In subsection (1), omit the words "or an
individual".
subsection (2) In subsection (2), omit the words "or the
individual".
Section 387 ("the relevant
date")

subsection (3) In paragraph (c) for "passing of the resolution for
the winding up of the company" substitute
"making of the determination by the limited
liability partnership that it be wound up
voluntarily".
Section 388 (meaning of "act as
insolvency practitioner")[175]

357
subsection (4) Delete ""company" means a company within the
meaning given by section 735(1) of the
Companies Act or a company which may be
wound up under Part V of this Act (unregistered
companies);" and delete ""interim trustee" and
"permanent trustee" mean the same as the
Bankruptcy (Scotland) Act 1985".
Section 389 (acting without
qualification an offence)[176]

subsection (1) Omit the words "or an individual".
Section 402 (official petitioner) Delete section 402.
Section 412 (individual
insolvency rules (England and
Wales))
Delete section 412.
Section 415 (Fees orders
(individual insolvency
proceedings in England and
Wales))
Delete section 415.
Section 416 (monetary limits
(companies winding up))

subsection (1) In subsection (1), omit the words "section 117(2)
(amount of company's share capital determining
whether county court has jurisdiction to wind it
up);" and the words "section 120(3) (the
equivalent as respects sheriff court jurisdiction in
Scotland);".
subsection (3) In subsection (3), omit the words "117(2), 120(3)
or".
Section 418 (monetary limits
(bankruptcy))
Delete section 418.
Section 420 (insolvent
partnerships)

Delete section 420.
Section 421 (insolvent estates of
deceased persons)

Delete section 421.
Section 422 (recognised banks,
etc.)[177]

358
Delete section 422.
Section 427 (parliamentary
disqualification)
Delete section 427.
Section 429 (disabilities on
revocation or administration
order against an individual)

Delete section 429.
Section 432 (offences by bodies
corporate)

subsection (2) Delete "secretary or".
Section 435 (meaning of
"associate")

A member of a limited liability partnership is an
associate of that limited liability partnership and
of every other member of that limited liability
partnership and of the husband or wife or relative
of every other member of that limited liability
partnership.".
subsection (11) For subsection (11) there shall be substituted "
(11) In this section "company" includes any body
corporate (whether incorporated in Great Britain
or elsewhere); and references to directors and
other officers of a company and to voting power
at any general meeting of a company have effect
with any necessary modifications."
Section 436 (expressions used
generally)

The following expressions and definitions shall be
added to the section - "designated member" has
the same meaning as it has in the Limited Liability
Partnerships Act 2000;

"limited liability partnership" means a limited
liability partnership formed and registered under
the Limited Liability Partnerships Act 2000;

"limited liability partnership agreement", in
relation to a limited liability partnership, means
any agreement, express or implied, made
between the members of the limited liability
partnership or between the limited liability
359
partnership and the members of the limited
liability partnership which determines the mutual
rights and duties of the members, and their rights
and duties in relation to the limited liability
partnership.
Section 437 (transitional
provisions, and savings)
Delete section 437.
Section 440 (extent (Scotland))
subsection (2) In subsection (2), omit paragraph (b).
Section 441 (extent (Northern
Ireland))

Delete section 441.
Section 442 (extent (other
territories))

Delete section 442.
Schedule 1
Paragraph 19 For paragraph 19 substitute the following - "
19. Power to enforce any rights the limited
liability partnership has against the members
under the terms of the limited liability partnership
agreement."
Schedule 10[178]
Section 85(2) In the entry relating to section 85(2) for
"resolution for voluntary winding up" substitute
"making of determination for voluntary winding
up".
"Director" substitute "Designated member".
Section 93(3) In the entry relating to section 93(3) for "general
meeting of the company" substitute "meeting of
Section 99(3) In the entries relating to section 99(3) for
"director" and "directors" where they appear
substitute "designated member" or "designated
members" as appropriate.
"company general meeting" substitute "meeting of
the members of the limited liability partnership".
360
Section 106(6) In the entry relating to section 106(6) for "final
meeting of the company" substitute "final meeting
of the members of the limited liability
partnership".
Sections 353(1) to 362 Delete the entries relating to sections 353(1) to
362 inclusive.
Section 429(5) Delete the entry relating to section 429(5).

SCHEDULE 4
Regulation 5(3)

The provisions listed in this Schedule are not applied to Scotland to the extent
specified below:
Sections 50 to 52;
Section 53(1) and (2), to the extent that those subsections do not relate to
the requirement for a copy of the instrument and notice being forwarded to
the registrar of companies;

Section 53(4) (6) and (7);
Section 54(1), (2), (3) (to the extent that that subsection does not relate to
the requirement for a copy of the interlocutor to be sent to the registrar of
companies), and subsections (5), (6) and (7);
Sections 55 to 58;
Section 60, other than subsection (1);
Section 61, including subsections (6) and (7) to the extent that those
subsections do not relate to anything to be done or which may be done to or
by the registrar of companies;
Section 62, including subsection (5) to the extent that that subsection does
not relate to anything to be done or which may be done to or by the registrar
of companies;
Sections 63 to 66;
subsections do not relate to anything to be done or which may be done to the
registrar of companies;
Section 68;
subsections do not relate to anything to be done or which may be done by the
registrar of companies;

Sections 70 and 71;
361
Subsection 84(3), to the extent that it does not concern the copy of the
resolution being forwarded to the registrar of companies within 15 days;
Sections 91 to 93;
subsections do not relate to the liquidator being required to send to the
registrar of companies a copy of the account and a return of the final
meeting;
Section 95;
Section 97;
Sections 100 to 102;
Section 106, including subsections (3), (4) and (5) to the extent that those
subsections do not relate to the liquidator being required to send to the
registrar of companies a copy of the account of winding up and a return of the
final meeting/quorum;
not relate to the liquidator being required to send to the registrar a copy of
the order made by the court;
Section 130(1) to the extent that that subsection does not relate to a copy of
the order being forwarded by the court to the registrar;
Section 131;
not relate to a copy of the order being forwarded by the company to the
registrar;
Section 162 to the extent that that section concerns the matters set out in
Section C.2 of Schedule 5 to the Scotland Act 1998 as being exceptions to the
insolvency reservation;
Section 169;
not relate to an application being made by the registrar to make good the
default;
Section 171;
not relate to the liquidator being required to give notice to the registrar;
Sections 173 and 174;
Section 177;
Section 196 to the extent that that section applies to the specified devolved
functions of Part IV of the Insolvency Act 1986;
Section 199;
Section 200 to the extent that it applies to the specified devolved functions of
Part IV of the First Group of Parts of the 1986 Act;
Section 218 subsections (1), (2), (4) and (6);
362
Section 231 to 232 to the extent that the sections apply to administrative
receivers, liquidators and provisional liquidators;
Section 233, to the extent that that section applies in the case of the
appointment of an administrative receiver, of a voluntary arrangement taking
effect, of a company going into liquidation or where a provisional liquidator is
appointed;
Section 234 to the extent that that section applies to situations other than
those where an administration order applies;
Section 235 to the extent that that section applies to situations other than
those where an administration order applies;
Sections 236 to 237 to the extent that those sections apply to situations other
than administration orders and winding up;
Section 244 to the extent that that section applies in circumstances other
than a company which is subject to an administration order;
Section 245;
Section 251, to the extent that that section contains definitions which apply
only to devolved matters;
Section 416(1) and (4), to the ext ent that those subsections apply to section
206(1)(a) and (b) in connection with the offence provision relating to the
winding up of a limited liability partnership;
Schedule 2;

Schedule 3;

Schedule 4;

Schedule 8, to the extent that that Schedule does not apply to voluntary
arrangements or administrations within the meaning of Parts I and II of the
1986 Act.

In addition, Schedule 10, which concerns punishment of offences under the
Insolvency Act 1986, lists various sections of the Insolvency Act 1986 which
create an offence. The following sections, which are listed in Schedule 10,
are devolved in their application to Scotland:
Section 51(4);
Section 51(5);
Sections 53(2) to 62(5) to the extent that those subsections relate to matters
other than delivery to the registrar of companies;
Section 64(2);
Section 65(4);
Section 66(6);
Section 67(8) to the extent that that subsection relates to matters other than
delivery to the registrar of companies;
Section 93(3);
Section 94(4) to the extent that that subsection relates to matters other than
delivery to the registrar of companies;
Section 94(6);
Section 95(8);
Section 105(3);
363
Section 106(4) to the extent that that subsection relates to matters other
than delivery to the registrar of companies;
Section 106(6);
Section 109(2);
Section 114(4);
Section 131(7);
Section 164;
Section 166(7);
Section 188(2);
Section 192(2);
Sections 206 to 211; and
Section 235(5) to the extent that it relates to matters other than
administration orders.

SCHEDULE 5
Regulation 9

GENERAL AND CONSEQUENTIAL AMENDMENTS IN OTHER LEGISLATION

The Bills of Sale Act (1878) Amendment Act 1882 c. 43

1. In section 17, after "incorporated company" insert "or by any limited liability
partnership" and after "such company" insert "or a limited liability partnership".
The Third Parties (Rights Against Insurers) Act 1930 c. 25

2. After section 3, insert -
" Application to limited liability partnerships.
3A. - (1) This Act applies to limited liability partnerships as it applies to
companies.

(2) In its application to limited liability partnerships, references to a
resolution for a voluntary winding-up being passed are references to a
determination for a voluntary winding-up being made."
The Corporate Bodies' Contracts Act 1960 c. 46

3. In section 2, insert at the end "or to a limited liability partnership".
The Criminal Justice Act 1967 c. 80

4. In section 9(8)(d), insert at the end -
" ; and in paragraph (d) of this subsection references to the secretary, in
relation to a limited liability partnership, are to any designated member of the
The Solicitors Act 1974 c. 47
364

5. In section 87, after the definition of "non-contentious business",

insert -
" "officer", in relation to a limited liability partnership, means a
member of the limited liability partnership;".
The Sex Discrimination Act 1975 c. 65

6. In section 11, insert at the end -
" (6) This section applies to a limited liability partnership as it applies to a
firm; and, in its application to a limited liability partnership, references to a
partner in a firm are references to a member of the limited liability
partnership."
The Race Relations Act 1976 c. 74

7. In section 10, insert at the end -
" (5) This section applies to a limited liability partnership as it applies to a
firm; and, in its application to a limited liability partnership, references to a
partner in a firm are references to a member of the limited liability
partnership."
The Betting and Gaming Duties Act 1981 c. 63

8. After section 32, insert -
" Application to limited liability partnerships.
32A. - (1) This Act applies to limited liability partnerships as it applies to
companies.

(2) In its application to a limited liability partnership, references to a
director of a company are references to a member of the limited liability
partnership."
The Companies Act 1985 c. 6

9. In section 26,[179] in subsection (1), after paragraph (bb) insert -
" (bbb) which includes, at any place in the name, the expression
"limited liability partnership" or its Welsh equivalent ("partneriaeth
atebolrwydd cyfyngedig");".
The Business Names Act 1985 c. 7.

10. In section 1, in subsection (1), insert at the end -
" (d) in the case of a limited liability partnership, does not consist of its
corporate name without any addition other than one so permitted."
365
11. - (1) Section 4 is amended as follows.

(2) In subsection (1)(a), for "subject to subsection (3)" substitute "subject
to subsections (3) and (3A)", omit the word "and" at the end of sub-
paragraph (iii) and after that sub-paragraph insert -
" (iiia) In the case of a limited liability partnership, its corporate name
and the name of each member, and".
(3) In subsection (2), for "the subsection next following" substitute
"subsection (3) or (3A)".

(4) After subsection (3) insert -
" (3A) Subsection (1)(a) does not apply in relation to any document issued
by a limited liability partnership with more than 20 members which maintains
at its principal place of business a list of the names of all the members if -
(a) none of the names of the members appears in the document
otherwise than in the text or as a signatory; and

(b) the document states in legible characters the address of the
principal place of business of the limited liability partnership and that
the list of the members' names is open to inspection at that place."
" (4A) Where a limited liability partnership maintains a list of the members'
names for the purposes of subsection (3A), any person may inspect the list
during office hours."
(6) In subsection (7), after "subsection (4)" insert "or (4A)" and after "any
partner of the partnership concerned" insert ",or any member of the limited
liability partnership concerned,".
The Administration of Justice Act 1985 c. 61

12. In section 9(8), after the definition of "multi-national partnership", insert -
13. In section 39(1), after the definition of "the Council", insert -
" "director", in relation to a limited liability partnership, means a
14. In paragraph 1(3) of Schedule 2, insert at the end
" ; and references in this Schedule to a director, in relation to a limited
liability partnership, are references to a member of the limited liability
partnership."
366
The Insolvency Act 1986 c. 45


(2) In subsection (1), after "sold" insert "(a)" and at the end insert -
" ,or (b) to a limited liability partnership (the "transferee limited liability
partnership")."
(3) In subsection (2), for the words "sale," onwards substitute
" sale -
(a) in the case of the transferee company, shares, policies or other like
interests in the transferee company for distribution among the
members of the transferor company, or

(b) in the case of the transferee limited liability partnership,
membership in the transferee limited liability partnership for
distribution among the members of the transferor company."
(4) In subsection (4), for the words "company may," onwards substitute
" company may -
(a) in the case of the transferee company, in lieu of receiving cash,
shares, policies or other like interests (or in addition thereto)
participate in the profits of, or receive any other benefit from, the
transferee company, or

(b) in the case of the transferee limited liability partnership, in lieu of
receiving cash or membership (or in addition thereto), participate in
some other way in the profits of, or receive any other benefit from, the
transferee limited liability partnership."
The Building Societies Act 1986 c. 53

16. In paragraph 1(2) of Schedule 21, after "In this Schedule - ", insert -
" "director", in relation to a limited liability partnership, means a member of
the limited liability partnership;".
The Courts and Legal Services Act 1990 c. 41

17. In section 119(1), after the definition of "multi-national partnership" insert -
The Employment Rights Act 1996 c. 18


367
(2) In subsection (5), omit the word "and" at the end of paragraph (a), and insert
at the end of paragraph (b)
" , and
(c) where the employer is a limited liability partnership, if (but only if)
subsection (8) is satisfied."
" (8) This subsection is satisfied in the case of an employer which is a
limited liability partnership -
(a) if a winding-up order, an administration order or a determination
for a voluntary winding-up has been made with respect to the limited

(b) if a receiver or (in England and Wales only) a manager of the
undertaking of the limited liability partnership has been duly
appointed, or (in England and Wales only) possession has been taken,
by or on behalf of the holders of any debentures secured by a floating
charge, of any property of the limited liability partnership comprised in
or subject to the charge, or

(c) if a voluntary arrangement proposed in the case of the limited
liability partnership for the purpose of Part I of the Insolvency Act
1986 has been approved under that Part of that Act."

(2) In subsection (1), omit the word "and" at the end of paragraph (a),
and insert at the end of paragraph (b)
" , and
(c) where the employer is a limited liability partnership, if (but only if)
subsection (4) is satisfied."
" (4) This subsection is satisfied in the case of an employer which is a
limited liability partnership -
(a) if a winding-up order, an administration order or a determination
for a voluntary winding-up has been made with respect to the limited

(b) if a receiver or (in England and Wales only) a manager of the
undertaking of the limited liability partnership has been duly
appointed, or (in England and Wales only) possession has been taken,
by or on behalf of the holders of any debentures secured by a floating
charge, of any property of the limited liability partnership comprised in
or subject to the charge, or

368
(c) if a voluntary arrangement proposed in the case of the limited
liability partnership for the purposes of Part I of the Insolvency Act
1986 has been approved under that Part of that Act."
The Contracts (Rights of Third Parties) Act 1999 c. 31

20. In section 6, after subsection (2) insert -
" (2A) Section 1 confers no rights on a third party in the case of any
incorporation document of a limited liability partnership or any limited liability
partnership agreement as defined in the Limited Liability Partnerships
Regulations 2001 (S.I. No. 2001/ )."
The Financial Services and Markets Act 2000 c. 8

21. In each of sections 177(2), 221(2) and 232(2) insert at the end -
" ; and "officer", in relation to a limited liability partnership, means a
member of the limited liability partnership."
Culpable officer provisions

22. - (1) A culpable officer provision applies in the case of a limited liability
partnership as if the reference in the provision to a director (or a person purporting
to act as a director) were a reference to a member (or a person purporting to act as
a member) of the limited liability partnership.

(2) A culpable officer provision is a provision in any Act or subordinate legislation
(within the meaning of the Interpretation Act 1978) to the effect that where -
(a) a body corporate is guilty of a particular offence, and

(b) the offence is proved to have been committed with the consent or
connivance of, or to be attributable to the neglect on the part of, (among
others) a director of the body corporate,
he (as well as the body corporate) is guilty of the offence.

SCHEDULE 6
Regulation 10

APPLICATION OF SUBORDINATE LEGISLATION

Part I Regulations made under the 1985 Act

1. The Companies (Revision of Defective Accounts and Report) Regulations
1990[180]

2. The Companies (Defective Accounts) (Authorised Person) Order 1991[181]
369

3. The Accounting Standards (Prescribed Body) Regulations 1990[182]

4. The Companies (Inspection and Copying of Registers, Indices and Documents)
Regulations 1991[183]

5. The Companies (Registers and other Records) Regulations 1985[184]

6. Companies Act 1985 (Disclosure of Remuneration for Non-Audit Work)
Regulations 1991[185]
Part II Regulations made under the 1986 Act

1. Insolvency Practitioners Regulations 1990[186]

2. The Insolvency Practitioners (Recognised Professional Bodies) Order
1986[187]

3. The Insolvency Rules 1986 and the Insolvency (Scotland) Rules 1986 (except
in so far as they relate to the exceptions to the reserved matters specified in section
C.2 of Part II of Schedule 5 to the Scotland Act 1998)[188]

4. The Insolvency Fees Order 1986[189]

5. The Co-operation of Insolvency Courts (Designation of Relevant Countries and
Territories) Order 1986[190]

6. The Co-operation of Insolvency Courts (Designation of Relevant Countries and
Territories) Order 1996[191]

7. The Co-operation of Insolvency Courts (Designation of Relevant Country)
Order 1998[192]

8. Insolvency Proceedings (Monetary Limits) Order 1986[193]

9. Insolvency Practitioners Tribunal (Conduct of Investigations) Rules 1986[194]

10. Insolvency Regulations 1994[195]

11. Insolvency (Amendment) Regulations 2000[196]
Part III Regulations made under other legislation

1. Company and Business Names Regulations 1981[197]

2. The Companies (Disqualification Orders) Regulations 1986[198]

3. The Insolvent Companies (Disqualification of Unfit Directors) Proceedings Rules
1987[199]

4. The Contracting Out (Functions of the Official Receiver) Order 1995[200]

5. The Uncertificated Securities Regulations 1995[201]
370

6. The Insolvent Companies (Reports on Conduct of Directors) Rules 1996[202]

7. The Insolvent Companies (Reports on Conduct of Directors)(Scotland) Rules
1996[203]

EXPLANATORY NOTE

(This note is not part of the Regulations)

The Limited Liability Partnerships Act 2000 provided for the creation of Limited
Liability Partnerships (LLPs) and for the making of regulations concerning them.
These Regulations regulate LLPs by applying to them, with appropriate modifications,
the appropriate provisions of the existing law which relate to companies and
partnerships.

The Regulations are structured in seven parts accompanied by six schedules. They
apply to LLPs, with appropriate modifications to reflect the structure of LLPs, a large
number of the provisions contained within the Companies Acts 1985 and 1989, the
Insolvency Act 1986 and the Company Directors Disqualification Act 1986.

The Regulations amend the relevant primary legislation by way of general
modifications which, provide that references to a company include references to a
limited liability partnership, and references to a director or officer include a reference
to a member of an LLP. Throughout the Schedules to the Regulations there are
references to designated members. This category of member is responsible for a
number of administrative and filing duties of the LLP but is also representative of the
LLP and its membership in circumstances such as the appointment, removal and
remuneration of auditors.

Part I of the Regulations contains the citation, commencement and interpretation
provisions to be applied to the Regulations, and gives the date on which they come
into force.

Part II of, and Schedule 1 to, the Regulations apply the provisions of Part VII of
the Companies Act 1985 (accounts and audit) and its attendant Schedules to LLPs
with appropriate modifications. Schedule 1 lists only those sections contained in Part
VII of the Companies Act 1985, (including the Schedules related to those sections),
which have been modified in their application to LLPs or not applied to LLPs.
Therefore, if Schedule 1 does not refer to a particular section, which is contained in
Part VII of the Companies Act 1985, or paragraph of a relevant Schedule, then that
section or paragraph will apply to LLPs, subject only to the general amendments set
out in regulation 3. The accounts and audit provisions, as applied by Part II of, and
Schedule 1 to, the Regulations, impose accounting requirements on LLPs which are
similar to those for companies. They require that LLPs file annual accounts with the
registrar of companies, and place audit requirements on LLPs similar to those
imposed on companies. They also define the form and content of the accounts, and
allow derogations for small and medium sized LLPs.

Part III of and Schedule 2 to the Regulations apply to LLPs the remainder of the
371
provisions of the Companies Act 1985 together with Part II of the Companies Act
1989 with appropriate modifications. Schedule 2 lists all those sections which apply
to LLPs. If Schedule 2 does not refer to a particular section of the Companies Act
1985 then that section will not apply to LLPs. Part III of and Schedule 2 to the
Regulations regulate an LLP by applying provisions, many of which are the same as
or similar to those imposed on companies, but which reflect the different nature and
structure of LLPs. They include provision for:

the execution of documents including bills of exchange and promissory notes and
the execution of deeds abroad;

the registration of debenture holders including, a right for the holders of
debentures issued by an LLP to inspect the register, the liability of trustees of
debentures and perpetual debentures;

the officers and registered office including a requirement to register changes in
the registered office of an LLP with the registrar of companies;

company identification - the name of an LLP is to appear outside its place of
business and on correspondence, in addition an LLP may have a common seal;

annual return - this part of the regulations provides that it is the duty of an LLP to
deliver an annual return to the registrar of companies and sets out requirements as
to the content of the annual return;

auditors - an LLP is, in general, required to appoint auditors, provision is made for
the appointment of auditors by the Secretary of State where an LLP is in default, the
auditors have various rights including the right to have access to an LLP's books,
accounts and information as necessary, the right to attend meetings of the LLP, and
certain rights in the event of being removed or not being re-appointed, provision is
also made for the resignation of auditors and the making of a statement by a person
ceasing to hold office as auditor;

registration of charges - sections 395 to 408, 410 to 423 of the Companies Act
1985, will apply to LLPs, with modifications, until section 92 of the Companies Act
1989 is commenced or some other amendment is made;

arrangements and reconstructions - an LLP will have the power to compromise
with its creditors and members, the sections set out detailed provisions concerning
the circulation of information on any compromise together with provisions for
facilitating an LLP's reconstruction or amalgamation;

investigation of LLPs and their affairs - an investigation of an LLP may be made
following its own application of that of its members, the sections set out detailed
provisions concerning investigations, the production of documents and evidence,
contempt of court, inspectors' reports and the use of inspectors' reports as evidence;

fraudulent trading is punished in the case of an LLP in the same was as a
company;

unfair prejudice - Schedule 2 applies the Companies Act 1985 so that, in general,
there is a remedy for the members of an LLP should they suffer unfair prejudice, the
members of a limited liability partnership may, however, by unanimous agreement
372
exclude the right contained in section 459 (1) for such period as may be agreed;

matters arising subsequent to winding up - the provisions deal with various
matters including the power of the court to declare the dissolution of a company
void, the striking out by the registrar of companies of a defunct company and crown
disclaimer of property vesting as bona vacantia;

registrar of companies - Schedule 2 sets out the registrar's functions and offices in
relation to LLPs;

miscellaneous and supplementary provisions - the provisions deal with various
matters including the form of company registers etc., the use of computers for
company records, the service of documents, the powers of a court to grant relief in
certain cases, and the punishment of offences.

Part III of the Regulations also applies the provisions of the Company Directors
Disqualification Act 1986 to limited liability partnerships with appropriate
modifications. These provide that members of an LLP will be subject to the same
penalties that currently apply to company directors under the CDDA 1986 and may
be disqualified from being the member of an LLP or a director of a company under
those provisions.

Part IV of, and Schedule 3 to, the Regulations apply to LLPs the First and Third
Groups of Parts of the Insolvency Act 1986, with appropriate modifications. Schedule
3 lists only those sections contained in the First or Third Group of Parts which have
been modified or omitted in their application to LLPs. If there is no reference in
Schedule 3 to a particular section contained in the First or Third Group of Parts of the
Insolvency Act 1986 then that section will apply to LLPs subject to the general
modifications contained in Regulation 5. The insolvency provisions as applied to LLPs
include provisions for voluntary arrangements, administration orders, receivership,
winding-up and liquidations. The most notable modifications of the provisions which
apply to companies are, an additional section, section 214A and the re-worded
section 74.

The new Section 214A provides that withdrawals made by members during the two
years prior to the commencement of winding-up will be subject to claw back if it is
proved that at the time of the withdrawal the member knew or had reasonable
grounds for believing that the LLP was, or would be made, insolvent. The modified
section 74 provides that in the event that an LLP is wound up, both past and present
members of the LLP are liable to contribute to the assets of the LLP to the extent
that they have agreed to do so with the other members, in the limited liability
partnership agreement.

Part V of the Regulations apply the provisions contained in Parts XV and XXIV of
the Financial Services and Markets Act 2000 to LLPs. These Parts provide for
insolvency arrangements of LLPs which are authorised under FSMA 2000. In addition,
these Parts give the Authority powers to ask the courts to wind up, or initiate other
insolvency procedures against, authorised and certain other persons. It also enables
the Authority to be heard by the court when such proceedings are commenced by
third parties.

Part VI of the Regulations provides for default provisions governing the rights and
duties of members, which modify those contained in section 24 of the Partnership
373
Act 1890. They will apply when there is no existing limited liability partnership
agreement, or where the agreement does not wholly deal with a particular issue.

Schedule 4 to the Regulations lists those provisions contained in the First and
Third Group of Parts of the Insolvency Act 1986 which are not applied to Scotland.
The provisions wholly or partly concern matters which are set out in Section C.2 of
the Fifth Schedule of the Scotland Act 1998 as being exceptions to the reservation.

Part VII of, and Schedule 5 to, the Regulations apply a number of general and
consequential amendments to other Acts of Parliament.

Part VII of, and Schedule 6 to, the Regulations apply to LLPs certain pieces of
subordinate legislation made under the Companies Act 1985, the Insolvency Act
1986 and other primary legislation.

Notes:

[1] 2000 c. 12.back
[2] 1985 c. 6.back
[3] 1986 c. 45.back
[4] 2000 c. 8.back
[5] 1998 c. 46.back
[6] Section 221 was substituted by section 2 of the Companies Act 1989 (c. 40) (the
"1989 Act"); section 223 was substituted by section 3 of the 1989 Act; section 226
was substituted by section 4 of the 1989 Act; section 227 was substituted by section
5 of the 1989 Act; sections 229 and 230 were substituted by section 5 of the 1989
Act; section 245C was inserted by section 12 of the 1989 Act; section 248 was
substituted by section 13(3) of the 1989 Act and amended by regulation 9 of S.I.
1996/189; section 248A was inserted by regulation 6 of S.I. 1997/220; section 249
was substituted by section 13(3) of the 1989 Act and amended by regulation 6 of
S.I. 1992/2452; section 256 was substituted by section 19 of the 1989 Act; section
258 was substituted by section 21(1) of the 1989 Act; section 259 was substituted
by section 22 of the 1989 Act; section 261 was substituted by section 22 of the 1989
Act. The footnotes to Schedule 1 to these Regulations provide details of the
amendments made to the provisions which are listed in that Schedule.back
[7] 1986 c. 46.back
[8] The provisions of the Insolvency Act 1986 applied by this regulation have been
amended as follows: - Section 19 was amended by sections 1 and 5 of, and
Schedule 2 to, the Insolvency Act 1994 (c. 7); section 44 was amended by section 2
of the Insolvency Act 1994 (c. 7); section 45 was amended by sections 107 and 212
of, and paragraph 3 of Schedule 16 and Schedule 24 to, the Companies Act 1989 (c.
40) as from a day to be appointed; section 53 was amended by sections 107 and
212 of the Companies Act 1989 (c. 40) and section 74 of, and Schedule 8 to the Law
Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c. 40); section 54 was
374
amended by sections 107 and 212 of, and Schedules 16 and 24 to, the Companies
Act 1989 (c. 40) as from a day to be appointed; section 57 was amended by section
3 of, the Insolvency Act 1994 (c. 7); section 62 was amended by sections 107 and
212 of, and Schedules 16 and 24 to, the Companies Act 1989 (c. 40) as from a day
to be appointed; section 162 was amended by section 52 of, and Part III of Schedule
2 to, the Court of Session Act 1988 (c. 36); section 184 was amended by article 2 of,
and Part I of the Schedule to, S.I. 1986/1996; section 241 was amended by section
1 of the Insolvency (No. 2) Act 1994 (c. 12); section 413 was amended by section
190 of, and paragraph 78 of Schedule 25 to, the Water Act 1989 (c. 15), by section
2 of, and paragraph 46 of Schedule 1 to, the Water Consolidation (Consequential
Provisions) Act 1991 (c. 60) and section 152 of, and paragraph 25 of Schedule 12 to
the Railways Act 1993 (c. 43); section 426 was amended by article 381 of, and
paragraph 41 of Part II of Schedule 9 to, S.I. 1989/2405 (N.I. 19); Schedule 6 was
amended by regulation 2 of S.I. 1987/2093, section 844 of, and paragraph 32 of
Schedule 29 to the Income and Corporation Taxes Act 1988 (c. 1); section 7 of, and
paragraph 22 of Schedule 2 to, the Finance Act 1991 (c. 31), section 4 of, and
paragraph 73 of Schedule 2 to, the Social Security (Consequential Provisions) Act
1992 (c. 6), section 190 of, and paragraph 18 of Schedule 8 to, the Pensions
Schemes Act 1993 (c. 48), section 36 of the Finance Act 1993 (c. 34), section 64 of,
and paragraph 7 of Part III of Schedule 7 to, the Finance Act 1994 (c. 9), section
100 of and paragraph 8 of Schedule 14 to, the Value Added Tax Act 1994 (c. 23),
section 40 of, and paragraph 13(1) of Schedule 6 to, the Finance Act 1994 (c. 9),
section 60 of, and paragraph 12 of Part III of Schedule to, the Finance Act 1996 (c.
8), section 240 of, and paragraph 29 of Schedule 1 to, the Employment Rights Act
1996 (c. 18), and sections 13 and 113 of, and paragraph 6 of Part II of Schedule 2
and Part II of Schedule 18 to, the Finance Act 1997 (c. 16); Schedule 7 was
amended by section 71(2) of, and paragraph 67 of Schedule 10 to, the Courts and
Legal Services Act 1990 (c. 41) and by section 18 of, and paragraph 19 of Schedule
3 to, the Tribunals and Inquiries Act 1992 (c. 53). The footnotes to Schedule 3 to
these regulations provide details of the amendments made to the provisions which
are listed in that Schedule.back
[9] 1989 c. 40.back
[10] Section 222 was substituted by section 2 of the Companies Act 1989 (c.
40).back
[11] Section 224 was substituted by section 3 of the Companies Act 1989, and
amended by regulation 2 of S.I. 1996/189.back
[13] Section 228 was substituted by section 5(3) of the Companies Act 1989, and
amended by regulation 4 of S.I. 1992/3178, by regulation 5(1) of, and paragraph 1
of Schedule 2 to, S.I. 1993/3246, by regulation 4 of S.I. 1996/189 and by section 30
of the Welsh Language Act 1993 (c. 38).back
amended by regulation 11(1) of S.I. 1993/1820 and by regulation 15(1) of S.I.
1996/189. back
375
[15] Section 232 was substituted by section 6(3) of the Companies Act 1989. Part I
of Schedule 6 was substituted by section 6(4) of, and paragraphs 1 to 3 of Schedule
4 to, the Companies Act 1989, and amended by S.I. 1997/570.back
[16] Section 233 was substituted by section 7 of the Companies Act 1989.back
subsequently amended in a manner not relevant to these Regulations.back
[18] Section 234A was inserted by section 8(1) of the Companies Act 1989.back
40).back
[22] Section 238 was substituted by section 10 of the Companies Act 1989 and
amended by article 12 of S.I. 2000/3373.back
[23] Section 239 was substituted by section 10 of the Companies Act 1989 (c. 40),
and amended by article 13 of S.I. 2000/3373.back
amended by regulation 4 of, and paragraph 1 of Schedule 1 to, S.I. 1994/1935. back
40).back
amended by sections 30(1) and (4) and 35(1) of, and Schedule 2 to, the Welsh
Language Act 1993 (c. 38).back
[27] Section 242A was inserted by section 11 of the Companies Act 1989.back
[28] Section 242B was inserted by regulation 3 of S.I. 1992/2452. back
amended by regulation 2 of S.I. 1992/1083, and sections 30 and 35 of, and
Schedule 2 to, the Welsh Language Act 1993.back
and amended by regulation 4 of, and paragraph 2 in Part I of Schedule 1 to, S.I.
1994/1935.back
376
[32] Section 245A was inserted by section 12 of the Companies Act 1989 (c.
40).back
[33] Section 245B was inserted by section 12 of the Companies Act 1989. back
[34] Section 246 was substituted by regulation 2(1) of S.I. 1997/220, and amended
by regulation 6(1) of S.I. 1997/550 and by regulation 8(1) of S.I. 2000/1430. back
[35] Section 246A was inserted by regulation 3 of S.I. 1997/220.back
amended by regulation 5 of S.I. 1992/2452, by regulation 8 of S.I. 1996/189 and by
regulation 7 of S.I. 1997/220. back
[37] Section 247A was inserted by regulation 4 of S.I. 1997/220.back
[38] Section 247B was inserted by regulation 5 of S.I. 1997/220, and amended by
regulation 8(2) of S.I. 2000/1430. back
[39] Section 249A was inserted by regulation 2 of S.I. 1994/1935, and amended by
regulation 2 of S.I. 1997/936 and by regulation 2 of S.I. 2000/1430.back
[40] Section 249AA was inserted by regulation 3 of S.I. 2000/1430.back
[41] Section 249B was inserted by regulation 2 of S.I. 1994/1935, and amended by
regulation 10 of S.I. 1996/189, by regulation 3 of S.I. 1997/936 and by regulation 4
of S.I. 2000/1430.back
[42] Section 249C was inserted by regulation 2 of S.I. 1994/1935, and amended by
regulation 7(3) of S.I. 1997/220 and by regulation 8(3) of S.I. 2000/1430.back
[43] Section 249D was inserted by regulation 2 of S.I. 1994/1934 and amended by
regulations 2 and 3 of S.I. 1995/589, by regulation 2 of S.I. 1996/3080 and by
regulation 4 of S.I. 1997/936. back
[44] Section 249E was inserted by regulation 2 of S.I. 1994/1935 and amended by
regulation 8(4) of S.I. 2000/1430. back
[46] Sections 252 and 253 were substituted by section 16 of the Companies Act
1989 (c. 40).back
[48] Section 255 (as substituted by section 18 of the Companies Act 1989) was
substituted by regulation 3 of S.I. 1991/2705, and amended by regulation 2 of S.I.
1993/3246.back
377
[49] Section 255A (as inserted by section 18 of the Companies Act 1989) was
1993/3246 and by regulation 15 of S.I. 1996/189.back
[50] Section 255B (as inserted by section 18 of the Companies Act 1989) was
1992/3178 and by regulation 3 of S.I. 1994/233. back
[51] Section 255D was inserted by section 18 of the Companies Act 1989.back
and amended by regulation 5(1) of, and paragraph 4 of Schedule 2 to, S.I.
1993/3246, and by regulation 7(5) of S.I. 1997/220.back
amended by regulation 7 of S.I. 1992/3178, by regulation 12(1) of S.I. 1996/189, by
regulation 4(1) of S.I. 1997/2306, and by article 16(1) of S.I. 2000/3373.back
[55] Section 262A was inserted by section 22 of the Companies Act 1989, and was
amended by regulation 6 of, and paragraph 3 of Schedule 2 to, S.I. 1991/2705, by
regulation 5 of, and paragraph 5 of Schedule 2 to, S.I. 1993/3246, by regulation
4(2) of S.I. 1994/233, by regulation 4 of, and paragraph 3 of Schedule 1 to, S.I.
1994/1935, by regulation 12(2) of S.I. 1996/189, by regulation 4(4) of S.I.
1997/2306 and by article 16(2) of S.I. 2000/3373.back
[56] Schedule 4 was amended by section 4(2) of, and Schedule 1 to, the Companies
Act 1989.back
[57] Paragraph 3 was amended by regulation 14(1) of, and paragraphs 1 and 2 of
Schedule 1 to, S.I. 1996/189.back
[58] Balance sheet formats 1 and 2 were amended by section 4(2) of, and
paragraphs 1 to 4 of Schedule 1 to, the Companies Act 1989.back
[59] Profit and loss account formats 1 and 2 were amended by section 4(2) of, and
paragraphs 1 to 3 of Schedule 1 to, the Companies Act 1989.back
[60] Paragraph 12 was amended by section 23 of, and paragraph 20 of Schedule 10
to, the Companies Act 1989 (c. 40).back
[61] Paragraph 34 was amended by section 4(2) of, and paragraph 6 of Schedule 1
to, the Companies Act 1989 and by regulation 14(1) of, and paragraphs 1 and 4 of
[63] Paragraph 58 was amended by section 4(2) of, and paragraph 10 of Schedule 1
to, the Companies Act 1989.back
378
[64] Schedule 4A was inserted by section 5(2) of, and Schedule 2 to, the Companies
Act 1989.back
Schedule 2 to, S.I. 1996/189, and by regulation 7(10)(a) of S.I. 1997/220.back
[66] Schedule 5 was substituted by section 6 of, and Schedule 3 to, the Companies
Act 1989.back
[68] Paragraph 9A was inserted by regulation 11(2) of S.I. 1993/1820.back
[69] Paragraph 28A was inserted by regulation 11(3) of S.I. 1993/1820.back
[70] Schedule 8 was substituted by regulation 2(2) of, and Schedule 1 to, S.I.
1997/220. back
[71] Schedule 8A was inserted by regulation 2(3) of, and Schedule 2 to, S.I.
1997/220. back
[72] Section 24 was amended by S.I. 1992/1699.back
[73] Section 36 was substituted by, and sections 36A to 36C inserted by, section 130
of the Companies Act 1989 (c. 40).back
[74] Section 38 was amended by section 130(7) of, and paragraph 1 of Schedule 17
to, the Companies Act 1989, by section 74 of, paragraph 33(2) of Schedule 8 and
Schedule 9 to, the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 (c.
40), and by section 14(1) of, and paragraph 52 of Schedule 4 to, the Requirements
of Writing (Scotland) Act 1995 (c. 7).back
[75] Section 39 was amended by section 130 of and Schedule 17 to the Companies
Act 1989 (c. 40).back
[76] Section 41 was amended by section 130(7) of, and by paragraph 4 of Schedule
17 to, the Companies Act 1989.back
[77] Section 183 was amended by regulation 40 of S.I. 1995/3272.back
[78] Section 184 was amended by section 194(5) of the Financial Services Act 1986
(c. 60).back
[79] Section 191 was amended by section 143(4) of the Companies Act 1989 (c.
40).back
[80] Section 196 was substituted by section 439(1) of, and Part I of Schedule 13 to,
the Insolvency Act 1986 (c. 45).back
379
40).back
[82] Section 288 was amended by section 143 of the Companies Act 1989.back
[83] Section 350 was amended by section 130 of the Companies Act 1989 (c.
40).back
[84] Section 351 was amended by sections 31 and 35(1) of, and Schedule 2 to, the
Welsh Language Act 1993 (c. 38).back
[86] Section 364 was substituted by section 139 of the Companies Act 1989 and
amended by S.I. 1999/2322.back
[87] Section 384 was substituted by sections 118 and 119(1) of the Companies Act
1989 (c. 40) and amended by regulation 4 of, and paragraph 4 in Part I of Schedule
1 to, S.I. 1994/1935.back
1989.back
1989 (c. 40).back
[90] Section 388 was inserted by sections 118 and 119(1) of the Companies Act
1989.back
[91] Section 388A was substituted by sections 118 and 119 of the Companies Act
1989, further substituted by S.I. 1994/1935 and amended by regulation 8 of S.I.
2000/1430.back
[92] Section 389A was inserted by sections 118 and 120 of the Companies Act 1989
(c. 40).back
[93] Section 390 was inserted by sections 118 and 120(1) of the Companies Act
1989, amended by article 3 of S.I. 1996/1471 and by article 31 of S.I.
2000/3373.back
[94] Section 390A was inserted by sections 118 and 121 of the Companies Act
1989.back
[95] Section 390B was inserted by sections 118 and 121 of the Companies Act
1989.back
[96] Section 391 was inserted by sections 118 and 122 of the Companies Act
1989.back
380
1989.back
[98] Section 392 was inserted by sections 118 and 122 of the Companies Act
1989.back
1989.back
[100] Section 394 was inserted by sections 118 and 123 of the Companies Act 1989
(c. 40).back
1989.back
[102] Section 395 was amended by section 109(1) of, and paragraph 10 of Schedule
6 to, the Insolvency Act 1985 (c. 65).back
[103] Section 396 was amended by section 303(1) of, and paragraph 31(1) and (2)
of Schedule 7 to, the Copyright, Designs and Patents Act 1988 (c. 48), and by
section 106(2) of, and Schedule 5 to, the Trade Marks Act 1994 (c. 26).back
[104] Section 403 was amended by article 22 of S.I. 2000/3373.back
[105] Section 410 was amended by section 109 of, and paragraph 10 of Schedule 6
to, the Insolvency Act 1986 (c. 45), by section 303 of, and paragraph 31 of Schedule
7 to, the Copyright, Designs and Patents Act 1988 (c. 48) and by section 106 of, and
paragraph 1 of Schedule 4 to, the Trade Marks Act 1994 (c. 26).back
[106] Section 419 was amended by article 23 of S.I. 2000/3373.back
to, the Insolvency Act 1985.back
[111] Section 433 was amended by sections 182 and 212(3) of, and paragraph 7 of
Schedule 13 and Part I of Schedule 17 to, the Financial Servic es Act 1986 (c.
60).back
[112] Section 434 was amended by section 56(1) to (5) of the Companies Act 1989
and by section 59 of and paragraphs 4 and 5 of Schedule 3 to the Youth Justic e and
Criminal Evidence Act 1999 (c. 23).back
381
[113] Section 436 was amended by section 56(6) of the Companies Act 1989 (c.
40).back
to, the Financial Services Act 1986, and by section 57 of the Companies Act
1989.back
6 to, the Insolvency Act 1985, by section 439(1) of, and Part I of Schedule 13 to, the
Insolvency Act 1986, and by section 61 of the Companies Act 1989.back
[118] Section 447 was amended by sections 63 and 212 of, and Schedule 24 to, the
Companies Act 1989 and by section 59 of, and paragraphs 4 and 6 of Schedule 3 to,
the Youth Justice and Criminal Evidence Act 1999 (c. 23).back
[119] Section 448 was substituted by section 64(1) of the Companies Act 1989.back
6 to, the Insolvency Act 1985; by section 439(1) of, and Part I of Schedule 13 to, the
Insolvency Act 1986; by sections 182 and 212(3) of, and paragraph 9 of Schedule 13
and Part I of Schedule 17 to, the Financial Services Act 1986; by section 108(1) of,
and paragraph 18(7) of Schedule 6 to, the Banking Act 1987 (c. 22); by sections 65
and 212 of, and Schedule 24 to, the Companies Act 1989; by section 120 of, and
paragraph 7 of Schedule 21 and Schedule 22 to, the Friendly Societies Act 1992 (c.
40); by section 79(13) of, and paragraph 4(2) in Part I of Schedule 5 to, the Criminal
Justice Act 1993 (c. 36); by section 122 of, and paragraph 12 of Schedule 3 to, the
Pensions Act 1995 (c. 26); by article 10(1) of, and paragraph 1 of Schedule 4 to, S.I.
1992/1315, and by regulation 68(1) of, and paragraph 9(2) in Part I of Schedule 8
to, S.I. 1994/1696.back
40).back
[123] Section 451A was inserted by section 182 of, and paragraph 10 of Schedule 13
to, the Financial Services Act 1986, and substituted by section 68 of the Companies
Act 1989. It was amended by regulation 68(1) of, and paragraph 9(3) in Part I of
[124] Section 452 was amended by sections 69 and 212 of, and Schedule 24 to, the
Companies Act 1989, and by regulation 68(1) of, and paragraph 9(4) in Part I of
382
[126] Section 460 was amended by sections 145 and 212 of, and Schedules 19 and
24 to, the Companies Act 1989.back
to, the Insolvency Act 1985 and by section 439 of, and Schedule 13 to, the
Insolvency Act 1986.back
[128] Section 464 was amended by section 439 of, and Part I of Schedule 13 to, the
Insolvency Act 1986 (c. 45) and by Schedule 24 to the Companies Act 1989 (c.
40).back
[129] Section 466 was amended by sections 130, 140 and 212 of, and Schedules 17
and Schedule 24 to, the Companies Act 1989 (c. 40).back
[130] Section 486 was amended by section 438 of, and Schedule 12 to, the
Insolvency Act 1986.back
[131] Section 651 was amended by sections 141 and 212 of, and Schedule 24 to,
the Companies Act 1989.back
[132] Section 652A was inserted, along with sections 652 B-F, by section 13 of the
Deregulation and Contracting Out Act 1994 (c. 40).back
[133] Section 653 was amended by section 13(1) of, and paragraphs 1 and 3 of
Schedule 5 to, the Deregulation and Contracting Out Act 1994 (c. 40).back
6 to, the Insolvency Act 1985, and by section 439(1) of, and Part I of Schedule 13
6 to, the Insolvency Act 1985, and by section 439(1) of, and Part I of Schedule 13
[136] Section 693 was amended by section 212 of, and Schedule 17 to the Financial
Services Act 1986 and by S.I. 1992/3179.back
to, the Deregulation and Contracting Out Act 1994.back
[138] Section 705 was substituted by section 145 of, and paragraph 14 of Schedule
19 to, the Companies Act 1989, and subsequently amended in a manner not relevant
to these Regulations.back
[139] Section 706 was substituted by section 125(1) of the Companies Act 1989,
and amended by regulation 4 of, and paragraphs 3 and 6 of Schedule 3 to, S.I.
1992/3179 and by article 31 of S.I. 2000/3373.back
[141] Section 707B was inserted by article 27 of S.I. 2000/3373.back
383
[142] Section 708 was amended by sections 127(2) and 212 of, and Schedule 24 to,
the Companies Act 1989.back
[143] Section 709 was substituted by section 126(2) of the Companies Act 1989 (c.
40) and by section 67 of, and Schedule 6 to, the Youth Justice and Criminal Evidence
Act 1999 (c. 23).back
[144] Section 710 was substituted by section 126(2) of the Companies Act
1989.back
[146] Section 710B was inserted by section 30 of the Welsh Language Act 1993 (c.
38).back
[147] Section 711 was amended by section 439(1) of, and Part I of Schedule 13 to,
the Insolvency Act 1986, by section 23 of, and paragraph 14 of Schedule 10 to, the
Companies Act 1989, by regulation 2(b) of S.I. 1987/1991, by regulation 4 of, and
paragraphs 3 and 7 of Schedule 3 to, S.I. 1992/3179 and by article 31 of S.I.
2000/3373.back
[148] Section 713 was amended by section 127(4) of the Companies Act 1989.back
[149] Section 714 was amended by regulation 4 of, and paragraphs 3 and 8 of
Schedule 3 to, S.I. 1992/3179 and by section 1(6) of and the Schedule to the
Limited Liability Partnerships Act 2000 (c. 12).back
[153] Section 731 was amended by section 5 of, and paragraph 56(3) of Schedule 4
to, the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995 (c.
40).back
6 to, the Insolvency Act 1985, by section 439(1) of, and Part I of Schedule 13 to, the
Insolvency Act 1986 and by sections 123(3) and 212 of, and Schedule 24 to, the
Companies Act 1989.back
[155] Section 734 was amended by section 5 of, and paragraph 56(4) of Schedule 4
to, the Criminal Procedure (Consequential Provisions) (Scotland) Act 1995 (c. 40)
and by section 120 of the Companies Act 1989.back
[156] Section 735A was inserted by section 439(1) of, and Part II of Schedule 13 to,
the Insolvency Act 1986, and amended by sections 127(5) and 212 of, and Schedule
24 to, the Companies Act 1989, by section 76 of, and paragraph 9 of Schedule 16 to,
384
the Deregulation and Contracting Out Act 1994 and by article 31 of S.I.
2000/3373.back
[157] Section 736 was substituted by section 144(1) of the Companies Act 1989 (c.
40).back
[158] Section 736A was inserted by section 144(1) of the Companies Act 1989 (c.
40).back
[159] Section 741 was amended by regulation 2 of, and paragraph 3(2) of the
Schedule to, S.I. 1992/1699. back
[160] Section 742 was substituted by section 23 of, and paragraph 15 of Schedule
10 to, the Companies Act 1989 and amended by article 28 of S.I. 2000/3373.back
[161] Section 743A was inserted by section 145 of, and paragraph 19 of Schedule 19
[162] Section 744 was amended by sections 23 and 212 of, and Schedules 10 and
24 to, section 79 of, and Schedule 5 to, the Criminal Justice Act 1993, regulation 4 of
S.I. 1997/2306, section 235 of, and Schedule 10 to, the Insolvency Act 1985, section
212 of, and Schedule 17 to, the Financial Services Act 1986, section 108 of and
Schedule 6 to the Banking Act 1987 and article 29 of S.I. 2000/3373.back
[163] Section 744A was inserted by section 145 of, and Schedule 19 to, the
Companies Act 1989 and amended by section 79 of and Schedule 5 to the Criminal
Justice Act 1993, regulation 4 of S.I. 1997/2306 and article 30 of S.I.
2000/3373.back
[164] Section 8 was amended by section 108 of, and Schedule 6 to, the Banking Act
1987 (c. 22).back
[165] Section 9 was amended by section 62 of the Criminal Justice Act 1988 (c. 33)
and by section 107 of, and paragraph 3 of Schedule 16 to, the Companies Act 1989
(c. 40).back
[166] Section 120 was amended by section 52 of, and Part III of Schedule 2 to, the
Court of Session Act 1988 (c. 36).back
[167] Section 122 was amended by regulation 2 of, and paragraph 8 of the Schedule
to, S.I. 1992/1699.back
[168] Section 124 was amended by section 62 of the Criminal Justice Act 1988 (c.
40) and by section 60 of the Companies Act 1989 (c. 40).back
[169] Section 124A was inserted by section 60 of the Companies Act 1989 (c.
40).back
[170] Section 184 was amended by article 2 of, and Part I of the Schedule to, S.I.
1986/1996.back
385
[171] Section 206 was amended by article 2 of, and Part I of the Schedule to, S.I.
1986/1996.back
40).back
to, the Electricity Act 1989 (c. 29), by section 190 of, and paragraph 78 of Schedule
25 to, the Water Act 1989 (c. 15), by section 203 of, and paragraph 43 of Schedule
20 to, the Broadcasting Act 1990 (c. 42).back
[174] Section 386 was amended by section 7 of, and Schedule 2 to, the Finance Act
1991 (c. 22) (as inserted by section 9 of the Finance (No. 2) Act 1992 (c. 48), by
section 36 of the Finance Act 1993 (c. 34), by S.I. 1987/2093 and by section 190 of
and Schedule 8 to the Pension Schemes Act 1993 (c. 48).back
[175] Section 388 was amended by regulation 15 of S.I. 1994/2421, by section
11(1) of the Bankruptcy (Scotland) Act 1993 (c. 6) and by article 4 of S.I.
1993/438. back
[176] Section 389 was amended by section 11 of the Bankruptcy (Scotland) Act
1993 (c. 6).back
[177] Section 422 was amended by section 108 of, and Schedule 6 to, the Banking
Act 1987 (c. 22).back
[178] Certain entries in Column 5 of Schedule 10 were repealed by section 212 of,
and Schedule 24 to, the Companies Act 1989 (c. 40).back
[179] Section 26 was amended by regulation 75 of, and paragraph 4 of Part I of
[180] S.I. 1990/2570, as amended by S.I.s 1994/1935, 1995/2092 and
1996/315. back
[181] S.I. 1991/13.back
[182] S.I. 1990/1667.back
[183] S.I. 1991/1998.back
[184] S.I. 1985/724.back
[185] S.I. 1991/2128, as amended by S.I. 1995/1520.back
[187] S.I. 1986/1764.back
386
[188] S.I. 1986/1925 as amended by S.I. 1987/1919, S.I. 1989/397, S.I. 1991/495,
S.I. 1993/602, S.I. 1995/586, S.I. 1999/359, S.I. 1999/1022, and S.I. 1986/1915,
as amended by S.I. 1987/1921.back
[189] S.I. 1986/2030 as amended by S.I. 1988/95, S.I. 1990/560, S.I. 1991/496,
S.I. 1992/34 and S.I. 1994/2541.back
[190] S.I. 1986/2123.back
[191] S.I. 1996/253.back
[192] S.I. 1998/2766.back
[193] S.I. 1986/1996.back
[194] S.I. 1986/952.back
[195] S.I. 1994/2507.back
[196] S.I. 2000/485.back
[199] S.I. 1987/2023, amended by S.I. 1999/1023. back
[200] S.I. 1995/1386.back
[201] S.I. 1995/3272.back
[202] S.I. 1996/1909.back
[203] S.I. 1996/1910.back

387
ANNEXURE 3

The Limited Liability Partnerships (Fees)
(No. 2) Regulations 2001

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2001 No. 969

PARTNERSHIP

LIMITED LIABILITY PARTNERSHIPS

The Limited Liability Partnerships (Fees) (No. 2) Regulations
2001

Approved by both Houses of Parliament
Made 14th March 2001
Laid before Parliament 14th March 2001
Coming into force 6th April 2001

The Secretary of State, in exercise of the powers conferred
on him by section 708(1) and (2) of the Companies Act
1985[1], as applied to limited liability partnerships by
regulation 4 of and Schedule 2 to the Limited Liability
Partnerships Regulations 2001[2], hereby makes the
following Regulations:

1. These Regulations may be cited as the Limited
Liability Partnerships (Fees) (No. 2) Regulations 2001.

2. These Regulations revoke the Limited Liability
Partnerships (Fees) Regulations 2001[3].

3. Regulations 1 and 2 shall come into force on the
day after these Regulations are made. The remainder of
these regulations shall come into force on 6th April 2001.

4. In these Regulations:
"the 1985 Act" means the Companies Act 1985 and any
reference to a numbered section is a reference to a section
of that Act;
"the 2000 Act" means the Limited Liability Partnerships
389
Act 2000[4] and any reference to a numbered section is a
reference to a section of that Act;
"an annual return" means a document required to be
submitted by a limited liability partnership to the
registrar of companies under section 363 of the 1985 Act as
applied to limited liability partnerships by the Limited
Liability Partnerships Regulations 2001;
"the Companies Acts" has the meaning contained in section
744 of the 1985 Act as extended by regulation 4 of the
Limited Liability Partnerships Regulations 2001;
"the register" means the register kept by the registrar of
companies for the purposes of the Companies Acts.
5. The fees set out in the second column of the
Schedule to these Regulations shall be the fees payable in
respect of the matters set out in the first column of that
Schedule.

Kim Howells,
Parliamentary Under-Secretary of State for Competition and
Consumer Affairs, Department of Trade and Industry

14th March 2001

SCHEDULE

FEES TO BE PAID TO THE REGISTRAR OF COMPANIES

Matter in respect of which fee is payable Amount
of fee
1. For registration of a limited liability
partnership on its incorporation under the 2000 Act
95.00
2. For registration of an annual return submitted by
a limited liability partnership
35.00
3. For registration of notification to the registrar of
companies of a change of the name of a limited
20.00
4. For the performance by the registrar of
companies of his functions in relation to an application
by a limited liability partnership under section 652A
of the 1985 Act, as applied to limited liability
10.00
390
partnerships, for a limited liability partnerships's
name to be struck off the register
5. For the registration of a charge under Chapters I
and II of Part XII of the 1985 Act as applied to limited

Per entry on a register of charges kept by the registrar
of companies in respect of a limited liability
partnership
20.00
6. For a paper copy of a document relating to a
limited liability partnership recorded and kept by
the registrar of companies and delivered by post:
(a) in respect of one document
9.00
(b) in respect of each further document relating to the
same limited liability partnership requested on the
same occasion
2.50
7. For paper copies of particulars registered by way
of an alphabetical index, accessed on the screen of
computer terminals, of live and dissolved companies
and limited liability partnerships together with their
former names:
(a) per screen of information on a computer
terminal delivered by post (first page)
4.00
(b) for each additional page 1.00
8. For a certified copy of, or extract from, any
record kept by the registrar of companies for the
purpose of the Companies Acts and relating to a
limited liability partnership
25.00
9. For a certificate of incorporation of a limited
(a) for the first certificate supplied on any
occasion
25.00
(b) for each additional certificate supplied on the same
occasion
10.00
391

EXPLANATORY NOTE

(This note is not part of the Regulations)These regulations are
made under section 708 of the Companies Act 1985. As applied to
limited liability partnerships by regulation 4 of and Schedule 2
to the Limited Liability Partnerships Regulations 2001, section
708 requires the payment of fees in respect of certain functions
performed by the registrar of companies both under the Limited
Liability Partnerships Act 2000 and under the Companies Act
1985, as it is applied to limited liability partnerships.

1. The fee for the registration of a limited liability
partnership under sections 2 and 3 of the Limited Liability
Partnerships Act 2000 is 95.00.

2. The fee for the registration of an annual return is 35.00. A
limited liability partnership is required to submit an annual
return to the registrar of companies by section 363 of the
Companies Act 1985 as amended by regulation 4 of and Schedule
2 to the Limited Liability Partnerships Regulations 2001.

3. The fee for the registration of a notification of a change of
name of a limited liability partnership is 20.00. A limited
liability partnership is permitted to change its name under
paragraph 4 of the Schedule to the Limited Liability
Partnerships Act 2000.

4. The fee for the performance by the registrar of companies of
his functions in relation to an application by a limited liability
partnership for its name to be struck off the register is 10.00.
Section 652A of the Companies Act 1985 is applied to limited
liability partnerships by regulation 4 of and Schedule 2 to the
Limited Liability Partnerships Regulations 2001.

5. The fee for the registration of a charge, created by a limited
liability partnership, is 20 per entry. The provisions governing
the charges created by limited liability partnerships are
contained in Chapters I and II of Part XII of the Companies Act
1985 as applied to limited liability partnerships by regulation 4
of and Schedule 2 to the Limited Liability Partnerships
Regulations 2001.

6. Section 709 of the Companies Act 1985, as applied to
limited liability partnerships by regulation 4 of and Schedule 2
to the Limited Liability Partnerships Regulations 2001, enables
persons to require the registrar of companies to produce a copy of
information contained in the records kept by him. For a paper copy
of a document relating to a limited liability partnership delivered
392
by post the fee is 9.00. For each further document relating to the
same limited liability partnership requested on the same
occasion the fee is 2.50.

7. For paper copies of a screen of information shown on a
computer terminal, kept by the registrar of companies, and
containing an alphabetical index of live and dissolved companies
and limited liability partnerships the fee is 4.00 when the
information is delivered by post. For each additional page the fee is
1.00.

8. Section 709 of the Companies Act 1985, as applied to
limited liability partnerships, enables persons to require a
certified copy of, or extract from, any record kept by the registrar
of companies. The fee for a certified copy of, or extract from, any
record relating to a limited liability partnership is 25.00.

9. Section 3(1) of the Limited Liability Partnerships Act
2000 provides that upon the incorporation of a limited liability
partnership the registrar of companies shall give a certificate that
the limited liability partnership is incorporated by the name
specified in the incorporation document. For the first certificate of
incorporation of a limited liability partnership supplied on any
occasion, other than on incorporation (when the certificat e is
included in the incorporation fee) the fee is 25.00. The fee for
each additional certificate supplied on the same occasion is 10.00.

Notes:

[1] 1985 c. 6.back
[2] S.I. 2001/1090.back
[3] S.I. 2001/529.back
[4] 2000 c. 12.back

ISBN 0 11 029210 3

393
ANNEXURE 4

The Limited Liability Partnerships
(Particulars of Usual Residential Address)
(Confidentiality Orders) Regulations 2002

to users.
Liability Partnerships (Particulars of Usual
Residential Address) (Confidentiality
Orders) Regulations 2002, ISBN 0 11 039775
4. The print version may be purchased by
clicking here. Braille copies of this Statutory
Instrument can also be purchased at the same
price as the print edition by contacting TSO
Customer Services on 0870 600 5522 or e-

394


2002 No. 915

PARTNERSHIP

The Limited Liability Partnerships (Particulars of Usual
Residential Address) (Confidentiality Orders) Regulations 2002

Made 31st March 2002
Coming into force 2nd April 2002

The Secretary of State, in exercise of the powers conferred on her
by sections 723B to F of the Companies Act 1985[1], as applied to
limited liability partnerships, and of all other powers enabling
her in that behalf, hereby makes the following Regulations, of
which a draft has been laid before Parliament in accordance with
section 723F(5) of that Act and approved by a resolution of each
House of Parliament:

Citation, commencement and interpretation
1. - (1) These Regulations may be cited as the Limited
Liability Partnerships (Particulars of Usual Residential Address)
(Confidentiality Orders) Regulations 2002.

(2) These Regulations shall come into force on 2nd April 2002.

(3) In these Regulations -
"the 1985 Act" means the Companies Act 1985 as applied to
limited liability partnerships by the Limited Liability
Partnerships Regulations 2001[2] and by the Limited
Liability Partnerships (No. 2) Regulations 2002[3];
"the 2000 Act" means the Limited Liability Partnerships
Act 2000[4];
"beneficiary of an order" means an individual in relation to
whom a confidentiality order is in force;
"Companies (Particulars of Usual Residential Address)
Regulations" means the Companies (Particulars of Usual
Residential Address) (Confidentiality Orders) Regulations
395
2002[5];
"competent authority" means any authority specified in
Schedule 1 to these Regulations;
"police force" means a police force within the meaning of
section 101(1) of the Police Act 1996[6] or section 50 of the
Police (Scotland) Act 1967[7];
"member" includes "designated member";
"principal Regulations" means the Limited Liability
Partnerships Regulations 2001[8];
"service address" means the address specified pursuant to
regulation 2(2)(b) in an application made under section
723B(1) of the 1985 Act or, if another address has been
substituted under regulation 7, the address most recently
substituted under that regulation; and
"working day" means any day other than a Saturday, a
Sunday, Christmas Day, Good Friday or a day which is a
bank holiday in any part of England or Wales under or by
virtue of the Banking and Financial Dealings Act 1971[9].
(4) In these Regulations unless the contrary intention
appears, expressions which are also used in the 2000 Act
or in the principal Regulations shall have the same
meanings as in that Act or in those Regulations.

PART 1

Applications for confidentiality orders under section 723B of
the 1985 Act
2. - (1) An application for a confidentiality order shall be made
to the Secretary of State.

(2) An application for a confidentiality order shall:
(a) be in such form and contain such information and be
accompanied by such evidence as the Secretary of State
may from time to time direct;

(b) specify each limited liability partnership of which the
applicant is or proposes to become a member and shall
specify an address complying with regulation 9.
(3) The Secretary of State may from time to time direct
different information or evidence be provided for different
cases or categories of application.

(4) The Secretary of State may require any information
or evidence delivered by an applicant to be verified in such
manner as she may direct.

(5) The Secretary of State may require any application
396
to be supported by a statement by any limited liability
partnership to which the application relates that the
limited liability partnership wishes a confidentiality
order to be made in respect of the applicant together with
the statement of the reasons for that wish.

(6) At any time after receiving an application and before
determining it, the Secretary of State may require that any
applicant deliver additional information or evidence
including the delivery by a limited liability partnership
of a statement complying with paragraph (5).

(7) Subject to paragraph (8) each application shall be
accompanied by a fee of 100, and the Secretary of State
may reject any application without considering it unless it is
accompanied by such fee.

(8) No fee shall be payable where an application is made
by an applicant -
(a) who at the same time has ma de an application for a
confidentiality order under the Companies (Particulars of
Usual Residence Address) Regulations, and where a fee
has been paid in respect of that application; or

(b) in respect of whom, at the time of the application, a
confidentiality order made under the Companies (Particulars
of Usual Residential Address) Regulations is in force.
(9) An applicant may withdraw his application, by notice
delivered to the Secretary of State, at any time before the
Secretary of State makes a decision on the application, and
the Secretary of State may retain the fee paid in respect of
that application.

Referral of questions for the purposes of the
determination of an application
3. - (1) The Secretary of State may, in respect of any
application or category of applications, refer to a relevant
body any question relating to an assessment, in the case of
such application or category of applications, of the nature
and extent of any risk of violence or intimidation considered
by the applicant as li kely to be created in relation to the
applicant, or any person living with him, by virtue of the
availability for inspection by members of the public of
particulars of his usual residential address.

(2) The Secretary of State may also refer to a relevant
body any question as to the nature or extent of any risk of
violence or intimidation likely to be created in relation to
any applicant or category of applicants or persons living
with them as a result of their involvement in the activities
397
of a particular limited liability partnership or category of
limited liability partnerships, of a particular sector of
commerce or industry or of a particular type of business
activity.

(3) The Secretary of State may accept any answer to a
question referred in accordance with paragraph (1) or (2)
as providing sufficient evidence of the nature and extent of
any risk relevant to an applicant or any person living with
him for the purposes of any determination under section
723B(3) or (4) of the 1985 Act.

(4) In this regulation, "relevant body" means any
police force and any other person whom the Secretary of
State considers may be able to assist in answering a
question referred to that person under paragraph (1) or
(2).

Notification of the outcome of an application
4. The Secretary of State shall send the applicant at his
usual residential address, as stated in his application,
notice of her decision under section 723B(3) or (4) of the
1985 Act and such notice shall be sent within five working
days of the decision being made.

Appeals
5. - (1) An applicant who has received notice under
regulation 4 that his application for a confidentiality order
has been unsuccessful may appeal to the High Court or the
Court of Session on the grounds that the decision -
(a) is unlawful;

(b) is irrational or unreasonable; or

(c) has been made on the basis of procedural impropriety or
otherwise contravenes the rules of natural justice.
(2) No appeal under this regulation may be brought
unless the leave of the court has been obtained.

(3) An applicant must bring an appeal within 21 days of
the sending of the notice under regulation 4 or, with the
court's permission, after the end of such period, but only if
the court is satisfied -
(a) where permission is sought before the end of that
period, that there is good reason for the applicant being
unable to bring the appeal in time; or

(b) where permission is sought after that time, that there
was a good reason for the applicant's failure to bring the
398
appeal in time and for any delay in applying for permission.
(4) The court determining an appeal may -
(a) dismiss the appeal; or

(b) quash the decision,
and where the court quashes a decision it may refer the
matter to the Secretary of State with a direction to
reconsider it and to make a determination in accordance
with the findings of the court.

PART II

Service addresses
6. Where an application for a confidentiality order is made by a
member, that individual shall notify to each of the limited liability
partnerships specified in the application the service address
specified in the application pursuant to regulation 2(2)(b).

7. If a beneficiary of an order wishes to substitute another
address, complying with regulation 9, for an address specified by
him under regulation 2(2)(b) or previously notified by him under
this regulation, he shall do so by notifying every limited liability
partnership of which he is a member of the address to be
substituted.

8. Where the beneficiary of an order -
(a) becomes a member of a limited liability partnership;
or

(b) is to be named in an incorporation document delivered
under sections 2 and 3 of the 2000 Act as a member of a
limited liability partnership to be formed under the 2000
Act,
that beneficiary shall, in a case falling within (a) above
notify to the limited liability partnership the service
address, and in a case falling within (b) above notify the
service address to be included in the statement as provided
in section 2(2A) of the 2000 Act.

9. - (1) Where an applicant for a confidentiality order
or a beneficiary of an order is, or proposes to become, a
member of more than one limited liability partnership
the service address specified by that applicant or
beneficiary in relation to each such limited liability
partnership must be the same, and that address shall
399
have effect in all cases where the applicant is or proposes
to become a member of a limited liability partnership.

(2) A service address must be at a place at which service
of documents may be effected by physical delivery other
than a PO or a DX Box Number and where that delivery is
capable of being recorded by the obtaining of an
acknowledgement of delivery by any person.

(3) A service address must be situated within a state
within the European Economic Area, and "a state within the
European Economic Area" means a state which is a
member of the European Communities and the Republic of
Iceland, the Kingdom of Norway and the Principality of
Liechtenstein.

PART III

Duration and renewal of a confidentiality order
10. - (1) Subject to paragraphs (2), (3) and (4) a
confidentiality order shall remain in force for the period of five
years from the date on which it is made unless revoked earlier
under regulation 11.

(2) Where the beneficiary of a confidentiality order ("the existing
order") delivers an application under section 723B(1) of the 1985
Act for a further confidentiality order ("the new order") before the
expiry of the existing order ("the expiry date") and the Secretary of
State decides before the expiry date to make a new order under
section 723B(3) of the 1985 Act, the new order shall come into
force on the expiry of the existing order.

(3) Where the beneficiary of an existing order delivers an
application under section 723B(1) of the 1985 Act for a new order
before the expiry date and the Secretary of State has not made a
decision under section 723B(3) or (4) of the 1985 Act before that
date, the existing order shall continue in force until -
(a) the Secretary of State makes a decision under section
723B(3) of the 1985 Act and the new order is made; or

(b) the application is dismissed under section 723B(4) of the
1985 Act.
(4) Where a confidentiality order is made in relation to
an application in respect of which no fee has been paid
pursuant to paragraph (8) of regulation 2 that order shall
remain in force for a period equal to the period for which
the confidentiality order referred to in paragraph (8) of
regulation 2, made under the Companies (Particulars of
400
Usual Residential Address) Regulations, is to remain in
force.

Revocation of a confidentiality order
11. - (1) The Secretary of State may revoke a
confidentiality order at any time if she is satisfied that -
(a) the beneficiary of the order, or any other person, in
purported compliance with any provision of these
Regulations, has furnished the Secretary of State with
false, misleading or inaccurate information; or

(b) the registrar has not received, within the period of 28
days beginning with the date on which the beneficiary of the
order was sent notice under regulation 4 of the Secretary
of State's decision, in relation to each limited liability
partnership of which that beneficiary is a member, the
information in respect of the service address required to be
delivered to the registrar under section 9 of the 2000 Act,
by virtue of the making of the order; or

(c) the registrar has not received, within the period of 28
days from -
(i) any change or alteration among, or to, the
members by virtue of the appointment of a
beneficiary of an order; or

(ii) any change in the particulars of the usual
residential address or the service address of the
beneficiary of an order, in relation to each limited
liability partnership of which that beneficiary is a
member,
the information required to be delivered to the registrar
under section 9 of the 2000 Act or sections 288 or 288A
of the 1985 Act, of any such change or alteration,
whether that change or alteration occurred before or
after the making of the confidentiality order; or

(d) any statement delivered to the registrar under
sections 2 and 3 of the 2000 Act naming as a member
an individual in respect of whom a confidentiality order
under the 1985 Act has been made did not contain the
service address of the beneficiary or was not
accompanied by a statement under the 2000 Act
containing the usual residential address of the
beneficiary; or

(e) any address purporting to be the service address of
a beneficiary of an order which has been notified to the
registrar under any provision of the 1985 Act or of the
401
2000 Act which does not comply with all the
requirements of regulation 9.
(2) Where a beneficiary is also the beneficiary of a
confidentiality order made under the Companies
(Particulars of Usual Residential Address) Regulations
which is revoked, any confidentiality order made in respect
of that beneficiary as a member of a limited liability
partnership is also revoked.

(3) If the Secretary of State proposes to revoke an order
under this regulation, other than one revoked under
paragraph (2), she shall send the beneficiary of the order
notice.

(4) The notice must -
(a) state the grounds on which it is proposed to revoke the
order;

(b) inform the beneficiary that he may, within a period of 21
days beginning with the date of the notice, deliver
representations to the Secretary of State; and

(c) state that if representations are not received by the
Secretary of State within that period, the order will be
revoked at the expiry of that period.
(5) If the beneficiary delivers representations as to why
the order should not be revoked within the period specified
in paragraph (4), the Secretary of State shall have regard
to the representations in determining whether to revoke
the order, and shall send the beneficiary notice of her
decision, and such notice shall be sent within five working
days of the decision being made.

(6) Any communication by the Secretary of State in
respect of the revocation or proposed revocation of a
confidentiality order shall be sent to the beneficiary at his
usual residential address.

Notification of cessation of a confidentiality order
12. On a confidentiality order ceasing to have effect, for
whatever reason, the beneficiary of that order shall notify
every relevant limited liability partnership within the
meaning of section 723D(1)(a) of the 1985 Act of which he
is a member, of that order ceasing to have effect within
five days of its so ceasing to have effect.

PART IV
402

Access to confidential records
13. - (1) Subject to paragraph (2), a competent authority is
entitled to inspect, and take copies of, confidential records.

(2) The circumstances in which a competent authority may
inspect, and take copies of, confidential records are that the
registrar has made a determination, in respect of that competent
authority, as to the manner in which that competent authority and
its officers, servants and representatives may inspect, and take
copies of, confidential records.

(3) The registrar may from time to time vary or revoke any
determination with the consent of the competent authority in
respect of whom it has been made.

Disclosure of relevant information
14. - (1) Subject to regulation 13 the disclosure of relevant
information by any person is prohibited in the following
circumstances -
(a) where the information disclosed was delivered to the
registrar, after the making of a confidentiality order in
relation to the beneficiary of an order to whom the
information relates, in the course the performance of the
duties of the registrar under the 1985 Act or the 2000 Act in
respect of that information and the information was
obtained by the person disclosing it from the registrar;

(b) where the information disclosed was provided to a
limited liability partnership, of which the beneficiary of
the order to which the information relates was a member,
after the making of that order, for the purpose of enabling
the limited liability partnership to comply with the
requirements of the 2000 Act and of the 1985 Act, as the
case may be, and the information was obtained by the
person disclosing it from the limited liability partnership.
(2) Paragraph (1) does not prohibit the disclosure of
relevant information by a competent authority which is
made for the purpose of facilitating the carrying out of a
public function and "public function" includes -
(a) any function conferred by or in accordance with any
provision contained in any enactment or subordinate
legislation;

(b) any function conferred by or in accordance with any
provision contained in the Community Treaties or any
Community instrument;

(c) any similar function conferred on persons by or under
403
provisions having effect as part of the law of a country or
territory outside the United Kingdom;

(d) any function exercisable in relation to the investigation
of any criminal offence or for the purposes of any criminal
proceedings,
and disclosure for the purpose of facilitating the carrying
out of a public function includes disclosure in relation to,
and for the purpose of, any proceedings whether civil,
criminal or disciplinary in which the competent authority
engages while carrying out its public functions.

(3) Paragraph (1) does not prohibit the disclosure of
relevant information where the disclosure -
(a) facilitates the creation and maintenance of confidential
records of a limited liability partnership, and the
provision of facilities for the inspection and copying of
confidential records; or

(b) is by the registrar, or any person performing functions
on his behalf, of any relevant information obtained in the
circumstances described in sub-paragraph (1)(a), included
in any document delivered to the registrar under any
provision of the 1985 Act or of the 2000 Act where that
document is prescribed or approved by the registrar in
respect of the delivery to the registrar of any information
which is not relevant information and that document is
made available for inspection and copying as if that were
required by section 709(1) of the 1985 Act; or

(c) is by any person of any relevant information obtain by
that person from any document as is referred to in sub-
paragraph (b).
(4) Paragraph (1) does not prohibit the disclosure by
any person of relevant information obtained in the course
of the performance of their duties or functions, where that
disclosure occurred notwithstanding the exercise by that
person of the due care and diligence in maintaining the
confidentiality, required by the 1985 Act and these
Regulations, of that information, that could reasonably by
expected of a person performing those duties and
functions.

(5) In this regulation -
"enactment" includes -
(a) an Act of the Scottish Parliament;

404
(b) Northern Ireland legislation;
"subordinate legislation" has the meaning given in the
Interpretation Act 1978[10] and also includes an
instrument made under an Act of the Scottish Parliament or
under Northern Ireland legislation.

PART V

Form and delivery of notices etc.
15. - (1) Any notice -
(a) by the Secretary of State under regulation 4, 11(3) or
11(5); or

(b) to the Secretary of State under regulation 2(9);
and any representations made to the Secretary of State
under regulation 11 shall be legible form.

(2) Where any notice is required to be sent by the
Secretary of State to the usual residential address of any
person, that notice is validly sent if sent to the address of
that person, shown in the records of the registrar available
for inspection or copying under section 709 of the 1985 Act
or the confidential records as the case may be when the
notice is sent.

Amendments of enactments
16. The enactments mentioned in Schedule 2 to these
Regulations shall have effect with the amendments
specified being amendments supplemental to, and
consequential upon, the making of these Regulations.

Offence and penalties
17. - (1) Any person who, in an application under 723B
of the 1985 Act, makes a statement which he knows to be
false in a material particular, or recklessly makes a
statement which is false in a material particular, shall be

(2) Any person who discloses information in
contravention of regulation 14 shall be guilty of an
offence.

(3) A person guilty of an offence under paragraph (1) or
(2) shall be liable -
(a) on conviction on indictment, to imprisonment for a term
not exceeding two years or to a fine or to both; and
405

(b) on summary conviction, to imprisonment not exceeding
six months, or to a fine not exceeding the statutory
maximum or to both.

