BUSINESS ORGANIZATIONS CODE
CHAPTER 152. GENERAL PARTNERSHIPS
SUBCHAPTER A. GENERAL PROVISIONS
§ 152.001. DEFINITIONS. In this chapter:
(1) "Event of withdrawal" or "withdrawal" means an
event specified by Section 152.501(b).
(2) "Event requiring a winding up" means an event
specified by Section 11.051 or 11.057.
(3) "Foreign limited liability partnership" means a
partnership that:
(A) is foreign; and
(B) has the status of a limited liability
partnership pursuant to the laws of the jurisdiction of formation.
(4) "Other partnership provisions" means the
provisions of Chapters 151 and 154 and Title 1 to the extent
applicable to partnerships.
(5) "Transfer" includes:
(A) an assignment;
(B) a conveyance;
(C) a lease;
(D) a mortgage;
(E) a deed;
(F) an encumbrance; and
(G) the creation of a security interest.
(6) "Withdrawn partner" means a partner with respect
to whom an event of withdrawal has occurred.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.002. EFFECT OF PARTNERSHIP AGREEMENT; NONWAIVABLE
AND VARIABLE PROVISIONS. (a) Except as provided by Subsection
(b), a partnership agreement governs the relations of the partners
and between the partners and the partnership. To the extent that
the partnership agreement does not otherwise provide, this chapter
and the other partnership provisions govern the relationship of the
partners and between the partners and the partnership.
(b) A partnership agreement or the partners may not:
(1) unreasonably restrict a partner's right of access
to books and records under Section 152.212;
(2) eliminate the duty of loyalty under Section
152.205, except that the partners by agreement may identify
specific types of activities or categories of activities that do
not violate the duty of loyalty if the types or categories are not
manifestly unreasonable;
(3) eliminate the duty of care under Section 152.206,
except that the partners by agreement may determine the standards
by which the performance of the obligation is to be measured if the
standards are not manifestly unreasonable;
(4) eliminate the obligation of good faith under
Section 152.204(b), except that the partners by agreement may
determine the standards by which the performance of the obligation
is to be measured if the standards are not manifestly unreasonable;
(5) vary the power to withdraw as a partner under
Section 152.501(b)(1), (7), or (8), except for the requirement that
notice be in writing;
(6) vary the right to expel a partner by a court in an
event specified by Section 152.501(b)(5);
(7) restrict rights of a third party under this
chapter or the other partnership provisions, except for a
limitation on an individual partner's liability in a limited
liability partnership as provided by this chapter;
(8) select a governing law not permitted under
Sections 1.103 and 1.002(43)(C); or
(9) except as provided in Subsections (c) and (d),
waive or modify the following provisions of Title 1:
(A) Chapter 1, if the provision is used to
interpret a provision or to define a word or phrase contained in a
section listed in this subsection;
(B) Chapter 2, other than Sections 2.104(c)(2),
2.104(c)(3), and 2.113;
(C) Chapter 3, other than Subchapters C and E of
that chapter; or
(D) Chapters 4, 5, 10, 11, and 12, other than
Sections 11.057(a)(1), (2), (5), and (6) and 11.057(b).
(c) A provision listed in Subsection (b)(9) may be waived or
modified in a partnership agreement if the provision that is waived
or modified authorizes the partnership to waive or modify the
provision in the partnership's governing documents.
(d) A provision listed in Subsection (b)(9) may be waived or
modified in a partnership agreement if the provision that is
modified specifies:
(1) the person or group of persons entitled to approve
a modification; or
(2) the vote or other method by which a modification is
required to be approved.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.003. SUPPLEMENTAL PRINCIPLES OF LAW. The
principles of law and equity and the other partnership provisions
supplement this chapter unless otherwise provided by this chapter
or the other partnership provisions.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.004. RULE OF STATUTORY CONSTRUCTION NOT
APPLICABLE. The rule that a statute in derogation of the common
law is to be strictly construed does not apply to this chapter or
the other partnership provisions.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.005. APPLICABLE INTEREST RATE. If an obligation
to pay interest arises under this chapter and the rate is not
specified, the interest rate is the rate specified by Section
302.002, Finance Code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER B. NATURE AND CREATION OF PARTNERSHIP
§ 152.051. PARTNERSHIP DEFINED. (a) In this section,
"association" does not have the meaning of the term "association"
under Section 1.002.
