LIMITED PARTNERSHIP.1

limited partnership
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LIMITED PARTNERSHIP.1

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  1. Limited Partnership

    Slide 1 - Limited Partnership

  2. Limited Partnership

    Slide 2 - Limited Partnership

    • A partnership compromised of one or more general partners who manage business and who are personally liable for partnership debts, and one or more limited partners who contribute capital and share in profits but who take no part in running business and incur no liability with respect to partnership obligations beyond contribution.
  3. limited partnership

    Slide 3 - limited partnership

    • A limited partnership is a partnership formed by two or more persons under Chapter 425E, Hawaii Revised Statutes, 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.
  4. STRUCTURE AND LIABILITIES

    Slide 4 - STRUCTURE AND LIABILITIES

    • GENERAL PARTNER (at least one)
    • 1. Assumes management responsibility
    • 2. Full responsibility for the partnership
    • 3. Personally liable for all debts of the partnership
    • LIMITED PARTNERS (one or more)
    • 1. Contributes cash or other property and owns
    • an interest in the firm
    • 2. Not personally liable for partnership debts
    • beyond their investment, unless:
    • a. Participates in management (voice)
    • b. Lends name to business
  5. FORMATION

    Slide 5 - FORMATION

    • Must have at least one General Partner
    • and one Limited Partner
    • Must be a writing (Certificate of Limited
    • Partnership) filed with DCCA (Secretary of
    • State)
    • Must maintain an office in its State of
    • organization
    • Agent for service of process identified
  6. CERTIFICATE OF LIMITED PARTNERSHIP

    Slide 6 - CERTIFICATE OF LIMITED PARTNERSHIP

    • FILED WITH DCCA (Secretary of State)
    • Must set forth the following:
    • 1. Partnership Name
    • 2. Name and address of the agent for service of
    • process
    • 3. Name and business address of each General
    • Partner
    • 4. Latest date upon which the Limited Partnership will
    • dissolve
  7. PARTNERSHIP’S OFFICE DOCUMENTATION

    Slide 7 - PARTNERSHIP’S OFFICE DOCUMENTATION

    • Certificate of Limited Partnership
    • Any partnership agreements
    • Limited Partnership’s tax returns for the
    • three most current years
    • Names and addresses of both General
    • and Limited Partners
  8. PARTNERSHIP AGREEMENT

    Slide 8 - PARTNERSHIP AGREEMENT

    • The amount and description of each
    • partner’s contribution
    • Times or events that trigger additional
    • contributions from the partners
    • Special rights of the partners regarding
    • dissolution
    • Description of events that will trigger
    • dissolution of the partnership
  9. RIGHTS AND LIABILITIES OF A GENERAL PARTNER

    Slide 9 - RIGHTS AND LIABILITIES OF A GENERAL PARTNER

    • RIGHTS AND LIABILITIES ARE THE SAME AS
    • A COMMON LAW PARTNERSHIP IN TERMS
    • OF PERSONAL LIABILITY
    • Control the day to day affairs of the partnership
    • Generally have authority to manage partnership operations and enter into transactions
    • No protection from liabilities of the partnership
  10. RIGHTS AND LIABILITIES OF A LIMITED PARTNER

    Slide 10 - RIGHTS AND LIABILITIES OF A LIMITED PARTNER

    • RIGHT OF ACCOUNTING AND INFORMATION
    • ACCESS (inspection/tax returns/etc.)
    • SHARING OF PROFITS AND LOSSES (IAW the partnership agreement)
    • RIGHT TO VOTE, WITHDRAW, DISSOLVE
    • RETURN OF CONTRIBUTIONS ON
    • DISSOLUTION
    • LIABILITY PROTECTION---LIABILITY LIMITED TO CAPITAL
    • CONTRIBUTED (or agreed upon) PROVIDED:
    • 1. NO PARTICIPATION IN MANAGEMENT
    • 2. PERSONAL NAME NOT USED IN THE NAME OF THE
    • PARTNERSHIP
  11. DISSOLUTION OF A LIMITED PARTNERSHIP

    Slide 11 - DISSOLUTION OF A LIMITED PARTNERSHIP

    • RETIREMENT, DEATH OR MENTAL
    • INCOMPETENCE OF A GENERAL
    • PARTNER (but no a Limited Partner)
    • OCCURRENCE OF THE TIME (or event) SPECIFIED IN THE PARTNERSHIP AGREEMENT
    • COURT DECREE
    • UNANIMOUS WRITTEN CONSENT OF ALL PARTNERS
    • BANKRUPTCY OR WITHDRAWAL*
    • (retirement) OF A GENERAL PARTNER
    • * Unless remaining General Partners consent to a continuation or as provided in the Certificate
  12. LIMITED LIABILITY PARTNERSHIPS