Melanie J. Johnson,
Parliamentary Under Secretary of State for Competition,
Consumers and Markets, Department of Trade and Industry

31st March 2002

SCHEDULE 1
Regulation 1

Competent Authorities

the Secretary of State;
the registrar and the registrar of companies for Northern
Ireland;
an inspector appointed under Part XIV of the Companies Act
1985 or regulation 30 of the Open-Ended Investment
Companies Regulations 2001[11];
any person authorised to exercise powers under section 447
of the Companies Act 1985 or section 84 of the Companies
Act 1989[12];
any person exercising functions conferred by Part VI of the
Financial Services and Markets Act 2000[13] or the
competent authority under that Part;
a person appointed to make a report under section 166 of
the Financial Services and Markets Act 2000;
a person appointed to conduct an investigation under
section 167 or 168(3) or (5) of the Financial Services and
Markets Act 2000;
an inspector appointed under section 284 of the Financial
Services and Markets Act 2000;
the Department of Enterprise, Trade and Investment in
Northern Ireland;
the Scottish Executive;
the Scotland Office;
the National Assembly for Wales;
the Wales Office (Office of the Secretary of State for Wales);
the Treasury;
the Commissioners of HM Customs and Excise;
the Commissioners of Inland Revenue;
the Bank of England;
the Director of Public Prosecutions and the Director of Public
Prosecutions in Northern Ireland;
406
the Serious Fraud Office;
the Secret Intelligence Service;
the Security Service;
the Financial Services Authority;
the Competition Commission;
the Occupational Pensions Regulatory Authority;
the Panel on Takeovers and Mergers;
the Chief Registrar of Friendly Societies and the Registrar
for Credit Unions and Industrial and Provident Societies for
Northern Ireland;
the Director General of Fair Trading;
the Office of the Information Commissioner;
the Friendly Societies Commission;
a local weights and measures authority;
the Charity Commission;
an official receiver appointed under section 399 of the
Insolvency Act 1986[14];
a person acting as an insolvency practitioner within the
meaning of section 388 of the Insolvency Act 1986;
an inspector appointed under Part XV of the Companies
(Northern Ireland) Order 1986[15] or Regulation 22 of the
Open-Ended Investment Companies (Companies with
Variable Capital) Regulations (Northern Ireland) 1997[16];
any person authorised to exercise powers under Article 440
of the Companies (Northern Ireland) Order 1986;
the Official Receiver for Northern Ireland;
a police force;
any procurator fiscal;
an overseas regulatory authority within the meaning of
section 82 of the Companies Act 1989.

SCHEDULE 2
Regulation 15

1. In section 2 of the 2000 Act, insert after subsection (2) -
" (2A) Where a confidentiality order, made under section
723B of the Companies Act 1985 as applied to a limited
liability partnerships, is in force in respect of any
individual named as a member of a limited liability
partnership under subsection (2) that subsection shall
have effect as if the reference to the address of the
individual were a reference to the address for the time being
notified by him under the Limited Liability Partnerships
(Particulars of Usual Residential Address) (Confidentiality
Orders) Regulations 2002 to any limited liability
partnership of which he is a member or if he is not such a
member either the address specified in his application for a
confidentiality order or the address last notified by him
under such a confidentiality order as the case may be.
407

(2B) Where the incorporation document or a copy of such
delivered under this section includes an address specified in
reliance on subsection (2A) there shall be delivered with it
or the copy of it a statement in a form approved by the
registrar containing particulars of the usual residential
address of the member whose address is so specified."
2. After section 288 of the 1985 Act, insert -
" 288A If an individual in respect of whom a
confidentiality order under section 723B as applied to
limited liability partnerships becomes a member
of a limited liability partnership -
(a) the notice to be delivered to the registrar under
section 9(1) of the Limited Liability Partnerships
Act 2000 shall contain the address for the time being
notified by the member to the limited liability
partnership under the Limited Liability
Partnerships (Particulars of Usual Residential
Address) (Confidentiality Orders) Regulations 2002
but shall not contain his usual residential address;
and

(b) with that notice the limited liability
partnership shall deliver to the registrar a notice in
the prescribed form containing the usual residential
address of that member."
3. After section 9(3) of the 2000 Act, insert -
" (3A) Where a confidentiality order under section 723B
of the Companies Act 1985 as applied to limited liability
partnerships is made in respect of an existing member,
the limited liability partnership must ensure that there is
delivered within 28 days to the registrar notice in a form
approved by the registrar containing the address for the
time being notified to it by the member under the Limited
Liability Partnerships (Particulars of Usual Residential
Address) (Confidentiality Orders) Regulations 2002.

(3B) Where such a confidentiality order is in force in
respect of a member the requirement in subsection (1)(b) to
notify a change in the address of a member shall be read in
relation to that member as a requirement to deliver to the
registrar, within 28 days, notice of -
(a) any change in the usual residential address of
that member; and

(b) any change in the address for the time being
notified to the limited liability partnership by the
408
member under the Limited Liability Partnerships
(Particulars of Usual Residential Address)
(Confidentiality Orders) Regulations 2002,
and the registrar may approve different forms for the
notification of each kind of address."

EXPLANATORY NOTE


Section 45 of the Criminal Justice and Police Act 2001 inserted
sections 723B to 723F into the Companies Act 1985 ("the 1985
Act"). Those sections provide for a system of granting
confidentiality orders to directors and secretaries of companies
formed under the 1985 Act and directors, secretaries and
permanent representatives of oversea companies with a place of
business, or a branch, in Great Britain in the meaning of the 1985
Act. The Limited Liability Partnerships (No.2) Regulations
2002 have applied sections 723B to 723F to limited liability
partnerships with appropriate modifications.

Confidentiality orders are granted to individuals on application to
the Secretary of State when she is satisfied that the availability for
inspection of the usual residential address of that individual in the
records of the registrar of companies creates, or is likely to create,
a serious risk that the individual, or a person who lives with him,
will be subjected to violence or intimidation. The effect of the order
is that all notifications to the registrar of companies subsequent to
the granting of the order in respect of the usual residential address
of the beneficiary of an order are kept in confidential records by the
registrar which do not form part of his records available for public
inspection. These Regulations make further provision for the
implementation of the system and for supplemental and
consequential amendments to the 1985 Act as applied to limited
liability partnerships.

Part I of the Regulations makes provision for the application
process. Regulation 2 provides for the manner of making
applications and for the evidence to be delivered to the Secretary
of State in support of the application. Regulation 3 empowers the
Secretary of State to refer questions to other bodies for the
purpose of deciding upon applications. Regulation 4 prescribes the
manner in which the Secretary of State notifies the outcome of an
application. Regulation 5 provides for appeals to the Court against
the decision of the Secretary of State rejecting an application.

Part II of the Regulations makes provision for the address which
409
is to appear on the public record of the registrar of companies on
the granting of a confidentiality order in place of the usual
residential address of the beneficiary of an order. Regulations 6, 7
and 8 specify how and by whom that address and any changes in it
are to be notified in the circumstances set out in those
Regulations. Regulation 9 requires such an address to be the
same in respect of all limited liability partnerships of which the
beneficiary of an order is a member. It also defines the nature of a
place that can be such an address and requires the address to be
situated within the European Economic Area.

Part III of the Regulations makes provision for the duration,
renewal and revocation of confidentiality orders. Regulation 10
determines the time for which confidentiality orders are to remain
in force and makes provision for the operation of confidentiality
orders when they are sought to be renewed. Regulation 11
describes the circumstances in which the Secretary of State may
revoke confidentiality orders; when orders have been obtained on
the basis of false, misleading or inaccurate information, when
certain information related to the beneficiary required by the 1985
Act or 2000 Act has not been delivered to the registrar within the
prescribed period and where a service address does not comply
with the requirements of Regulation 9. It also prescribes the
procedure to be followed on the revocation of an order.

Part IV of the Regulations makes provision for granting access to
the confidential records of the registrar and imposes a prohibition
on the disclosure of relevant information as defined in section
723C(5) of the 1985 Act. Regulation 13 grants access to the
confidential records to the competent authorities listed in Schedule
1. Regulation 14 prohibits disclosure of relevant information by
persons requiring such information in the circumstances set out in
paragraph (1) of that regulation, while the remaining paragraphs
of the regulation provide exemptions from that prohibition.

Part V of the Regulations contains provisions on the manner and
form of certain notices to be given to and by the Secretary of State
under these Regulations (Regulation 15). Breach of the
prohibition in Regulation 14 and knowingly or recklessly making
statements, false in a material particular, in an application under
section 723B constitutes an offence. Regulation 16 makes the
modifications in Schedule 2 to the enactments specified in that
Schedule. The amendments seek to ensure that the enactments
under which limited liability partnerships are required to notify
the usual residential address of members are modified to require
notification of the service address of a beneficiary of an order to
the registrar for the public record and the continued notification of
changes in the particulars of the usual residential address of a
beneficiary to the registrar for the confidential record defined in
section 723D of the 1985 Act.

410
Notes:

[1] 1985 c. 6; sections 723B to E were inserted by section 45 of
the Criminal Justice and Police Act 2001 (c. 16) and applied to
limited liability partnerships by the Limited Liability
Partnerships (No. 2) Regulations 2002/913.back
[2] S.I. 2001/1090.back
[3] S.I. 2002/913.back
[4] 2000 c. 12.back
[5] S.I. 2002/912.back
[6] 1996 c. 16.back
[7] 1967 c. 77.back
[8] S.I. 2001/1090.back
[9] 1971 c. 80.back
[10] 1978 c. 30.back
[11] S.I. 2001/1228.back
[12] 1989 c. 40.back
[13] 2000 c. 8.back
[14] 1986 c. 45.back
[15] 1986/1032 (N.I. 6).back
[16] S.R.N.I. 1997/251.back

ISBN 0 11 039775 4

411

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The Limited Liability Partnerships
(Amendment) Regulations 2005

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Liability Partnerships (Amendment)
Regulations 2005, ISBN 011073114X. The
print version may be purchased by clicking here.
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413


2005 No. 1989

PARTNERSHIP

The Limited Liability Partnerships (Amendment)
Regulations 2005

Made 13th July 2005
Laid before Parliament 20th July 2005
Coming into force 1st October 2005

The Secretary of State, in exercise of the powers
conferred upon him by sections 14, 15 and 17 of the
Limited Liability Partnerships Act 2000[1] and of
all other powers enabling him in that behalf, hereby
makes the following Regulations:

Citation, commencement and interpretation
1. (1) These Regulations may be cited as the
Limited Liability Partnerships (Amendment)
Regulations 2005 and come into force on 1st October
2005 ("the commencement date").

(2) Regulation 2 below has effect as respects
financial years which begin on or after 1st January
2005 and which end on or after the commencement
date.

(3) In these Regulations
"the 1985 Act" means the Companies Act
1985[2],
"the 1986 Act" means the Insolvency Act
1986[3], and
"the principal regulations" means the Limited
Liability Partnerships Regulations 2001[4].
Amendment of Schedule 1 to the principal
414
regulations (accounts and audit)
2. Schedule 1 to the principal regulations
(modifications to provisions of Part 7 of the 1985
Act as applied to limited liability
partnerships) is amended in accordance with
Schedule 1 to these Regulations.

Amendment of Schedule 3 to the principal
regulations (insolvency)
3. Schedule 3 to the principal regulations
(modifications to provisions of the 1986 Act as
applied to limited liability partnerships) is
amended in accordance with Schedule 2 to these
Regulations.

Transitional provision
4. In a case where a petition for an
administration order has been presented before
the commencement date, the amendments to
the principal regulations made by regulation 3
shall have no effect.

Gerry Sutcliffe
Parliamentary Under-Secretary of State for
Employment Relations and Consumers
Department of Trade and Industry

13th July 2005

SCHEDULE 1
Regulation 2

FURTHER MODIFICATIONS TO PROVISIONS OF PART
7 OF THE 1985 ACT APPLIED TO LIMITED
LIABILITY PARTNERSHIPS

1. Schedule 1 to the principal regulations is
amended as follows.

2. After the entry relating to section 225 of the
1985 Act (alteration of accounting reference date)
insert
Provision of Part 7 Modification
Section 226 (duty to prepare
individual accounts)[5]
Omit subsection
(3).
415
Section 227 (duty to prepare group
accounts)[6]
Omit subsection
(4)..

1985 Act (exemption for parent companies included
in accounts of larger group) insert
Section 228A (exemption for parent
companies included in non-EEA group
accounts)[7]
Omit
subsection
(4)..

4. For the entry relating to sections 234 (duty to
prepare directors' report) and 234A (approval and
signing of directors' report) of the 1985 Act
substitute
Sections 234 to 234ZZB (duty to
prepare directors' report)[8]
Omit sections
234 to 234ZZB.
Section 234ZA (statement as to
disclosure of information to auditors)[9]
Omit section
234ZA.
Section 234A (approval and signing of
directors' report)[10]
Omit section
234A.
Sections 234AA (duty to prepare
operating and financial review) and
234AB (approval and signing of
operating and financial review)[11]
Omit sections
234AA and
234AB.
Sections 234B (duty to prepare
directors' remuneration report) and
234C (approval and signing of directors'
remuneration report)[12]
Omit sections
234B and
234C..

5. In the entry relating to section 235 of the 1985
Act (auditors' report)[13], for "subsection (3)", in
both places where it occurs, substitute "subsections
(3) to (5)".

Act (persons entitled to receive copies of accounts
and reports)[14] after the entry relating to
subsection (1) insert
subsection (1A) Omit subsection (1A)(b) to (d)..

7. For the entry relating to subsection (1) of
416
section 239 of the 1985 Act (right to demand copies
of accounts and reports)[15] substitute
subsection
(1)
(a) Omit paragraphs (b), (ba) and (c), and

(b) in paragraph (d), omit the words from
"and that directors' report" to the end..

Act (requirements in connection with publication of
accounts)[16], for the modification to subsection
(3)(d) substitute "(b) omit paragraph (e), and".

1985 Act (accounts and report to be laid before
general meeting) insert
Section 241A (members' approval of
directors' remuneration report)[17]
Omit section
241A..

10. For the entry relating to subsection (1) of
section 242 of the 1985 Act (accounts and reports to
be delivered to registrar)[18] substitute
subsection
(1)
(a) For the words "The directors of a
company" substitute "The designated
members of a limited liability
partnership",

(b) omit paragraphs (b), (ba) and (c),

(c) in paragraph (d), omit from "and that
directors' report" to the end, and

(d) for "the directors must annex" substitute
"the designated members must annex"..

11. Omit the entry relating to section 243 of the
1985 Act (accounts of subsidiary undertakings to be
appended in certain cases)[19].

12. Omit the entry relating to section 244(3) of
the 1985 Act (3 month extension of period allowed
for delivering accounts where oversea interests)[20].

13. For the entry relating to section 245 of the
1985 Act (voluntary revision of accounts)[21]
417
substitute
Provision of
Part 7
Modification
Section 245
(voluntary
revision of
accounts)

subsection (1) For subsection (1) substitute

(1) If it appears to the members of a
limited liability partnership that any
annual accounts did not comply with the
requirements of this Act, they may
prepare revised accounts..
subsection (2) (a) Omit the words ", report or review" in
both places where they occur, and

(b) omit the words "laid before the
company in general meeting or".
subsection (3) Omit the words from "or a revised
summary financial statement" to the
end.
subsection (4) (a) In paragraph (a), omit the words ",
statement, report or review",

(b) in paragraph (b), omit the words "or
reporting accountant" and the words ",
statement, report or review", and

(c) in paragraph (c)
(i) for "where the previous
accounts, report or review"
substitute "where the previous
accounts",

(ii) omit sub-paragraph (ii), and

(iii) omit the words from ", or
where a summary financial
statement" to the end..

14. For the entry relating to section 245A
(Secretary of State's notice in respect of annual
accounts, reports and reviews)[22] substitute
418
Section 245A
(Secretary of
State's notice in
respect of annual
accounts)

subsection (1) (a) For paragraphs (a) and (b)
substitute

"a copy of a limited liability
partnership's annual accounts has
been delivered to the registrar,", and

(b) omit the words ", report or
review".
subsection (2) Omit the words ", report or review"
and the words "or a revised report or
review".
subsection (3) Omit the words ", report or review"
in both places where they occur.
subsection (4) Omit the words ", revised directors'
reports and revised operating and
financial reviews" and the words ",
reports or reviews" in both places
where they occur..

15. For the entry relating to section 245B
(application in respect of defective accounts, reports
and reviews)[23] substitute
Section 245B
(application in respect
of defective accounts,
reports and reviews)

subsection (1) Omit the words "or a directors'
report or operating and financial
review does not comply," and the
words "or a revised report or
review".
subsection (4) Omit the words ", report or
review" in each place where they
419
occur and the words "or a revised
report or review".
subsection (5) Omit the words ", report or
review" in both places where they
occur.
subsection (7) Omit the words "revised directors'
reports and revised operating and
financial reviews," and the words
", reports or reviews" in both
places where they occur..

16. After the entry relating to section 245B
insert
Section 245C (other
persons authorised to
apply to court)

subsection (1)[24] Omit the words , directors'
reports and operating and financial
reviews in both places where they
occur..

17. At the beginning of the entry relating to
section 246A of the 1985 Act (special provisions for
medium-sized companies)[25] insert
subsection (2A) Omit subsection (2A)..

18. For the entry relating to section 247A (cases
in which special provisions do not apply)[26]
substitute
Provision of Part
7
Modification
Section 247A
(cases in which
special
provisions do
not apply)

subsection (1B) For subsection (1B) substitute

(1B) A limited liability partnership
is ineligible if it is a person (other than a
banking limited liability partnership)
who has permission under Part 4 of the
420
Financial Services and Markets Act 2000
to carry on one or more regulated
activities...

19. After the entry relating to section 255D
insert
Section 256A (reporting
standards)[27]
Omit section
256A..

20. In paragraph (a) of the entry relating to
subsection (1) of section 262 of the 1985 Act (minor
definitions)[28], for "and "credit institution""
substitute ""credit institution" and "quoted
company"".

21. In paragraph (a) of the entry relating to
subsection (1) of section 262A of the 1985 Act
(index of defined expressions)[29], after ""credit
institution"" insert ""quoted company"".

22. In the entry relating to paragraph 3 of
Schedule 4 to the 1985 Act (movements in reserves;
disclosure of dividends)[30], omit the entry relating
to sub-paragraph (7)(b) and (c).

23. Before the entry relating to paragraph 37 of
Schedule 4 to the 1985 Act insert
Paragraph 35A[31] Omit paragraphs (b), (c) and (d)..

24. In the entry relating to paragraph 3 of
Schedule 8 to the 1985 Act (small company
accounts: movements in reserves; disclosure of
aggregate dividends)[32], omit the reference to sub-
paragraph (7)(b).

25. Before the entry relating to paragraph 37 of
Schedule 8 to the 1985 Act insert
Paragraph 35A[33] Omit paragraphs (b), (c) and (d)..

421
SCHEDULE 2
Regulation 3

AMENDMENTS TO SCHEDULE 3 TO THE PRINCIPAL
REGULATIONS

1. Schedule 3 to the principal regulations is
amended as follows.

1986 Act (those who may propose an arrangement)
insert
Section 1A
(moratorium)[34]

subsection (1) For "the directors of an eligible
company intend" substitute "an
eligible limited liability
partnership intends".

For "they" substitute "it"..

3. In the entries relating to modifications to
sections 2 to 7 of the 1986 Act where a proposal
under section 1 has been made by the limited
(a) in the entry relating to section 2
(procedure where the nominee is not the
liquidator or administrator)[35]
(i) before the entry in relation to
subsection (2) insert
subsection
(1)
For "the directors do" substitute "the
limited liability partnership does".,

(ii) in the entry relating to subsection
(2), for "(a)" substitute "(aa)", and

(iii) in the entry relating to subsection
(4) insert at the beginning of the
modification to subsection (4) "In
paragraph (a)" and at the end insert
"In paragraph (b) for "that person"
substitute "those designated
422
members".",
(b) after the entry relating to section 4
(decisions of meetings) insert
Section 4A (approval of
arrangement)[36]

subsection (2) Omit " (a)".

For "both meetings"
substitute "the meeting".

Omit the words from ", or"
to "that section".
subsection (3) Omit.
subsection (6) Omit.,

(c) in the entry relating to section 5
(effect of approval)[37], omit the entry
relating to subsection (1),

(d) in the entry relating to section 6
(challenge of decisions)[38]
(i) in the entry relating to subsection
(1), omit the words ""meetings"
substitute "meeting" and for",

(ii) in the entry relating to subsection
(2), for "(a)" substitute "(aa)" and for
"(aa) as follows "(aa)"" substitute
"(ab) as follows "(ab)"",

(iii) in the substituted subsection (4),
for "the approval given by the
meeting" substitute "any decision
approving the voluntary arrangement
which has effect under section 4A",
and

(iv) in the entry relating to subsection
(5), omit the words "the first" and omit
the words ", for the second "meetings"
423
substitute "meeting"",
(e) after the entry relating to section 6
insert
Section 6A (false representations,
etc)[39]

subsection (1) Omit "members
or".,

(f) in the entry relating to section 7
(implementation of proposal)[40]
(i) omit the entry relating to
subsection (1),

(ii) insert
subsection
(2)
In paragraph (a) omit "one or both of" and
for "meetings" substitute "meeting"., and

(g) in the paragraph after the entry
relating to section 7, for the words "an
administration order is in force in relation
to the limited liability partnership"
substitute "the limited liability
partnership is in administration".
4. Omit the entries relating to sections 8, 9,
10, 11, 13 and 14 of the 1986 Act[41].

5. In the entry relating to section 84 of the
1986 Act (circumstances in which company may
be wound up voluntarily)[42]
(a) insert after subsection (2)
subsection
(2A)
For "company passes a resolution for
voluntary winding up" substitute "limited
liability partnership determines that it is to
be wound up voluntarily" and for "resolution"
where it appears for the second time
substitute "determination".
subsection
(2B)
For "resolution for voluntary winding up may
be passed only" substitute "determination to
424
wind up voluntarily may only be made" and
in sub-paragraph (b), for "passing of the
resolution" substitute "making of the
determination"., and

(b) in the entry relating to subsection (4), for
"(3)" substitute "(4)" and for "(4)" substitute
"(5)" wherever it appears.
1986 Act (circumstances in which company may
be wound up by the court)[43], in the entry
relating to subsection (1) in the substituted
subsection in modified sub paragraph (1)(d) omit
", or" and at the end of that sub paragraph insert
the following
"(da) at the time at which a moratorium for the
limited liability partnership under section 1A
comes to an end, no voluntary arrangement
approved under Part I has effect in relation to the
limited liability partnership,".

1986 Act (application for winding up)[44] insert
at the end
subsection
(3A)
For "122(1)(fa)" substitute
"122(1)(da)"..

1986 Act (avoidance of property dispositions,
etc.)[45], insert in the left hand column
"subsection (1)".

9. Omit the entry relating to section 233 of
the 1986 Act (suppliers of gas, water, electricity,
etc.)[46].

1986 Act ("insolvency" and "go into
liquidation")[47] insert at the end
subsection
(3)
For "resolution for voluntary winding up"
substitute "determination to wind up
voluntarily"..
425

11. In the entry relating to subsection (3) of
section 387 of the 1986 Act ("the relevant
date")[48] insert before the modification to
paragraph (c)
"In paragraph (ab) for "passed a resolution for
voluntary winding up" substitute "made a
determination that it be wound up voluntarily".".

12. After the entry relating to section 389 of
the 1986 Act (acting without qualification an
offence)[49] insert
Section 389A (authorisation of
nominees and supervisors)

subsection (1) Omit "or Part
VIII"..

13. After the entry relating to section 422 of
the 1986 Act (recognised banks, etc.)[50]
insert
Section 426A (disqualification from
Parliament (England and Wales))
Omit.
Section 426B (devolution) Omit.
Section 426C (irrelevance of privilege) Omit..

14. Before the entry relating to Schedule 1 to
the 1986 Act (powers of the administrator or
administrative receiver) insert
Schedule
A1[51]

Paragraph
6

sub- For "directors of a company wish" substitute
426
paragraph
(1)
"limited liability partnership wishes".

For "they" substitute "the designated
partnership".
sub-
paragraph
(2)
For "directors" substitute "the designated
partnership".

In sub-paragraph (c), for "meetings of the
company and" substitute "a meeting of".
Paragraph
7

sub-
paragraph
(1)
For "directors of a company" substitute
"designated members of the limited liability
partnership".

In sub-paragraph (e)(iii), for "meetings of the
company and" substitute "a meeting of".
Paragraph
8

sub-
paragraph
(2)
For "meetings" substitute "meeting".

For "are" substitute "is".

Omit the words in parenthesis.
sub-
paragraph
(3)
For "either of those meetings" substitute "the
meeting".

For "those meetings were" substitute "that
meeting was".

Omit the words in parenthesis.
sub-
paragraph
(4)
For "either" substitute "the".
sub-
paragraph
(6)(c)
For "one or both of the meetings" substitute
"the meeting".
Paragraph
9

427
sub-
paragraph
(1)
For "directors" substitute "designated
partnership".
sub-
paragraph
(2)
partnership".
Paragraph
12

sub-
paragraph
(1)(b)
Omit.
sub-
paragraph
(1)(c)
For "resolution may be passed" substitute
"determination that it may be wound up may
be made".
sub-
paragraph
(2)
For "transfer of shares" substitute "any
transfer by a member of the limited liability
partnership of his interest in the property of
Paragraph
20

sub-
paragraph
(8)
partnership".
sub-
paragraph
(9)
partnership".
Paragraph
24

sub-
paragraph
(2)
partnership".
Paragraph
25

sub-
paragraph
(2)(c)
partnership".
Paragraph
26

sub-
paragraph
(1)
Omit ", director".
Paragraph
29

428
sub-
paragraph
(1)
For "meetings of the company and its
creditors" substitute "a meeting of the
creditors of the limited liability
partnership".
Paragraph
30

sub-
paragraph
(1)
new sub-
paragraph
(2A)
Insert new sub-paragraph (2A) as follows

"(2A) If modifications to the proposal are
proposed at the meeting the chairman of the
meeting shall, before the conclusion of the
meeting, ascertain from the limited liability
partnership whether or not it accepts the
proposed modifications; and if at that
conclusion the limited liability partnership
has failed to respond to a proposed
modification it shall be presumed not to have
agreed to it.".
sub-
paragraph
(3)
For "either" substitute "the".

After "the result of the meeting" in the first
place where it occurs insert "(including, where
modifications to the proposal were proposed
at the meeting, the response to those
proposed modifications made by the limited
liability partnership)".

At the end add "and to the limited liability
partnership".
Paragraph
31

sub-
paragraph
(1)
sub-
paragraph
(7)
For "directors of the company" substitute
"designated members of the limited liability
partnership".

For "meetings (or either of them)" substitute
"meeting".

For " directors" substitute "limited liability
partnership".
429

For "those meetings" substitute "that
meeting".
Paragraph
32

sub-
paragraph
(2)
For sub-paragraphs (a) and (b) substitute
"with the day on which the meeting
summoned under paragraph 29 is first held.".
Paragraph
36

sub-
paragraph
(2)
For sub-paragraph (2) substitute

"(2) The decision has effect if, in accordance
with the rules, it has been taken by the
creditors' meeting summoned under
paragraph 29.".
sub-
paragraph
(3)
Omit.
sub-
paragraph
(4)
Omit.
sub-
paragraph
(5)
Omit.
Paragraph
37

sub-
paragraph
(5)
For "each of the reports of the meetings"
substitute "the report of the meeting".
Paragraph
38

sub-
paragraph
(1)(a)
"the meeting".
sub-
paragraph
(1)(b)
For "either of those meetings" substitute "the
meeting".
sub-
paragraph
(2)(a)
For "either of the meetings" substitute "the
meeting".

After sub-paragraph (2)(a) insert new (aa) as
430
follows
" (aa) any member of the limited
liability partnership;".
sub-
paragraph
(2)(b)
Omit "creditors'".
sub-
paragraph
(3)(a)
For "each of the reports" substitute "the
report".
sub-
paragraph
(3)(b)
Omit "creditors'".
sub-
paragraph
(4)(a)(ii)
Omit "in question".
sub-
paragraph
(4)(b)(i)
For "further meetings" substitute "a further
meeting" and for "directors" substitute
"limited liability partnership".
sub-
paragraph
(4)(b)(ii)
Omit "company or (as the case may be)
creditors'".
sub-
paragraph
(5)
For "directors do" substitute "limited
liability partnerships does".
Paragraph
39

sub-
paragraph
(1)
"the meeting".
Schedule
B1[52]

Paragraph
2

sub-
paragraph
(c)
For "company or its directors" substitute
"limited liability partnership".
Paragraph
8

sub-
paragraph
(1)(a)
voluntarily".
431
Paragraph
9
Omit.
Paragraph
12

sub-
paragraph
(1)(b)
Omit.
Paragraph
22
For sub-paragraph (1) substitute

"(1) A limited liability partnership may
appoint an administrator.".

Omit sub-paragraph (2).
Paragraph
23

sub-
paragraph
(1)(b)
Omit "or its directors".
Paragraph
42

sub-
paragraph
(2)
For "resolution may be passed for the winding
up of" substitute "determination to wind up
voluntarily may be made by".
Paragraph
61
For paragraph 61 substitute

"61. The administrator has power to prevent
any person from taking part in the
management of the business of the limited
liability partnership and to appoint any
person to be a manager of that business.".
Paragraph
62
At the end add the following
Subsections (3) and (4) of section 92
shall apply for the purposes of this
paragraph as they apply for the
purposes of that section..
Paragraph
83

sub-
paragraph
(6)(b)
voluntarily".
432
sub-
paragraph
(8)(b)
For "passing of the resolution for voluntary
winding up" substitute "determination to wind
up voluntarily".
sub-
paragraph
(8)(e)
For "passing of the resolution for voluntary
winding up" substitute "determination to wind
up voluntarily".
Paragraph
87

sub-
paragraph
(2)(b)
Insert at the end "or".
sub-
paragraph
(2)(c)
Omit ", or".
sub-
paragraph
(2)(d)
Omit the words from "(d)" to "company".
Paragraph
89

sub-
paragraph
(2)(b)
Insert at the end "or".
sub-
paragraph
(2)(c)
Omit ", or".
sub-
paragraph
(2)(d)
Omit the words from "(d)" to "company".
Paragraph
91

sub-
paragraph
(1)(c)
Omit.
Paragraph
94
Omit.
Paragraph
95
For "to 94" substitute "and 93".
Paragraph
97

sub-
paragraph
(1)(a)
Omit "or directors".
433
Paragraph
103

sub-
paragraph
(5)
Omit.
Paragraph
105
Omit..

15. In the entry relating to Schedule 10 to the 1986
Act (punishment of offences under this Act)[53]
(a) before the entry relating to section 85(2) insert
Section
6A(1)
In the entry relating to section 6A omit
"members' or".,

(b) after the entry relating to section 429(5) insert
Schedule A1,
paragraph 9(2)
For "Directors" substitute
"Designated Members".
Schedule A1,
paragraph 20(9)
For "Directors" substitute
"Designated Members".
Schedule B1,
paragraph 27(4)
Schedule B1,
paragraph 29(7)
Schedule B1,
paragraph 32
Omit "or directors"..

EXPLANATORY NOTE


These Regulations amend Schedules 1 and 3 to the Limited
Liability Partnerships Regulations 2001 (S.I. 2001/1090)
("the principal regulations"). The principal regulations apply
certain provisions of the Companies Act 1985 (c.6) ("the
434
1985 Act") and the Insolvency Act 1986 (c.45) ("the 1986
Act") to limited liability partnerships ("LLPs").

Regulation 3 of the principal regulations applies Part 7 of the
1985 Act (accounts and audit) to LLPs, with the
modifications set out in Schedule 1 to the principal
regulations. Part 7 has been amended in particular by the
Directors' Remuneration Report Regulations 2002 (S.I.
2002/1986), by the Companies Act 1985 (International
Accounting Standards and Other Accounting Amendments)
Regulations 2004 (S.I. 2004/2947) and by the Companies
Act 1985 (Operating and Financial Review and Directors'
Report etc.) Regulations 2005 (S.I. 2005/1011). Regulation
2 of, and Schedule 1 to, the Regulations contain further
modifications to the provisions of Part 7 of the 1985 Act
consequential upon those amendments.

Regulation 5 of the principal regulations applies provisions
of the 1986 Act to LLPs, with the modifications set out in
Schedule 3 to the principal regulations. The 1986 Act has
been amended by the Insolvency Act 2000 (c.39), by the
Insolvency Act 1986 (Amendment) Regulations 2002 (S.I.
2002/1037), by the Insolvency Act 1986 (Amendment) (No.
2) Regulations 2002 (S.I. 2002/1240) and by the Enterprise
Act 2002 (c.40). As a consequence of these amendments to
the 1986 Act regulation 3 of, and Schedule 2 to, the
Regulations amend the modifications to the 1986 Act as set
out in Schedule 3 to the principal regulations.

Regulation 4 makes transitional provision for cases where a
petition for an administration order has been presented
before the commencement of these Regulations. In such a
case the amendments made by these Regulations shall not
apply.

A full regulatory impact assessment of the effect that S.I.
2004/2947, and associated instruments such as these
Regulations, will have on the costs of business is available
from the Department of Trade and Industry, Corporate Law
and Governance Directorate, 5th floor, 1 Victoria Street,
London, SW1H 0ET (they are also available electronically at
www.dti.gov.uk/cld). Copies have also been placed in the
libraries of both Houses of Parliament.

A full regulatory impact assessment has not been produced
for the amendments made by regulation 3 of, and Schedule
2 to, this instrument as they have no impact on the costs of
business.

Notes:

435
[1] 2000 c.12.back
[2] 1985 c.6.back
[3] 1986 c.45.back
[5] Section 226 was substituted by section 4(1) of the
Companies Act 1989 (c.40), and amended by regulation
2 of S.I. 2004/2947.back
[6] Section 227 was substituted by section 5(1) of the
Companies Act 1989, and amended by regulation 2 of
S.I. 2004/2947.back
[7] Section 228A was inserted by regulation 4 of S.I.
2004/2947.back
[8] Section 234 was substituted, and sections 234ZZA
and 234ZZB inserted, by regulation 2 of S.I.
2005/1011.back
[9] Section 234ZA was inserted by section 9(3) of the
Companies (Audit, Investigations and Community
Enterprise) Act 2004 (c.27).back
[10] Section 234A was inserted by section 8(1) of the
Companies Act 1989.back
[11] Sections 234AA and 234AB were inserted by
regulation 8 of S.I. 2005/1011.back
[12] Sections 234B and 234C were inserted by
[13] Section 235 was substituted by section 9 of the
S.I. 2002/1986, by regulation 6 of S.I. 2004/2947 and
by regulations 3 and 10 of S.I. 2005/1011.back
Companies Act 1989, and amended by article 12 of S.I.
2000/3373, by regulation 10(4) of S.I. 2002/1986 and
by regulation 19 of, and paragraph 2 of the Schedule to,
S.I. 2005/1011.back
Companies Act 1989, and amended by article 13 of S.I.
2000/3373, by regulation 10(6) of S.I. 2002/1986 and
436
by regulation 19 of, and paragraph 3 of the Schedule to,
S.I. 2005/1011.back
Companies Act 1989, and amended by regulation 4 of,
and paragraph 1 of Schedule 1 to, S.I. 1994/1935 and
by regulation 8 of S.I. 2004/2947.back
2002/1986.back
Companies Act 1989, and amended by sections 30(1)
and (4) and 35(1) of, and Schedule 2 to, the Welsh
Language Act 1993 (c.38), by regulation 10(8) of S.I.
2002/1986 and by regulation 19 of, and paragraph 5 of
the Schedule to, S.I. 2005/1011.back
[19] Section 243 was repealed by regulation 15 of, and
paragraph 6 in Part I of Schedule 7 to, S.I.
2004/2947.back
Companies Act 1989. Section 244(3) was repealed by
and paragraph 2 in Part I of Schedule 1 to, S.I.
1994/1935, by regulation 10(9) of S.I. 2002/1986, by
regulations 3 and 10 of, and paragraph 11 of Schedule 1
to, S.I. 2004/2947 and by regulation 14 of S.I.
2005/1011.back
[22] Section 245A was inserted by section 12 of the
and paragraph 11 of Schedule 1 to, S.I. 2004/2947 and
by regulation 15 of S.I. 2005/1011.back
[23] Section 245B was inserted by section 12 of the
S.I. 2002/1986, by regulation 3 of, and paragraph 11 of
Schedule 1 to, S.I. 2004/2947 and by regulation 16 of
S.I. 2005/1011.back
[24] Section 245C was inserted by section 12 of the
Companies Act 1989, and amended by sections 10 and
64 of, and Schedule 8 to, the Companies (Audit,
Investigations and Community Enterprise) Act 2004, by
regulation 3 of, and paragraph 11 of Schedule 1 to, S.I.
2004/2947 and by regulation 17 of S.I. 2005/1011.back
437
1997/220, and amended by regulation 3 of, and
paragraph 13 of Schedule 1 to, S.I. 2004/2947 and by
1997/220, and amended by article 11 of S.I. 2001/3649
and by regulation 6 of S.I. 2005/1011. The entry
relating to section 247A in the Schedule to the principal
regulations was amended by article 8 of S.I.
2004/355. back
2005/1011.back
S.I. 1992/3178, by regulation 12(1) of S.I. 1996/189,
by regulation 4 of S.I. 1997/2306, by regulation 2 of
S.I. 2000/2952, by article 16(1) of S.I. 2000/3373, by
regulation 2 of S.I. 2002/765, by regulation 10 of S.I.
2002/1986 and by regulation 20 of S.I. 2004/2947. The
entry relating to section 262 in the Schedule to the
principal regulations was amended by article 8 of S.I.
2004/355. back
and paragraph 3 of Schedule 2 to, S.I. 1991/2705, by
regulation 7 of S.I. 1997/220, by regulation 4(4) of S.I.
1997/2306, by article 16(2) of S.I. 2000/3373, by
regulation 10 of S.I. 2002/1986 and by regulation 21 of
S.I. 2004/2947. The entry relating to section 262A in
the Schedule to the principal regulations was amended
by article 8 of S.I. 2004/355.back
[30] Paragraph 3 was amended by regulation 14(1) of,
and paragraphs 1 and 2 of Schedule 1 to, S.I. 1996/189
and by regulation 14(1) of, and paragraph 2 of Schedule
2 to, S.I. 2004/2947.back
[31] Paragraph 35A of Schedule 4 was inserted by
regulation 14(1) of, and paragraph 7(2) of Schedule 2
to, S.I. 2004/2947.back
[32] Schedule 8 was substituted by regulation 2(2) of,
and Schedule 1 to, S.I. 1997/220. Paragraph 3(7) of
438
Schedule 8 was repealed by regulation 14(2) of, and
paragraph 2 of Schedule 3 to, S.I. 2004/2947.back
[33] Paragraph 35A of Schedule 8 was inserted by
regulation 14(2) of, and paragraph 7(2) of Schedule 3
to, S.I. 2004/2947.back
[34] Section 1A was inserted by section 1 of, and
paragraph 2 of Schedule 1 to, the Insolvency Act 2000
(c.39).back
[35] Section 2 was amended by section 1 of, and
paragraph 3 of Schedule 1 to, and section 2 of, and
paragraph 3 of Schedule 2 to, the Insolvency Act
2000.back
2000.back
paragraph 6 of Schedule 2 to, the Insolvency Act 2000,
by section 248 of, and paragraph 11 of Schedule 17 to,
the Enterprise Act 2002 (c.40) and by section 159 of,
and paragraph 43 of Schedule 20 to, the Energy Act
2004 (c.20).back
the Enterprise Act 2002 and by section 159 of, and
paragraph 44 of Schedule 20 to, the Energy Act
2004.back
2000.back
2000.back
[41] Sections 8, 9, 10, 11, 13 and 14 were substituted
by section 248 of, and Schedule B1 to, the Enterprise
Act 2002.back
paragraph 6 of Schedule 5 to, the Commonhold and
Leasehold Reform Act 2002 (c.15) and by article 4 of,
and paragraph 10 of the Schedule to, S.I.
2003/2096.back
439
2000.back
by regulations 3 and 8 of S.I. 2002/1240, by section
109 of, and paragraph 294 of Schedule 8 to, the Courts
Act 2003 (c.39), by regulation 73 of S.I. 2004/2326
and by section 50 of the Companies (Audit,
Investigations and Community Enterprise) Act 2004
(c.27).back
paragraph 15 of Schedule 17 to, the Enterprise Act
2002.back
paragraph 14 of Schedule 4 to, the Gas Act 1995
(c.45), by section 108 of, and paragraph 47 of Schedule
6 to, the Utilities Act 2000 (c.27), by section 1 of, and
the Enterprise Act 2002, by section 406 of, and
paragraph 82 of Schedule 17 to, the Communications
Act 2003 (c.21) and by article 2 of, and paragraph 14 of
the Schedule to, S.I. 2004/1822.back
2002.back
2000, by regulation 16 of S.I. 2002/1240 and by section
248 of, and paragraph 34 of Schedule 17 to, the
Enterprise Act 2002.back
Insolvency Act 2000. back
2002.back
[51] Schedule A1 was inserted by section 1 of, and
2000.back
[52] Schedule B1 was inserted by section 248 of, and
440
Schedule 16 to, the Enterprise Act 2002.back
[53] Schedule 10 was amended by section 1 of, and
paragraph 12 of Schedule 2 to, the Insolvency Act 2000
and by section 248 of, and paragraph 39 of Schedule 17
to, the Enterprise Act 2002.back

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441

CHAPTER 5: LIMITED LIABILITY PARTNERSHIP LAWS IN CANADA

5.0 INTRODUCTION
Canada became a self-governing dominion in 1867 while retaining ties to the British
crown. Economically and technologically the nation has developed in parallel with the
US, its neighbor to the south across an unfortified border.
52

Canada has 10 provinces namely Alberta, British Columbia, Manitoba, New
Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island,
Quebec and Saskatchewan and 3 territories namely Northwest Territories, Nunavut
and Yukon Territory.
53

In March 1998, the Senate Committee on Banking, Trade and Commerce released a
report entitled Joint and Several Liability and Professional Defendants recommending
that Canadian provinces and territories adopt the LLP model. The Committee
stated
54
:

The Committee questions whether there remain good and sufficient reasons for
requiring certain professionals to practice within a traditional partnership structure.
Why should partners who are not involved in a negligent act be personally exposed
to liability arising from the activities of their negligent partners? Why must the
traditional professions such as law, accounting and medicine continue to face
exposure to personal liability for the activities of their negligent partners while other
professionals can limit their exposure through incorporation or some other limited
liability structure?
55

The Committee believes that structures such as limited liability partnerships should
be available to professionals who wish to limit their personal liability.
56

Ontario, in 1998, was the first Canadian jurisdiction to enact LLP legislation. Alberta
followed in 1999 after extensive study of the issue by the Alberta Law Reform
Institute. The Alberta Law Reform Institute issues paper and final report is available
on the Internet.
57

In August 1999, the Uniform Law Conference of Canada produced an issues paper on
limited liability partnerships and a model LLP Act. The ULCC paper and model Act are
also available on the Internet. Since then British Columbia, Saskatchewan, Manitoba,
Quebec, Nova Scotia and New Brunswick have all adopted forms of LLP legislation,
drawing to various degrees on the ULCC model Act.
58

Canadian jurisdictions enacting LLP legislation have generally limited the use of LLPs
to eligible professions, i.e. professions that are regulated under an Act, such as
accountants, lawyers and doctors. Alberta, Saskatchewan, Manitoba, Ontario,
Quebec, New Brunswick and Nova Scotia have all taken this approach. However, in

52
http://www.cia.gov/cia/publications/factbook/geos/ca.html
53
Ibid.
54
Limited Liability Partnership Legislation Discussion Paper, Office of the Attorney General, Prince Edward
Island
55
Ibid.
56
Ibid.
57
Ibid.
58
Ibid.
442
2005, British Columbia adopted LLP legislation, which places no restrictions on the
types of business able to register.

5.1 PRINCE EDWARD ISLAND
Under existing laws, LLPs cannot be formed in Prince Edward Island. LLPs formed in
other jurisdictions, which are carrying on business in Prince Edward Island, can
register under the general partnership provisions of the Partnership Act. However,
partners in extra-provincial LLPs carrying on business in Prince Edward Island,
whether or not the LLP is registered under the Partnership Act, are subject to
ordinary partnership liability. The partners cannot take advantage of the LLP limited
liability in relation to actions governed by the laws of Prince Edward Island.

5.2 ONTARIO
59

In Ontario, amendments to the Partnerships Act, 1990 (See Annexure 1) came into
force in July 1998 permitting professionals to practice in the form of limited liability
partnerships. Unlike a general partnership, where the partners are liable for debts
and liabilities arising from the negligent acts of all partners, the partners in a limited
liability partnership are not personally liable for the negligent acts of another partner
or an employee who is directly supervised by another partner. However, the
partnership assets continue to be at risk for the negligence of the partners and
employees.

Section 44-46 of the Partnerships Act, 1990 deals with the provisions relating to

Section 44.1 of the Act, deals with the formation of the LLP and provides that a
limited liability partnership that is not an extra-provincial limited liability partnership
is formed when two or more persons enter into a written agreement that,
(a) designates the partnership as a limited liability partnership; and
(b) states that this Act governs the agreement.

A partnership may be continued as a limited liability partnership that is not an extra-
provincial limited liability partnership if all of the partners,
(a) enter into an agreement that continues the partnership as a limited liability
partnership and states that this Act governs the agreement; or
(b) if there is an existing agreement between the partners that forms the
partnership, amend the agreement to designate the partnership as a limited
liability partnership and to state that this Act governs the agreement.

Upon the continuance of a partnership as a limited liability partnership,
(a) the limited liability partnership possesses all the property, rights, privileges
and franchises and is subject to all liabilities, including civil, criminal and
quasi-criminal, and all contracts, disabilities and debts of the partnership
which were in existence immediately before the continuance; and
(b) all persons who were partners immediately before the continuance remain
liable for all debts, obligations and liabilities of the partnership or all partners
with respect to the other partners that arose before the continuance.

Section 44.2 of the Act places limitation on business activity of a LLP and provides
that a limited liability partnership may carry on business in Ontario only for the
purpose of practising a profession governed by an Act and only if,

59
www.ontla.on.ca
443
(a) that Act expressly permits a limited liability partnership to practise the
profession;
(b) the governing body of the profession requires the partnership to maintain a
minimum amount of liability insurance; and
(c) the partnership complies with section 44.3 if it is not an extra-provincial
limited liability partnership or section 44.4 if it is an extra-provincial limited

Section 44.3 deals with the provisions relating to the business name of LLP and
provides that no limited liability partnership formed or continued by an agreement
governed by this Act shall carry on business unless it has registered its firm name
under the Business Names Act. Further, the name of a limited liability partnership
should contain the words limited liability partnership or socit responsabilit
limite or the abbreviations LLP, L.L.P. or s.r.l. as the last words or letters of
its name.

A person may serve a notice or document on an extra-provincial limited liability
partnership at its Ontario place of business, if any, or its address required to be
maintained under the laws of the jurisdiction of formation or its principal office
address.
444
ANNEXURE 1
Ontario Partnerships Act 1990

Definitions
1. (1) In this Act,
business includes every trade, occupation and profession; (entreprise)
court includes every court and judge having jurisdiction in the case; (tribunal)
extra-provincial limited liability partnership means a limited liability partnership
formed under the laws of another jurisdiction but does not include an extra-
provincial limited partnership within the meaning of the Limited Partnerships Act;
(socit responsabilit limite extraprovinciale)
limited liability partnership means a partnership, other than a limited partnership,
that is formed or continued as a limited liability partnershi p under section 44.1 or
that is an extra-provincial limited liability partnership. (socit responsabilit
limite) R.S.O. 1990, c. P.5, s. 1 (1); 1998, c. 2, s. 1.
Idem
(2) A person is deemed to be insolvent within the meaning of this Act if the
person is adjudged a bankrupt under the Bankruptcy Act (Canada) or if the person
makes an assignment for the general benefit of his or her creditors, and insolvency
has a meaning corresponding with insolvent. R.S.O. 1990, c. P.5, s. 1 (2).
Nature of Partnership
Partnership
2. Partnership is the relation that subsists between persons carrying on a
business in common with a view to profit, but the relation between the members of a
company or association that is incorporated by or under the authority of any special
or general Act in force in Ontario or elsewhere, or registered as a corporation under
any such Act, is not a partnership within the meaning of this Act. R.S.O. 1990,
c. P.5, s. 2.
Rules for determining existence of partnership
3. In determining whether a partnership does or does not exist, regard shall be
had to the following rules:
1. Joint tenancy, tenancy in common, joint property, common property, or
part ownership does not of itself create a partnership as to anything so held or
owned, whether the tenants or owners do or do not share any profits made by the
use thereof.
2. The sharing of gross returns does not of itself create a partnership,
whether the persons sharing such returns have or have not a joint or common right
or interest in any property from which or from the use of which the returns are
derived.
3. The receipt by a person of a share of the profits of a business is proof, in
the absence of evidence to the contrary, that the person is a partner in the business,
but the receipt of such a share or payment, contingent on or varying with the profits
of a business, does not of itself make him or her a partner in the business, and in
particular,
(a) the receipt by a person of a debt or other liquidated amount by instalments or
otherwise out of the accruing profits of a business does not of itself make him or her
a partner in the business or liable as such;
(b) a contract for the remuneration of a servant or agent or a person engaged in a
business by a share of the profits of the business does not of itself make the servant
or agent a partner in the business or liable as such;
(c) a person who,
(i) was married to a deceased partner immediately before the deceased partner
died,
445
(ii) was living with a deceased partner in a conjugal relationship outside marriage
immediately before the deceased partner died, or
(iii) is a child of a deceased partner,
and who receives by way of annuity a portion of the profits made in the business in
which the deceased partner was a partner is not by reason only of such receipt a
partner in the business or liable as such;
(d) the advance of money by way of loan to a person engaged or about to engage
in a business on a contract with that person that the lender is to receive a rate of
interest varying with the profits, or is to receive a share of the profits arising from
carrying on the business, does not of itself make the lender a partner with the
person or persons carrying on the business or liable as such, provided that the
contract is in writing and signed by or on behalf of all parties thereto;
(e) a person receiving by way of annuity or otherwise a portion of the profits of a
business in consideration of the sale by him or her of the goodwill of the business, is
not by reason only of such receipt a partner in the business or liable as such. R.S.O.
1990, c. P.5, s. 3; 1999, c. 6, s. 52; 2005, c. 5, s. 55.
Insolvency

4. In the event of a person to whom money has been advanced by way of loan upon
such a contract as is mentioned in section 3, or of a buyer of the goodwill in
consideration of a share of the profits of the business, becoming insolvent or
entering into an arrangement to pay his or her creditors less than 100 cents on the
dollar or dying in insolvent circumstances, the lender of the loan is not entitled to
recover anything in respect of the loan, and the seller of the goodwill is not entitled
to recover anything in respect of the share of profits contracted for, until the claims
of the other creditors of the borrower or buyer, for valuable consideration in money
or moneys worth, are satisfied. R.S.O. 1990, c. P.5, s. 4.
Meaning of firm
5. Persons who have entered into partnership with one another are, for the
purposes of this Act, called collectively a firm, and the name under which their
business is carried on is called the firm name. R.S.O. 1990, c. P.5, s. 5.
Relation of Partners to Persons Dealing with Them
Power of partner to bind firm
6. Every partner is an agent of the firm and of the other partners for the
purpose of the business of the partnership, and the acts of every partner who does
any act for carrying on in the usual way business of the kind carried on by the firm of
which he or she is a member, bind the firm and the other partners unless the partner
so acting has in fact no authority to act for the firm in the particular matter and the
person with whom the partner is dealing either knows that the partner has no
authority, or does not know or believe him or her to be a partner. R.S.O. 1990,
c. P.5, s. 6.
Partners bound by acts on behalf of firm
7. An act or instrument relating to the business of the firm and done or
executed in the firm name, or in any other manner showing an intention to bind the
firm by a person thereto authorized, whether a partner or not, is binding on the firm
and all the partners, but this section does not affect any general rule of law relating
to the execution of deeds or negotiable instruments. R.S.O. 1990, c. P.5, s. 7.
Partner using credit of firm for private purposes
8. Where one partner pledges the credit of the firm for a purpose apparently not
connected with the firms ordinary course of business, the firm is not bound, unless
he or she is in fact specially authorized by the other partners, but this section does
not affect any personal liability incurred by an individual partner. R.S.O. 1990,
c. P.5, s. 8.
446
Effect of notice that firm not bound by act of partner
9. If it is agreed between the partners to restrict the power of any one or more
of them to bind the firm, no act done in contravention of the agreement is binding on
the firm with respect to persons having notice of the agreement. R.S.O. 1990,
c. P.5, s. 9.
Liability of partners
10. (1) Except as provided in subsection (2), every partner in a firm is liable
jointly with the other partners for all debts and obligations of the firm incurred while
the person is a partner, and after the partners death the partners estate is also
severally liable in a due course of administration for such debts and obligations so far
as they remain unsatisfied, but subject to the prior payment of his or her separate
debts. R.S.O. 1990, c. P.5, s. 10; 1998, c. 2, s. 2 (1).
Limited liability partnerships
(2) Subject to subsection (3), a partner in a limited liability partnership is not
liable, by means of indemnification, contribution, assessment or otherwise, for debts,
obligations and liabilities of the partnership or any partner arising from negligent acts
or omissions that another partner or an employee, agent or representative of the
partnership commits in the course of the partnership business while the partnership
is a limited liability partnership. 1998, c. 2, s. 2 (2).
Liability of negligent partner
(3) Subsection (2) does not affect the liability of a partner in a limited liability
partnership for the partners own negligence or the negligence of a person under the
partners direct supervision or control. 1998, c. 2, s. 2 (2).
Partner not proper party to action
(4) A partner in a limited liability partnership is not a proper party to a proceeding
by or against the limited liability partnership for the purpose of recovering damages
or enforcing obligations arising out of the negligent acts or omissions described in
subsection (2). 1998, c. 2, s. 2 (2).
Extra-provincial limited liability partnerships
(5) This section does not apply to an extra-provincial limited liability partnership.
1998, c. 2, s. 2 (2).
Liability of firm for wrongs
11. Where by any wrongful act or omission of a partner acting in the ordinary
course of the business of the firm, or with the authority of the co-partners, loss or
injury is caused to a person not being a partner of the firm, or any penalty is
incurred, the firm is liable therefor to the same extent as the partner so acting or
omitting to act. R.S.O. 1990, c. P.5, s. 11.
Misapplication of money or property received for or in custody of the firm
12. In the following cases, namely,
(a) where one partner, acting within the scope of the partners apparent
authority, receives the money or property of a third person and misapplies it; and
(b) where a firm in the course of its business receives money or property of
a third person, and the money or property so received is misapplied by one or more
of the partners while it is in the custody of the firm,
the firm is liable to make good the loss. R.S.O. 1990, c. P.5, s. 12.
Liability for wrongs joint and several
13. Except as provided in subsection 10 (2), every partner is liable jointly with
the co-partners and also severally for everything for which the firm, while the person
is a partner therein, becomes liable under section 11 or 12. R.S.O. 1990, c. P.5,
s. 13; 1998, c. 2, s. 3.
Improper employment of trust property for partnership purposes
447
14. If a partner, being a trustee, improperly employs trust property in the
business or on the account of the partnership, no other partner is liable for the trust
property to the persons beneficially interested therein, but,
(a) this section does not affect any liability incurred by any partner by
reason of the partner having notice of a breach of trust; and
(b) nothing in this section prevents trust money from being followed and
recovered from the firm if still in its possession or under its control. R.S.O. 1990,
c. P.5, s. 14.
Persons liable by holding out
15. (1) Every person, who by words spoken or written or by conduct represents
himself or herself or who knowingly suffers himself or herself to be represented as a
partner in a particular firm, is liable as a partner to any person who has on the faith
of any such representation given credit to the firm, whether the representation has
or has not been made or communicated to the persons so giving credit by or with the
knowledge of the apparent partner making the representation or suffering it to be
made. R.S.O. 1990, c. P.5, s. 15 (1).
Continuing business after death of partner
(2) Where after a partners death the partnership business is continued in the
old firm name, the continued use of that name or of the deceased partners name as
part thereof does not of itself make his or her executors or administrators estate or
effects liable for any partnership debts contracted after his or her death. R.S.O.
1990, c. P.5, s. 15 (2).
Admissions and representations of partners
16. An admission or representation made by a partner concerning the
partnership affairs and in the ordinary course of its business is evidence against the
firm. R.S.O. 1990, c. P.5, s. 16.
Notice to acting partner to be notice to the firm
17. Notice to a partner who habitually acts in the partnership business of any
matter relating to partnership affairs operates as notice to the firm, except in the
case of a fraud on the firm committed by or with the consent of that partner. R.S.O.
1990, c. P.5, s. 17.
Liability commences with admission to firm
18. (1) A person who is admitted as a partner into an existing firm does not
thereby become liable to the creditors of the firm for anything done before the
person became a partner. R.S.O. 1990, c. P.5, s. 18 (1).
Liability for debts, etc., incurred before retirement
(2) A partner who retires from a firm does not thereby cease to be liable for
partnership debts or obligations incurred before the partners retirement. R.S.O.
1990, c. P.5, s. 18 (2).
Agreement discharging retiring partner
(3) A retiring partner may be discharged from any existing liabilities by an
agreement to that effect between the partner and the members of the firm as newly
constituted and the creditors, and this agreement may be either express or inferred
as a fact from the course of dealing between the creditors and the firm as newly
constituted. R.S.O. 1990, c. P.5, s. 18 (3).
Revocation of continuing guaranty by change in firm
19. A continuing guaranty or cautionary obligation given either to a firm or to a
third person in respect of the transactions of a firm is, in the absence of agreement
to the contrary, revoked as to future transactions by any change in the constitution
of the firm to which, or of the firm in respect of the transaction of which, the
guaranty or obligation was given. R.S.O. 1990, c. P.5, s. 19.
Relation of Partners to One Another
Variation by consent of terms of partnership
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20. The mutual rights and duties of partners, whether ascertained by agreement
or defined by this Act, may be varied by the consent of all the partners, and such
consent may be either expressed or inferred from a course of dealing. R.S.O. 1990,
c. P.5, s. 20.
Partnership property
21. (1) All property and rights and interests in property originally brought into
the partnership stock or acquired, whether by purchase or otherwise, on account of
the firm, or for the purposes and in the course of the partnership business, are called
in this Act partnership property, and must be held and applied by the partners
exclusively for the purposes of the partnership and in accordance with the
partnership agreement. R.S.O. 1990, c. P.5, s. 21 (1).
Devolution of land
(2) The legal estate or interest in land that belongs to a partnership devolves
according to the nature and tenure thereof and the general rules of law thereto
applicable, but in trust, so far as necessary, for the persons beneficially interested in
the land under this section. R.S.O. 1990, c. P.5, s. 21 (2).
Co-owners of land
(3) Where co-owners of an estate or interest in land, not being itself partnership
property, are partners as to profits made by the use of that land or estate, and
purchase other land or estate out of the profits to be used in like manner, the land or
estate so purchased belongs to them, in the absence of an agreement to the
contrary, not as partners, but as co-owners for the same respective estates and
interests as are held by them in the land or estate first mentioned at the date of
purchase. R.S.O. 1990, c. P.5, s. 21 (3).
Property bought with partnership money
22. Unless the contrary intention appears, property bought with money
belonging to the firm shall be deemed to have been bought on the account of the
firm. R.S.O. 1990, c. P.5, s. 22.
Conversion of land bought with partnership money into personalty
23. Where land or any heritable interest therein becomes partnership property,
unless the contrary intention appears, it is to be treated as between the partners,
including the representatives of a deceased partner, and also as between the heirs of
a deceased partner and his or her executors or administrators as personal or
movable and not real or heritable estate. R.S.O. 1990, c. P.5, s. 23.
Rules as to interests and duties of partners
24. The interests of partners in the partnership property and their rights and
duties in relation to the partnership shall be determined, subject to any agreement
express or implied between the partners, by the following rules:
1. All the partners are entitled to share equally in the capital and profits of
the business, and must contribute equally towards the losses, whether of capital or
otherwise, sustained by the firm, but a partner shall not be liable to contribute
toward losses arising from a liability for which the partner is not liable under
subsection 10 (2).
2. The firm must indemnify every partner in respect of payments made and
personal liabilities incurred by him or her,
(a) in the ordinary and proper conduct of the business of the firm;
or
(b) in or about anything necessarily done for the preservation of
the business or property of the firm.
2.1 A partner is not required to indemnify the firm or other partners in
respect of debts or obligations of the partnership for which a partner is not liable
under subsection 10 (2).
449
3. A partner making, for the purpose of the partnership, any actual
payment or advance beyond the amount of capital that he or she has agreed to
subscribe is entitled to interest at the rate of 5 per cent per annum from the date of
the payment or advance.
4. A partner is not entitled, before the ascertainment of profits, to interest
on the capital subscribed by the partner.
5. Every partner may take part in the management of the partnership
business.
6. No partner is entitled to remuneration for acting in the partnership
business.
7. No person may be introduced as a partner without the consent of all
existing partners.
8. Any difference arising as to ordinary matters connected with the
partnership business may be decided by a majority of the partners, but no change
may be made in the nature of the partnership business without the consent of all
existing partners.
9. The partnership books are to be kept at the place of business of the
partnership, or the principal place, if there is more than one, and every partner may,
when he or she thinks fit, have access to and inspect and copy any of them. R.S.O.
1990, c. P.5, s. 24; 1998, c. 2, s. 4 .
Expulsion of partner
25. No majority of the partners can expel any partner unless a power to do so
has been conferred by express agreement between the partners. R.S.O. 1990,
c. P.5, s. 25.
Retirement from partnership at will
26. (1) Where no fixed term is agreed upon for the duration of the partnership,
any partner may determine the partnership at any time on giving notice of his or her
intention to do so to all the other partners. R.S.O. 1990, c. P.5, s. 26 (1).
Notice of retirement
(2) Where the partnership was originally constituted by deed, a notice in
writing, signed by the partner giving it, is sufficient for that purpose. R.S.O. 1990,
c. P.5, s. 26 (2).
Presumption of continuance after expiry of term
27. (1) Where a partnership entered into for a fixed term is continued after the
term has expired and without any express new agreement, the rights and duties of
the partners remain the same as they were at the expiration of the term, so far as is
consistent with the incidents of a partnership at will. R.S.O. 1990, c. P.5, s. 27 (1).
Arises from continuance of business
(2) A continuance of the business by the partners or such of them as habitually
acted therein during the term without any settlement or liquidation of the
partnership affairs shall be presumed to be a continuance of the partnership. R.S.O.
1990, c. P.5, s. 27 (2).
Duty as to rendering accounts
28. Partners are bound to render true accounts and full information of all things
affecting the partnership to any partner or the partners legal representatives.
R.S.O. 1990, c. P.5, s. 28.
Accountability for private profits
29. (1) Every partner must account to the firm for any benefit derived by the
partner without the consent of the other partners from any transaction concerning
the partnership or from any use by the partner of the partnership property, name or
business connection. R.S.O. 1990, c. P.5, s. 29 (1).
Extends to survivors and representatives of deceased
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(2) This section applies also to transactions undertaken after a partnership has
been dissolved by the death of a partner and before its affairs have been completely
wound up, either by a surviving partner or by the representatives of the deceased
partner. R.S.O. 1990, c. P.5, s. 29 (2).
Duty of partner not to compete with firm
30. If a partner, without the consent of the other partners, carries on a business
of the same nature as and competing with that of the firm, the partner must account
for and pay over to the firm all profits made by the partner in that business. R.S.O.
1990, c. P.5, s. 30.
Rights of assignee of share in partnership
31. (1) An assignment by a partner of the partners share in the partnership,
either absolute or by way of mortgage or redeemable charge, does not, as against
the other partners, entitle the assignee, during the continuance of the partnership, to
interfere in the management or administration of the partnership business or affairs,
or to require any accounts of the partnership transactions, or to inspect the
partnership books, but entitles the assignee only to receive the share of profits to
which the assigning partner would otherwise be entitled, and the assignee must
accept the account of profits agreed to by the partners. R.S.O. 1990, c. P.5,
s. 31 (1).
On dissolution
(2) In the case of a dissolution of the partnership, whether as respects all the
partners or as respects the assigning partner, the assignee is entitled to receive the
share of the partnership assets to which the assigning partner is entitled as between
the assigning partner and the other partners, and, for the purpose of ascertaining
that share, to an account as from the date of the dissolution. R.S.O. 1990, c. P.5,
s. 31 (2).
Dissolution of Partnership
Dissolution by expiry of term or notice
32. Subject to any agreement between the partners, a partnership is dissolved,
(a) if entered into for a fixed term, by the expiration of that term;
(b) if entered into for a single adventure or undertaking, by the termination
of that adventure or undertaking; or
(c) if entered into for an undefined time, by a partner giving notice to the
other or others of his or her intention to dissolve the partnership, in which case the
partnership is dissolved as from the date mentioned in the notice as the date of
dissolution, or, if no date is so mentioned, as from the date of the communication of
the notice. R.S.O. 1990, c. P.5, s. 32.
Dissolution by death or insolvency of partner
33. (1) Subject to any agreement between the partners, every partnership is
dissolved as regards all the partners by the death or insolvency of a partner. R.S.O.
1990, c. P.5, s. 33 (1).
Where partners share charged for separate debt
(2) A partnership may, at the option of the other partners, be dissolved if any
partner suffers that partners share of the partnership property to be charged under
this Act for that partners separate debt. R.S.O. 1990, c. P.5, s. 33 (2).
By illegality of business
34. A partnership is in every case dissolved by the happening of any event that
makes it unlawful for the business of the firm to be carried on or for the members of
the firm to carry it on in partnership. R.S.O. 1990, c. P.5, s. 34.
By the court
35. On application by a partner, the court may order a dissolution of the
partnership,
451
(a) when a partner is found mentally incompetent by inquisition or is shown
to the satisfaction of the court to be of permanently unsound mind, in either of which
cases the application may be made as well on behalf of that partner by his or her
committee or litigation guardian or person having title to intervene as by any other
partner;
(b) when a partner, other than the partner suing, becomes in any other way
permanently incapable of performing the partners part of the partnership contract;
(c) when a partner, other than the partner suing, has been guilty of such
conduct as, in the opinion of the court, regard being had to the nature of the
business, is calculated to prejudicially affect the carrying on of the business;
(d) when a partner, other than the partner suing, wilfully or persistently
commits a breach of the partnership agreement, or otherwise so conducts himself or
herself in matters relating to the partnership business that it is not reasonably
practicable for the other partner or partners to carry on the business in partnership
with the partner;
(e) when the business of the partnership can only be carried on at a loss; or
(f) when in any case circumstances have arisen that in the opinion of the
court render it just and equitable that the partnership be dissolved. R.S.O. 1990,
c. P.5, s. 35.
Rights of persons dealing with firm against apparent members
36. (1) Where a person deals with a firm after a change in its constitution, the
person is entitled to treat all apparent members of the old firm as still being
members of the firm until the person has notice of the change. R.S.O. 1990, c. P.5,
s. 36 (1).
Notice
(2) An advertisement in The Ontario Gazette shall be notice as to persons who
had not dealings with the firm before the dissolution or change so advertised. R.S.O.
1990, c. P.5, s. 36 (2).
Estate of dead or insolvent partner, how far liable
(3) The estate of a partner who dies, or who becomes insolvent, or of a partner
who, not having been known to the person dealing with the firm to be a partner,
retires from the firm, is not liable for partnership debts contracted after the date of
the death, insolvency, or retirement. R.S.O. 1990, c. P.5, s. 36 (3).
Right to give notice of dissolution
37. On the dissolution of a partnership or retirement of a partner, any partner
may publicly give notice of the same, and may require the other partner or partners
to concur for that purpose in all necessary or proper acts, if any, that cannot be done
without his, her or their concurrence. R.S.O. 1990, c. P.5, s. 37.
Continuing authority of partners for purposes of winding up
38. After the dissolution of a partnership, the authority of each partner to bind
the firm and the other rights and obligations of the partners continue despite the
dissolution so far as is necessary to wind up the affairs of the partnership and to
complete transactions begun but unfinished at the time of the dissolution, but not
otherwise; provided that the firm is in no case bound by the acts of a partner who
has become insolvent; but this proviso does not affect the liability of a person who
has, after the insolvency, represented himself or herself or knowingly suffered
himself or herself to be represented as a partner of the insolvent. R.S.O. 1990,
c. P.5, s. 38.
Rights of partners as to application of partnership property
39. On the dissolution of a partnership every partner is entitled, as against the
other partners in the firm and all persons claiming through them in respect of their
interests as partners, to have the property of the partnership applied in payment of
the debts and liabilities of the firm and to have the surplus assets after such
452
payment applied in payment of what may be due to the partners respectively after
deducting what may be due from them as partners to the firm, and for that purpose
any partner or the partners representative may, on the termination of the
partnership, apply to the court to wind up the business and affairs of the firm.
R.S.O. 1990, c. P.5, s. 39.
Apportionment of premium on premature dissolution
40. Where one partner paid a premium to another on entering into a
partnership for a fixed term and the partnership is dissolved before the expiration of
that term otherwise than by the death of a partner, the court may order the
repayment of the premium, or of such part thereof as it thinks just, having regard to
the terms of the partnership contract and to the length of time during which the
partnership has continued, unless,
(a) the dissolution is, in the judgment of the court, wholly or chiefly due to
the misconduct of the partner who paid the premium; or
(b) the partnership has been dissolved by an agreement containing no
provision for a return of a part of the premium. R.S.O. 1990, c. P.5, s. 40.
Rights where partnership dissolved for fraud or misrepresentations
41. Where a partnership contract is rescinded on the ground of the fraud or
misrepresentation of one of the parties thereto, the party entitled to rescind is,
without prejudice to any other right, entitled,
(a) to a lien on, or right of retention of, the surplus of the partnership
assets, after satisfying the partnership liabilities, for any sum of money paid by the
party for the purchase of a share in the partnership and for any capital contributed
by him or her; and
(b) to stand in the place of the creditors of the firm for any payments made
by the party in respect of the partnership liabilities; and
(c) to be indemnified by the person guilty of the fraud or making the
representation against all the debts and liabilities of the firm. R.S.O. 1990, c. P.5,
s. 41.
Right of outgoing partner as to share in profits after dissolution
42. (1) Where any member of a firm dies or otherwise ceases to be a partner
and the surviving or continuing partners carry on the business of the firm with its
capital or assets without any final settlement of accounts as between the firm and
the outgoing partner or his or her estate, then, in the absence of an agreement to
the contrary, the outgoing partner or his or her estate is entitled, at the option of the
outgoing partner or his or her representatives, to such share of the profits made
since the dissolution as the court finds to be attributable to the use of the outgoing
partners share of the partnership assets, or to interest at the rate of 5 per cent per
annum on the amount of his or her share of the partnership assets. R.S.O. 1990,
c. P.5, s. 42 (1).
Proviso as to option of remaining partners to purchase share
(2) Where by the partnership contract an option is given to surviving or
continuing partners to purchase the interest of a deceased or outgoing partner and
that option is duly exercised, the estate of the deceased partner, or the outgoing
partner or his or her estate, as the case may be, is not entitled to any further or
other share of profits, but if any partner, assuming to act in exercise of the option,
does not in all material respects comply with the terms thereof, he or she is liable to
account under the foregoing provisions of this section. R.S.O. 1990, c. P.5,
s. 42 (2).
Retiring or deceased partners share to be a debt
43. Subject to any agreement between the partners, the amount due from
surviving or continuing partners to an outgoing partner or the representatives of a
453
deceased partner in respect of the outgoing or deceased partners share, is a debt
accruing at the date of the dissolution or death. R.S.O. 1990, c. P.5, s. 43.
Rules for distribution of assets on final settlement of accounts
44. In settling accounts between the partners after a dissolution of partnership,
the following rules shall, subject to any agreement, be observed:
1. Losses, including losses and deficiencies of capital, are to be paid first out of
profits, next out of capital, and lastly, if necessary, by the partners individually in the
proportion in which they were entitled to share profits, but a partner is not required
to pay any loss arising from a liability for which the partner is not liable under
subsection 10 (2).
2. The assets of the firm, including the sums, if any, contributed by the
partners to make up losses or deficiencies of capital, are to be applied in the
following manner and order,
(a) in paying the debts and liabilities of the firm to persons who are not partners
therein;
(b) in paying to each partner rateably what is due from the firm to him or her for
advances as distinguished from capital;
(c) in paying to each partner rateably what is due from the firm to him or her in
respect of capital.
3. After making the payments required by paragraph 2, the ultimate
residue, if any, is to be divided among the partners in the proportion in which profits
are divisible. R.S.O. 1990, c. P.5, s. 44; 1998, c. 2, s. 5.
Limited Liability Partnerships
Formation
44.1 (1) A limited liability partnership that is not an extra-provincial limited
liability partnership is formed when two or more persons enter into a written
agreement that,
(a) designates the partnership as a limited liability partnership; and
(b) states that this Act governs the agreement. 1998, c. 2, s. 6.
Continuance
(2) A partnership may be continued as a limited liability partnership that is not an
extra-provincial limited liability partnership if all of the partners,
(a) enter into an agreement that continues the partnership as a limited liability
partnership and states that this Act governs the agreement; or
(b) if there is an existing agreement between the partners that forms the
partnership, amend the agreement to designate the partnership as a limited liability
partnership and to state that this Act governs the agreement. 1998, c. 2, s. 6.
Effect of continuance
(3) Upon the continuance of a partnership as a limited liability partnership under
subsection (2),
(a) the limited liability partnership possesses all the property, rights, privileges and
franchises and is subject to all liabilities, including civil, criminal and quasi-criminal,
and all contracts, disabilities and debts of the partnership which were in existence
immediately before the continuance; and
(b) all persons who were partners immediately before the continuance remain
liable for all debts, obligations and liabilities of the partnership or all partners with
respect to the other partners that arose before the continuance. 1998, c. 2, s. 6.
Limitation on business activity
44.2 A limited liability partnership may carry on business in Ontario only for the
purpose of practising a profession governed by an Act and only if,
(a) that Act expressly permits a limited liability partnership to practise the
profession;
454
(b) the governing body of the profession requires the partnership to maintain a
minimum amount of liability insurance; and
(c) the partnership complies with section 44.3 if it is not an extra-provincial limited
liability partnership or section 44.4 if it is an extra-provincial limited liability
partnership. 1998, c. 2, s. 6.
Business name
44.3 (1) No limited liability partnership formed or continued by an agreement
governed by this Act shall carry on business unless it has registered its firm name
under the Business Names Act. 1998, c. 2, s. 6.
Amendments, cancellations and renewals
(2) To amend, renew or cancel a registration of its firm name, a limited liability
partnership mentioned in subsection (1) shall register an amendment, renewal or
cancellation of a registration in accordance with the requirements of the Business
Names Act. 1998, c. 2, s. 6.
Name
(3) The name of a limited liability partnership mentioned in subsection (1) shall
contain the words limited liability partnership or socit responsabilit limite
or the abbreviations LLP, L.L.P. or s.r.l. as the last words or letters of its name.
1998, c. 2, s. 6.
Use of registered name only
(4) No limited liability partnership mentioned in subsection (1) shall carry on
business under a name other than its registered firm name. 1998, c. 2, s. 6.
Right to carry on business outside of Ontario
(5) Nothing in this Act prevents a limited liability partnership mentioned in
subsection (1) from carrying on its business and exercising its powers in any
province or territory of Canada or any other country. 1998, c. 2, s. 6.
Extra-provincial limited liability partnerships
44.4 (1) No extra-provincial limited liability partnership shall carry on business
in Ontario unless it has registered its name under the Business Names Act. 1998,
c. 2, s. 7.
Amendments, cancellations and renewals
(2) To amend, renew or cancel a registration of its firm name, an extra-
provincial limited liability partnership shall register an amendment, renewal or
cancellation of a registration in accordance with the requirements of the Business
Names Act. 1998, c. 2, s. 7.
Use of registered name only
(3) No extra-provincial limited liability partnership shall carry on business under
a name other than its registered firm name. 1998, c. 2, s. 7.
Laws of other jurisdiction
(4) The laws of the jurisdiction under which an extra-provincial limited liability
partnership is formed shall govern,
(a) its organization and internal affairs; and
(b) the liability of its partners for debts, obligations and liabilities of or
chargeable to the partnership or any of its partners. 1998, c. 2, s. 7.
Service
(5) A person may serve a notice or document on an extra-provincial limited
liability partnership at its Ontario place of business, if any, or its address required to
be maintained under the laws of the jurisdiction of formation or its principal office
address. 1998, c. 2, s. 7.
General
Saving as to rules of equity and common law
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45. The rules of equity and of common law applicable to partnership continue in
force, except so far as they are inconsistent with the express provisions of this Act.
R.S.O. 1990, c. P.5, s. 45.
Construction
46. This Act is to be read and construed as subject to the Limited Partnerships
Act and the Business Names Act. R.S.O. 1990, c. P.5, s. 46.

456

CHAPTER 6: LIMITED LIABILITY PARTNERSHIP LAWS IN DUBAI
INTERNATIONAL FINANCIAL CENTRE

6.0 INTRODUCTION
Since the formation of the United Arab Emirates in 1971, Dubai has developed
rapidly from oil and gas based state to a broadly based market economy. A 30-year
development plan provided for substantial investment in education and infrastructure
(transport and telecommunications) and has led to rapid growth in trade and inward
investment.
The success of the Dubai economy is the result of dynamic and visionary leadership,
an ultra- modern and efficient infrastructure, the absence of government
bureaucracy, and a diversely skilled, well educated, multi-cultural and multi-lingual
workforce. It has an abundant supply of housing for expatriate professionals, and
excellent schools and centres of further education.
All this has made it one of the fastest growing cities in the region, and one of the
world's most prominent centres for business and leisure.
The Dubai International Financial Centre, creating a world-class financial market for
the region, is a logical development in the context of all of Dubai's other recent
achievements.
6.1.0 DIFC
Located at the crossroads of the major international capital markets of New York and
London (in the West) and Hong Kong (in the East), Dubai is the complementary hub
connecting the region with the 24-hour/7 days a week global financial network.
The Government of Dubai for the benefit of the UAE and the wider region as a whole
conceived the Dubai International Financial Centre. Its remit is to create a regional
capital market, offering investors and issuers of capital world-class regulations and
standards. Its hallmarks are: integrity, transparency and efficiency.

As a new global jurisdiction for financial institutions, the DIFC offers its participants a
highly attractive investment environment, including:
100 per cent foreign ownership
Zero per cent tax rate on income and profits
A wide network of double taxation treaties available to UAE incorporated
entities
No restrictions on foreign exchange
Freedom to repatriate capital and profits without restrictions
High standards of rules and regulations
Ultra modern office accommodation, sophisticated infrastructure, and
operational support and business continuity facilities of uncompromisingly
high standards
But unlike offshore tax havens, the DIFC is a fully-fledged onshore capital market,
comparable to Hong Kong, London and New York.

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The DIFC is made up of the following core bodies:
6.1.1 The DIFC Authority
The DIFC Authority is the body of the DIFC charged with developing overall strategy
and providing direction and supervision to the Centre. Its responsibilities include
attracting licensees to operate in the DIFC as well as the creation of laws and
regulations that govern non-financial services activities.

6.1.1.1 Dubai International Financial Exchange Limited (DIFX)
A wholly owned subsidiary of the DIFC Authority, the DIFX has been created to
provide investors and issuers with a larger and more liquid securities market than
currently exists in the region. Based on state-of-the-art technology, this fully
integrated electronic market place will be capable of trading a wide range of financial
instruments, including equities, bonds, funds and derivatives. The DIFX, which will
be open for trading on September 26, 2005, has signed a Memorandum of
Understanding with AtosEuronext for the supply of an automated trading platform.