(b) Except as provided by Subsection (c) and Section
152.053(a), an association of two or more persons to carry on a
business for profit as owners creates a partnership, regardless of
whether:
(1) the persons intend to create a partnership; or
(2) the association is called a "partnership," "joint
venture," or other name.
(c) An association or organization is not a partnership if
it was created under a statute other than:
(1) this title and the provisions of Title 1
applicable to partnerships and limited partnerships;
(2) a predecessor to a statute referred to in
Subdivision (1); or
(3) a comparable statute of another jurisdiction.
(d) The provisions of this chapter govern limited
partnerships only to the extent provided by Sections 153.003 and
153.152 and Subchapter H, Chapter 153.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.052. RULES FOR DETERMINING IF PARTNERSHIP IS
CREATED. (a) Factors indicating that persons have created a
partnership include the persons':
(1) receipt or right to receive a share of profits of
the business;
(2) expression of an intent to be partners in the
business;
(3) participation or right to participate in control
of the business;
(4) agreement to share or sharing:
(A) losses of the business; or
(B) liability for claims by third parties against
the business; and
(5) agreement to contribute or contributing money or
property to the business.
(b) One of the following circumstances, by itself, does not
indicate that a person is a partner in the business:
(1) the receipt or right to receive a share of profits
as payment:
(A) of a debt, including repayment by
installments;
(B) of wages or other compensation to an employee
or independent contractor;
(C) of rent;
(D) to a former partner, surviving spouse or
representative of a deceased or disabled partner, or transferee of
a partnership interest;
(E) of interest or other charge on a loan,
regardless of whether the amount varies with the profits of the
business, including a direct or indirect present or future
ownership interest in collateral or rights to income, proceeds, or
increase in value derived from collateral; or
(F) of consideration for the sale of a business
or other property, including payment by installments;
(2) co-ownership of property, regardless of whether
the co-ownership:
(A) is a joint tenancy, tenancy in common,
tenancy by the entirety, joint property, community property, or
part ownership; or
(B) is combined with sharing of profits from the
property;
(3) the right to share or sharing gross returns or
revenues, regardless of whether the persons sharing the gross
returns or revenues have a common or joint interest in the property
from which the returns or revenues are derived; or
(4) ownership of mineral property under a joint
operating agreement.
(c) An agreement by the owners of a business to share losses
is not necessary to create a partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.053. QUALIFICATIONS TO BE PARTNER; NONPARTNER'S
LIABILITY TO THIRD PERSON. (a) A person may be a partner unless
the person lacks capacity apart from this chapter.
(b) Except as provided by Section 152.307, a person who is
not a partner in a partnership under Section 152.051 is not a
partner as to a third person and is not liable to a third person
under this chapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.054. FALSE REPRESENTATION OF PARTNERSHIP OR
PARTNER. (a) A false representation or other conduct falsely
indicating that a person is a partner with another person does not
of itself create a partnership.
(b) A representation or other conduct indicating that a
person is a partner in an existing partnership, if that is not the
case, does not of itself make that person a partner in the
partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.055. AUTHORITY OF CERTAIN PROFESSIONALS TO CREATE
PARTNERSHIP. (a) Persons licensed as doctors of medicine and
persons licensed as doctors of osteopathy by the Texas State Board
of Medical Examiners and persons licensed as podiatrists by the
Texas State Board of Podiatric Medical Examiners may create a
partnership that is jointly owned by those practitioners to perform
a professional service that falls within the scope of practice of
those practitioners.
(b) When doctors of medicine, osteopathy, and podiatry
create a partnership that is jointly owned by those practitioners,
the authority of each of the practitioners is limited by the scope
of practice of the respective practitioners and none can exercise
control over the other's clinical authority granted by their
respective licenses, either through agreements, bylaws,
directives, financial incentives, or other arrangements that would
assert control over treatment decisions made by the practitioner.
(c) The Texas State Board of Medical Examiners and the Texas
State Board of Podiatric Medical Examiners continue to exercise
regulatory authority over their respective licenses.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.056. PARTNERSHIP AS ENTITY. A partnership is an
entity distinct from its partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER C. PARTNERSHIP PROPERTY
§ 152.101. NATURE OF PARTNERSHIP PROPERTY. Partnership
property is not property of the partners. A partner or a partner's
spouse does not have an interest in partnership property.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.102. CLASSIFICATION AS PARTNERSHIP
PROPERTY. (a) Property is partnership property if acquired in
the name of:
(1) the partnership; or
(2) one or more partners, regardless of whether the
name of the partnership is indicated, if the instrument
transferring title to the property indicates:
(A) the person's capacity as a partner; or
(B) the existence of a partnership.
