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LIMITED PARTNERSHIP - Coggle Diagram

- - - - CONTRIBUTIONS OF A LIMITED PARTNER MAY BE CASH OR PROPERTY BUT NOT SERVICES
        Article 1845. The contributions of a limited partner may be cash or property, but not services.
        
        SURNAME OF A LIMITED PARTNER SHALL NOT APPEAR IN PARTNERSHIP NAME
        Article 1846. The surname of a limited partner shall not appear in the partnership name unless:
        (1) It is also the surname of a general partner, or
        (2) Prior to the time when the limited partner became such, the business has been carried on under a name in which his surname appeared.
        A limited partner whose surname appears in a partnership name contrary to the provisions of the first paragraph 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.
        
        EFFECT OF FALSE STATEMENT IN CERTIFICATE
        [IF]
        
        CERTIFICATE CONTAINS FALSE STATEMENT
        
        ONE SUFFERS LOSS
        (a) BY RELIANCE ON SUCH STATEMENT
        
        [THEN]
        ANY PARTY TO CERTIFICATE WHO KNEW FALSE STATEMENT MAY BE HELD LIABLE
        
        AT THE TIME HE SIGNED THE CERTIFICATE
        OR
        
        SUBSEQUENTLY BUT WITHIN A SUFFICIENT TIME BEFORE STATEMENT WAS RELIED UPON TO ENABLE HIM
        (a) TO CANCEL OR AMEND THE CERTIFICATE or
        (b) TO FILE A PETITION FOR ITS CANCELLATION OR AMENDMENT AS PROVIDED IN ART. 1865
        Article 1847. 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:
        
        (1) At the time he signed the certificate, or
        (2) 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 article 1865.
        
        LIMITED PARTNER SHALL NTO BECOME LIABLE AS A GENERAL PARTNER
        Article 1848. 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.
        
        HOW TO ADMIT ADDITIONAL LIMITED PARTNERS
        
        AMENDMENT TO ORIGINAL CERTIFICATE IN ACCORDANCE WITH ART. 1865
        (a) AFTER FORMATION OF A LIMITED PARTNERSHIP
        Article 1849. 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 article 1865.
        
        POWERS OF A GENERAL PARTNER IN A LIMITED PARTNERSHIP: SAME AS ONE WITHOUT LIMITED PARTNERS
        Article 1850. 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. However, 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:
        (1) Do any act in contravention of the certificate;
        (2) Do any act which would make it impossible to carry on the ordinary business of the partnership;
        (3) Confess a judgment against the partnership;
        (4) Possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose;
        (5) Admit a person as a general partner;
        (6) Admit a person as a limited partner, unless the right so to do is given in the certificate;
        (7) Continue the business with partnership property on the death, retirement, insanity, civil interdiction or insolvency of a general partner, unless the right so to do is given in the certificate.
        
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        UNLESS HE TAKES PART IN THE CONTROL OF THE BUSINESS, IN ADDITION TO THE EXERCISE OF HIS RIGHTS AND POWERS AS A LIMITED PARTNER
        
        UNLESS [EITHER] IT IS ALSO THE SURNAME OF A GENERAL PARTNER
        OR
        
        PRIOR TO TIME WHEN LIMITED PARTNER BECAME SUCH, BUSINESS HAS BEEN CARRIED ON UNDER A NAME WITH HIS SURNAME
        
        EFFECT OF VIOLATION:
        LIABLE AS GENERAL PARTNER
        
        SURNAME APPEARS IN PARTNERSHIP IN VIOLATION OF THE 1ST PARAGRAPH
        
        PARTNERSHIP CREDITORS EXTEND CREDIT TO PARTNERSHIP
        (a)WITHOUT KNOWLEDGE THAT HE IS NOT A GENERAL PARTNER
        
        LIMITED PARTNERS CANNOT BE INDUSTRIAL PARTNERS; CAN ONLY BE CAPITALIST PARTNERS
      - FILE FOR RECORD THE CERTIFICATE IN THE OFFICE OF THE SEC File for record the certificate in the Office of the Securities and Exchange Commission.
        
        SUBSTANTIAL COMPLIANCE IN GOOD FAITH
        A limited partnership is formed if there has been substantial compliance in good faith with the foregoing requirements.
        
        NO SUB-COMP -> GENERAL PARTNERSHIP
        To validly form a limited partnership, all that is required is substantial compliance in good faith with all the requirements under Art. 1844 as enumerated above.
        If no substantial compliance, then the firm becomes a general partnership as far as third persons are concerned (but as amongst the partners, still limited) (Jo Chung Cang v. Pacific Commercial Co., 45 Phil 142)
  - - - COURT MAY:
        
        CHARGE INTEREST OF INDEBTED PARTNER WITH PAYMENT OF UNSATISFIED AMOUNT OF SUCH CLAIM
        -
        
        APPOINT A RECEIVER
        -
        
        MAKE ALL OTHER ORDERS, DIRECTIONS, AND INQUIRIES WHICH CIRCUMSTANCES OF THE CASE MAY REQUIRE
        Article 1862. On due application to a court of competent jurisdiction by any creditor of a limited partner, the court may charge the interest of the indebted limited partner with payment of the unsatisfied amount of such claim, and may appoint a receiver, and make all other orders, directions and inquiries which the circumstances of the case may require.
        