6.1.1.2 DIFC Registrar of Companies (ROC)
A corporation sole admi nistered by the DIFC Authority, the ROC is responsible for
incorporating and registering all the companies that will operate within the DIFC,
from multi-billion dollar financial institutions through to non-financial registrants
seeking to establish a presence in the DIFC. The ROC is also responsible for
administering the companies law and regulations.

6.1.2 Dubai Financial Services Authority (DFSA)
The DFSA is the independent body responsible for regulating all financial and
associated services conducted in or from the DIFC; as well as licensing, authorising
and registering businesses to conduct those services. The DFSAs regulatory
framework has been developed by a team of experienced regulators and legal
experts drawn from internationally recognised regulatory bodies and major financial
institutions around the world, and is based on the best practices and laws of the
worlds leading financial jurisdictions. The DFSA is an Associate Member of the
International Organisation of Securities Commissions (IOSCO), the worlds leading
body of securities regulators.

6.1.3 DIFC Judicial Authority (DJA)
An autonomous body, The DIFC Judicial Authority is responsible for administering
and enforcing civil and commercial laws at DIFC. The DIFC Courts, including both
trial and appellate courts, deal exclusively with all cases and claims arising between
DIFC registered entities and out of the DIFC operations. The official language of the
Courts is English.

6.2.0 LIMITED LIABILITY PARTNERSHIP LAW 2004
The LLP Law, 2004 came into effect in the year 2004 and applies in the jurisdiction of
the DIFC. The law is administered by the Registrar of Companies. The law is divided
in ten parts and contains two schedules.

6.2.1 Corporate Capacity
The Act classifies partners as member and designated member. This classification
is similar to that of the UK LLP Act, 2000. A limited liability partnership is considered
as a body corporate with a legal personality separate from that of its members. The
Act provides that there should be at least two partners to form an LLP for conducting
any lawful business. However, there is no limit on the maximum number of partners
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that an LLP can have. If a LLP carries on business without having at least two
members and does so for more than 14 days then:

(a) the Registrar may strike the LLP off the register and the LLP will be
dissolved; and
(b) a person who, for the whole or any part of the period, that it so carries on
business after those 14 days:
i. is a member of the LLP; and
ii. knows that it is carrying on business with less than two
members;
is liable (jointly and severally with the LLP) for the payment of the LLPs debts
contracted during the period or, as the case may be , that part of it.

6.2.2 Formation and Registration
Any two or more persons may apply for the incorporation of a Limited Liability
Partnership in accordance with the terms of the limited liability partnership
agreement, by signing and filing with the Registrar an application for incorporation.

A limited liability Partnership may be incorporated to conduct any lawful business.
The application filed with the Registrar under Article 8 (1) of the Act shall be signed
by the Members and shall set out:
(a) the name of the Limited Liability Partnership which must end with the words
Limited Liability Partnership;
(b) the address of the Limited Liability Partnerships registered office;
(c) the nature of the business to be conducted. It shall be sufficient to state that
the purpose of the limited liability partnership is to engage in any lawful act or
activity
(d) the name and address of each of the persons who are to be Members of the
Limited liability partnership on incorporation;
(e) the names of those persons who are to be Designated Members or state that
every person who from time to time is a member of the limited liability
partnership is a designated member; and
(f) such other particulars as the Registrar may require.

6.2.3 Limited Liability Partnership Agreement
Article 9 of the Act contains the provisions relating to the LLP Agreement and
provides that the agreement shall be in the English language and shall be printed
and be divided into paragraphs numbered consecutively.

The mutual rights and duties of the Limited Liability Partnership and the Members
are determined, subject to the terms of the limited liability partnership agreement,
by the following rules:
(a) All members of a limited liability partnership are entitled to share equally in
the capital and profits of the Limited Liability Partnership.
(b) The Limited Liability Partnership shall indemnify each Member in respect of
payments made and personal liabilities incurred by him in the ordinary and
proper conduct of the business of the Limited Liability Partnership; or in or
about anything necessarily done for the preservation of the business or
property of the Limited Liability Partnership;
(c) Every member may take part in the management of the LLP
(d) No Member shall be entitled to remuneration for acting in the business or
management of the LLP.
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(e) No person may be introduced as a member of voluntarily assign an interest in
LLP without the consent of all existing members.
(f) Any difference arising as to ordinary matters connected with the business of
the LLP shall be decided by a majority of the member, but no change may be
made in the nature of the business of the LLP without the consent of all the
members.
(g) The books and records of the Limited Liability Partnership shall be made
available for inspection at the registered office of the LLP or at such other
place as the Members think fit and every Member of the LLP may have
reasonable access to inspect and copy any of them.
(h) Each member shall render true accounts and full information of all things
affecting the LLP to any member or his legal representatives.
(i) If a member, without the consent of the LLP carries on any business of the
same nature as and competing with the LLP he shall account for and pay over
to the Limited Liability Partnership all profits made by him in that business.
(j) A Member shall account to the LLP for any benefit derived by him without the
consent of the LLP from any transaction concerning the Limited Liability
Partnership, or from any use by him of the property of the LLP, name or
business connection.

6.2.4 Registration
The Registrar may refuse to register a Limited Liability Partnership for such reason
as he believes to be proper grounds for refusing such registration. Where the
Registrar refuses to register a LLP he shall not be subject to appeal or review in any
court.

On the registration of a Limited Liability Partnership and its Limited Liability
Partnership Agreement the Registrar shall give a certificate that the Limited Liability
Partnership is incorporated and allocate to the Limited Liability Partnership a
number, which shall be the Limited Liability Partnerships registered number.

From the date of incorporation mentioned in the certificate of incorporation, the
Members shall be a body corporate having the name contained in the certificate of
incorporation capable forthwith of exercising all the functions of a Limited Liability
Partnership. A certificate of incorporation is conclusive evidence of the incorporation
of the LLP and that the requirements of this Law have been complied with in respect
of the registration of the Limited Liability Partnership.

6.2.5 Registered Office and Conduct of Business
A Limited Liability Partnership at all times is required to have a registered office in
the DFIC to which all communications and notices may be addressed. A Limited
Liability Partnership must carry on its principal business activity in the DFIC, unless
the Registrar otherwise permits. A document may be served on a Limited Liability
Partnership by leaving it at, or sending it by post to the registered office of the
Limited Liability Partnership.

A limited liability partnership is required to display its name and address of the
registered office in legible characters in all its business letters and order forms.
Wherever its name appears, a Limited Liability Partnership may abbreviate the words
Limited Liability Partnership to LLP.

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6.2.6 Members
In addition to the persons whose name appears as Members in the Limited Liability
Partnership Agreement, any person may become a Member of a Limited Liability by
and in accordance with an agreement with the existing Members. Similarly, a person
may cease to be a member of a Limited Liability Partnership (as well as by death or,
dissolution) in accordance with an agreement with the other Members or in the
absence of agreement with other members as to cessation of Membership, by giving
reasonable notice to the other Members.

The Act provides that no majority of Members can expel any Member unless a power
to do so has been conferred by express agreement between the Members. Further, a
Member of a Limited Liability Partnership is not regarded for any purpose as
employed by the Limited Liability Partnership.

6.2.7 Duties of Members
A member of a LLP in exercising his powers and discharging his duty shall act
honestly and in good faith with a view to the bes interests of the members and the
LLP; and exercise the care, diligence and skill that a reasonably prudent person
would exercise in comparable circumstances.

6.2.8 Members as agents
Every member of a LLP is the agent of the LLP. But a LLP is not bound by anything
done by a member in dealing with a person if the member in fact has no authority to
act for the LLP by doing that thing and the person knows that the member has no
authority or does not know or believe him to be a member of the LLP.

Similarly, where a person has ceased to be a member of the LLP, the former member
is to be regarded in relation to any person dealing with the LLP, as still being a
member of the LLP unless the person has notice that the former member has ceased
to be a member of the LLP or notice that the former member has ceased to be a
member of the LLLP has been delivered to the Registrar.

Where a member of the LLP is liable to any person other than another member of the
LLP, as a result of a wrongful act or omission of his in the course of the business of
the LLP or with its authority, the LLP is jointly and severally liable to the same extent
as the member.

6.2.9 Assignment
Where a member of a LLP has ceased to be a member or died or become bankrupt or
has been wound up or assigned the whole or any part of his share in the LLP
absolutely or by way of charge or security then the former member/his personal
representative/his liquidator or his assignee as the case may be, may not interfere in
the management or administration of any business or affairs of the LLP. However, it
does not affect any right to receive an amount due to him from the LLP in that event.

6.2.10 Designated Members
If the LLP agreement specifies who are to be the designated members then they are
the designated members on incorporation and any member may become a
designated member by and in accordance with an agreement with the other
members. Similarly a member may cease to be a designated member in accordance
with an agreement with the other members. There must be at least one designated
member, and where no member is appointed, then every member is a designated
member. The particulars of the designated member shall be filed with the Registrar.
461

6.2.11 Registration of Membership Changes
A LLP must ensure that where a person becomes or ceases to be a member or
designated member, notice is delivered to the Registrar within 14 days; and where
there is any change in the name or address of a member, notice is delivered to the
Registrar within 28 days.

6.2.12 Maintenance of Accounting Records
Every LLP shall keep accounting records, which are sufficient to show and explain its
transactions, and are such as to disclose with reasonable accuracy the financial
position of the LLP at any time; and enable the members to ensure that any
accounts prepared by the LLP comply with the requirements of the Act.

The records shall be kept at a place within DFIC as the members think fit unless
specifically prescribed in the Regulations; preserved by the LLP for at least 10 years
from the date to which they relate or for some other period as may be prescribed in
the Regulations; at all reasonable times open to inspection by any member or
auditor of the LLP and otherwise kept and maintained in such manner as may be
provide in the Regulations.

6.2.13 Financial Years
The first financial year of a Limited Liability Partnership starts on the day on which it
is incorporated and lasts for 12 months or some other period not exceeding 18
months as may be determined by the members.

The second and any subsequent financial year starts at the end of the previous
financial year and shall last for 12 months or some other period which is within 7
days either shorter or longer than 12 months as may be determined by the
Members.

6.2.14 Accounts
The Members of every Limited Liability Partnership will cause accounts to be
prepared in relation to each financial year of the Limited Liability Partnership.

The accounts will be prepared in accordance with accounting principles or standards
approved by the Registrar or prescribed in Regulations and will show a true and fair
view of the profit or loss of the Limited Liability Partnership for the period and of the
state of the Limited Liability Partnership's affairs at the end of the period and comply
with any other requirements of this Law.

A Limited Liability Partnership's accounts will be approved by the Members and
signed on their behalf by at least one of them. Within 6 months after the end of the
financial year, the accounts for that year will be:
(a) prepared and approved by all the Members; and
(b) examined and reported upon by an auditor.

A Limited Liability Partnership is required to file with the Registrar within 7 days after
the accounts have been approved by the members, a copy of the accounts and
auditors report.

Any Member of a Limited Liability Partnership is entitled, on written request to be
furnished with a copy of the Limited Liability Partnerships latest audited accounts
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and auditors report without charge. A LLP is required to comply with such a request
within seven days.

6.2.15 Foreign Limited Liability Partnerships
A foreign LLP cannot carry on business unless:
(a) it is registered as a Recognised LLP under the Act or;
(b) it has submitted all necessary documents and information to be registered in
accordance with the requirements of the Registrar and the application has not
been dealt with.
The Regulations prescribe the manner in which a foreign LLP can register with the
Registrar.

6.2.16 Requirements of a Recognised LLP
A recongnised LLP is required to:
(1) appoint and retain at all times at least one person who is authorised to accept
service of any document or notice on behalf of the Recognised LLP and to
undertake any other function as may be prescribed in the Regulations;
(2) have a principal place of business in DFIC to which all communications and
notices may be addressed; and
(3) file with the Registrar notice of:
(i) appointment of persons authorised to accept service;
(ii) address of principal place of business in the DFIC; and
(iii) any change in the details of persons authorised to accept service and
the address of its principal place of business in the DFIC;
in the form and manner as prescribed in the Regulations.

6.2.17 Dissolution of Limited Liability Partnerships
If the Registrar has reason to believe that:
(a) a LLP is not carrying on business or is not in operation;
(b) a LLP is acting in contravention of this law; or
(c) it is prejudicial to the interests of the DFIC for a LLP to remain on the
Register, he may give notice to the LLP that at the conclusion of three
months from the date of notice, the LLP shall be struck off the register
unless reason in shown to the contrary.

If the LLP to whom notice is to be given is licensed, registered or recognised by the
DFSA, the Registrar shall first obtain the consent of the DFSA prior to giving such
notice.

If by the end of the three-month period the Registrar:
(a) has received confirmation that the Limited Liability Partnership is no longer
carrying on business or is not in operation; or
(b) has not received from the Limited Liability Partnership sufficient reasons as to
why Limited Liability Partnership should not be struck off the register,

the Registrar shall strike the name of the Limited Liability Partnership off the
Register and the Limited Liability Partnership shall be dissolved.

If, where a Limited Liability Partnership is being wound up in a creditors winding up,
the Registrar has reason to believe either that no liquidator is acting, or that the
affairs of the Limited Liability Partnership are fully wound up, and the returns
required to be made by the liquidator have not been made for a period of six
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consecutive months, the Registrar may give notice to the LLP or the liquidator (if
any).

At the end of the period mentioned in the notice the Registrar shall, unless reason to
the contrary is shown by the LLP, creditor or liquidator, strike the name of the LLP
off the Register and the LLP will be dissolved.

Where a LLP is struck off the register, the liability of every member of the LLP
continues and may be enforced as if the LLP had not been dissolved.

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CHAPTER 7: LIMITED LIABILITY PARTNERSHIP LAWS IN SINGAPORE

7.0 INTRODUCTION
In Singapore, a Study Team on Limited Partnerships (LPs) and Limited Liability
Partnerships (LLPs) was set up by the Ministry of Finance in November 2002, to
work out the details of the legal framework governing limited partnerships and
limited liability partnerships. The Singapore Limited Liability Partnership Act 2005
(See Annexure 1) came into effect on April 11, 2005. By having a close look at the
legislation, one can conclude that the Singapore LLP Act is broadly modeled on the
Delaware Revised Uniform Partnership Act (the Delaware Code).

7.1.0 SALIENT FEATURES
The following paragraphs discuss the salient features of the LLP Act.

7.1.1 LEGAL ENTITY
The LLP is a body corporate and has a legal personality separate from its partners.
The LLP has perpetual succession. Any change in the partners of a LLP does not
affect its existence, rights or liabilities. The LLP provides the owners the flexibility of
operating as a partnership whilst giving them limited liability. It combines the
benefits of a partnership with those of private limited companies. However, this
comes with safeguards in law to minimize abuse and provide protection to parties
who deal with the LLP.

An LLP is capable of:
Suing and being sued in its name;
Acquiring and holding property in its name;
Having a common seal in its name; and
Doing such other acts and things in its name, as bodies corporate may
lawfully do and suffer.
7.1.1 NUMBER OF PARTNERS
A LLP is required at all times to have at least two partners, with the exception that if
the LLP is left with only one partner, the remaining sole partner is given a grace
period of up to two years to find a new partner. If the LLP continues with less than
two partners for more than two years, the remaining sole partner assumes unlimited
liability and is vulnerable to winding-up by the courts. However, there is no limit on
the maximum number of partners that an LLP can have.

7.1.2 LIABILITY OF PARTNERS
The partners of the LLP are not held personally liable for any business debts incurred
by the LLP. However a partner may be held personally liable for claims from losses
resulting from his own wrongful act or omission. But a partner is not personally liable
for such wrongful acts or omissions of any other partner of the LLP.

7.1.3 FINANCIAL RECORDS
A LLP is required to keep such accounting and other records that will sufficiently
explain the transactions and financial position of the LLP for a period of seven years.
This will enable profit and loss accounts and balance sheets to be prepared to give a
true and fair view of the state of affairs of the LLP. If the LLP does not do so, the LLP
and every partner will be guilty of an offence. The punishment may be a fine or
imprisonment, or both. In addition, the LLP shall submit to the Registrar an annual
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declaration of solvency of insolvency. Such solvency status reported is available to
the public. Under Section 24(2), this first annual declaration must be lodged within
15 months from the date of the registration of the LLP. Subsequent declarations
must be lodged once in every calendar year and not more than 15 months after the
lodgment of the last declaration. The LLP may apply for an extension of time under
Section 24(3) for the lodging of the annual declaration. Failure to file a declaration of
solvency implies insolvency leaving the LLP vulnerable to winding-up action by
creditors. Further, it is also not mandatory to file the partnership agreement with the
Registrar.
7.1.4 PUBLICATION OF NAME
LLPs are required to ensure that the partnership name is followed by the words
limited liability partnership or the acronym LLP. Invoices and official
correspondence are also required to carry the name, registration number and a
statement that the partnership is registered with limited liability.

The Registrar may refuse to register a new LLP or allow the LLP to change its name
to one that is undesirable or identical to any other LLP, company or business name
or identical to a name being reserved under the Business Registration Act or the
Companies Act or of a kind that the Minister has directed the Registrar not to accept
for registration.

7.1.5 MANAGER
It is mandatory for a LLP to have a local manager who is a natural person aged
twenty one years and above and does not have a questionable character and must
also meet other requirements specified under the LLP Regulations, including those
pertaining to solvency. One of the important characteristics of a manager is that he
need not be a partner of the LLP. However, the manager of the LLP must not be:
a) an undischarged bankrupt (unless he has obtained Leave of the High Court or
the written permission of the Official Assignee);
b) disqualified as an unfit manager of insolvent LLPs under section 34 of the LLP
Act;
c) disqualified as a manager of a former LLP wound up on grounds of national
security or interest and disqualified to act as a manager;
d) disqualified as a person who was convicted of offences involving fraud or
dishonesty, or other offences connected with formation or management of a
LLP;
e) disqualified under Sections 149, 149A or 154 of the Companies Act.

7.1.6 CONVERSION TO LLP
A business firm may convert to an LLP if the partners of the business firm are all
going to be the partners of the LLP. Similarly, a private company may convert to a
LLP if all the shareholders of the company are going to be the partners of the LLP
and the company has no outstanding security interests in its assets at the time of
application for conversion.
A business firm or a company may convert to an LLP by submitting an online
transaction via www.bizfile.gov.sg. The fee payable for the conversion is $100. Upon
conversion, the status of the business firm or the company will be updated as
Converted to LLP and the date of conversion will be the date of registration of the
LLP. The LLP will be issued with a new registration number.
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Additionally, LLPs formed by conversion of existing unlimited partnerships are
required to carry a statement regarding the conversion and the effective date on all
official correspondence and invoices for 12 months commencing 14 days after the
date of registration.
7.1.7 CREDITOR PROTECTION
As a measure of creditor protection, there is a claw-back mechanism, which allows
LLPs to recover amounts distributed to its partners within a period of three years
preceding the commencement of the winding up of an LLP.

7.1.8 REGISTERED OFFICE
Every limited liability partnership is required to have a registered office within
Singapore to which all communications and notices may be addressed. A document
can be served on a limited liability partnership by leaving it at or sending it by
registered post to the registered office of the limited liability partnership. A limited
liability partnership can change the address of its registered office by lodging with
the Registrar notice of such change in such medium and form as the Registrar may
determine, and any such change takes effect only upon such lodgment.

7.1.9 ELECTRONIC FILING SERVICE
The Registrar may require any document to be lodged under the Act to be filed
electronically using the service provided by the Registry of Limited Liability
Partnerships whereby documents prescribed under the Act may be filed with or
submitted to the Registrar electronically.

A copy of or an extract from any document electronically filed with or submitted to
the Registrar, which is supplied or issued by the Registrar is admissible in evidence
as of equal validity with the original document.

7.1.10.0 WINDING UP
The winding up of a limited liability partnership cane be either voluntary or
compulsory. The voluntary winding up can be further classified as members
voluntary winding up and creditors voluntary winding up. A limited liability
partnership may also be wound up by the Courts order.

7.1.10.1 Members Voluntary Winding up
A LLP may decide to wind up its affairs voluntarily if the partners are of the opinion
that the LLP will be able to pay its debts in full within 12 months after the
commencement of the winding up. The LLP will appoint a liquidator or provisional
liquidator to wind up its affairs and file the necessary notifications required under the
Limited Liability Partnership Act.

7.1.10.2 Creditors Voluntary Winding up
A LLP may decide to opt for creditors voluntary winding up if its partners are of the
opinion that it cannot by reason of its liabilities continue its business. The LLP
convene a meeting of its creditors to consider its proposal for the company to be
wound up. If the creditors agree, the LLP will appoint a liquidator or provisional

7.1.10.3 Compulsory Winding up
A LLP may be wound up under an Order of the Court under certain circumstances
e.g. the LLP is unable to pay its debts. The Court may appoint a liquidator to wind up
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the affairs of the LLP. Where no liquidator is appointed by the Court, the Official
Receiver shall be the liquidator of the LLP. The liquidator will file the necessary
notifications required under the Limited Liability Partnership Act.

7.1.11 STRIKING OFF
A LLP may apply to Accounting and Corporate Regulatory Authority (ACRA) to strike
its name off the Register pursuant to Section 38 of the Limited Liability Partnership
Act. ACRA may approve the application if it has reasonable cause to believe that the
LLP is not carrying on business.

7.2.0 SUBORDINATE LEGISLATIONS
The LLP Act and all subsidiary legislation made under the Act commenced operation
on 11th April 2005. ACRA administers the Act and provides a system of registration
for LLPs.

7.2.1 LLP REGULATIONS
These regulations are made by the Minister pursuant to section 56 of the Act and
include provisions on electronic filings, procedural requirements relating to
registration of LLPs, documents to be attached to the electronic forms for filing and
composition of offences. The First Schedule of the Regulations provides for fees
payable to the Registrar for applications or filings under the Act and includes the
following:

Applications or Filings under the Act Fees
Registration of new LLPs $150
Approval and reservation of LLP name $15
Conversion to LLPs $100
Notification of changes $30
Lodgement of name complaints $30

7.2.2 THE LLP (IDENTICAL NAME) RULES
These rules are made by the Registrar of LLPs pursuant to section 19(10) of the Act
and sets out what the Registrar considers as identical. The rules are similar to the
Companies (Identical Names) Rules and the Business Registration (Identical Names)
Rules and state the following:
In determining whether one name is identical to another, the following is
disregarded:
(i) "The", where it is the first word of the name;
(ii) Limited Liability Partnership, LLP, "Private", "Pte", "Sendirian", "Sdn",
"Limited", "Ltd", "Berhad" and "Bhd";
(iii) The following words and expressions where they appear at the end of the
name: "company", "and company", "corporation", "Incorporated", "Asia,
Asia Pacific", "International", "Singapore", "South Asia", "South East Asia" and
"Worldwide";
(iv) Any word or expression which, in the opinion of the Registrar, is intended to
represent any word or expression in sub-paragraph (iii).
(v) The plural version of the name;
(vi) The type and case of letters, spacing between letters and punctuation marks;
and
(vii) The symbol "&" shall have the same meaning as the word "and".
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For the purposes of (iii) and (iv) above, a limited liability partnership is related to a
corporation if the corporation is a partner of the limited liability partnership and
signifies its consent to the use by that LLP. The rules also provide that the Registrar
may refer the parties in dispute over the use of a name to mediation before giving
any direction for a name change.

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ANNEXURE 1

SINGAPORE LIMITED LIABILITY PARTNERSHIPS ACT 2005
60

PART I
PRELIMINARY

Short title and commencement
1. This Act may be cited as the Limited Liability Partnerships Act 2005 and shall
come into operation on such date as the Minister may, by notification in the
Gazette, appoint.

Interpretation
2. (1) In this Act, unless the context otherwise requires
"Authority" means the Accounting and Corporate Regulatory Authority established
under the Accounting and Corporate Regulatory Authority Act 2004 (Act 3 of 2004);
"company" has the same meaning as in section 4 (1) of the Companies Act (Cap.
50);
"corporation" means any body corporate formed or incorporated or existing in
Singapore or outside Singapore and includes
(a) any limited liability partnership registered under this Act; and
(b) any foreign company,
but does not include
(i) any corporation sole;
(ii) any co-operative society; or
(iii) any registered trade union;
"firm" has the same meaning as in section 2 (1) of the Business Registration Act
(Cap. 32);
"foreign company" has the same meaning as in section 4 (1) of the Companies Act;
"limited liability partnership" has the meaning given to it by section 4 (1);
"limited liability partnership agreement" , in relation to a limited liability partnership,
means any agreement expressed or implied between the partners of the limited
liability partnership or between the limited liability partnership and its partners which
determines the mutual rights and duties of the partners and their rights and duties in
relation to the limited liability partnership;
"liquidator" includes the Official Receiver when acting as the liquidator of a
corporation;
"manager" , in relation to a limited liability partnership, means any person (whether
or not a partner of the limited liability partnership) who is concerned in or takes part
in the management of the limited liability partnership (whether or not his particulars
or consent to act are lodged with the Registrar as required under section 23 (2));
"officer" , in relation to a limited liability partnership, means
(a) any manager of the limited liability partnership;
(b) a receiver and manager of any part of the undertaking of the limited liability
partnership appointed under a power contained in any instrument; and
(c) any liquidator of the limited liability partnership appointed in a voluntary
winding up,
but does not include
(i) any receiver who is not also a manager;
(ii) any receiver and manager appointed by the High Court; or
(iii) any liquidator appointed by the High Court or by the creditors;

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http://statutes.agc.gov.sg/
470
"Official Receiver" means the Official Assignee appointed under the Bankruptcy Act
(Cap. 20) and includes the deputy of any such Official Assignee and any person
appointed as Assistant Official Assignee;
"partner" , in relation to a limited liability partnership, means any person who has
been admitted as a partner in the limited liability partnership in accordance with the
limited liability partnership agreement;
"prescribed person" means a person, or a person within a class of persons,
prescribed by the Minister;
"private company" has the same meaning as in section 4 (1) of the Companies Act
(Cap. 50);
"register" means any register kept and maintained under this Act;
"Registrar" means the Registrar of Limited Liability Partnerships appointed under
section 3 (2) (a) and includes any Deputy Registrar or Assistant Registrar appointed
under section 3 (2) (b).
(2) Where a limited liability partnership has more than one manager
(a) anything that the manager is required by this Act to do may be done
by any one of the managers; and
(b) anything which constitutes an offence by the manager under this Act
constitutes an offence by each of the managers.
(3) A reference in this Act to the managers of a limited liability partnership shall,
in the case of a limited liability partnership which has only one manager, be
construed as a reference to that manager.
(4) A reference in this Act to the doing of any act by 2 or more managers of a
limited liability partnership shall, in the case of a limited liability partnership
which has only one manager, be construed as the doing of that act by that
manager.

Administration of Act and appointment of Registrar of Limited Liability
Partnerships, etc.
3. (1) The Authority shall be responsible for the administration of this Act,
subject to the general or special directions of the Minister.
(2) The Minister may, after consultation with the Authority
(a) appoint an officer of the Authority to be the Registrar of Limited
Liability Partnerships; and
(b) from amongst the officers of the Authority, public officers and the
officers of any other statutory board, appoint such number of Deputy
Registrars and Assistant Registrars of Limited Liability Partnerships as
the Minister considers necessary,
for the proper administration of this Act.
(3) The Registrar shall be responsible generally for the carrying out of the
provisions of this Act and for the collection of the fees thereunder and shall
pay all amounts so collected into the funds of the Authority.
(4) The Authority may give to the Registrar such directions, not inconsistent with
the provisions of this Act, as to the exercise of his powers, functions or duties
under this Act, and the Registrar shall give effect to such directions.
(5) The Registrar may, subject to such conditions or restrictions as he thinks fit,
for the purposes of the administration of this Act, delegate to any person all
or any of the powers, functions and duties vested in him by this Act except
the power of delegation conferred by this subsection.
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PART II
NATURE OF LIMITED LIABILITY PARTNERSHIP
Separate legal personality
4. (1) A limited liability partnership is a body corporate which is formed by
being registered under this Act and which has legal personality separate from
that of its partners.
(2) A limited liability partnership shall have perpetual succession.
(3) Any change in the partners of a limited liability partnership shall not affect the
existence, rights or liabilities of the limited liability partnership.

Capacity and execution of documents
5. (1) A limited liability partnership shall, by its name, be capable of
(a) suing and being sued;
(b) acquiring, owning, holding and developing or disposing of property,
both movable and immovable;
(c) having a common seal; and
(d) doing and suffering such other acts and things as bodies corporate
may lawfully do and suffer.
(2) Sections 41 (except subsection (9)) and 144 (1) (a) of the Companies Act
(Cap. 50) shall apply to a limited liability partnership as they apply to a
corporation within the meaning of that Act.

Non-applicability of partnership law
6. Except as otherwise provided by this Act, the law relating to partnerships
shall not apply to a limited liability partnership.

Partners
7. (1) Any individual or body corporate may be a partner in a limited liability
partnership.
(2) For the avoidance of doubt, the reference in subsection (1) to body corporate
shall exclude any trade union.

Limited liability of partners
8. (1) An obligation of the limited liability partnership whether arising in
contract, tort or otherwise, is solely the obligation of the limited liability
partnership.
(2) A partner is not personally liable, directly or indirectly, by way of
indemnification, contribution, assessment or otherwise, for an obligation
referred to in subsection (1) solely by reason of being a partner of the limited
(3) Subsections (1) and (2) shall not affect the personal liability of a partner in
tort for his own wrongful act or omission, but a partner shall not be personally
liable for the wrongful act or omission of any other partner of the limited
(4) Where a partner of a limited liability partnership is liable to any person (other
than another partner of the limited liability partnership) as a result of a
wrongful act or omission of his in the course of the business of the limited
liability partnership or with its authority, the limited liability partnership is
liable to the same extent as the partner.
(5) The liabilities of the limited liability partnership shall be met out of the

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Power of partner to bind the limited liability partnership
9. (1) Every partner of a limited liability partnership is the agent of the
(2) Notwithstanding subsection (1), a limited liability partnership is not bound by
anything done by a partner in dealing with a person if
(a) the partner has in fact no authority to act for the limited liability
partnership by doing that thing; and
(b) the person knows that he has no authority or does not know or believe
him to be a partner of the limited liability partnership.
(3) Where a person has ceased to be a partner of a limited liability partnership,
the former partner is to be regarded (in relation to any person dealing with
the limited liability partnership) as still being a partner of the limited liability
partnership unless
(a) the person has notice that the former partner has ceased to be a
partner of the limited liability partnership; or
(b) notice that the former partner has ceased to be a partner of the
limited liability partnership has been delivered to the Registrar.

Relationship of partners, etc.
10. (1) Except as otherwise provided by this Act, the mutual rights and duties of
the partners of a limited liability partnership, and the mutual rights and duties
of a limited liability partnership and its partners, shall be governed
(a) by the limited liability partnership agreement; or
(b) in the absence of agreement as to any matter, by any provision
relating to that matter set out in the First Schedule.
(2) Any reference to a resolution of partners for a particular matter, is a
reference to a resolution passed by all or such number of partners as may be
required by the limited liability partnership agreement for that matter.

Cessation of partnership interest
11. (1) A partner of a limited liability partnership may cease to be a partner in
accordance with the limited liability partnership agreement, or in the absence
of such agreement, by that partner giving 30 days notice to the other
partners of his intention to resign as partner.
(2) Without affecting the generality of subsection (1), a partner of a limited
liability partnership shall cease to be a partner upon the death or dissolution
of the partner.
(3) Where a partner of a limited liability partnership ceases to be a partner,
unless otherwise provided in the limited liability partnership agreement, the
former partner, his personal representative or its liquidator (as the case may
be) shall be entitled to receive from the limited liability partnership an amount

(a) equal to the former partners capital contribution to the limited liability
partnership and his right to share in the accumulated profits of the
limited liability partnership after the deduction of losses of the limited
liability partnership; and
(b) determined as at the date the former partner ceased to be a partner.
(4) For the avoidance of doubt, a former partner, his personal representative or
its liquidator (as the case may be) shall not interfere in the management of

Bankruptcy of partner
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12. Unless otherwise provided in the limited liability partnership agreement, if a
partner of a limited liability partnership is adjudicated a bankrupt by a court
in Singapore or elsewhere
(a) his bankruptcy shall not by itself cause him to cease being a partner of
the limited liability partnership, but the restriction on him being a
manager of the limited liability partnership under section 33 applies;
and
(b) the Official Assignee or trustee of the estate of the bankrupt partner
shall not interfere in the management of the limited liability
partnership but shall be entitled to receive distributions from the
limited liability partnership that the bankrupt partner is entitled to
receive under the limited liability partnership agreement.

Assignment of partners interest in distributions
13. (1) Unless otherwise provided in the limited liability partnership
agreement, a partner may assign the whole or any part of his interest in the
limited liability partnership but only to the extent that the assignee becomes
entitled to receive distributions from the limited liability partnership that the
partner would otherwise have been entitled to receive.
(2) An assignment under subsection (1) shall not by itself
(a) cause the partner to cease being a partner of the limited liability
partnership; and
(b) entitle the assignee to interfere in the management of the limited

PART III
REGISTRATION

Registration of limited liability partnership
14. Subject to the provisions of this Act, any 2 or more persons associated for
carrying on a lawful business with a view to profit may, by complying with the
requirements as to registration, register a limited liability partnership under
this Act.

Manner and particulars of registration
15. (1) A limited liability partnership may be registered under this Act if a
statement by every person who is to be a partner of the limited liability
partnership is lodged with the Registrar in such medium and form as the
Registrar may determine, containing the following particulars:
(a) the name of the proposed limited liability partnership;
(b) the general nature of the proposed business of the limited liability
partnership;
(c) the proposed registered office of the limited liability partnership;
(d) the name, identification (if any), nationality and the usual place of
residence of every person who is to be a partner of the limited liability
partnership and, where any of these persons is a body corporate, the
corporate name, place of incorporation or registration, registration
number and registered office of the body corporate to which all notices
and communications may be addressed;
(e) the name, identification (if any), nationality and the usual place of
residence of every person who is to be a manager of the limited
liability partnership and, where any of these persons is a body
corporate, the corporate name, place of incorporation or registration,
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registration number and registered office of the body corporate to
which all notices and communications may be addressed; and
(f) such other information concerning the proposed limited liability
partnership as may be prescribed by the Minister.
(2) The Registrar may, in any particular case, require the statement referred to in
subsection (1) to be verified in such manner as the Registrar considers fit.
(3) The High Court may, on the application of any person alleged or claiming to
be a partner, direct the rectification of the register and decide any question
arising under this section.
(4) In this section, identification means, in the case of any person issued with
an identity card, the number of the identity card, and in the case of a person
not issued with an identity card, particulars of the passport or such other
similar evidence of identification as is available, if any.

Registration
16. (1) On receiving the statement referred to in section 15, the Registrar
shall, subject to the provisions of this Act, register the statement and issue a notice
of registration in such form as the Registrar may determine.
(2) On and from the date of registration specified in the notice of registration
issued under subsection (1), there shall be a limited liability partnership, by
the name specified in the notice, registered under this Act with all the
attributes described in Part II.
(3) The notice of registration is conclusive evidence that the requirements of
section 15 are complied with and that the limited liability partnership is
registered by the name specified in the notice.
(4) The Registrar may, upon receipt of the application in the prescribed form of a
limited liability partnership registered under subsection (1) and on payment of
the prescribed fee, issue to that limited liability partnership a certificate of
confirmation of registration in such form as the Registrar may determine.
(5) Nothing in this section shall be construed to require the Registrar to register
any limited liability partnership if he is not satisfied with the particulars or
other information furnished under this Act.
(6) Any person aggrieved by the refusal of the Registrar to register a limited
liability partnership of which he is to be a partner may, within 30 days of the
date of the refusal, appeal to the Minister whose decision shall be final.
(7) The registration of any limited liability partnership shall not be deemed to
imply that the requirements of any law in relation to any business carried on
by that limited liability partnership have been complied with.

Power to refuse registration
17. (1) Notwithstanding any provision in this Act or any other written law, the
Registrar shall refuse to register a limited liability partnership under this Act
where he is satisfied that
(a) the proposed business is likely to be used for an unlawful purpose or
for purposes prejudicial to public peace, welfare or good order in
Singapore; or
(b) it would be contrary to the national security or interest for the limited
liability partnership to be registered.
(2) Any person aggrieved by the decision of the Registrar under subsection (1)
may, within 30 days of the date of the decision, appeal to the Minister whose
decision shall be final.
(3) For the purposes of this section, a certificate issued by the Minister charged
with the responsibility for internal security stating that he is satisfied that it
475
would be contrary to the national security or interest for the limited liability
partnership to be registered under this Act shall be conclusive evidence of the
matters so stated.

Names of limited liability partnerships
18. (1) Every limited liability partnership shall have either the words limited
liability partnership or the acronym LLP as part of its name.
(2) No limited liability partnership that is registered under this Act shall carry on
business under a name that is not registered under section 16 or 28.
(3) The registration of a name under which a limited liability partnership carries
on business shall not be construed as authorising the use of that name if,
apart from such registration, the use of that name could be prohibited.
(4) Any limited liability partnership which contravenes this section shall be guilty
of an offence and shall be liable on conviction to a fine not exceeding $5,000.

Restrictions on registration of business names
19. (1) The Registrar may refuse to register a limited liability partnership
under a name, or allow a limited liability partnership to change its name to
one, that in the opinion of the Registrar is
(a) undesirable;
(b) identical to that of any other limited liability partnership or corporation
or to a business name;
(c) identical to a name that is being reserved under this section, section
13 of the Business Registration Act (Cap. 32) or section 27 of the
Companies Act (Cap. 50); or
(d) a name of a kind that the Minister has directed the Registrar not to
accept for registration.
(2) A person may apply in the prescribed manner to the Registrar for the
reservation of a name set out in the application as
(a) the name of a proposed limited liability partnership; or
(b) the name to which a limited liability partnership proposes to change its
name.
(3) Upon receipt of an application under subsection (2) and on payment of the
prescribed fee, the Registrar may, if he is satisfied that the name to be
reserved is not one which may be rejected on any ground referred to in
subsection (1) (a), (b), (c) or (d), reserve the name for a period of 2 months
from the date of lodgment of the application or such longer period as the
Registrar may allow.
(4) Notwithstanding anything in this section, where the Registrar is satisfied that
a limited liability partnership has been registered (whether through
inadvertence or otherwise and whether originally or by a change of name)
under a name which
(a) is a name referred to in subsection (1); or
(b) so nearly resembles the name of any other limited liability partnership
or corporation or a business name as to be likely to be mistaken for it,
the Registrar may direct the limited liability partnership to change its name,
and the limited liability partnership shall comply with the direction within 6
weeks after the date of the direction or such longer period as the Registrar
may allow, unless the direction is annulled by the Minister.
(5) Any person may apply, in writing, to the Registrar to give a direction to any
limited liability partnership, on a ground referred to in subsection (4) (a) or
(b), to change its name.
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(6) The Registrar shall not consider any application under subsection (5) to give a
direction to a limited liability partnership on the ground referred to in
subsection (4) (b) unless the Registrar receives the application within 12
months from the date of registration of the limited liability partnership under
that name.
(7) Any limited liability partnership which fails to comply with a direction given
under subsection (4) shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding $2,000 and, in the case of a continuing
offence, to a further fine not exceeding $200 for every day or part thereof
during which the offence continues after conviction.
(8) The Registrar may, if he is satisfied that a limited liability partnership which is
directed under subsection (4) to change its name had applied for registration
under that name in bad faith, require that limited liability partnership to pay
the Registrar such fees as may be prescribed, and such fees shall be
recoverable as a debt due to the Authority.
(9) Any limited liability partnership aggrieved by a direction of the Registrar
under subsection (4) or a requirement of the Registrar under subsection (8)
may, within 30 days of the date of the direction or requirement, appeal to the
Minister whose decision shall be final.
(10) The Registrar may, by publication in the Gazette, make such rules as he
considers appropriate for the purposes of determining the matters referred to
in subsections (1) to (4).
(11) In this section, business name has the same meaning as in section 2 (1) of
the Business Registration Act (Cap. 32).

PART IV
CONVERSION TO LIMITED LIABILITY PARTNERSHIP

Conversion from firm to limited liability partnership
20. (1) A firm may convert to a limited liability partnership by complying with
the requirements as to the conversion set out in the Second Schedule.
(2) Upon such conversion, the partners of the firm, the limited liability
partnership to which the firm has converted and the partners of that limited
liability partnership shall be bound by the provisions of the Second Schedule
that are applicable to them.
(3) The Minister may, by order published in the Gazette, amend, add to or vary
the provisions in the Second Schedule.
(4) Any order made under subsection (3) shall be presented to Parliament as
soon as possible after publication in the Gazette.
(5) In this section, convert, in relation to a firm converting to a limited liability
partnership, means a transfer of the property, assets, interests, rights,
privileges, liabilities, obligations and the undertaking of the firm to the limited
liability partnership in accordance with the Second Schedule.

Conversion from private company to limited liability partnership
21. (1) A private company may convert to a limited liability partnership by
complying with the requirements as to the conversion set out in the Third
Schedule.
(2) Upon such conversion, the private company, its shareholders, the limited
liability partnership to which the private company has converted and the
partners of that limited liability partnership shall be bound by the provisions
of the Third Schedule that are applicable to them.
477
(3) The Minister may, by order published in the Gazette, amend, add to or vary
the provisions in the Third Schedule.
(4) Any order made under subsection (3) shall be presented to Parliament as
soon as possible after publication in the Gazette.
(5) In this section, convert, in relation to a private company converting to a
limited liability partnership, means a transfer of the property, assets,
interests, rights, privileges, liabilities, obligations and the undertaking of the
private company to the limited liability partnership in accordance with the
Third Schedule.

PART V
MANAGEMENT AND ADMINISTRATION

Minimum of 2 partners
22. (1) Every limited liability partnership shall have at least 2 partners.
(2) If a limited liability partnership carries on business with fewer than 2 partners
for a period of more than 2 years, a person shall (notwithstanding section 8
(1) and (2)) be personally liable, jointly and severally with the limited liability
partnership, for any obligation of the limited liability partnership incurred
during the period that the limited liability partnership so carries on business
after those 2 years if, at the time the obligation was incurred, he
(a) was a partner of the limited liability partnership; and
(b) knew that the limited liability partnership was carrying on business
with fewer than 2 partners for a period of more than 2 years.

Manager
23. (1) Every limited liability partnership shall ensure that it has at least one
manager who is a natural person of full age and capacity and who is ordinarily
resident in Singapore.
(2) Every limited liability partnership shall ensure that the particulars of every
person who acts as manager of the limited liability partnership and his
consent to act as such are lodged with the Registrar in such medium and form
as the Registrar may determine.
(3) A manager shall be
(a) answerable for the doing of all acts, matters and things, as are
required to be done by the limited liability partnership under sections
24, 27 and 28; and
(b) personally liable to all penalties imposed on the limited liability
partnership for any contravention of those sections unless he satisfies
the court hearing the matter that he should not be so liable.
(4) If a limited liability partnership contravenes subsection (1), the limited liability
partnership and every partner of the limited liability partnership shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding
$5,000 and, in the case of a continuing offence, to a further fine not
exceeding $200 for every day or part thereof during which the offence
continues after conviction.
(5) Any limited liability partnership which contravenes subsection (2) shall be

478
Annual declaration of solvency or insolvency
24. (1) Every limited liability partnership shall lodge with the Registrar a
declaration by one of its managers that in that managers opinion, the limited
liability partnership either
(a) appears as at that date to be able to pay its debts as they become due
in the normal course of business; or
(b) does not appear as at that date to be able to pay its debts as they
become due in the normal course of business.
(2) The declaration referred to in subsection (1) shall be lodged not later than 15
months after the registration of the limited liability partnership and
subsequently once in every calendar year at intervals of not more than 15
months.
(3) Notwithstanding subsection (2), the Registrar may, on application by a limited
liability partnership and if he thinks fit, grant an extension of time for the
lodging of the declaration referred to in subsection (1).
(4) If a limited liability partnership fails to lodge the declaration referred to in
subsection (1) within the time or extended time referred to in subsections (2)
and (3), the limited liability partnership shall be
(a) guilty of an offence and shall be liable on conviction to a fine not
exceeding $5,000; and
(b) paragraph 3 (2) (d) of the Fifth Schedule shall apply.
(5) A manager who makes a declaration referred to in subsection (1) (a) without
having reasonable grounds for his opinion, shall be guilty of an offence and
shall be liable on conviction
(a) in the case where the manager is an individual, to a fine not exceeding
$5,000 or to imprisonment for a term not exceeding 12 months or to
both; and
(b) in any other case, to a fine not exceeding $5,000.
(6) Any person who, in connection with a declaration made under this section,
makes a statement or furnishes information (whether directly or indirectly) to
a manager that is false or misleading in a material particular, when he knows
or ought reasonably to have known that the statement or information is false
or misleading in a material particular, shall be guilty of an offence and shall
be liable on conviction
(a) in the case where the person is an individual, to a fine not exceeding
$10,000 or to imprisonment for a term not exceeding 2 years or to
both; and
(7) If an offence under this section is committed with intent to defraud creditors
of the limited liability partnership or for a fraudulent purpose, the offender
shall be liable on conviction
(a) in the case where the offender is an individual, to a fine not exceeding
both; and

Accounts
25. (1) Every limited liability partnership shall keep such accounting and other
records as will sufficiently explain the transactions and financial position of the
limited liability partnership and enable profit and loss accounts and balance-sheets to
be prepared from time to time which give a true and fair view of the state of affairs
of the limited liability partnership.
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(2) The limited liability partnership shall retain the records referred to in
subsection (1) for 7 years after the completion of the transactions or
operations to which they respectively relate.
(3) The records referred to in subsection (1) shall be kept at such place as the
partners think fit and shall at all times be open to inspection by the partners.
(4) The Registrar may, by notice in writing to the limited liability partnership or
any of its partners, require the limited liability partnership or that partner to
produce the records referred to in subsection (1) for his inspection within
such time and at such place as may be specified in that notice.
(5) If a limited liability partnership contravenes subsection (1), (2) or (3), the
limited liability partnership and every partner of the limited liability
partnership shall be guilty of an offence and shall be liable on conviction
both; and
(6) Any person who fails to comply with a requirement under subsection (4) shall
be guilty of an offence and shall be liable on conviction
both; and

Registered office
26. (1) Every limited liability partnership shall have a registered office within
Singapore to which all communications and notices may be addressed.
(2) A document may be served on a limited liability partnership by leaving it at or
sending it by registered post to the registered office of the limited liability
partnership.
(3) A limited liability partnership may change the address of its registered office
by lodging with the Registrar notice of such change in such medium and form
as the Registrar may determine, and any such change shall take effect only
upon such lodgment.

Publication of name and limited liability
27. (1) Every limited liability partnership shall ensure that its invoices and
official correspondence bear the following:
(a) the name and registration number of the limited liability partnership;
and
(b) a statement that it is registered with limited liability.

Registration of changes in particulars
28. (1) Whenever a change is made or occurs in any of the particulars
registered in respect of any limited liability partnership, that limited liability
partnership shall, within 14 days after the change, or such further period as
the Registrar may on application allow, lodge with the Registrar a statement
specifying the nature and date of the change, and containing such other
information as may be prescribed.
480
(2) Any person who ceases to be a partner or manager of a limited liability
partnership may himself lodge with the Registrar the statement referred to in
subsection (1) if he has reasonable cause to believe that the limited liabil ity
partnership will not lodge the statement with the Registrar.
(3) Where any partner or manager of a limited liability partnership has changed
his residential address and has made a report of the change under section 8
of the National Registration Act (Cap. 201) within 14 days of the change, he
shall be deemed to have informed the Registrar of the change of his
residential address in compliance with subsection (1).
(4) The Registrar may, in any particular case, require a statement lodged under
subsection (1) to be rectified in such manner as the Registrar considers fit.
(5) Any statement required to be lodged under this section shall be in such
medium and form as the Registrar may determine.
continues after c onviction.