(b) Property is presumed to be partnership property if
acquired with partnership property, regardless of whether the
property is acquired as provided by Subsection (a).
(c) Property acquired in the name of one or more partners is
presumed to be the partner's property, regardless of whether the
property is used for partnership purposes, if the instrument
transferring title to the property does not indicate the person's
capacity as a partner or the existence of a partnership, and if the
property is not acquired with partnership property.
(d) For purposes of this section, property is acquired in
the name of the partnership by a transfer to:
(1) the partnership in its name; or
(2) one or more partners in the partners' capacity as
partners in the partnership, if the name of the partnership is
indicated in the instrument transferring title to the property.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER D. RELATIONSHIP BETWEEN PARTNERS AND BETWEEN PARTNERS
AND PARTNERSHIPS
§ 152.201. ADMISSION AS PARTNER. A person may become a
partner only with the consent of all partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.202. CREDITS OF AND CHARGES TO PARTNER. (a) Each
partner is credited with an amount equal to:
(1) the cash and the value of property the partner
contributes to a partnership; and
(2) the partner's share of the partnership's profits.
(b) Each partner is charged with an amount equal to:
(1) the cash and the value of other property
distributed by the partnership to the partner; and
(2) the partner's share of the partnership's losses.
(c) Each partner is entitled to be credited with an equal
share of the partnership's profits and is chargeable with a share of
the partnership's capital or operating losses in proportion to the
partner's share of the profits.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.203. RIGHTS AND DUTIES OF PARTNER. (a) Each
partner has equal rights in the management and conduct of the
business of a partnership. A partner's right to participate in the
management and conduct of the business is not community property.
(b) A partner may use or possess partnership property only
on behalf of the partnership.
(c) A partner is not entitled to receive compensation for
services performed for a partnership other than reasonable
compensation for services rendered in winding up the business of
the partnership.
(d) A partner who, in the proper conduct of the business of
the partnership or for the preservation of its business or
property, reasonably makes a payment or advance beyond the amount
the partner agreed to contribute, or who reasonably incurs a
liability, is entitled to be repaid and to receive interest from the
date of the:
(1) payment or advance; or
(2) incurrence of the liability.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.204. GENERAL STANDARDS OF PARTNER'S
CONDUCT. (a) A partner owes to the partnership and the other
partners:
(1) a duty of loyalty; and
(2) a duty of care.
(b) A partner shall discharge the partner's duties to the
partnership and the other partners under this code or under the
partnership agreement and exercise any rights and powers in the
conduct or winding up of the partnership business:
(1) in good faith; and
(2) in a manner the partner reasonably believes to be
in the best interest of the partnership.
(c) A partner does not violate a duty or obligation under
this chapter or under the partnership agreement merely because the
partner's conduct furthers the partner's own interest.
(d) A partner, in the partner's capacity as partner, is not
a trustee and is not held to the standards of a trustee.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.205. PARTNER'S DUTY OF LOYALTY. A partner's duty
of loyalty includes:
(1) accounting to and holding for the partnership
property, profit, or benefit derived by the partner:
(A) in the conduct and winding up of the
partnership business; or
(B) from use by the partner of partnership
property;
(2) refraining from dealing with the partnership on
behalf of a person who has an interest adverse to the partnership;
and
(3) refraining from competing or dealing with the
partnership in a manner adverse to the partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.206. PARTNER'S DUTY OF CARE. (a) A partner's
duty of care to the partnership and the other partners is to act in
the conduct and winding up of the partnership business with the care
an ordinarily prudent person would exercise in similar
circumstances.
(b) An error in judgment does not by itself constitute a
breach of the duty of care.
(c) A partner is presumed to satisfy the duty of care if the
partner acts on an informed basis and in compliance with Section
152.204(b).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.207. STANDARDS OF CONDUCT APPLICABLE TO PERSON
WINDING UP PARTNERSHIP BUSINESS. Sections 152.204-152.206 apply
to a person winding up the partnership business as the personal or
legal representative of the last surviving partner to the same
extent that those sections apply to a partner.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.208. AMENDMENT TO PARTNERSHIP AGREEMENT. A
partnership agreement may be amended only with the consent of all
partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.209. DECISION-MAKING REQUIREMENT. (a) A
difference arising in a matter in the ordinary course of the
partnership business may be decided by a majority-in-interest of
the partners.