        ORDER OF LIABILITY AFTER DISSOLUTION:
        Article 1863. In settling accounts after dissolution the liabilities of the partnership shall be entitled to payment in the following order:
        
        TO CREDITORS IN ORDER OF PRIORITY AS PROVIDED AS PROVIDED BY LAW
        (a) EXCEPT THOSE TO LIMITED PARTNERS ON ACCOUNT OF THEIR CONTRIBUTIONS AND TO GENERAL PARTNERS
        (1) 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;
        
        TO LIMITED PARTNERS IN RESPECT OF THEIR SHARE OF PROFITS AND OTHER CBWOI ON THEIR CONTRIBUTIONS
        (2) Those to limited partners in respect to their share of the profits and other compensation by way of income on their contributions;
        
        TO LIMITED PARTNERS IN RESPECT TO CAPITAL OF THEIR CONTRIBUTIONS
        (3) Those to limited partners in respect to the capital of their contributions;
        
        TO GENERAL PARTNERS OTHER THAN FOR CAPITAL AND PROFITS
        (4) Those to general partners other than for capital and profits;
        
        TO GENERAL PARTNERS IN RESPECT TO PROFITS
        (5) Those to general partners in respect to profits;
        
        THOSE TO GENERAL PARTNERS IN RESPECT TO CAPITAL
        (6) Those to general partners in respect to capital.
        
        WHEN CERTIFICATE IS CANCELLED
        Article 1864. The certificate shall be cancelled when the partnership is dissolved or all limited partners cease to be such.
        
        REQUIREMENTS FOR AMENDMENT
        THE WRITING TO AMEND SHALL
        Article 1865. The writing to amend a certificate shall:
        
        AMENDMENT SHALL CONFORM TO REQUIREMENTS OF 1844 AS FAR AS NECESSARY TO SET FORTH CLEARLY THE CHANGE IN CERTIFICATE
        (1) Conform to the requirements of article 1844 as far as necessary to set forth clearly the change in the certificate which it is desired to make; and
        
        (2) Be signed and sworn to by all members, and an amendment substituting a limited partner or adding a limited or general partner shall be signed also by the 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.
        
        A CONTRIBUTOR IS NOT A PROPER PARTY TO PROCEEDINGS BY OR AGAINST A PARTNERSHIP
        Article 1866. 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 partner's right against or liability to the partnership.
        
        LIMITED PARTNERSHIP FORMED BEFORE EFFECTIVITY OF NCC MAY BECOME A LIMITED PARTNERSHIP BY COMPLYING WITH 1844
        Article 1867. A limited partnership formed under the law prior to the effectivity of this Code, may become a limited partnership under this Chapter by complying with the provisions of article 1844, provided the certificate sets forth:
        CERTIFICATE SHALL CONTAIN:
        
        AMOUNT OF ORIGINAL CONTRIBUTION OF EACH LIMITED PARTNER
        (a)TIME WHEN SUCH CONTRIBUTION WAS MADE
        (1) The amount of the original contribution of each limited partner, and the time when the contribution was made; and
        
        THAT THE PROPERTY OF THE PARTNERSHIP EXCEEDS THE AMOUNT SUFFICIENT TO DISCHARGE ITS LIABILITIES TO PERSONS WHO:
        (a) ARE NOT GENERAL OR LIMITED PARTNERS
        (b) ARE NOT CLAIMING AN AMOUNT GREATER THAN THE SUM OF THE LP'S CONTRIBUTIONS
        (2) 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.
        
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        UNLESS HE IS A GENERAL PARTNER
        
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        WRITING TO CANCEL SHALL BE SIGNED BY ALL MEMBERS
        The writing to cancel a certificate shall be signed by all members.
        
        A PERSON DESIRING CANCELLATION OR AMENDMENT MAY PETITION THE COURT TO ORDER A CANCELLATION OR AMENDMENT THEREOF
        PROVIDED: THE PERSON DESIGNATED IN THE FIRST AND SECOND PARAGRAPH AS A PERSON WHO MUST EXECUTE THE WRITING REFUSES TO DO SO
        A person desiring the cancellation or amendment of a certificate, if any person designated in the first and second paragraphs as a person who must execute the writing refuses to do so, may petition the court to order a cancellation or amendment thereof.
        