PART VI
RECEIVERSHIP AND WINDING UP

Receivership
29. The provisions of the Fourth Schedule shall apply to the appointment of a
receiver or receiver and manager of the property of a limited liability partnership,
and to the receivership of a limited liability partnership.
Winding up
30. (1) The winding up of a limited liability partnership may be either voluntary
or by the High Court and, unless inconsistent with the context, the provisions of the
Fifth Schedule shall apply to the winding up of a limited liability partnership in either
of these modes.
(2) The provisions of the Fifth Schedule relating to the remedies against the
property of a limited liability partnership and the priorities of debts shall bind the
Government.
Amendment of Fourth and Fifth Schedules
31. (1) Subject to subsections (2) and (3), the Minister may, by order published
in the Gazette, amend the Fourth or Fifth Schedule.
(2) The Minister shall not amend the Fourth or Fifth Schedule to increase the
maximum penalty for any of the offences in the Schedules.
(3) The Minister may amend the Fourth or Fifth Schedule to include a new offence
provided that the maximum penalty for such new offence shall not exceed a fine of
$2,000 or a term of imprisonment of 12 months and, in the case of a continuing
offence, the maximum penalty shall not exceed a fine of $200 for every day or part
thereof during which the offence continues after conviction.
(4) Any order made under subsection (1) shall be presented to Parliament as soon
as possible after publication in the Gazette.
Debt owed to partner
32. (1) Any sum due to a partner of a limited liability partnership (in his capacity
as a partner) shall not be a debt of the limited liability partnership payable to that
partner in a case of competition between himself and any other creditor who is not a
partner, but any such sum may be taken into account for the purpose of the final
adjustment of the rights of the partners among themselves.
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(2) Subsection (1) shall not apply to any sum due to a partner as repayment of a
loan made in good faith by him to the limited liability partnership.
PART VII
MISCELLANEOUS
Restriction on undischarged bankrupt being manager of limited liability
partnership
33. (1) Any person who, being an undischarged bankrupt (whether he was
adjudicated bankrupt by a court in Singapore or elsewhere), acts as manager of any
limited liability partnership without the leave of the High Court or the written
permission of the Official Assignee, shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding $10,000 or to imprisonment for a term not
exceeding 2 years or to both.
(2) On an application by an undischarged bankrupt under subsection (1) to the
High Court or the Official Assignee, the High Court or the Official Assignee, as the
case may be, may refuse the application or approve the application subject to such
conditions as the High Court or the Official Assignee may impose.
(3) The leave of the High Court for the purpose of this section shall not be given
unless notice of intention to apply for leave has been served on the Official Assignee
and the Official Assignee is heard on the application.
Disqualification of unfit managers of insolvent limited liability partnerships
34. (1) The High Court may
(a) on the application of the Minister or the Official Receiver as provided for in
subsection (11); and
(b) on being satisfied as to the matters referred to in subsection (2),
make an order disqualifying a person specified in the order from being a manager of
a limited liability partnership for a period specified in the order not exceeding 5 years
from the date of the making of the order (referred to in this section as a
disqualification order).
(2) The High Court shall make a disqualification order under subsection (1) if it is
satisfied that
(a) the person against whom the order is sought has been given not less than 14
days notice of the application for the order;
(b) the person is or has been a manager of a limited liability partnership which has
gone into liquidation (whether while he was a manager or within 3 years of his
ceasing to be a manager of the limited liability partnership) and was insolvent at the
date of its liquidation; and
(c) the persons conduct as a manager of that limited liability partnership taken alone
or taken together with his conduct as a manager of any other limited liability
partnership or a director of any other corporation makes him unfit to be a manager
of a limited liability partnership.
(3) If in the case of a person who is or has been a manager of a limited liability
partnership which is
(a) being wound up by the High Court, it appears to the Official Receiver or to the
liquidator, if he is not the Official Receiver; or
(b) being wound up otherwise than as mentioned in paragraph (a), it appears to the
liquidator,
that the conditions mentioned in subsection (2) (b) and (c) are satisfied as respects
that person, the Official Receiver or the liquidator, as the case may be, shall
immediately report the matter to the Minister.
(4) The Minister may require the Official Receiver or the liquidator or the former
liquidator of a limited liability partnership to
(a) furnish him with such information with respect to any persons conduct as a
manager of the limited liability partnership; and
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(b) produce and permit inspection of such books, papers and other records relevant
to that persons conduct as such a manager,
as the Minister may reasonably require for the purpose of exercising or determining
whether to exercise any of his functions under this section.
(5) If any person fails to comply with any requirement under subsection (4), the
High Court may, on the application of the Minister, make an order requiring that
person to make good the default within such time as is specified in the order.
(6) For the purposes of this section
(a) the date of liquidation of a limited liability partnership shall be
(i) if the limited liability partnership is wound up by the High Court, the date of the
presentation of the winding up petition;
(ii) where a provisional liquidator was appointed under paragraph 37 of the Fifth
Schedule, the date the declaration made under that paragraph was lodged with the
Registrar; and
(iii) in any other case, the date of the passing of the resolution for winding up;
(b) a limited liability partnership shall be taken to be insolvent if it was unable to pay
its debts, within the meaning of that expression in paragraph 3 (2) of the Fifth
Schedule; and
(c) references to a persons conduct as a manager of any limited liability partnership
or director of any corporation include, where any of those entities have become
insolvent, references to that persons conduct in relation to any matter connected
with or arising out of the insolvency of that entity.
(7) In deciding whether a persons conduct as a manager of any particular limited
liability partnership makes him unfit to be a manager of a limited liability partnership
as is mentioned in subsection (2) (c), the High Court shall in relation to his conduct
as a manager of that limited liability partnership have regard
(a) generally to the matters referred to in subsection (8); and
(b) in particular, to the matters referred to in subsection (9),
notwithstanding that the manager has not been convicted or may not be criminally
liable in respect of any of these matters.
(8) The matters referred to in subsection (7) (a) to which the High Court shall have
regard generally are
(a) whether there has been any misfeasance or breach of any fiduciary or other duty
by the manager in relation to the limited liability partnership;
(b) whether there has been any misapplication or retention by the manager of, or
any conduct by the manager giving rise to an obligation to account for, any money
or other property of the limited liability partnership; and
(c) the extent of the managers responsibility for any failure by the limited liability
partnership to comply with any provision of this Act.
(9) The matters referred to in subsection (7) (b) to which the High Court shall have
regard in particular are
(a) the extent of the managers responsibility for the causes of the limited liability
partnership becoming insolvent;
(b) the extent of the managers responsibility for any failure by the limited liability
partnership to supply any goods or services which have been paid for (in whole or in
part);
(c) the extent of the managers responsibility for the limited liability partnership
entering into any transaction liable to be set aside under paragraph 8 (1) of the Fifth
Schedule; and
(d) whether the causes of the limited liability partnership becoming insolvent are
attributable to its carrying on business in a particular industry where the risk of
insolvency is generally recognised to be higher.
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(10) The Minister may, by order published in the Gazette, add to, vary or amend
the matters referred to in subsection (8) or (9) and that order may contain such
transitional provisions as may appear to the Minister to be necessary or expedient.
(11) In the case of a person who is or has been a manager of a limited liability
partnership which has gone into liquidation and is being wound up by the High Court,
an application under this section shall be made by the Official Receiver but in any
other case an application shall be made by the Minister.
(12) On a hearing of an application under this section
(a) the Minister or the Official Receiver, as the case may be, shall appear and call the
attention of the High Court to any matter which appears to him to be relevant (and
for this purpose the Minister may be represented) and may give evidence or call
witnesses; and
(b) the person against whom an order is sought may appear and himself give
evidence or call witnesses.
(13) A person who acts as receiver or receiver and manager shall not be liable to
have a disqualification order made against him in respect of acts done in his capacity
as receiver or receiver and manager, as the case may be.
(14) Nothing in this section shall prevent a person who is disqualified pursuant to
an order made under subsection (1) from applying for leave of the High Court to be a
manager of a limited liability partnership.
(15) On the hearing of an application made under subsection (14), the Minister or
the Official Receiver shall appear (and for this purpose the Minister may be
represented) and call the attention of the High Court to any matter which appears to
him to be relevant to the application and may himself give evidence or call
witnesses.
(16) Any person who contravenes a disqualification order made under this section
shall be guilty of an offence and shall be liable on conviction to a fine not exceeding
$10,000 or to imprisonment for a term not exceeding 2 years or to both.
Disqualification of managers of limited liability partnerships wound up on
grounds of national security or interest
35. (1) Subject to subsections (2) and (3), where a limited liability partnership is
ordered to be wound up by the High Court under paragraph 3 (1) (f) of the Fifth
Schedule on the ground that it is being used for purposes against national security or
interest, the High Court may, on the application of the Minister, make an order
(referred to in this section as a disqualification order) disqualifying any person who is
a manager of that limited liability partnership from being a manager of any limited
liability partnership for a period of 3 years from the date of the making of the
winding up order.
(2) The High Court shall not make a disqualification order against any person under
subsection (1) unless the High Court is satisfied that the person against whom the
order is sought has been given not less than 14 days notice of the Ministers
application for the order.
(3) The High Court shall not make a disqualification order against any person under
subsection (1) if such person proves to the satisfaction of the High Court that
(a) the limited liability partnership had been used for purposes against national
security or interest without his consent or connivance; and
(b) he had exercised such diligence to prevent the limited liability partnership from
being so used as he ought to have exercised having regard to the nature of his
function in that capacity and to all the circumstances.
(4) Any person who contravenes a disqualification order made under subsection (1)
$10,000 or to imprisonment for a term not exceeding 2 years or to both.
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Disqualification to act as manager on conviction for certain offences
36. (1) Where a person is convicted (whether in Singapore or elsewhere) of any
offence involving fraud or dishonesty punishable with imprisonment for 3 months or
more, he shall be subject to the disqualifications provided in subsection (3).
(2) Where a person is convicted in Singapore of
(a) any offence in connection with the formation or management of a limited liability
partnership; or
(b) any offence under paragraph 94 of the Fifth Schedule,
the court may make a disqualification order in addition to any other sentence
imposed.
(3) A person who is disqualified under subsection (1) or who has had a
disqualification order made against him under subsection (2) shall not act as a
manager of a limited liability partnership.
(4) Where a disqualified person
(a) has not been sentenced to imprisonment, the disqualifications in subsection (3)
shall take effect upon conviction and shall continue for a period of 5 years or for such
shorter period as the court may order under subsection (2);
(b) has been sentenced to imprisonment, the disqualifications in subsection (3) shall
take effect upon conviction and shall continue for a period of 5 years after his release
from prison.
(5) An application for leave to act as a manager of a limited liability partnership
may be made by a person against whom a disqualification order has been made
upon that person giving the Minister not less than 14 days notice of his intention to
apply for such leave.
(6) On the hearing of any application under this section, the Minister may be
represented at the hearing and may oppose the granting of the application.
(7) A person who contravenes a disqualification order under this section shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding $10,000
or to imprisonment for a term not exceeding 2 years or to both.
(8) Without prejudice to section 53, a District Court may make a disqualification
order under this section.
Disqualification under Companies Act
37. (1) A person who is subject to a disqualification or disqualification order
under section 149, 149A or 154 of the Companies Act (Cap. 50) shall not act as
manager of a limited liability partnership during the period of the disqualification or
disqualification order.
(2) Any person who contravenes subsection (1) shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a
term not exceeding 2 years or to both.
Power of Registrar to strike defunct limited liability partnership off register
38. (1) Where the Registrar has reasonable cause to believe that a limited
liability partnership is not carrying on business or is not in operation, he may send to
the limited liability partnership by post a letter to that effect and stating that, if an
answer showing cause to the contrary is not received within one month from the
date of the letter, a notice will be published in the Gazette with a view to striking the
name of the limited liability partnership off the register.
(2) Unless the Registrar receives an answer within one month from the date of the
letter to the effect that the limited liability partnership is carrying on business or is in
operation, he may publish in the Gazette and send to the limited liability partnership
by registered post a notice that at the expiration of 3 months from the date of that
notice the name of the limited liability partnership mentioned therein will, unless
cause is shown to the contrary, be struck off the register and the limited liability
partnership will be dissolved.
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(3) If in any case where a limited liability partnership is being wound up the
Registrar has reasonable cause to believe that
(a) no liquidator is acting;
(b) the affairs of the limited liability partnership are fully wound up and, for a period
of 6 months, the liquidator has been in default in lodging any return required to be
made by him; or
(c) the affairs of the limited liability partnership have been fully wound up under Part
II of the Fifth Schedule and there are no assets or the assets available are not
sufficient to pay the costs of obtaining an order of the High Court dissolving the
limited liability partnership,
the Registrar may publish in the Gazette and send to the limited liability partnership
or the liquidator, if any, a notice to the same effect as that referred to in subsection
(2).
(4) At the expiration of the time mentioned in the notice, the Registrar may, unless
cause to the contrary is previously shown, strike the name of the limited liability
partnership off the register, and shall publish notice thereof in the Gazette.
(5) On the publication in the Gazette of the notice referred to in subsection (4), the
limited liability partnership shall be dissolved; but
(a) the liability, if any, of every officer and partner of the limited liability partnership
shall continue and may be enforced as if the limited liability partnership had not been
dissolved; and
(b) nothing in this subsection shall affect the power of the High Court to wind up a
limited liability partnership the name of which has been struck off the register.
(6) If any person feels aggrieved by the name of the limited liability partnership
having been struck off the register, the High Court, on an application made by the
person at any time within 15 years after the name of the limited liability partnership
has been so struck off, may order the name of the limited liability partnership to be
restored to the register if the High Court is satisfied that
(a) the limited liability partnership was, at the time of the striking off, carrying on
business or in operation; or
(b) it is just that the name of the limited liability partnership be restored to the
register.
(7) Upon a copy of the order referred to in subsection (6) being lodged with the
Registrar, the limited liability partnership shall be deemed to have continued in
existence as if its name had not been struck off, and the High Court may by the
order give such directions and make such provisions as seem just for placing the
limited liability partnership and all other persons in the same position as nearly as
may be as if the name of the limited liability partnership had not been struck off.
(8) A notice to be sent under this section to a liquidator may be addressed to the
liquidator at his last known place of business, and a letter or notice to be sent under
this section to a limited liability partnership may be addressed to the limited liability
partnership at its registered office or, if no offic e has been registered, to the care of
any officer of the limited liability partnership.
(9) The provisions of the Fifth Schedule relating to
(a) the dissolution of a limited liability partnership shall apply to a limited liability
partnership struck off the register under this section; and
(b) the remedies against the property of a limited liability partnership and the
priorities of debts shall bind the Government.
False representation as to registration as limited liability partnership
39. If any person knowingly holds out that a business is registered as a limited
liability partnership under this Act, the person shall, where he knows or ought to
have known that at the material time the business was not registered as a limited
liability partnership under this Act, be guilty of an offence and shall be liable on
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Rectification of register
40. (1) Where it appears to the High Court, as a result of evidence adduced
before it by an applicant limited liability partnership, that any particular recorded in a
register is erroneous or defective, the High Court may, by order, direct the Registrar
to rectify the register on such terms and conditions as seem to the High Court just
and expedient, as are specified in the order and the Registrar shall, upon receipt of
the order, rectify the register accordingly.
(2) An order of the High Court made under subsection (1) may require that a fresh
document, showing the rectification, shall be filed by the applicant limited liability
partnership with the Registrar, together with a copy of the High Court order and a
copy of the High Court application.
(3) Notwithstanding subsections (1) and (2), an officer of a limited liability
partnership may notify the Registrar in the prescribed form of any typographical or
clerical error contained in any document relating to the limited liability partnership
lodged with the Registrar.
(4) The Registrar may, upon receipt of any notification referred to in subsection
(3), rectify the register accordingly.
Information service exclusion of liability of errors or omissions
41. Where the Registry of Limited Liability Partnerships furnishes, in any form,
information relating to a limited liability partnership registered under this Act to any
person, the Authority, any of its members, officers or employees and any authorised
agent of the Registry who is involved in the supply of such information shall not be
liable for any loss or damage suffered by any person by reason of any error or
omission of whatever nature or however caused, if the error or omission
(a) is made in good faith and in the ordinary course of the discharge of the duties of
such member, officer, employee or authorised agent; or
(b) has occurred or arisen as a result of any defect or breakdown in the service or in
any of the equipment used for the service.
Electronic filing service
42. (1) The Registrar may require any document to be lodged under this Act to
be filed electronically with the Registrar using the service provided by the Registry of
Limited Liability Partnerships whereby documents under this Act may be filed with or
submitted to the Registrar electronically.
(2) Where any document is required to be filed with or submitted to the Registrar
electronically by any person using the service referred to in subsection (1), the
Registrar may allow the document to be filed or submitted by a prescribed person on
behalf of the first-mentioned person, subject to such conditions as may be imposed
from time to time by the Registrar on the prescribed person.
(3) Where the Registry of Limited Liability Partnerships provides a service whereby
documents required under this Act may be filed electronically with the Registrar, the
Authority and its members, officers or employees shall not be liable for any loss or
damage suffered by any person by reason of any error or omission of whatever
nature or however caused appearing in any document obtained by any person under
the service, if the error or omission
(a) is made in good faith and in the ordinary course of the discharge of the duties of
such members, officers or employees; or
(b) has occurred or arisen as a result of any defect or breakdown in the service or in
any of the equipment used for the service.
(4) A copy of or an extract from any document electronically filed with or submitted
to the Registrar using the service referred to in subsection (1) which is supplied or
issued by the Registrar and certified under his hand and seal to be a true copy of or
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extract from such document shall, in any proceedings, be admissible in evidence as
of equal validity with the original document.
(5) Any information supplied by the Registrar that is certified by the Registrar
under his hand and seal to be a true extract from any document filed or lodged with
or submitted to the Registrar using the service referred to in subsection (1) shall, in
any proceedings, be admissible in evidence and be presumed, unless evidence to the
contrary is adduced, to be a true extract from such document.
(6) Subsections (4) and (5) shall have effect notwithstanding the provisions of any
other written law.
Inspection
43. (1) The Registrar may authorise in writing any officer or employee of the
Authority or any public officer to be an inspector for the purposes of this Act.
(2) The Registrar or any inspector shall, for the purposes of ascertaining whether
the provisions of this Act are being complied with, have power at all reasonable
times to enter into any premises at which he has reason to believe any person is
carrying on business and to make such examination and inquiry as may be necessary
for those purposes.
(3) The Registrar and every inspector when exercising any power under this Act
shall declare his office and shall produce his authority in writing to any person
affected by the exercise of that power.
(4) Any person who fails to comply with a request made by the Registrar or an
inspector or resists or obstructs the Registrar or an inspector in the performance of
his duties under this Act shall be guilty of an offence and shall be liable on conviction
to a fine not exceeding $5,000 or to imprisonment for a term not exceeding 12
months or to both.
(5) It shall not be an offence for any person to refuse to comply with any request
made by the Registrar or an inspector, or to resist or obstruct the Registrar or an
inspector in the performance of any of his duties under this Act, if the Registrar or
inspector fails to declare his office and to produce his authority in writing.
Power of Registrar to obtain further information
44. (1) In order to obtain such information as the Registrar may consider
necessary for the purposes of carrying out the provisions of this Act, the Registrar
may
(a) require any past or present partner or manager of a limited liability partnership
to answer any question in writing which the Registrar may consider necessary to ask
for the purposes specified in this subsection; or
(b) summon that person to appear before him or an inspector or any other public
officer whom the Registrar may designate to answer any such question orally.
(2) The Registrar may further require the person referred to in subsection (1) to
make such further declaration or supply such further particulars as the Registrar may
require.
(3) Any person who, without lawful excuse, fails to comply with any summons or
requisition of the Registrar under this section shall be guilty of an offence and shall
be liable on conviction to a fine not exceeding $5,000 or to imprisonment for a term
not exceeding 12 months or to both.
Penalty for providing false information to the Registrar
45. Any person who makes any statement or furnishes any information to the
Registrar under the provisions of this Act which is false in any material particular or
by reason of the omission of any material particular and which he either knows or
has reason to believe is false, shall be guilty of an offence and shall be liable on
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Composition of offences
46. (1) The Registrar may, in his discretion, compound any offence under this Act
which is prescribed as a compoundable offence by collecting from a person
reasonably suspected of having committed the offence a sum not exceeding one half
of the amount of the maximum fine that is prescribed for the offence, or a sum not
exceeding $5,000, whichever is lower.
(2) The Minister may make regulations to prescribe the offences which may be
compounded.
(3) All sums collected under this section shall be paid to the Authority.
Officers and inspectors deemed to be public servants
47. All officers and inspectors appointed under this Act shall be deemed to be
public servants for the purposes of the Penal Code (Cap. 224).
Destruction of old records
48. The Registrar may destroy or give to the National Archives of Singapore any
document lodged, filed or registered with the Registrar and which has been
microfilmed or converted to electronic form if in his opinion it is no longer necessary
or desirable to retain the document.
Enforcement of duty to make returns
49. (1) If any person is in default in complying with
(a) any provision of this Act or of any other law which requires the lodging or filing in
any manner with the Registrar of any return, account or other document or the
giving of notice to him of any matter; or
(b) any request of the Registrar to amend or complete and resubmit any document
or to submit a fresh document,
and fails to make good the default within 14 days after the service on the person of a
notice requiring it to be done, a District Court or Magistrates Court may, on
application by the Registrar, make an order directing that person or (if that person is
a corporation) any officer of the corporation to make good the default within such
time as is specified in the order.
(2) Any such order may provide that all the costs of and incidental to the
application shall be borne by that person or by any officer of the corporation who is
responsible for the default if that person is a corporation.
(3) Nothing in this section shall limit the operation of any other provision of this Act
or any written law imposing penalties (in respect of any default referred to in this
section) on that person or an officer of a corporation if that person is a corporation.
Offences by limited liability partnerships
50. Where an offence under this Act committed by a limited liability partnership is
proved
(a) to have been committed with the consent or connivance of a partner or manager
of that limited liability partnership; or
(b) to be attributable to any neglect on the part of the partner or manager of that
the partner or manager of that limited liability partnership (as the case may be) as
well as that limited liability partnership shall be guilty of the offence and shall be
Offences by other bodies corporate and partnerships, etc.
51. (1) Where an offence under this Act committed by a body corporate (other
than a limited liability partnership) is proved
(a) to have been committed with the consent or connivance of an officer of that body
corporate; or
(b) to be attributable to any neglect on the part of the officer of that body corporate,
the officer of that body corporate, as well as that body corporate, shall be guilty of
the offence and shall be liable to be proceeded against and punished accordingly.
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(2) Where the affairs of a body corporate are managed by its members, subsection
(1) shall apply in relation to the acts and defaults of a member in connection with his
functions of management as if he were a director of the body corporate.
(3) Where an offence under this Act committed by a partnership (other than a
limited liability partnership) is proved
(a) to have been committed with the consent or connivance of a partner; or
(b) to be attributable to any neglect on the part of the partner,
the partner, as well as the partnership, shall be guilty of the offence and shall be
(4) Where an offence under this Act committed by an unincorporated association
(other than a partnership) is proved
(a) to have been committed with the consent or connivance of an officer of the
unincorporated association or a member of its governing body; or
(b) to be attributable to any neglect on the part of the officer or member,
the officer or member (as the case may be), as well as the unincorporated
association, shall be guilty of the offence and shall be liable to be proceeded against
and punished accordingly.
(5) In this section
"officer"
(a) in relation to a body corporate means any director, member of the committee of
management, chief executive, manager, secretary or other similar officer of the body
corporate and includes any person purporting to act in any such capacity; or
(b) in relation to an unincorporated association (other than a partnership), means
the president, the secretary, or any member of the committee of the unincorporated
association, or any person holding a position analogous to that of president,
secretary or member of a committee and includes any person purporting to act in
any such capacity;
"partner" includes a person purporting to act as a partner.
(6) Regulations may provide for the application of any provision of this section, with
such modifications as the Minister considers appropriate, to any body corporate or
unincorporated association formed or recognised under the law of a territory outside
Singapore.
Authority and its employees not liable to suit
52. (1) The Registrar, any public officer or any member, officer or employee of
the Authority shall not be under any liability in respect of any error or inaccuracy in a
register or in respect of any error or inaccuracy (whether in the copying or
otherwise) in any certificate, certified extract, copy or other document made or
issued under this Act and no court shall entertain any suit or other proceedings or
damages in respect of any such matter.
(2) Notwithstanding anything to the contrary in any written law, the Authority shall
not be under any liability or be liable to be sued in respect of any of the matters
referred to in subsection (1).
Jurisdiction of District Court
53. Notwithstanding any provision to the contrary in the Criminal Procedure Code
(Cap. 68), a District Court shall have jurisdiction to try any offence under this Act
and shall have power to impose the full penalty or punishment in respect of the
offence.
Evidence
54. (1) Subject to subsection (3), a document or certificate issued by the
Registrar in connection with the administration or enforcement of this Act or with an
investigation carried out under this Act shall be admissible as evidence in any
proceedings under this Act and shall be prima facie evidence of the facts stated
therein.
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(2) For the purposes of this section, a document purporting to be a certificate
referred to in subsection (1) on its production by the prosecution shall, until the
contrary is proved, be deemed to be such a certificate.
(3) A certificate referred to in subsection (1) shall not be received in evidence
under that subsection unless the person charged has been given
(a) a copy of the certificate; and
(b) notice of the intention of the prosecution to produce the certificate as evidence in
the proceedings,
not less than 10 clear days before the commencement of the proceedings.
(4) Where a certificate of the Registrar is admitted in evidence under subsection
(1), the person charged may require the Registrar to be called as a witness for the
prosecution and be cross-examined as if he had given evidence of the matters stated
in the certificate.
General penalties
55. Any person guilty of an offence under this Act for which no penalty is expressly
provided shall be liable on conviction to a fine not exceeding $10,000.
Regulations
56. (1) The Minister may make regulations for carrying out the purposes and
provisions of this Act.
(2) Without prejudice to the generality of subsection (1), the Minister may make
regulations for or with respect to all or any of the following matters:
(a) the registration and regulation of foreign limited liability partnerships;
(b) the powers and duties of the Registrar;
(c) the forms for the purposes of this Act, including the form of registers to be kept
and the places at which the registers are to be kept;
(d) the translation of documents and records required for the purposes of this Act,
and the authentication and lodgment of any such translation;
(e) all matters connected with or arising from the restrictions as to the business
name which may be used by a limited liability partnership registered under this Act;
(f) the fees to be charged in respect of anything done under or by virtue of this Act,
and the method of payment of such fees;
(g) the persons or classes of persons who are to be exempted from the payment of
any fee or part thereof;
(h) the penalties for the late lodgment of documents;
(i) prescribing all matters and things which are required or permitted to be
prescribed otherwise than by rules, under or for the purposes of this Act.
(3) The Minister may, in making any regulations, provide that any contravention of,
or failure or neglect to comply with, any provision of the regulations or any directive
issued by the Registrar pursuant to the regulations shall be an offence punishable
with a fine not exceeding $5,000 or with imprisonment for a term not exceeding 12
months or with both and, in the case of a continuing offence, with a further fine not
exceeding $200 for every day or part thereof during which the offence continues
after conviction.
(4) In this section, foreign limited liability partnership means a partnership
formed, registered or incorporated outside Singapore in which the liability of the
partners is limited, and having such other features as may be prescribed by the
Minister.
Rules
57. The Rules Committee constituted under section 80 of the Supreme Court of
Judicature Act (Cap. 322) may make rules
(a) with respect to proceedings and the practice and procedure of the High Court
under this Act;
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(b) with respect to any matter or thing which is by the Fifth Schedule required or
permitted to be prescribed by rules;
(c) without limiting the generality of this section, with respect to High Court fees and
costs and with respect to rules as to meetings ordered by the High Court; and
(d) generally with respect to the winding up of limited liability partnerships.
Criminal liability of partners and managers of limited liability partnerships
under other written laws
58. (1) A culpable officer provision shall apply, with the necessary modifications,
to a limited liability partnership as if the reference in that provision to a director (or a
person purporting to act as a director) were a reference to a partner or manager (or
a person purporting to act as a partner or manager, as the case may be) of the
(2) A culpable officer provision is a provision in any written law to the effect that
where a body corporate, corporation or company is guilty of a particular offence, a
director of the body corporate, corporation or company is also guilty of that offence
in any one or more of the following circumstances:
(a) if the offence is proved to have been committed with his authority;
(b) if the offence is proved to have been committed with his consent or connivance;
(c) if the offence is proved to be attributable to or to have been facilitated by any
neglect on his part;
(d) if the offence is proved to be attributable to any act or default on his part;
(e) if he fails to prove that the offence was committed without his consent or
connivance, and that he had exercised such diligence to prevent the commission of
the offence as he ought to have exercised having regard to the nature of his
functions in that capacity and to all the circumstances.
Service of documents on limited liability partnerships under other written
laws
59. A provision in any written law for the service of notices, orders or documents
on a body corporate, corporation or company shall apply, with the necessary
modifications, to a limited liability partnership as it applies to the body corporate,
corporation or company, and a reference in that provision to the secretary or other
like officer of the body corporate, corporation or company shall be construed as a
reference to the manager of the limited liability partnership.
Consequential and related amendments to other written laws
60. (1) The provisions of the Acts specified in the first column of the Sixth
Schedule are amended in the manner set out in the second column thereof.
(2) The Minister may, by order published in the Gazette, repeal or amend any
written law in force at the date of commencement of this Act which appears to him to
be unnecessary having regard to the provisions of this Act or to be inconsistent with
any provision of this Act.
(3) An order under subsection (2)
(a) may be made at any time within the period of 2 years after the commencement
of this section; and
(b) shall be presented to Parliament as soon as possible after publication in the
Gazette.
Transitional and savings provisions
61. The Minister may make regulations to provide for such transitional, savings and
other consequential provisions as he considers necessary or expedient.
FIRST SCHEDULE
Section 10
DEFAULT PROVISIONS FOR LIMITED LIABILITY PARTNERSHIPS
1. The mutual rights and duties of the partners and the mutual rights and duties of
the limited liability partnership and the partners shall be determined, subject to the
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terms of any limited liability partnership agreement, by the provisions in this
Schedule.
2. All the partners of a limited liability partnership are entitled to share equally in
the capital and profits of the limited liability partnership.
3. The limited liability partnership must indemnify each partner in respect of
payments made and personal liabilities incurred by him
partnership; or
(b) in or about anything necessarily done for the preservation of the business or
4. Every partner may take part in the management of the limited liability
partnership.
5. No partner shall be entitled to remuneration for acting in the business or
management of the limited liability partnership.
6. No person may be introduced as a partner without the consent of all existing
partners.
7. Any matter or issue relating to the limited liability partnership shall be decided
by resolution passed by a majority in number of the partners, and for this purpose,
each partner shall have one vote.
8. Each partner shall render true accounts and full information of all things
affecting the limited liability partnership to any partner or his legal representatives.
9. If a partner, without the consent of the limited liability partnership, carries on
any business of the same nature as and competing with the limited liability
partnership, he must account for and pay over to the limited liability partnership all
profits made by him in that business.
10. Every partner must account to the limited liability partnership for any benefit
derived by him without the consent of the limited liability partnership from any
transaction concerning the limited liability partnership, or from any use by him of the
property, name or any business connection of the limited liability partnership.
11. No majority of the partners can expel any partner unless a power to do so has
been conferred by express agreement between the partners.
SECOND SCHEDULE
Section 20
CONVERSION FROM FIRM TO LIMITED LIABILITY PARTNERSHIP
Interpretation
1. In this Schedule, convert has the same meaning as in section 20 (5).
Eligibility for conversion
2. A firm may apply to convert to a limited liability partnership in accordance with
this Schedule if and only if the partners of the limited liability partnership to which
the firm is to be converted, comprises all the partners of the firm and no one else.
Statements to be lodged
3. A firm may apply to convert to a limited liability partnership by lodging with the
Registrar
(a) a statement by all of its partners in such medium and form as the Registrar may
determine containing the following particulars:
(i) the name and registration number (if applicable) of the firm; and
(ii) the date on which the firm was registered under the Business Registration Act
(Cap. 32) or any written law (if applicable); and
(b) a statement referred to in section 15 (1).
Registration of conversion
4. On receiving the statements referred to in paragraph 3, the Registrar shall
subject to the provisions of this Act, register the statements and issue a notice of
registration in such form as the Registrar may determine stating that the limited
493
liability partnership is, on and from the date specified in the notice, registered under
this Act.
Registrar may refuse to register
5. (1) Nothing in this Schedule shall be construed to require the Registrar to
register any limited liability partnership if he is not satisfied with the particulars or
other information furnished under the provisions of this Act.
(2) The Registrar may, in any particular case, require the statements referred to in
paragraph 3 to be verified in such manner as the Registrar considers fit.
Effect of registration
6. On and from the date of registration specified in the notice of registration issued
under paragraph 4 (referred to in this Schedule as the date of registration)
(a) there shall be a limited liability partnership by the name specified in the notice of
registration registered under this Act, with all the attributes described in Part II of
this Act and subject to the provisions of this Act;
(b) all movable and immovable property vested in the firm, all assets, interests,
rights, privileges, liabilities, obligations relating to the firm and the whole of the
undertaking of the firm shall be transferred to and shall vest in the limited liability
partnership without further assurance, act or deed; and
(c) the firm shall be deemed to be dissolved and if earlier registered under the
Business Registration Act, removed from the register of businesses under that Act.
Registration in relation to property
7. If any property to which paragraph 6 (b) applies is registered with any authority,
the limited liability partnership shall as soon as practicable after the date of
registration, take all necessary steps as required by the relevant authority to notify
the authority of the conversion and of the particulars of the limited liability
partnership in such medium and form as the authority may determine.
Pending proceedings
8. All proceedings by or against the firm which are pending on the date of
registration may be continued, completed and enforced by or against the limited
Continuance of conviction, ruling, order or judgment
9. Any conviction, ruling, order or judgment in favour of or against the firm may be
enforced by or against the limited liability partnership.
Existing agreements
10. Every agreement to which the firm was a party immediately before the date of
registration, whether or not of such nature that the rights and liabilities thereunder
could be assigned, shall have effect as from that day as if
(a) the limited liability partnership were a party to such an agreement instead of the
firm; and
(b) for any reference to the firm, there were substituted in respect of anything to be
done on or after the date of registration a reference to the limited liability
partnership.
Existing contracts, etc.
11. All deeds, contracts, schemes, bonds, agreements, applications, instruments
and arrangements subsisting immediately before the date of registration relating to
the firm or to which the firm is a party, shall continue in force on and after that date
as if they relate to the limited liability partnership and shall be enforceable by or
against the limited liability partnership as if the limited liability partnership were
named therein or were a party thereto instead of the firm.
Continuance of employment
12. Every contract of employment to which paragraph 10 or 11 applies shall
partnership were the employer thereunder instead of the firm.
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Existing appointment, authority or power
13. (1) Every appointment of the firm in any role or capacity which is in force
immediately before the date of registration shall take effect and operate from that
date as if the limited liability partnership were appointed.
(2) Any authority or power conferred on the firm which is in force immediately
before the date of registration shall take effect and operate from that date as if it
were conferred on the limited liability partnership.
Application of paragraphs 6 to 13
14. Paragraphs 6 to 13 shall not apply to any approval, permit or licence issued
under any written law to the firm which is in force immediately before the date of
registration of the limited liability partnership.
Partner liable for liabilities and obligations of firm before conversion
15. (1) Notwithstanding paragraphs 6 to 13, every partner of a firm that has
converted to a limited liability partnership shall continue to be personally liable
(jointly and severally with the limited liability partnership) for the liabilities and
obligations of the firm which were incurred prior to the conversion or which arose
from any contract entered into prior to the conversion.
(2) If any such partner discharges any liability or obligation referred to in sub-
paragraph (1), he shall be entitled (subject to any agreement with the limited
liability partnership to the contrary) to be fully indemnified by the limited liability
partnership in respect of such liability or obligation.
Notice of conversion in invoices and correspondence
16. (1) The limited liability partnership shall ensure that for a period of 12
months commencing 14 days after the date of registration, every invoice or official
correspondence of the limited liability partnership bears the following:
(a) a statement that it was, as from the date of registration, converted from a firm
to a limited liability partnership; and
(b) the name and registration number (if applicable) of the firm from which it was
converted.
(2) Any limited liability partnership which contravenes sub-paragraph (1) shall be
and, in the case of a continuing offence, to a further fine not exceeding $200 for
every day or part thereof during which the offence continues after conviction.
THIRD SCHEDULE
Section 21
CONVERSION FROM PRIVATE COMPANY TO LIMITED LIABILITY
PARTNERSHIP
Interpretation
1. In this Schedule
"company" means a private company within the meaning of the Companies Act (Cap.
50);
"convert" has the same meaning as in section 21(5).
Eligibility for conversion
2. A company may apply to convert to a limited liability partnership in accordance
with this Schedule if and only if
(a) there is no security interest in its assets subsisting or in force at the time of
application; and
(b) the partners of the limited liability partnership to which it converts comprises all
the shareholders of the company and no one else.
Statements to be lodged
3. A company may apply to convert to a limited liability partnership by lodging with
the Registrar
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(a) a statement by all its shareholders in such medium and form as the Registrar
may determine containing the following particulars:
(ii) the date on which the company was incorporated under the Companies Act
(Cap. 50); and
(b) a statement referred to in section 15 (1).
Registration of conversion
4. On receiving the statements referred to in paragraph 3, the Registrar shall
subject to the provisions of this Act, register the statements and issue a notice of
registration in such form as the Registrar may determine stating that the limited
liability partnership is, on and from the date specified in the notice, registered under
this Act.
Registrar may refuse to register
5. (1) Nothing in this Schedule shall be construed to require the Registrar to
register any limited liability partnership if he is not satisfied with the particulars or
other information furnished under the provisions of this Act.
(2) The Registrar may, in any particular case, require the statement referred to in
paragraph 3 to be verified in such manner as the Registrar considers fit.
Effect of registration
6. On and from the date of registration specified in the notice of registration issued
under paragraph 4 (referred to in this Schedule as the date of registration)
(a) there shall be a limited liability partnership by the name specified in the notice of
registration registered under this Act with all the attributes described in Part II of
this Act and subject to the provisions of this Act;
(b) all movable and immovable property vested in the company, all assets, interests,
rights, privileges, liabilities, obligations relating to the company and the whole of the
undertaking of the company shall be transferred to and shall vest in the limited
liability partnership without further assurance, act or deed; and
(c) the company shall be deemed to be dissolved and removed from the register of
companies under the Companies Act (Cap.50).
Registration in relation to property
7. If any property to which paragraph 6 (b) applies is registered with any authority,
the limited liability partnership shall as soon as practicable after the date of
registration, take all necessary steps as required by the relevant authority to notify
the authority of the conversion and of the particulars of the limited liability
partnership in such medium and form as the authority may determine.
Pending proceedings
8. All proceedings by or against the company which are pending on the date of
registration may be continued, completed and enforced by or against the limited
Continuance of conviction, ruling, order or judgment
9. Any conviction, ruling, order or judgment in favour of or against the company
Existing agreements
10. Every agreement to which the company was a party immediately before the
date of registration, whether or not of such nature that the rights and liabilities
thereunder could be assigned, shall have effect as from that day as if
(a) the limited liability partnership were a party to such an agreement instead of the
company; and
(b) for any reference to the company, there were substituted in respect of anything
to be done on or after the date of registration a reference to the limited liability
partnership.
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Existing contracts, etc.
11. All deeds, contracts, schemes, bonds, agreements, applications, instruments
and arrangements subsisting immediately before the date of registration relating to
the company or to which the company is a party shall continue in force on and after
that date as if they relate to the limited liability partnership and shall be enforceable
by or against the limited liability partnership as if the limited liability partnership
were named therein or were a party thereto instead of the company.
Continuance of employment
12. Every contract of employment to which paragraph 10 or 11 applies shall
Existing appointment, authority or power
13. (1) Every appointment of the company in any role or capacity which is in
force immediately before the date of registration shall take effect and operate from
that date as if the limited liability partnership were appointed.
(2) Any authority or power conferred on the company which is in force immediately
before the date of registration shall take effect and operate from that date as if it
were conferred on the limited liability partnership.
Application of paragraphs 6 to 13
14. Paragraphs 6 to 13 shall not apply to any approval, permit or licence issued
under any written law to the company which is in force immediately before the date
of registration of the limited liability partnership.
Notice of conversion in invoices and correspondence
15. (1) The limited liability partnership shall ensure that for a period of 12
months commencing 14 days after the date of registration, every invoice or official
correspondence of the limited liability partnership bears the following:
(a) a statement that it was, as from the date of registration, converted from a
company to a limited liability partnership; and
(b) the name and registration number of the company from which it was converted.
(2) Any limited liability partnership which contravenes sub-paragraph (1) shall be
FOURTH SCHEDULE
Section 29
RECEIVERS AND MANAGERS
Interpretation
1. In this Schedule
"Court" means the High Court;
"public accountant" has the same meaning as in section 2 of the Accountants Act
2004 (Act 4 of 2004).
Disqualification for appointment as receiver
2. (1) The following shall not be qualified to be appointed and shall not act as
receiver of the property of a limited liability partnership:
(a) a corporation;
(b) an undischarged bankrupt;
(c) a mortgagee of any property of the limited liability partnership, or a director,
manager or an employee of the limited liability partnership or of any corporation
which is a mortgagee of the property of the limited liability partnership; and
(d) any person who is neither an approved liquidator nor the Official Receiver.
(2) Nothing in sub-paragraph (1) (a) or (d) shall apply to any corporation
authorised by any written law to act as receiver of the property of a limited liability
partnership.
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Liability of receiver
3. (1) Any receiver or other authorised person entering into possession of any
assets of a limited liability partnership for the purpose of enforcing any charge shall,
notwithstanding any agreement to the contrary, but without prejudice to his rights
against the limited liability partnership or any other person, be liable for debts
incurred by him in the course of the receivership or possession for services rendered,
goods purchased or property hired, leased, used or occupied.
(2) Sub-paragraph (1) shall not be so construed as to constitute the person entitled
to the charge a mortgagee in possession.
(3) A receiver or manager of the property of a limited liability partnership may
apply to the Court for directions in relation to any matter arising in connection with
the performance of his functions.
(4) Where a receiver or manager has been appointed to enforce any charge for the
benefit of holders of debentures of the limited liability partnership, any such
debenture holder may apply to the Court for directions in relation to any matter
arising in connection with the performance of the functions of the receiver or
manager.
Power of Court to fix remuneration of receivers or managers
4. (1) The Court may, on application by the liquidator of a limited liability
partnership, by order fix the amount to be paid by way of remuneration to any
person who, under the powers contained in any instrument, has been appointed as
receiver or manager of the property of the limited liability partnership.
(2) The power of the Court shall, where no previous order has been made with
respect thereto
(a) extend to fixing the remuneration for any period before the making of the order
or the application therefor;
(b) be exercisable notwithstanding that the receiver or manager has died or ceased
to act before the making of the order or the application therefor; and
(c) where the receiver or manager has been paid or has retained for his
remuneration for any period before the making of the order any amount in excess of
that fixed for that period, extend to requiring him or his personal representatives to
account for the excess or such part thereof as may be specified in the order.
(3) The power conferred by sub-paragraph (2) (c) shall not be exercised as
respects any period before the making of the application for the order unless in the
opinion of the Court there are special circumstances making it proper for the power
to be so exercised.
(4) The Court may from time to time, on an application made either by the
liquidator or by the receiver or manager, vary or amend an order made under this
paragraph.
Appointment of liquidator as receiver
5. Where an application is made to the Court to appoint a receiver on behalf of the
debenture holders or other creditors of a limited liability partnership which is being
wound up by the Court, the liquidator may be so appointed.
Notification of appointment of receiver
6. (1) If any person obtains an order for the appointment of a receiver or
manager of the property of a limited liability partnership or appoints such a receiver
or manager under any powers contained in any instrument, he shall within 7 days
after he has obtained the order or made the appointment lodge notice of the fact
with the Registrar.
(2) Where any person appointed as receiver or manager of the property of a limited
liability partnership under the powers contained in any instrument ceases to act as
such, he shall within 7 days thereafter lodge with the Registrar notice to that effect.
498
(3) Every person who fails to comply with the requirements of this paragraph shall
be guilty of an offence and shall be liable on conviction to a fine not exceeding
$1,000 and, in the case of a continuing offence, to a further fine not exceeding $200
for every day or part thereof during which the offence continues after conviction.
Statement that receiver appointed
7. (1) Where a receiver or manager of the property of a limited liability
partnership has been appointed, every invoice, order for goods or business letter
issued by or on behalf of the limited liability partnership or the receiver or manager
or the liquidator of the limited liability partnership, being a document on or in which
the name of the limited liability partnership appears, shall contain a statement
immediately following the name of the limited liability partnership that a receiver or
manager has been appointed.
(2) If sub-paragraph (1) is contravened, the limited liability partnership and every
officer and every liquidator of the limited liability partnership and every receiver or
manager who knowingly and wilfully authorises or permits the contravention shall be
guilty of an offence and shall be liable on conviction to a fine not exceeding $1,000.
Provisions as to information where receiver or manager appointed
8. (1) Where a receiver or manager of the property of a limited liability
partnership (referred to in this paragraph and in paragraph 9 as the receiver) is
appointed
(a) the receiver shall immediately send notice to the limited liability partnership of
his appointment;
(b) there shall, within 14 days after receipt of the notice, or such longer period as
may be allowed by the Court or by the receiver, be made out and submitted to the
receiver in accordance with paragraph 9 a statement in the prescribed form as to the
affairs of the limited liability partnership; and
(c) the receiver shall within one month after receipt of the statement
(i) lodge with the Registrar, a copy of the statement and of any comments he sees fit
to make thereon;
(ii) send to the limited liability partnership, a copy of any such comments referred to
in sub-paragraph (i), or if he does not see fit to make any comment, a notice to that
effect; and
(iii) where the receiver is appointed by or on behalf of the holders of debentures of
the limited liability partnership send to the trustees, if any, for those holders, a copy
of the statement and his comments thereon.
(2) Sub-paragraph (1) shall not apply in relation to the appointment of a receiver
or manager to act with an existing receiver or manager or in place of a receiver or
manager dying or ceasing to act, except that, where that sub-paragraph applies to a
receiver or manager who dies or ceases to act before that sub-paragraph has been
fully complied with, the references in sub-paragraph (1) (b) and (c) to the receiver
shall (subject to sub-paragraph (3)) include references to his successor and to any
continuing receiver or manager.
(3) Where the limited liability partnership is being wound up, this paragraph and
paragraph 9 shall apply notwithstanding that the receiver or manager and the
liquidator are the same person, but with any necessary modifications arising from
that fact.
(4) If any person fails to comply with any of the requirements of this paragraph, he
Special provisions as to statement submitted to receiver
9. (1) The statement as to the affairs of a limited liability partnership required by
paragraph 8 to be submitted to the receiver shall show as at the date of the
499
receivers appointment the particulars of the limited liability partnerships assets,
debts and liabilities, the names and addresses of its creditors, the securities held by
them respectively, the dates when the securities were respectively given and such
further or other information as may be prescribed.
(2) The statement shall be submitted by, and be verified by affidavit of, one or
more of the persons who were at the date of the receivers appointment the
managers of the limited liability partnership, or by such of the persons, hereafter in
this sub-paragraph mentioned, as the receiver may require to submit and verify the
statement, that is to say
(a) persons who are or have been officers;
(b) persons who have taken part in the formation of the limited liability partnership
at any time within one year before the date of the receivers appointment;
(c) persons who are in the employment of the limited liability partnership, or have
been in the employment of the limited liability partnership within that year, and are
in the opinion of the receiver capable of giving the information required;
(d) persons who are or have been, within that year, officers of, or in the employment
of, a corporation which is, or within that year was, an officer of the limited liability
partnership to which the statement relates.
(3) Any person making the statement and affidavit shall be allowed and shall be
paid by the receiver (or his successor) out of his receipts, such costs and expenses
incurred in and about the preparation and making of the statement and affidavit as
the receiver (or his successor) may consider reasonable, subject to an appeal to the
Court.
(4) If any person fails to comply with the requirements of this paragraph, he shall
(5) For the purposes of this paragraph
(a) officer, in relation to a corporation, has the same meaning as in section 4 (1) of
the Companies Act (Cap. 50); and
(b) references to the receivers successor shall include a continuing receiver or
manager.
Lodging of accounts of receivers and managers
10. (1) Every receiver or manager of the property of a limited liability partnership
shall
(a) within one month after the expiration of the period of 6 months from the date of
his appointment and of every subsequent period of 6 months and within one month
after he ceases to act as receiver or manager, lodge with the Registrar a detailed
account in the prescribed form showing
(i) his receipts and his payments during each period of 6 months, or, where he
ceases to act as receiver or manager, during the period from the end of the period to
which the last preceding account related or from the date of his appointment, as the
case may be, up to the date of his so ceasing;
(ii) the aggregate amount of those receipts and payments during all preceding
periods since his appointment; and
(iii) where he has been appointed pursuant to the powers contained in any
instrument, the amount owing under that instrument at the time of his appointment,
in the case of the first account, and at the expiration of every 6 months after his
appointment and, where he has ceased to act as receiver or manager at the date of
his so ceasing, and his estimate of the total value of all assets of the limited liability
partnership which are subject to that instrument; and
(b) before lodging such account, verify by affidavit all accounts and statements
referred to therein.
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(2) The Registrar may, of his own motion or on the application of the limited
liability partnership or a creditor, cause the accounts to be audited by a public
accountant appointed by the Registrar and for the purpose of the audit the receiver
or manager shall furnish the auditor with such vouchers and information as he
requires and the auditor may at any time require the production of and inspect any
books of account kept by the receiver or manager or any document or other records
relating thereto.
(3) Where the Registrar causes the accounts to be audited upon the request of the
limited liability partnership or a creditor, he may require the applicant to give
security for the payment of the cost of the audit.
(4) The costs of an audit under sub-paragraph (2) shall be fixed by the Registrar
and be paid by the receiver unless the Registrar otherwise determines.
(5) Every receiver or manager who contravenes this paragraph shall be guilty of an
offence and shall be liable on conviction to a fine not exceeding $1,000 and, in the
case of a continuing offence, to a further fine not exceeding $200 for every day or
part thereof during which the offence continues after conviction.
Payments of certain debts out of assets subject to floating charge in priority
to claims under charge
11. (1) Where a receiver is appointed on behalf of the holders of any debentures
of a limited liability partnership secured by a floating charge or possession is taken
by or on behalf of debenture holders of any property comprised in or subject to a
floating charge, then, if the limited liability partnership is not at the time in the
course of being wound up, debts which in every winding up are preferential debts
and are due by way of wages, salary, retrenchment benefit or ex gratia payment,
vacation leave or superannuation or provident fund payments and any amount which
in a winding up is payable in pursuance of paragraph 76 (6) or (8) of the Fifth
Schedule shall be paid out of any assets coming to the hands of the receiver or other
person taking possession in priority to any claim for principal or interest in respect of
the debentures and shall be paid in the same order of priority as is prescribed by
that paragraph in respect of those debts and amounts.
(2) In sub-paragraph (1), floating charge means a charge which, as created, was
a floating charge.
(3) For the purposes of sub-paragraph (1), the references in paragraph 76 (1) (b),
(c), (d) and (e) of the Fifth Schedule to the commencement of the winding up shall
be read as a reference to the date of the appointment of the receiver or of
possession being taken as aforesaid, as the case requires.
(4) Any payments made under this paragraph shall be recouped as far as may be
out of the assets of the limited liabil ity partnership available for payment of general
creditors.
Enforcement of duty of receiver, etc., to make returns
12. (1) If any receiver or manager of the property of a limited liability
partnership who is in default in making or lodging any return, account or other
document or in giving any notice required by law fails to make good the default
within 14 days after the service on him by any partner or creditor of the limited
liability partnership or trustee for debenture holders of a notice requiring him to do
so, the Court may, on an application made for the purpose by the person who has
given the notice, make an order directing him to make good the default within such
time as is specified in the order.
(2) If it appears that any receiver or manager of the property of a limited liability
partnership has misapplied or retained or become liable or accountable for any
money or property of the limited liability partnership or been guilty of any
misfeasance or breach of trust or duty in relation to the limited liability partnership,
the Court may on the application of any creditor or partner or of the liquidator
501
examine into the conduct of such receiver or manager and compel him to repay or
restore the money or property or any part thereof with interest at such rate as the
Court thinks just or to contribute such sum to the assets of the limited liability
partnership by way of compensation in respect of the misapplication, retainer,
misfeasance or breach of trust or duty as the Court thinks just.
(3) This paragraph shall have effect notwithstanding that the offence is one for
which the offender is criminally liable.
FIFTH SCHEDULE
Section 30
WINDING UP
PART I
INTERPRETATION
1. In this Schedule
"approved liquidator" means
(a) a person who falls within a class of persons declared as approved liquidators
under section 9 (1) of the Companies Act (Cap. 50); or
(b) a person who has been approved under section 9 (2) of the Companies Act as a
liquidator and whose approval has not been revoked;
"Court" means the High Court;
"public accountant" has the same meaning as in section 2 of the Accountants Act
2004 (Act 4 of 2004).
PART II
WINDING UP BY COURT
DI VI SI ON 1 General
Application for winding up by Court
2. (1) A limited liability partnership, whether or not it is being wound up
voluntarily, may be wound up under an order of the Court on the petition
(a) of the limited liability partnership;
(b) of any creditor, including a contingent or prospective creditor, of the limited
liability partnership;
(c) of a partner or the Official Assignee or trustee of the estate of a bankrupt
partner;
(d) of the liquidator; or
(e) of the Minister on the ground specified in paragraph 3 (1) (b), (f) or (g),
or of any 2 or more of those parties.
(2) Notwithstanding anything in sub-paragraph (1)
(a) the Court shall not hear the petition if presented by a contingent or prospective
creditor until such security for costs has been given as the Court thinks reasonable
and a prima facie case for winding up has been establ ished to the satisfaction of the
Court; and
(b) the Court shall not, where a limited liability partnership is being wound up
voluntarily, make a winding up order unless it is satisfied that the voluntary winding
up cannot be continued with due regard to the interests of the creditors or partners.
Circumstances in which limited liability partnership may be wound up by
Court
3. (1) The Court may order the winding up if
(a) the partners have resolved that the limited liability partnership be wound up by
the Court;
(b) the limited liability partnership carries on business with less than 2 partners for
more than 2 years;
(c) the limited liability partnership is unable to pay its debts;
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(d) the Court is of the opinion that it is not reasonably practicable to carry on the
business of the limited liability partnership in conformity with the limited liability
partnership agreement;
(e) the Court is of the opinion that it is just and equitable that the limited liability
partnership be wound up;
(f) the limited liability partnership is being used for an unlawful purpose or for
purposes prejudicial to public peace, welfare or good order in Singapore or against
national security or interest; or
(g) the limited liability partnership is convicted of an offence under section 23 (4).
(2) For the purposes of sub-paragraph (1) (c), a limited liability partnership shall be
deemed to be unable to pay its debts if
(a) a creditor by assignment or otherwise to whom the limited liability partnership is
indebted in a sum exceeding $10,000 then due has served on the limited liability
partnership by leaving at the registered office a demand under his hand or under the
hand of his agent thereunto lawfully authorised requiring the limited liability
partnership to pay the sum so due, and the limited liability partnership has for 3
weeks thereafter neglected to pay the sum or to secure or compound for it to the
reasonable satisfaction of the creditor;
(b) execution or other process issued on a judgment, decree or order of any court in
favour of a creditor of the limited liability partnership is returned unsatisfied in whole
or in part;
(c) it is proved to the satisfaction of the Court that the limited liability partnership is
unable to pay its debts; and in determining whether a limited liability partnership is
unable to pay its debts the Court shall take into account the contingent and
prospective liabilities of the limited liability partnership; or
(d) the limited liability partnership fails to lodge a declaration of solvency or
insolvency as required under section 24, until such time as a declaration referred to
in section 24 (1) ( a) is lodged.
(3) For the purpose of sub-paragraph (1) (f), a certificate issued by the Minister
charged with the responsibility for internal security stating that he is satisfied that
the limited liability partnership referred to in the certificate is being used for
purposes against national security or interest shall be conclusive evidence that the
limited liability partnership is being used for such purposes.
(4) Upon the presentation of a petition by the Minister under paragraph 2 (1) (e)
for the winding up of a limited liability partnership under sub-paragraph (1) (f) on
the ground that it is being used for purposes against national security or interest, the
Court, upon the application of the Minister, may, pending the hearing of the petition
or the making of a winding up order, make
(a) an order restraining the limited liability partnership or its partners, managers,
officers or employees from doing any act or from carrying out any activity as may be
specified in the order; and
(b) such other interim orders as the Court thinks fit.
(5) Any person who fails to comply with an order made by the Court under sub-
paragraph (4) shall be guilty of an offence and shall be liable on conviction to a fine
not exceeding $10,000 or to imprisonment for a term not exceeding 2 years or to
both.
Commencement of winding up
4. (1) Where before the presentation of the petition a resolution has been passed
by the partners for the voluntary winding up of the limited liability partnership, the
winding up of the limited liability partnership shall be deemed to have commenced at
the time of the passing of the resolution, and, unless the Court on proof of fraud or
mistake thinks fit otherwise to direct, all proceedings taken in the voluntary winding
up shall be deemed to have been validly taken.
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(2) In any other case the winding up shall be deemed to have commenced at the
time of the presentation of the petition for the winding up.
Payment of preliminary costs, etc.
5. (1) The persons, other than the limited liability partnership itself or the
liquidator thereof, on whose petition any winding up order is made, shall at their own
cost prosecute all proceedings in the winding up until a liquidator has been appointed
under this Schedule.
(2) The liquidator shall, unless the Court orders otherwise, reimburse the petitioner
out of the assets of the limited liability partnership the taxed costs incurred by the
petitioner in any such proceedings.
(3) Where the limited liability partnership has no assets or has insufficient assets,
and in the opinion of the Minister any fraud has been committed by any person in the
formation of the limited liability partnership or by any officer of the limited liability
partnership in relation to the limited liability partnership since the registration
thereof, the taxed costs or so much of them as is not so reimbursed may, with the
approval in writing of the Minister, to an extent specified by the Minister but not in
any case exceeding $3,000, be reimbursed to the petitioner out of moneys provided
by Parliament for the purpose.
(4) Where any winding up order is made upon the petition of the limited liability
partnership or the liquidator thereof, the costs incurred shall, subject to any order of
the Court, be paid out of assets of the limited liability partnership in like manner as if
they were the costs of any other petitioner.
Powers of Court on hearing petition
6. (1) On hearing a winding up petition, the Court may dismiss it with or without
costs or adjourn the hearing conditionally or unconditionally or make any interim or
other order that it thinks fit, but the Court shall not refuse to make a winding up
order on the ground only that the assets of the limited liability partnership have been
mortgaged to an amount equal to or in excess of those assets or that the limited
liability partnership has no assets or in the case of a petition by a partner that there
will be no assets available for distribution amongst the partners.
(2) The Court may on the petition coming on for hearing or at any time on the
application of the petitioner, the limited liability partnership, or any person who has
given notice that he intends to appear on the hearing of the petition
(a) direct that any notices be given or any steps taken before or after the hearing of
the petition;
(b) dispense with any notices being given or steps being taken which are required by
this Act, or by the rules made thereunder, or by any prior order of the Court;
(c) direct that oral evidence be taken on the petition or any matter relating thereto;
(d) direct a speedy hearing or trial of the petition or any issue or matter;
(e) allow the petition to be amended or withdrawn; and
(f) give such directions as to the proceedings as the Court thinks fit.
Power to stay or restrain proceedings against limited liability partnership
7. At any time after the presentation of a winding up petition and before a winding
up order has been made, the limited liability partnership or any creditor or partner
may, where any action or proceeding against the limited liability partnership is
pending, apply to the Court to stay or restrain further proceedings in the action or
proceeding, and the Court may stay or restrain the proceedings accordingly on such
terms as it thinks fit.
Avoidance of dispositions of property and certain attachments, etc., and
petition to be lis pendens etc.
8. (1) Any disposition of the property of the limited liability partnership, and any
assignment of a partners interest or right to distributions from the limited liability
partnership, or alteration in the status of the partners of the limited liability
504
partnership made after the commencement of the winding up by the Court shall
(unless the Court otherwise orders) be void.
(2) Any attachment, sequestration, distress or execution put in force against the
estate or effects of the limited liability partnership after the commencement of the
winding up by the Court shall be void.
(3) Any petition for winding up a limited liability partnership shall constitute a lis
pendens within the meaning of any law relating to the effect of a lis pendens upon
purchasers or mortgagees.
Winding up order
9. (1) Within 7 days after the making of a winding up order, the petitioner shall
lodge with the Registrar notice of
(a) the order and its date; and
(b) the name and address of the liquidator.
(2) On the passing and entering of the winding up order, the petitioner shall within
7 days
(a) lodge an office copy of the order with the Official Receiver and a copy of the
order with the Registrar;
(b) cause a copy to be served upon any manager of the limited liability partnership
or upon such other person or in such manner as the Court directs; and
(c) deliver a copy to the liquidator with a statement that the requirements of this
sub-paragraph have been complied with.
(3) When a winding up order has been made or a provisional liquidator has been
appointed, no action or proceeding shall be proceeded with or commenced against
the limited liability partnership except
(a) by leave of the Court; and
(b) in accordance with such terms as the Court imposes.
(4) Subject to paragraph 70, an order for winding up a limited liability partnership
shall operate in favour of all the creditors and partners of the limited liability
partnership as if made on the joint petition of a creditor and of a partner.
(5) Any petitioner which contravenes sub-paragraph (1) or (2) shall be guilty of an
offence and shall be liable on conviction to a fine not exceeding $1,000 and, in the
case of a continuing offence, to a further fine not exceeding $200 for every day or
part thereof during which the offence continues after conviction.
Divi si on 2 Liquidators
Disqualification of liquidators
10. (1) Subject to this paragraph, a person shall not, except with the leave of the
Court, consent to be appointed, and shall not act as liquidator of a limited liability
partnership
(a) if he is not an approved liquidator;
(b) if he is indebted to the limited liability partnership in an amount exceeding
$2,500;
(c) if he is
(i) an officer of the limited liability partnership;
(ii) a partner, employer or employee of an officer of the limited liability partnership;
or
(iii) a partner or employee of an employee of an officer of the limited liability
partnership;
(d) if he is an undischarged bankrupt;
(e) if he has assigned his estate for the benefit of his creditors or has made an
arrangement with his creditors pursuant to any law relating to bankruptcy; or
(f) if he has been convicted of an offence involving fraud or dishonesty punishable on
conviction by imprisonment for 3 months or more.
(2) Sub-paragraph (1) (a) and (c) shall not apply
505
(a) to a partners voluntary winding up; or
(b) to a creditors voluntary winding up, if by a resolution carried by a majority of the
creditors in number and value present in person or by proxy and voting at a meeting
of which 7 days notice has been given to every creditor stating the object of the
meeting, it is determined that that sub-paragraph shall not so apply.
(3) A person shall not be appointed as liquidator of a limited liability partnership
unless he has prior to such appointment consented in writing to act as such
liquidator.
(4) Any person who contravenes sub-paragraph (1) shall be guilty of an offence
and shall be liable on conviction to a fine not exceeding $2,000.
Appointment, style, etc., of liquidators
11. The following provisions with respect to liquidators shall have effect on a
winding up order being made:
(a) if an approved liquidator, other than the Official Receiver, is not appointed to be
the liquidator of the limited liability partnership, the Official Receiver shall by virtue
of his office become the provisional liquidator and shall continue to act as such until
he or another person becomes liquidator and is capable of acting as such;
(b) if there is no liquidator appointed, the Official Receiver shall summon separate
meetings of the creditors and partners of the limited liability partnership for the
purpose of determining whether or not an application is to be made to the Court for
appointing a liquidator in the place of the Official Receiver;
(c) the Court may make any appoint ment and order required to give effect to any
such determination, and, if there is a difference between the determinations of the
meetings of the creditors and partners in respect of the matter aforesaid, the Court
shall decide the difference and make such order thereon as the Court may think fit;
(d) in a case where a liquidator is not appointed by the Court, the Official Receiver
shall be the liquidator of the limited liability partnership;
(e) in a case where a winding up order is made under paragraph 3 (1) (f) on the
ground that the limited liability partnership is being used for purposes against
national security or interest, the Official Receiver shall be the liquidator of the limited
(f) the Official Receiver shall by virtue of his office be the liquidator during any
vacancy;
(g) any vacancy in the office of a liquidator appointed by the Court may be filled by
the Court;
(h) a liquidator shall be described, where a person other than the Official Receiver is
liquidator, by the style of the liquidator, and, where the Official Receiver is
liquidator, by the style of the Official Receiver and liquidator, of the particular
limited liability partnership in respect of which he is appointed, and not by his
individual name.
Provisions where person other than Official Receiver is appointed liquidator
12. Where in the winding up of a limited liability partnership by the Court, a person
other than the Official Receiver, is appointed liquidator, that person
(a) shall not be capable of acting as liquidator until he has notified his appointment
to the Registrar and given security in the prescribed manner to the satisfaction of the
Official Receiver; and
(b) shall give the Official Receiver such information and such access to and fac ilities
for inspecting the books and documents of the limited liability partnership, and
generally such aid as may be required for enabling that officer to perform his duties
under this Act.
Control of unofficial liquidators by Official Receiver
13. (1) Where in the winding up of a limited liability partnership by the Court, a
person, other than the Official Receiver, is the liquidator the Official Receiver shall
506
take cognizance of his conduct and if the liquidator does not faithfully perform his
duties and duly observe all the requirements imposed on him by any written law or
otherwise with respect to the performance of his duties, or if any complaint is made
to the Official Receiver by any creditor or partner in regard thereto, the Official
Receiver shall inquire into the matter, and take such action thereon as he may think
expedient.
(2) The Official Receiver may at any time require any such liquidator of a limited
liability partnership which is being wound up by the Court to answer any inquiry in
relation to any winding up in which he is engaged, and may, if the Official Receiver
thinks fit, apply to the Court to examine him or any other person on oath concerning
the winding up.
(3) The Official Receiver may also direct a local investigation to be made of the
books and vouchers of such liquidator.
Control of Official Receiver by Minister
14. The Minister shall take cognizance of the conduct of the Official Receiver and of
all Assistant Official Receivers who are concerned in the liquidation of limited liability
partnerships, and if any such person does not faithfully perform his duties and duly
observe all the requirements imposed on him by any written law or otherwise with
respect to the performance of his duties, or if any complaint is made to the Minister
by any creditor or partner in regard thereto, the Minister shall inquire into the
matter, and take such action thereon as he may think expedient, and may direct a
local investigation to be made of the books and vouchers of such person.
Provisional liquidator
15. The Court may appoint the Official Receiver or an approved liquidator
provisionally at any time after the presentation of a winding up petition and before
the making of a winding up order and the provisional liquidator shall have and may
exercise all the functions and powers of a liquidator, subject to such limitations and
restrictions as may be prescribed by the Rules or as the Court may specify in the
order appointing him.
General provisions as to liquidators
16. (1) A liquidator appointed by the Court may resign or on cause shown be
removed by the Court.
(2) A provisional liquidator, other than the Official Receiver, shall be entitled to
receive such salary or remuneration by way of percentage or otherwise as is
determined by the Court.
(3) A liquidator, other than the Official Receiver, shall be entitled to receive such
salary or remuneration by way of percentage or otherwise as is determined
(a) by agreement between the liquidator and the committee of inspection, if any;
(b) failing such agreement, or where there is no committee of inspection, by a
resolution passed at a meeting of creditors by a majority of not less than 75% in
value and 50% in number of the creditors present in person or by proxy and voting
at the meeting and whose debts have been admitted for the purpose of voting, which
meeting shall be convened by the liquidator by a notice to each creditor to which
notice shall be attached a statement of all receipts and expenditure by the liquidator
and the amount of remuneration sought by him; or
(c) failing a determination in a manner referred to in sub-paragraph (a) or (b), by
the Court.
(4) Where the salary or remuneration of a liquidator is determined in the manner
specified in sub-paragraph (3) (a), the Court may, on the application of any partner
confirm or vary the determination.
(5) Where the salary or remuneration of a liquidator is determined in the manner
specified in sub-paragraph (3) (b), the Court may, on the application of the liquidator
or the partner referred to in sub-paragraph (4), confirm or vary the determination.
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(6) Subject to any order of the Court, the Official Receiver when acting as a
liquidator or provisional liquidator of a limited liability partnership shall be entitled to
receive such salary or remuneration by way of percentage or otherwise as is
prescribed.
(7) If more than one liquidator is appointed by the Court, the Court shall declare
whether anything by this Act required or authorised to be done by the liquidator is to
be done by all or any one or more of the persons appointed.
(8) Subject to the provisions of this Act, the acts of a liquidator shall be valid
notwithstanding any defects that may afterwards be discovered in his appointment
or qualification.
Custody and vesting of limited liability partnerships property
17. (1) Where a winding up order has been made or a provisional liquidator has
been appointed, the liquidator or provisional liquidator shall take into his custody or
under his control all the property and things in action to which the limited liability
partnership is or appears to be entitled.
(2) The Court may, on the application of the liquidator, by order direct that all or
any part of the property of whatever description belonging to the limited liability
partnership or held by trustees on its behalf shall vest in the liquidator and
thereupon the property to which the order relates shall vest accordingly and the
liquidator may, after giving such indemnity, if any, as the Court directs, bring or
defend any action or other legal proceeding which relates to that property or which it
is necessary to bring or defend for the purpose of effectually winding up the limited
liability partnership and recovering its property.
(3) Where an order is made under this paragraph, every liquidator of a limited
liability partnership in relation to which the order is made shall lodge within 7 days of
the making of the order
(a) a copy of the order with the Registrar; and
(b) where the order relates to land, an office copy of the order with the appropriate
authority concerned with the registration or recording of dealings in that land,
and any liquidator who contravenes this paragraph shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding $2,000 and, in the case of a
continuing offence, to a further fine not exceeding $200 for every day or part thereof
(4) No vesting order referred to in this paragraph shall have any effect or operation
in transferring or otherwise vesting land until an appropriate entry or memorandum
thereof is made by or with the appropriate authority.
Statement of limited liability partnerships affairs to be submitted to Official
Receiver
18. (1) There shall be made out and verified in the prescribed form and manner
and submitted to the Official Receiver or the liquidator, as the case requires, a
statement as to the affairs of the limited liability partnership as at the date of the
winding up order showing
(a) the particulars of its assets, debts and liabilities;
(b) the names and addresses of its creditors;
(c) the securities held by them respectively;
(d) the dates when the securities were respectively given; and
(e) such further information as is prescribed or as the Official Receiver or the
liquidator requires.
(2) The statement shall be submitted by one or more of the persons who are, at
the date of the winding up order, managers of the limited liability partnership, or by
such of the persons hereinafter mentioned as the Official Receiver or the liquidator,
subject to the direction of the Court, requires, that is to say, persons
(a) who are or have been partners or officers of the limited liability partnership;
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(b) who have taken part in the formation of the limited liability partnership at any
time within one year before the date of the winding up order; or
(c) who are or have been within that period officers of or in the employment of a
corporation which is, or within that period was, an officer of the limited liability
partnership to which the statement relates.
(3) The statement shall be submitted within 14 days after the date of the winding
up order or within such extended time as the Official Receiver or the liquidator or the
Court for special reasons specifies, and the Official Receiver or the liquidator shall
within 7 days after its receipt cause a copy of the statement to be filed with the
Court and lodged with the Registrar and, where the Official Receiver is not the
liquidator, shall cause a copy to be lodged with the Official Receiver.
(4) Any person making or concurring in making the statement required by this
paragraph may, subject to the rules, be allowed, and be paid, out of the assets of
the limited liability partners hip, such costs and expenses incurred in and about the
preparation and making of the statement as the Official Receiver or the liquidator
considers reasonable subject to an appeal to the Court.
(5) Any person who, without reasonable excuse, contravenes this paragraph shall
$5,000 or to imprisonment for a term not exceeding 12 months or to both, and, in
the case of a continuing offence, to a further fine not exceeding $200 for every day
or part thereof during which the offence continues after conviction.
(6) In this paragraph, officer, in relation to a corporation, has the same meaning
as in section 4(1) of the Companies Act (Cap. 50).
Report by liquidator
19. (1) The liquidator shall as soon as practicable after receipt of the statement
of affairs submit a preliminary report to the Court or if the liquidator is not the
Official Receiver, to the Official Receiver
(a) as to the amount of capital paid up and the estimated amount of assets and
liabilities;
(b) if the limited liability partnership has failed, as to the causes of the failure; and
(c) whether, in his opinion, further inquiry is desirable as to any matter relating to
the formation or failure of the limited liability partnership or the conduct of the
business thereof.
(2) The liquidator may also, if he thinks fit, make further reports to the Court or if
the liquidator is not the Official Receiver, to the Official Receiver stating the manner
in which the limited liability partnership was formed and whether in his opinion any
fraud has been committed or any material fact has been concealed by any person in
its formation or by any officer in relation to the limited liability partnership since its
formation, and whether any officer of the limited liability partnership has
contravened any of the provisions of this Act, and specifying any other matter which
in his opinion it is desirable to bring to the notice of the Court.
Powers of liquidator
20. (1) The liquidator may with the authority either of the Court or of the
committee of inspection
(a) carry on the business of the limited liability partnership so far as is necessary for
the beneficial winding up thereof, but the authority shall not be necessary to so carry
on the business during the 4 weeks next after the date of the winding up order;
(b) subject to paragraph 76 pay any class of creditors in full;
(c) make any compromise or arrangement with creditors or persons claiming to be
creditors or having or alleging themselves to have any claim present or future,
certain or contingent, ascertained or sounding only in damages against the limited
liability partnership, or whereby the limited liability partnership may be rendered
liable;
509
(d) compromise any calls and liabilities to calls, debts and liabilities capable of
resulting in debts and any claims present or future, certain or contingent,
ascertained or sounding only in damages subsisting, or supposed to subsist, between
the limited liability partnership and a partner or other debtor or person apprehending
liability to the limited liability partnership, and all questions in any way relating to or
affecting the assets or the winding up of the limited liability partnership, on such
terms as are agreed, and take any security for the discharge of any such call, debt,
liability or claim, and give a complete discharge in respect thereof; and
(e) appoint a solicitor to assist him in his duties.
(2) The liquidator may
(a) bring or defend any action or other legal proceeding in the name and on behalf of
the limited liability partnership;
(b) compromise any debt due to the limited liability partnership, other than calls and
liabilities for calls and other than a debt where the amount claimed by the limited
liability partnership to be due to it exceeds $1,500;
(c) sell the immovable and movable property and things in action of the limited
liability partnership by public auction, public tender or private contract with power to
transfer the whole thereof to any person or limited liability partnership or to sell the
same in parcels;
(d) do all acts and execute in the name and on behalf of the limited liability
partnership all deeds, receipts and other documents and for that purpose use when
necessary the limited liability partnerships seal;
(e) prove, rank and claim in the bankruptcy of any partner or debtor for any balance
against his estate, and receive dividends in the bankruptcy in respect of that balance
as a separate debt due from the bankrupt, and rateably with the other separate
creditors;
(f) draw, accept, make and indorse any bill of exchange or promissory note in the
name and on behalf of the limited liability partnership with the same effect with
respect to the liability of the limited liability partnership as if the bill or note had
been drawn, accepted, made or indorsed by or on behalf of the limited liability
partnership in the course of its business;
(g) raise on the security of the assets of the limited liability partnership any money
required;
(h) take out letters of administration of the estate of any deceased partner or debtor,
and do any other act necessary for obtaining payment of any money due from a
partner or debtor or his estate which cannot be conveniently done in the name of the
limited liability partnership, and in all such cases the money due shall for the
purposes of enabling the liquidator to take out the letters of administration or
recover the money be deemed due to the liquidator himself;
(i) appoint an agent to do any business which the liquidator is unable to do himself;
and
(j) do all such other things as are necessary for winding up the affairs of the limited
liability partnership and distributing its assets.
(3) The exercise by the liquidator of the powers conferred by this paragraph shall
be subject to the control of the Court, and any creditor or partner may apply to the
Court with respect to any exercise or proposed exercise of any of those powers.
Exercise and control of liquidators powers
21. (1) Subject to this Schedule, the liquidator shall in the administration of the
assets of the limited liability partnership and in the distribution thereof among its
creditors have regard to any directions given by resolution of the creditors or
partners at any general meeting or by the committee of inspection, and any
directions so given by the creditors or partners shall, in case of conflict, override any
directions given by the committee of inspection.
510
(2) The liquidator may summon general meetings of the creditors or partners for
the purpose of ascertaining their wishes, and he shall summon meetings at such
times as the creditors or partners by resolution direct or whenever requested in
writing to do so by not less than 10% in value of the creditors or 10% of the total
number of partners.
(3) The liquidator may apply to the Court for directions in relation to any particular
matter arising under the winding up.
(4) Subject to this Schedule, the liquidator shall use his own discretion in the
management of the affairs and property of the limited liability partnership and the
distribution of its assets.
Payment by liquidator into bank
22. (1) Every liquidator shall, in the manner and at the times prescribed by the
rules, pay the money received by him into such bank account as is prescribed by
those rules or as is specified by the Court.
(2) If any liquidator retains for more than 10 days a sum exceeding $1,000, or such
other amount as the Court in any particular case authorises him to retain, then,
unless he explains the retention to the satisfaction of the Court, he shall pay interest
on the amount so retained in excess, computed from the expiration of the
abovementioned 10 days, until he has complied with sub-paragraph (1) at the rate
of 20% per annum, and shall be liable
(a) to disallowance of all or such part of his remuneration as the Court thinks just;
(b) to be removed from his office by the Court; and
(c) to pay any expenses occasioned by reason of his default.
(3) Any liquidator who pays any sums received by him as liquidator into any bank
or account other than the bank or account prescribed or specified under sub-
paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine
not exceeding $1,000.
Release of liquidators and dissolution of limited liability partnership
23. When the liquidator
(a) has realised all the property of the limited liability partnership or so much thereof
as can in his opinion be realised, without needlessly protracting the liquidation, and
has distributed a final dividend, if any, to the creditors and adjusted the rights of the
partners among themselves and made a final return, if any, to the partners; or
(b) has resigned or has been removed from his office, he may apply to the Court
(i) for an order that he be released; or
(ii) for an order that he be released and that the limited liability partnership be
dissolved.
As to orders for release or dissolution
24. (1) Where an order is made that the limited liability partnership be dissolved,
the limited liability partnership shall from the date of the order be dissolved
accordingly.
(2) The Court
(a) may cause a report on the accounts of a liquidator, not being the Official
Receiver, to be prepared by the Official Receiver or by a public accountant appointed
by the Court;
(b) on the liquidator complying with all the requirements of the Court, shall take into
consideration the report and any objection which is urged by the Official Receiver,
public accountant or any creditor or partner or other person interested against the
release of the liquidator; and
(c) shall either grant or withhold the release accordingly.
(3) Where the release of a liquidator is withheld, the Court may, on the application
of any creditor or partner or person interested, make such order as it thinks just
511
charging the liquidator with the consequences of any act or default which he may
have done or made contrary to his duty.
(4) An order of the Court releasing the liquidator shall discharge him from all
liability in respect of any act done or default made by him in the administration of
the affairs of the limited liability partnership or otherwise in relation to his conduct as
liquidator, but any such order may be revoked on proof that it was obtained by fraud
or by suppression or concealment of any material fact.
(5) Where the liquidator has not previously resigned or been removed his release
shall operate as a removal from office.
(6) Where the Court has made
(a) an order that the liquidator be released; or
(b) an order that the liquidator be released and that the limited liability partnership
be dissolved,
a copy of the order and an office copy of the order shall, within 14 days after the
making thereof, be lodged by the liquidator with the Registrar and with the Official
Receiver, respectively and a liquidator who contravenes this sub-paragraph shall be
and, in the case of a continuing offence , to a further fine not exceeding $200 for
Division 3 Committees of inspection
Appointment, constitution and proceedings of committee of inspection
25. (1) The liquidator may, and shall, if requested by any creditor or partner,
summon separate meetings of the creditors and partners for the purpose of
determining whether or not the creditors or partners require the appointment of a
committee of inspection to act with the liquidator, and if so who are to be members
of the committee.
(2) If there is a difference between the determinations of the meetings of the
creditors and partners the Court shall decide the difference and make such order as
it thinks fit.
(3) The committee of inspection shall consist of creditors and partners of the
limited liability partnership or persons holding
(a) general powers of attorney from creditors or partners; or
(b) special authorities from creditors or partners authorising the persons named
therein to act on such a committee,
appointed by the meetings of creditors and partners in such proportions as are
agreed or, in case of difference, as are determined by the Court.
(4) The committee shall meet at such times and places as it may from time to time
appoint, and the liquidator or any member of the committee may also call a meeting
of the committee as he thinks necessary.
(5) The committee may act by a majority of its members present at a meeting, but
shall not act unless a majority of the committee is present.
(6) A member of the committee may resign by notice in writing signed by him and
delivered to the liquidator.
(7) If a member of the committee becomes bankrupt or assigns his estate for the
benefit of his creditors or makes an arrangement with his creditors pursuant to any
written law relating to bankruptcy or is absent from 5 consecutive meetings of the
committee without the leave of those members who together with himself represent
the creditors or partners, as the case may be, his office shall thereupon become
vacant.
(8) A member of the committee may be removed by an ordinary resolution at a
meeting of creditors, if he represents creditors, or of partners, if he represents
partners, of which meeting 7 days notice has been given stating the object of the
meeting.
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(9) A vacancy in the committee may be filled by the appointment by the committee
of the same or another creditor or partner or person holding a general power of
attorney or special authority as specified in sub-paragraph (3).
(10) The liquidator may at any time of his own motion and shall within 7 days after
the request in writing of a creditor or partner summon a meeting of creditors or of
partners, as the case requires, to consider any appointment made pursuant to sub-
paragraph (9), and the meeting may confirm the appointment or revoke the
appointment and appoint another creditor or partner or person holding a general
power of attorney or special authority as specified in sub-paragraph (3), as the case
requires, in his stead.
(11) The continuing members of the committee if not less than 2 may act
notwithstanding any vacancy in the committee.
Division 4 General powers of Court
Power to stay winding up
26. (1) At any time after an order for winding up has been made, the Court may,
on the application of the liquidator or of any creditor or partner and on proof to the
satisfaction of the Court that all proceedings in relation to the winding up ought to be
stayed, make an order staying the proceedings either altogether or for a limited time
on such terms and conditions as the Court thinks fit.
(2) On any such application the Court may, before making an order, require the
liquidator to furnish a report with respect to any facts or matters which are in his
opinion relevant.
(3) A copy of an order made under this paragraph and an office copy of such an
order shall be lodged by the limited liability partnership with the Registrar and the
Official Receiver, respectively, within 14 days after the making of the order.
and shall be liable on conviction to a fine not exceeding $1,000 and, in the case of a
Collection and application of assets
27. (1) As soon as possible after making a winding up order, the Court may
rectify the register of partners in all cases where rectification is required in
pursuance of this Schedule and shall cause the assets of the limited liability
partnership to be collected and applied in discharge of its liabilities.
(2) The Court may order any person from whom money is due to the limited
liability partnership to pay the amount due into some bank, named in such order, to
the account of the liquidator instead of to the liquidator, and any such order may be
enforced in the same manner as if it had directed payment to the liquidator.
(3) All moneys and securities paid or delivered into any bank pursuant to this
Schedule shall be subject in all respects to orders of the Court.
Appointment of special manager
28. (1) The liquidator may, if satisfied that the nature of the estate or business of
the limited liability partnership, or the interests of the creditors or partners generally,
require the appointment of a special manager of the estate or business of the limited
liability partnership other than himself, apply to the Court which may appoint a
special manager of the estate or business to act during such time as the Court
directs with such powers, including any of the powers of a receiver or manager, as
are entrusted to him by the Court.
(2) The special manager
(a) shall give such security and account in such manner as the Court directs;
(b) shall receive such remuneration as is fixed by the Court; and
(c) may at any time resign after giving not less than one months notice in writing to
the liquidator of his intention to resign, or on cause shown be removed by the Court.
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Claims of creditors and distribution of assets
29. (1) The Court may fix a date on or before which creditors are to prove their
debts or claims or after which they will be excluded from the benefit of any
distribution made before those debts are proved.
(2) The Court may, in the event of the assets being insufficient to satisfy the
liabilities, make an order as to the payment out of the assets of the costs, charges
and expenses incurred in the winding up in such order of priority as the Court thinks
fit.
Inspection of books by creditors and partners
30. The Court may make such order for inspection of the books and papers of the
limited liability partnership by creditors and partners as the Court thinks just, and
any books and papers in the possession of the limited liability partnership may be
inspected by creditors or partners accordingly, but not further or otherwise.
Power to summon persons connected with limited liability partnership
31. (1) The Court may summon before it any officer of the limited liability
partnership or person known or suspected to have in his possession any property of
the limited liability partnership or supposed to be indebted to the limited liability
partnership, or any person whom the Court considers capable of giving information
concerning the formation, trade dealings, affairs or property of the limited liability
partnership.
(2) The Court may examine him on oath concerning the matters mentioned in sub-
paragraph (1) either by word of mouth or on written interrogatories and may reduce
his answers to writing and require him to sign them, and any writing so signed may
be used in evidence in any legal proceedings against him.
(3) The Court may require him to produce any books and papers in his custody or
power relating to the limited liability partnership, but where he claims any lien on
books or papers the production shall be without prejudice to that lien, and the Court
shall have jurisdiction to determine all questions relating to that lien.
(4) An examination under this paragraph or paragraph 32 may, if the Court so
directs and subject to the Rules of Court, be held before any District Judge named
for the purpose by the Court, and the powers of the Court under this paragraph and
paragraph 32 may be exercised by that Judge.
(5) If any person so summoned, after being tendered a reasonable sum for his
expenses, refuses to come before the Court at the time appointed, not having a
lawful excuse, made known to the Court at the time of its sitting and allowed by it,
the Court may cause him to be apprehended and brought before the Court for
examination.
Power to order public examination of officers, etc.
32. (1) Where the liquidator has made a report under this Schedule stating that,
in his opinion, a fraud has been committed or that any material fact has been
concealed by any person in the formation of the limited liability partnership or by any
officer in relation to the limited liability partnership since its formation or that any
officer of the limited liability partnership has failed to act honestly or diligently or has
been guilty of any impropriety or recklessness in relation to the affairs of the limited
liability partnership, the Court may, after consideration of the report, direct that the
person or officer, or any other person who was previously an officer of the limited
liability partnership, including any banker, solicitor or auditor, or who is known or
suspected to have in his possession any property of the limited liability partnership
or is supposed to be indebted to the limited liability partnership or any person whom
the Court considers capable of giving information concerning the formation, trade
dealings, affairs or property of the limited liability partnership, shall attend before
the Court on a day appointed and be publicly examined as to the formation or the
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conduct of the business of the limited liability partnership, or in the case of an officer
or former officer as to his conduct and dealings as an officer thereof.
(2) The liquidator and any creditor or partner may take part in the examination
either personally or by a solicitor.
(3) The Court may put or allow to be put such questions to the person examined as
the Court thinks fit.
(4) The person examined shall be examined on oath and shall answer all such
questions as the Court puts or allows to be put to him.
(5) A person ordered to be examined under this paragraph shall before his
examination be furnished with a copy of the liquidators report.
(6) Where a person directed to attend before the Court under sub-paragraph (1)
applies to the Court to be exculpated from any charges made or suggested against
him, the liquidator shall appear on the hearing of the application and call the
attention of the Court to any matters which appear to him to be relevant and if the
Court, after hearing any evidence given or witnesses called by the liquidator, grants
the application the Court may allow the applicant such costs as the Court in its
discretion thinks fit.
(7) Notes of the examination
(a) shall be reduced to writing;
(b) shall be read over to or by and signed by the person examined;
(c) may thereafter be used in evidence in any legal proceedings against him; and
(d) shall be open to the inspection of any creditor or partner at all reasonable times.
(8) The Court may if it thinks fit adjourn the examination from time to time.
Power to arrest absconding partner, manager or former manager
33. The Court, at any time before or after making a winding up order, on proof of
probable cause for believing that a partner, manager or former manager of the
limited liability partnership is about to leave Singapore or otherwise to abscond or to
remove or conceal any of his property for the purpose of evading the discharge of
any liability arising under this Schedule or of avoiding examination respecting the
affairs of the limited liability partnership, may cause the partner, manager or former
manager to be arrested and his books and papers and movable personal property to
be seized and safely kept until such time as the Court orders.
Delegation to liquidator of certain powers of Court
34. Provision may be made by rules enabling or requiring all or any of the powers
and duties conferred and imposed on the Court by this Schedule in respect of
(a) the holding and conducting of meetings to ascertain the wishes of creditors and
partners;
(b) the settling of lists of partners, the rectifying of the register of partners where
required, and the collecting and applying of the assets;
(c) the paying, delivery, conveyance, surrender or transfer of money, property,
books or papers to the liquidator;
(d) the making of calls and the adjusting of the rights of partners; and
(e) the fixing of a time within which debts and claims must be proved,
to be exercised or performed by the liquidator as an officer of the Court and subject
to the control of the Court, but the liquidator shall not, without the special leave of
the Court, rectify the register of partners and shall not make any call without either
the special leave of the Court or the sanction of the committee of inspection.
Powers of Court cumulative
35. (1) Any powers by this Act conferred on the Court shall be in addition to, and
not in derogation of, any existing powers of instituting proceedings against any
partner or debtor of the limited liability partnership or the estate of any partner or
debtor for the recovery of any call or other sums.
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(2) Subject to the Rules of Court, an appeal from any order or decision made or
given in the winding up of a limited liability partnership shall lie in the same manner
and subject to the same conditions as an appeal from any order or decision of the
Court in cases within its ordinary jurisdiction.
PART III
VOLUNTARY WINDING UP
Division 1 I ntroductory
Circumstances in which limited liability partnership may be wound up
voluntarily
36. (1) A limited liability partnership may be wound up voluntarily if the partners
so resolve.
(2) A limited liability partnership shall
(a) within 7 days after the passing of a resolution for voluntary winding up, lodge a
copy of the resolution with the Registrar; and
(b) within 10 days after the passing of the resolution, give notice of the resolution in
one or more newspapers circulating in Singapore.
(3) If the limited liability partnership contravenes sub-paragraph (2), the limited
liability partnership and every officer of the limited liability partnership who is in
default shall be guilty of an offence and shall be liable on conviction to a fine not
exceeding $1,000.
Provisional liquidator
37. (1) Where the managers of a limited liability partnership have made a
statutory declaration in the prescribed form which has been lodged with the Official
Receiver and have lodged a declaration in the prescribed form with the Registrar
(a) that the limited liability partnership cannot by reason of its liabilities continue its
business; and
(b) that meetings of the limited liability partnership and of its creditors have been
summoned for a date within one month of the date of the declaration,
the managers shall immediately appoint an approved liquidator to be the provisional
liquidator.
(2) A provisional liquidator shall have and may exercise all the functions and
powers of a liquidator in a creditors winding up subject to such limitations and
restrictions as may be prescribed by the Rules of Court.
(3) The appointment of a provisional liquidator under this paragraph shall continue
for one month from the date of his appointment or for such further period as the
Official Receiver may allow in any particular case or until the appointment of a
liquidator, whichever first occurs.
(4) Notice of the appointment of a provisional liquidator under this paragraph
together with a copy of the declaration lodged with the Official Receiver shall be
advertised within 14 days of the appointment of the provisional liquidator in at least
4 local daily newspapers, one each published in the English, Malay, Chinese and
Tamil languages.
(5) A provisional liquidator shall be entitled to receive such salary or remuneration
by way of percentage or otherwise as is prescribed.
Commencement of voluntary winding up
38. A voluntary winding up shall commence
(a) where a provisional liquidator has been appointed before the resolution for
voluntary winding up was passed, at the time when the declaration referred to in
paragraph 37 (1) was lodged with the Registrar; and
(b) in any other case, at the time of the passing of the resolution for voluntary
winding up.
Effect of voluntary winding up
39. (1) The limited liability partnership shall from the commencement of the
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winding up cease to carry on its business, except so far as is in the opinion of the
liquidator required for the beneficial winding up thereof, but the limited liability
partnership shall, notwithstanding anything to the contrary in the limited liability
partnership agreement, continue until it is dissolved.
(2) Any assignment of a partners interest or right to distributions from the limited
liability partnership, not being an assignment made to or with the sanction of the
liquidator, and any alteration in the status of the partners made after the
commencement of the winding up, shall be void.
Declaration of solvency
40. (1) Where it is proposed to wind up a limited liability partnership voluntarily,
the managers of the limited liability partnership or (in the case of a limited liability
partnership having more than 2 managers) the majority of the managers shall, in the
case of a partners voluntary winding up, make a declaration to the effect that they
have made an inquiry into the affairs of the limited liability partnership and have
formed the opinion that the limited liability partnership will be able to pay its debts in
full within a period not exceeding 12 months after the commencement of the winding
up.
(2) There shall be attached to the declaration a statement of affairs of the limited
liability partnership showing, in the prescribed form
(a) the assets of the limited liability partnership and the total amount expected to be
realised therefrom;
(b) the liabilities of the limited liability partnership; and
(c) the estimated expenses of winding up,
made up to the latest practicable date before the making of the declaration.
(3) A declaration so made shall have no effect for the purposes of this Act unless it
is
(a) made within 5 weeks immediately preceding the passing of the resolution for
voluntary winding up ; and
(b) lodged with the Registrar at the same time when the resolution for winding up is
lodged.
(4) A manager who makes a declaration under this paragraph without having
reasonable grounds for the opinion that the limited liability partnership will be able to
pay its debts in full within the period stated in the declaration, shall be guilty of an
offence and shall be liable on conviction to a fine not exceeding $5,000 or to
imprisonment for a term not exceeding 12 months or to both.
(5) If the limited liability partnership is wound up in pursuance of a resolution for
voluntary winding up passed within a period of 5 weeks after the making of the
declaration, but its debts are not paid or provided for in full within the period stated
in the declaration, it shall be presumed until the contrary is shown that the manager
did not have reasonable grounds for his opinion.
Division 2 Provisions applicable only to partners voluntary winding up
Liquidator
41. (1) The limited liability partnership shall, by resolution of the partners,
appoint one or more liquidators for the purpose of winding up the affairs and
distributing the assets of the limited liability partnership and may fix the
remuneration to be paid to him or them.
(2) On the appointment of a liquidator, all powers of control and management of
the limited liability partnership conferred on any person shall cease except so far as
the liquidator approves the continuance thereof.
(3) The limited liability partnership may in a meeting convened by any partner by
resolution of the partners of which notice has been given to the creditors and the
liquidators, remove any liquidator but no such resolution shall be effective to remove
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a liquidator if the Court, on the application of the liquidator or a creditor, has ordered
that the liquidator be not removed.
(4) If a vacancy occurs by death, resignation, removal or otherwise in the office of
a liquidator, the limited liability partnership may, by resolution of the partners, fill
the vacancy by the appointment of a liquidator and fix the remuneration to be paid
to him.
Duty of liquidator to call creditors meeting in case of insolvency
42. (1) If the liquidator is at any time of the opinion that the limited liability
partnership will not be able to pay or provide for the payment of its debts in full
within the period stated in the declaration made under paragraph 40, he shall
immediately summon a meeting of the creditors and lay before the meeting a
statement of the assets and liabilities of the limited liability partnership and the
notice summoning the meeting shall draw the attention of the creditors to the right
conferred upon them by sub-paragraph (2).
(2) The creditors may, at the meeting summoned under sub-paragraph (1), appoint
some other person to be the liquidator for the purpose of winding up the affairs and
distributing the assets of the limited liability partnership instead of the liquidator
appointed by the limited liability partnership.
(3) If the creditors appoint some other person under sub-paragraph (2), the
winding up shall thereafter proceed as if the winding up were a creditors voluntary
winding up.
(4) Within 7 days after a meeting has been held pursuant to sub-paragraph (1), the
liquidator or if some other person has been appointed by the creditors to be the
liquidator, the person so appointed shall lodge with the Registrar and with the Official
Receiver a notice in the prescribed form and if the liquidator or the person so
appointed contravenes this sub-paragraph, he shall be guilty of an offence and shall
be liable on conviction to a fine not exceeding $800 and, in the case of a continuing
offence, to a further fine not exceeding $200 for every day or part thereof during
which the offence continues after conviction.
(5) Where the liquidator has convened a meeting under sub-paragraph (1) and the
creditors do not appoint a liquidator instead of the liquidator appointed by the limited
liability partnership, the winding up shall thereafter proceed as if the winding up
were a creditors voluntary winding up; but the liquidator shall not be required to
summon an annual meeting of creditors at the end of the first year from the
commencement of the winding up if the meeting held under sub-paragraph (1) was
held less than 3 months before the end of that year.
Division 3 Provisions applicable only to creditors voluntary winding up
Meeting of creditors
43. (1) The limited liability partnership shall cause a meeting of the creditors of
the limited liability partnership to be summoned for the day, or the day next
following the day, on which there is to be held the meeting at which the resolution
for voluntary winding up is to be proposed, and shall cause the notices of the
meeting of creditors to be sent by post to the creditors simultaneously with the
sending of the notices of the meeting of the limited liability partnership.
(2) The limited liability partnership shall convene the meeting at a time and place
convenient to the majority in value of the creditors and shall
(a) give to the creditors at least 7 clear days notice by post of the meeting; and
(b) send to each creditor with the notice, a statement showing the names of all
creditors and the amounts of their claims.
(3) The limited liability partnership shall cause notice of the meeting of the
creditors to be advertised at least 7 days before the date of the meeting in a
newspaper circulating in Singapore.
(4) The managers of the limited liability partnership shall
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(a) cause a full statement of the limited liability partnerships affairs (verified in the
prescribed form and manner) showing in respect of assets the method and manner
in which the valuation of the assets was arrived at, together with a list of the
creditors and the estimated amount of their claims to be laid before the meeting of
creditors; and
(b) appoint one of their number to attend the meeting.
(5) The manager so appointed shall attend the meeting and disclose to the meeting
the limited liability partnerships affairs and the circumstances leading up to the
proposed winding up.
(6) The creditors may appoint one of their number or the manager appointed under
sub-paragraph (4) (b) to preside at the meeting.
(7) The chairman shall at the meeting determine whether the meeting has been
held at a time and place convenient to the majority in value of the creditors and his
decision shall be final.
(8) If the chairman decides that the meeting has not been held at a time and place
convenient to that majority, the meeting shall lapse and a further meeting shall be
summoned by the limited liability partnership as soon as is practicable.
(9) If the meeting of the limited liability partnership is adjourned and the resolution
for winding up is passed at an adjourned meeting, any resolution passed at the
meeting of the creditors shall have effect as if it had been passed immediately after
the passing of the resolution for winding up.
(10) If any provision in this paragraph is contravened, the limited liability
partnership and any officer of the limited liability partnership who is in default shall
$2,000.
Liquidators
44. (1) The limited liability partnership shall, and the creditors may at their
respective meetings, nominate a person to be liquidator for the purpose of winding
up the affairs and distributing the assets of the limited liability partnership, and if the
creditors and the limited liability partnership nominate different persons the person
nominated by the creditors shall be liquidator, and if no person is nominated by the
creditors the person nominated by the limited liability partnership shall be liquidator.
(2) Notwithstanding sub-paragraph (1), where different persons are nominated,
any manager, partner or creditor may, within 7 days after the date on which the
nomination was made by the creditors, apply to the Court for an order directing that
the person nominated as liquidator by the limited liability partnership shall be
liquidator instead of or jointly with the person nominated by the creditors.
(3) The committee of inspection or, if there is no such committee, the creditors
may fix the remuneration to be paid to the liquidator.
(4) On the appointment of a liquidator, all powers of control and management of
the limited liability partnership conferred on any person shall cease, except so far as
the committee of inspection, or, if there is no such committee, the creditors, approve
the continuance thereof.
(5) If a liquidator, other than a liquidator appointed by or by the direction of the
Court, dies, resigns or otherwise vacates the office, the creditors may fill the vacancy
and for the purpose of so doing a meeting of the creditors may be summoned by any
2 of their number.
Committee of inspection
45. (1) The creditors at the meeting summoned pursuant to paragraph 42 or 43
or at any subsequent meeting may, if they think fit, appoint a committee of
inspection consisting of not more than 5 persons, whether creditors or not and, if
such a committee is appointed, the limited liability partnership may, after the
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resolution for voluntary winding up has been passed, appoint such number of
persons but not more than 5 as it thinks fit to act as members of the committee.
(2) Notwithstanding sub-paragraph (1), the creditors may, if they think fit, resolve
that all or any of the persons so appointed by the limited liability partnership ought
not to be members of the committee of inspection and, if the creditors so resolve,
the persons mentioned in the resolution shall not, unless the Court otherwise directs,
be qualified to act as members of the committee, and on any application to the Court
under this sub-paragraph the Court may, if it thinks fit, appoint other persons to act
as such members in place of the persons mentioned in the resolution.
(3) Subject to this paragraph and the rules made under this Act, paragraph 25
relating to the proceedings of and vacancies in committees of inspection shall apply
with respect to a committee of inspection appointed under this paragraph.
Property and proceedings
46. (1) Any attachment, sequestration, distress or execution put in force against
the estate or effects of the limited liability partnership after the commencement of a
creditors voluntary winding up shall be void.
(2) After the commencement of the winding up no action or proceeding shall be
proceeded with or commenced against the limited liability partnership except by
leave of the Court and subject to such terms as the Court imposes.
Division 4 Provisions applicable to every voluntary winding up
Distribution of property of limited liability partnership
47. Subject to the provisions of this Act as to preferential payments, the property
of a limited liability partnership shall, on its winding up, be applied pari passu in
satisfaction of its liabilities, and, subject to that application, shall, unless the limited
liability partnership agreement otherwise provides, be distributed among the
partners according to their rights and interests in the limited liability partnership.
Appointment of liquidator
48. If from any cause there is no liquidator acting, the Court may appoint a
liquidator.
Removal of liquidator
49. The Court may, on cause shown, remove a liquidator and appoint another
liquidator.
Review of liquidators remuneration
50. Any partner or creditor or the liquidator may at any time before the dissolution
of the limited liability partnership apply to the Court to review the amount of the
remuneration of the liquidator, and the decision of the Court shall be final and
conclusive.
Act of liquidator valid, etc.
51. (1) The acts of a liquidator shall be valid notwithstanding any defects that
may afterwards be discovered in his appointment or qualification.
(2) Any conveyance, assignment, transfer, mortgage, charge or other disposition of
a limited liability partnerships property made by a liquidator shall, notwithstanding
any defect or irregularity affecting the validity of the winding up or the appointment
of the liquidator be valid in favour of any person taking such property bona fide and
for value and without notice of such defect or irregularity.
(3) Every person making or permitting any disposition of property to any liquidator
shall be protected and indemnified in so doing notwithstanding any defect or
irregularity affecting the validity of the winding up or the appointment of the
liquidator not then known to that person.
(4) For the purposes of this paragraph, a disposition of property shall be taken as
including a payment of money.
Powers and duties of liquidator
52. (1) The liquidator may
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(a) in the case of a partners voluntary winding up, with the approval of a resolution
of the partners and, in the case of a creditors voluntary winding up, with the
approval of the Court or the committee of inspection, exercise any of the powers
given by paragraph 20 (1) (b), (c), (d) and (e) to a liquidator in a winding up by the
Court;
(b) exercise any of the other powers by this Act given to the liquidator in a winding
up by the Court; or
(c) summon meetings of the partners for the purpose of obtaining the sanction of the
partners by resolution in respect of any matter or for any other purpose he thinks fit.
(2) The liquidator shall pay the debts of the limited liability partnership and adjust
the rights of the partners among themselves.
(3) When several liquidators are appointed, any power given by this Act may be
exercised by such one or more of them as is determined at the time of their
appointment, or in default of such determination by any number not less than two.
Power of liquidator to accept shares, etc., as consideration for sale of
property of limited liability partnership
53. (1) Where it is proposed that the whole or part of the business or property of
a limited liability partnership (referred to in this paragraph as the limited liability
partnership) be transferred or sold to another corporation (referred to in this
paragraph as the corporation), the liquidator of the limited liability partnership may,
with the sanction of a resolution of the partners conferring either a general authority
on the liquidator or an authority in respect of any particular arrangement, receive in
compensation or part compensation for the transfer or sale shares, debentures,
policies or other like interests in the corporation for distribution among the partners
of the limited liability partnership, or may enter into any other arrangement whereby
the partners of the limited liability partnership may, in lieu of receiving cash, shares,
debentures, policies or other like interests or in addition thereto, participate in the
profits of or receive any other benefit from the corporation and any such transfer,
sale or arrangement shall be binding on the partners of the limited liability
partnership.
(2) If any partner of the limited liability partnership expresses his dissent therefrom
in writing addressed to the liquidator and left at the registered office of the liquidator
within 7 days after the passing of the resolution, he may require the liquidator either
to abstain from carrying the resolution into effect or to purchase his interest at a
price to be determined by agreement or by arbitration in the manner provided by
this paragraph.
(3) If the liquidator elects to purchase the partners interest, the purchase money
shall be paid before the limited liability partnership is dissolved and be raised by the
liquidator in such manner as is determined by resolution.
(4) A resolution shall not be invalid for the purposes of this paragraph by reason
that it is passed before or concurrently with a resolution for voluntary winding up or
for appointing liquidators but, if an order for winding up the limited liability
partnership by the Court is made within a year after the passing of the resolution,
the resolution shall not be valid unless sanctioned by the Court.
(5) For the purposes of an arbitration under this paragraph, the Arbitration Act
(Cap. 10) shall apply as if there were a submission for reference to 2 arbitrators, one
to be appointed by each party; and the appointment of an arbitrator may be made
under the hand of the liquidator, or if there is more than one liquidator then under
the hands of any 2 or more of the liquidators; and the Court may give any directions
necessary for the initiation and conduct of the arbitration and such direction shall be
binding on the parties.
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(6) In the case of a creditors voluntary winding up, the powers of the liquidator
under this paragraph shall not be exercised except with the approval of the Court or
the committee of inspection.
Annual meeting of partners and creditors
54. (1) If the winding up continues for more than one year, the liquidator shall
summon a meeting of the partners in the case of a partners voluntary winding up,
and of the partners and the creditors in the case of a creditors voluntary winding up,
at the end of the first year from the commencement of the winding up and of each
succeeding year or not more than 3 months thereafter, and shall lay before the
meeting an account of his acts and dealings and of the conduct of the winding up
during the preceding year.
(2) The liquidator shall cause the notices of the meeting of creditors to be sent by
post to the creditors simultaneously with the sending of the notices of the meeting of
(3) Every liquidator who contravenes this paragraph shall be guilty of an offence
and shall be liable on conviction to a fine not exceeding $2,000 and, in the case of a
Final meeting and dissolution
55. (1) As soon as the affairs of the limited liability partnership are fully wound
up, the liquidator shall make up an account showing how the winding up has been
conducted and the property of the limited liability partnership has been disposed of,
and thereupon shall call a general meeting of the limited liability partnership, or in
the case of a creditors voluntary winding up a meeting of the limited liability
partnership and the creditors, for the purpose of laying before it the account and
giving any explanation thereof.
(2) The meeting shall be called by advertisement published in at least 4 local daily
newspapers, one each in the English, Malay, Chinese and Tamil languages which
advertisement shall specify the time, place and object of the meeting and shall be
published at least one month before the meeting, except that when a declaration is
made by the liquidator and filed with the Official Receiver that neither at the date of
commencement of the winding up nor since that date has the limited liability
partnership had trade creditors, the advertisement referred to in this sub-paragraph
need only be published in a newspaper circulating generally throughout Singapore.
(3) The liquidator shall within 7 days after the meeting lodge with the Registrar and
the Official Receiver a return of the holding of the meeting and of its date with a
copy of the account attached to such return, and if the return or copy of the account
is not so lodged the liquidator shall be guilty of an offence and shall be liable on
conviction to a fine not exceeding $1,000 and, in the case of a continuing offence, to
a further fine not exceeding $200 for every day or part thereof during which the
offence continues after conviction.
(4) The quorum at a meeting of the limited liability partnership shall be 2 and at a
meeting of the limited liability partnership and the creditors shall be 2 partners and 2
creditors and if a quorum is not present at the meeting, the liquidator shall in lieu of
the return mentioned in sub-paragraph (3) lodge a return (with account attached)
that the meeting was duly summoned and that no quorum was present thereat, and
upon such a return being lodged sub-paragraph (3) as to the lodging of the return
shall be deemed to have been complied with.
(5) On the expiration of 3 months after the lodging of the return with the Registrar
and with the Official Receiver, the limited liability partnership shall be dissolved.
(6) Notwithstanding sub-paragraph (5), the Court may, on the application of the
liquidator or of any other person who appears to the Court to be interested, make an
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order deferring the date at which the dissolution of the limited liability partnership is
to take effect for such time as the Court thinks fit.
(7) The person on whose application an order of the Court under this paragraph is
made shall, within 14 days after the making of the order, lodge with the Registrar
and with the Official Receiver a copy of the order and an office copy of the order,
respectively, and if he fails to do so he shall be guilty of an offence and shall be liable
on conviction to a fine not exceeding $1,000.
(8) If the liquidator fails to call a meeting as required by this paragraph, he shall be
Arrangement when binding on creditors
56. (1) Any arrangement entered into between a limited liability partnership
about to be or in the course of being wound up and its creditors shall, subject to the
right of appeal under this paragraph, be binding on the limited liability partnership if
sanctioned by a resolution passed by the partners, and on the creditors if acceded to
by 75% in value and 50% in number of the creditors, every creditor for under $50
being reckoned in value only.
(2) A creditor shall be accounted a creditor for value for such sum as upon an
account fairly stated, after allowing the value of security or liens held by him and the
amount of any debt or set-off owing by him to the debtor, appears to be the balance
due to him.
(3) Any dispute with regard to the value of any such security or lien or the amount
of such debt or set-off may be settled by the Court on the application of the limited
liability partnership, the liquidator or the creditor.
(4) Any creditor or partner may within 3 weeks from the completion of the
arrangement appeal to the Court against it, and the Court may thereupon, as it
thinks just, amend, vary or confirm the arrangement.
Application to Court to have questions determined or powers exercised
57. (1) The liquidator or any partner or creditor may apply to the Court
(a) to determine any question arising in the winding up of a limited liability
partnership; or
(b) to exercise all or any of the powers which the Court might exercise if the limited
liability partnership were being wound up by the Court.
(2) The Court, if satisfied that the determination of the question or the exercise of
power will be just and beneficial, may accede wholly or partially to any such
application on such terms and conditions as it thinks fit or may make such other
order on the application as it thinks just.
Costs
58. All proper costs, charges and expenses of and incidental to the winding up
including the remuneration of the liquidator shall be payable out of the assets of the
limited liability partnership in priority to all other claims.
Limitation on right to wind up voluntarily
59. Where a petition has been presented to the Court to wind up a limited liability
partnership on the ground that it is unable to pay its debts the limited liability
partnership shall not, without the leave of the Court, resolve that it be wound up
voluntarily.
PART IV
PROVISIONS APPLICABLE TO EVERY MODE OF WINDING UP
Division 1 Gener al
Books to be kept by liquidator and control of Court over liquidator
60. (1) Every liquidator shall keep proper books in which he shall cause to be
made entries or minutes of proceedings at meetings and of such other matters as
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are prescribed, and any creditor or partner may, subject to the control of the Court,
personally or by his agent inspect them.
(2) The Court shall take cognizance of the conduct of liquidators, and if a liquidator
does not faithfully perform his duties and observe the prescribed requirements or the
requirements of the Court or if any complaint is made to the Court by any creditor or
partner or by the Official Receiver in regard thereto, the Court shall inquire into the
matter and take such action as it thinks fit.
(3) The Registrar or the Official Receiver may report to the Court any matter which
in his opinion is a misfeasance, neglect or omission on the part of the liquidator and
the Court may order the liquidator to make good any loss which the estate of the
limited liability partnership has sustained thereby and make such other order as the
Court thinks fit.
(4) The Court may at any time require any liquidator to answer any inquiry in
relation to the winding up and may examine him or any other person on oath
concerning the winding up and may direct an investigation to be made of the books
and vouchers of the liquidator.
(5) The Court may require any partner, trustee, receiver, banker, agent or officer of
the limited liability partnership to pay, deliver, convey, surrender or transfer to the
liquidator or provisional liquidator immediately or within such time as the Court
directs any money, property, books and papers in his hands to which the limited
liability partnership is prima facie entitled.
Powers of Official Receiver where no committee of inspection
61. (1) Where a person other than the Official Receiver is the liquidator and there
is no committee of inspection, the Official Receiver may, on the application of the
liquidator, do any act or thing or give any direction or permission which is by this Act
authorised or required to be done or given by the committee.
(2) Where the Official Receiver is the liquidator and there is no committee of
inspection, the Official Receiver may in his discretion do any act or thing which is by
this Act required to be done by, or subject to any direction or permission given by,
the committee.
Appeal against decision of liquidator
62. Any person aggrieved by any act or decision of the liquidator may apply to the
Court which may confirm, reverse or modify the act or decision complained of and
make such order as the Court thinks just.
Notice of appointment and address of liquidator
63. (1) A liquidator shall, within 14 days after his appointment, lodge with the
Registrar and with the Official Receiver notice in the prescribed form of his
appointment and of the situation of his office and in the event of any change in the
situation of his office shall within 14 days after the change lodge with the Registrar
and with the Official Receiver notice in the prescribed form of the change.
(2) Service made by leaving any document at or sending it by post addressed to
the address of the office of the liquidator given in any such notice lodged with the
Registrar shall be deemed to be good service upon the liquidator and upon the
(3) A liquidator shall, within 14 days after his resignation or removal from office,
lodge with the Registrar and with the Official Receiver notice thereof in the
prescribed form.
(4) If a liquidator contravenes this paragraph, he shall be guilty of an offence and
shall be liable on conviction to a fine not exceeding $1,000 and, in the case of a
Liquidators accounts
64. (1) Every liquidator shall, within one month after the expiration of a period of
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6 months from the date of his appointment and of every subsequent period of 6
months and in any case within one month after he ceases to act as liquidator and
immediately after obtaining an order of release, lodge with the Official Receiver in
the prescribed form and verified by statutory declaration an account of his receipts
and payments and a statement of the position in the winding up, and any liquidator
who fails to do so shall be guilty of an offence and shall be liable on conviction to a
fine not exceeding $1,000 and, in the case of a continuing offence, to a further fine
not exceeding $200 for every day or part thereof during which the offence continues
after conviction.
(2) The liquidator referred to in sub-paragraph (1) shall also lodge with the
Registrar a notice in the prescribed form of the matters referred to in that sub-
paragraph and, if he fails to do so, he shall be guilty of an offence and shall be liable
on conviction to a fine not exceeding $1,000 and, in the case of a continuing offence,
to a further fine not exceeding $200 for every day or part thereof during which the
offence continues after conviction.
(3) The Official Receiver may cause the account of any liquidation to be audited by
a public accountant, and for the purpose of the audit the liquidator shall furnish the
public accountant with such vouchers and information as he requires, and the public
accountant may at any time require the production of and inspect any books or
accounts kept by the liquidator.
(4) A copy of the account or, if audited, a copy of the audited account shall be kept
by the liquidator and the copy shall be open to the inspection of any creditor or of
any person interested at the office of the liquidator.
(5) The liquidator shall
(a) give notice that the account has been made up to every creditor and partner
when next forwarding any report, notice of meeting, notice of call or dividend; and
(b) in such notice inform the creditors and partners at what address and between
what hours the account may be inspected.
(6) The costs of an audit under this paragraph shall be fixed by the Official Receiver
and shall be part of the expenses of winding up.
Liquidator to make good defaults
65. (1) If any liquidator who has made any default in lodging or making any
application, return, account or other document, or in giving any notice which he is by
law required to lodge, make or give, fails to make good the default within 14 days
after the service on him of a notice requiring him to do so, the Court may, on the
application of any partner or creditor of the limited liability partnership or the Official
Receiver, make an order directing the liquidator to make good the default within
such time as is specified in the order.
(2) Any order made under sub-paragraph (1) may provide that all costs of and
incidental to the application shall be borne by the liquidator.
(3) Nothing in sub-paragraph (1) shall prejudice the operation of any written law
imposing penalties on a liquidator in respect of any such default.
Notification that a limited liability partnership is in liquidation
66. (1) Where a limited liability partnership is being wound up, every invoice,
order for goods or business letter issued by or on behalf of the limited liability
partnership or a liquidator of the limited liability partnership or a receiver or manager
of the property of the limited liability partnership, being a document on or in which
the name of the limited liability partnership appears, shall have the words in
liquidation added after the name of the limited liability partnership where it first
appears therein.
(2) If sub-paragraph (1) is contravened, the limited liability partnership, and every
officer of the limited liability partnership or liquidator and every receiver or manager
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who knowingly and wilfully authorises or permits the default, shall be guilty of an
offence and shall be liable on conviction to a fine not exceeding $400.
Books of limited liability partnership
67. (1) Where a limited liability partnership is being wound up, all books and
papers of the limited liability partnership and of the liquidator that are relevant to the
affairs of the limited liability partnership at or subsequent to the commencement of
the winding up of the limited liability partnership shall, as between the partners of
the limited liability partnership, be prima facie evidence of the truth of all matters
purporting to be therein recorded.
(2) When a limited liability partnership has been wound up the liquidator shall
retain the books and papers referred to in sub-paragraph (1) for a period of 2 years
from the date of dissolution of the limited liability partnership and at the expiration
of that period may destroy them.
(3) Notwithstanding sub-paragraph (2), when a limited liability partnership has
been wound up the books and papers referred to in sub-paragraph (1) may be
destroyed within a period of 2 years after the dissolution of the limited liability
partnership
(a) in the case of a winding up by the Court, in accordance with the directions of the
Court;
(b) in the case of a partners voluntary winding up, as the partners by resolution
direct; and
(c) in the case of a creditors voluntary winding up, as the committee of inspection,
or, if there is no such committee, as the creditors of the limited liability partnership
direct.
(4) No responsibility shall rest on the limited liability partnership or the liquidator
by reason of any such book or paper not being forthcoming to any person claiming to
be interested therein if such book or paper has been destroyed in accordance with
this paragraph.
and shall be liable on conviction to a fine not exceeding $2,000.
Investment of surplus funds on general account
68. (1) Whenever the cash balance standing to the credit of any limited liability
partnership in liquidation is in excess of the amount which, in the opinion of the
committee of inspection, or, if there is no committee of inspection, of the liquidator,
is required for the time being to answer demands in respect of the estate of the
limited liability partnership, the liquidator, if so directed in writing by the committee
of inspection, or, if there is no committee of inspection, the liquidator himself, may,
unless the Court on application by any creditor thinks fit to direct otherwise and so
orders, invest the sum or any part thereof in securities issued by the Government of
Singapore or of Malaysia or place it on deposit at interest with any bank, and any
interest received in respect thereof shall form part of the assets of the limited liability
partnership.
(2) Whenever any part of the money so invested is, in the opinion of the committee
of inspection, or, if there is no committee of inspection, of the liquidator, required to
answer any demands in respect of the limited liability partnerships estate, the
committee of inspection may direct, or, if there is no committee of inspection, the
liquidator may arrange for the sale or realisation of such part of those securities as is
necessary.
Unclaimed assets to be paid to Official Receiver
69. (1) Where a liquidator has in his hands or under his control
(a) any unclaimed dividend or other moneys which have remained unclaimed for
more than 6 months from the date when the dividend or other moneys became
payable; or
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(b) after making final distribution, any unclaimed or undistributed moneys arising
from the property of the limited liability partnership,
he shall immediately pay those moneys to the Official Receiver to be placed to the
credit of the Limited Liability Partnerships Liquidation Account and shall be entitled to
the prescribed certificate of rec eipt for the moneys so paid and that certificate shall
be an effectual discharge to him in respect thereof.
(2) The Court may, at any time on the application of the Official Receiver, order any
liquidator to submit to it an account of any unclaimed or undistributed funds,
dividends or other moneys in his hands or under his control verified by affidavit and
may direct an audit thereof and may direct him to pay those moneys to the Official
Receiver to be placed to the credit of the account referred to in sub-paragraph (1).
(3) The interest arising from the investment of the moneys standing to the credit of
the account referred to in sub-paragraph (1) shall be paid into the Consolidated
Fund.
(4) For the purposes of this paragraph, the Court may exercise all the powers
conferred by this Act with respect to the discovery and realisation of the property of
the limited liability partnership and the provisions of this Act with respect thereto
shall with such adaptations as are prescribed apply to proceedings under this
paragraph.
(5) This paragraph shall not, except as expressly declared in this Act, deprive any
person of any other right or remedy to which he is entitled against the liquidator or
any other person.
(6) If any claimant makes any demand for any money placed to the credit of the
account referred to in sub-paragraph (1), the Official Receiver upon being satisfied
that the claimant is the owner of the money shall authorise payment thereof to be
made to him out of that account or, if it has been paid into the Consolidated Fund,
may authorise payment of a like amount to be made to him out of moneys made
available by Parliament for the purpose.
(7) Any person dissatisfied with the decision of the Official Receiver in respect of a
claim made in pursuance of sub-paragraph (6) may appeal to the Court which may
confirm, disallow or vary the decision.
(8) Where any unclaimed moneys paid to any claimant are afterwards claimed by
any other person, that other person shall not be entitled to any payment out of the
account referred to in sub-paragraph (1) or out of the Consolidated Fund but such
person may have recourse against the claimant to whom the unclaimed moneys
have been paid.
(9) Any unclaimed moneys paid to the credit of the account referred to in sub-
paragraph (1) to the extent to which the unclaimed moneys have not been under
this paragraph paid out of that account shall, on the lapse of 7 years from the date
of the payment of the moneys to the credit of that account, be paid into the
Consolidated Fund.
Outstanding assets of limited liability partnership wound up on grounds of
national security or interest
70. Notwithstanding any written law or rule of law to the contrary, upon a limited
liability partnership being wound up under paragraph 3 (1) (f) on the ground that it
is being used for purposes against national security or interest, the Court may, on
the application of the Minister, order that any assets of the limited liability
partnership remaining after payment of its debts and liabilities and the costs,
charges and expenses of the winding up shall be paid into the Consolidated Fund.
Expenses of winding up where assets insufficient
71. (1) Unless expressly directed to do so by the Official Receiver, a liquidator
shall not be liable to incur any expense in relation to the winding up of a limited
liability partnership unless there are sufficient available assets.
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(2) The Official Receiver may, on the application of a creditor or a partner, direct a
liquidator to incur a particular expense on condition that the creditor or partner
indemnifies the liquidator in respect of the recovery of the amount expended and, if
the Official Receiver so directs, gives such security to secure the amount of the
indemnity as the Official Receiver thinks reasonable.
Resolutions passed at adjourned meetings of creditors and partners
72. Subject to paragraph 43 (9), where a resolution is passed at an adjourned
meeting of any creditors or partners of a limited liability partnership, the resolution
shall for all purposes be treated as having been passed on the date on which it was
in fact passed and not on any earlier date.
Meetings to ascertain wishes of creditors or partners
73. (1) The Court may, as to all matters relating to the winding up of a limited
liability partnership, have regard to the wishes of the creditors or partners as proved
to it by any sufficient evidence, and may if it thinks fit for the purpose of ascertaining
those wishes direct meetings of the creditors or partners to be called, held and
conducted in such manner as the Court directs, and may appoint a person to act as
chairman of any such meeting and to report the result thereof to the Court.
(2) In the case of creditors, regard shall be had to the value of each creditors debt.
(3) In the case of partners, regard shall be had to the number of votes conferred on
each partner by this Act or the limited liability partnership agreement.
Special commission for receiving evidence
74. (1) District Judges shall be commissioners for the purpose of taking evidence
under this Schedule, and the Court may refer the whole or any part of the
examination of any witnesses under this Schedule to any person hereby appointed
commissioner.
(2) Every commissioner shall, in addition to any powers which he might lawfully
exercise as a District Judge, have in the matter so referred to him the same powers
as the Court of summoning and examining witnesses of requiring the production or
delivery of documents, of punishing defaults by witnesses and of allowing costs and
expenses to witnesses.
(3) Unless otherwise ordered by the Court, the taking of evidence by
commissioners shall be in open court and shall be open to the public.
(4) The examination so taken shall be returned or reported to the Court in such
manner as the Court directs.
Division 2 Proof and ranking of claims
Proof of debts
75. (1) In every winding up all debts payable on a contingency, and all claims
against the limited liability partnership, present or future, certain or contingent,
ascertained or sounding only in damages, shall be admissible to proof against the
limited liability partnership, a just estimate being made, so far as possible, of the
value of such debts or claims as are subject to any contingency or sound only in
damages, or for some other reason do not bear a certain value.
(2) Subject to paragraph 76, in the winding up of an insolvent limited liability
partnership the same rules shall prevail and be observed with regard to the
respective rights of secured and unsecured creditors and debts provable and the
valuation of annuities and future and contingent liabilities as are in force for the time
being under the law relating to bankruptcy in relation to the estates of bankrupt
persons, and all persons, who in any such case would be entitled to prove for and
receive dividends out of the assets of the limited liability partnership, may come in
under the winding up and make such claims against the limited liability partnership
as they respectively are entitled to by virtue of this paragraph.
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Priorities
76. (1) Subject to the provisions of this Act, in a winding up there shall be paid in
priority to all other unsecured debts
(a) firstly, the costs and expenses of the winding up including the taxed costs of a
petitioner payable under paragraph 5, the remuneration of the liquidator and the
costs of any audit carried out pursuant to paragraph 64;
(b) secondly, subject to sub-paragraph (2), all wages or salary (whether or not
earned wholly or in part by way of commission) including any amount payable by
way of allowance or reimbursement under any contract of employment or award or
agreement regulating conditions of employment of any employee;
(c) thirdly, subject to sub-paragraph (2), the amount due to an employee as a
retrenchment benefit or ex gratia payment under any contract of employment or
award or agreement that regulates conditions of employment whether such amount
becomes payable before, on or after the commencement of the winding up;
(d) fourthly, all amounts due in respect of workmens compensation under the
Workmens Compensation Act (Cap. 354) accrued before, on or after the
commencement of the winding up;
(e) fifthly, all amounts due in respect of contributions payable during the 12 months
next before, on or after the commencement of the winding up by the limited liability
partnership as the employer of any person under any written law relating to
employees superannuation or provident funds or under any scheme of
superannuation which is an approved scheme under the law relating to income tax;
(f) sixthly, all remuneration payable to any employee in respect of vacation leave, or
in the case of his death to any other person in his right, accrued in respect of any
period before, on or after the commencement of the winding up; and
(g) seventhly, the amount of all tax assessed and all goods and services tax due
under any written law before the date of the commencement of the winding up or
assessed at any time before the time fixed for the proving of debts has expired.
(2) The amount payable under sub-paragraph (1) (b) and (c) shall not exceed an
amount that is equivalent to 5 months salary whether for time or piecework in
respect of services rendered by him to the limited liability partnership or $7,500,
whichever is the lesser.
(3) The Minister may, by order published in the Gazette, amend sub-paragraph (2)
by varying the amount specified in that sub-paragraph as the maximum amount
payable under sub-paragraph (1) (b) and (c).
(4) In sub-paragraph (1) (b) and (c)
"employee" means a person who has entered into or works under a contract of
service with an employer and includes a subcontractor of labour;
ex gratia payment means the amount payable to an employee on the winding up of
a limited liability partnership or on the termination of his service by his employer on
the ground of redundancy or by reason of any re-organisation of the employer,
profession, business, trade or work, and the amount payable to an employee for
these purposes means the amount stipulated in any contract of employment, award
or agreement, as the case may be;
retrenchment benefit means the amount payable to an employee on the winding
up of a limited liability partnership, on the termination of his service by his employer
on the ground of redundancy or by reason of any re-organisation of the employer,
profession, business, trade or work, and the amount payable to an employee for
these purposes means the amount stipulated in any contract of employment, award
or agreement, as the case may be, or if no amount is stipulated therein, such
amount as is stipulated by the Commissioner for Labour.
"wages or salary" shall be deemed to include
(i) all arrears of money due to a subcontractor of labour;
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(ii) any amount payable to an employee on account of wages or salary during a
period of notice of termination of employment or in lieu of notice of such termination,
as the case may be, whether such amount becomes payable before, on or after the
commencement of the winding up; and
(iii) any amount payable to an employee, on termination of his employment, as a
gratuity under any contract of employment, or under any award or agreement that
regulates conditions of employment whether such amount becomes payable before,
on or after the commencement of the winding up.
(5) The debts in each class, specified in sub-paragraph (1), shall rank in the order
therein specified but as between debts of the same class shall rank equally between
themselves, and shall be paid in full, unless the property of the limited liability
partnership is insufficient to meet them, in which case they shall abate in equal
proportions between themselves.
(6) Where any payment has been made to any employee of the limited liability
partnership on account of wages, salary or vacation leave out of money advanced by
a person for that purpose, the person by whom the money was advanced shall, in a
winding up, have a right of priority in respect of the money so advanced and paid, up
to the amount by which the sum in respect of which the employee would have been
entitled to priority in the winding up has been diminished by reason of the payment,
and shall have the same right of priority in respect of that amount as the employee
would have had if the payment had not been made.
(7) So far as the assets of the limited liability partnership available for payment of
general creditors are insufficient to meet any preferential debts specified in sub-
paragraph (1) (a), (b), (c), (e) and (f) and any amount payable in priority by virtue
of sub-paragraph (6), those debts shall have priority over the claims of the holders
of debentures under any floating charge created by the limited liability partnership
(which charge, as created, was a floating charge), and shall be paid accordingly out
of any property comprised in or subject to that charge.
(8) Where the limited liability partnership is under a contract of insurance (entered
into before the commencement of the winding up) insured against liability to third
parties, then if any such liability is incurred by the limited liability partnership (either
before or after the commencement of the winding up) and an amount in respect of
that liability is or has been received by the limited liability partnership or the
liquidator from the insurer the amount shall, after deducting any expenses of or
incidental to getting in such amount, be paid by the liquidator to the third party in
respect of whom the liability was incurred to the extent necessary to discharge that
liability or any part of that liability remaining undischarged in priority to all payments
in respect of the debts referred to in sub-paragraph (1).
(9) If the liability of the insurer to the limited liability partnership is less than the
liability of the limited liabil ity partnership to the third party, nothing in sub-paragraph
(8) shall limit the rights of the third party in respect of the balance.
(10) Notwithstanding anything in sub-paragraph (1)
(a) sub-paragraph (1) (d) shall not apply in relation to the winding up of a limited
liability partnership in any case where the limited liability partnership is being wound
up voluntarily merely for the purpose of reconstruction or of amalgamation with
another limited liability partnership and the right to the compensation has on the
reconstruction or amalgamation been preserved to the person entitled thereto, or
where the limited liability partnership has entered into a contract with an insurer in
respect of any liability under any law relating to workmens compensation; and
(b) where a limited liability partnership has given security for the payment or
repayment of any amount to which sub-paragraph (1) (g) relates, sub-paragraph (1)
(g) shall apply only in relation to the balance of any such amount remaining due
after deducting therefrom the net amount realised from such security.
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(11) Where in any winding up assets have been recovered under an indemnity for
costs of litigation given by certain creditors, or have been protected or preserved by
the payment of moneys or the giving of indemnity by creditors, or where expenses in
relation to which a creditor has indemnified a liquidator have been recovered, the
Court may make such order as it thinks just with respect to the distribution of those
assets and the amount of those expenses so recovered with a view to giving those
creditors an advantage over others in consideration of the risks run by them in so
doing.
Division 3 Effect on other transactions
Transactions at an undervalue
77. (1) Subject to this paragraph and paragraphs 79 and 81, where a limited
liability partnership is wound up and it has at the relevant time (as defined in
paragraph 79) entered into a transaction with any person at an undervalue, the
Official Assignee may apply to the Court for an order under this paragraph.
(2) The Court shall, on such an application, make such order as it thinks fit for
restoring the position to what it would have been if that limited liability partnership
had not entered into that transaction.
(3) The Court shall not make an order under sub-paragraph (2) in respect of a
transaction at an undervalue if it is satisfied that
(a) the limited liability partnership which entered into the transaction did so in good
faith and for the purpose of carrying on its business; and
(b) that at the time it did so, there were reasonable grounds for believing that the
transaction would benefit the limited liability partnership.
(4) For the purposes of this paragraph and paragraphs 79 and 81, a limited liability
partnership enters into a transaction with a person at an undervalue if
(a) it makes a gift to that person or it otherwise enters into a transaction with that
person on terms that provide for it to receive no consideration; or
(b) it enters into a transaction with that person for a consideration the value of
which, in money or moneys worth, is significantly less than the value, in money or
moneys worth, of the consideration provided by the limited liability partnership.
Unfair preferences
78. (1) Subject to this paragraph and paragraphs 79 and 81, where a limited
liability partnership is wound up and it has, at the relevant time (as defined in
paragraph 79), given an unfair preference to any person, the Official Assignee may
apply to the Court for an order under this paragraph.
(2) The Court shall, on such an application, make such order as it thinks fit for
restoring the position to what it would have been if that limited liability partnership
had not given that unfair preference.
(3) For the purposes of this paragraph and paragraphs 79 and 81, a limited liability
partnership gives an unfair preference to a person if
(a) that person is one of the limited liability partnerships creditors or a surety or
guarantor for any of its debts or other liabilities; and
(b) the limited liability partnership does anything or suffers anything to be done
which (in either case) has the effect of putting that person into a position which, in
the event of the limited liability partnerships liquidation, will be better than the
position he would have been in if that thing had not been done.
(4) The Court shall not make an order under this paragraph in respect of an unfair
preference given to any person unless the limited liability partnership which gave the
preference was influenced in deciding to give it by a desire to produce in relation to
that person the effect mentioned in sub-paragraph (3) (b).
(5) A limited liability partnership which has given an unfair preference to a person
connected with the limited liability partnership (otherwise than by reason only of
being its employee) at the time the unfair preference was given shall be presumed,
531
unless the contrary is shown, to have been influenced in deciding to give it by such a
desire as is mentioned in sub-paragraph (4).
(6) The fact that something has been done in pursuance of the order of a court
does not, without more, prevent the doing or suffering of that thing from constituting
the giving of an unfair preference.
(7) This paragraph shall apply without prejudic e to the operation of paragraph 85.
Relevant time under paragraphs 77 and 78
79. (1) Subject to this paragraph, the time at which a limited liability partnership
enters into a transaction at an undervalue or gives an unfair preference shall be a
relevant time if the transaction is entered into or the preference given
(a) in the case of a transaction at an undervalue, within the period of 5 years ending
on the day which the winding up of the limited liability partnership is deemed by this
Schedule to have commenced;
(b) in the case of an unfair preference which is not a transaction at an undervalue
and is given to a person who is connected with the limited liability partnership
(otherwise than by reason only of being its employee), within the period of 2 years
ending on that day; and
(c) in any other case of an unfair preference which is not a transaction at an
undervalue, within the period of 6 months ending on that day.
(2) Where a limited liability partnership enters into a transaction at an undervalue
or gives an unfair preference at a time mentioned in sub-paragraph (1) (a), (b) or
(c), that time is not a relevant time for the purposes of paragraphs 77 and 78 unless
the limited liability partnership
(a) is insolvent at that time; or
(b) becomes insolvent in consequence of the transaction or preference.
(3) Where a transaction is entered into at an undervalue by a limited liability
partnership with a person who is connected to the limited liability partnership
(otherwise than by reason only of being its employee), the requirements under sub-
paragraph (2) shall be presumed to be satisfied unless the contrary is shown.
(4) For the purposes of sub-paragraph (2), a limited liability partnership shall be
insolvent if
(a) it is unable to pay its debts as they fall due; or
(b) the value of its assets is less than the amount of its liabilities.
Meaning of connected with
80. (1) For the purposes of paragraphs 78 and 79, any question whether a
person is connected with a limited liability partnership shall be determined in
accordance with this paragraph.
(2) A person is connected with a limited liability partnership if he is
(a) a partner of the limited liability partnership or an associate of such a partner; or
(b) an associate of the li mited liability partnership.
(3) A person is an associate of an individual if that person is the individuals spouse,
or is a relative, or the spouse of a relative of, the individual or his spouse.
(4) A person is an associate of any person with whom he is in partnership, and of
the spouse or relative of any individual with whom he is in partnership.
(5) A person is an associate of any person whom he employs or by whom he is
employed and for this purpose, any director or other officer of a company shall be
treated as employed by that company and any partner of a limited liability
partnership shall be treated as employed by that limited liability partnership.
(6) A person in his capacity as trustee of a trust is an associate of another person if
the beneficiaries of the trust include, or the terms of the trust confer a power that
may be exercised for the benefit of, that person or an associate of that person.
(7) A limited liability partnership or company shall be regarded as an associate of
another limited liability partnership or company if
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(a) the same person has control of both entities, or a person has control of one
entity and persons who are his associates, or he and persons who are his associates,
have control of the other entity; or
(b) a group of 2 or more persons has control of each entity, and such groups either
consist of the same persons or could be regarded as consisting of the same persons
by treating (in one or more cases) a member of either group as replaced by a person
of whom he is an associate.
(8) A limited liability partnership or company is an associate of a person if that
person has control of it or if that person and other persons who are his associates
together have control of it.
(9) For the purposes of this paragraph, a person is a relative of an individual if he is
that individuals brother, sister, uncle, aunt, nephew, niece, lineal ancestor or lineal
descendant, treating
(a) any relationship of the half blood as a relationship of the whole blood and the
step-child or adopted child of any person as his child; and
(b) an illegitimate child as the legitimate child of his mother and reputed father.
(10) References in this paragraph to a spouse shall include a former spouse.
(11) For the purposes of this paragraph, a person shall be taken to have control of
a limited liability partnership or company if
(a) the partners of the limited liability partnership or directors of the company or the
partners or directors of another entity which has control of the partnership or
company, as the case may be (or any of them), are accustomed to act in accordance
with his directions or instructions; or
(b) he is entitled to exercise, or control the exercise of, one-third or more of the
voting power at any meeting of the limited liability partnership or general meeting of
the company or of another entity which has control of the partnership or company,
as the case may be,
and where 2 or more persons together satisfy sub-paragraph (a) or (b), they shall be
taken to have c ontrol of the limited liability partnership or company.
(12) In this paragraph, company includes any body corporate (whether
incorporated in Singapore or elsewhere); and references to directors and other
officers of a company and to voting power at any general meeting of a company shall
have effect with any necessary modifications.
Orders under paragraphs 77 and 78
81. .(1) Without prejudice to the generality of paragraphs 77 (2) and 78 (2), an
order under either of those paragraphs with respect to a transaction or preference
entered into or given by a limited liability partnership which is subsequently wound
up may, subject to this paragraph
(a) require any property transferred as part of the transaction, or in connection with
the giving of the preference, to be vested in the limited liability partnership;
(b) require any property to be so vested if it represents in any persons hands the
application of the proceeds of sale of property so transferred or of money so
transferred;
(c) release or discharge (in whole or in part) any security given by the limited
(d) require any person to pay, in respect of benefits received by him from the limited
liability partnership, such sums to the liquidator as the Court may direct;
(e) provide for any surety or guarantor whose obligations to any person were
released or discharged (in whole or in part) under the transaction or by the giving of
the preference to be under such new or revived obligations to that person as the
Court thinks appropriate;
(f) provide for security to be provided for the discharge of any obligation imposed by
or arising under the order, for such an obligation to be charged on any property and
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for the security or charge to have the same priority as a security or charge released
or discharged (in whole or in part) under the transaction or by the giving of the
unfair preference; and
(g) provide for the extent to which any person whose property is vested by the order
in the limited liability partnership, or on whom obligations are imposed by the order,
is to be able to prove in the winding up of the limited liability partnership for debts or
other liabilities which arose from, or were released or discharged (in whole or in
part) under or by, the transaction or the giving of the unfair preference.
(2) An order under paragraph 77 or 78 may affect the property of, or impose any
obligation on, any person whether or not he is the person with whom the limited
liability partnership in question entered into the transaction or, as the case may be,
the person to whom the unfair preference was given.
(3) An order under paragraph 77 or 78 shall not
(a) prejudice any interest in property which was acquired from a person other than
that limited liability partnership and was acquired in good faith, for value and without
notice of the relevant circumstances, or prejudice any interest deriving from such an
interest; or
(b) require a person who received a benefit from the transaction or unfair preference
in good faith, for value and without notice of the relevant circumstances to pay a
sum to the liquidator, except where he was a party to the transaction or the
payment is to be in respect of an unfair preference given to that person at a time
when he was a creditor of that limited liability partnership.
(4) For the purposes of this paragraph, the relevant circumstances, in relation to a
transaction or unfair preference, shall be
(a) the circumstances by virtue of which an order under paragraph 77 or 78 could be
made in respect of the transaction or preference if the limited liability partnership in
question were wound up within the particular period after the transaction is entered
into or the unfair preference given; and
(b) if that period has expired, the fact that that limited liability partnership has been
wound up within that period.
Extortionate credit transactions
82. (1) This paragraph shall apply where a limited liability partnership which is
wound up is or has been a party to a transaction for or involving the provision to it of
credit.
(2) The Court may, on the application of the liquidator, make an order with respect
to the transaction if the transaction is or was extortionate and was entered into
within 3 years before the commencement of the winding up.
(3) For the purposes of this paragraph, a transaction shall be extortionate if, having
regard to the risk accepted by the person providing the credit
(a) the terms of it are or were such as to require grossly exorbitant payments to be
made (whether unconditionally or in certain contingencies) in respect of the provision
of the credit; or
(b) it is harsh and unconscionable or substantially unfair,
and it shall be presumed, unless the contrary is proved, that the transaction was
extortionate.
(4) An order under this paragraph may contain one or more of the following:
(a) provision setting aside the whole or part of any obligation created by the
transaction;
(b) provision varying the terms of the transaction or varying the terms on which any
security for the purposes of the transaction is held;
(c) provision requiring any person who is or was a party to the transaction to pay the
liquidator any sums paid to that person;
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(d) provision requiring any person to surrender to the liquidator any property held by
him as security for the purposes of the transaction;
(e) provision directing accounts to be taken between any persons.
(5) Any sums or property required to be paid or surrendered to the liquidator in
accordance with an order under this paragraph shall be comprised in the bankrupts
estate.
Avoidance of general assignment of book debts
83. (1) This paragraph shall apply where a limited liability partnership makes a
general assignment to another person of its existing or future book debts, or any
class of them, and is subsequently wound up.
(2) The assignment shall be void against the liquidator as regards book debts which
were not paid before the commencement of winding up of the limited liability
partnership, unless the assignment has been registered under the Bills of Sale Act
(Cap. 24).
"assignment" includes an assignment by way of security or charge on book debts;
"general assignment" does not include
(a) an assignment of book debts due at the date of the assignment from specified
debtors or of debts becoming due under specified contracts; or
(b) an assignment of book debts included either in a transfer of a business made in
good faith and for value or in an assignment of assets for the benefit of creditors
generally.
(4) For the purposes of registration under the Bills of Sale Act, an assignment of
book debts shall be treated as if it were a bill of sale given otherwise than by way of
security for the payment of a sum of money.
(5) The provisions of the Bills of Sale Act with respect to the registration of bills of
sale shall apply accordingly with such necessary modifications as may be made by
rules under that Act.
Right of recovery of distributions
84. (1) A partner or former partner of a limited liability partnership who receives
a distribution from the limited liability partnership
(a) when the limited liability partnership is insolvent and knew or ought to have
known at the time of the distribution that the limited liability partnership was
insolvent; or
(b) which results in the limited liability partnership becoming insolvent and knew or
ought to have known at the time of distribution that the limited liability partnership
would become insolvent as a result of the distribution,
shall be personally liable to the limited liability partnership for the amount or value of
the distribution if it was received within a period of 3 years before the
commencement of the winding up of the limited liability partnership.
(a) a limited liability partnership is insolvent at a particular time if
(i) it is at that time, unable to pay its debts as they become due in the normal course
of business; or
(ii) at that time, the value of the limited liability partnerships assets is less than the
value of its liabilities;
(b) distribution means any payment of dividends, distribution of profits, return or
refund of capital by the limited liability partnership, whether in cash or in kind and
any payment made by the limited liability partnership under section 11 (3); and
(c) a partner or former partner shall be deemed to have received a distribution if the
distribution is received by his assignee.
(3) Where any partner or former partner has made a payment to discharge his
liability under sub-paragraph (1), the amount of the payment shall constitute a debt
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due from the limited liability partnership to such partner or former partner, and
paragraph 47 shall apply to such debt but only after all the liabilities of the limited
liability partnership (excluding the debts arising under this sub-paragraph) have
been discharged and settled in full.
Liquidators right to recover in respect of certain sales to or by limited
85. (1) Where any property, business or undertaking has been acquired by a
limited liability partnership for a cash consideration within a period of 2 years before
the commencement of the winding up of the limited liability partnership
(a) from a person who was at the time of the acquisition a manager of the limited
(b) from a limited liability partnership of which, at the time of the acquisition, a
manager was also a manager of the first-mentioned limited liability partnership;
(c) from a corporation (other than a limited liability partnership) of which, at the
time of the acquisition, a director was also a manager of the limited liability
partnership; or
(d) from a firm of which, at the time of the acquisition, a partner was also a manager
of the limited liability partnership,
the liquidator may recover from the person, limited liability partnership, corporation
or firm from which the property, business or undertaking was acquired any amount
by which the cash consideration for the acquisition exceeded the value of the
property, business or undertaking at the time of its acquisition.
(2) Where any property, business or undertaking has been sold by a limited liability
partnership for a cash consideration within a period of 2 years before the
commencement of the winding up of the limited liability partnership
(a) to a person who was, at the time of the sale, a manager of the limited liability
partnership;
(b) to a limited liability partnership of which, at the time of the sale, a manager was
also a manager of the first-mentioned limited liability partnership;
(c) from a corporation (other than a limited liability partnership) of which, at the
time of the sale, a director was also a manager of the limited liability partnership; or
(d) from a firm of which, at the time of the sale, a partner was also a manager of the
the liquidator may recover from the person, limited liability partnership, corporation
or firm to which the property, business or undertaking was sold any amount by
which the value of the property, business or undertaking at the time of the sale
exceeded the cash consideration.
(3) For the purposes of this paragraph, the value of the property, business or
undertaking includes the value of any goodwill or profits which might have been
made from the business or undertaking or similar considerations.
(4) In this paragraph, cash consideration, in relation to an acquisition or sale by a
limited liability partnership, means consideration for such acquisition or sale payable
otherwise than as contribution of capital to the limited liability partnership.
Disclaimer of onerous property
86. (1) Where any part of the property of a limited liability partnership consists of