    Slide 12 - LIMITED LIABILITY PARTNERSHIPS

  13. Limited Liability Partnership

    Slide 13 - Limited Liability Partnership

    • A Domestic Limited Liability Partnership is a General Partnership that has elected to have limited liability.
  14. Domestic Limited Liability Partnership

    Slide 14 - Domestic Limited Liability Partnership

    • A partnership formed in accordance with the laws of Hawaii. Subject to the partnership meeting specified provisions of HRS Chapter 425, Partner's liability is limited.
  15. LIABILITY OF A GENERAL PARTNER IS THE SAME AS THAT OF A LIMITED PARTNER(amount of investment)

    Slide 15 - LIABILITY OF A GENERAL PARTNER IS THE SAME AS THAT OF A LIMITED PARTNER(amount of investment)

  16. LLP STRUCTURE

    Slide 16 - LLP STRUCTURE

    • The business forms a corporation to act as the general partner for a limited partnership and thus the corporation protects its shareholders against the liabilities of the general partnership interest.
    • This cumbersome structure with two entities is now obsolete in most instances.
  17. Limited Liability  Partnership

    Slide 17 - Limited Liability Partnership

    • Limited Liability Partnership means a limited partnership whose certificate of limited partnership states that the limited partnership is a limited liability partnership. 
    • A general partner shall not be personally liable, directly or indirectly, by way of contribution or otherwise, for such an obligation solely by reason of being or acting as a general partner.  This applies despite anything inconsistent in the partnership agreement that existed immediately before the general partners of a limited partnership consented to become a limited liability partnership.
  18. Limited LIABILITY COMPANIES

    Slide 18 - Limited LIABILITY COMPANIES

  19. limited liability company

    Slide 19 - limited liability company

    • A limited liability company is a legal entity distinct from its members, consisting of one or more members organized under HRS Chapter 428 (Uniform Limited Liability Company Act).
  20. A hybrid between a Partnership and a Corporation

    Slide 20 - A hybrid between a Partnership and a Corporation

  21. STRUCTURE

    Slide 21 - STRUCTURE

    • Owners of an LLC are called MEMBERS; instead of partners or shareholders.
    • Persons responsible for operating the day-to-day activities are called MANAGERS; instead of general partners or corporate officers.
  22. LIABILITY

    Slide 22 - LIABILITY

    • All members of an LLC enjoy limited liability from the debts and obligations of the LLC.
    • Managers are not liable for the debts and obligations of the LLC, but are liable for their own personal actions carried out on behalf of the LLC.
  23. DISTINGUISHING FEATURE

    Slide 23 - DISTINGUISHING FEATURE

    • Unlike a general partnership, limited partnership, or LLP, the LLC is permitted to have only one member—a single member LLC.
    • Not recognized as a tax entity by the IRS for income tax purposes.
  24. FORMATION

    Slide 24 - FORMATION

    • FILING ARTICLES OF ORGANIZATION
    • 1. With Secretary of State or other similar
    • central agency (DCCA in Hawaii)
    • 2. Specific state format
    • 3. Payment of fee
    • TENDENCY BY COURTS TO TREAT AS
    • LEGAL ENTITY
  25. ARTICLES OF ORGANIZATION

    Slide 25 - ARTICLES OF ORGANIZATION

    • Name of business (include LLC)
    • Principal address
    • Name and address of registered agent
    • Names of the owners
    • Information on how the LLC will be
    • managed
  26. ADVANTAGES

    Slide 26 - ADVANTAGES

    • Liability of members is limited to the
    • amounts of their investments
    • Flexibility in business operations and
    • management
    • Taxation--With two or more members,
    • can choose to be taxed as a partnership
    • or as a corporation
  27. DISADVANTAGES

    Slide 27 - DISADVANTAGES

    • No uniformity in state LLC statutes
    • Lack of case law dealing with LLCs
  28. LLC OPERATING AGREEMENT

    Slide 28 - LLC OPERATING AGREEMENT

    • Developed my members of LLC
    • Typically contains provisions relating to:
    • 1. Management
    • 2. Profit division
    • 3. Transfer of membership interests
    • 4. Whether LLC will be dissolved at death
    • or departure of member
    • Writing not required or formed
  29. LLC MANAGEMENT

    Slide 29 - LLC MANAGEMENT

    • MEMBER-MANAGED
    • MANAGER-MANAGED
    • 1. Designated manager
    • 2. Fiduciary duty of loyalty and duty of care
  30. QUESTIONS

    Slide 30 - QUESTIONS