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        WHEN CERTIFICATE IS DEEMED AMENDED
        A certificate shall be amended when:
        
        CHANGE
        (a) IN NAME OF PARTNERSHIP
        (b) IN THE AMOUNT OR CHARACTER OF CONTRIBUTION OF ANY LP
        (1) There is a change in the name of the partnership or in the amount or character of the contribution of any limited partner;
        
        SUBSTITUTION OF PERSON AS LP
        (2) A person is substituted as a limited partner;
        
        ADMITTED ADDITIONAL LP
        (3) An additional limited partner is admitted;
        
        ADMITTED GP
        (4) A person is admitted as a general partner;
        
        GP DRCII
        (5) A general partner retires, dies, becomes insolvent or insane, or is sentenced to civil interdiction and the business is continued under article 1860;
        
        CHANGE IN CHARACTER OF BUSINESS OF PARTNERSHIP
        (6) There is a change in the character of the business of the partnership;
        
        FALSE/ERRONEOUS STATEMENT IN CERTIFICATE
        (7) There is a false or erroneous statement in the certificate;
        
        CHANGE IN TIME AS STATED IN CERTIFICATE FOR DISSOLUTION OR FOR RETURN OF CONTRIBUTION
        (8) 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;
        
        FIXING TIME FOR DISSOLUTION OR RETURN OF CONTRIBUTION, WHEN NO TIME HAS BEEN SPECIFIED
        (9) 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
        
        CHANGE IN ANY OTHER STATEMENT IN CERTIFICATE IN ORDER THAT IT SHALL ACCURATELY REPRESENT AGREEMENT AMONG THEM
        (10) The members desire to make a change in any other statement in the certificate in order that it shall accurately represent the agreement among them.
        
        LPs SHARE IN PARTNERSHIP ASSETS
        IN RESPECT TO THEIR CLAIMS FOR CAPITAL
        AND
        IN RESPECT TO THEIR CLAIMS FOR PROFITS OR FOR CBWOI ON THEIR CONTRIBUTION RESPECTIVELY,
        IN PROPORTION TO RESPECTIVE AMOUNTS OF SUCH CLAIMS.
        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 contribution respectively, in proportion to the respective amounts of such claims.
        
        SUBJECT TO ANY STATEMENT IN THE CERTIFICATE OR TO SUBSEQUENT AGREEMENT
        
        INTEREST MAY BE REDEEMED WITH SEPARATE PROPERTY OF ANY GENERAL PARTNER
        The interest may be redeemed with the separate property of any general partner, but may not be redeemed with partnership property.
        
        INTEREST MAY NOT BE REDEEMED WITH PARTNERSHIP PROPERTY
        
        REMEDIES CONFERRED BY 1ST PARAGRAPH DO NOT EXCLUDE OTHERS THAT MAY EXIST
        The remedies conferred by the first paragraph shall not be deemed exclusive of others which may exist.
        Nothing in this Chapter shall be held to deprive a limited partner of his statutory exemption.
        
        WHO: BY ANY CREDITOR OF A LIMITED PARTNER
        
        WHEN: ON DUE APPLICATION TO A COURT OF COMPETENT JURISDICTION
    - - LIMITED PARTNER MAY:
        
        LOAN MONEY
        
        TRANSACT OTHER BUSINESS WITH THE PARTNERSHIP
        
        RECEIVE A PRO RATA SHARE OF ASSETS
        (a) BUT ON ACCOUNT OF RESULTING CLAIMS AGAINST PARTNERSHIP, UNLESS HE IS ALSO A GENERAL PARTNER
        Article 1854. 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.
        
        IF SEVERAL LIMITED PARTNERS, MEMBERS MAY AGREE ON THEIR PRIORITY OVER OTHER LIMITED PARTNERS AS TO RETURN OF THEIR CONTRIBUTIONS, COMPENSATION BY WAY OF INCOME, & AS TO ANY OTHER MATTER
        Article 1855. 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 other matter.
        
        LIMITED PARTNERS MAY RECEIVE FROM PARTNERSHIP SHARE OF PROFITS OR COMPENSATION BY WAY OF INCOME STIPULATED FOR IN THE CERITIFICATE
        Article 1856. 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;
        
        LIMITED PARTNER SHALL NOT RECEIVE ANY PART OF HIS CONTRIBUTIONS UNTIL:
        Article 1857. A limited partner shall not receive from a general partner or out of partnership property any part of his contributions until:
        
        ALL LIABILITIES OF PARTNERSHIP HAVE BEEN PAID, EXCEPT LIABILITY TO GENERAL PARTNERS & LIMITED PARTNERS,
        OR
        THERE REMAINS PROPERTY OF THE PARTNERSHIP SUFFICIENT TO PAY THEM
        (1) 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;
        
        CONSENT OF ALL MEMBERS, UNLESS RETURN OF CONTRIBUTION MAY BE RIGHTFULLY DEMANDED IN 2ND PARA.
        (2)The consent of all members is had, unless the return of the contribution may be rightfully demanded under the provisions of the second paragraph; and
        
        CERTIFICATE IS CANCELLED OR AMENDED AS TO SET FORTH WITHDRAWAL OR REDUCTION
        (3) The certificate is cancelled or so amended as to set forth the withdrawal or reduction.
        