(a) any estate or interest in land which is burdened with onerous covenants;
(b) shares or interests in corporations;
(c) unprofitable contracts; or
(d) any other property that is unsaleable, or not readily saleable, by reason of its
binding the possessor thereof to the performance of any onerous act, or to the
payment of any sum of money,
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the liquidator of the limited liability partnership, notwithstanding that he has
endeavoured to sell or has taken possession of the property or exercised any act of
ownership in relation thereto, may, with the leave of the Court or the committee of
inspection and, subject to this paragraph, by writing signed by him, at any time
within 12 months after the commencement of the winding up or such extended
period as is allowed by the Court, disclaim the property; but where any such
property has not come to the knowledge of the liquidator within one month after the
commencement of the winding up, the power of disclaiming may be exercised at any
time within 12 months after he has become aware thereof or such extended period
as is allowed by the Court.
(2) The disclaimer shall operate to determine, as from the date of disclaimer, the
rights, interest and liabilities of the limited liability partnership and the property of
the limited liability partnership in or in respect of the property disclaimed, but shall
not, except so far as is necessary for the purpose of releasing the limited liability
partnership and the property of the limited liability partnership from liability, affect
the rights or liabilities of any other person.
(3) The Court or the committee before or on granting leave to disclaim may require
such notices to be given to persons interested, and impose such terms as a condition
of granting leave, and make such other order in the matter as the Court or
committee thinks just.
(4) The liquidator shall not be entitled to disclaim if an application in writing has
been made to him by any person interested in the property requiring him to decide
whether he will or will not disclaim, and the liquidator has not, within a period of 28
days after the receipt of the application or such further period as is allowed by the
Court or the committee, given notice to the applicant that he intends to apply to the
Court or the committee for leave to disclaim, and, in the case of a contract, if the
liquidator after such an application in writing does not within that period or further
period disclaim the contract the liquidator shall be deemed to have adopted it.
(5) The Court may, on the application of a person who is, as against the liquidator,
entitled to the benefit or subject to the burden of a contract made with the limited
liability partnership, make an order rescinding the contract on such terms as to
payment by or to either party of damages for the non-performance of the contract,
or otherwise as the Court thinks just, and any damages payable under the order to
that person may be proved by him as a debt in the winding up.
(6) The Court may, on the application of a person who either claims any interest in
any disclaimed property or is under any liability not discharged by this Act in respect
of any disclaimed property and on hearing such persons as it thinks fit, make an
order for the vesting of the property in or the delivery of the property to any person
entitled thereto, or to whom it seems just that the property should be delivered by
way of compensation for such liability as aforesaid, or a trustee for him, and on such
terms as the Court thinks just, and on any such vesting order being made and a
copy thereof and an office copy thereof being lodged with the Registrar and the
Official Receiver, respectively, and if the order relates to land with the appropriate
authority concerned with the recording or registration of dealings in that land, as the
case requires, the property comprised therein shall vest accordingly in the person
therein named in that behalf without any further conveyance, transfer or
assignment.
(7) Notwithstanding anything in sub-paragraph (6), where the property disclaimed
is of a leasehold nature, the Court shall not make a vesting order in favour of any
person claiming under the limited liability partnership, whether as under-lessee or as
mortgagee, except upon the terms of making that person
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(a) subject to the same liabilities and obligations as those to which the limited
liability partnership was subject under the lease in respect of the property at the
commencement of the winding up; or
(b) if the Court thinks fit, subject only to the same liabilities and obligations as if the
lease had been assigned to that person at that date,
and in either event, if the case so requires, as if the lease had comprised only the
property comprised in the vesting order, and any under-lessee or mortgagee
declining to accept a vesting order upon such terms shall be excluded from all
interest in and security upon the property, and, if there is no person claiming under
the limited liability partnership who is willing to accept an order upon such terms, the
Court may vest the estate and interest of the limited liability partnership in the
property in any person liable personally or in a representative character and either
alone or jointly with the limited liability partnership to perform the lessees covenants
in the lease, freed and discharged from all estates, incumbrances and interests
created therein by the limited liability partnership.
(8) Any person injured by the operation of a disclaimer under this paragraph shall
be deemed to be a creditor of the limited liability partnership to the amount of the
injury, and may accordingly prove the amount as a debt in the winding up.
Interpretation
87. In paragraphs 88 and 89
"goods" includes all chattels personal;
"bailiff" includes any officer charged with the execution of a writ or other process.
Restriction of rights of creditor as to execution or attachment
88. (1) Where a creditor has issued execution against the goods or land of a
limited liability partnership or has attached any debt due to the limited liability
partnership and the limited liability partnership is subsequently wound up, he shall
not be entitled to retain the benefit of the execution or attachment against the
liquidator unless he has completed the execution or attachment before the date of
the commencement of the winding up, but
(a) where any creditor has had notice of a meeting having been called at which a
resolution for voluntary winding up is to be proposed, the date on which the creditor
so had notice shall for the purposes of this paragraph be substituted for the date of
the commencement of the winding up;
(b) a person who purchases in good faith under a sale by the bailiff any goods of a
limited liability partnership on which an execution has been levied shall in all cases
acquire a good title to them against the liquidator; and
(c) the rights conferred by this sub-paragraph on the liquidator may be set aside by
the Court in favour of the creditor to such extent and subject to such terms as the
Court thinks fit.
(a) an execution against goods is completed by seizure and sale;
(b) an attachment of a debt is completed by receipt of the debt; and
(c) an execution against land is completed by sale or, in the case of an equitable
interest, by the appointment of a receiver.
Duties of bailiff as to goods taken in execution
89. (1) Subject to sub-paragraph (3), where any goods of a limited liability
partnership are taken in execution and, before the sale thereof or the completion of
the execution by the receipt or recovery of the full amount of the levy, notice is
served on the bailiff that a provisional liquidator has been appointed or that a
winding up order has been made or that a resolution for voluntary winding up has
been passed, the bailiff shall, on being so required, deliver the goods and any money
seized or received in part satisfaction of the execution to the liquidator, but the costs
of the execution shall be a first charge on the goods or moneys so delivered, and the
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liquidator may sell the goods, or a sufficient part thereof, for the purpose of
satisfying that charge.
(2) Subject to sub-paragraph (3), where under an execution in respect of a
judgment for a sum exceeding $100 the goods of a limited liability partnership are
sold or money is paid in order to avoid sale, the bailiff shall deduct the costs of the
execution from the proceeds of the sale or the money paid and retain the balance of
14 days; and if within that time notice is served on him of a petition for the winding
up of the limited liability partnership having been presented or of a meeting having
been called at which there is to be proposed a resolution for the voluntary winding
up and an order is made or a resolution is passed for the winding up, the bailiff shall
pay the balance to the liquidator who shall be entitled to retain it as against the
execution creditor.
(3) The rights conferred by this paragraph on the liquidator may be set aside by the
Court in favour of the creditor to such extent and subject to such terms as the Court
thinks fit.
Division 4 Offences
Offences by officers of limited liability partnerships in liquidation
90. (1) Every person who, being a past or present officer or a partner of a limited
liability partnership which is being wound up
(a) does not to the best of his knowledge and belief fully and truly disclose to the
liquidator all the property movable and immovable of the limited liability partnership,
and how and to whom and for what consideration and when the limited liability
partnership disposed of any part thereof, except such part as has been disposed of in
the ordinary way of the business of the limited liability partnership;
(b) does not deliver up to the liquidator, or as he directs
(i) all the movable and immovable property of the limited liability partnership in his
custody or under his control and which he is required by law to deliver up; or
(ii) all books and papers in his custody or under his control belonging to the limited
liability partnership and which he is required by law to deliver up;
(c) within 12 months next before the commencement of the winding up or at any
time thereafter
(i) has concealed any part of the property of the limited liability partnership to the
value of $200 or upwards, or has concealed any debt due to or from the limited
(ii) has fraudulently removed any part of the property of the limited liability
partnership to the value of $200 or upwards;
(iii) has concealed, destroyed, mutilated or falsified, or has been privy to the
concealment, destruction, mutilation or falsification of, any book or paper affecting or
relating to the property or affairs of the limited liability partnership;
(iv) has made or has been privy to the making of any false entry in any book or
paper affecting or relating to the property or affairs of the limited liability
partnership;
(v) has fraudulently parted with, altered or made any omission in, or has been privy
to fraudulent parting with, altering or making any omission in, any document
affecting or relating to the property or affairs of the limited liability partnership;
(vi) by any false representation or other fraud, has obtained any property for or on
behalf of the limited liability partnership on credit which the limited liability
partnership has not subsequently paid for;
(vii) has obtained on credit, for or on behalf of the limited liability partnership, under
the false pretence that the limited liability partnership is carrying on its business, any
property which the limited liability partnership has not subsequently paid for; or
(viii) has pawned, pledged or disposed of any property of the limited liability
partnership which has been obtained on credit and has not been paid for, unless
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such pawning, pledging or disposing was in the ordinary way of the business of the
limited liability partnership;
(d) makes any material omission in any statement relating to the affairs of the
limited liability partnership;
(e) knowing or believing that a false debt has been proved by any person fails for a
period of one month to inform the liquidator thereof;
(f) prevents the production of any book or paper affecting or relating to the property
or affairs of the limited liability partnership;
(g) within 12 months next before the commencement of the winding up or at any
time thereafter, has attempted to account for any part of the property of the limited
liability partnership by fictitious losses or expenses; or
(h) within 12 months next before the commencement of the winding up or at any
time thereafter, has been guilty of any false representation or other fraud for the
purpose of obtaining the consent of the creditors of the limited liability partnership or
any of them to an agreement with reference to the affairs of the limited liability
partnership or to the winding up,
$10,000 or to imprisonment for a term not exceeding 2 years.
(2) It shall be a good defence to a charge under sub-paragraph (1) (a), (b), (d) or
sub-paragraph (1) (c) (i), (vii) or (viii) if the accused proves that he had no intent to
defraud, and to a charge under sub-paragraph (1) (f) or sub-paragraph (1) (c) (iii)
or (iv) if he proves that he had no intent to conceal the state of affairs of the limited
liability partnership or to defeat the law.
(3) Where any person pawns, pledges or disposes of any property in circumstances
which amount to an offence under sub-paragraph (1) (c) (viii), every person who
takes in pawn or pledge or otherwise receives the property knowing it to be pawned,
pledged or disposed of in those circumstances shall be guilty of an offence and shall
be liable on conviction to a fine not exceeding $10,000 or to imprisonment for a term
not exceeding 2 years.
Inducement to be appointed liquidator
91. Any person who gives or agrees or offers to give to any partner or creditor of a
limited liability partnership any valuable consideration with a view to securing his
own appointment or nomination, or to securing or preventing the appointment or
nomination of some person other than himself, as the limited liability partnerships
liquidator shall be guilty of an offence and shall be liable on conviction to a fine not
exceeding $2,000 or to imprisonment for a term not exceeding 6 months.
Penalty for falsification of books
92. Every officer or partner of any limited liability partnership being wound up who
destroys, mutilates, alters or falsifies any books, papers or securities, or makes or is
privy to the making of any false or fraudulent entry in any register or book of
account or document belonging to the limited liability partnership with intent to
defraud or deceive any person shall be guilty of an offence and shall be liable on
exceeding 2 years.
Liability where proper accounts not kept
93. (1) If, on an investigation under this Act or where a limited liability
partnership is wound up, it is shown that proper books of account were not kept by
the limited liability partnership throughout the period of 2 years immediately
preceding the commencement of the investigation or winding up or the period
between the registration of the limited liability partnership and the commencement
of the investigation or winding up (whichever is the lesser) every officer who is in
default shall, unless he acted honestly and shows that, in the circumstances in which
the business of the limited liability partnership was carried on, the default was
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excusable, be guilty of an offence and shall be liable on conviction to a fine not
exceeding $5,000 or to imprisonment for a term not exceeding 12 months.
(2) For the purposes of this paragraph, proper books of account shall be deemed
not to have been kept in the case of any limited liability partnership if there have not
been kept such books or accounts as are necessary to exhibit and explain the
transactions and financial position of the trade or business of the limited liability
partnership, including books containing entries from day to day in sufficient detail of
all cash received and cash paid, and, where the trade or business has involved
dealings in goods, statements of the annual stocktakings and (except in the case of
goods sold by way of ordinary retail trade) of all goods sold and purchased, showing
the goods and the buyers and sellers thereof in sufficient detail to enable those
goods and those buyers and sellers to be identified or if such books or accounts have
not been kept in such manner as to enable them to be conveniently and properly
audited, whether or not the limited liability partnership has appointed an auditor.
(3) If, in the course of the winding up of a limited liability partnership or in any
proceedings against a limited liability partnership, it appears that an officer of the
limited liability partnership who was knowingly a party to the contracting of a debt
had, at the time the debt was contracted, no reasonable or probable ground of
expectation, after taking into consideration the other liabilities, if any, of the limited
liability partnership at the time of the limited liability partnership being able to pay
the debt, the officer shall be guilty of an offence and shall be liable on conviction to a
fine not exceeding $2,000 or to imprisonment for a term not exceeding 3 months.
Responsibility for fraudulent trading
94. (1) If, in the course of the winding up of a limited liability partnership or in
any proceedings against a limited liability partnership, it appears that any business
of the limited liability partnership has been carried on with intent to defraud creditors
of the limited liability partnership or creditors of any other person or for any
fraudulent purpose, the Court, on the application of the liquidator or any creditor or
partner of the limited liability partnership, may, if it thinks proper to do so, declare
that any person who was knowingly a party to the carrying on of the business in that
manner shall be personally responsible, without any limitation of liability, for all or
any of the debts or other liabilities of the limited liability partnership as the Court
directs.
(2) Where a person has been convicted of an offence under paragraph 93 (3) in
relation to the contracting of such a debt as is referred to in that sub-paragraph, the
Court, on the application of the liquidator or any creditor or partner of the limited
liability partnership, may, if it thinks proper to do so, declare that the person shall be
personally responsible without any limitation of liability for the payment of the whole
or any part of that debt .
(3) Where the Court makes any declaration pursuant to sub-paragraph (1) or (2), it
may give such further directions as it thinks proper for the purpose of giving effect to
that declaration, and in particular may make provision for making the liability of any
person under the declaration a charge on any debt or obligation due from the limited
liability partnership to him, or on any charge or any interest in any charge on any
assets of the limited liability partnership held by or vested in him or any corporation
or person on his behalf, or any person claiming as assignee from or through the
person liable or any corporation or person acting on his behalf, and may from time to
time make such further order as is necessary for the purpose of enforcing any charge
imposed under this sub-paragraph.
(4) In sub-paragraph (3), assignee includes any person to whom or in whose
favour by the directions of the person liable the debt, obligation or charge was
created, issued or transferred or the interest created, but does not include an
assignee for valuable consideration (not including consideration by way of marriage)
541
given in good faith and without notice of any of the matters on the ground of which
the declaration is made.
(5) Where any business of a limited liability partnership is carried on with the intent
or for the purpose mentioned in sub-paragraph (1), every person who was knowingly
a party to the carrying on of the business with that intent or purpose shall be guilty
of an offence and shall be liable on conviction to a fine not exceeding $15,000 or to
imprisonment for a term not exceeding 7 years or to both.
(6) Sub-paragraph (5) shall apply to a limited liability partnership whether or not it
has been, or is in the course of being, wound up.
(7) This paragraph shall have effect notwithstanding that the person concerned is
criminally liable apart from this paragraph in respect of the matters on the ground of
which the declaration is made.
(8) On the hearing of an application under sub-paragraph (1) or (2), the liquidator
may himself give evidence or call witnesses.
Power of Court to assess damages against delinquent officers, etc.
95. (1) If, in the course of winding up, it appears that any person who has taken
part in the formation or registration of the limited liability partnership or any past or
present liquidator or officer has misapplied or retained or become liable or
accountable for any money or property of the limited liability partnership or been
guilty of any misfeasance or breach of trust or duty in relation to the limited liability
partnership, the Court may on the application of the liquidator or of any creditor or
partner examine into the conduct of such person, liquidator or officer and compel
him to repay or restore the money or property or any part thereof with interest at
such rate as the Court thinks just, or to contribute such sum to the assets of the
limited liability partnership by way of compensation in respect of the misapplication,
retainer, misfeasance or breach of trust or duty as the Court thinks just.
(2) This paragraph shall extend and apply to and in respect of the receipt of any
money or property by any officer of the limited liability partnership during the 2
years preceding the commencement of the winding up whether by way of salary or
otherwise appearing to the Court to be unfair or unjust to other partners of the
(3) This paragraph shall have effect notwithstanding that the offence is one for
which the offender is criminally liable.
Prosecution of delinquent officers and partners of limited liability
partnership
96. (1) If it appears to the Court, in the course of a winding up by the Court, that
any past or present officer, or any partner of the limited liability partnership has
been guilty of an offence in relation to the limited liability partnership for which he is
criminally liable, the Court may, either on the application of any person interested in
the winding up or of its own motion, direct the liquidator to prosecute the offender or
to refer the matter to the Minister.
(2) If it appears to the liquidator, in the course of a voluntary winding up, that any
past or present officer, or any partner, of the limited liability partnership has been
guilty of any offence in relation to the limited liability partnership for which he is
criminally liable, he shall immediately report the matter to the Minister and shall, in
respect of information or documents in his possession or under his control which
relate to the matter in question, furnish the Minister with such information and give
to him such access to and facilities for inspecting and taking copies of any
documents as he may require.
(3) If it appears to the liquidator, in the course of any winding up, that the limited
liability partnership which is being wound up will be unable to pay its unsecured
creditors more than 50 cents in the dollar, the liquidator shall immediately report the
matter in writing to the Official Receiver and shall furnish the Official Receiver with
542
such information and give to him such access to and facilities for inspecting and
taking copies of any document as the Official Receiver may require.
(4) Where any report is made under sub-paragraph (2) or (3), the Minister may, if
he thinks fit, investigate the matter and for the purposes of such an investigation
shall have all such powers of investigating the affairs of the limited liability
partnership as are provided by this Act in the case of a winding up by the Court, but
if it appears to him that the case is not one in which proceedings ought to be taken
by him he shall inform the liquidator accordingly, and thereupon, subject to the
previous approval of the Court the liquidator may himself take proceedings against
the offender.
(5) If it appears to the Court in the course of a voluntary winding up that any past
or present officer, or any partner, of the limited liability partnership has been guilty
as aforesaid and that no report with respect to the matter has been made by the
liquidator to the Minister, the Court may, on the application of any person interested
in the winding up or of its own motion, direct the liquidator to make such a report,
and on a report being made accordingly this paragraph shall have effect as though
the report has been made in pursuance of sub-paragraph (2).
(6) If, where any matter is reported or referred to the Minister or the Official
Receiver under this paragraph, he considers that the case is one in which a
prosecution ought to be instituted, he may institute proceedings accordingly, and the
liquidator and every officer and agent of the limited liability partnership past and
present, other than the defendant in the proceedings, shall give the Minister or the
Official Receiver all assistance in connection with the prosecution which he is
reasonably able to give.
(7) For the purposes of sub-paragraph (6), agent, in relation to a limited liability
partnership, includes any banker or solicitor of the limited liability partnership and
any person employed by the limited liability partnership as auditor, whether or not
an officer of the limited liability partnership.
(8) If any person fails or neglects to give assistance in the manner required by sub-
paragraph (6), the Court may, on the application of the Minister or the Official
Receiver, direct that person to comply with the requirements of that sub-paragraph,
and where any application is made under this sub-paragraph with respect to a
liquidator the Court may, unless it appears that the failure or neglect to comply was
due to the liquidator not having in his hands sufficient assets of the limited liability
partnership to enable him to do so, direct that the costs of the application shall be
borne by the liquidator personally.
(9) The Minister may direct that the whole or any part of any costs and expenses
properly incurred by the liquidator in proceedings brought under this paragraph shall
be defrayed out of moneys provided by Parliament.
(10) Subject to any direction given under sub-paragraph (9) and to any charges on
the assets of the limited liability partnership and any debts to which priority is given
by this Act, all such costs and expenses shall be payable out of those assets as part
of the costs of winding up.
Division 5 Dissolution
Power of Court to declare dissolution of limited liability partnership void
97. (1) Where a limited liability partnership has been dissolved, the Court may at
any time within 2 years after the date of dissolution, on application of the liquidator
of the limited liability partnership or of any other person who appears to the Court to
be interested, make an order upon such terms as the Court thinks fit declaring the
dissolution to have been void, and thereupon such proceedings may be taken as
might have been taken if the limited liability partnership had not been dissolved.
(2) The person on whose application the order was made shall, within 7 days after
the making of the order or such further time as the Court allows, lodge with the
543
Registrar and with the Official Receiver a copy of the order and an office copy of the
order, respectively, and if he fails to do so shall be guilty of an offence and shall be
liable on conviction to a fine not exceeding $1,000.
Official Receiver to act as representative of defunct limited liability
partnership in certain events
98. (1) Where, after a limited liability partnership has been dissolved, it is proved
to the satisfaction of the Official Receiver
(a) that the limited liability partnership, if still existing, would be legally or equitably
bound to carry out, complete or give effect to some dealing, transaction or matter;
and
(b) that in order to carry out, complete or give effect thereto some purely
administrative act, not discretionary, should have been done by or on behalf of the
limited liability partnership, or should be done by or on behalf of the limited liability
partnership, if still existing,
the Official Receiver may, as representing the limited liability partnership or its
liquidator under this paragraph, do or cause to be done any such act.
(2) The Official Receiver may execute or sign any relevant instrument or document
adding a memorandum stating that he has done so in pursuance of this paragraph,
and such execution or signature shall have the same force, validity and effect as if
the limited liability partnership if existing had duly executed such instrument or
document.
Outstanding assets of defunct limited liability partnership to vest in Official
Receiver
99. (1) Where, after a limited liability partnership has been dissolved, there
remains any outstanding property, movable or immovable, including things in action
and whether in or outside Singapore which was vested in the limited liability
partnership or to which it was entitled, or over which it had a disposing power at the
time it was so dissolved, but which was not got in, realised upon or otherwise
disposed of or dealt with by the limited liability partnership or its liquidator, such
property, shall, for the purposes of the following paragraphs of this Division and
notwithstanding any written law or rule of law to the contrary, by the operation of
this paragraph, be and become vested in the Official Receiver for all the estate and
interest therein legal or equitable of the limited liability partnership or its liquidator
at the date the limited liability partnership was dissolved, together with all claims,
rights and remedies which the limited liability partnership or its liquidator then had in
respect thereof.
(2) Where any claim, right or remedy of the liquidator may under this Act be made,
exercised or availed of only with the approval or concurrence of the Court or some
other person, the Official Receiver may for the purposes of this paragraph make,
exercise or avail himself of that claim, right or remedy without such approval or
concurrence.
Outstanding interests in property how disposed of
100. (1) Upon proof to the satisfaction of the Official Receiver that there is
vested in him by operation of paragraph 99 or by operation of any corresponding
previous written law any estate or interest in property, whether solely or together
with any other person, of a beneficial nature and not merely held in trust, the Official
Receiver may sell or otherwise dispose of or deal with such estate or interest or any
part thereof as he sees fit.
(2) The Official Receiver may sell or otherwise dispose of or deal with such property
either solely or in concurrence with any other person in such manner for such
consideration by public auction, public tender or private contract upon such terms
and conditions as he thinks fit, with power to rescind any contract and resell or
otherwise dispose of or deal with such property as he thinks expedient, and may
544
make, execute, sign and give such contracts, instruments and documents as he
thinks necessary.
(3) The Official Receiver shall be remunerated by such commission, whether by way
of percentage or otherwise, as is prescribed in respect of the exercise of the powers
conferred upon him by sub-paragraph (1).
(4) The moneys received by the Official Receiver in the exercise of any of the
powers conferred on him by this Division shall be applied in defraying all costs,
expenses, commission and fees incidental thereto and thereafter to any payment
authorised by this Division and the surplus, if any, shall be dealt with as if they were
unclaimed moneys paid to the Official Receiver in pursuance of paragraph 69.
Liability of Official Receiver and Government as to property vested in Official
Receiver
101. Property vested in the Official Receiver by operation of this Division or by
operation of any corresponding previous written law shall be liable and subject to all
charges, claims and liabilities imposed thereon or affecting such property by reason
of any statutory provision as to rates, taxes, charges or any other matter or thing to
which such property would have been liable or subject had such property continued
in the possession, ownership or occupation of the limited liability partnership; but
there shall not be imposed on the Official Receiver or the Government any duty,
obligation or liability whatsoever to do or suffer any act or thing required by any
such statutory provision to be done or suffered by the owner or occupier other than
the satisfaction or payment of any such charges, claims or liabilities out of the assets
of the limited liability partnership so far as they are in the opinion of the Official
Receiver properly available for and applicable to such payment.
Accounts and audit
102. (1) The Official Receiver shall
(a) record in a register a statement of any property coming to his hand or under his
control or to his knowledge vested in him by operation of this Division and of his
dealings therewith;
(b) keep accounts of all moneys arising therefrom and of how they have been
disposed of; and
(c) keep all accounts, vouchers, receipts and papers relating to such property and
moneys.
(2) The Auditor-General shall have all the powers in respect of such accounts as are
conferred upon him by any Act relating to audit of public accounts.
SIXTH SCHEDULE
Section 60
CONSEQUENTIAL AMENDMENTS TO OTHER WRITTEN LAWS
First column Second column
(1) Accounting and Corporate Regulatory
Authority Act 2004
(Act 3 of 2004)

(a) Section 33 (3) Insert, immediately after paragraph
(c), the following paragraph:
(d) the Registrar of Limited Liability
Partnerships and any Deputy or
Assistant Registrar of Limited Liability
Partnerships appointed under the
Limited Liability Partnerships Act
2005.
(b) Second Schedule Insert, immediately after item 4, the
545
following item:
5. Limited Liability Partnerships Act
2005.

(2) Banking Act (Chapter 19, 2003 Ed.)
(a) Section 2 (1) Insert, immediately after the
definition of licence, the following
definition:
"limited liability partnership" has the
same meaning as in section 2 (1) of
the Limited Liability Partnerships Act
2005;
Insert, immediately after the
definition of officer, the following
definition:
partner and manager, in relation
to a limited liability partnership, have
the respective meanings assigned to
them in section 2 (1) of the Limited
Liability Partnerships Act 2005;
(b) Section 27 (1) (i) Delete paragraph (b) and
substitute the following paragraphs:
(b) any firm or limited liability
partnership in which the bank or any
of its directors is a partner, manager
or agent; or
(ba) any individual of whom, or firm
or limited liability partnership of
which, any of the directors of the
bank is a guarantor;
(ii) Insert, immediately after the
word firm in paragraph (f), the
words , limited liability partnership.

(c) Section 28 (3) (i) Insert, immediately after the word
firm in the 4th line, the words or
partner or manager of a specified
word firm in the 6th line, and in
paragraph (a), the words or limited

(d) Section 29 (1) (d) Insert, immediately after the word
firm wherever it appears in sub-
paragraph (ii), the words or limited

546
(3) Business Registration Act
(Chapter 32, 2004 Ed.)

(a) Section 2 (1) Insert, immediately after the word
legislation in the definition of
corporation, the words , or a
limited liability partnership registered
under the Limited Liability
Partnerships Act 2005,.
(b) Section 4 Insert, immediately after subsection
(2), the following subsection:
(3) This Act shall not apply to any
Partnerships Act 2005 carrying on
business under its registered name.
(c) Section 6 (4) (i) Insert, immediately after the
words Companies Act (Cap. 50) in
paragraph (b), the words or a
manager of the corporation within the
meaning of section 2 of the Limited
Liability Partnerships Act 2005.
word secretary in paragraph (d),
the words or manager.
(d) Section 13 (1) Delete the words any other in
paragraph (b) and substitute the
word a.
(e) Section 25 (i) Insert, immediately after the
words the directors in subsection
(1), the words , the managers.
word director in subsection (2), the
word , manager.

(4) Companies Act (Chapter 50, 1994 Ed.)
(a) Section 4 (1) (i) Delete the word or at the end of
paragraph (c) of the definition of
corporation.
(ii) Insert the word or at the end of
paragraph (d) of the definition of
corporation and i nsert immediately
thereafter the following paragraph:
(e) any limited liability partnership;
(iii) Insert, immediately after the
definition of limited company, the
following definition:
547
2005;
(b) Section 27 (i) Delete paragraph (b) of subsection
(1) and substitute the following
paragraph:
(b) is identical to that of any other
company, limited liability partnership
or corporation, or to a business
name; or
(ii) Delete paragraph (b) of
subsection (2) and substitute the
following paragraph:
(b) so nearly resembles the name of
any other company or limited liability
partnership or corporation, or a
business name, as to be likely to be
mistaken for it,
(c) Section 28 (3) Delete paragraph (b) and substitute
the following paragraph:
(b) a name that so nearly resembles
the name of any other company or
limited liability partnership or
corporation, or a business name, as
to be likely to be mistaken for it,
(d) New section 155A Insert, immediately after section 155,
the following section:
Disqualification under Limited
Liability Partnerships Act 2004
155A. A person who is subject to a
disqualification or disqualification
order under section 34, 35 or 36 of
2005 shall not act as director of, or in
any way (whether directly or
indirectly) take part in or be
concerned in the management of, a
corporation during the period of the
disqualification or disqualification
order.
(e) Section 156 Delete subsection (4) and substitute
the following subsection:
(4) For the purposes of subsection
(1), a general notice given to the
directors of a company by a director
to the effect that he is an officer or
member of a specified corporation or
a member of a specified firm or a
partner or officer of a specified
limited liability partnership and is to
be regarded as interested in any
transaction which may, after the date
548
of the notice, be made with that
corporation, firm or limited liability
partnership shall be deemed to be a
sufficient declaration of interest in
relation to any transaction so made if

(a) it specifies the nature and extent
of his interest in the specified
corporation, firm or limited liabil ity
partnership;
(b) his interest is not different in
nature or greater in extent than the
nature and extent so specified in the
general notice at the time any
transaction is so made; and
(c) it is given at a meeting of the
directors or the director takes
reasonable steps to ensure that it is
brought up and read at the next
meeting of the directors after it is
given.
(f) Section 405(1) Insert, immediately before the words
Business Registration Act in the 9th
line, the words Limited Liability
Partnerships Act 2004 or the.
(g) Fourth Schedule
(i) Paragraphs 47 and 59 Insert, immediately after the word
corporation, the words or a limited
(ii) Paragraph 76 Insert, immediately after the word
firm, in the 2nd line, the words

(h) Sixth Schedule
(i) Part I (page 548) Insert, immediately after the word
firm wherever it appears, the words
or limited liability partnership.
(ii) Part II, paragraph 1 Insert, immediately after the word
business wherever it appears, the
words or limited liability
partnership.
(iii) Part III, paragraph 4 Insert, immediately after the word
corporation in the 2nd and 3rd
lines, the words or limited liability
partnership.

(5) Contracts (Rights of Third Parties) Act
(Chapter 53B, 2002 Ed.)

549
Section 7 Insert, immediately after subsection
(2A) Section 2 shall not confer any
right on a third party in the case of
any registration document of a
Partnerships Act 2005 or any limited
liability partnership agreement as
defined in that Act.

(6) Corporate Bodies Contract Act
(Chapter 385, 1994 Ed.)

Section 2 Repeal and substitute the following
section:
Exclusion of companies under
Companies Act and limited
liability partnerships under
2. This Act shall not apply to any
company as defined in the Companies
Act (Cap. 50) or to any limited
liability partnership as defined in the
2005.

(7) Finance Companies Act
(Chapter 108, 2000 Ed.)

(a) Section 2 (i) Insert, immediately after the
definition of Government securities,
the following definition:
2005;
definition:

(b) Section 21A (1) Insert, immediately after the word
firm in paragraphs (b), (c) and (g),
the words or limited liability
partnership.
(c) Section 21B (3) (i) Insert, immediately after the word
550
firm in the 4th line, the words or
partner or manager of a specified
(ii) Delete the words or firm after
the word company in the 6th line,
and in paragraph (a), and substitute
the words , firm or limited liability
partnership.
(d) Section 23 (5) Delete paragraph (b) and substitute
the following paragraphs:
(b) a firm or limited liability
partnership in which that finance
company or any of its directors has
an interest as a partner, manager or
agent;
(ba) any individual of whom, or firm
or limited liability partnership of
which, any of that finance companys
directors is a guarantor;
(e) Section 51 (i) Insert, immediately after the word
firm in the 1st, 3rd and 6th lines,
the words or limited liability
partnership.
word firm in the 5th line, the words
and every partner or manager of the

(8) Financial Advisers Act
(Chapter 110, 2002 Ed.)

(a) Section 2 (1) (i) Delete sub-paragraph (ii) of
paragraph (a) of the definition of
connected person and substitute
the following sub-paragraph:
(ii) a firm, a limited liability
partnership or a corporation in which
the individual or any of the persons
mentioned in sub-paragraph (i) has
control of not less than 20% of the
voting power in the firm, limited
liability partnership or corporation,
whether such control is exercised
individually or jointly;
(ii) Delete paragraph (b) of the
definition of connected person and
substitute the following paragraph:
(b) a firm, a limited liability
partnership or a corporation, means
another firm, limited liability
551
partnership or corporation in which
the first-mentioned firm, limited
liability partnership or corporation
has control of not less than 20% of
the voting power in that other firm,
corporation,
definition of life policy, the following
definition:
2005;
(iv) Insert, immediately after the
definition:
(b) Section 83 (i) Insert, immediately after
subsection (3), the following
subsection:
(3A) Where an offence under this
Act committed by a limited liability
partnership is proved to have been
committed with the consent or
connivance of, or to be attributable to
any neglect on the part of, a partner
or manager of the limited liability
partnership, the partner or manager
(as the case may be) as well as the
partnership shall be guilty of that
offence and shall be liable to be
proceeded against and punished
accordingly.
(ii) Delete the definition of partner
in subsection (5) and substitute the
body corporate and partnership
exclude a limited liability partnership
within the meaning of the Limited
definition of officer in subsection
(5), the following definition:
"partner" , in relation to a
partnership, includes a person
purporting to act as a partner.
552
(c) New section 88 (4) Insert, immediately after subsection
(4) In this section, body corporate
excludes a limited liability partnership
within the meaning of the Limited
Liability Partnerships Act 2005.
(9) Insurance Act (Chapter 142, 2002 Ed.)
(a) Section 1A Insert, immediately after the
definition of life reinsurance broker,
the following definitions:
2005;
(b) Section 4 (1) Delete paragraph (b) and substitute
the following paragraph:
(b) where that person is a
corporation, limited liability
partnership or firm, every director,
manager or officer of the corporation
and every partner or officer of the
firm and every partner or manager of
the limited liability partnership (as
the case may be) shall, unless he
proves that the offence was
committed without his knowledge or
consent, be guilty of an offence.

(10) Mental Disorders and Treatment Act
(Chapter 178, 1985 Ed.)

Section 18 Renumber the section as subsection
(1) of that section, and insert
immediately thereafter the following
subsection:
(2) Subsection (1) does not apply to
registered under the Limited Liability

(11) Money-changing and Remittance
Businesses Act (Cap. 187, 1996 Ed.)

(a) Section 2 (1) (i) Insert, immediately after the
definition of licence, the following
definition:
553
2005;
definition of money-changing
business, the following definition:
(b) Section 21 (i) Insert, immediately after
subsection:
Act has been committed by a limited
liability partnership, any person who
at the time of the commission of the
offence was a partner or manager of
the limited liability partnership shall
be liable to be proceeded against and
punished accordingly unless he
proves that
(a) the offence was committed
without his consent or connivance;
and
(b) he exercised such diligence to
prevent the commission of the
offence as he ought to have exercised
having regard to the nature of his
function in that capacity and to all the
circumstances.
(ii) Insert, immediately after
subsection:
(4) In this section, body corporate
and partnership exclude a limited
liability partnership within the
meaning of the Limited Liability

(12) Securities and Futures Act
(Chapter 289, 2002 Ed.)

(a) Section 2 (1) (i) Delete sub-paragraph (ii) of
paragraph (a) of the definition of
connected person and substitute
the following sub-paragraph:
(ii) a firm, a limited liability
partnership or a corporation in which
554
the individual or any of the persons
mentioned in sub-paragraph (i) has
control of not less than 20% of the
voting power in the firm, limited
liability partnership or corporation,
whether such control is exercised
individually or jointly; or
(ii) Delete paragraph (b) of the
definition of connected person and
substitute the following paragraph:
(b) a firm, a limited liability
partnership or a corporation, means
another firm, limited liability
partnership or corporation in which
the first-mentioned firm, limited
liability partnership or corporation
has control of not less than 20% of
the voting power in that other firm,
corporation,
definition of licensed person, the
2005;
(iv) Insert, immediately after the
definition of participant, the
(b) Section 227 Repeal section 227 and substitute the
following section:
Attribution of knowledge within
partnerships and limited liability
partnerships
227. (1) For the purposes of this
Division
(a) a partner of a partnership or a
limited liability partnership (as the
case may be) is taken to possess any
information
(i) which another partner of the
partnership or limited liability
partnership (as the case may be)
possesses and which came into such
other partners possession in his
555
capacity as a partner of the
partnership (as the case may be); or
(ii) which an employee of the
partnership or a manager of a limited
liability partnership (as the case may
be) possesses and which came into
the possession of such an employee
or manager in the course of the
performance of his duties as such an
employee or manager; and
(b) if a partner or employee of a
partnership or a partner, manager or
employee of a limited liability
partnership (as the case may be)
knows or ought reasonably to know
any matter or thing in his capacity as
such a partner, manager or
employee, it is to be presumed that
every partner of the partnership or
case may be) knows or ought
reasonably to know that matter or
thing.
(2) The partners of a partnership or
case may be)do not contravene
section 218 (2) or 219 (2) by
entering into a transaction or
agreement at any time merely
because one or more (but not all) of
the partners, or a manager or
managers, or an employee or
employees, of the partnershipor
case may be)are in actual possession
of information if
(a) the decision to enter into the
transaction or agreement was taken
on behalf of the partnership or
limited liability partnership by any
one or more of the following persons:
(i) a partner who is taken to have
possessed the information merely
because another partner, or
amanager or employee, of the
partnership, was in possession of the
information;
(ii) an employee of the partnershipor
limited liability partnership or a
manager of the limited liability
556
partnership who was not in
possession of the information;
(b) the partnership or limited liability
partnership had in operation at that
time arrangements that could
reasonably be expected to ensure
that the information was not
communicated to the person or
persons who made the decision and
that no advice with respect to the
transaction or agreement was given
to that person or any of those
persons by a person in possession of
the information; and
(c) the information was not so
communicated and no such advice
was so given.
(3) A partner of a partnership or
case may be)does not contravene
section 218 (2) or 219 (2) by
entering into a transaction or
agreement otherwise than on behalf
of the partnership or limited liability
partnershipmerely because he is
taken to possess information that is
in the possession of another partner,
a manageror an employee of the
partnership.

(c) Section 331 (i) Insert, immediately after
subsection:
Act committed by a limited liability
partnership is proved to have been
committed with the consent or
connivance of, or to be attributable to
any neglect on the part of, a partner
or manager of the limited liability
partnership, the partner or manager
(as the case may be) as well as the
partnership shall be guilty of that
offence and shall be liable to be
proceeded against and punished
accordingly.
(ii) Delete the definition of partner
in subsection (5) and substitute the
body corporate and
partnershipexclude a limited liability
557
partnership within the meaning of the
2005;
definition of officer in subsection
(5), the following definition:
"partner" , in relation to a
partnership, includes a person
purporting to act as a partner.

(13) Societies Act
(Chapter 311, 1985 Ed.)

Section 2 Insert, immediately after paragraph
(b)ofthe definition of society, the
following paragraph:
(ba) any limited liability partnership
Partnerships Act 2005;

(14) Subordinate Courts Act
(Chapter 321, 1999 Ed.)

Section 26 Insert, immediately after the word
partnership where it first appears in
paragraph (f), the words (other than
Partnerships Act 2005).

(15) Third Parties (Rights Against
Insurers) Act (Chapter 395,
1994 Ed.)

New section 3A Insert, immediately after section 3,
the following section:
Application to limited liability
partnerships
3A. This Act applies to limited
liability partnerships registered under
2005 as it applies to companies.

