Bài giảng Business Law - Chapter 40: Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin9Introduction to Forms of Business and Formation of PartnershipsOperation of Partnerships and Related FormsPartners’ Dissociation and Partnerships’ Dissolution and Winding UpLimited Liability Companies, Limited Partnerships, and Limited Liability Limited PartnershipsPartnershipsPARTLimited Liability Companies, Limited Partnerships, and Limited Liability Limited PartnershipsPAETRHC40The man who occupies the first place seldom plays the principal part.Johann Wolfgang von GoetheLearning ObjectivesExplain the attributes of a limited liability company and a member’s default rights and liabilitiesExplain the attributes of a limited partnership and limited liability limited partnership and the default rights and liabilities of partnersThe limited liability company (LLC) combines advantages of the corporation with regard to protection from personal liability and favorable tax status of the partnershipThe Uniform Limited Liability Company Act of 1996 (ULLCA) offers default rules similar to RUPA that govern an LLC in the absence of a contrary agreement of its owners least one person (organizer) must file the articles of organization with a secretary of stateArticles must include LLC name, duration, and the name and address of its registered agentOwners of an LLC are membersAn individual, partnership, corporation, or another LLC may be a member of an LLCAn LLC is an entity separate from its membersCreation of the LLCAn LLC member has no individual liability on LLC contracts, unless LLC contracts signed in a personal capacity (e.g., as a surety)A member’s liability is usually limited to the member’s capital contributionsA member is liable for torts s/he committed while acting for the LLCLiability of MembersUnder the ULLCA, an LLC must choose to be member-managed or manager-managedEach member in a member-managed LLC shares equal rights in the management of the business and each member is an agent of the LLC with implied authority to carry on its ordinary businessManagers in a manager-managed LLC are elected and removed by a vote of a majority of LLC membersLLC ChoiceEach member in a member-managed LLC and each manager in a manager-managed LLC is a fiduciary of the LLC and its members with duties similar to the duties of partners, including the duty of careA member’s ownership interest in an LLC is the member’s personal property and the distributional interest is transferableDuties of Members and Ownership Under the ULLCA, members dissociate from an LLC in ways similar to those by which a partner dissociates from a partnership or LLP under RUPAAs in partnership, a member’s dissociation may be wrongful or nonwrongfulDissociation terminates a member’s status as a memberDissociationDissolution of an LLC is similar to that of an LLP or partnershipWhen an LLC dissolves, any member who has not wrongly dissociated may wind up the businessAfter all assets sold, proceeds distributed first to LLC creditors, then members’ contributions are returned; remainder distributed in equal shares to membersDissolution Substantially similar to RUPA, the ULPA of 2001 is the first comprehensive statement of American limited partnership lawOnly ULPA applies to limited partnershipsThe limited partnership (or LLLP) form is perpetual and used primarily in tax shelter ventures, real estate ventures, oil and gas drilling, and professional sportsUniform Limited Partnership ActLimited partnerships has two owner classes: General partners contribute capital, manage the business, share in profits, and possess unlimited liability for its obligationsLimited partners contribute capital and share profits, but possess no management powersLiability limited up to amount of the investment in the businessLimited partnership agreements common The Limited Partnership A variant of a limited partnership is the limited liability limited partnership (LLLP) which offers limited liability status for all its partners, including general partnersExcept for liability of general partners, limited partnerships and LLLPs are identicalLimited Liability Limited Partnership A partner may contribute any property or other benefit to the limited partnershipUnder ULPA, profits and losses shared on basis of each partner’s capital contribution unless a written agreement to the contrary Limited partners have no right to voteEach partner owns a transferable interest in limited partnership as personal propertyRights of LP and LLLP Partners A general partner of a limited partnership or LLLP has same right to manage and same agency powers as a partner in an ordinary partnership, including the duty of careA general partner of a limited partnership or LLLP is in a position of trust and therefore owes fiduciary duties to the limited partnership and the other partnersManagement & DutiesULPA adopts terminology and framework of partnership law, establishing dissociation and dissolution rulesGeneral partner’s express and implied authority to act for the limited partnership terminates upon dissociationGeneral partner’s liability for partnership obligation incurred while a partner continuesWithdrawing & Dissociation ULPA provides that a limited partnership (or LLLP) is not dissolved, wound up, or terminated merely because a partner dissociated from the limited partnershipWhen a limited partnership dissolves, winding up follows automatically by the general partners After liquidation, proceeds distributed first to creditors and remainder paid to partners in same proportions as distributionsDissolution of the LP and LLLPThought QuestionWhy should business owners be allowed to limit their liability or choose the form of business that gives them the greatest protection? What risk does the typical business face?