        LP LIABLE TO PARTNERSHIP FOR
        Article 1858. A limited partner is liable to the partnership:
        
        DIFFERENCE BETWEEN HIS CONTRIBUTION AND THAT STATED IN CERTIFICATE
        (1) For the difference between his contribution as actually made and that stated in the certificate as having been made, and
        
        ANY UNPAID CONTRIBUTION WHICH HE TO MAKE IN FUTURE AT TIME & CONDITIONS IN CERTIFICATE
        (2) For any unpaid contribution which he agreed in the certificate to make in the future at the time and on the conditions stated in the certificate.
        
        LIMITED PARTNER'S INTEREST IS ASSIGNABLE
        Article 1859. A limited partner's interest is assignable.
        
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        Why bother stating "as actually made"? Can a contribution be not actually made?
        
        LP HOLDS AS TRUSTEE FOR PARTNERSHIP
        A limited partner holds as trustee for the partnership:
        
        SPECIFIC PROPERTY STATED IN CERTIFICATE AS CONTRIBUTED BY HIM
        (a) BUT WHICH WAS NOT CONTRIBUTED OR HAS BEEN WRONGFULLY RETURNED
        (1) Specific property stated in the certificate as contributed by him, but which was not contributed or which has been wrongfully returned, and
        
        MONEY OR OTHER PROPERTY WRONGFULLY PAID OR CONVEYED TO HIM ON ACCOUNT OF HIS CONTRIBUTION
        (2) Money or other property wrongfully paid or conveyed to him on account of his contribution.
        
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        INSTANCES WHEN LIMITED PARTNER MAY RIGHTFULLY DEMAND RETURN OF CONTRIBUTION
        Subject to the provisions of the first paragraph, a limited partner may rightfully demand the return of his contribution:
        
        DISSOLUTION OF A PARTNERSHIP
        (1) On the dissolution of a partnership; or
        
        ON DATE SPECIFIED IN CERTIFICATE FOR RETURN
        (2) When the date specified in the certificate for its return has arrived, or
        
        AFTER SIX MONTHS' NOTICE IN WRITING TO ALL OTHER MEMBERS, IF NO TIME SPECIFIED IN CERTIFICATE, EITHER FOR RETURN OF CONTRIBUTION OR DISSOLUTION OF PARTNERSHIP
        (3) After he has 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.
        
        IN ABSENCE OF STATEMENT IN CERITIFICATE TO CONTRARY OR OF CONSENT OF ALL MEMBERS, LP ONLY HAS RIGHT TO DEMAND & RECEIVE CASH IN RETURN FOR CONTRIBUTION
        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.
        
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        SUCH PAYMENT CAN ONLY BE MADE IF 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
        provided, that after such payment is made, whether from 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.
        
        SUCH PRIORITIZATION MUST BE STATED IN THE CERTIFICATE
        ABSENCE OF STATEMENT = LIMITED PARTNERS STAND ON EQUAL FOOTING
        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.
        
        What is "compensation by way of income"? Why do the articles stress on that so much?
        
        NO LIMITED PARTNER SHALL:
        No limited partner shall in respect to any such claim:
        
        RECEIVE or HOLD ANY PARTNERSHIP PROPERTY AS COLLATERAL
        (1) Receive or hold as collateral security any partnership property, or
        
        RECEIVE FROM A GENERAL PARTNER OR THE PARTNERSHIP PAYMENT, CONVEYANCE, OR RELEASE FROM LIABILITY
        (a) IF ASSETS OF PARTNERSHIP ARE NOT SUFFICIENT TO DISCHARGE PARTHERSHIP LIABILITIES TO PERSON NOT GENERAL OR LIMITED PARTNERS
        (2) 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. (Art. 1854)
        
        EFFECT OF VIOLATION: FRAUD ON CREDITORS OF THE PARTNERSHIP
        The receiving of collateral security, or payment, conveyance, or release in violation of the foregoing provisions is a fraud on the creditors of the partnership. (Art. 1854)
      - DUAL PARTNER HAVE ALL RIGHTS, POWERS, AND RESTRICTIONS OF A GENERAL PARTNER
        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;
        
        DUAL PARTNER HAS RIGHT TO CONTRIBUTION AGAINST OTHER PARTNERS, AS IF HE WERE NOT A GENERAL PARTNER
        except that, in respect to his contribution, he shall have the rights against the other members which he would have had if he were not also a general partner.