558

CHAPTER 8: LIMITED LIABILITY PARTNERSHIP LAWS IN AUSTRALIA

8.0 INTRODUCTION
Australia has adopted the US Model of Limited Liability Partnership. Partnerships are
governed on a state-to-state basis. Each State has its own legislation. Some States
have already introduced legislation to allow for limited liability partnerships to be
formed. For example, in Queensland, Western Australia and Tasmania, limited
liability partnerships are regulated by the State's Limited Partnership Act. In New
South Wales and Victoria, the provisions are incorporated into the Partnership Act
(See Annexure 1: New South Wales Partnership Act, 1892). Although the
legislation in the various States are not uniform, they are similar.
61

A limited liability partnership is a separate legal entity and provides for two basic
types of partners, namely the general partner and a limited partner. A general
partner in a limited liability partnership has unlimited liability for the debts and
obligations of the partnership. The assets of the LLP are generally held by the
general partner. As against this the limited partner acts only as investor and his
liability is limited to the contribution of the partner to the capital of the partnership.
A general partner and the limited liability partnership are not considered an agent of
the limited partner.
62

The general partner is responsible for the management of the partnership business.
Limited partners cannot take part in the management and the partnership is not
dissolved in the event of their death or bankruptcy. Should a limited partner become
involved in the management of the partnership, he/she automatically ceases to have
limited liability.
63

A limited liability partnership must be registered with the Registrar or equivalent
official. To protect the limited liability of those designated partners, the partnership
should not start trading until it is registered with the appropriate body. Failure to
register will automatically result in the partnership being treated as a "general"
partnership.
64

The liability of incoming and outgoing partners is also a delicate area, which needs to
be given much consideration. There are a number of provisions under the various
State and Territory Partnership Acts, which apply, these include:
A person who becomes a partner of an existing business/firm is not liable to the
creditors of the business/firm for anything done before he/she became a partner.
A partner who retires from a business does not cease to be liable for partnership
debts or obligations incurred before the retirement.
A retiring partner may be discharged from any existing liabilities based on an
agreement between them, members of the business and the creditors.
65

However, there are special rules under the partnership legislation covering limited
liability partnerships when it comes to their rights as part of the partnership. For
example:

61
http://smallbusiness.ninemsn.com.au/article.aspx?id=21974
62
Ibid.
63
Ibid.
64
Ibid.
65
Ibid.
559
Ordinary business matters may be decided upon by the majority of the "general
partners".
The limited partner may assign their partnershi p share with the approval of the
partners. The person taking the limited partner's share will then occupy his/her
position in the partnership.
A new general partner can be introduced into the partnership without the consent
of the limited partner(s).
The limited partner is not able to dissolve the partnership by giving notice.
66

Under the Australian model, certain types of investors from specified countries are
exempted from Australian tax on investment gains, these being gains from sale of
investments rather than dividends or other revenue from investments held. In effect,
the Australian model provides exemptions to certain capital gains tax on
investments, which would otherwise be taxable in that country.
67

One of the most significant hazards of the LLP is that although it looks like a
partnership it is not strictly treated as such. For example, in its home country, as
long as the limited partner meets legislative requirements, there is no joint and
several liabilities. However, there is a concern that Li mited partners liability will be
unlimited if the partnership trades in overseas jurisdictions under different
partnership regimes. Accordingly, the benefit of limited liability back home might be
lost in relation to those overseas dealings.
68

This matter has rarely been considered by common law courts and there is no
precedent on point which confirms that a statutory limitation of partner liability
would be recognised outside the home country of the LLP. General legal consensus is
that there is a risk that a foreign court would not recognise the limitation of liability
of limited partners.
69

It was considered that the ambiguity surrounding this issue represented substantial
risk to investors and may block the use of LLPs as an effective vehicle for
international transactions.
70

Accordingly, a crucial aspect of the reform of the Australian state partnership laws
was aimed at ensuring that the LLP base legislation treats the partnership as a
separate legal entity sheltering the limited partner from legal responsibility for
partnership actions. How the parties conduct their business in foreign jurisdictions is
also likely to impact on whether the limited partners limitation of liability is effective
in those jurisdictions.
71

As already discussed, under various State Partnership Laws, limited partners were
prohibited from participating in the management of the investment (subject to a set
of safe harbours). Generally, the venture capital process is very hands-on with
the venture capital investor helping the investee implement and give effect to their
ideas, by providing both capital and expertise.
72

66
Ibid.
67
http://www.chapmantripp.co.nz/resource_library/published_article.asp?id=2617
68
Ibid.
69
Ibid.
70
Ibid.
71
Ibid.
72
Ibid.
560

However, this involvement by limited partner ran the risk of breaching that
prohibition on management participation with the undesirable consequence that
limited partners lose their limitation of liability. Given the nature of the venture
capital process being medium to long-term/patient capital, investors are not
prepared to simply part with their money without some form of management input
and in certain circumstances, ability to control.
73

Accordingly, a very prescriptive list of safe harbours was introduced into or expanded
under the Australian state laws to allow for the specific dynamics of the venture
capital management involvement. For example, under the Victoria Partnership
(Venture Capital Funds) Act 2003, and if permitted in the partnership agreement, a
limited partner will not be regarded as taking part in the management of the
business by virtue of voting on any resolution or examining the state or prospects of
the businesses of the partnership or advising, or consulting with, other partners in
relation to these matters.
74

8.1 LIABILITY CAPPING LEGISLATION
The State of New South Wales (NSW) was the first state in Australia to introduce a
legislation capping liability for professionals in the year 1994. Although all the
Australian States and Territories, except for Tasmania, have passed similar
legislation, only NSW and Western Australia have professional standards schemes
operating at the moment. It enables occupational associations to establish their own
professional standards schemes, requiring members to insure and implement
strategies for the protection of the parties concerned in exchange for their liability
capped at a specified level. The cap is to provide "some guarantee of payment for
the vast majority of claimants".
75

The liability capping legislation of NSW gives a blanket cover to the professionals
under their respective professional standards schemes, no matter whether they have
personal involvement in the wrongful act or not. For example, under the Solicitors
Scheme, the maximum liability for each claim depends on the number of principals in
the legal practice.

An occupational association intending to set up a professional standards scheme has
to apply with the Professional Standards Council (PSC), which is a statutory body
formed
76
under the Professional Standards Act 1994 (See Annexure 2). Part-time
members appointed by the Attorney General of NSW govern it. Its main role is to
approve and monitor professional standards schemes.

Whilst PSC is evaluating the application, it must publish a notice in a daily newspaper
circulating in NSW explaining the nature and significance of the proposed scheme,
and inviting comments and submissions within a specified time
77
. It may conduct a
public hearing as well.

73
Ibid.
74
Ibid.
75
Selected Places
76
It was formed in 1995.
77
The time given should not be less than 21 days after the publication of the notice.
561
The scheme approved by PSC is submitted to the Attorney General of NSW, who may
authorize the publication of the approved scheme in the Gazette.
78
Written notice of
the making of the scheme has to be laid before each House of Parliament of NSW
within 14 sitting days after the day on which it is published in the Gazette.
79

Either House of Parliament may pass a resolution disallowing the professional
standards scheme in the same way that a statutory rule may be disallowed.
80
A
person who is or is reasonably likely to be affected by the scheme published may
also apply to the Supreme Court for an order that the scheme is void.
81

An occupational association with a professional standards scheme pays an annual fee
to PSC. In NSW, the fee is calculated at the rate of AUS$35 per member covered by
the professional standards scheme.

A professional standards scheme remains in force for a period not exceeding five
years from its commencement. For the legal profession, the Solicitors Scheme was
established on 5 December 1996 and renewed on 22 November 2000. The present
Solicitors Scheme will remain in force until 21 November 2005.

The NSW government may direct PSC to review the operation of the professional
standards scheme concerned. PSC may also conduct a review on its own initiative. A
review may be conducted in order to decide whether a professional standards
scheme should be amended or revoked, or whether a new scheme should be made.
PSC may prepare an amendment to or revocation of a professional standards
scheme.
82
Before the amendment or revocation, PSC must consider the same set of
factors as that for approving a proposed professional standards scheme.

Only an occupational association may prepare a professional standards scheme and
apply for approval. An occupational association is "a body corporate which represents
the interests of persons who are members of the same occupational group or related
occupational groups, and the membership of which is limited principally to members
of that occupational group or those occupational groups".
83

Apart from the Solicitors Scheme, seven other professional standards schemes have
been established in NSW over the years. They are the Professional Surveyors
Scheme, Professional Engineers Scheme, National Institute of Accountants Scheme,
Investigative and Remedial Engineers Professional Standards Scheme, Institute of
Consulting Valuers Scheme, Accountants Professional Standards Scheme and the
Barristers Professional Standards Scheme.

Under the Professional Standards Act 1994, the requirements for establishing a
professional standards scheme apply to the legal profession and other professions
alike. The legislation sets out a minimum level of liability applicable to all
professions. Nevertheless, each of the occupational associations can always establish
a higher threshold for its own profession. While the legislation lists the types of
safeguards that all professional standards schemes must provide, each occupational

78
The scheme commences on a date specified in the approved scheme or two months after the date of its
publication in the Gazette.
79
Section 13 of the Professional Standards Act 1994 and section 40 of the Interpretation Act 1987
80
Section 41 of the Interpretation Act 1987
81
Section 15(1) of the Professional Standards Act 1994
82
Sections 16 and 16A of the Professional Standards Act 1994
83
Section 4 of the Professional Standards Act 1994
562
association may determine the specifics of those measures, such as standards of
insurance policies, to best suit the characteristics of the profession. In short, while
the professional standards schemes share a common framework, the specific
requirements vary.

Under the Professional Standards Act 1994, a professional standards scheme may
apply to all persons or a specified class of persons within an occupational association.
A person may apply to the occupational association for exemption from the
professional standards scheme.

The Professional Standards Act 1994 requires professionals to have insurance and/or
business assets
84
of value not less than the maximum amount of liability applicable
under a professional standards scheme. An occupational association may require its
members to hold insurance against occupational liability and impose such a
requirement as a condition of membership. In that event, as a person must be a
member of an occupational association before the respective professional standards
scheme applies to him or her, the insurance provision is not just a membership
condition but also an eligibility requirement for joining a professional standards
scheme.

If a professional standards scheme applies to a person, it applies to each partner and
employee of that person. In other words, if a person is covered by a professional
standards scheme, the liability of his or her partners and employees will also be
capped as a result. If a professional standards scheme applies to a body corporate, it
also applies to each officer
85
of the body corporate as well.

The Solicitors Scheme is available to all members of the NSW Law Society who are
holding a current practising certificate and have the benefit of an insurance policy.
The insurance policy under which the amount payable in respect of occupational
liability must not be less than the maximum amount of liability specified in the
Solicitors Scheme
86
. Members of the NSW Law Society can apply for exemption from
the Solicitors Scheme.

For an incorporated legal practice, the practice itself is not covered by the Solicitors
Scheme because a body corporate cannot be a member of the NSW Law Society, and
therefore, not eligible for the Solicitors Scheme. As it is required by law
87
there must
be at least one solicitor director
88
in an incorporated legal practice, the solicitor
director can be a member of the NSW Law Society and thus covered by the Solicitors
Scheme.

If a law firm runs as a general partnership, its partners are fully and personally liable
for all the liabilities of the firm. Nevertheless, under the Solicitors Scheme, the
partners' liabilities are capped and hence, the law firm's liabilities are capped as a
result.

84
Business assets cannot be used as a reference to fulfill the requirement for limitation of liability unless
the particular professional standards scheme has such specification.
85
"Officer" of a corporation in general means a director or secretary of the corporation, or a person who is
concerned or takes part in the management of that corporation.
86
The Solicitors Scheme does not limit liability using business assets.
87
Section 47E of the Legal Profession Act 1987
88
A solicitor director means a director of an incorporated legal practice who holds an unrestricted
practising certificate as a solicitor and barrister.
563
The nature of the liability to be capped is governed by the Professional Standards Act
1994 for all professions alike. The capped occupational liability includes "civil liability
arising (in tort, contract or otherwise) directly or vicariously from anything done or
omitted by a member of the occupational association acting in the performance of his
or her occupation".
89

The Professional Standards Act 1994 does not cap liability for damages arising from
any one of the following
90
:
(a) death or injury to a person;
(b) breach of trust;
(c) fraud or dishonesty; and
(d) liability, which may be the subject of proceedings under Part 13 or 14 of the
Real Property Act
91
.

The limitation of liability is made on a per claim basis. The maximum liability is a
limitation of the amount of damages that may be awarded for a single claim, not for
all claims arising out of a single event.
92

The Professional Standards Act 1994 prohibits the splitting of claimants or
defendants, which may occur in an attempt to generate more claims so as to avoid
the limit.
93
Two or more claims by the same person arising out of a single event
against associated persons to whom a professional standards scheme applies are to
be treated as a single claim. Persons are associated if they are partners, employees
of the same employer or in the relationship of employer and employee, or officers of
the same body corporate or in the relationship of body corporate and officer of the
body corporate.
94

The Professional Standards Act 1994 provides that the maximum amount of liability
must not be less than AUS$500,000
95
for a single claim, with the view that the great
majority of claims are met in full
96
. The policy behind the legislation is that "it is
preferable to provide some guarantee of payment for the vast majority of claimants
than to have a system of unlimited liability with no certainty of any payment "
97
.

Professionals covered by a professional standards scheme are liable to damages not
exceeding AUS$500,000, whilst their respective occupational association is given the
discretionary authority to specify a higher maximum amount of liability. The
statutory cap would not prevail over other regulatory schemes. For instance, if a
statute requires a certain profession be covered with a higher compulsory insurance,
the professionals concerned would be subject to that higher compulsory insurance
requirement instead of the AUS$500,000 cap imposed by the Professional Standards
Act 1994.

89
90
91
Under the Real Property Act, any person who suffers loss or damage in respect of any land arising from
a number of reasons listed in Part 13 or 14 of the Real Property Act, is entitled to payment of
compensation from the Torrens Assurance Fund administered by the Registrar-General.
92
93
Ibid.
94
Ibid.
95
Sections 22-26 of the Professional Standards Act 1994
96
Speech of the Attorney General in the second reading of the Professional Standards Bill. NSW Legislative
Council Hansard. 14 September 1994, pp.2933-2935
97
Ibid.
564
The Professional Standards Act 1994 provides for a number of different bases for
specifying the limitation amount, including a set amount for all cases, different
amounts for different classes of practitioners or different kinds of work, and a
multiple of the fee charged for services provided. The occupational associations
applying for a professional standards scheme may select one of these bases to best
suit the characteristic of their professions.

Under the Solicitors Scheme, an NSW Law Society member may have limited liability
of between AUS$1.5 million and AUS$50 million.

The Solicitors Scheme specifies different limitation amounts for different classes of
persons. The persons specified include solicitors and their employees. For persons in
a sole practitioner legal practice or in a legal practice having no more than three
principals, the maximum amount of liability is AUS$1.5 million. For solicitors who
practice in a firm having more than three principals, it can be calculated by
multiplying AUS$500,000 by the number of principals in the firm, up to AUS$10
million, but a member can select a higher liability amount up to AUS$50 million.

The maximum amount of liability of persons in a legal practice is specified in the
Solicitors Scheme as follows:

Class Description Maximum amount of
liability (for a single
claim)
1 Persons in a sole practitioner legal
practice or in a legal practice having
no more than three principals
98

AUS$1.5 million
2 4 principals AUS$2.0 million
18 20 or more principals AUS$10.0 million
19 Persons in a legal practice where the
sole practioner or principals in
classes 1-18, as the case may be,
select and specify a maximum
amount of liability greater than that
specified for the class.
The selected maximum
amount of liability greater
than that specified for the
class but not exceeding a
maximum amount of AUS
$ 50 million.

98
Partners of the legal practice are regarded as principals of the practice.
565

The statutory cap on damages is tied to a number of safeguards. These measures
are introduced not only to protect the interests of the parties concerned, but also to
promote greater professional control through self-regulation.

The Professional Standards Act 1994 in NSW requires the professions to insure in
exchange for having their liability capped. The legislation provides that an
occupational association may compel its members to hold insurance under a
professional standards scheme and the insurance policy must comply with the
standards determined by the respective occupational association.
99

Given that the benefit of insurance must not be less than the amount of the liability
ceiling, the statutory requirement for minimum insurance is AUS$500,000
100
for a
single claim.

Although the Professional Standards Act 1994 does not require occupational
associations to report annually to PSC the claims made against its members, PSC
requires that they include claims information in their annual report on risk
management strategies.

The Professional Standards Act 1994 requires a person with capped occupational
liability to specify that fact on all documents given to a client or prospective client
that promote or advertise the person or the person's occupation, including official
correspondence ordinarily used by the person in the performance of his or her
occupation.
101
Non-compliance of the disclosure requirement is an offence and the
maximum penalty is a fine of AUS$5,500.
102

The Professional Standards Regulation 2004 prescribes a statement for solicitors and
other professionals to adopt to fulfill the disclosure requirement. The statement is
"Liability limited by a scheme approved under Professional Standards Legislation."
103

The size of the disclosure statement is also specified in the Professional Standards
Regulation 2004.
104
All in all, the disclosure should be adequate to reveal that the
liability of the service provided is limited.

The policy statement on disclosure of limited liability issued by PSC states that, at a
minimum, the disclosure should appear on the following documents:
(a) letterhead, letters, etc. signed by the company or on its behalf;
(b) fax cover sheets;
(c) documents such as written advice, plans, drawings, specifications and other
documents produced by the service provider for clients where those
documents are not accompanied by a letter or other document on which
appears a disclosure statement when given to a client;
(d) newsletters and other publications;

99
Sections 21, 27 and 34 of the Professional Standards Act 1994

100
Sections 22-26 of the Professional Standards Act 1994
101
102
103
Until 29 October 2005, the old form of statement may be adopted as well: "Liability limited by
Solicitors Scheme, approved under the Professional Standards Act 1994 (NSW)".
104
It is required that the statement be printed in a size not less than the face measurement of Times
New Roman typeface in 8 point
566
(e) memorandum of fees and invoices not accompanied by a letter or other
document on which appears a disclosure statement when given to a client and
where no previous documents on which appeared a disclosure statement was
previously given to the client;
(f) e-mail; and
(g) websites via which services are delivered to clients
105
.

The NSW Law Society and other occupational associations have to provide an annual
report to PSC as to the implementation and monitoring of their risk management
strategies, the effect of these strategies and any changes made or proposed to be
made under their respective professional standards scheme.
106
They are also
required to monitor their members' compliance with the insurance requirements and
the implementation of the complaints and disciplinary systems, to take appropriate
actions and to report to PSC.

The Professional Standards Act 1994 does not impose any reporting requirement on
financial information of those covered by professional standards schemes. Those
persons covered by the Solicitors Scheme are not required to report their financial
position to the NSW Law Society or PSC either.

The Professional Standards Act 1994 provides a Model Code to deal with complaints
and disciplinary matters in Schedule 1 as default rules. Occupational associations
may set up their own complaints and disciplinary systems.

The Model Code states that an occupational association must consider a complaint as
soon as practicable. After an occupational association has conducted a hearing into a
complaint against a person, it may discipline the person in various ways if it finds the
complaint substantiated. However, an occupational association is not entitled to
award any compensation. Within 30 days after a decision is made concerning a
complaint, the complainant and the person against whom the complaint is made
must be given a written statement of the decision with reasons for the decision.

When an occupational association seeks the approval of PSC for its professional
standards scheme, it must furnish PSC with a detailed list of the risk management
strategies intended to be implemented in respect of its members and the means by
which those strategies are to be implemented.
107
The means of implementation may
be imposed as a condition of membership or otherwise.
108

A report
109
discloses that the average size of professional indemnity claims settled
across professions in 2003 was AUS$21,713, which was well below the AUS$500,000
statutory threshold. According to PSC, this survey shows that most claimants are
fully compensated for damages and only corporate clients would experience limits on
their claims against professions, but they have the capacity to self-insure and to
manage risk. PSC is not aware of any large claim across professions that are above
the limitation amount since the professional standards schemes commenced.

105
Where a website only contains promotional material, it is not necessary to include a disclosure
statement.
106
107
108
109
Australian Competition and Consumer Commission (2004)
567
According to PSC, the impact of the professional standards schemes has been more
dramatic for other occupations. For instance, insurance and continuing education,
which were not compulsory for some occupations, are established after their
respective professional standards scheme has been set up. PSC states that one of
the impacts of the Professional Standards Act 1994 is that self-regulating
occupations with professional standards schemes are more accountable to the
community because they report to the community through their reports to PSC.

568
ANNEXURE 1

New South Wales Partnership Act 1892 No 12
110

Part 1 Preliminary
1A Name of Act
This Act may be cited as the Partnership Act 1892.
1B Interpretation
(1) In this Act:
business includes trade, occupation and profession.
Court means the court having jurisdiction in the case
concerned.
general partner is defined in section 49.
incorporated limited partnership is defined in section
49.
l i mi ted partner is defined in section 49.
limited partnership is defined in section 49.
(2) In this Act, a reference, in relation to an
incorporated limited partnership, to the partnership or
the firm is a reference to the incorporated limited
partnership as a separate legal entity and not to the
partners in that partnership.
(3) Notes included in this Act do not form part of this
Act.
1C Application of laws of partnership to incorporated limited partnerships
Except as provided (whether expressly or by necessary implication) by
this Act or any other enactment, the law relating to partnership does
not apply to or in respect of an incorporated limited partnership, the
partners in an incorporated limited partnership or to the relationship
between an incorporated limited partnership and its partners.
Part 2 Partnerships generally

110
http://www.legislation.nsw.gov.au/maintop/scanact/inforce/NONE/0
569
Division 1 Nature of partnership
1 Definition of partnership
(1) Partnership is the relation which exists between
persons carrying on a business in common with a view
of profit and includes an incorporated limited
partnership.
(2) But the relation between members of any company
or association which is:
(a) incorporated under the Corporations
Act 2001 of the Commonwealth, or
(b) Formed or incorporated by or in
pursuance of any other Act of Parliament
or Letters Patent or Royal Charter,
is not a Partnership within the meaning of this Act.
2 Rules for determining existence of partnership
(1) In determining whether a partnership does or does
not exist, regard shall be had to the following rules:
(1) Joint tenancy, tenancy in common,
joint property, or part ownership does not
of itself create a partnership as to
anything so held or owned, whether the
tenants or owners do or do not share any
profits made by the use thereof.
(2) The sharing of gross returns does not
of itself create a partnership, whether the
persons sharing such returns have or have
not a joint or common right or interest in
any property from which or from the use
of which the returns are derived.
(3) The receipt by a person of a share of
the profits of a business is prima facie
evidence that the person is a partner in
the business, but the receipt of such a
share, or of a payment contingent on, or
varying with the profits of a business does
not of itself make the person a partner in
570
the business; and in particular:
(a) The receipt by a person
of a debt or other liquidated
demand by instalments or
otherwise out of the
accruing profits of a
business does not of itself
make the person a partner
in the business or liable as
such:
(b) A contract for the
remuneration of a servant
or agent of a person
engaged in a business by a
share of the profits of the
business does not of itself
make the servant or agent a
partner in the business or
liable as such:
(c) A person being the
widow, widower or child of a
deceased partner, and
receiving by way of annuity
a portion of the profits
made in the business in
which the deceased person
was a partner, is not by
reason only of such receipt
a partner in the business or
liable as such:
(d) The advance of money
by way of loan to a person
engaged or about to engage
in any business on a
contract with that person,
that the lender shall receive
a rate of interest varying
with the profits, or shall
receive a share of the
profits arising from carrying
on the business, does not of
itself make the lender a
partner with the person or
persons carrying on the
571
business or liable as such:
Provided that the contract is
in writing and signed by or
on behalf of all the parties
thereto:
(e) A person receiving by
way of annuity or otherwise
a portion of the profits of a
business in consideration of
the sale by the person of
the goodwill of the business
is not by reason only of
such receipt a partner in the
business or liable as such.
(2) This section does not apply to or in respect of an
incorporated limited partnership.
3 Postponement of rights of persons lending or selling in consideration of
share of profits in case of insolvency
In the event of any person to whom money has been advanced by way
of loan upon such a contract as is mentioned in the last foregoing
section, or of any buyer of a goodwill in consideration of a share of the
profits of the business being adjudged a bankrupt, entering into an
arrangement to pay the persons creditors less than one hundred cents
in the dollar, or dying in insolvent circumstances, the lender of the
loan shall not be entitled to recover anything in respect of the loan,
and the seller of the goodwill shall not be entitled to recover anything
in respect of the share of profits contracted for, until the claims of the
other creditors of the borrower or buyer for valuable consideration in
money or moneys worth have been satisfied.
4 Meaning of firms
Persons who have entered into partnership other than an incorporated
limited partnership with one another are for the purpose of this Act
called collectively a firm, and the name under which their business is
carried on is called the firm- name.
Note. On the meaning of firm in relation to an
incorporated limited partnership see section 1B (2). On
the meaning of firm- name of an incorporated limited
partnership see section 49.
Division 2 Relationship of partners to persons dealing with them
5 Power of partner to bind firm
572
(1) Every partner in a partnership other than a firm that
is a limited partnership or incorporated limited
partnership is an agent of the firm and of the other
partners for the purpose of the business of the
partnership; and the acts of every partner who does any
act for carrying on in the usual way business of the kind
carried on by the firm of which the partner is a member,
binds the firm and the other partners, unless the partner
so acting has in fact no authority to act for the firm in
the particular matter, and the person with whom the
partner is dealing either knows that the partner has no
authority, or does not know or believe the partner to be
a partner.
(2) Every general partner in a limited partnership or
incorporated limited partnership is an agent of the firm
and of the other general partners for the purpose of the
business of the partnership, and the acts of every
general partner who does any act for carrying on in the
usual way business of the kind carried on by the firm of
which the partner is a member, bind the firm and the
other general partners, unless:
(a) the general partner has in fact no
authority to act for the firm in the
particular matter, and
(b) the person with whom the general
partner is dealing either knows that the
general partner has no authority, or does
not know or believe the general partner to
be a general partner.
6 Partners bound by acts on behalf of firm
(1) An act or instrument relating to the business of a
firm other than an incorporated limited partnership, and
done or executed in the firm-name, or in any other
manner, showing an intention to bind the firm by any
person thereto authorised, whether a partner or not, is
binding on the firm and all the partners.
(2) An act or instrument relating to the business of a
firm that is an incorporated limited partnership, and
done or executed in the firm-name, or in any other
manner, showing an intention to bind the firm by any
person authorised to bind the firm, whether a general
573
partner or not, is (subject to section 9 (3)) binding on
the firm and all the general partners.
(3) This section does not affect any general rule of law
relating to the execution of deeds or negotiable
instruments.
7 Partner using credit of firm for private purposes
(1) Where one partner pledges the credit of a firm other
than a firm that is an incorporated limited partnership
for a purpose apparently not connected with the firms
ordinary course of business, the firm is not bound unless
the partner is in fact specially authorised by the other
partners; but this section does not affect any personal
liability incurred by an individual partner.
(2) Where a general partner pledges the credit of a firm
that is an incorporated limited partnership for a purpose
apparently not connected with the firms ordinary course
of business, the firm is not bound unless the general
partner is in fact specially authorised by the firm, but
this section does not affect any personal liability incurred
by an individual general partner.
8 Effect of notice that firm will not be bound by acts of partner
(1) If it has been agreed between the partners that any
restrictions shall be placed upon the power of any one or
more of them to bind a firm other than a firm that is an
incorporated limited partnership, no act done in
contravention of the agreement is binding on the firm
with respect to persons having notice of the agreement.
(2) If it has been agreed by the partners in an
incorporated limited partnership that any restrictions are
to be placed on the power (if any) of any one or more of
them to bind the firm, no act done in contravention of
the agreement is binding on the firm with respect to
persons having notice of the agreement.
9 Liability of partner
(1) Every partner in a firm other than an incorporated
limited partnership is liable jointly with the other
partners for all debts and obligations of the firm incurred
while the partner is a partner; and (if the partner is an
individual) after the partners death the partners estate
574
is also severally liable in a due course of administration
for such debts and obligations so far as they remain
unsatisfied, but subject to the prior payment of the
partners separate debts.
(2) Every general partner in an incorporated limited
partnership is liable jointly with the incorporated limited
partnership for all debts and obligations of the
partnership incurred while the general partner is a
general partner, and (if the general partner is an
individual) after the general partners death the general
partners estate is also severally liable in a due course of
administration for such debts or obligations so far as
they remain unsatisfied but subject to the prior payment
of the partners separate debts.
(3) Despite subsection (2), a general partner in an
incorporated limited partnership is only liable for any
debts or obligations of the incorporated limited
partnership:
(a) to the extent the incorporated limited
partnership is unable to satisfy the debts
and obligations, or
(b) to a greater extent provided by the
10 Liability of firm for wrongs
(1) Subject to subsection (2), where by any wrongful
act or omission of any partner in a firm other than an
incorporated limited partnership acting in the ordinary
course of the business of the firm, or with the authority
of the partners co-partners, loss or injury is caused to
any person not being a partner of the firm, or any
penalty is incurred, the firm is liable therefor to the
same extent as the partner so acting or omitting to act.
(2) For the purposes of subsection (1), a partner in a
firm other than an incorporated limited partnership who
commits a wrongful act or omission as a director of a
body corporate, within the meaning of the Corporations
Act 2001 of the Commonwealth, is not to be taken to be
acting in the ordinary course of the business of the firm
or with the authority of the partners co-partners only
because of any one or more of the following:
575
(a) the partner obtained the agreement
or authority of the partners co-partners,
or some of them, to be appointed or to act
as a director of the body corporate,
(b) remuneration that the partner
receives for acting as a director of the
body corporate forms part of the income
of the firm,
(c) any co-partner is also a director of
that or any other body corporate.
(3) Subject to subsection (4), where by any wrongful
act or omission of any general partner in an
incorporated limited partnership acting in the ordinary
course of the business of the incorporated limited
partnership, or with its authority, loss or injury is caused
to any person not being a partner in the incorporated
limited partnership, or any penalty is incurred, the
incorporated limited partnership is liable in respect of
that loss or injury or penalty to the same extent as the
general partner so acting or omitting to act.
(4) For the purposes of subsection (3), a general
partner in an incorporated limited partnership who
commits a wrongful act or omission as a director of a
body corporate, within the meaning of the Corporations
Act 2001 of the Commonwealth, is not to be taken to be
acting in the ordinary course of business of the
incorporated limited partnership or with its authority
only because of any one or more of the following:
(a) the general partner obtained the
agreement or authority of the
incorporated limited partnership to be
appointed or to act as a director of the
body corporate,
(b) remuneration that the general partner
receives for acting as a director of the
body corporate forms part of the income
of the incorporated limited partnership,
(c) any other general partner in the
incorporated limited partnership is also a
director of that or any other body
576
corporate.
11 Misapplication of money or property received for or in the custody of
the firm
(1) In the following cases involving the partners of a
firm other than an incorporated limited partnership,
namely:
(a) Where one partner acting within the
scope of the partners apparent authority
receives the money or property of a third
person and misapplies it, and
(b) When a firm in the course of its
business receives money or property of a
third person, and the money or property
so received is misapplied by one or more
of the partners while it is in the custody of
the firm,
the firm is liable to make good the loss.
(2) In the following cases involving general partners in
an incorporated limited partnership:
(a) where one general partner acting
within the scope of the general partners
apparent authority receives the money or
property of a third person and misapplies
it,
(b) when an incorporated limited
partnership in the course of its business
receives money or property of a third
person, and the money or property so
received is misapplied by one or more of
the general partners while it is in the
custody of the incorporated limited
partnership,
the incorporated limited partnership is liable to
make good the loss.
12 Liability for wrongs joint and several
(1) Every partner in a firm other than an incorporated
577
limited partnership is liable jointly with the partners co-
partners and also severally for everything for which the
firm while the partner is a partner therein becomes
liable under either of the two last preceding sections.
(2) Every general partner in an incorporated limited
partnership is liable jointly with the other general
partners in the partnership and also severally for
everything for which the firm becomes liable under
section 10 (3) or 11 (2) while the general partner is a
general partner in the firm.
(3) Despite subsection (2), a general partner in an
incorporated limited partnership is only liable for any
liability of the incorporated limited partnership referred
to in that subsection:
(a) to the extent the incorporated limited
partnership is unable to satisfy the
liability, or
(b) to a greater extent provided by the
13 Improper employment of trust property for partnership purposes
(1) If a partner in a firm other than an incorporated
limited partnership being a trustee improperly employs
trust property in the business or on account of the
partnership, no other partner is liable for the trust
property to the persons beneficially interested therein:
Provided as follows:
(1) This section shall not affect any
liability incurred by any partner by reason
of the partners having notice of a breach
of trust, and
(2) Nothing in this section shall prevent
trust money from being followed and
recovered from the firm if still in its
possession or under its control.
(2) If a general partner in an incorporated limited
partnership being a trustee improperly employs trust
property in the business or on account of the
578
partnership, neither the partnership nor any other
general partner is liable for the trust property to the
persons beneficially interested in it.
(3) Subsection (2):
(a) does not affect any liability incurred
by any general partner by reason of the
partners having notice of a breach of
trust, and
(b) does not prevent trust money from
being followed and recovered from the
incorporated limited partnership if still in
its possession or under its control.
14 Persons liable by holding out
(1) Every one who by words spoken or written, or by
conduct represents himself or herself, or who knowingly
suffers himself or herself to be represented as a partner
in a particular firm that is a firm other than a limited
partnership or incorporated limited partnership, is liable
as a partner to any one who has on the faith of any such
representation given credit to the firm, whether the
representation has or has not been made or
communicated to the person so giving credit by or with
the knowledge of the apparent partner making the
representation or suffering it to be made.
(1A) Every one who by words spoken or written, or by
conduct represents himself or herself or who knowingly
suffers himself or herself to be represented as a general
partner in a particular firm that is a limited partnership
or an incorporated limited partnership, is liable as a
general partner to any one who has on the faith of any
such representation given credit to the firm, whether the
representation has or has not been made or
communicated to the person so giving credit by or with
the knowledge of the apparent general partner making
the representation or suffering it to be made.
(2) Provided that where after a partners death the
partnership business is continued in the old firm- name,
the continued use of that name or of the deceased
partners name as part thereof shall not of itself make
the partners executors or administrators estate or
effects liable for any partnership debts contracted after
579
the partners death.
15 Admissions and representations of partners
(1) An admission or representation made by any
partner in a firm other than a limited partnership or
incorporated limited partnership concerning the
partnership affairs, and in the ordinary course of its
business, is evidence against the firm.
(2) An admission or representation made by any
general partner in a limited partnership or incorporated
limited partnership concerning the partnership affairs,
and in the ordinary course of its business, is evidence
against the firm.
16 Notice to acting partner to be notice to firm
(1) Notice to any partner in a firm other than a limited
partnership or incorporated limited partnership who
habitually acts in the partnership business of any matter
relating to partnership affairs operates as notice to the
firm, except in the case of a fraud on the firm committed
by or with the consent of that partner.
(2) Notice to any general partner in a limited
partnership or incorporated limited partnership who
habitually acts in the partnership business of any matter
relating to partnership affairs operates as notice to the
firm except in the case of a fraud on the firm committed
by or with the consent of that partner.
17 Liabilities of incoming and outgoing partners
(1) A person who is admitted as a partner into an
existing firm other than a limited partnership or
incorporated limited partnership does not by that
admission alone become liable for anything done before
the person became a partner.
(2) A person who is admitted as a general partner into
an existing limited partnership or incorporated limited
partnership does not by that admission alone become
liable for anything done before the person became a
general partner.
(3) A partner who retires from a firm other than a
580
limited partnership or incorporated limited partnership
does not by that retirement alone cease to be liable for
partnership debts and obligations incurred before the
partners retirement.
(4) A partner who retires from a limited partnership or
incorporated limited partnership does not by that
retirement alone cease to be liable for liabilities of the
firm incurred before the partners retirement for which
the partner was liable.
Note. Liability is defined in section 49.
(5) A retiring partner in a firm other than a limited
partnership or incorporated limited partnership may be
discharged from any existing liabilities by an agreement
to that effect between the partner and the members of
the firm as newly constituted and the creditors, and this
agreement may be either expressed or inferred as a fact
from the course of dealing between the creditors and the
firm as newly constituted.
(6) A retiring partner in a limited partnership or
incorporated limited partnership may be discharged from
any existing liabilities by an agreement to that effect
between the partner and the firm and the creditors, and
this agreement may be either expressed or inferred as a
fact from the course of dealing between the creditors
and the firm.
18 Revocation of continuing guaranty by change of firm
(1) A continuing guaranty or cautionary obligation given
either to a firm or to a third person in respect of the
transactions of a firm is, in the absence of agreement to
the contrary, revoked as to future transactions by any
change in the constitution of the firm to which, or of the
firm in respect of whose transactions, the guaranty or
obligation was given.
Division 3 Relationship between partners
19 Variation by consent of terms of partnership
The mutual rights and duties of partners, whether ascertained by
agreement or defined by this Act, may be varied by the consent of all
581
the partners, and such consent may be either expressed or inferred
from a course of dealing.
20 Partnership property of firms other than incorporated limited
partnerships
(1) All property, and rights and interests in property,
originally brought into the partnership stock or acquired,
whether by purchase or otherwise, on account of the
firm, or for the purposes and in the course of the
partnership business, are called in this Act partnership
property, and must be held and applied by the partners
exclusively for the purposes of the partnership, and in
accordance with the partnership agreement.
(2) Provided that the legal estate or interest in any land
which belongs to the partnership shall devolve according
to the nature and tenure thereof, and the general rules
of law thereto applicable, but in trust so far as is
necessary for the persons beneficially interested in the
land under this section.
(3) Where co-owners of an estate or interest in any
land, not being itself partnership property, are partners
as to profits made by the use of that land or estate, and
purchase other lands and estate out of the profits to be
used in like manner, the land or estate so purchased
belongs to them, in the absence of an agreement to the
contrary, not as partners, but as co-owners for the same
respective estates and interests as are held by them in
the land or estate first-mentioned at the date of the
purchase.
20A Partnership property of incorporated limited partnership
(1) All property, and rights and interests in property,
acquired, whether by purchase or otherwise, on account
of an incorporated limited partnership, or for the
purposes and in the course of the business of the
partnership, are called in this Act partnership
property, and must be applied by the partnership
exclusively for the purposes of the partnership.
(2) No partner in an incorporated limited partnership,
by virtue only of being a partner in the partnership, has
582
any legal or beneficial interest in its partnership
property.
21 Property bought with partnership money
Unless the contrary intention appears, property bought with money
belonging to the firm is deemed to have been bought on account of
the firm.
22 Conversion into personal estate of land held as partnership property
(1) Where land or any heritable interest therein has
become partnership property, it shall, unless the
contrary intention appears, be treated as between the
partners (including the representatives of a deceased
partner), and also as between the heirs of a deceased
partner and the deceased partners executors or
administrators as personal or movable and not real or
heritable estate.
23 Procedure against partnership property for a partners separate
judgment debt
(1) After the commencement of this Act a writ of
execution shall not issue against any partnership
property except on a judgment against the firm.
(2) The Supreme Court may, on the application of any
judgment creditor of a partner, make an order charging
that partners interest in the partnership property and
profits with payment of the amount of the judgment
debt and interest thereon and may by the same or a
subsequent order appoint a receiver of that partners
share of profits (whether already declared or accruing),
and of any other money which may be coming to the
partner in respect of the partnership, and direct all
accounts and inquiries, and give all other orders and
directions which might have been directed or given if the
charge had been made in favour of the judgment
creditor by the partner, or which the circumstances of
the case may require.
(3) The other partner or partners shall be at liberty at
any time to redeem the interest charged, or in the case
583
of a sale being directed to purchase the same.
(4) Subsections (2) and (3) do not apply to or in
respect of an incorporated limited partnership.
24 Rules as to the interests and duty of partners other than partners in
incorporated limited partnership subject to special agreement
(1) The interests of partners in the partnership property
and their rights and duties in relation to the partnership
shall be determined, subject to any agreement
expressed or implied between the partners, by the
following rules:
(1) All the partners are entitled to share
equally in the capital and profits of the
business, and must contribute equally
towards the losses whether of capital or
otherwise sustained by the firm.
(2) The firm must indemnify every
partner in respect of payment made and
personal liabilities incurred by the partner.
(a) In the ordinary and
proper conduct of the
business of the firm, or
(b) In or about anything
necessarily done for the
preservation of the business
or property of the firm.
(3) A partner making, for the purpose of
the partnership, any actual payment or
advance beyond the amount of capital
which the partner has agreed to subscribe
is entitled to interest at the rate of seven
per centum per annum from the date of
the payment or advances.
(4) A partner is not entitled before the
ascertainment of profits to interest on the
capital subscribed by the partner.
(5) Every partner may take part in the
584
management of the partnership business.
(6) No partner shall be entitled to
remuneration for acting in the partnership
business.
(7) No person may be introduced as a
partner without the consent of all existing
partners.
(8) Any difference arising as to ordinary
matters connected with the partnership
business may be decided by a majority of
partners, but no change may be made in
the nature of the partnership business
without the consent of all existing
partners.
(9) The partnership books are to be kept
at the place of business of the partnership
(or the principal place, if there is more
than one), and every partner may, when
the partner thinks fit, have access to and
inspect and copy any of them.
25 Expulsion of partner
No majority of the partners can expel any partner unless a power to do
so has been conferred by express agreement between the partners.
26 Retirement from partnership at will
(1) Where no fixed term has been agreed upon for the
duration of the partnership, any partner may determine
the partnership at any time on giving notice of the
partners intention so to do to all the other partners.
(2) Where the partnership has originally been
constituted by deed, a notice signed by the partner
giving it, shall be sufficient for this purpose.
(3) This section does not apply to or in respect of a
limited partnership or incorporated limited partnership.
585
27 Where partnership for term is continued over, continuance on old terms
presumed
(1) Where a partnership entered into for a fixed term is
continued after the term has expired, and without any
express new agreement, the rights and duties of the
partners remain the same as they were at the expiration
of the term, so far as is consistent with the incidents of
a partnership at will.
(2) A continuance of the business by the partners or
such of them as habitually acted therein during the term
without any settlement or liquidation of the partnership
affairs, is presumed to be a continuance of the
partnership.
28 Duty of partners to render accounts
(1) Partners in a firm other than an incorporated limited
partnership are bound to render true accounts and full
information of all things affecting the partnership to any
partner or the partners legal representatives.
(2) An incorporated limited partnership is, subject to
the partnership agreement, bound to render true
accounts and full information in respect of all things
affecting the partnership to any partner or the partners
legal representatives.
29 Accountability of partners for private profits
(1) Every partner must account to the firm for any
benefit derived by the partner without the consent of the
other partners from any transaction concerning the
partnership, or for any use by the partner of the
partnership property, name, or business connexion.
(2) This section applies also to transactions undertaken
after a partnership has been dissolved by the death of a
partner, and before the affairs thereof have been
completely wound up, either by any surviving partner or
by the representatives of the deceased partner.
586
30 Duty of partner not to compete with firm
(1) If a partner, without the consent of the other
partners, carries on any business of the same nature as
and competing with that of the firm, the partner must
account for and pay over to the firm all profits made by
the partner in that business.
31 Rights of assignee of share in partnership
(1) An assignment by any partner of the partners share
in the partnership, either absolute or by way of
mortgage or redeemable charge, does not, as against
the other partners, entitle the assignee during the
continuance of the partnership, to interfere in the
management or administration of the partnership
business or affairs, or to require any account of the
partnership transactions, or to inspect the partnership
books, but entitles the assignee only to receive the
share of profits to which the assigning partner would
otherwise be entitled, and the assignee must accept the
account of profits agreed to by the partners.
(2) In case of a dissolution of the partnership, whether
as respect all the partners, or as respects the assigning
partner, the assignee is entitled to receive the share of
the partnership assets to which the assigning partner is
entitled as between the partner and the other partners,
and for the purpose of ascertaining that share, to an
account as from the date of the dissolution.
Division 4 Dissolution of partnership
31A Division does not apply to incorporated limited partnerships
This Division does not apply to or in respect of an incorporated limited
partnership.
32 Dissolution by expiration or otherwise
587
Subject to any agreement between the partners, a partnership is
dissolved:
(a) If entered into for a fixed term, by the expiration of
that term:
(b) If entered into for a single adventure or
undertaking, by the termination of that adventure or
undertaking:
(c) If entered into for an undefined time, by any partner
giving notice to the other or others of the partners
intention to dissolve the partnership.
In the last-mentioned case the partnership is dissolved as from the
date mentioned in the notice as the date of dissolution, or, if no date is
mentioned, as from the date of the communication of the notice.
33 Dissolution by bankruptcy, death, or change
(1) Subject to any agreement between the partners,
every partnership is dissolved as regards all the partners
by the death or bankruptcy of any partner.
(2) A partnership may, at the option of the other
partners, be dissolved if any partner suffers the
partners share of the partnership property to be
charged under this Act for the partners separate debt.
34 Dissolution by illegality of partnership
A partnership is in every case dissolved by the happening of any event
which makes it unlawful for the business of the firm to be carried on,
or for the members of the firm to carry it on in partnership.
35 Dissolution by the Court
On application by a partner the Court may order a dissolution of the
partnership in any of the following cases:
(a) When a partner has been declared in accordance
with law to be of unsound mind and incapable of
managing the partners affairs, or is shown to the
satisfaction of the Court to be of permanently unsound
mind, in either of which cases the application may be
made as well on behalf of that partner by the partners
588
committee or next friend or person having title to
intervene as by any other partner.
(b) When a partner, other than the partner suing,
becomes in any other way permanently incapable of
performing the partners part of the partnership
contract.
(c) When a partner, other than the partner suing, has
been guilty of such conduct as, in the opinion of the
Court, regard being had to the nature of the business, is
calculated to prejudicially affect the carrying on of the
business.
(d) When a partner, other than the party suing, wilfully
or persistently commits a breach of the partnership
agreement, or otherwise conducts himself or herself in
matters relating to the partnership business so that it is
not reasonably practicable for the other partner or
partners to carry on the business in partnership with the
partner.
(e) When the business of the partnership can only be
carried on at a loss.
(f) Whenever in any case circumstances have arisen,
which, in the opinion of the Court, render it just and
equitable that the partnership be dissolved.
36 Rights of persons dealing with firm against apparent members of firm
(1) When a person deals with a firm after a change in
its constitution, the person is entitled to treat all
apparent members of the old firm as still being members
of the firm until the person has notice of the change.
(2) An advertisement in the Gazette and in at least one
newspaper circulating in Sydney and one newspaper
circulating in the district in which the firm carries on
business shall be notice as to persons who had not
dealings with the firm before the date of the dissolution
or change so advertised.
(3) The estate of a partner who dies, or who becomes
bankrupt, or of a partner who, not having been known
to the person dealing with the firm to be a partner,
retires from the firm, is not liable for partnership debts
contracted after the date of the death, bankruptcy, or
589
retirement respectively.
37 Right of partners to notify dissolution
On the dissolution of a partnership or retirement of a partner any
partner may publicly notify the same, and may require the other
partner or partners to concur for that purpose in all necessary and
proper acts, if any, which cannot be done without the partners or their
concurrence.
38 Continuing authority of partners for purposes of winding-up
After the dissolution of a partnership the authority of each partner to
bind the firm, and the other rights and obligations of the partners
continue, notwithstanding the dissolution, so far as may be necessary
to wind up the affairs of the partnership, and to complete transactions
begun but unfinished at the time of the dissolution, but not otherwise:
Provided that the firm is in no case bound by the acts of a partner who
has become bankrupt; but this proviso does not affect the liability of
any person who has, after the bankruptcy, represented himself or
herself or knowingly suffered himself or herself to be represented as a
partner of the bankrupt.
39 Rights of partners to application of partnership property
On the dissolution of a partnership every partner is entitled, as against
the other partners in the firm, and all persons claiming through them
in respect of their interests as partners, to have the property of the
partnership applied in payment of the debts and liabilities of the firm,
and to have the surplus assets after such payment applied in payment
of what may be due to the partners respectively after deducting what
may be due from them as partners to the firm; and for that purpose
any partner or the partners representatives may, on the termination
of the partnership, apply to the Court to wind up the business and
affairs of the firm.
40 Apportionment of premium when partnership prematurely dissolved
Where one partner has paid a premium to another on entering into a
partnership for a fixed term, and the partnership is dissolved before
the expiration of that term otherwise than by the death of a partner,
the Court may order the repayment of the premium, or of such part as
it thinks just, having regard to the terms of the partnership contract,
and to the length of time during which the partnership has continued;
unless:
(a) the dissolution is, in the judgment of the Court,
wholly or chiefly due to the misconduct of the partner
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who paid the premium, or
(b) the partnership has been dissolved by an agreement
containing no provision for a return of any part of the
premium.
41 Rights where partnership dissolved for fraud or misrepresentation
Where a partnership contract is rescinded on the ground of the fraud
or misrepresentation of one of the parties thereto, the party entitled to
rescind is, without prejudice to any other right, entitled:
(a) to a lien on, or right of retention of, the surplus of
the partnership assets, after satisfying the partnership
liabilities, for any sum of money paid by the party for
the purchase of a share in the partnership and for any
capital contributed by the party, and is
(b) to stand in the place of the creditors of the firm for
any payments made by the party in respect of the
partnership liabilities, and
(c) to be indemnified by the person guilty of the fraud
or making the representation against all the debts and
liabilities of the firm.
42 Right of outgoing partner in certain cases to share profits made after
dissolution
(1) Where any member of a firm has died, or otherwise
ceased to be a partner, and the surviving and continuing
partners carry on the business of the firm with its capital
or assets without any final settlement of accounts as
between the firm and the outgoing partner, or the
partners estate, then, in the absence of any agreement
to the contrary, the outgoing partner or the partners
estate is entitled, at the option of the partner or the
partners representatives, to such share of the profits
made since the dissolution as the Court may find to be
attributable to the use of the partners share of the
partnership assets, or to interest at the rate of six per
centum per annum on the amount of the partners share
of the partnership assets.
(2) Provided that where, by the partnership contract, an
option is given to surviving or continuing partners to
purchase the interest of a deceased or outgoing partner,
and that option is duly exercised, the estate of the
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deceased partner, or the outgoing partner or the
partners estate, as the case may be, is not entitled to
any further or other share of profits; but if any partner
assuming to act in exercise of the option does not in all
material respects comply with the terms thereof, the
partner is liable to account under the foregoing
provisions of this section.
43 Retiring or deceased partners share to be a debt
Subject to any agreement between the partners, the amount due from
surviving or continuing partners to an outgoing partner, or the
representatives of a deceased partner, in respect of the outgoing or
deceased partners share, is a debt accruing at the date of the
dissolution or death.
44 Rule for distribution of assets on final settlement of accounts
In settling accounts between the partners after a dissolution of
partnership, the following rules shall, subject to any agreement, be
observed:
(a) Losses, including losses and deficiencies of capital,
shall be paid first out of profits, next out of capital, and
lastly, if necessary, by the partners individually in the
proportion in which they were entitled to share profits.
(b) The assets of the firm, including the sums, if any,
contributed by the partners to make up losses or
deficiencies of capital, shall be applied in the following
manner and order:
1 In paying the debts and liabilities of the
firm to persons who are not partners
therein.
2 In paying to each partner ratably what
is due by the firm to the partner for
advances as distinguished from capital.
3 In paying to each partner ratably what
is due from the firm to the partner in
respect of capital.
4 The ultimate residue, if any, shall be
divided among the partners in the
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proportion in which profits are divisible.
45 (Repealed)
Division 5 Miscellaneous provisions
46 Saving for rules of equity and common law
The rules of equity and of common law applicable to partnership shall
continue in force except so far as they are inconsistent with the
express provisions of this Act.
47 Repeal of 30 Vic No 14
The Act thirtieth Victoria number fourteen is hereby repealed.
48 (Repealed)
Part 3 Limited partnerships and incorporated limited partnerships
Division 1 Preliminary
49 Definitions
In this Act:
external partnership means a partnership (or legal entity, however
described, in the nature of a partnership) formed in accordance with a
law of another State, a Territory or another country or jurisdiction,
whether or not under that law the liability of any partner for the
liabilities of the partnership (or entity) is limited and whether or not
under that law the partnership (or entity) is incorporated or is
otherwise a separate legal entity.
firm- name of:
(a) an incorporated limited partnershipmeans the
name of the partnership recorded in the Register, and
(b) of an external partnershipmeans the name under
which, in accordance with the law of the place in which it
is formed, the partnership carries on the business of the
partnership.
general partner:
(a) in a limited partnershipmeans a partner in the
limited partnership who is not a limited partner, and
(b) in an incorporated limited partnershipmeans a
person or partnership (including an external partnership)
admitted as a partner in the incorporated limited
593
partnership in accordance with the partnership
agreement and who is not a limited partner.
incorporated limited partnership means an incorporated limited
partnership formed in accordance with section 50A (2).
liability includes any debt, obligation or other liability of any kind,
wherever and however incurred.
l i mi ted partner:
(a) in a limited partnershipmeans a partner in the
limited partnership whose liability for the liabilities of the
partnership is limited in accordance with this Part, and
(b) in an incorporated limited partnershipmeans a
person or partnership (including an external partnership)
admitted and designated as a limited partner in the
incorporated limited partnership in accordance with the
limited partnership means a limited partnership formed in
accordance with section 50A (1).
partner in a limited partnership or incorporated limited partnership
means a general partner or a limited partner.
Regi ster means the Register of Limited and Incorporated Limited
Partnerships kept under this Part.
registered particulars means particulars recorded in the Register
under section 55 (3).
Registrar means the person who keeps the Register of Business
Names under the Business Names Act 2002.
50 Application of other provisions of this Act
(1) Parts 1 and 2 apply to limited partnerships and
incorporated limited partnerships, except as provided by
those Parts or this Part.
(2) If a provision made by or under this Part relating to
limited partnerships or incorporated limited partnerships
is inconsistent with a provision made by or under any
other Part that applies to limited partnerships or
incorporated limited partnerships, respectively, the
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provision made by or under this Part prevails and the
other provision is (to the extent of the inconsistency) of
no force or effect in relation to limited partnerships or
incorporated limited partnerships.
Division 2 Nature and formation of limited partnership and incorporated
limited partnership
50A Limited partnership or incorporated limited partnership is formed on
registration
(1) A limited partnership is formed by and on
registration of the partnership under this Part as a
(2) An incorporated limited partnership is formed by
and on registration of the partnership under this Part as
an incorporated limited partnership.
51 Composition of limited partnership or incorporated limited partnership
(1) A limited partnership or incorporated limited
partnership must have:
(a) at least one general partner, and
(b) at least one limited partner.
(2) A corporation may be a general partner or a limited
partner in a limited partnership or incorporated limited
partnership.
(3) A partnership (including an external partnership)
may be a general partner or a limited partner in a
limited partnership or incorporated limited partnership.
52 Size of limited partnership or incorporated limited partnership
partnership may have any number of limited partners.
(2) An incorporated limited partnership must not have
more than 20 general partners.
(3) A limited partnership:
(a) must not have more than 20 general
595
partners, or
(b) if the partnership is of a particular
kind in respect of which a higher number
applies in accordance with section 115 (2)
of the Corporations Act 2001 of the
Commonwealth (and the partnership
consisted only of those general
partners)must not have more general
partners than that higher number.
(4) For the purposes of this section:
(a) if a general partner is a partnership or
external partnership and no partner in
that partnership has, under the law of the
place where the partnership is formed,
limited liability for the liabilities of the
partnership, the number of partners in
that partnership is to be counted, and
(b) if a general partner is a partnership or
external partnership and any partner in
that partnership has, under the law of the
place where the partnership is formed,
limited liability for the liabilities of the
partnership, the number of partners in
that partnership whose liability is not so
limited is to be counted but no account is
to be taken of the number of partners in
that partnership whose liability is so
limited.
53 Incorporated limited partnership is separate legal entity
(1) An incorporated limited partnership:
(a) is a body corporate with legal
personality separate from that of the
partners in it and with perpetual
succession, and
(b) may have a common seal, and
(c) may sue and be sued in its firm-
name.
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(2) The common seal of an incorporated limited
partnership must be kept in such custody as the
partnership directs and must not be used except as
authorised by it.
53A Powers of incorporated limited partnership
(1) An incorporated limited partnership has the legal
capacity and powers of an individual and also all the
powers of a body corporate including (for example) the
power, whether within or outside New South Wales or
outside Australia:
(a) to carry on the business of the
partnership, or
(b) to enter into contracts or otherwise
acquire rights or liabilities, or
(c) to create, confer, vary or cancel
interests in the partnership, or
(d) to acquire, hold and dispose of real or
personal property or an interest (whether
beneficial or legal) in real or personal
property, or
(e) to appoint agents and attorneys, and
act as agent for other persons, or
(f) to form, and participate in the
formation of, companies or incorporated
limited partnerships, or
(g) to participate in partnerships, trusts,
joint ventures or other associations and
other arrangements for the sharing of
profits, or
(h) to do such other things as it is
authorised to do by or under this Act.
(2) The powers of an incorporated limited partnership
may be limited by the partnership agreement.
53B Partnership agreement
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(1) There must at all times be a written partnership
agreement between the partners in an incorporated
(2) The interests of the partners in an incorporated
limited partnership and their rights and duties in relation
to the partnership are, subject to this Act, to be
determined in accordance with the agreement.
(3) A partnership agreement also has effect as a
contract between the incorporated limited partnership
and each partner under which the partnership and each
of the partners agree to observe and perform the
agreement so far as it applies to them.
53C Relationship of partners in incorporated limited partnership to others
and between themselves
(1) Except as otherwise provided by the partnership
agreement or agreed between the partners in an
incorporated limited partnership:
(a) a general partner, the partnership or
an officer, employee, agent or
representative of a general partner or of
the partnership is not an agent of a
limited partner and the acts of a general
partner or of the partnership or of such an
officer, employee, agent or representative
do not bind a limited partner, and
(b) a limited partner is not an agent of,
nor fiduciary for, a general partner or of
another limited partner or of or for the
partnership and the acts of a limited
partner do not bind a general partner,
another limited partner or the partnership
itself.
(2) A reference in subsection (1) to a general partner
includes, if the general partner is a partnership or an
external partnership, a reference to a partner in that
partnership.
(3) Nothing in subsection (1) prevents the making of,
or limits or restricts, an agreement between a partner
(the first person) and either another partner or the
598
incorporated limited partnership (the second person)
under which:
(a) the first person acts as an agent of
the second person and, by so acting,
binds the second person, or
(b) the second person acts as an agent of
the first person and, by so acting, binds
the first person.
(4) Any consent or authority that under this Act is
required or permitted to be given by a partner or two or
more partners or all the partners may, in the case of an
incorporated limited partnership and without limiting any
other way in which it might be given, be given by that
partner or those partners by or under the partnership
agreement either in relation to all cases, or in relation to
all cases subject to specified exceptions, or in relation to
any specified case or class of cases.
(5) Any consent or authority that under this Act is
required or permitted to be given by an incorporated
limited partnership may, without limiting any other way
in which it might be given, be given by a general partner
or two or more general partners acting in accordance
with the partnership agreement.
(6) A limited partner, in the capacity of limited partner,
is not a proper party to any proceeding commenced in a
court or tribunal by or against the incorporated limited
partnership, other than a proceeding commenced by the
incorporated limited partnership against the limited
partner or by the limited partner against the
Division 3 Registration of limited partnerships and incorporated limited
partnerships
53D Who may apply for registration?
(1) An application for registration as a limited
partnership may be made by:
(a) a partnership, or
(b) any persons or partnerships (or both)
proposing to be partners in the limited
599
partnership.
(2) An application for registration as an incorporated
limited partnership may be made, in the circumstances
described in subsection (3), by:
(a) a partnership (including an external
partnership), or
(b) any persons or partnerships
(including external partnerships), or both,
proposing to be partners in the proposed
(3) The circumstances are:
(a) that the partnership is registered
under Part 2 of the Venture Capital Act
2002 of the Commonwealth, or a general
partner in the partnership or a proposed
general partner in the proposed
incorporated limited partnership intends to
apply for registration of the incorporated
limited partnership or proposed
partnership under that Part, as:
(i) a VCLP within the
meaning of that Act, or
(ii) an AFOF within the
meaning of that Act, or
(b) that the partnership is a venture
capital management partnership within
the meaning of section 94D (3) of the
Income Tax Assessment Act 1936 of the
Commonwealth or the partners in the
partnership or the proposed partners in
the proposed incorporated limited
partnership intend that the partnership or
proposed incorporated limited partnership
will meet the requirements set out in that
section for recognition as a venture capital
management partnership, or
(c) such other circumstances as are
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prescribed.
54 Application for registration
(1) An application for registration of a limited
partnership or incorporated limited partnership is made
by lodging with the Registrar in accordance with this
Part a statement signed:
(a) if the application is made by a
partnership (including an external
partnership)either by each partner in
the partnership or by a person given
authority to make such an application on
behalf of the partnership and the partners
in it, or
(b) in any other caseby each proposed
partner.
(2) The statement must be made in the form approved
by the Registrar and must:
(a) contain a statement of whether the
partnership is to be registered as a limited
partnership or an incorporated limited
partnership, and
(b) in the case of an application by a
partnership), contain particulars of:
(i) the firm-name of the
partnership, and
(ii) the full address of the
office or principal office in
New South Wales of the
partnership (to be called the
registered office of the
proposed partnership), and
(c) in the case of an application by
persons or partnerships (including
external partnerships) proposing to be the
partners in the proposed partnership,
601
contain particulars of:
(i) the proposed firm-name
of the proposed partnership,
and
(ii) the full address of the
proposed office or principal
office in New South Wales
of the proposed partnership
(to be called the registered
office of the partnership),
and
(d) contain particulars of the full name of
each partner or proposed partner or, if the
partner or proposed partner is a
partnership), the name of that partnership
or, if that partnership does not have a
name, the full name of each partner in the
partnership, and
(e) in the case of an application by a
partnership, contain particulars of its
registered office or principal office, and in
any other case, contain particulars of the
full address of each partner or proposed
partner, being (in the case of an
individual) his or her principal place of
residence or (in the case of a corporation
or partnership) its registered office or
principal place of business, and
(f) contain a statement in relation to each
partner or proposed partner that is an
individual as to whether that partner or
proposed partner is, or is proposed to be,
a general partner or a limited partner, and
(g) contain a statement in relation to
each partner or proposed partner that is a
corporation or a partnership that is, or is
proposed to be, a partner a statement in
relation to the corporation or partnership
as to whether it is to be a general partner
or a limited partner, and
602
(h) contain a statement in relation to
each partner or proposed partner that is a
partnership to the effect that the partner
or proposed partner is a partnership, and
(i) in the case of an application for a
limited partnershipcontain a statement
in relation to each limited partner to the
effect that the partner is a limited partner
whose liability to contribute is limited to
the extent of the amount specified in the
statement (being the amount of any
capital, or the value of any property, that
the limited partner has agreed to
contribute to the partnership or, in the
case of a limited partner that is a
partnership, the aggregate amounts or
values), and
(j) in the case of an application by a
partnership or persons or partnerships
proposing to be partners in a partnership
that intends to apply for registration as a
VCLP or an AFOF under Part 2 of the
Venture Capital Act 2002 of the
Commonwealth, contain a statement that
it so intends to apply, and
(k) in the case of an application by a
partnership that is registered as a VCLP or
an AFOF under Part 2 of the Venture
Capital Act 2002 of the Commonwealth,
be accompanied by a copy of a document
evidencing its status as a VCLP or an
AFOF, and
(l) in the case of an application by a
partnership or proposed persons or
partnerships proposing to be a partnership
that intends to meet the requirements for
recognition as a venture capital
management partnership set out in
section 94D (3) of the Income Tax
Assessment Act 1936 of the
Commonwealth, contain a statement that
it so intends to meet those requirements,
and
603
(m) in the case of an application by a
partnership that is a venture capital
management partnership within the
meaning of section 94D (3) of the Income
Tax Assessment Act 1936 of the
Commonwealth, a statement that it is
such a partnership, and
(n) contain such other particulars as are
required by the regulations or by the
approved form of statement.
55 Registration of limited partnership
(1) If an application for registration of a limited
partnership or incorporated limited partnership has been
duly made, the Registrar is to register the limited
partnership or incorporated limited partnership.
(2) However, the limited partnership or incorporated
limited partnership is not to be registered if the
Registrar is of the opinion that the firm-name would not
be eligible for registration as a business name under the
Business Names Act 2002.
(2A) If the Registrar registers a limited partnership or
an incorporated limited partnership, the firm- name of
the partnership is its name as recorded in the Register.
(2B) On registration of a limited partnership as an
incorporated limited partnership, the limited partnership
ceases to be a limited partnership and the Registrar is to
record the cancellation of its registration in the Register.
However any liability of the firm or a partner in it that
arose before its registration as an incorporated limited
partnership is to be dealt with as if it were still a limited
partnership.
(3) Registration is effected by recording in the Register
the particulars in the statement lodged with the
Registrar.
55A Acts preparatory to registration do not constitute partnership
Any act done in connection with the making of an application for
registration under this Part by or on behalf of persons or partnerships
(including external partnerships) proposing to be the partners in a
proposed partnership does not of itself create a partnership between
604
those persons or partnerships.
56 Changes in registered particulars
(1) If any change occurs in relation to the registered
particulars of a limited partnership or incorporated
limited partnership, a statement setting out the changed
particulars must be lodged with the Registrar within 7
days after the change occurred.
(2) The statement must be signed by all the general
partners, or by a general partner authorised by all the
general partners for the purposes of this section.
(2A) In the case of a limited partnership, if the change
relates to the admission of a limited partner, or a
change in the liability of a limited partner to contribute,
the statement must also be signed:
(a) by the limited partner concerned, or
(b) if that limited partner is a limited
partnership, by all the general partners in
that limited partnership or by a general
partner in that limited partnership
authorised by all the general partners in
that limited partnership for the purposes
of this section.
(3) The statement must be in the form approved by the
Registrar and contain the particulars required by the
regulations or the approved form of statement.
(4) If the statement is duly lodged, the Registrar is to
record the change in the Register, unless, in the case of
a limited partnership, as a result of a change in relation
to the registered particulars, the partnership is not
eligible to be registered as a limited partnership.
(5) If subsection (1) is not complied with, each general
partner of the limited partnership is guilty of an offence.
Maximum penalty: 10 penalty units.
Note. See section 80A in relation to offences committed
by general partners.
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57 Register of Limited Partnerships and Incorporated Limited Partnerships
(1) The Registrar is required to keep a register of
limited partnerships and incorporated limited
partnerships registered under this Part (to be called the
Register of Limited and Incorporated Limited
Partnerships).
(1A) In the Register, there is to be a division of limited
partnerships and a division of incorporated limited
partnerships.
(2) The Register may be kept in such form as the
Registrar thinks fit.
(3) The Registrar must make the information recorded
in the Register available for public inspection at the
office of the Registrar during the ordinary business
hours of that office.
(4) The Registrar may correct any error or omission in
the Register by:
(a) inserting an entry, or
(b) amending an entry, or
(c) omitting an entry,
if the Registrar decides that the correction is
necessary.
(5) The Registrar must not omit an entry in the Register
unless satisfied that the whole of the entry was included
in error.
58 Certificates of registration
(1) The Registrar must, at the time of:
(a) registering a limited partnership or an
incorporated limited partnership, or
(b) recording a change in its registered
particulars, or
(c) correcting an error or omission in the
606
Register in relation to it,
issue to the general partners a certificate as to its
formation and its registered particulars as at that time.
(2) The Registrar may, on application, issue to the
applicant a certificate in relation to a limited partnership
or incorporated limited partnership as to its formation
and its registered particulars as at the time of the
application.
(3) A certificate under this section is to be in such form
as the Registrar thinks fit.
(4) A certificate under this section:
(a) as to the formation of a limited
partnership or incorporated limited
partnership is conclusive evidence that the
partnership was formed on the date of
registration referred to in the certificate,
and
(b) as to the registered particulars as at a
specified time of the partnership, is
(unless the contrary is established)
conclusive evidence that the partnership
existed at that time, and
(c) as to the general partners and limited
partners in a partnership as at a specified
time is (unless the contrary is established)
conclusive evidence of the general
partners and limited partners as at that
time, and
(d) as to any other particular of a
partnership recorded in the Register as at
a specified time, is (unless the contrary is
established) conclusive evidence of that
particular as at that time.
59 Business Names Act 2002 not to apply
The Business Names Act 2002 does not apply so as to require the
partners in a limited partnership or an incorporated limited partnership
to register a business name if that name is the firm-name registered
607
under this Part.
Division 4 Limitation of liability of limited partners in limited partnership
60 Liability of limited partner limited to amount shown in Register
(1) The liability of a limited partner to contribute to the
liabilities of the limited partnership is (subject to this
Part) not to exceed the amount shown in relation to the
limited partner in the Register as the extent to which the
limited partner is liable to contribute.
(2) If a limited partner makes a contribution towards
the liabilities of the limited partnership, the liability of
the limited partner is reduced to such part of the
amount shown in the Register as remains unpaid.
(3) If a partnership (the investing partnership) is a
limited partner in a limited partnership (the principal
partnership), a partner in the investing partnership has
no separate liability to contribute to the liabilities of the
principal partnership, but nothing in this subsection
affects any liability of the investing partnership as a
limited partner to contribute to those liabilities.
61 Change in liability of limited partner
(1) Any reduction in the liability of a limited partner
caused by a reduction in the relevant amount shown in
the Register in relation to the partner does not extend to
any liability of the limited partnership that arose before
the reduction is recorded in the Register.
(2) Any increase in the liability of a limited partner
caused by an increase in the relevant amount shown in
the Register in relation to the partner extends to any
liability of the limited partnership that arose before the
increase is recorded in the Register.
62 Change in status of partners
(1) If a general partner becomes a limited partner, the
limitation on liability does not extend to any liability of
the limited partnership that arose before the partner
became a limited partner.
(2) If a limited partner becomes a general partner, the
limitation on liability no longer extends to any liability of
608
the limited partnership that arose before the partner
became a general partner.
63 Liability for business conducted outside the State
The limitation on the liability of a limited partner extends to any
liability incurred in connection with the conduct of the partnerships
business outside the State.
64 Liability for limited partnerships formed under corresponding laws
(1) In this section:
corresponding law means a law of another State, a
Territory or another country or jurisdiction that is
declared by the regulations to be a corresponding law
for the purposes of this Part.
recognised limited partnership means a partnership
formed in accordance with a corresponding law.
(2) Any limitation under a corresponding law on the
liability of a limited partner in a recognised limited
partnership extends to any liability incurred in
connection with the conduct of the partnerships
business in this State.
(3) The law of another State or a Territory may not be
declared to be a corresponding law unless the Minister
has certified to the Governor:
(a) that the provisions of the law are
similar to the provisions of this Part, and
(b) that under that law the limitation of
liability of limited partners in a limited
partnership formed in accordance with this
Part extends to any liability incurred in
connection with the conduct of the
partnerships business in that State or
Territory.
(4) The law of another country or jurisdiction may not
be declared to be a corresponding law unless the
Minister has certified to the Governor that the law
provides for the limitation of liability for partners in
609
certain partnerships.
(5) This section is additional to, and does not derogate
from, any rule of law under which recognition is or may
be given to a limitation of liability of a partner in a
partnership (including an external partnership).
64A Effect of sections 63 and 64
No implication is to be taken as arising from section 63 or 64 that a
limited partner has any liability (or but for that section would have any
liability) in connection with the conduct of a partnerships business
outside the State that the limited partner would not have in connection
with the conduct of a partnerships business within the State.
65 Contribution towards discharge of debts etc
(1) Any contribution made by a limited partner towards
the discharge of the debts or obligations of a limited
partnership is to be in the form of money only.
(2) If the whole or any part of such a contribution is
received back by the limited partner, the liability of the
limited partner is restored accordingly.
66 Limitation on liability may not be varied by partnership agreement etc
The provisions of this Part relating to the limitation on the liability of a
limited partner may not be varied by the partnership agreement or the
consent of the partners.
Division 4A Limitation of liability of limited partners in incorporated limited
partnerships
66A Limitation of liability of limited partners
(1) A limited partner has no liability for the liabilities of
the incorporated limited partnership or of a general
partner.
(2) Nothing in subsection (1) or section 66C or 66D
prevents:
(a) a contribution of capital or property
made by a limited partner to the
incorporated limited partnership being
used, or
610
(b) an obligation of a limited partner to
contribute capital or property to the
incorporated limited partnership being
enforced by any person to whom the
obligation is owed,
in satisfaction of a liability of the partnership or of a
general partner.
(3) This section is subject to section 67A (Limited
partner not to take part in the management of
incorporated limited partnership).
66B Change in status of partners
(1) If a general partner becomes a limited partner, the
partner remains liable for any liability of the
incorporated limited partnership that arose before the
partner became a limited partner to the extent that the
partnership is unable to satisfy the liability or to the
greater extent provided by the partnership agreement.
(2) If a limited partner becomes a general partner, the
partner remains not liable (subject to section 67A (2))
for any liability of the incorporated limited partnership
that arose before the partner became a general partner.
Note. Section 67A (2) imposes liability in
certain circumstances on a limited partner
who takes part in the management of the
business of the incorporated limited
partnership.
66C Liability in respect of conduct or acts or omissions outside the State
The limitation on the liability of a limited partner in an incorporated
limited partnership by or under this Division extends to any liability
incurred:
(a) in connection with the conduct of the partnerships
business outside the State, or
(b) as a result of an act or omission outside the State of
a general partner or a limited partner in the partnership,
the partnership or of any officer, employee, agent or
representative of a general partner in the partnership or
611
the partnership.
66D Incorporated limited partnerships formed under corresponding laws
corresponding law means:
(a) a law of another State or of a
Territory or of another country or
jurisdiction that substantially corresponds
to the provisions of this Act that relate to
incorporated limited partnerships, or
(b) a law declared under subsection (3)
to be a corresponding law for the
purposes of this Part.
recognised incorporated limited partnership means
a partnership formed in accordance with a corresponding
law.
(2) A partner in a recognised incorporated limited
partnership is liable for a liability incurred by the
partnership as a result of:
(a) the conduct of the recognised
incorporated limited partnerships
business in this State, or
(b) the acts or omissions in this State of
a partner in the recognised incorporated
limited partnership or of the partnership
itself or of any officer, employee, agent or
representative of such a partner or of the
partnership,
only in circumstances where the partner would be so
liable under the corresponding law if the conduct or acts
or omissions occurred in the place where the recognised
incorporated limited partnership was formed.
(3) Subject to subsections (4) and (5), the Governor
may, by order published in the Gazette, declare a law of
another State, a Territory or another country or
jurisdiction to be a corresponding law for the purposes
612
of this Part.
(4) The law of another State or of a Territory may not
be declared to be a corresponding law unless the
Minister has certified to the Governor that under that
law a limited partner in an incorporated limited
partnership formed in accordance with this Part and
registered or otherwise recognised under that law is
liable for a liability incurred by the partnership as a
result of:
(a) the conduct in that State or Territory
of the business of the partnership, or
(b) the acts or omissions in that State or
Territory of a partner in the partnership or
of the partnership itself or of any officer,
employee, agent or representative of a
general partner or of the partnership,
only in circumstances where the limited partner
would be so liable under this Act if the c onduct or acts or
omissions occurred within the State.
(5) The law of another country or jurisdiction (not being
another State or Territory) may not be declared to be a
corresponding law unless the Minister has certified to
the Governor that that law provides for the limitation of
liability of certain partners in certain partnerships.
(6) This section is additional to, and does not derogate
from, any rule of law under which recognition is or may
be given to a limitation of liability of a partner in a
partnership.
66E Effect of sections 66C and 66D
No implication is to be taken as arising from section 66C or 66D that a limited
partner has any liability (or but for that section would have any liability) in
connection with the conduct of a partnerships business or acts or omissions
outside the State that the limited partner would not have in connection with
the conduct of a partnerships business or acts or omissions within the State.
Division 5 Other modifications of general law of partnership
67 Limited partner not to take part in management of limited partnership
(1) A limited partner must not take part in the management of the
613
business of the limited partnership and does not have power to bind
the limited partnership.
(2) If a limited partner takes part in the management of
the business of the limited partnership, the limited
partner is liable, as if the partner were a general
partner, for the liabilities of the partnership incurred
while the limited partner takes part in the management
of that business.
(3) A limited partner is not to be regarded as taking
part in the management of the business of the limited
partnership merely because the limited partner:
(a) is an employee or an independent
contractor of the partnership or of a
general partner, or is an officer of a
general partner that is a corporation, or
(b) gives advice to, or on behalf of, the
limited partnership or a general partner in
the proper exercise of functions arising
from the engagement of the limited
partner in a professional capacity or
arising from business dealings between
the limited partner and the partnership or
a general partner, or
(c) gives a guarantee or indemnity in
respect of any liability of the partnership
or of a general partner, or
(d) participates in any action by other
limited partners for the purpose of
enforcing their rights or safeguarding their
interests as limited partners, or
(e) if authorised by the partnership
agreement, participates in general
meetings of all the partners, or
(f) exercises any power conferred on the
limited partner by subsection (4).
(4) A limited partner or a person authorised by the
limited partner may at any time:
614
(a) have access to and inspect the books
of the partnership and copy any of them,
and
(b) examine the state and prospects of
the business of the partnership and advise
and consult with other partners in relation
to such matters.
(5) The provisions of this section may not be varied by
the partnership agreement or the consent of the
partners.
(6) No implication is to be taken as arising from section
67A (3) that a limited partner in a limited partnership is
to be regarded as taking part in the management of the
business of the partnership merely because the limited
partner or a person acting on behalf of the partner does
any thing in connection with the conduct of that
business that is not referred to in that subsection.
67A Limited partner not to take part in the management of incorporated
limited partnership
(1) A limited partner in an incorporated limited
partnership must not take part in the management of
the business of the partnership.
(2) If:
(a) as a direct result of any wrongful act
or omission of a limited partner in taking
part in the management of the business of
an incorporated limited partnership the
limited partner causes any loss or injury
to any person other than a partner in the
partnership (a third party), and
(b) at the time of the act or omission the
third party had reasonable grounds to
believe that the limited partner was a
general partner in the partnership,
the limited partner is liable for the loss or injury to
the same extent that the limited partner would have
been liable if the limited partner were in fact a general
615
partner in the partnership.
Note. A limited partner is not an agent of
an incorporated limited partnership and
the acts of a limited partner do not bind a
general partner, another limited partner
or the partnership itselfsee section 53C
(1).
partnership is not to be regarded as taking part in the
management of the business of the partnership merely
because the limited partner or a person acting on behalf
of the limited partner:
(a) is an employee of or an independent
contractor engaged by the partnership, a
general partner in the partnership or an
associate of the general partner, or is an
officer of a general partner that is a body
corporate or of an associate of a general
partner that is a body corporate, or
(b) gives advice to, or on behalf of, the
partnership or a general partner in the
partnership or an associate of such a
general partner in the proper exercise of
functions arising from the engagement of
the limited partner, or a person acting on
behalf of the limited partner, in a
professional capacity or arising from
business dealings between the limited
partner, or a person acting on behalf of
the limited partner, and the partnership or
a general partner or an associate of the
general partner, or
(c) gives a guarantee or indemnity in
respect of any liability of the partnership
or of a general partner in the partnership
or an associate of the general partner, or
(d) takes any action, or participates in
any action taken by any other limited
partner in the partnership, for the purpose
of enforcing the rights, or safeguarding
the interests, of the limited partner as a
616
limited partner, or
(e) if permitted by the partnership
agreement:
(i) calls, requisitions,
convenes, chairs,
participates in, postpones,
adjourns or makes a record
of a meeting of the partners
or of the limited partners or
of any of them, or
(ii) requisitions, signs or
otherwise passes, approves,
disapproves or amends any
resolution (whether at a
meeting, in writing or
otherwise) of the partners
or of the limited partners or
of any of them, including
without limitation by
formulating, moving,
proposing, supporting,
opposing, speaking to or
voting on any such
resolution, or
(f) exercises a power conferred on the
limited partner by subsection (4) or has,
or exercises, any right to:
(i) have access to and
inspect the books or records
of the partnership or copy
any of them, or
(ii) examine the state or
prospects of the business of
the partnership or advise,
or consult with, other
partners in relation to such
matters, or
(g) gives advice to, or consults with, or is
or acts as an officer, director, security
holder, partner, agent, representative,
employee of or independent contractor
617
engaged by an associate of the
partnership, or
Note. Associate of a
partnership is defined in
section 67B.
(h) is or acts as a lender to, or fiduciary
for, an associate of the partnership, or
(i) to the extent authorised by the
partnership agreement, participates on, or
has or exercises any right to appoint one
or more persons to, or remove one or
more persons from, or to nominate one or
more persons for such appointment to or
removal from, a committee which
considers, approves of, consents to or
disapproves of any one or more of the
following proposals from a general
partner:
(i) a proposal involving a
material change in the
nature of the business of
the partnership (including a
change in, or departure
from, any investment
guidelines, policies or
conditions relating to the
business of the
partnership),
(ii) a proposal for the
adoption of a method for
valuing some or all of the
assets of the partnership
(including a change to,
replacement of or variation
from such a method),
(iii) a proposal for an
extension or reduction in
the period in which, under
the partnership agreement,
investments (or certain
types of investments) can
be made by the partnership,
618
or for any approval or
disapproval of investments
that the partnership does
not otherwise have a right
to make,
(iv) a proposal relating to
any actual or potential
transaction or other matter
involving any actual or
potential conflict of interest,
(v) a proposal relating to
any actual or potential
transaction, contract,
arrangement or
understanding between one
or more of the partners, or
their associates, and the
general partner, the
partnership or any associate
of the general partner or of
the partnership,
(vi) a proposal for the
delegation, waiver, release
or variation of an authority,
right, duty or obligation of
the general partner,
(vii) a proposal for the
appointment or approval
under the partnership
agreement of any person as
a senior executive of the
general partner or of an
associate of the general
partner, or
(j) nominates, selects, investigates,
evaluates or negotiates with any person in
connection with the removal or
replacement of a general partner, or
participates on a committee which
proposes, considers, approves of,
consents to or disapproves of any
nomination, selection, appointment,
change in control or ownership,
619
suspension, replacement or removal of a
general partner or an associate of a
general partner, or
(k) takes any action, or participates in
any action taken by any other limited
partner, for the purpose of registering or
maintaining the registration of the
partnership or a general partner in the
partnership under Part 2 of the Venture
Capital Act 2002 of the Commonwealth as
a VCLP or an AFOF within the meaning of
that Act.
partnership or a person authorised by the limited
partner may, if and to the extent the partner or person
is so authorised by the partnership agreement as in
force from time to time:
(a) have access to and inspect the books
or records of the partnership or copy any
of them, and
(b) examine the state or prospects of the
business of the partnership and advise, or
consult with, other partners in relation to
such matters.
(5) The provisions of this section may not be varied by
the partnership agreement or with the consent of the
partners, whether given by or under the partnership
agreement or otherwise.
Note. Section 53C (4) enables partners to
give consent by or under the partnership
agreement.
(6) No implication is to be taken as arising from
subsection (3) that a limited partner in an incorporated
limited partnership is to be regarded as taking part in
the management of the business of the partnership
merely because the limited partner or a person acting on
behalf of the partner does any thing in connection with
the conduct of that business that is not referred to in
that subsection.
(7) For the purposes of this section, a limited partner in
620
an incorporated limited partnership that is a venture
capital management partnership (within the meaning of
section 94D (3) of the Income Tax Assessment Act 1936
of the Commonwealth) is not to be regarded as taking
part in the management of the business of the
incorporated limited partnership merely because of any
act the limited partner takes in respect of the
incorporated limited partnership in the capacity of a
partner or associate of a partner in the venture capital
management partnership.
67B Interpretation of section 67A
(1) In section 67A:
(a) a reference to an associate of a
general partner includes a reference to:
(i) if the general partner is
a partnership, a partner in
that partnership (a partner
i n the general partner),
and
(ii) any person who has an
interest in the general
partner or in any partner in
the general partner,
whether as security holder,
trustee, responsible entity,
manager, custodian, sub-
custodian, nominee,
administrator, executor,
legal personal
representative, beneficiary
or otherwise, and
(iii) any person to whom
the general partner or any
partner in the general
partner has delegated any
power, authority, right, duty
or obligation of the general
partner in relation to the
partnership or any other
partnership in which the
general partner is general
621
partner, and
(iv) if the general partner
or a partner in the general
partner or a person covered
by subparagraph (ii) or (iii)
is a body corporate, a
related body corporate of
that body corporate, and
(v) a director, officer,
employee, agent,
representative or security
holder of the general
partner or of any partner in
the general partner or of a
person covered by
subparagraph (ii), (iii) or
(iv), and
(b) a reference to an associate of a
limited partner includes a reference to:
(i) if the limited partner is a
partnership, a partner in
that partnership (a partner
in the limited partner),
and
(ii) any person who has an
interest in the limited
partner or in any partner in
the limited partner, whether
as security holder, trustee,
responsible entity,
manager, custodian, sub-
custodian, nominee,
administrator, executor,
legal personal
representative, beneficiary
or otherwise, and
(iii) if the limited partner or
a partner in the limited
partner or a person covered
by subparagraph (ii) is a
body corporate, a related
body corporate of that body
622
corporate, and
(iv) a director, officer,
employee, agent,
representative or security
holder of the limited partner
or of any partner in the
limited partner or of a
person covered by
subparagraph (ii) or (iii),
and
(c) a reference to an associate of an
incorporated limited partnership includes a
reference to:
(i) any person or
partnership in which the
incorporated limited
partnership has an interest,
whether as security holder
or otherwise, and
(ii) if a person or
partnership covered by
subparagraph (i) is a body
corporate, a related body
corporate of that body
corporate.
(2) In section 67A and this section, a reference to a
general partner in an incorporated limited partnership
includes, if the general partner is a partnership, a
reference to a partner in that partnership.
(3) In section 67A and this section:
related body corporate has the same meaning given
by section 9 of the Corporations Act 2001 of the
Commonwealth.
securi ty hol der, in relation to a body (whether
corporate or unincorporated) includes a holder of
securities (within the meaning given by section 92 (3) of
the Corporations Act 2001 of the Commonwealth) in or
of the body.
68 Differences between partners
623
(1) A difference arising as to ordinary matters
connected with the business of a limited partnership or
an incorporated limited partnership may be decided by a
majority of the general partners.
(2) The provisions of this section may be varied by the
partnership agreement or the consent of the partners.
Note. See section 53C (4).
69 Change in partners
(1) A limited partner in a limited partnership may, with
the consent of the general partners, assign the limited
partners share in the limited partnership. In that case
the assignee is taken to be a limited partner in
substitution for the assignor with all the rights and
obligations of the assignor.
(1A) A limited partner in an incorporated limited
partnership may, with the consent of the general
partners and the agreement of the transferee, transfer
the whole or a proportion of the limited partners
interest in the incorporated limited partnership.
(1B) If the whole of the limited partners interest in the
incorporated limited partnership is transferred to the
one transferee, the transferee becomes a limited partner
in substitution for the transferor with all the rights and
obligations of the transferor.
(1C) If only a proportion of the limited partners interest
in the incorporated limited partnership is transferred to
a transferee, the transferee becomes a limited partner in
substitution for the transferor in respect of the
transferred proportion and with all the rights and
obligations of the transferor in respect of it.
(2) A person may be admitted as a partner in a limited
partnership or incorporated limited partnership without
the necessity to obtain the consent of any limited
partner.
(3) The provisions of this section may be varied by the
partnership agreement or the consent of the partners.
624
Note. See section 53C (4).
Division 6 Dissolution and cessation of limited partnerships and
incorporated limited partnerships
70 Dissolution not available in certain cases
(1) Subject to the terms of any agreement between the
partners in a limited partnership:
(a) a limited partner is not entitled to
dissolve the partnership by notice, and
(b) the general partners or the other
limited partners are not entitled to
dissolve the partnership because a limited
partner has allowed the partners share of
the partnership property to be charged for
the partners separate liabilities, and
(c) the death, bankruptcy or retirement
or, in the case of a corporation, the
dissolution of a limited partner does not
dissolve the partnership.
(2) The fact that a limited partner in a limited
partnership or an incorporated limited partnership is
declared to be of unsound mind and incapable of
managing the partners affairs is not a ground for
dissolution of the partnership by a Court unless the
share and interest of the partner in the partnership
cannot be otherwise ascertained or realised.
71 Cessation of limited partnerships
(1) A partnership ceases to be a limited partnership if
none of the partners is a limited partner or the partners
agree that they will carry on the business of the
partnership otherwise than as a limited partnership.
(2) If a limited partnership ceases to be a limited
partnership and the forming members of the partnership
or some of them continue in association or partnership,
that association or partnership is no longer taken to be
formed in accordance with this Part.
72 Registration of dissolution or cessation of limited partnership
625
(1) If a limited partnership:
(a) is dissolved, or
(b) ceases to carry on business,
the general partners who were registered
immediately before the dissolution or cessation must, as
soon as practicable, lodge with the Registrar a notice of
the dissolution or cessation, specifying the date on
which it took effect.
(2) The notice must be in the form approved by the
Registrar and contain the particulars required by the
regulations or the approved form of notice.
(3) The Registrar is required to record in the Register
the fact of the dissolution or cessation and the date on
which it took effect.
73 Winding up by general partners
If the affairs of a limited partnership are to be wound up by the
partners with a view to its dissolution, the winding up is to be carried
out by the general partners unless a Court otherwise orders.
73A Winding up of incorporated limited partnerships
Schedule 1 has effect.
Division 7 Miscellaneous provisions
73B Execution of documents
Without limiting the ways in which an incorporated limited partnership
may execute a document (including a deed), an incorporated limited
partnership may execute a document:
(a) without using a common seal (whether it has one or
not) if the document is signed by a general partner, or
(b) as a deed if the document is expressed to be
executed as a deed and is executed with the use of a
626
common seal or in accordance with paragraph (a).
Note. Section 150 (1) of the Evidence Act 1995 provides
for certain presumptions to be made with respect to
seals and duly sealed documents. See also section 53
(2) on seals of incorporated limited partnerships.
73C Entitlement to make assumptions
(1) A person is entitled to make the assumptions in
section 73D in relation to dealings with an incorporated
limited partnership. The incorporated limited partnership
is not entitled to assert in proceedings in relation to the
dealings that any of the assumptions are incorrect.
(2) A person is entitled to make the assumptions in
section 73D in relation to dealings with another person
who has, or purports to have, directly or indirectly
acquired title to property from an incorporated limited
partnership. The incorporated limited partnership and
the other person are not entitled to assert in
proceedings in relation to the dealings that any of the
assumptions are incorrect.
(3) The assumptions may be made even if a partner or
agent of the incorporated limited partnership acts
fraudulently, or forges a document, in connection with
the dealings.
(4) A person is not entitled to make an assumption in
section 73D if, at the time of the dealings, the person
knew or suspected that the assumption was incorrect.
73D Assumptions that may be made under section 73C
(1) A person may assume that the partnership
agreement of the incorporated limited partnership has
been complied with.
(2) A person may assume that anyone who appears,
from information provided by the incorporated limited
partnership that is available to the public from the
Register, to be a general partner in the incorporated
limited partnership:
(a) is a general partner in the
627
incorporated limited partnership, and
(b) has authority to exercise the powers
and perform the duties customarily
exercised or performed by a general
partner in an incorporated limited
partnership.
(3) A person may assume that anyone who is held out
by the incorporated limited partnership to be a general
partner in, or an agent of, the incorporated limited
partnership:
(a) is a general partner in the
incorporated limited partnership or has
been duly appointed as an agent of the
incorporated limited partnership, as the
case requires, and
(b) has authority to exercise the powers
and perform the duties customarily
exercised or performed by that kind of
partner in, or agent of, an incorporated
(4) A person may assume that the general partners in,
and agents of, the incorporated limited partnership
properly perform their duties to the incorporated limited
partnership.
(5) A person may assume that a document has been
duly executed by the incorporated limited partnership if
the document appears to have been signed in
accordance with section 73B.
(6) A person may assume that a document has been
duly executed by the incorporated limited partnership if
the incorporated limited partnerships common seal
appears to have been affixed to the document.
(7) A person may assume that a general partner in, or
agent of, the incorporated limited partnership who has
authority to issue a document or certified copy of a
document on its behalf also has authority to warrant
that the document is genuine or is a true copy.
(8) Without limiting the generality of this section, the
assumptions that may be made under this section apply
628
for the purposes of this section.
73E Lodgment of certain documents with the Registrar
(1) An incorporated limited partnership that was
incorporated on the basis that it intended to be
registered as a VCLP or an AFOF under Part 2 of the
Venture Capital Act 2002 of the Commonwealth must,
within one month after being so registered, lodge with
the Registrar a copy of a document evidencing its status
as a VCLP or an AFOF.
(2) An incorporated limited partnership that was
incorporated on the basis that it intended to meet the
requirements for recognition as a venture capital
management partnership within the meaning of section
94D (3) of the Income Tax Assessment Act 1936 of the
Commonwealth must, within one month after becoming
such a venture capital management partnership, lodge
with the Registrar a statement that it is such a
partnership.
(3) If:
(a) the registration of an incorporated
limited partnership as a VCLP or an AFOF
2002 of the Commonwealth is revoked, or
(b) an incorporated limited partnership
ceases to be a venture capital
management partnership within the
meaning of section 94D (3) of the Income
Tax Assessment Act 1936 of the
Commonwealth,
the incorporated limited partnership must, within 7
days after the date on which that revocation took effect
or it ceased to be such a venture capital limited
partnership, lodge with the Registrar a notice of that
revocation or cessation, specifying the date on which it
took effect.
(4) If an incorporated limited partnership ceases to
carry on business, the incorporated limited partnership
must, as soon as practicable, lodge with the Registrar a
notice of the cessation, specifying the date on which it
629
took effect.
(5) A copy of a document or a notice required to be
lodged with the Registrar under this section must be
accompanied by the prescribed fee or, if no fee is
prescribed, a fee of $70.
(6) A notice required to be lodged with the Registrar
under this section must be:
(a) in the form approved by the
Registrar, and
(b) contain the particulars required by
the regulations or the approved form of
notice.
(7) If subsection (1), (2), (3) or (4) is not complied
with, each general partner in the incorporated limited
partnership is guilty of an offence.
74 Model limited partnership agreement
(1) The regulations may prescribe a model limited
partnership agreement or model limited partnership
agreements.
(2) The partnership agreement of a limited partnership
may adopt any such model agreement (or any part of it)
whether as in force at a particular time or as in force
from time to time.
75 Identification of limited partnerships and incorporated limited
partnerships
(1) In this section, document includes any letter,
notice, publication, written offer, contract, order for
goods or services, invoice, bill of exchange, promissory
note, cheque, negotiable instrument, endorsement,
letter of credit, receipt and statement of account.
(2) Any document issued on behalf of a limited
partnership in connection with the conduct of the
partnerships business must contain in legible letters the
words A Limited Partnership (or L.P. or LP as an
630
abbreviation) at the end of the firm-name of the
partnership.
(2A) Any document issued on behalf of an incorporated
limited partnership in connection with the conduct of the
partnerships business must contain in legible letters the
words An Incorporated Limited Partnership (or L.P.
or LP as an abbreviation) at the end of the firm-name
of the partnership.
(3) A person who:
(a) issues or authorises the issue of a
document in contravention of this section,
or
(b) being a general partner in the limited
partnership concernedis aware that
documents are being issued in
contravention of this section,
is guilty of an offence.
(4) The certificate of registration of a limited
partnership or incorporated limited partnership must be
displayed at all times in a conspicuous position at the
registered office of the partnership.
(5) If the certificate of registration is not so displayed,
each general partner is guilty of an offence.
76 Registered office
partnership must keep in New South Wales (at the place
shown in the Register as the address of the registered
office of the firm) an office to which all communications
with the partnership may be addressed.
(2) The regulations may prescribe the hours during
which the registered office is to be open and accessible
631
to the public.
(3) If subsection (1) is not complied with, each general
partner in the limited partnership or incorporated limited
partnership concerned is guilty of an offence.
77 Service
(1) Without affecting any other method of serving
documents on the partners in a limited partnership or on
an incorporated limited partnership:
(a) a document concerning the business
of a limited partnership may be duly
served on partners in the partnership, or
(b) a document concerning the business
of an incorporated limited partnership
may be duly served on the partnership,
if it is left at, or sent by post addressed to, the
registered office of the firm for the time being shown in
the Register.
(2) This section does not apply to a document relating
to proceedings before a Court.
78 Entry in Register constitutes notice
An entry in the Register of any particular fact concerning a limited
partnership or an incorporated limited partnership, including an entry
stating the effect of any notice received by the Registrar:
(a) is sufficient notice of the fact or of the effect of the
notice to all persons who deal with the partnership, and
(b) has effect, for the purposes of section 36 (2), as if it
were an advertisement in the Gazette.
79 Giving false or misleading information
A person who, under this Part, provides the Registrar with a document
that the person knows is false or misleading in a material particular
(whether by way of a statement in the document or by an omission
632
from the document) is guilty of an offence.
80 Criminal proceedings
Proceedings for an offence against this Act or the regulations are to be
dealt with summarily before a Local Court constituted by a Magistrate
sitting alone.
80A Offences by partnerships
(1) If this Act provides that a general partner (being a
partnership, whether or not an external partnership) in a
limited partnership or incorporated limited partnership is
guilty of an offence, the reference to the general partner
is to be read as a reference:
(a) to each partner in the partnership (or
external partnership), or
(b) if the partnership (or external
partnership) is one in which any partner
has under the law of the place where it is
formed limited liability for the liabilities of
the partnership, each partner in the
partnership whose liability is not so
limited.
(2) In any proceeding against a partner for an offence
against this Act brought in reliance on subsection (1) it
is a defence for the partner to prove that the partner
took all reasonable precautions and exercised all due
diligence to avoid the commission of the offence.
80B Duty to furnish information
(1) For the purpose of monitoring compliance with this
Part or the regulations made for the purposes of this
Part, the Registrar may by notice in writing require an
incorporated limited partnership to furnish within a
period specified in the notice (being a period of not less
than 28 days) or within such further period as the
Registrar may allow such information as is specified in
the notice.
(2) An incorporated limited partnership required under
633
subsection (1) to furnish information to the Registrar
must within the period specified in the notice or within
such further period as the Registrar has allowed furnish
such information as it is within its power to furnish and
must not furnish any information that to its knowledge is
false or misleading in a material particular.
(3) If subsection (2) is not complied with each general
partner in the incorporated limited partnership is guilty
of an offence.
81 Regulations
(1) The Governor may make regulations, not
inconsistent with this Act, for or with respect to any
matter that is required or permitted to be prescribed or
that is necessary or convenient to be prescribed for
carrying out or giving effect to this Part.
(2) In particular, the regulations may make provision
for or with respect to the following:
(a) the keeping of records by a limited
partnership,
(b) information or copies of records or
documents required to be provided to the
Registrar by a limited partnership or
incorporated limited partnership,
(c) the form in which any record required
under this Act to be kept is to be kept,
(d) the fees required to accompany an
application, statement, notice or other
document lodged under this Act or the
fees payable for the inspection of the
Register or for the issue of certificates of
information recorded in the Register.
(3) The regulations may exempt, or provide for the
exemption, of any person or class of persons or any
other matter or thing from any specified provision or
provisions of this Act or the regulations, in such
634
circumstances (if any) and subject to such conditions (if
any) as may be specified or referred to in the
regulations.
(4) A regulation may create an offence punishable by a
penalty not exceeding 20 penalty units.
81A Relationship with Corporations legislation
The regulations may declare a matter that is dealt with by this Act or
the regulations to be an excluded matter for the purposes of section 5F
of the Corporations Act 2001 of the Commonwealth in relation to:
(a) the whole of the Corporations legislation to which
Part 1.1A of the Corporations Act 2001 of the
Commonwealth applies, or
(b) a specified provision of that legislation, or
(c) that legislation other than a specified provision, or
(d) that legislation otherwise than to a specified extent.
Note. Section 5F of the Corporations Act 2001 of the
Commonwealth provides that if a State law declares a
matter to be an excluded matter for the purposes of that
section in relation to all or part of the Corporations
legislation of the Commonwealth, then the provisions
that are the subject of the declaration will not apply in
relation to that matter in the State concerned.
Part 4 Miscellaneous
82 Application of amendments
(1) This section applies to section 10 as amended by
the Partnership Amendment Act 1998.
(2) Section 10 (2) does not apply to wrongful acts or
omissions of the kind referred to in that subsection and
that occurred before the commencement of that Act.
(3) Section 10 (2) (a), (b) and (c) extend to acts,
matters and things of the kind referred to in those
paragraphs and that occurred before the
commencement of that Act.
83 Savings, transitional and other provisions
635
Schedule 1 Winding up of incorporated limited partnerships
(Section 73A)
1 Definitions
In this Schedule:
assets of an incorporated limited partnership means the assets
remaining after satisfaction of the liabilities of the partnership and the
costs, charges and expenses of the winding up.
special resolution of the limited partners in an incorporated limited
partnership means a resolution that has been passed by at least 75%
of the limited partners.
2 Voluntary winding up
(1) An incorporated limited partnership may be wound
up voluntarily:
(a) if the partnership agreement sets out
the terms on which the partnership may
voluntarily be wound upin accordance
with the partnership agreement, or
(b) subject to the partnership agreement,
if the limited partners so resolve by
special resolution.
(2) On a voluntary winding up of an incorporated
limited partnership:
how the assets are to be dealt with on a
voluntary winding up, the assets must be
dealt with in accordance with the
partnership agreement, or
(b) in any other case, the assets are to
be distributed among the partners in
shares that are proportionate to their
respective contributions of capital or
property to the partnership.
(3) Any person aggrieved by the operation of this
636
clause in relation to the assets of an incorporated limited
partnership may apply to the Supreme Court.
(4) On an application under subclause (3), the Supreme
Court may make any order relating to the disposal of the
assets that it thinks fit.
3 Winding up on Registrars certificate
(1) The Registrar may, by notice, require an
incorporated limited partnership to show good cause
why it should not be required to be wound up if the
Registrar is of the opinion:
(a) that the partnership has ceased to
carry on business, or
(b) that none of the partners is a limited
partner, or
(c) that incorporation of the partnership
has been obtained by mistake or fraud, or
(d) that the partnership exists for an
illegal purpose.
(2) If, on the expiration of 28 days after the notice is
given under subclause (1), the Registrar is satisfied that
the incorporated limited partnership should be required
to be wound up, the Registrar may publish in the
Gazette a certificate as to the requirement that the
incorporated limited partnership be wound up.
(3) The Registrar may publish in the Gazette a
certificate requiring an incorporated limited partnership
to be wound up if the Registrar is satisfied (whether by a
notice under section 73E (3) or otherwise) that, having
been incorporated on the basis that the partnership is or
is intended to be:
(a) registered as a VCLP or an AFOF
2002 of the Commonwealth, or
(b) a venture capital management
partnership within the meaning of section
94D (3) of the Income Tax Assessment
637
Act 1936 of the Commonwealth,
the partnerships registration has been revoked, or
it has not within the period of 2 years after its
incorporation become so registered or it has ceased to
meet, or has not in the period of 2 years after its
incorporation met, the requirements set out in section
94D (3) for recognition as such a venture capital
management partnership.
(4) The Registrar must not publish a certificate under
subclause (2) or (3) unless satisfied that good cause has
not been shown why the incorporated limited
partnership should not be required to be wound up.
(5) The Registrar must give notice of the publication
under subclause (2) or (3) of a certificate to the
incorporated limited partnership as soon as possible
after the publication.
(6) The Registrar must as soon as practicable after
giving a notice to an incorporated limited partnership,
record the giving of the notice in the Register.
(7) A notice under subclause (1) or (5) must be given
to the incorporated limited partnership:
(a) by being served on the incorporated
limited partnership at its registered office,
or
(b) if service cannot reasonably be
effected, by being published in a
newspaper circulating generally in the
State.
4 Review of certificate
(1) A person whose interests are affected by a decision
of the Registrar to publish a certificate under clause 3
may apply to the Supreme Court for review of the
decision.
(2) An application under subclause (1) must be made
within 28 days after the certificate is published.
(3) The decision is suspended on the making of an
638
application for review until the application is withdrawn
or the review is determined.
(4) In determining an application for review, the
Supreme Court may:
(a) affirm the decision under review, or
(b) set aside the decision under review
and require the Registrar to cancel the
certificate.
(5) Nothing in this clause prevents the Registrar
cancelling a certificate published under clause 3 at any
time after an application is made under subclause (1).
5 Procedure for winding up on certificate
(1) If the Registrar has published, and has not
cancelled or been required under clause 4 (4) (b) to
cancel, a certificate under clause 3 that an incorporated
limited partnership is required to be wound up, the
winding up:
(a) must be commenced:
(i) no later than the end of
28 days after the day on
which the certificate is
published unless an
application is made under
clause 4, or
(ii) if an application is
made under clause 4 and
the Supreme Court affirms
the decision to publish the
certificate, no later than 28
days after the day on which
the application is
determined, and
(b) must be completed by the day
specified by the Registrar in a notice given
to the partnership, not being a day earlier
than 60 days after the day on which the
639
winding up must be so commenced.
(2) On the commencement of the winding up, the
Registrar may appoint a person to be the liquidator of
the incorporated limited partnership.
(3) The liquidator may be a general partner in the
incorporated limited partnership, an associate of the
general partner (within the meaning of section 67B) or
any other person and need not be a registered liquidator
under the Corporations Act 2001 of the Commonwealth.
(4) The liquidator must within 10 days of being
appointed give notice of his or her appointment in the
Gazette.
(5) The liquidator must give such security as may be
prescribed and is entitled to receive such fees as are
fixed by the Registrar.
(6) Any vacancy occurring in the office of liquidator is to
be filled by a person appointed by the Registrar.
(7) The reasonable costs of a winding up required on a
certificate of the Registrar under clause 3 are payable
out of the property of the incorporated limited
partnership.
6 Distribution of assets on winding up required on Registrars certificate
(1) On a winding up of an incorporated limited
partnership required on a certificate of the Registrar
under clause 3:
how the assets are to be dealt with on
such a winding up, the assets must be
dealt with in accordance with the
partnership agreement, or
(b) in any other case, the assets are to
be distributed among the partners in
shares that are proportionate to their
respective contributions of capital or
property to the partnership.
(2) Any person aggrieved by the operation of this
640
clause in relation to the assets of an incorporated limited
partnership may apply to the Supreme Court.
(3) On an application under subclause (2), the Supreme
Court may make any order relating to the disposal of the
assets that it thinks fit.
7 Application of Corporations Act to winding up
(1) The winding up of an incorporated limited
partnership (other than a voluntary winding up or a
winding up required on a certificate of the Registrar
under clause 3) is declared to be an applied
Corporations legislation matter for the purposes of Part
3 of the Corporations (Ancillary Provisions) Act 2001 in
relation to the provisions of Part 5.7 (Winding up bodies
other than companies) of the Corporations Act 2001 of
the Commonwealth and that Part applies as if the
incorporated limited partnership were a Part 5.7 body
within the meaning of that Act, subject to the following
modifications:
(a) as if the words or in the public
interest were inserted in paragraph (c)
(ii) of section 583 after the words just
and equitable,
(b) as if paragraph (d) of section 583 did
not form part of that section,
(c) any other modifications (within the
meaning of Part 3 of the Corporations
(Ancillary Provisions) Act 2001) that are
prescribed by the regulations.
Note. Part 3 of the Corporations (Ancillary
Provisions) Act 2001 provides for the
application of provisions of the
Corporations Act and Part 3 of the ASIC
Act as laws of the State in respect of any
matter declared by a law of the State
(whether with or without modification) to
be an applied Corporations legislation
matter for the purposes of that Part in
relation to those Commonwealth
provisions. This does not apply to any
provisions that already apply to a matter
641
as a law of the Commonwealth.
(2) The Australian Securities and Investments
Commission may perform a function conferred on it
under a law applied by subclause (1):
(a) pursuant to an agreement or
arrangement of the kind referred to in
section 11 (8) or (9A) (b) of the Australian
Securities and Investments Commission
Act 2001 of the Commonwealth, and
(b) the Commission is authorised to
perform that function under section 11 of
that Act.
(3) Unless a function under a law applied by subclause
(1) is conferred on the Australian Securities and
Investments Commission as referred to in subclause (2),
that law applies as if a reference in it to the Commission
were a reference to the Registrar.
8 Registrar to be notified of winding up
(1) An incorporated limited partnership must lodge with
the Registrar a notice of the commencement of the
winding up of the partnership within 7 days after:
(a) the passing of a special resolution
referred to in clause 2 (1) (b), or
(b) in any other case, the
commencement of the winding up.
(2) An incorporated limited partnership must lodge with
the Registrar a notice of the completion of the winding
up of the partnership within 7 days after that
completion, specifying the date on which the winding up
was completed.
(3) The Registrar must, as soon as practicable after
receiving a notice under subclause (1) or (2), record the
receipt of the notice in the Register.
(4) If subclause (1) or (2) is not complied with, each
general partner of the incorporated limited partnership is
642
9 Cancellation of incorporation
(1) The Registrar must, by notice published in the
Gazette, cancel the incorporation of an incorporated
limited partnership as soon as practicable after the
partnership is wound up.
(2) The Registrar must, as soon as practicable after the
publication of a notice under subclause (1), record the
cancellation of the incorporation in the Register.
(3) An incorporated limited partnership ceases to exist
on the cancellation of its incorporation under this
Schedule.
Schedule 2 Savings, transitional and other provisions
(Section 83)
1 Regulations
(1) The regulations may contain provisions of a savings
or transitional nature consequent on the enactment of
the following Acts:
Partnership Amendment (Venture Capital
Funds) Act 2004
(2) Any such provision may, if the regulations so
provide, take effect from the date of assent to the Act
concerned or a later date.
(3) To the extent to which any such provision takes
effect from a date that is earlier than the date of its
publication in the Gazette, the provision does not
operate so as:
(a) to affect, in a manner prejudicial to
any person (other than the State or an
authority of the State), the rights of that
person existing before the date of its
publication, or
(b) to impose liabilities on any person
(other than the State or an authority of
643
the State) in respect of anything done or
omitted to be done before the date of its
publication.
2 Saving of existing limited partnerships
(1) The Register of Limited Partnerships kept under
section 57 as in force immediately before the
commencement of this clause is taken on that
commencement to be the Register of Limited and
Incorporated Limited Partnerships required to be kept
under the section as amended by the Partnership
Amendment (Venture Capital Funds) Act 2004.
(2) Subject to this Act, a partnership registered as a
limited partnership immediately before the
commencement of this clause is taken on that
commencement to be registered as a limited partnership
in the division of limited partnerships in the Register.
Historical notes
The following abbreviations are used in the Historical notes:
Am amended No number Schs Schedules
Cl clause p page Sec section
Cll clauses pp pages Secs sections
Div Division Reg Regulation Subdiv Subdivision
Divs Divisions Regs Regulations Subdivs Subdivisions
GG Government Gazette Rep repealed Subst substituted
Ins inserted Sch Schedule
Table of amending instruments
Partnership Act 1892 (55 Vic No 12). Assented to 20.2.1892. This Act has been
amended as follows:
1965 No 33 Decimal Currency Act 1965. Assented to 20.12.1965.
Date of commencement of sec 4, 14.2.1966, secs 1 (3), 2 (1)
and the Currency Act 1965 (Commonwealth), sec 2 (2).
1970 No 52 Supreme Court Act 1970. Assented to 14.10.1970.
Date of commencement, Part 9 excepted, 1.7.1972, sec 2 (1) and
GG No 59 of 2.6.1972, p 2018. Amended by Supreme Court
(Amendment) Act 1972 No 41. Assented to 11.4.1972.
1991 No 48 Partnership (Limited Partnership) Amendment Act 1991. Assented
to 11.12.1991.
Date of commencement, 1.5.1992, sec 2 and GG No 55 of
1.5.1992, p 2987.
1994 No 32 Statute Law (Miscellaneous Provisions) Act 1994. Assented to
644
2.6.1994.
Date of commencement of Sch 3, assent, sec 2.
1998 No 36 Partnership Amendment Act 1998. Assented to 15.6.1998.
Date of commencement, assent, sec 2.
2001 No 34 Corporations (Consequential Amendments) Act 2001. Assented to
28.6.2001.
Date of commencement of Sch 4.43, 15.7.2001, sec 2 (1) and
Commonwealth Gazette No S 285 of 13.7.2001.
2002 No 97 Business Names Act 2002. Assented to 29.11.2002.
Date of commencement of Sch 1.8, 5.10.2004, sec 2 (1) and GG
No 149 of 24.9.2004, p 7607.
2004 No 8 Partnership Amendment (Venture Capital Funds) Act 2004.
Assented to 17.3.2004.
2.4.2004, p 1797.
No 91 Statute Law (Miscellaneous Provisions) Act (No 2) 2004. Assented
to 10.12.2004.
Date of commencement of Sch 2.63, assent, sec 2 (2).
Table of amendments
Part 1 Ins 1991 No 48, Sch 2 (2).
Sec 1A Ins 1991 No 48, Sch 2 (2).
Sec 1B Ins 1991 No 48, Sch 2 (2). Am 2004 No 8, Sch 1 [1] [2].
Sec 1C Ins 2004 No 8, Sch 1 [3].
Part 2,
heading
Ins 1991 No 48, Sch 2 (2).
Part 2, Div 1,
heading
Ins 1991 No 48, Sch 2 (2).
Sec 1 Am 1991 No 48, Sch 2 (3); 2001 No 34, Sch 4.43 [1]; 2004 No
8, Sch 1 [4].
Sec 2 Am 1970 No 52, Second Sch; 1994 No 32, Sch 3; 2004 No 8,
Sch 1 [5].
Sec 3 Am 1965 No 33, First Sch; 1994 No 32, Sch 3.
Sec 4 Am 2004 No 8, Sch 1 [6].
Sec 4, note Ins 2004 No 8, Sch 1 [7].
Part 2, Div 2,
heading
Ins 1991 No 48, Sch 2 (4).
Sec 5 Am 1994 No 32, Sch 3; 2004 No 8, Sch 1 [8] [9].
Sec 6 Am 2004 No 8, Sch 1 [10][12]
Sec 8 Am 2004 No 8, Sch 1 [15] [16].
Sec 9 Am 1994 No 32, Sch 3; 2004 No 8, Sch 1 [17][19].
Sec 10 Am 1994 No 32, Sch 3; 1998 No 36, Sch 1 [1] [2]; 2001 No 34,
Sch 4.43 [2]; 2004 No 8, Sch 1 [20][22].
645
Sec 15 Am 2004 No 8, Sch 1 [31] [32].
Sec 16 Am 2004 No 8, Sch 1 [33] [34].
Sec 17 Am 1994 No 32, Sch 3. Subst 2004 No 8, Sch 1 [35].
Sec 18 Am 2004 No 8, Sch 1 [36].
Part 2, Div 3,
heading
Ins 1991 No 48, Sch 2 (5).
Sec 20 Am 2004 No 8, Sch 1 [37].
Sec 20A Ins 2004 No 8, Sch 1 [38].
Sec 22 Am 1994 No 32, Sch 3; 2004 No 8, Sch 1 [39].
Sec 23 Am 1970 No 52, Second Sch (am 1972 No 41, Second Sch);
1994 No 32, Sch 3; 2004 No 8, Sch 1 [40].
Sec 27 Am 2004 No 8, Sch 1 [43].
Part 2, Div 4,
heading
Ins 1991 No 48, Sch 2 (6).
Sec 31A Ins 2004 No 8, Sch 1 [49].
Secs 32, 33 Am 1994 No 32, Sch 3.
Sec 35 Am 1970 No 52, Second Sch; 1994 No 32, Sch 3.
Secs 36, 37 Am 1994 No 32, Sch 3.
Sec 38 Am 1970 No 52, Second Sch; 1994 No 32, Sch 3.
Sec 39 Am 1994 No 32, Sch 3.
Sec 40 Am 1970 No 52, Second Sch (am 1972 No 41, Second Sch).
Secs 41, 42,
44
Am 1994 No 32, Sch 3.
Sec 45 Rep 1991 No 48, Sch 2 (7).
Part 2, Div 5,
heading
Ins 1991 No 48, Sch 2 (8).
Sec 48 Rep 1991 No 48, Sch 2 (9).
Part 3,
heading
Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [50].
Part 3 Ins 1991 No 48, Sch 1.
646
Part 3, Div 1 Ins 1991 No 48, Sch 1.
Sec 49 Ins 1991 No 48, Sch 1. Am 2002 No 97, Sch 1.8 [1]; 2004 No 8,
Sch 1 [51][53].
Sec 50 Ins 1991 No 48, Sch 1. Subst 2004 No 8, Sch 1 [54].
Part 3, Div 2,
heading
Sec 50A Ins 2004 No 8, Sch 1 [56].
Sec 52 Ins 1991 No 48, Sch 1. Am 2001 No 34, Sch 4.43 [3]; 2004 No
8, Sch 1 [58] [59].
Secs 53A53C Ins 2004 No 8, Sch 1 [60].
Part 3, Div 3,
heading
Sec 53D Ins 2004 No 8, Sch 1 [62].
Sec 54 Ins 1991 No 48, Sch 1. Am 1994 No 32, Sch 3. Subst 2004 No
8, Sch 1 [63].
Sch 1 [64][66].
Sec 55, note Ins 2004 No 8, Sch 1 [67]. Rep 2004 No 91, Sch 2.63.
Sec 55A Ins 2004 No 8, Sch 1 [68].
Sec 56 Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [69][71].
Sec 57 Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [73] [74].
Sch 1 [76].
Sec 59, note Ins 2004 No 8, Sch 1 [77]. Rep 2004 No 91, Sch 2.63.
Part 3, Div 4,
heading
Secs 6163 Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [81].
Sec 64A Ins 2004 No 8, Sch 1 [85].
Secs 65, 66 Ins 1991 No 48, Sch 1.
Part 3, Div 4A
(secs 66A
66E)
Ins 2004 No 8, Sch 1 [86].
647
Sec 67 Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [81] [88] [89].
Secs 67A, 67B Ins 2004 No 8, Sch 1 [90].
Sec 68 Ins 1991 No 48, Sch 1. Am 2004 No 8, Sch 1 [91].
Part 3, Div 6,
heading
Sec 70 Ins 1991 No 48, Sch 1. Am 1994 No 32, Sch 3; 2004 No 8, Sch
1 [97] [98].
Secs 7173 Ins 1991 No 48, Sch 1.
Sec 73A Ins 2004 No 8, Sch 1 [99].
Secs 73B73E Ins 2004 No 8, Sch 1 [100].
Sec 74 Ins 1991 No 48, Sch 1.
Sec 79 Ins 1991 No 48, Sch 1.
Secs 80A, 80B Ins 2004 No 8, Sch 1 [107].
Sec 81A Ins 2004 No 8, Sch 1 [109].
Part 4 Ins 1998 No 36, Sch 1 [3].
Sec 82 Ins 1998 No 36, Sch 1 [3].
Sec 83 Ins 2004 No 8, Sch 1 [110].
Schs 1, 2 Ins 2004 No 8, Sch 1 [110].
The whole Act
(italicised
headings
before
sections)
Am 1991 No 48, Sch 2 (1) (italicised headings before secs 1, 5,
19, 32 and 45 omitted).

648
ANNEXURE 2
New South Wales Professional Standards Act 1994 No 81
Part 1 Preliminary
1 Name of Act
This Act may be cited as the Professional Standards Act 1994.
2 Commencement
This Act commences on a day or days to be appointed by
proclamation.
3 Objects of this Act
The objects of this Act are as follows:
(a) to enable the creation of schemes to limit the civil
liability of professionals and others,
(b) to facilitate the improvement of occupational
standards of professionals and others,
(c) to protect the consumers of the services provided by
professionals and others,
(d) to constitute the Professional Standards Council to
supervise the preparation and application of schemes
and to assist in the improvement of occupational
standards and protection of consumers.
4 Definitions
(1) In this Act:
business assets means the property of a person that is
used in the performance of the persons occupation and
that is able to be taken in proceedings to enforce a
judgment of a court.
Council means the Professional Standards Council
constituted by this Act.
court includes an arbitrator.
damages means damages awarded in respect of a claim
649
or counter-claim or by way of set-off, and includes:
(a) interest payable in respect of an
amount awarded as damages, and
(b) legal costs and expenses ordered to
be paid in connection with an award of
damages (other than legal costs and
expenses incurred in enforcing a judgment
or incurred on an appeal made by a
defendant).
exercise of a function includes, where the function is a
duty, the performance of the duty.
function includes a power, authority and duty.
j udgment includes:
(a) a judgment given by consent, and
(b) an award of an arbitrator.
occupational association means a body corporate:
(a) which represents the interests of
persons who are members of the same
occupational group or related occupational
groups, and
(b) the membership of which is limited
principally to members of that
occupational group or those occupational
groups.
occupational group includes a professional group and
a trade group.
occupational liability means civil liability arising (in
tort, contract or otherwise) directly or vicariously from
anything done or omitted by a member of an
occupational association acting in the performance of his
or her occupation.
scheme means a scheme for limiting the occupational
liability of members of an occupational association.
650
(2) Notes included in this Act do not form part of this
Act.
5 Occupational liability to which Act does not apply
(1) This Act does not apply to liability for damages
arising from any of the following:
(a) the death of or personal injury to a
person,
(b) (Repealed)
(c) a breach of trust,
(d) fraud or dishonesty.
(2) This Act does not apply to liability which may be the
subject of proceedings under Part 13 or 14 of the Real
Property Act 1900.
(3) Subsection (1) (a) does not operate to exclude from
the operation of this Act liability for damages arising out
of any negligence or other fault of a legal practitioner in
acting for a client in a personal injury claim.
6 Act binds the Crown
This Act binds the Crown not only in right of New South Wales but
also, so far as the legislative power of Parliament permits, the Crown
in all its other capacities.
Part 2 Limitation of liability
Division 1 Making, amendment and revocation of schemes
7 Preparation and approval of schemes
(1) An occupational association may prepare a scheme.
(2) The Council may, on the application of an
occupational association, prepare a scheme.
occupational association, approve a scheme prepared
under this section.
8 Public notification of schemes
651
Before approving a scheme, the Council must publish a notice in a
daily newspaper circulating throughout New South Wales:
(a) explaining the nature and significance of the
scheme, and
(b) advising where a copy of the scheme may be
obtained or inspected, and
(c) inviting comments and submissions within a
specified time, but not less than 21 days after
publication of the notice.
9 Making of comments and submissions concerning schemes
(1) Any person may make a comment or submission to
the Council concerning a scheme of which notice has
been published under section 8.
(2) A comment or submission must be made within the
period specified for that purpose in the notice or within
such further time as the Council may allow.
10 Consideration of comments, submissions and other matters
Before approving a scheme, the Council must consider the following:
(a) all comments and submissions made to it in
accordance with section 9,
(b) the position of persons who may be affected by
limiting the occupational liability of members of the
occupational association concerned,
(c) the nature and level of claims relating to
occupational liability made against members of the
occupational association concerned,
(d) the risk management strategies of the occupational
association concerned,
(e) the means by which those strategies are intended to
be implemented,
(f) the cost and availability of insurance against
occupational liability for members of the occupational
652
association concerned,
(g) the standards (referred to in section 27) determined
by the occupational association concerned in relation to
insurance policies.
11 Public hearings
(1) The Council may conduct a public hearing
concerning a scheme if the Council thinks it appropriate.
(2) A public hearing may be conducted in such manner
as the Council determines.
12 Submission of schemes to Minister
The Council may submit a scheme approved by it to the Minister.
13 Gazettal, tabling and disallowance of schemes
(1) The Minister may authorise the publication in the
Gazette of a scheme submitted to the Minister by the
Council.
(2) Part 6 of the Interpretation Act 1987 (sections 39,
42 and 43 excepted) applies to a scheme which is
published in the Gazette with the authorisation of the
Minister in the same way as it applies to a statutory
rule.
14 Commencement of schemes
(1) A scheme published in the Gazette with the
authorisation of the Minister commences:
(a) on such day subsequent to the date
of its publication as may be specified in
the scheme, or
(b) if no such day is specified2 months
after the date of its publication.
(2) This section is subject to any order of the Supreme
Court under section 15 (2).
15 Challenges to schemes
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(1) A person who is or is reasonably likely to be
affected by a scheme published as referred to in section
13 may apply to the Supreme Court for an order that
the scheme is void for want of compliance with this Act.
(2) The Court may, on the making of the application or
at any time before the scheme commences, order that
the commencement of the scheme is stayed until further
order of the Court.
(3) The Court, in relation to an application, may:
(a) make an order that a scheme is void
for want of compliance with this Act, or
(b) decline to make such an order, or
(c) give directions as to the things that
are required to be done in order that a
scheme, the commencement of which is
stayed under this section, may
commence, or
(d) make any other order it thinks fit.
16 Review of schemes
(1) The Minister may direct the Council to review the
operation of a scheme.
(2) The Council must comply with any such direction
but may on its own initiative at any time (whether
before or after the scheme ceases to have effect) review
the operation of a scheme.
(3) A review may, but need not, be conducted in order
to decide whether a scheme should be amended or
revoked or whether a new scheme should be made.
16A Amendment and revocation of schemes
(1) An occupational association may prepare an
amendment to or revocation of a scheme that relates to
its members.
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occupational association, prepare or approve an
amendment to or revocation of a scheme that relates to
the members of the association.
(3) The Minister may direct the Council to prepare an
amendment to or revocation of a scheme.
(4) The Council must comply with any such direction
but may on its own initiative, at any time while the
scheme remains in force, prepare an amendment to or
revocation of a scheme.
(5) The provisions of sections 715 apply, with any
necessary modifications, to the amendment or
revocation of a scheme as well as to the making of a
scheme.
Division 2 Contents of schemes
17 Persons to whom scheme applies
(1) A scheme may provide that it applies to all persons
within an occupational association or to a specified class
or classes of persons within an occupational association.
(2) A scheme may provide that the occupational
association concerned may, on application by a person,
exempt the person from the scheme.
(3) A scheme ceases to apply to a person exempted
from the scheme as referred to in subsection (2) on and
from the date on which the exemption is granted or on
and from a later date specified in the exemption.
(4) Subsection (2) does not apply to a person to whom
a scheme applies by virtue of section 18, 19 or 20.
18 Officers or partners of persons to whom scheme applies
(1) If a scheme applies to a body corporate, the
scheme also applies to each officer of the body
corporate.
(2) If a scheme applies to a person, the scheme also
applies to each partner of the person.
(3) However, if an officer of a body corporate or a
partner of a person is entitled to be a member of the
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same occupational association as the body corporate or
person, but is not a member, the scheme does not apply
to that officer or partner.
officer:
(a) in relation to a body corporate that is
a corporation within the meaning of the
Corporations Act 2001 of the
Commonwealth, has the same meaning as
in that Act, and
(b) in relation to a body corporate that is
not a corporation within the meaning of
that Act, means any person (by whatever
name called) who is concerned in or takes
part in the management of the body
corporate.
19 Employees of persons to whom a scheme applies
(1) If a scheme applies to a person, the scheme also
applies to each employee of the person.
(2) However, if an employee of a person is entitled to
be a member of the same occupational association as
the person but is not a member, the scheme does not
apply to the employee.
20 Other persons to whom a scheme applies
If persons are prescribed by the regulations for the purposes of section
29 (4) as being associated with persons to whom a scheme applies,
the scheme also applies to the prescribed persons.
20A Extension of liability limitation to other persons to whom scheme
applies
(1) A limitation that applies under this Act to the
occupational liability of a person as a member of an
occupational association in respect of a cause of action
(the principal cause of action) also applies, in respect
of the principal cause of action and any related cause of
action, to the liability of any other person to whom the
scheme concerned applies as a partner, officer,
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employee or associate of the member (whether or not
the other persons liability is an occupational liability).
Note. Sections 1820 provide for a
scheme to apply to a partner, officer,
employee or associate of a member of an
occupational association to whom the
scheme applies.
(2) A rel ated cause of acti on is a cause of action in
respect of civil liability of the other person arising (in
tort, contract or otherwise) directly or vicariously from
anything done or omitted by that person that caused or
contributed to the loss or damage with which the
principal cause of action is concerned and that resulted
from the same or substantially the same event as that
from which the principal cause of action arose.
(3) A reference in this section to a person who is a
partner, officer, employee or associate of a member of
an occupational association is a reference to a person
who was such a partner, officer, employee or associate
at the time of the event that gave rise to the principal
cause of action.
(4) A reference in this section to a limitation on liability
that applies to a person as a member of an occupational
association includes a reference to a limitation on
liability that would apply to the person if a cause of
action relating to the liability were brought against the
person.
associate of a person means someone who is
associated with the person pursuant to the regulations
under section 29 (4) (b).
officer:
(a) in relation to a body corporate that is
a corporation within the meaning of the
Corporations Act 2001 of the
Commonwealth, has the same meaning as
in that Act, and
(b) in relation to a body corporate that is
not a corporation within the meaning of
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that Act, means any person (by whatever
name called) who is concerned in or takes
part in the management of the body
corporate.
21 Limitation of liability by insurance arrangements
A scheme may provide that if a person to whom the scheme applies
and against whom a proceeding relating to occupational liability is
brought is able to satisfy the court that the person has the benefit of
an insurance policy:
(a) insuring the person against that occupational
liability, and
(b) under which the amount payable in respect of the
occupational liability relating to the cause of action
(including any amount payable by way of excess under
or in relation to the policy) is not less than the amount
of the monetary ceiling specified in the scheme in
relation to the class of person and the kind of work to
which the cause of action relates at the time at which
the act or omission giving rise to the cause of action
occurred,
the person is not liable in damages in relation to that cause of action
above the amount so specified.
22 Limitation of liability by reference to amount of business assets
A scheme may provide that if a person to whom the scheme applies
and against whom a proceeding relating to occupational liability is
brought is able to satisfy the court:
(a) that the person has business assets the net current
market value of which is not less than the amount of the
monetary ceiling specified in the scheme in relation to
the class of person and the kind of work to which the
cause of action relates at the time at which the act or
omission giving rise to the cause of action occurred, or
(b) that:
(i) the person has business assets and
the benefit of an insurance policy that
insures the person against that
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occupational liability, and
(ii) the net current market value of the
business assets and the amount payable
under the insurance policy in respect of
the occupational liability relating to the
cause of action (including any amount
payable by way of excess under or in
relation to the policy), if combined, would
total an amount that is not less than the
amount of the monetary ceiling specified
in the scheme in relation to the class of
person and the kind of work to which the
cause of action relates at the time at
which the act or omission giving rise to
the cause of action occurred,
the person is not liable in damages in relation to that cause of action
above the amount of the monetary ceiling so specified.
23 Limitation of liability by multiple of charges
(1) A scheme may provide that if a person to whom the
scheme applies and against whom a proceeding relating
to occupational liability is brought is able to satisfy the
court:
(a) that the person has the benefit of an
insurance policy:
(i) insuring the person
against that occupational
liability, and
(ii) under which the
amount payable in respect
of the occupational liability
relating to the cause of
action (including any
amount payable by way of
excess under or in relation
to the policy) is not less
than an amount (in this
section called the
limitation amount), being
a reasonable charge for the
services provided by the
person or which the person
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failed to provide and to
which the cause of action
relates, multiplied by the
multiple specified in the
scheme in relation to the
class of person and the kind
of work to which the cause
of action relates at the time
at which the act or omission
giving rise to the cause of
action occurred, or
(b) that person has business assets the
net current market value of which is not
less than the limitation amount, or
(c) that:
(i) the person has business
assets and the benefit of an
insurance policy insuring
the person against that
occupational liability, and
(ii) the net current market
value of the assets and the
amount payable under the
insurance policy in respect
of the occupational liability
relating to the cause of
action (including any
amount payable by way of
excess under or in relation
to the policy), if combined,
would total an amount that
is not less than the
limitation amount,
the person is not liable in damages in relation to
that cause of action above the limitation amount or, if
the scheme specifies a minimum cap determined by the
Council for the purposes of the scheme that is higher
than the limitation amount, above the amount of the
minimum cap so specified.
(2) In determining the amount of a reasonable charge
for the purposes of such a provision, a court is to have
660
regard to any amount actually charged and to:
(a) the amount that would ordinarily be
charged in accordance with a scale of
charges accepted by the occupational
association of which the person is a
member, or
(b) if there is no such scale, the amount
that a competent person of the same
qualifications and experience as the
person would be likely to charge in the
same circumstances.
(3) This section does not limit an amount of damages to
which a person is liable if the amount is less than the
amount specified for the purpose in the scheme in
relation to the class of person and the kind of work
concerned.
24 Specification of limits of liability and multiples
(1) A scheme may:
(a) specify the same maximum amount of
liability in relation to all cases to which the
scheme applies or different maximum
amounts of liability for different cases or
classes of case or for the same case or
class of case for different purposes, and
(b) confer a discretionary authority on an
occupational association, on application by
a person to whom the scheme applies, to
specify in relation to the person a higher
maximum amount of liability than would
otherwise apply under the scheme in
relation to the person either in all cases or
in any specified case or class of case.
(2) A scheme may specify a multiple, monetary ceiling
or minimum cap by way of a formula that is to be
applied to calculate the multiple, ceiling or cap.
25 Combination of provisions under sections 21, 22 and 23
If, in a scheme, provisions of the kind referred to in section 23 and
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provisions of the kind referred to in section 21 or 22 (or both) apply to
a person at the same time in respect of the same kind of work, the
scheme must provide that the damages which may be awarded against
the person are to be determined in accordance with section 23 but
must not exceed the amount of the monetary ceiling specified in
relation to the class of person and the kind of work in the provisions of
the kind referred to in section 21 or 22.
26 Liability that cannot be limited by a scheme
(1) A scheme can only affect the liability for damages
arising from a single cause of action to the extent to
which the liability results in damages exceeding such
amount (but not less than $500,000) as is determined
for the purposes of the scheme by the Council and
specified in the scheme.
(2) In making a determination, the Council must have
regard to:
(a) the number and amounts of claims
made against persons within the
occupational association concerned, and
(b) the need to adequately protect
consumers.
(3) A Council determination:
(a) takes effect when an amendment
providing for its specification in the
scheme takes effect, and
(b) applies only to a cause of action that
arises after the determination takes effect.
27 Insurance to be of requisite standard
For the purposes of a scheme, an insurance policy must be a policy, or
a policy of a kind, which complies with standards determined by the
occupational association whose members may be insured under such a
policy, or a policy of such a kind.
Division 3 Effect of schemes
28 Limit of occupational liability by schemes
(1) To the extent provided by this Act and the
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provisions of the scheme, a scheme limits the
occupational liability, in respect of a cause of action
founded on an act or omission occurring during the
period when the scheme is in force, of any person to
whom the scheme applied at the time when the act or
omission occurred.
(2) The applicable limitation of liability is the limitation
specified by the scheme as in force at the time of the
relevant act or omission.
(3) A limitation of liability that, in accordance with this
section, applies in respect of an act or omission
continues to apply to every cause of action founded on
it, irrespective of when the cause arises or proceedings
are instituted in respect of it, and even if the scheme
has been amended or has, in accordance with section
32, ceased to be in force.
(4) A person to whom a scheme applies cannot choose
not to be subject to the scheme, except in accordance
with provisions included in the scheme under section 17
(2).
29 Limitation of amount of damages
(1) Limitation imposed on single claims
A limitation imposed by a scheme in force under this Act
of an amount of damages is a limitation of the amount
of damages that may be awarded for a single claim and
is not a limitation of the amount of damages that may
be awarded for all claims arising out of a single event.
(2) No splitting of plaintiffs
Claims by a number of persons who have a joint interest
in a cause of action are to be treated as a single claim
for the purposes of this Act despite the fact that they
may also have several interests.
(3) No splitting of defendants
Two or more claims by the same person arising out of a
single event against persons to whom a scheme in force
under this Act applies and who are associated are to be
treated as a single claim for the purposes of this Act.
(4) Associated defendants
Persons are associated if they are:
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(a) partners, employees of the same
employer or in the relationship of
employer and employee, or
(a1) officers of the same body corporate
or in the relationship of body corporate
and officer of the body corporate (with
officer having the same meaning as in
section 18), or
(b) persons who are prescribed by the
regulations for the purposes of this
subsection.
30 Effect of scheme on other parties to proceedings
A scheme does not limit the liability of a person who is a party to
proceedings if the scheme does not apply to the person.
31 Proceedings to which a scheme applies
A scheme in force under this Act applies to proceedings relating to an
act or omission that occurred after the commencement of the scheme.
32 Duration of scheme
(1) A scheme remains in force for such period (not
exceeding 5 years) from its commencement as is
determined by the Council unless, before the end of the
period so determined:
(a) it is revoked, or
(b) its operation is extended by notice
under this section, or
(c) its operation ceases because of the
operation of another Act.
(2) The Minister may, by notice published in the
Gazette, extend the period for which a scheme is in
force. the notice must be published on or before the day
when the original period ends.
(3) Only one extension may be effected under
subsection (2) in respect of any particular scheme, and
664
the maximum period of such an extension is 12 months.
33 Notification of limitation of liability
(1) If a persons occupational liability is limited in
accordance with this Part, all documents given by the
person to a client or prospective client that promote or
advertise the person or persons occupation, including
official correspondence ordinarily used by the person in
the performance of the persons occupation and similar
documents, must carry a statement to that effect.
(2) A person who contravenes this section is guilty of
an offence.
(3) The regulations may prescribe a form of statement
for the purposes of this section.
(4) A person does not commit an offence against this
section if the statement carried on the persons
documents is in the prescribed form.
(5) In this section, a reference to a document does not
include a reference to a business card.
Part 3 Compulsory insurance
34 Occupational association may compel its members to insure
(1) An occupational association may require its
members to hold insurance against occupational liability.
(2) Such a requirement may be imposed as a condition
of membership or otherwise.
(3) The occupational association may set the standards
with which the insurance must comply (for example, as
to the amount of the insurance).
(4) The occupational association may specify different
standards of insurance for different classes of members
or for different kinds of work or on the basis of any
other differing circumstances that it considers relevant.
35 Monitoring claims
665
(1) An occupational association may establish a
committee for monitoring and analysing claims made
against its members for occupational liability or two or
more occupational associations may establish a common
committee for that purpose.
(2) It is not necessary for all the committee members
to be members of the occupational association or
associations concerned. (For example, members may
include representatives of insurers.)
(3) An occupational association may, through such a
committee or otherwise, issue practice advice to its
members with a view to minimising claims for
occupational liability.
Part 4 Risk management
36 Risk management strategies
(1) If an occupational association seeks the approval of
the Council under section 7 to a scheme, it must furnish
the Council with:
(a) a detailed list of the risk management
strategies intended to be implemented in
respect of its members, and
(b) the means by which those strategies
are intended to be implemented.
(2) The means of implementation may be imposed as a
condition of membership or otherwise.
(3) The strategies are to apply in addition to other
statutory requirements and must not be inconsistent
with them.
37 Reporting
(1) An occupational association must provide
information to the Council concerning its risk
management strategies if requested to do so by the
Council.
(2) An occupational association must provide an annual
report to the Council as to the implementation and
666
monitoring of its risk management strategies, the effect
of those strategies and any changes made or proposed
to be made to them.
(3) The occupational associations annual report is to be
incorporated into the Councils annual report in such
form as the Council determines.
Part 5 Complaints and disciplinary matters
38 Occupational Associations (Complaints and Discipline) Code
(1) A scheme may adopt the provisions of the Model
Code set out in Schedule 1 with such additions,
omissions or other modifications (if any) as may be
approved by the Council.
(2) The modifications may include provisions relating to
the making and determination of complaints and the
imposition and enforcement of disciplinary measures
against members of an occupational association,
including (but not limited to) the following:
(a) the establishment of committees for
the purpose of implementing the Model
Code or any of its provisions,
(b) the procedure at meetings of any
such committee,
(c) whether any such committee may
administer an oath,
(d) the application or exclusion of the
rules of and practice as to evidence,
(e) the grounds on which a complaint
may be made,
(f) the verification of complaints by
statutory declaration,
(g) the suspension of members from
membership or from practice,
(h) the imposition of fines,
667
(i) the making of appeals,
(j) the exchanging of information with
other occupational associations (within or
outside New South Wales).
Part 6 The Professional Standards Council
Division 1 Constitution of the Council
39 Constitution of the Council
There is constituted by this Act a body corporate with the corporate
name of the Professional Standards Council.
Division 2 Membership and procedure of the Council
40 Membership of the Council
The Council is to consist of 11 persons appointed by the Minister who
have such experience, skills and qualifications as the Minister
considers appropriate to enable them to make a contribution to the
work of the Council.
41 Provisions relating to members of the Council
Schedule 2 has effect with respect to the members of the Council.
42 Provisions relating to procedure of the Council
Schedule 3 has effect with respect to the procedure of the Council.
Division 3 Functions of the Council
43 Functions of Council
(1) The Council has the following functions:
(a) to give advice to the Minister
concerning:
(i) the publication in the
Gazette of a scheme, or of
an amendment to a
scheme, submitted by it to
the Minister, or of notice of
the revocation of such a
scheme,
(ii) the operation of this
668
Act,
(iii) any other matter
relating to the occupational
liability of members of
occupational associations,
(b) to give advice to occupational
associations concerning policies of
insurance for the purposes of Part 2,
(c) to encourage and assist in the
improvement of occupational standards of
members of occupational associations,
(d) to encourage and assist in the
development of self-regulation of
occupational associations, including the
giving of advice and assistance concerning
the following:
(i) codes of ethics,
(ii) codes of practice,
(iii) quality management,
(iv) risk management,
(v) resolution of complaints
by clients,
(vi) voluntary mediation
services,
(vii) membership
requirements,
(viii) discipline of members,
(ix) continuing occupational
education,
(e) to monitor the occupational standards
of persons to whom this Act applies,
(f) to monitor the compliance by an
669
occupational association with its risk
management strategies,
(g) to publish advice and information
concerning the matters referred to in this
section,
(h) to conduct forums on issues of
interest to members of occupational
groups,
(i) to collect, analyse and provide the
Minister with information on issues and
policies concerning the standards of
occupational groups,
(j) to institute proceedings in its own
name for the prosecution of an offence
against this Act or the regulations that
comes to its notice or for injunctive or
other relief in respect of such offences.
(2) The Council is not empowered to give advice
concerning occupational standards contained in any
other Act or statutory instrument.
(3) Any advice given to the Minister by the Council may
be given either at the request of the Minister or without
any such request.
(4) The Council has such other functions as are
conferred or imposed on it by or under this or any other
Act.
(5) The Council is taken to have locus standi for the
purpose of pursuing any injunctive or other relief in
accordance with subsection (1) (j), and is not to be
required to give any undertaking as to damages in
connection with the grant of any interlocutory relief.
Division 4 Miscellaneous
44 Requirement to provide information
(1) The Council may, by notice in writing, require an
occupational association whose members are subject to
a scheme in force under this Act or which seeks the
approval of the Council under section 7 to a scheme, or
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an amendment to or revocation of a scheme, to furnish
information to it which it may reasonably require in
order to exercise its functions.
(2) An occupational association which does not comply
with a notice under this section is guilty of an offence.
44A Referral of complaints
(1) An occupational association may refer to the Council
any complaint or other evidence received by it that a
member or former member of the association has
committed an offence against section 33 or an offence
against the regulations.
(2) Nothing that is done in good faith under this section
by or on behalf of an association subjects the
association, any member of the associations executive
body or any person acting under the direction of the
association or its executive body to any action, liability,
claim or demand.
45 Committees of Council
(1) The Council may establish committees to assist it in
the exercise of its functions.
(2) It does not matter that any or all of the members of
a committee are not members of the Council.
(3) The procedure for calling committee meetings and
for the conduct of business at those meetings is to be as
determined by the Council or (subject to any
determination of the Council) by the committee.
46 Staff of the Council
The Council may, with the approval of the Minister, arrange for the use
of the services of any staff or facilities of a government department,
an administrative office or a public or local authority.
47 Annual report
(1) As soon as practicable after 30 June, but before 1
October, in each year, the Council must prepare and
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forward to the Minister a report on the Councils work
and activities for the period of 12 months ending on 30
June in that year.
(2) The Minister is required to lay the report or cause it
to be laid before both Houses of Parliament as soon as
practicable after receiving the report.
(3) The report is to include details of any forums
conducted by the Council under section 43 (1) (h), and
of any committees established by the Council under
section 45, during the period to which the report relates.
48 Characterisation of this Act
The provisions of this Act are to be regarded as part of the substantive
law of the State.
49 Application of this Act
(1) To the extent to which Parts 3, 4 and 5 are
inconsistent with another Act, the other Act prevails.
Otherwise, this Act has effect despite any other law to
the contrary.
(2) This Act does not affect the operation of section 5 of
the Corporations (New South Wales) Act 1990.
50 No contracting out of this Act
This Act applies in relation to a person to whom a scheme in force
under this Act applies despite any contract to the contrary, whether
the contract was made before, on or after the date on which the
person became a person to whom the scheme applies.
51 No limitation on other insurance
Nothing in this Act limits the insurance arrangements a person may
make apart from those made for the purposes of this Act.
52 Proceedings for offences
Proceedings for an offence against this Act or the regulations are to be
dealt with summarily before a Local Court constituted by a Magistrate
sitting alone.
672
53 Regulations
(1) The Governor may make regulations, not
inconsistent with this Act, for or with respect to any
matter that by this Act is required or permitted to be
prescribed or that is necessary or convenient to be
prescribed for carrying out or giving effect to this Act.
(2) Without limiting the generality of subsection (1), the
regulations may make provision concerning the
following:
(a) the fees for applications for the
Councils approval, under Division 1 of
Part 2, of a scheme, or an amendment to
or revocation of a scheme,
(b) the annual fee to be paid to the
Council by an occupational association
whose members are subject to a scheme
in force under this Act.
(3) A regulation may create an offence punishable by a
penalty not exceeding 50 penalty units.
54 Rules of court
(1) Rules of court may be made with respect to any
matter arising under Part 2.
(2) A rule of court may specify:
(a) matters relating to section 15, and
(b) the means by which the net current
market value of assets may be
determined for the purposes of section 22
or 23.
(3) This section does not limit the rule- making powers
of any court.
55 Review of Act
(1) The Minister is to review this Act to determine
whether the policy objectives of the Act remain valid and
whether the terms of the Act remain appropriate for
673
securing those objectives.
(2) The review is to be undertaken as soon as possible
after the period of 5 years from the date of assent to
this Act.
(3) A report of the outcome of the review is to be tabled
in each House of Parliament within 12 months after the
end of the period of 5 years.
56 Savings, transitional and other provisions
Schedule 1 Complaints and disciplinary matters
(Section 38)
Model code
1 Citation
This Code may be cited as the Occupational Associations (Complaints
and Discipline) Code.
2 Definitions
In this Code:
Council means the Professional Standards Council constituted by the
Professional Standards Act 1994.
3 What actions may be the subject of a complaint?
A complaint may be made that a member of the occupational
association has acted (or has failed to act) in such a way as to justify
the taking of disciplinary action against the member under this Code. A
complaint may be made and dealt with even though the person about
whom it is made has ceased to be a member.
4 Who may make a complaint?
Any person may make a complaint (including the occupational
association and the Council).
5 How is a complaint made?
A complaint may be made to the occupational association. The
complaint must be in writing and contain the particulars of the
allegations on which it is founded. the occupational association must
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notify the Council of each complaint made to it (other than a complaint
made by the Council).
6 What happens after a complaint is made?
The occupational association must consider a complaint as soon as
practic able after the complaint is made to it or notified to it by the
Council. The association may then do any one or more of the
following:
(a) it may require the complainant to provide further
particulars of the complaint,
(b) it may carry out an investigation into the complaint,
(c) it may attempt to resolve the complaint by
conciliation,
(d) it may decline to entertain the complaint (because,
for example, the complaint is frivolous, vexatious,
misconceived or lacking in substance),
(e) it may conduct a hearing into the complaint.
7 What action may be taken after a hearing into a complaint?
After an occupational association has conducted a hearing into a
complaint against a person, it may, if it finds the complaint
substantiated, do any one or more of the following:
(a) caution or reprimand the person,
(b) impose conditions as to the carrying out of the
persons occupation,
(c) require the person to complete specified courses of
training or instruction,
(d) require the person to report as to the carrying out
of the persons occupation at the times, in the manner
and to the persons specified by the association,
(e) order the person to obtain advice as to the carrying
out of the persons occupation, from such persons as are
specified by the association,
(f) expel the person from membership of the
675
association.
If the association does not find the complaint substantiated, it must
dismiss the complaint. The association is not entitled to make an
award of compensation.
8 Notices of decisions
Within 30 days after a decision is made by an occupational association
concerning a complaint, the complainant and the person against whom
the complaint is made must be given a written statement of the
decision. The statement must include the reasons for the decision.
9 What rights of representation do parties to a complaint have?
The complainant and the person about whom the complaint is made
are not entitled to legal representation during attempts to resolve the
complaint by conciliation but are entitled to legal representation during
a hearing into the complaint.
10 How may the functions of the occupational association under this Code
be exercised?
A function of an occupational association under this Code may, in
accordance with a resolution of the association, be exercised by the
executive body of the association or by a person or persons appointed
for the purpose.
11 Protection from liability
No matter or thing done or omitted by the occupational association or
a person acting in accordance with a resolution of the association
subjects a member of the executive body of the association or the
person so acting personally to any liability if the matter or thing was
done or omitted in good faith for the purpose of implementing this
Code.
Schedule 2 Provisions relating to members of the Council
(Section 41)
1 Chairperson and Deputy Chairperson of the Council
(1) Two of the members of the Council are (in and by
their respective instruments of appointment or in and by
other instruments executed by the Minister) to be
appointed as Chairperson and Deputy Chairperson of the
Council, respectively.
676
(2) The Minister may remove a member from the office
of Chairperson or Deputy Chairperson of the Council at
any time.
(3) A person holding office as Chairperson or Deputy
Chairperson of the Council vacates that office if the
person:
(a) is removed from that office by the
Minister, or
(b) resigns that office by instrument in
writing addressed to the Minister, or
(c) ceases to be a member.
2 Deputies of members
(1) The Minister may, from time to time, appoint a
person to be the deputy of a member, and the Minister
may revoke any such appointment.
(2) In the absence of a member, the members deputy:
(a) is, if available, to act in the place of
the member, and
(b) while so acting, has all the functions
of the member and is taken to be a
member.
(3) The deputy of a member who is Chairperson or
Deputy Chairperson of the Council does not (because of
this clause) have the members functions as Chairperson
or Deputy Chairperson.
(4) A person while acting in the place of a member is
entitled to be paid such allowances as the Minister may
from time to time determine in respect of the person.
3 Term of office
Subject to this Schedule, a member holds office for such period (not
exceeding 3 years) as may be specified in the members instrument of
appointment, but is eligible (if otherwise qualified) for re-ointment.
4 Allowances
677
A member is entitled to be paid such allowances as the Minister may
from time to time determine in respect of the member.
5 Vacancy in office of member
(1) The office of a member becomes vacant if the
member:
(a) dies, or
(b) completes a term of office and is not
re-appointed, or
(c) resigns the office by instrument in
writing addressed to the Minister, or
(d) is removed from office by the Minister
under this clause or by the Governor
under Part 8 of the Public Sector
Management Act 1988, or
(e) is absent from 4 consecutive
meetings of the Council of which
reasonable notice has been given to the
member personally or in the ordinary
course of post, except on leave granted by
the Council or unless, before the
expiration of 4 weeks after the last of
those meetings, the member is excused
by the Council for having been absent
from those meetings, or
(f) becomes bankrupt, applies to take the
benefit of any law for the relief of
bankrupt or insolvent debtors, compounds
with his or her creditors or makes an
assignment of his or her remuneration for
their benefit, or
(g) becomes a mentally incapacitated
person, or
(h) is convicted in New South Wales of an
offence that is punishable by
imprisonment for 12 months or more or is
convicted elsewhere than in New South
678
Wales of an offence that, if committed in
New South Wales, would be an offence so
punishable.
(2) The Minister may remove a member from office for
incompetence or misbehaviour.
6 Filling of vacancy in office of member
If the office of a member becomes vacant, a person may, subject to
this Act, be appointed to fill the vacancy.
7 Effect of certain other Acts
(1) Part 2 of the Public Sector Management Act 1988
does not apply to the appointment of a member.
(2) A provision made by or under any Act:
(a) requiring a person who is the holder
of a specified office to devote the whole of
his or her time to the duties of that office,
or
(b) prohibiting the person from engaging
in employment outside the duties of that
office,
does not operate to disqualify the person from
holding that office and also the office of a member or
from accepting and retaining any remuneration payable
to the person under this Act as such a member.
(3) The office of a member is not, for the purposes of
any Act, an office or place of profit under the Crown.
8 Personal liability of members
No matter or thing done or omitted by the Council, a member or any
person acting under the direction of the Council or a member subjects
the member or person personally to any liability if the matter or thing
was done or omitted in good faith for the purpose of executing this or
any other Act.
Schedule 3 Provisions relating to procedure of the Council
(Section 42)
1 General procedure
679
The procedure for the calling of meetings of the Council and for the
conduct of business at those meetings is, subject to this Act and the
regulations, to be as determined by the Council.
2 Quorum
The quorum for a meeting of the Council is a majority of its members
for the time being.
3 Presiding member
(1) The Chairperson of the Council or, in the absence of
the Chairperson, the Deputy Chairperson of the Council
or, in the absence of both, another member elected to
chair the meeting by the members present is to preside
at a meeting of the Council.
(2) The person presiding at any meeting of the Council
has a deliberative vote and, in the event of an equality
of votes, has a second or casting vote.
4 Voting
A decision supported by a majority of the votes cast at a meeting of
the Council at which a quorum is present is the decision of the Council.
5 First meeting
The Chairperson of the Council is to call the first meeting of the
Council in such manner as the Chairperson thinks fit.
Schedule 4 Savings, transitional and other provisions
(Section 56)
1 Regulations
(1) The regulations may contain provisions of a savings
or transitional nature consequent on the enactment of
the following Acts:
Professional Standards Amendment Act
1998
1999
680
2004
(2) Any such provision may, if the regulations so
provide, take effect from the date of assent to the Act
concerned or a later date.
(3) To the extent to which any such provision takes
effect from a date that is earlier than the date of its
publication in the Gazette, the provision does not
operate so as:
(a) to affect, in a manner prejudicial to
any person (other than the State or an
authority of the State), the rights of that
person existing before the date of its
publication, or
(b) to impose liabilities on any person
(other than the State or an authority of
the State) in respect of anything done or
omitted to be done before the date of its
publication.
Part 2 Professional Standards Amendment Act 1998
2 Definition
In this Part, the amending Act means the Professional Standards
Amendment Act 1998.
3 Review of schemes
The provisions of section 16, as inserted by the amending Act, extend
to apply in respect of schemes in force at the commencement of the
section, as so inserted.
4 Limitation of damages in respect of subsisting causes of action
(1) Sections 21, 22 and 23, as in force immediately
before the day on which amendments made to them by
the amending Act took effect, continue to apply in
respect of any cause of action that arose before that day
as if those amendments had not been made, except as
provided by subclause (2).
(2) The amendments made to sections 21, 22 and 23
by Schedule 1 [3] to the amending Act apply in relation
681
to a cause of action arising before, as well as after,
those amendments took effect.
(3) Sections 28 and 32, as in force immediately before
their repeal by the amending Act, continue to apply in
respect of a cause of action arising from anything done
or omitted before their repeal.
5 Determination of extent of limitation of damages
The amendments made by the amending Act to section 26 do not
apply in respect of a determination made under that section before
those amendments took effect.
6 Fees payable on applications for approval of amendment to or revocation
of scheme
For avoidance of doubt, section 53, as in force immediately before the
amendment made to that section by the amending Act, is taken
always to have empowered the prescription by regulation of any fee
that might be prescribed under that section as in force after the
amendment took effect.
7 Definition of existing schemes
In this Part, existing scheme means a scheme purporting to have
been established in compliance with this Act and in existence
immediately before the commencement of this clause.
8 Validation of existing schemes for limited period
(1) The provisions of an existing scheme are, to the
extent to which they fail to provide for the scheme to
apply to all persons within an occupational association or
to a specified class or classes of persons within an
occupational association, taken to have complied with
this Act:
(a) at the time at which the provisions
were first included in the scheme, and
(b) at all times until:
(i) the expiration of 12
months after the
commencement of this
682
clause, or
(ii) the amendment of the
provisions in accordance
with this Act after the
commencement of this
clause, or
(iii) the operation of the
scheme ceases,
whichever occurs first.
(2) This clause does not apply to the provisions of an
existing scheme to which clause 9 applies.
9 Validation of exemption provisions in existing schemes and exemptions
(1) This clause applies to the provisions of an existing
scheme that provide (in effect) that an occupational
association may, on application, exempt a person from
the scheme.
(2) The provisions of an existing scheme to which this
clause applies are taken to have complied with this Act:
(a) at the time at which the provisions
were first included in the scheme, and
(b) at all times until the commencement
of section 17 (2).
(3) The provisions of an existing scheme to which this
clause applies are taken to have been made under
section 17 (2).
(4) An exemption granted before the commencement of
this clause under the provisions of an existing scheme to
which this clause applies is taken to have been validly
granted on the date on which it was granted and is
taken to be valid at all times on and from that date.
10 Part does not apply to new provisions of existing schemes
This Part does not apply to a provision of an existing scheme included
in the scheme after the commencement of this clause.
683
11 Part does not affect previous court or tribunal decisions
This Part does not affect any decision or order of a court or tribunal
made before the commencement of this clause.
12 Definition
In this Part:
amending Act means the Professional Standards Amendment Act
2004.
13 Operation of amendments
Except as provided by this Part, an amendment made by the amending
Act extends to a cause of action arising before the commencement of
the amendment but not so as to affect any decision of a court, or any
compromise or settlement made before the commencement of the
amendment.
14 Personal injury claims
The amendments made by the amending Act to section 5 do not apply
to a cause of action that arose before the commencement of the
amendments.
15 Application of schemes to officers, partners, employees and associates
The amendments made by the amending Act that substitute section 18
and insert section 20A do not apply to a cause of action that arose
before the commencement of the amendments.
Historical notes
The following abbreviations are used in the Historical notes:
Am amended No number Schs Schedules
Cl clause p page Sec section
Cll clauses pp pages Secs sections
Div Division Reg Regulation Subdiv Subdivision
Divs Divisions Regs Regulations Subdivs Subdivisions
GG Government Gazette Rep repealed Subst substituted
Ins inserted Sch Schedule
Table of amending instruments
Professional Standards Act 1994 No 81. Assented to 12.12.1994. Date of
684
commencement, 1.5.1995, sec 2 and GG No 23 of 3.3.1995, p 1036. This Act has
been amended as follows:
1998 No 10 Professional Standards Amendment Act 1998. Assented to
12.5.1998.
26.6.1998, p 4427.
No 120 Statute Law (Miscellaneous Provisions) Act (No 2) 1998. Assented
to 26.11.1998.
Date of commencement of Sch 1.33, assent, sec 2 (2).
22.11.1999.
Date of commencement, assent, sec 2.
No 94 Crimes Legislation Amendment (Sentencing) Act 1999. Assented
to 8.12.1999.
Date of commencement of sec 7 and Sch 5, 1.1.2000, sec 2 (1)
and GG No 144 of 24.12.1999, p 12184.
2000 No 28 Real Property Amendment (Compensation) Act 2000. Assented to
5.6.2000.
Date of commencement of sec 4, 15.9.2000, sec 2 and GG No
121 of 15.9.2000, p 10416.
3.11.2004.
12.11.2004, p 8432.
Table of amendments
Sec 4 Am 2004 No 83, Sch 1 [1][3].
Sec 5 Am 2000 No 28, sec 4; 2004 No 83, Sch 1 [4] [5].
Sec 14 Subst 1998 No 10, Sch 1 [1].
Sec 16 Subst 1998 No 10, Sch 1 [2].
Sec 16A Ins 1998 No 10, Sch 1 [2].
Sec 17 Am 1999 No 56, Sch 1 [1].
Sec 18 Subst 2004 No 83, Sch 1 [6].
Sec 20A Ins 2004 No 83, Sch 1 [7].
Sec 21 Am 1998 No 10, Sch 1 [3] [4]; 2004 No 83, Sch 1 [8] [9].
Secs 22, 23 Am 1998 No 10, Sch 1 [3] [4]. Subst 2004 No 83, Sch 1 [10].
Sec 24 Subst 2004 No 83, Sch 1 [11].
Sec 25 Am 2004 No 83, Sch 1 [12] [13].
Sec 26 Am 1998 No 10, Sch 1 [5] [6].
Sec 28 Subst 1998 No 10, Sch 1 [7]. Am 1999 No 56, Sch 1 [2][4].
Sec 29 Am 2004 No 83, Sch 1 [14].
Sec 32 Subst 1998 No 10, Sch 1 [8].
Sec 33 Am 1998 No 10, Sch 1 [9] [10].
Sec 34 Am 2004 No 83, Sch 1 [15].
685
Sec 43 Am 1998 No 10, Sch 1 [11][13]; 2004 No 83, Sch 1 [16].
Sec 44 Am 1998 No 10, Sch 1 [14].
Sec 44A Ins 1998 No 10, Sch 1 [15].
Sec 45 Am 2004 No 83, Sch 1 [17].
Sec 47 Subst 1998 No 120, Sch 1.33. Am 2004 No 83, Sch 1 [18].
Sec 53 Am 1998 No 10, Sch 1 [16].
Sec 56 Ins 1998 No 10, Sch 1 [17].
Sch 1 Am 1998 No 10, Sch 1 [18].
Sch 2 Am 1999 No 94, sec 7 (2) and Sch 5, Part 2.
Sch 4 Ins 1998 No 10, Sch 1 [19]. Am 1999 No 56, Sch 1 [5] [6];
2004 No 83, Sch 1 [19] [20].

686

CHAPTER 9: ANALYSIS

9.0 INTRODUCTION
This chapter aims to analyze the provisions of various limited liability partnership
laws around the world and suggest the best practices.

9.1 MODELS / SOURCES
It has been observed that almost all major economies like US, UK, Canada, Jersey
Australia and Singapore recognize the importance of limited liability partnership form
of business. Broadly speaking, there are basically two models of limited liability
partnerships laws prevalent in these economies, namely:

(a) Stand Alone Model
In this model, there is a separate legislation to deal with the limited liability
partnership form of business. Some of the examples of this model are:

S. No. Name of the Country Statute
1. Jersey Limited Liability Partnerships (Jersey) Law, 1997
2. United Kingdom Limited Liability Partnership Act, 2000
3. Singapore Limited Liability Partnership Act, 2005

(b) Sub-set Model
In this model, there is no separate legislation for limited liability partnership form of
business, instead the Partnership Act, Limited Partnership Act, General Laws,
State Statutes or State Codes contain the provisions dealing with the Limited
Liability Partnerships. Most states in US, Canada and Australia have adopted this
model. Similarly, New Zealand is expected to adopt this model.

The following US States contain in their respective statutes and codes, provisions
relating to limited liability partnerships:

S. No. Name of the State Statute
1 Alabama

Title 10 - Corporations, Partnerships and
Associations of the Code of Alabama 1975.
2 Alaska

Title 32 Partnership of the Alaska Statutes
2004.
3 Arizona

Title 29 Partnership of the Arizona Revised
Statutes.
4 Arkansas

Chapter 42 - Uniform Partnership Act of the
Arkansas Code.
5 California

Article 10 (Sec. 16951-16962) of Chapter 5
(Uniform Partnership Act of 1994) of the
California Corporations Code.
6 Colorado

Title 7 - Corporations and Associations of the
Colorado Revised Statutes.
7 Connecticut Title 34 of the Connecticut General Statutes.
8 Delaware

Chapter XV - Delaware Revised Uniform
Partnership Act of Title 6 on Commerce and
Trade of the Delaware Code.
9 District of Columbia

Subchapter X - Limited Liability Partnership of
Chapter 1 - Uniform partnerships of Division V -
687
Local Business Affairs of Title 33 Partnerships
of the District of Columbia Code 2001.
10 Florida

Part II - Revised Uniform Partnership Act of
Chapter 620 Partnership Laws of Title 36 of the
Florida Statutes 2005.
11 Georgia

Chapter 14 - Georgia Business Corporation Code
of the Georgia Code.
12 Hawaii

Part IV - Uniform Partnership Act of Chapter 25
Partnerships of the Hawaii Revised Statutes.
13 Idaho

Part 10 - Limited Liability Partnership of Chapter
3 - Uniform Partnership Act of Title 53
Partnership of the Idaho statutes.
14 Illinois

Uniform Partnership Act, Chapter 805 - Business
Organizations of the Illinois Compiled Statutes.
15 Indiana

Chapter 1 - Uniform Partnership Act of Article 4
Partnerships of Title 23 - Business and Other
Associations of the Indiana Code.
16 Iowa

Chapter 486A - Uniform Partnership Act of Article
10 - Limited Liability Partnership of Subtitle 1
Partnerships of Title XII - Business Entities of the
IOWA Code 2005.
17 Kansas

Article 10 - Limited Liability Partnership of
Chapter 56a - Kansas Uniform Partnership Act of
the Kansas Statutes.
18 Kentucky

Chapter 362 of the Kentucky Revised Statutes.
19 Louisiana

Title 9 - Civil code-ancillaries (RS 9:3431) of the
Louisiana Revised Statutes.
20 Maine

Chapter 15: Limited Liability Partnerships of Title
31: Partnerships and Associations of the Maine
Revised Statutes.
21 Maryland

Title 9A - Maryland Revised Uniform Partnership
Act of the Maryland Code.
22 Massachusetts

Chapter 108A of the General Laws of
Massachusetts.
23 Michigan

Chapter 449 Partnerships of the Michigan
Compiled Laws.
24 Minnesota

Chapter 323A: Uniform Partnership Act of 1994
of the Minnesota Statutes.
25 Mississippi

Chapter 12: Partnerships of Title 79
Corporations, Associations, And Partnerships of
the Mississippi Code.
26 Missouri

Chapter 358 - Uniform Partnership Law of the
Missouri Revised Statutes.
27 Montana

Chapter 10: Partnerships in General of Title 35:
Corporations, Partnerships, and Associations of
Montana Code.
28 Nebraska

Chapter 67: Partnerships of the Nebraska
Statutes.
29 Nevada

Chapter 87: Partnerships (Uniform Act) of
Nevada Revised Statues.
30 New Hampshire Chapter 304-A: Uniform Partnership Act of Title
688
XXVIII: Partnerships of New Hampshire Revised
Statutes.
31 New Jersey

Title 42: Partnerships and Partnership
Associations of the New Jersey Statute.
32 New Mexico

Article 1A: Uniform Partnerships of Chapter 54:
Partnerships of New Mexico Statutes.
33 New York

Chapter 39 - Partnership Law of the New York
Consolidated Laws.
34 North Carolina

Chapter 59: Partnership of North Carolina
General Statutes.
35 North Dakota

Chapter 45-22: Limited Liability Partnerships of
Title 45: Partnerships of the North Dakota
Century Code
36 Ohio

Chapter 1775: Uniform Partnership Law of Title
XVII: Corporations Partnerships of Ohio
Revised Code.
37 Oklahoma

Title 54: Partnership of the Oklahoma Statutes.
38 Oregon

Title 7: Corporations And Partnerships of Chapter
67: Partnerships; Limited Liability Partnerships of
the Oregon Revised Statutes.
39 Pennsylvania

Chapter 82: Registered Limited Liability
Partnerships of Title 15: Corporations and
Unincorporated Associations of Pennsylvania
Consolidated Statutes.
40 Rhode Island

Chapter 7-12 of the General Laws of Rhode
Island.
41 South Carolina

Chapter 41: Uniform Partnership Act of Title 33:
South Carolina Code of Laws.
42 South Dakota

Chapter 48-7A: Uniform Partnership Act of Title
48: Partnerships of South Dakota Codified Laws.
43 Tennessee

Chapter 1: Revised Uniform Partnership Act of
Title 61: Partnerships of the Tennessee Code.
44 Texas

Title 4 Partnerships of Chapter 152 - General
Partnerships and Chapter 153 Limited
Partnerships of Business Organizations Code of
the Texas Statutes.
45 Utah

Chapter 1: General and Limited Liability
Partnerships of Title 48: Partnership of Utah
Code.
46 Vermont

Chapter 22: Partnerships of Title 11:
The Vermont Statutes.
47 Virginia

Chapter 2.2: Virginia Uniform Partnership Act of
Title 50: Partnerships of the Code of Virginia.
48 Washington

Chapter 25.05: Revised Uniform Partnership Act
of Title 25: Partnerships of the Revised Code Of
Washington.
49 West Virginia

Chapter 47B: Uniform Partnership Act of the
West Virginia Code.
50 Wisconsin Chapter 70 of the Wisconsin Statutes 2005.
689
51 Wyoming

Chapter 21: Uniform Partnership Act Of Title 17
Corporations, Partnerships And Associations of
Wyoming Statutes.

It is suggested that India should have a separate legislation catering to the need of a
limited liability partnership i.e. the Stand Alone Model may be adopted.

9.2 LEGAL ENTITY
In UK, Jersey and Singapore a limited liability partnership is considered to be a body
corporate, which has a legal personality, separate from that of its partners. This
ensures that it has perpetual succession and any change in the partners generally
does no affect its existence, rights and obligations.

However, LLPs formed in the US are considered as general partnerships by the UK
Law Society, which is of the view that they do not have separate legal personality
and thus treats them accordingly under it's rules. It is important to note here that
California LLPs are considered separate legal personality but it is illegal for them to
carry on solicitors' practice in England and Wales.
111

It is suggested that in India also LLPs may be considered as a body corporate having
perpetual succession and separate legal entity.

9.3 POWERS
Limited liability partnerships being a body corporate, generally have the power to
sue and be sued; acquire, own, hold and dispose of property, both movable and
immovable; have a common seal; and do and suffer such other acts and things as
bodies corporate may lawfully do and suffer. It is suggested that in India also they
may be given the same powers.

9.4 APPLICATION OF LLP REGIME
In US, an LLP is usually a partnership, which has the option to convert itself to a
limited liability partnership. LLPs were originally restricted to professionals such as
doctors, lawyers and accountants and provided limited liability protection only for
malpractice-based claims. Gradually, efforts were made in most US States to
broaden the permitted activities and the liability shield.

Many states including the States of Colorado, Delaware Maryland, Minnesota, Oregon
and Pennsylvania
112
now allow LLPs to carry on any business activity
113
. However,
the California, New York, Nevada and Oregon LLP Statutes restrict the use of LLP
structure to professionals only
114
. In California, the term "professionals" is defined
narrowly to include only lawyers and accountants, further restricting the applicability
of the LLPs there
115
.

In UK and Singapore also the LLP structure is available to all types of businesses.
However, in UK individual profession can determine if their members can operate
through LLPs or not.

111
Selected Places
112
http://www.lectlaw.com/files/buo04.htm
113
http://www.crossborder.com/CTF1998.html
114
The Economics of Limited Liability: An Empirical Study of New York Law Firms by Scott Baker &
Kimberly D. Krawiec.
115
http://www.toolkit.cch.com/text/P12_4265.asp
690

In India, the Naresh Chandra Committee on Regulation of Private Companies and
Partnership in its report recommended that the LLP form should be initially made
available only to those providing defined professional services like lawyers, company
secretaries, accountants and the like. To be eligible for this form of partnership, the
profession must be governed by a regulatory Act that adequately controls and
disciplines, errant professional conduct. The Ministry of Company Affairs may notify
such professions from time to time. LLP may be extended, at a later stage, to other
services and business activities once the experience gained with the LLP form of
organisation has been evaluated and tested
116
.

It is believed that LLP form of business will be useful to entrepreneurial startups and
small and medium enterpriese. Moreover, considering the time and effort it takes to
bring legislation and the applicability of LLP structure globally, it is suggested that
the LLP structure may be provided to all businesses.

9.5 NON-APPLICATION OF PARTNERSHIP LAWS
In UK, Jersey and Singapore, except it is specifically provided by the LLP Act, the law
relating to general partnerships is not applicable to limited liability partnerships. It is
suggested that, in India also the provisions of the Indian Partnership Act, 1932 may
not be made applicable to limited liability partnerships.

9.6 INCORPORATION
An LLP is more closely akin to a company than to a partnership, as a result it needs
to be incorporated or registered under the relevant Act. In UK, for a limited liability
partnership to be incorporated two or more persons associated for carrying on a
lawful business with a view to earn profit must have subscribed their names to an
incorporation document, which has to be delivered to the registrar in the prescribed
manner. A statement must also be delivered to the registrar that there has been
compliance with the requirement that at least two persons, associated for the
purpose of carrying on a lawful business with a view to earn profit, have subscribed
their names to the incorporation document. The statement must be made by a
subscriber to the incorporation document or a solicitor engaged in the formation of
the LLP.

In Singapore also similar provisions are there and any two or more persons
associated for carrying on a lawful business with a view to earn profit may by
complying with the requirements as to registration, register a limited liability
partnership.

In New York, to form an LLP, an eligible partnership must file a Certificate of
Registration with the Department of State. The name of the limited liability
partnership must indicate the fact that it is a limited liability partnership. After
registering, a notice of its registration should be published in two newspapers in the
county where the principal office of the LLP is located once a week for six
consecutive weeks. An affidavit of publication must then be filed with the
Department of State. Thereafter, every five years the LLP must file a Status
Statement with the Department of the State to maintain its LLP status. In the event
the LLP fails to comply with these requirements, it will be unable to maintain any
action or special proceeding in New York. Moreover, the LLP will not be able to
represent that it is duly organized and in good standing, potentially jeopardizing

116
http://www.dca.nic.in/naresh/naresh_second/nc_chap3_llp_ver5final.htm
691
credit applications and contractual relations. In comparison to the other partnership
forms, the costs to form an LLP are typically greater. The more extensive filing and
publication requirements, coupled with the drafting of a partnership agreement
results in the higher costs
117
.

In Delaware, the Delaware Revised Uniform Partnership Act provides for the
formation of a limited liability partnership. An LLP is for all purposes a general
partnership. However, by converting to an LLP, the partners of a Delaware general
partnership are able to limit their liability.

Section 15-1001 of the Act states that an LLP can be formed by filing of a statement
of qualification and by providing such other information as may be prescribed. The
Statement of Qualification must contain the name of the partnership, which must
include as the last words or letters of its name "Limited Liability Partnership," "L.L.P."
or "LLP", the address of the registered office and the name and address of the
registered agent for service of process, the number of partners, a statement that the
partnership elects to be a limited liability partnership and a specific, certain future
effective date or time if the Statement of Qualification if it is not to be effective upon
filing.
Similarly, in Florida, a limited liability partnership must file with the Florida
Department of State a Statement of qualification according to Section 620.9001 of
the Florida Revised Uniform Limited Partnership Act, 2005. The terms and conditions
on which a partnership becomes a limited liability partnership must be approved by
the vote necessary to amend the partnership agreement except, in the case of a
partnership agreement that expressly considers contribution obligations, the vote
necessary to amend those provisions.
As per the Jersey Law, an application shall be delivered to the Registrar in the form
of a declaration, signed by any person who is, on registration, a designated partner.
The declaration shall be accompanied by the prescribed documents.

It is suggested that to incorporate a LLP, there must at the outset be at least two
persons who are associated for carrying on a lawful business with a view to earn
profit and who subscribe their names to the incorporation document.

The incorporation document must be delivered to the Registrar in the prescribed
form and manner. A statement must also be delivered to the Registrar that there has
been compliance with all the requirements and Regulations of the Act with respect to
incorporation and matters precedent and incidental thereto. The statement must be
made by a subscriber to the incorporation document and by either an advocate, or a
company secretary, or a Chartered Accountant in whole time practice in India, who is
engaged in the formation of the LLP.

The incorporation document must contain information such as the name of the LLP,
its proposed business, address of its registered office, the name, address and
photographs of the persons who are to be its partners and manager (s) on
incorporation.

When the registrar receives the incorporation document he shall retain and register
it. However, the Registrar must be assigned powers to refuse to register the

117
Michael K de Chiara, Michael S Zetlin, New York Construction Law, p. 21
692
incorporation document. In this regard, the Singapore Act provides that the Registrar
shall refuse to register a limited liability partnership where he is satisfied that the
proposed business is likely to be used for an unlawful purpose or for purposes
prejudicial to public peace, welfare or good order in Singapore; or it would be
contrary to the national security or interest for the limited liability partnership to be
registered. Similar provisions may be incorporated in the Indian legislation as well.

Once the incorporation document is registered, the registrar shall issue a certificate
that the LLP is incorporated by the name specified in the incorporation document.
The certificate issued by the registrar shall be conclusive evidence that all
requirements under the Act have been complied with.

9.7 NAME
Most LLP Statutes require a limited liability partnership to use a name including the
words "limited liability partnership" or "registered limited liability partnership" or the
abbreviations "LLP" or "RLLP" to disclose their liability status to persons dealing with
it.

In UK, The Companies Act 1985
118
requires an LLP to paint or affix its name on the
outside of every office or place in which its business is carried on, in a conspicuous
position and in letters reasonably legible. The name of an LLP must comply with Part
I of the Schedule of the LLPs Act. The name of an LLP must end with the expression
"limited liability partnership", or the abbreviation "llp" or "LLP". If an LLP has a
registered office in Wales, its name must end with the above expression or
abbreviation in English or its Welsh equivalent.

Under the Companies Act 1985
119
, an LLP must put its full corporate name on the
following:
(a) business letters;
(b) notices and other official publications;
(c) bills of exchange, endorsements, cheques and orders for money or goods; and
(d) the LLP's bills, invoices, receipts and credit notes.

The Companies Act 1985
120
also requires an LLP to put the following particulars on its
business letters and order forms:
(a) the LLP's registered number;
(b) the LLP's place of registration;
(c) the address of the LLP's registered office; and
(d) the fact that it is an LLP unless this is spelled out in full in the LLP's name.

If an LLP uses a trading name, it must put its full corporate name, the principal place
of business and a list of the LLP's members (or, where there are more than 20
members, there should be a statement that the list i s open to inspection at the
principal place of business) on its business letters and other documents.
121

The US, Jersey and Singapore LLP Statutes also require LLPs to identify themselves
with the words Limited Liability Partnership or the abbreviations LLP or such other
abbreviation which may reflect their form of business, on its stationeries and

118
Section 348 of the Companies Act 1985, as applied by the LLPs Regulations
119
120
121
Section 4 of the Business Names Act 1985, as applied by the LLPs Regulations. Other documents
include notepapers, orders for goods and services, invoices, receipts and demands for payment.
693
communications to the public. The Ohio LLP statute uses the term "registered
partnership having limited liability" to describe Ohio LLPs and mandates the use of
the abbreviation "P.L.L.".

It is suggested that in India also every limited liability partnership should be required
to have the words limited liability partnership or the acronym LLP as the last
words of its name. The name should prominently be printed outside all places of
business, invoices and official correspondence. Further, the law should ensure inter
alia that an LLP is not registered with a name, which is identical or too nearly
resembles the name of another body corporate or business organisation.

9.8 REGISTERED OFFICE
The UK, US, Jersey and Singapore LLP Statutes provide that a limited liability
partnership shall have a registered office and any change in the address shall be filed
with the Registrar.

It is suggested that in India also a limited liability partnership should be required to
have a registered office which should be situated in India to which all
communications and notices may be addressed and received. Further, any change in
the address should be lodged with the Registrar. A document may be served on a
limited liability partnership by sending it under a certificate of posting or by
registered post or by courier or by any other mode, which may be prescribed.

9.9 PARTNERS
Generally, any individual or body corporate may be a partner in a limited liability
partnership. In New York, a partner can be an individual, a general partnership, an
LLP, or a corporation. Each partner has to be a licensed professional or a licensed
professional firm (either domestic or foreign), including an LLP, a professional service
LLC or a professional service corporation.

In wake of globalisation and growing integration of world economies, it is suggested
that the Indian LLP legislation besides allowing a foreign body corporate to be a
partner of the LLP should also allow foreign nationals to be a partner of an Indian
LLP. Further, any person who is not subject to any disqualifications as may be
prescribed under the Act may become a partner of a limited liability partnership by
and in accordance with an agreement with the existing partners.

9.10 NUMBER OF PARTNERS
In most LLP statutes especially in Jersey, UK and Singapore, an LLP is required to
have at least two partners. However, there is no limit on the maximum number of
partners. It is suggested that we may have the same provisions in India also.

An important question that arises at this point is that what happens if the number of
partners falls below two? In Singapore, a partner is provided a period of two years to
find another partner. However, if the LLP continues with less than two partners for
more than two years, the sole remaining partner assumes unlimited liability and is
vulnerable to winding-up by the courts.

As per the Jersey Law, a limited liability partnership shall be dissolved immediately
upon there ceasing to be two partners in the partnership. Where the person
responsible for winding up the affairs of the limited liability partnership is the person
who, at the time of dissolution, was the last remaining partner he shall, within 28
days after the dissolution, deliver a statement of dissolution signed by him to the
694
registrar. Upon the receipt of such a statement the Registrar shall register it and
issue a certificate of dissolution.

It is suggested that in India, a period of six months should be provided to the sole
remaining partner to find a suitable partner. However, if the limited liability
partnership carries on business for more than six months while the number is so
reduced, the sole remaining partner should be held severally for the payment of the
whole debts of the limited liability partnership contracted during that time, and may
be severally sued therefor.

9.11 TYPES OF PARTNERS
Various statutes around the world categorize the partners of a LLP differently. The
classification generally provides distinction between the partners who manage the
affairs of the LLP and normal partners. For example, the Jersey Law classifies the
partners as partner and designated partner, the UK LLP Act has the concept of
member and designated member and the Singapore LLP Act has the concept of
partner and manager. The important thing to note here is that a manager unlike a
designated partner need not be a partner of the LLP.

In California, the concept of agent is there, which is similar to the concept of
manager in Singapore. Every registered limited liability partnership whose principal
office is not in the state and each foreign limited liability partnership not registered in
the State shall designate an agent for service of process. Any natural person or a
domestic or foreign corporation can be designated as agent.

An LLP being a body corporate, it is suggested that ownership should be separate
from management. We may therefore, have the concept of partner and manager.

Every LLP should be required have a manager who shall be shall be a natural person
who has attained the age of majority and resident of India. A manager need not be a
partner of the LLP. He shall be answerable for doing all acts, matters and things, as
are required to be done by the limited liability partnership and shall be held
personally liable to all penalties imposed on the limited liability partnership for any
contravention of the provisions of the Act, unless he satisfies the Tribunal that he
should not be held liable.

In case the position of a manager goes vacant, every partner resident in India should
be treated as a partner. Further, every LLP should be required to appoint another
person as a manager within sixty days from the date on which the former manager
resigned.

9.12 CONTRIBUTION
Every partner of an LLP is generally required to contribute to the partnership by way
of cash, property or services. The Singapore and UK LLP Acts do not specifically
provide for the forms of contribution and the liability of a partner to contribute to the
assets of the LLP. However, Delaware Code provides that the contribution of a
partner may be in cash, property or services rendered, or a promissory note or other
obligation to contribute cash or property or to perform services.

Further, a partner is obligated to the partnership to perform any promise to
contribute cash or property or to perform services. However, if the partner is unable
to perform any promise because of death, disability or any other reason, the partner
is obligated at the option of the partnership to contribute cash equal to that portion
695
of the value of the contribution that has not been made. Most US states including
New York, Texas and Florida have similar provisions.

It is suggested that in India also we may have similar provisions as prescribed by the
Delaware Code.

9.13 ADMISSION AND RETIREMENT OF PARTNERS
Most LLP statutes generally deal the matters relating to admission and retirement of
partners. As per the Jersey Law, an additional partner shall not be admitted to a
limited liability partnership except in accordance with the partnership agreement. A
partner may only retire from a limited liability partnership in accordance with the
partnership agreement. Further, no retirement shall have effect before a statement
is delivered to the registrar
122
.

In UK, the first members of an LLP are those who signed the incorporation
document. After incorporation, any person may become a member of an LLP by
agreement with the existing members. Similarly, a person may cease to be a
member by death, dissolution and in accordance with any agreement with the other
members of the LLP. Where there is no agreement a member may cease to be a
member by giving reasonable notice to the other members
123
.

The Naresh Chandra Committee has recommended that when a person ceases to be
a partner of an LLP he/ she should continue to be treated as a partner unless the
partnership has notice that the former partner has ceased to be a partner of the LLP
or a notice that the former partner has ceased to be a partner of the LLP has been
delivered to the Registrar. Further, a partner having resigned from an LLP would
continue to be liable for acts done by him during his tenure as member of the LLP.

9.14 RELATIONSHIP OF PARTNERS
In LLP Statutes the relationship of partners is defined by their partnership
agreement. The mutual rights and duties of the partners of a limited liability
partnership, and the mutual rights and duties of a limited liability partnership and its
partners is governed by the agreement between the partners, or between the
limited liability partnership and its partners.

Further, the UK and Singapore statutes provide a schedule of default provisions,
which are applicable to matters where the partnership agreement is silent.

In Delaware the Act itself allows for a great amount of flexibility to modify the default
provisions in a partnership agreement. The partners, in the partnership agreement,
may also modify certain duties of partners to the partnership and other partners.
Such flexibility allows for partners in the partnership agreement to, among other
things, specifically address management of the partnership, distributions, voting
rights and indemnification, in order to appropriately reflect the intentions of the
partners.

9.15 LIABILITY OF PARTNERS
A limited liability partnership generally provides a full shield to its partners. In
Delaware, for example, an obligation of a partnership incurred while the partnership
is a LLP, whether arising in contract, tort or otherwise, is solely the obligation of the

122
See paragraph (1) of Article 17 and paragraph (2) of Article 24 of the Jersey Law.
123
See Section 4 of the UK LLP Act, 2000.
696
partnership. A partner is not personally liable, directly or indirectly, by way of
indemnification, contribution, assessment or otherwise, for such an obligation solely
by reason of being or so acting as partner. However, a partner may agree to be
assessment or otherwise, for any or all of the obligations of the partnership.

In UK, the LLPs Act does not expressly confer limited liability upon the members of
LLPs. As an LLP is a separate legal person from its members, the normal laws of
obligations (i.e. legal duty) confine liability to the LLP itself and separate the
individual liability of the members from the liability of the LLP. Individual members
are not liable for each other's acts simply by virtue of being a member of the LLP.

As per the California Corporation Code a partner in an LLP is not liable for debts or
obligations chargeable to a partnership whether arising in tort contract or otherwise,
that are assumed by the partnership while it is an LLP, by reason of being a partner
of the LLP.

In New York, unlike general and limited partnerships, an LLP is characterized by
limited personal liability to all partners, making it an attractive alternative for
professionals. Specifically, partners of an LLP are not liable for debts and liabilities of
the LLP or those of other partners, arising in tort, contract, or otherwise solely by
reason of being a partner. Instead, the partners are liable only for their wrongful and
negligent acts, as well as any wrongful or negligent acts of an employee under that
particular partners direct supervision or control while rendering professional services
on behalf of the LLP.

As per sub-section (2) of section 8 of the Singapore LLP Act, 2005, a partner is not
assessment or otherwise, for an obligation of the limited liability partnership whether
arising in contract, tort or otherwise. However, it does not affect the personal liability
of a partner in tort for his own wrongful act or omission, but a partner shall not be
personally liable for the wrongful act or omission of any other partner of the limited

In Florida, the partners in a LLP enjoy protection from personal liability in the same
way as limited partners in limited partnerships.
124
Limited liability partners are not
liable for obligations or liabilities of the partnership arising from contracts, errors or
omissions, negligence, malpractice or wrongful acts committed by another partner or
by an employee, agent or representative of the partnership
125
. Limited liability
partners are responsible for any losses arising from errors, omissions, negligence,
malpractice, or wrongful acts, committed by them or any person under their direct
supervision and control in any activities in which the wrongful acts are occurred. The
partners are also responsible for any debts they accepted liability for in writing. The
partners in a limited liability partnership are not subject to the limitations imposed
on limited partners in a traditional limited partnership.

Under Jersey Law a partner of the LLP is not liable for any debts or losses (jointly
and severally). However, the restriction on liability does not apply to a partners
personal debt or any loss personally caused by him.

124
Linda L. Crawford, David S. Coleman, Florida Real Estate Principles, Practices & Law, p. 89.
125
Linda L Crawford, Edward J O'Donnell, Florida Real Estate Brokers Guide, p. 30.
697
The Colorado, Maryland, Minnesota, Oregon and Pennsylvania LLP statutes limit
liability for all claims and provide full protection to the partners.

To briefly summarise, the three broad categories of protection that may be afforded
by a particular LLP legislation are as follows:
(iv) The protection (less than full shield) is provided against the tortuous acts
of other partners of the LLP.
(v) The protection (less than full shield) is provided against acts whether
arising in tort or in contract.
(vi) The protection (full shield) is provided for any debt chargeable to the
partnership, whether arising in tort, contract, or otherwise.

The following table
126
provides a birds eye view of the liability shield provided by
major LLP statutes.

Country / State Full Shield or
Less
Jersey Full Shield
Canada (Ontario) Full Shield
DIFC Full Shield
UK Full Shield
Singapore Full Shield
US
Alabama Full Shield
Alaska Full Shield
Arizona Full Shield
Arkansas Full Shield
California Full Shield
Colorado Full Shield
Connecticut Full Shield
Delaware Full Shield
District of Columbia Full Shield
Florida Full Shield
Georgia Full Shield
Hawaii Full Shield
Idaho Full Shield
Illinois Full Shield
Indiana Full Shield
Iowa Full Shield
Kansas Full Shield
Kentucky Less than full shield
Louisiana Less than full shield
Maine Less than full shield
Maryland
Full Shield
Massachusetts Full Shield
Michigan Less than full shield
Minnesota Full Shield

126
Limit Practice Liability by Sandra K. Miller and James J. Tucker III.

698
Mississippi Full Shield
Missouri Full Shield
Montana Full Shield
Nebraska Full Shield
Nevada Full Shield
New Hampshire Full Shield
New Jersey Full Shield
New Mexico Full Shield
New York Full Shield
North Carolina Less than full shield
North Dakota Full Shield
Ohio Less than full shield
Oklahoma Full Shield
Oregon Full Shield
Pennsylvania
127
Less than full shield
Rhode Island Full Shield
South Carolina Less than full shield
South Dakota Full Shield
Tennessee Less than full shield
Texas Full Shield
Utah Less than full shield
Vermont Full Shield
Virginia Full Shield
Washington Full Shield
West Virginia Less than full shield
Wisconsin Less than full shield
Wyoming Full Shield

The Naresh Chandra Committee has recommended that where a partner of the LLP is
liable to any person or entity as a result of his wrongful act or omission in the course
of the business of the LLP, the LLP would be liable in such circumstances. However,
the partner would be liable only to the extent of his/her contribution to the LLP.
Further, in the event of an act carried out by a LLP, or any of its partners,
fraudulently, the liability would not be limited; it would, in fact, become unlimited as
provided for in section 542 of the Companies Act, 1956. Moreover, a partner shall
not be liable for the personal acts or misconduct of any other partner.
It is suggested that a full shield should be provided to a partner of the LLP as
provided by most LLP Statutes. However, this shield should be withdrawn in case of
fraudulent acts.
9.16 ASSIGNMENT BY PARTNERS
A partners interests can broadly be classified as economic interest or non-economic
interest. The economic interest is generally freely transferable and includes the
rights of the partner to a share of the profits and losses of the partnership and to
receive distributions in accordance with the limited liability partnership agreement.

127
The Pennsylvania legislature has introduced a proposal to extend a full shield to LLPs engaged in
accounting, law and medicine. Senate bill 392 (2005 PA SB 392) can be found online in the Pennsylvania
General Assembly Electronic Bill Room. Go to www.legis.state.pa.us/index.cfm, type S392 in the search
box and click on Go.

699
As against this the non-economic rights are generally not transferable unless specified
by the partnership agreement.

In Delaware, sections 15-502 and 15-503 of the Delaware Code provide that a
partnership interest is personal property and that only a partners economic interest
may be transferred. The transferee only has the right to receive distributions but
cannot participate in management or inspect the LLPs books or records.

Similar provisions are there in UK as well. A transferee is entitled to receive
distributions but may not participate in the management or administration of the
LLP. The effect is that a partner cannot unilaterally assign his partnership status such
that the transferee becomes a partner in his place.

In Singapore, unless otherwise provided in the limited liability partnership
agreement, a partner may assign the whole or any part of his interest in the limited
liability partnership but only to the extent that the assignee becomes entitled to
receive distributions from the limited liability partnership that the partner would
otherwise have been entitled to receive. Further, an assignment shall not by itself
either cause the partner to cease being a partner of the limited liability partnership;
or entitle the assignee to interfere in the management of the limited liability
partnership.

It is suggested that in this case we may adopt the Singapore Model.

9.17 CLASSES AND VOTING
As per the Delaware Code, a partnership agreement may provide for classes or
groups of partners having such relative rights, powers and duties as the partnership
agreement may provide, and may make provision for the future creation in the
manner provided in the partnership agreement of additional classes or groups of
partners having such relative rights, powers and duties as may from time to time be
established, including rights, powers and duties senior to existing classes and groups
of partners.

The partnership agreement may grant to all or certain identified partners or a
specified class or group of the partners the right to vote separately or with all or any
class or group of the partners on any matter. Voting by partners may be on a per
capita, number, financial interest, class, group or any other basis.

Further, a partnership agreement may set forth provisions relating to notice of the
time, place or purpose of any meeting at which any matter is to be voted on by any
partners, waiver of any such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements, voting in person or by proxy,
or any other matter with respect to the exercise of any such right to vote. Similar
provisions are there in other LLP Statutes in US.

The Naresh Chandra Committee has not expressed any view on this issue. However,
it is suggested that flexibility needs to be given the LLP to decide how they would
like to manage their internal affairs. At the most the default provisions may provide
that any matter or issue relating to the limited liability partnership shall be decided
by resolution passed by a majority in number of the partners, and for this purpose,
each partner shall have one vote.

9.18 DISQUALIFICATIONS
700
In UK, Part III of the LLPs Regulations applies the provisions of the Company
Directors Disqualification Act 1986 (CDDA) to LLPs with appropriate modifications.
Accordingly, members of LLPs are subject to the same disqualifications and penalties
currently applicable to company directors.

Under CDDA, undischarged bankrupts are automatically disqualified from acting as
members of an LLP, without the leave of the court. CDDA also grants the court
power to issue a disqualification order against a person so that the person shall not,
without the leave of the court, be a member of an LLP, for a specified period. A
register of disqualification orders is open for public inspection at the Companies
House.

Section 6 of CDDA provides the court with the power to issue a mandatory
disqualification order against a person who is or has been a member of an LLP which
has become insolvent (whether while he was a director or subsequently) and that his
or her conduct as a member of that LLP makes him or her "unfit to be concerned in
the management of that LLP". Unfitness may be reflected by dishonest conduct or by
conduct, which is highly incompetent. The minimum period of disqualification is two
years and the maximum is 15 years. Most of the disqualification orders have been
made by a mandatory order.
128

There are other grounds where the court has discretionary power to issue a
disqualification order
129
, for instance, the conviction of a person of an indictable
offence in connection with the promotion, formation, management, liquidation or
striking off of an LLP. However, these grounds are of limited significance since only a
small fraction of disqualification orders have been issued based on these grounds.

If a person acts in contravention of a disqualification order, he or she is guilty of a
criminal offence and is liable to imprisonment or a fine or both
130
. He or she will
further be personally liable for all the relevant debts of the LLP, which incurred at a
time when he or she was acting in contravention of a disqualification order.
131

In Singapore, the disqualifications and penalties that currently apply to company
directors are also extended to LLP partners. Moreover, Section 33-37 of the
Singapore LLP Act deals extensively with the disqualification of a manager.

The Naresh Chandra Committee has recommended that any person may become a
partner by entering into an agreement with the existing partners in the LLP.
However, no disqualification has been prescribed. It is suggested that we may
provide for certain disqualifications for the partners as well as for managers. For
example, the disqualifications of directors under the Companies Act, 1956 with
appropriate modifications may be made applicable to the partners and managers of
the LLP.

9.19 FILING AND AUDIT REQUIREMENTS
Generally, in case of LLPs the requirements for maintaining, filing and auditing of
records are not as stringent as is the case with companies. For example, in Jersey,
all LLPs are required to maintain accounting records for ten years but there is no

128
Selected Places
129
Sections 2-4, 8,9,11 of CDDA
130
Section 13 of CDDA
131
Section 15 of CDDA
701
statutory requirement for the accounts to be audited or filed with the Registrar.
However, before the end of February, in every year following the year in which a
limited liability partnership is registered, the designated partner is required to deliver
an annual declaration signed by him to the registrar stating the name and address of
every person who, on the first day of January in that year, was a partner in the
partnership.

The Delaware Act does not impose any financial disclosure requirement. While the
LLP is required to file an Annual Report, the required information relates only to non-
financial items, such as the name, address and number of partners of the LLP. An
LLP is not required to make any filing, or amend a previous filing, due solely to
changes in the number of partners of the partnership
132
. The annual report must be
filed by June 1 of each year following the calendar year in which a statement of
qualification filed by a partnership becomes effective or a foreign partnership
becomes authorized to transact business in the State of Delaware.

In New York, each LLP has to, within 60 days prior to its fifth anniversary of the
effective date of its registration and every five years thereafter, furnish a statement
to the Department of State setting forth a number of items, including:
(a) the name of the LLP;
(b) the address of the principal office of the LLP; and
(c) a statement that it is eligible to register as an LLP.

If the statement is not timely filed, the Department of State may proclaim that the
registration to be revoked 60 days after mailing to the LLP a notice of the failure to
file the statement.
133
Upon publication of the proclamation in the state register, the
registration is deemed revoked. The concerned partnership may file a certificate of
consent with that statement or certifying that the statement has been filed, and pay
the statutorily required fees to reinstate its LLP status. Upon reinstatement, the
limited liability status is available to the partners for the lapse period.

The NY Partnership Law does not impose any financial disclosure requirement on
LLPs and does not require LLPs to keep or disclose any accounting records. Further,
the Law does not provide that the capital withdrawn by partners of an LLP while the
business is or is about to become insolvent may be clawed back in the event of
insolvency.
In UK, the accounting and audit requirements for LLPs are similar to those of
companies. They are required to submit properly audited accounts, which give a true
and fair view of the affairs of the LLP. However, the exemptions open to small and
medium sized companies also apply to LLPs.
In general, an LLP has to deliver to the Registrar of Companies successive annual
returns within 28 days after the anniversary of the incorporation of the LLP. If an LLP
fails to deliver an annual return in time, the LLP and its designated members are
guilty of an offence and may be fined. The annual return has to contain the
following:
(a) the address of the registered offic e of the LLP;
(b) the names and usual residential addresses of the members of the LLP, and
the names of those members who are designated members; and

132
Scott E. Waxman and Eric N. Feldman, Delaware Limited Liability Partnerships
133
Section 121-1500(g) of the NY Partnership Law
702
(c) if any register of debenture holders is not kept at the registered office of the
LLP, the address of the place where it is kept
134
.

Provisions of Part VII of the Companies Act 1985, with appropriate modifications,
impose accounting and auditing requirements on LLPs similar to those for limited
companies. An LLP has a duty to keep proper accounting records for three years,
from the date on which it is formed. The annual accounts, together with a copy of
the auditor's report on those accounts, must be sent to every member of the LLP
135

and must be filed with the Registrar of Companies
136
so that the accounts are
available for public scrutiny.

Qualified small and medium-sized LLPs may deliver abbreviated accounts to the
Registrar of Companies.
137
The requirements of the abbreviated accounts are
different between small and medium-sized LLPs.
138
At least two of the following
conditions must be satisfied to be qualified as a small or medium-sized LLP for
submitted abbreviated accounts.

Table: Eligibility Requirements for delivering abbreviated accounts

Particulars Small-sized LLP Medium-sized LLP
5.6 million net or less 22.8 million net or less Annual Turnover
6.72 million gross or less 27.36 million gross or
less
2.8 million net or less 11.4 million net or less Balance sheet total
3.36 million gross or less 13.68 million gross or
less
Average number of
employees

50 or fewer 250 or fewer

The auditing requirement may be exempted if the turnover of an LLP is 5.6 million
or less and the balance sheet total is 2.8 million or less
139
. An LLP may be fined for
not filing LLP documents and the penalties are the same as those for limited
companies
140
. In addition, the designated member of the LLP may also be liable for a
fine
141
and may even be disqualified from being a designated member as a result.

In Singapore, every limited liability partnership is required to maintain such
accounting and other records as will sufficiently explain the transactions and financial
position of the limited liability partnership and enable profit and loss accounts and
balance-sheets to be prepared from time to time which give a true and fair view of
the state of affairs of the limited liability partnership. The records shall be retained

134
Selected Places
135
Section 238(1) of the Companies Act 1985
136
Section 242 of the Companies Act 1985
137
Sections 246 and 246A of the Companies Act 1985
138
The abbreviated accounts of a small-sized LLP must include the abbreviated balance sheet and notes;
and a special auditor's report (unless the LLP is also claiming audit exemption). The abbreviated accounts
of a medium-sized LLP must include the abbreviated profit and loss account; the full balance sheet; a
special auditor's report and notes to the account.
139
Section 249A(3) of the Companies Act 1985.
140
Section 242A of the Companies Act 1985. The civil penalties are between 100 and 1,000 depending
on how late the accounts are delivered.
141
Up to 5,000 for each offence
703
for seven years after the completion of the transactions or operations to which they
respectively relate and are open to inspection by the partners.

Further, every limited liability partnership shall lodge with the Registrar a declaration
by one of its managers that in his/her opinion, the limited liability partnership either
appears as at that date to be able to pay its debts as they become due in the normal
course of business; or does not appear as at that date to be able to pay its debts as
they become due in the normal course of business. The declaration is required to be
lodged not later than 15 months after the registration of the limited liability
partnership and subsequently once in every calendar year at intervals of not more
than 15 months.

However, in New York all LLPs that derive any income from the State of New York
are required to file an annual return and pay an annual fee based on the number of
partners
142
.

As far as the filing of the partnership agreement is concerned, it is not mandatory in
UK and Singapore. It is debatable whether in India the filing of LLP agreement should
be made mandatory or not. It is important to note that the Naresh Chandra
Committee has recommended that such agreement must be filed with the Registrar;
changes made in the agreement will also have to be filed with the Registrar.

However, it is suggested that the partnership agreement may be catergorised in two
parts. Part I may contain general information and shall be filed with the Registrar,
the Part II may contain confidential information which shall not be required to be
filed with the Registrar.
The Naresh Chandra Committee has further recommended that the standards of
financial disclosures would be the same as, or similar to, that being prescribed for
private companies subject to privilege already available between a professional and
his or her client in maintaining confidentiality.
It is suggested that an LLP should be required to maintain financial records relating
to accounts for each year of its existence, which should be kept at its registered
office. The records should give a true and fair view of the state of affairs of the
limited liability partnership at any time. The manager should be held personally
responsible for maintaining the same. However, the audit of such records should not
be made mandatory. Instead, the manager of the LLP should be required to file an
annual declaration of solvency and insolvency as is the case in Singapore.
9.20 CREDITOR PROTECTION
A Limited liability partnership provides liability shield to its partners. From the
partners perspective this is encouraging, however, from the creditors perspective
this is a cause of worry. Most LLP Statutes with a view to provide financial protection
to creditors and with a view to increase the assets available for distribution in the
event of a successful claim against the LLP, have made certain provisions.

For instance, every Jersey LLP is required to have in place a 5 million financial
provision by a bank or insurance company. If the provision is not available on

142
See N.Y. Tax Law 658 (c) (requiring payment of an annual fee of $50 per partner, with a minimum
fee of $325 and a maximum fee of $10,000)
704
winding up, the partners would be liable to the full extent of their assets in the event
of an insolvency.

In California, for claims based upon acts, errors, or omissions arising out of the
practice of public accountancy, a registered limited liability partnership or foreign
limited liability partnership providing accountancy services is required to maintain a
policy or policies of insurance against liability imposed on or against it by law for
damages arising out of claims in an amount for each claim of at least one hundred
thousand dollars ($100,000) multiplied by the number of licensed persons rendering
professional services on behalf of the partnership. However, the total aggregate limit
of liability under the policy or policies of insurance for partnerships with fewer than
five licensed persons shall not be less than five hundred thousand dollars
($500,000), and for all other partnerships is not required to exceed five million
dollars ($5,000,000) in any one designated period (viz. 12 months), less amounts
paid in defending, settling, or discharging claims.
Some of the other LLP statutes including those in Georgia, Pennsylvania, Texas and
Virginia, also mandate an LLP to have an insurance or an escrow account to cover
liabilities as to which partners do not bear personal liability.
In UK, a proposal of a minimum bond or compulsory insurance requirement was
raised in the consultation paper, but was rejected in that the government considered
it difficult to specify a sum which would provide a sufficient guarantee for creditors
without turning it to be a disincentive to firms considering the LLP option. The law
provides for creditor protection by way of disclosure, audit and financial reporting.
The essential filing requirements relate to accounts, annual returns, changes in
membership generally, changes in designated membership and a change to the
registered office. As far as maintaining of accounts is concerned. The provisions that
apply to limited companies with regard to auditing apply to LLPs. They are required
to submit properly audited accounts, which give a true and fair view of the affairs of
the LLP. However, the exemptions open to small and medium sized companies apply
to LLPs
143
.

The Naresh Chandra Committee has recommended that an LLP should be required to
maintain an insurance cover and/or or funds in specially designated, segregated
accounts for the satisfaction of judgments and decrees against the LLP.

However, it is debatable whether in India there should be a provision for compulsory
insurance or not. It is understood that compulsory insurance will make LLPs an
expensive business vehicle for small and medium businesses.

9.21 TAXATION
The taxation of LLPs is very interesting. In UK LLPs have the features of a company,
but are taxed and operated as a partnership. In US, the model that has been widely
adopted is the Delaware model, which regards LLPs primarily as partnerships instead
of treating them as companies.

In New York a LLP is treated as a partnership for tax purposes and income, gains,
and losses of the LLP flow through the LLP without taxation and are reported on the
personal income tax returns of the partners
144
.

143
The limited liability partnership by David Kelly
144
See IRS Tax Form 8832.
705

In California, while an LLP must file an informational tax return, its income is passed
through to its partners and taxed at the individual partner level, without any income
tax assessment at the LLP entity level. Notwithstanding pass-through tax treatment,
for state tax purposes, an LLP is subject to an $800 annual California franchise tax
for the privilege of doing business as an LLP.
145

The Naresh Chandra Committee has recommended that the LLPs should be governed
by a taxation regime that taxes the partners as individuals, rather than taxing the
LLP itself, i.e., the LLPs should be treated in the same manner as the firm under the
tax laws.

9.22 CONVERSION FROM PARTNERSHIP FIRM OR COMPANY TO LLP
Most LLP Statutes contain provisions, which facilitate partnership firms and other
forms of businesses to convert to LLP. In Delaware, a corporation or general
partnership can easily convert to an LLP by filing a certificate of conversion with the
Secretary of State
146
. The terms and conditions on which a partnership becomes
limited liability partnership must be approved by the vote necessary to amend the
partnership agreement except, in the case of a partnership agreement that expressly
considers obligations to contribute to the partnership, the vote necessary to amend
those provisions. However, partner in a general partnership cannot avoid his liability
by simply converting the general partnership to an LLP.

As against this, the UK LLP Act does not provide for a conversion process. However,
it does provide that any general partnership converting to an LLP will receive relief
from stamp duty on any property transferred in the first year, subject to certain
conditions. In addition, where an LLP succeeds to a business previously carried on by
an existing partnership, there should be no cessation of trade for income tax
purposes.
147

As per the California Corporation Code a domestic partnership, other than a limited
partnership, may convert to a registered limited liability by the vote of the partners
possessing a majority of the interests of its partners in the current profits of the
partnership or by a different vote as may be required in its partnership agreement.

When such a conversion takes effect, all property, real and personal, tangible and
intangible, of the converting partnership remains vested in the converted registered
limited liability partnership, all debts, obligations, liabilities, and penalties of the
converting partnership continue as debts, obligations, liabilities, and penalties of the
converted registered limited liability partnership, any action, suit, or proceeding, civil
or criminal, then pending by or against the converting partnership continue as if the
conversion had not occurred, the partners of a partnership continue as partners in
the converted registered limited liability partnership, to the extent provided in the
agreement of conversion and in the Act, and a partnership that has been converted
to a registered limited liability partnership pursuant to the Act remains the same
person that existed prior to the conversion.

145
http://www.cab.ca.gov/limit_liability.htm
146
Section 15-1001, Delaware Revised Uniform Partnership Act
147
LLP Consultation Paper, Singapore
706
In Singapore, the second schedule to the LLP Act provides for the conversion from
firm to LLP and third schedule provides for the conversion from private company to
LLP.

It is observed that the conversion from a partnership firm to an LLP faces certain
complications. Firstly, an LLP is a separate legal entity but a partnership is not.
Secondly, in a general partnership, properties and assets are held in the name of the
partners and not in the name of the LLP. Therefore, the conversion process should
provide that whenever a partnership converts to an LLP, all the properties and assets
that are vested in the partnership shall vest in the LLP. In addition, all the liabilities
and obligations of the partnership shall be transferred to the LLP. Further, a firm
should be allowed to convert to a limited liability partnership if and only if the
partners of the limited liability partnership to which the firm is to be converted,
comprises all the partners of the firm and no one else.

To protect creditors, the partners (who were previously partners of the general
partnership) shall have unlimited liability for the debts and obligations that arose
prior to or that arose out of a contract entered into prior to the formation of the LLP.
In other words, a partner in a general partnership should not be allowed to avoid his
liability by simply converting the general partnership to an LLP.

Similarly there should be a provision for the private and unlisted public companies to
get themselves converted into a limited liability partnership. In my view, a company
should be allowed to convert to a limited liability partnership if and only if there is no
charge on its assets subsisting or in force at the time of application; and the partners
of the limited liability partnership to which it converts comprises all the shareholders
of the company and no one else.

It is suggested that the LLP Statute in India should provide for a seamless
conversion process from a firm, private company and unlisted public company to
LLP. The provisions may be given by way of a separate schedule to the Act.

9.23 DESTRUCTION OF OLD RECORDS, ETC.
As per the Jersey Law, the registrar may destroy any record or document relating to
a limited liability partnership, which has been in his possession or under his control
for more than thirty years. Where any record or document has been in the
possession of the registrar or under his control for more than thirty years, no
responsibility rests on any person by reason of that record or document not being
forthcoming to a person claiming to be interested in it.

As per section 48 of the Singapore Act, the Registrar may destroy or give to the
National Archives of Singapore any document lodged, filed or registered with the
Registrar and which has been microfilmed or converted to electronic form if in his
opinion it is no longer necessary or desirable to retain the document.

It is suggested that in this case we may adopt the Singapore Model.

9.24 CLAWBACK PROVISIONS
In UK, withdrawals (profits, salaries, interests on loans to the LLP etc.) made by the
members of the LLP during two years prior to the commencement of winding up are
subject to clawback. However, this is subject to the condition that the member knew
707
or had reasonable grounds to believe that the LLP was, or would be unable to pay its
debts at the time of withdrawal
148
.

In Jersey, a partner of an LLP is allowed to withdraw his capital. If the partner
withdraws his capital when the LLP is insolvent, or if the LLP becomes insolvent as a
result of the withdrawal, the partner will be liable to repay the entire amount
withdrawn
149
. However, there is no time limit to the clawback period.

In Delaware, withdrawals (excluding compensation for benefits or payments made in
the ordinary course of business pursuant to a bona fide retirement or benefits
program) made by the partners of the LLP during three years prior to the
commencement of winding up are subject to clawback. However, this is subject to
the condition that the member knew or had reasonable grounds to believe that the
LLP was, or would be unable to pay its debts at the time of withdrawal
150
.

In Singapore, a partner or former partner of a limited liability partnership who
receives a distribution from the limited liability partnership when the limited liability
partnership is insolvent and knew or ought to have known at the time of the
distribution that the limited liability partnership was insolvent; or which results in the
limited liability partnership becoming insolvent and knew or ought to have known at
the time of distribution that the limited liability partnership would become insolvent
as a result of the distribution, shall be personally liable to the limited liability
partnership for the amount or value of the distribution if it was received within a
period of three years before the commencement of the winding up of the limited

9.25.0 DISSOLUTION AND WINDING UP

9.25.1.0 JERSEY

9.25.1.1 Dissolution upon a change in the partners in a partnership
151

As per the Jersey Law, a limited liability partnership shall not be dissolved by any
change in the persons who are partners in it if the partnership agreement so
provides.

9.25.1.2 Dissolution upon partnership ceasing to have two or more
partners
152

A limited liability partnership shall be dissolved immediately upon there ceasing to be
two or more partners in the partnership. Where the person responsible for winding
up the affairs of the limited liability partnership is the person who, at the time of
dissolution, was the last remaining partner he shall, within 28 days after the
dissolution, deliver a statement of dissolution signed by him to the registrar. In case
the person responsible for winding up the affairs of the limited liability partnership is
not the last remaining partner, he shall, within 28 days after the day on which he
becomes the person so responsible, deliver a statement of dissolution signed by him
to the registrar. Upon delivery to him of a statement referred above, the registrar
shall register the statement and issue a certificate of dissolution.

148
See Section 214A of the UK Insolvency Act, 1986.
149
See Article 5(3) of the Jersey LLP Act.
150
Section 15-309(b) of the Delaware Code.
151
ARTICLE 20 of the Jersey Law
152
708
9.25.1.3 Dissolution by act of partner or other occurrence
153

Where a limited liability partnership is dissolved by any act of a partner or by any
other occurrence, other than the fact that there ceases to be less than two partners,
the designated partner shall, within 28 days after the dissolution, deliver to the
registrar a statement of dissolution signed by him. Upon delivery to him of a
statement referred above, the registrar shall register the statement and issue a
certificate of dissolution.

9.25.1.4 Power of Court to order dissolution
154

The Court may, on the application of any partner in a limited liability partnership,
order the dissolution of the partnership in any of the following cases:
(a) when a partner, other than the partner making the application, becomes in
any way permanently incapable of performing his part of the partnership
contract;
(b) when a partner, other than the partner making the application, has been
guilty of such conduct as, in the opinion of the Court, regard being had to the
nature of the business, is calculated to prejudicially affect the carrying on of
the business;
(c) when a partner, other than the partner making the application, willfully or
persistently commits a breach of the partnership agreement, or otherwise so
conducts himself in matters relating to the partnership business that it is not
reasonably practicable for the other partner or partners to carry on the
business in partnership with him;
(d) when the business of the partnership can only be carried on at a loss; or
(e) whenever in any case circumstances have arisen which, in the opinion of the
Court, render it just and equitable that the partnership be dissolved.

Where the Court orders the dissolution of a limited liability partnership, the partner
making the application shall deliver a copy of the order to the registrar within 28
days after it is made.

9.25.1.5 Continuation of partnership following dissolution
155

Where, following dissolution of a limited liability partnership but before completion of
the winding up of its affairs, two or more of the partners are to acquire the
partnership interests of each of the remaining partners, either by agreement or by a
direction of the Court upon an application by the relevant majority
(a) the affairs of the limited liability partnership shall not be wound up and
the partnership shall continue as if it had not been dissolved; and
(b) subject to paragraph (3) of Article 13
156
, upon the acquisition taking
place, the partners whose interests are acquired shall be taken to
retire from it.

One of the acquiring partners shall, within 28 days after the agreement or direction
to acquire the partnership of the remaining partners, deliver to the registrar a
statement of c essation of dissolution signed by him specifying
(a) the date for acquisition of the retiring partners interests;
(b) the names of the acquiring partners and indicating which of them is to be a
designated partner; and

153
154
155
156
No retirement shall have effect before a statement is delivered to the registrar specifying the change
pursuant to paragraph (1) of Article 17 or paragraph (2) of Article 24, as the case may be
709
(c) the names of the retiring partners.

Upon delivery to him of a statement referred above, the registrar shall register the
statement and issue a certificate to that effect. With effect from the issue of the
certificate, Article 6
157
shall apply as if the limited liability partnership had not been
dissolved.

9.25.1.6 Winding up
158

Subject to paragraph (2) and Article 24
(a) in the event of the dissolution of a limited liability partnership on there
ceasing to be less than two partners, its affairs shall be wound up by the
person who, at the time of dissolution, was the last remaining partner or, if
he is deceased, his personal representatives; and
(b) in the event of the dissolution of a limited liability partnership in any other
circumstances, its affairs shall be wound up by a person appointed by the
partners for the purpose or, if none, the designated partner, or if more than
one, all of the designated partners.

The Court may appoint a person to wind up the affairs of a limited liability
partnership upon the application of
(a) a partner in the partnership;
(b) a creditor of the partnership; or
(c) where the partnership is dissolved by the death of a partner, the personal
representatives of that deceased partner.

After the dissolution of a limited liability partnership, paragraphs (2) to (4) of Article
15 shall only continue to apply so far as may be necessary or desirable to achieve a
beneficial winding up of its affairs or to such lesser extent as the partnership
agreement may provide.

Upon the dissolution of a limited liability partnership in the circumstances described
in paragraph (1) of Article 21, or upon the limited liability partnership ceasing to
have two or more partners at any time during the winding up of its affairs following
its dissolution in any other circumstances
(a) the limited liability partnership shall cease to be a legal person;
(b) the limited liability partnership property vested in the limited liability
partnership and the beneficial interest of the limited liability partnership in
any limited liability partnership property held by any person on its behalf,
shall vest in the person responsible for winding up the affairs of the limited
(c) any proceedings, which might have been continued or commenced against
the limited liability partnershi p, may be continued or commenced against the
person responsible for winding up the affairs of the limited liability partnership
in his capacity as such;
(d) any judgment obtained against the limited liability partnership prior to its
ceasing to have two or more partners and any judgment obtained against the
person responsible for winding up the affairs of the partnership in his capacity
as such in any proceedings continued or commenced in accordance with sub-

157
Requirement for and payment of financial provision
158

710
paragraph (c) shall only be enforceable against the limited liability partnership
property.

Where the name of a limited liability partnership is inscribed in the Public Registry of
Contracts as the holder of or having an interest in immoveable property, the person
responsible for winding up the affairs of the limited liability partnership, in whom that
property or interest vests by virtue of sub-paragraph (b) of paragraph (4) shall
deliver to the Judicial Greffier notice of the name of the person responsible for
winding up the affairs of the limited liability partnership, in whom the property has
vested, within 28 days after the property so vests.

9.25.1.7 Power of Court to give directions as to winding up
159

The Court may give such directions as it thinks fit in the course of the winding up of
the affairs of a limited liability partnership upon the application of
(a) any partner in the partnership;
(b) any creditor of the partnership;
(c) the person responsible for winding up the affairs of the partnership; or
(d) where the partnership is dissolved by the death of a partner, the personal
representatives of that deceased partner.

Without prejudice to the above discretion, on an application by the relevant majority,
the Court may give a direction that the applicants purchase the partnership interest
of each of the remaining partners at such a price and otherwise upon such terms as
it thinks fit. The relevant majority in relation to a limited liability partnership shall
have the meaning assigned to it for the purposes of that paragraph by the
partnership agreement or, if no meaning is so assigned, shall mean a majority of the
partners of which such partnership was composed at the date of its dissolution, being
either
(a) a majority of the partners by number; or
(b) such number of partners as were at the date of dissolution together entitled
to a majority of the profits of the partnership.

The partnership interest of each of the remaining partners includes the partnership
interest of any deceased partner and of any partner other than an individual, which
ceases to exist.

9.25.2.0 UNITED KINGDOM
The Limited Liability Partnership Regulations 2001 extend the provisions relating to
the insolvency and winding up of registered companies to LLPs. Thus the relevant
sections of the Companies Act 1985; the Insolvency Act 1986; the Company
Directors Disqualification Act 1986 and the Financial Services and Markets Act 2000
have been appropriately modified to apply to LLPs.
Of particular interest are two alterations to the Insolvency Act. Section 1(4) of the
LLPA merely stated that members of LLPs should have liability to contribute to its
assets in the event of its winding up as is provided for by virtue of this Act. The
actual extent of that liability is established by the new Section 74 introduced into the
Insolvency Act under the LLPR.

159

711
The new section provides that: when a limited liability partnership is wound up
every present and past member of the limited liability partnership who has agreed
with the other members or with the limited liability partnership that he will, in
circumstances which have arisen, be liable to contribute to the assets of the limited
liability partnership in the event that the limited liability partnership goes into
liquidation is liable, to the extent that he has so agreed, to contribute to its assets to
any amount sufficient for payment of its debts and liabilities, and the expenses of the
winding up, and for the adjustment of the rights of the contributories among
themselves.
Thus it is a matter for the members to agree the level of their potential liability,
which may be set at a nominal level, as there is no minimum level established in the
section. Indeed, there is no compulsion for the members to agree to pay any debts
of the LLP.
As has been stated previously, members of LLPs are subject to the usual controls
exerted over company members in relation to their conduct towards their insolvent
companies, such as actions for misfeasance, fraudulent trading and wrongful trading.
In addition to these, however, the LLPR introduces a new Section 214A into the
Insolvency Act 1986. This allows a liquidator to recover assets from members who
have previously withdrawn property from their LLP. This measure strengthens the
degree of creditor protection and is necessary in light of the lack of the capital
maintenance provisions, which apply to companies. Section 214A applies in the
following circumstances:
A member withdrew property from the LLP in the two years prior to the start
of its winding up. The property may be in the form of a share of profits;
salary; repayment of or payment of interest on a loan to the limited liability
partnership or any other withdrawal of property.
It can be shown that at the time of the withdrawal the member knew or had
reasonable grounds to believe that the LLP:
was unable to pay its debts or
became unable to pay its debts as a result of the withdrawal.
In deciding whether a person had reasonable grounds to believe in the continued
solvency of the LLP, the court will apply a minimum objective test. This will be based
on what they ought to have known in their position, as well as a potentially more
onerous subjective test, depending on what they ought to have known given their
personal attributes.
Under Section 214A, the court may declare that the person who made the
withdrawal is liable to make such contribution (if any) to the limited liability
partnerships assets as it thinks proper. However, the court cannot make a
declaration, which exceeds the aggregate of the amounts of all the withdrawals
made by that person within the period of two years previously referred to.

In the United Kingdom, an LLP may be wound up by the Court under any of the
following circumstances:
(a) it has determined that it be wound up by the Court;
(b) it has not commenced business within a year from its incorporation or
suspends its business for a whole year;
(c) the number of members falls below 2;
(d) it is unable to pay its debts; or
712
(e) the Court is of the opinion that it is just and equitable that the LLP be wound
up.

The UK Insolvency Act states that an LLP may be wound up voluntarily when it
determines that it is to be wound up voluntarily. It is regarded as a members
voluntary liquidation when the designated members of the LLP believe that it is
solvent and they make a statutory declaration of solvency.
In United Kingdom, the Secretary of State is required to make regulations applying
or incorporating, with such modifications as appear appropriate, Parts I to IV, VI and
VII of the Insolvency Act 1986.

The Insolvency Act provides a comprehensive code of procedures relating to both
corporate and individual insolvency. This subsection ensures that the major
corporate insolvency and winding up procedures including company voluntary
arrangements, administration, receivership and voluntary and compulsory winding
up, will be applied to LLPs. Such procedures will be adapted as necessary to suit
LLPs.

Subsection (2) The Secretary of State may make regulations making other provision
about the winding up and insolvency of an LLP or an oversea limited liability
partnership by applying or incorporating with or without modifications, or
disapplying, any law relating to the insolvency or winding up of companies or other
corporations.
9.25.3.0 SINGAPORE
Section 30 of the Singapore Act deals with the winding up of a limited liability
partnership. The winding up can be either voluntary or by the High Court and, unless
inconsistent with the context, the provisions of the Fifth Schedule applies to the
winding up of a limited liability partnership in either of these modes.

9.25.3.1 Members Voluntary Winding up
A LLP may decide to wind up its affairs voluntarily if the partners are of the opinion
that the LLP will be able to pay its debts in full within 12 months after the
commencement of the winding up. The LLP will appoint a liquidator or provisional
Act.

9.25.3.2 Creditors Voluntary Winding up
A LLP may decide to opt for creditors voluntary winding up if its partners are of the
opinion that it cannot by reason of its liabilities continue its business. The LLP
convene a meeting of its creditors to consider its proposal for the company to be
wound up. If the creditors agree, the LLP will appoint a liquidator or provisional

9.25.3.3 Compulsory Winding up
A LLP may be wound up under an Order of the Court under certain circumstances
e.g. the LLP is unable to pay its debts. The Court may appoint a liquidator to wind up
the affairs of the LLP. Where no liquidator is appointed by the Court, the Official
Receiver shall be the liquidator of the LLP. The liquidator will file the necessary
notifications required under the Limited Liability Partnership Act.

713

9.25.3.4 Striking off
A LLP may apply to ACRA to strike its name off the Register pursuant to Section 38
of the Limited Liability Partnership Act. ACRA may approve the application if it has
reasonable cause to believe that the LLP is not carrying on business.

9.25.4.0 DELAWARE
Subchapter VIII - Winding Up Partnership Business or Affairs of Chapter 15 -
Delaware Revised Uniform Partnership Act deals with the winding up of a limited

Events causing dissolution and winding up of partnership business or affairs
160

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 Section 15-601(2) through (12), of
that partner's express will to withdraw as a partner, on a later date specified
by the partner in the notice or, if no later date is specified, then upon receipt
of notice;

(2) In a partnership for a definite term or particular undertaking:
(i) Within 90 days after a partner's dissociation by death or otherwise
under Section 15-601(6) through (12) or wrongful dissociation under
Section 15-602(b), at least half of the remaining partners express the
will to wind up the partnership business, for which purpose a partner's
rightful dissociation pursuant to Section 15-602(b)(2)(i) of this title
constitutes the expression of that partner's will to wind up the
partnership business;

(ii) The express will of all of the partners to wind up the partnership
business or affairs; 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 or affairs;

(4) An event that makes it unlawful for all or substantially all of the business or
affairs of the partnership to be continued, but a cure of such illegality within
90 days after the partnership has notic e of the event is effective retroactively
to the date of the event for purposes of this section;

(5) On application by or for a partner to the Court of Chancery, the entry of a
decree of dissolution of a partnership by the Court of Chancery upon a
determination by the Court of Chancery that it is not reasonably practicable to
carry on the partnership business, purpose or activity in conformity with the
partnership agreement; or

(6) On application by a transferee of a partner's economic interest to the Court of
Chancery, a determination by the Court of Chancery that it is equitable to
wind up the partnership business or affairs:

160
15-801 of the Delaware Code
714
(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.

9.25.4.1 Right to wind up partnership business or affairs
161

(a) A partner at the time of dissolution, including a partner who has dissociated
but not wrongfully, may participate in winding up the partnership's business
or affairs, but on application of any partner or a partner's legal representative
or transferee, the Court of Chancery 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 or affairs.

(c) The persons winding up the partnership's business or affairs may, in the
name of, and for and on behalf of, the partnership, prosecute and defend
suits, whether civil, criminal or administrative, gradually settle and close the
partnership's business or affairs, dispose of and convey the partnership's
property, discharge or make reasonable provision for the partnership's
liabilities, distribute to the partners pursuant to Section 15-807 any remaining
assets of the partnership, and perform other acts which are necessary or
convenient to the winding up of the partnership's business or affairs.

9.25.4.2 Statement of dissolution
162

(a) After dissolution, a partnership may file a statement of dissolution stating the
name of the partnership and that the partnership has dissolved and is winding
up its business or affairs.

(b) A statement of dissolution cancels a filed statement of partnership existence
for the purposes of Section 15-303(b) and is a limitation on authority for the
purposes of Section 15-303(c).

(c) For the purposes of Sections 15-301 and 15-804, a person not a partner is
deemed to have notice of the dissolution and the limitation on the partners'
authority as a result of a statement of dissolution 60 days after it is filed.

(d) After filing a statement of dissolution, a dissolved partnership may file a
statement of partnership existence which will operate with respect to a person
not a partner as provided in Section 15-303(b) and (c) in any transaction,
whether or not the transaction is appropriate for winding up the partnership

161
162
715
(e) If a partnership, which has dissolved, fails or refuses to file a statement of
dissolution, any partner or dissociated partner who is or may be adversely
affected by the failure or refusal may petition the Court of Chancery to direct
the filing. If the Court finds that the statement of dissolution should be filed
and that the partnership has failed or refused to do so, it shall enter an order
granting appropriate relief.

9.25.5.0 NEW YORK
In New York, an LLP may be dissolved if any partner turns bankrupt.
163
A court does
not have the authority to disqualify a certain partner of an LLP, but it may order the
dissolution of an LLP if, on application by any partner, the court is satisfied that
164
:
(a) a partner has been declared incompetent in any judicial proceeding or is
shown to be of unsound mind; or
(b) a partner becomes in any other way incapable of performing his or her part of
the partnership contract; or
(c) a partner has been guilty of such conduct as tends to affect prejudicially the
carrying on of the business; or
(d) a partner willfully or persistently commits a breach of the partnership
agreement, or otherwise so conducts himself or herself in matters relating to
the partnership business that it is not reasonably practicable to carry on the
business in partnership with him or her.
165

9.26 DE-CODIFYING THE DNA OF THE CONCEPT PAPER ON LIMITED
LIABILITY PARTNERSHIP LAW

It is observed that the Concept Paper on Limited Liability Partnershi p Law released
by the Ministry of Company Affairs on November 2, 2005 is based on the Singapore
LLP Act, 2005, UK LLP Act, 2000, Indian Companies Act, 1956 and some US LLP
Statutes like the Delaware Code.

The following table will attempt to de-codify the Concept Paper on Limited Liability
Partnership Law

Provisions of the Concept Paper on Limited
Liability Partnership Law
Statutes / Provisions
Referred
Chapter I
Preliminary

Section 1 Short title, commencement
and extent.
(i) Indian Companies Act,
1956
Section 2 Definitions (i) Section 18 of the UK LLP
Act, 2000.
(ii) Section 2 of the Indian
Companies Act, 1956.
(iii) Concept Paper on New
Company Law. (India)
(iv) Delaware Code.
(v) Singapore LLP Act, 2005.
Chapter II

163
164
165
The court may also decree a dissolution if the business of the partnership can only be carried on at a
loss or other circumstances render a dissolution equitable.
716
Applicability
Section 3 Limited Liability Partnership Section 4 of the Singapore
LLP Act, 2005.
Section 4 Non-applicability of
partnership law
(i) Section 6 of the Singapore
LLP Act, 2005.
(ii) Section 1(5) of the UK
LLP Act, 2000.
Section 5 Partners Section 7 of the Singapore
LLP Act, 2005.
Section 6 Minimum and Maximum
Number of Partners
Section 22 of the Singapore
LLP Act, 2005.
Section 7 Manager Section 23 of the Singapore
LLP Act, 2005.
Chapter III
Incorporation

Section 8 Incorporation Document Section 2 of the UK LLP Act,
2000.
Section 9 Incorporation by Registration Section 3 of the UK LLP Act,
2000.
Section 10 Registered Office Section 26 of the Singapore
LLP Act, 2005.
Section 11 Powers Section 5 of the Singapore
LLP Act, 2005.
Section 12 Names of limited liability
partnerships
Section 18 and 19 of the
Singapore LLP Act, 2005.
Section 13 Publication of name and
limited liability
LLP Act, 2005.
Chapter IV -
Partnership

Section 14 Partner Section 4 of the UK LLP Act,
2000.
Section 15 Relationship of Partners Section 10 of the Singapore
LLP Act, 2005.
Section 16 Cessation of partnership
interest
LLP Act, 2005.
Section 17 Registration of changes in
partners
Section 9 of the UK LLP Act,
2000.
Chapter V -
Extent and
Limitation of
Liability

Section 18 Partner as agent (i) Section 9 of the Singapore
LLP Act, 2005.
(ii)Section 6 of the UK LLP
Act, 2000
Section 19 Extent of liability of the
Section 8 and 9 of the
Section 20 Extent of liability of a partner Section 8 of the Singapore
LLP Act, 2005.
Section 21 Unlimited liability in case of
fraud
General Partnership Principle.
Section 22 Liability for personal acts General Partnership Principle.
717
Chapter VI -
Duties and
Standards of
Conduct

Section 23 Duties of Partners General Principle.
Section 24 General Standards of
Partner's Conduct
General Principle.
Chapter VII -
Contributions

Section 25 Form of Contribution Section 15-206 of the
Delaware Code
Section 26 Liability for Contribution Section 15-207 of the
Delaware Code
Chapter VIII -
Financial
Disclosures

Section 27 Maintenance of records Section 25 of the Singapore
LLP Act, 2005.
Section 28 Annual declaration of
solvency
LLP Act, 2005.
Section 29 Power of Registrar to obtain
further information
LLP Act, 2005.
Section 30 Penalty for providing false
information to the Registrar
LLP Act, 2005.
Section 31 Composition of offences Section 46 of the Singapore
LLP Act, 2005.
Section 32 Destruction of old records Section 48 of the Singapore
LLP Act, 2005.
Section 33 Enforcement of duty to make
returns
LLP Act, 2005.
Section 34 Keeping of limited liability
partnership records
General Principle.
Chapter IX -
Taxation

Section 35 Income Tax and Capital Gains General Principle.
Chapter X -
Assignment and
Transfer of
Partnership
Rights

Section 36 Partner's transferable interest Section 15-502 of the
Delaware Code
Section 37 Transfer of partner's
transferable interest
Section 15-503 of the
Delaware Code
Chapter XI -
Investigation

Section 38 Investigation of the affairs of
Section 235 of the Indian
Section 39 Application by partners to be
supported by evidence and
power to call for security.
Section 40 Firm, body corporate or Section 238 of the Indian
718
association not to be
appointed as inspector.
Section 41 Power of inspectors to carry
out investigation into affairs
of related entities, et.
Section 42 Production of documents and
evidence.
Section 43 Seizure of documents by
inspector.
Section 240A of the Indian
Section 44 Inspectors' report Section 241 of the Indian
Section 45 Prosecution. Section 242 of the Indian
Section 46 Application for winding up of
other entity
Section 47 Proceedings for recovery of
damages or property.
Section 48 Expenses of investigation. Section 245 of the Indian
Section 49 Inspectors' report to be
evidence.
Chapter XII
Conversion to
Limited Liability
Partnership

Section 50 Conversion from firm to

Schedule 2 of the Singapore
LLP Act, 2005
Section 51 Conversion from private
company to limited liability
partnership

LLP Act, 2005.
Section 52 Conversion from unlisted
public company to limited
(i) Schedule 3 of the
(ii) SEBI (Disclosure &
Investor Protection)
Guidelines, 2000.

Chapter XIII -
Foreign Limited
Liability
Partnership

Section 53 Foreign Limited Liability
Partnership

To be made.
719
Chapter XIV
Amalgamation,
Merger and
Demerger of
Limited Liability
Partnerships

Section 54 Amalgamation, Merger and
Demerger of Limited Liability
Partnerships
To be made.
Chapter XV -
Winding Up and
Dissolution

Section 55 Winding Up and Dissolution To be made.
Chapter XVI -
Miscellaneous

Section 56 Business Transactions of
Partner with Partnership
General Principle.
Section 57 Application of Company Law Section 15 of the UK LLP Act,
2000
Section 58 Electronic filing service Section 42 of the Singapore
LLP Act, 2005.
Section 59 Penalty General Principle
Section 60 Application of other laws not
barred
General Principle
Section 61 Power to make regulations Section 56 of the Singapore
LLP Act, 2005.
Section 62 Power to remove difficulties General Principle
Section 63 Power of Registrar to strike
defunct limited liability
partnership off register
LLP Act, 2005.
Section 64 Offences by limited liability
partnerships
LLP Act, 2005.
Section 65 Jurisdiction of the Tribunal General Principle
Section 66 General penalties General Principle
FIRST SCHEDULE DEFAULT PROVISIONS FOR
LIMITED LIABILITY
PARTNERSHIPS
LLP Act, 2005.
SECOND
SCHEDULE
CONVERSION FROM FIRM TO
LIMITED LIABILITY
PARTNERSHIP
LLP Act, 2005.
THIRD SCHEDULE CONVERSION FROM PRIVATE
COMPANY TO LIMITED
LIABILITY PARTNERSHIP
LLP Act, 2005.
FOURTH
SCHEDULE
CONVERSION FROM
UNLISTED PUBLIC COMPANY
TO LIMITED LIABILITY
PARTNERSHIP
LLP Act, 2005.
FIFTH SCHEDULE PENALTIES (i) Schedule 24 of the UK
Companies Act
(ii) Schedule of Penalties of
the Concept Paper on New
720
Company Law. (India)
LLP
REGULATIONS.
To be made.

721

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722
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