(b) An act outside the ordinary course of business of a
partnership may be undertaken only with the consent of all
partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.210. PARTNER'S LIABILITY TO PARTNERSHIP AND OTHER
PARTNERS. A partner is liable to a partnership and the other
partners for:
(1) a breach of the partnership agreement; or
(2) a violation of a duty to the partnership or other
partners under this chapter that causes harm to the partnership or
the other partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.211. REMEDIES OF PARTNERSHIP AND
PARTNERS. (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, including an
accounting of partnership business, to:
(1) enforce a right under the partnership agreement;
(2) enforce a right under this chapter, including:
(A) the partner's rights under Sections
152.201-152.209, 152.212, and 152.213;
(B) the partner's right on withdrawal to have the
partner's interest in the partnership redeemed under Subchapter H
or to enforce any other right under Subchapters G and H; and
(C) the partner's rights under Subchapter I;
(3) enforce the rights and otherwise protect the
interests of the partner, including rights and interests arising
independently of the partnership relationship; or
(4) enforce a right under Chapter 11.
(c) The accrual of and a time limitation on a right of action
for a remedy under this section is governed by other applicable law.
(d) A right to an accounting does not revive a claim barred
by law.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.212. BOOKS AND RECORDS OF PARTNERSHIP. (a) In
this section, "access" includes the opportunity to inspect and copy
books and records during ordinary business hours.
(b) A partnership shall keep its books and records, if any,
at its chief executive office.
(c) A partnership shall provide access to its books and
records to a partner or an agent or attorney of a partner.
(d) The partnership shall provide a former partner or an
agent or attorney of a former partner access to books and records
pertaining to the period during which the former partner was a
partner or for any other proper purpose with respect to another
period.
(e) A partnership may impose a reasonable charge, covering
the costs of labor and material, for copies of documents furnished
under this section.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.213. INFORMATION REGARDING PARTNERSHIP. (a) On
request and to the extent just and reasonable, each partner and the
partnership shall furnish complete and accurate information
concerning the partnership to:
(1) a partner;
(2) the legal representative of a deceased partner or
a partner who has a legal disability; or
(3) an assignee.
(b) A legal representative of a deceased partner or a
partner who has a legal disability and an assignee are subject to
the duties of a partner with respect to information made available.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.214. CERTAIN THIRD-PARTY OBLIGATIONS NOT
AFFECTED. Sections 152. 203, 152.208, and 152.209 do not limit a
partnership's obligations to another person under Sections 152.301
and 152.302.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER E. RELATIONSHIP BETWEEN PARTNERS AND OTHER PERSONS
§ 152.301. PARTNER AS AGENT. Each partner is an agent
of the partnership for the purpose of its business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.302. BINDING EFFECT OF PARTNER'S
ACTION. (a) Unless a partner does not have authority to act for
the partnership in a particular matter and the person with whom the
partner is dealing knows that the partner lacks authority, an act of
a partner, including the execution of an instrument in the
partnership name, binds the partnership if the act is apparently
for carrying on in the ordinary course:
(1) the partnership business; or
(2) business of the kind carried on by the
partnership.
(b) An act of a partner that is not apparently for carrying
on in the ordinary course a business described by Subsection (a)
binds the partnership only if authorized by the other partners.
(c) A conveyance of real property by a partner on behalf of
the partnership not otherwise binding on the partnership binds the
partnership if the property has been conveyed by the grantee or a
person claiming through the grantee to be a holder for value without
knowledge that the partner exceeded that partner's authority in
making the conveyance.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.303. LIABILITY OF PARTNERSHIP FOR CONDUCT OF
PARTNER. (a) A partnership is liable for loss or injury to a
person, including a partner, or for a penalty caused by or incurred
as a result of a wrongful act or omission or other actionable
conduct of a partner acting:
(1) in the ordinary course of business of the
partnership; or
(2) with the authority of the partnership.
(b) A partnership is liable for the loss of money or
property of a person who is not a partner that is:
(1) received in the course of the partnership's
business; and
(2) misapplied by a partner while in the custody of the
partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.304. NATURE OF PARTNER'S LIABILITY. (a) Except
as provided by Subsection (b) or Section 152.801(b), all partners
are liable jointly and severally for a debt or obligation of the
partnership unless otherwise:
(1) agreed by the claimant; or
(2) provided by law.
(b) A person who is admitted as a partner into an existing
partnership does not have personal liability under Subsection (a)
for an obligation of the partnership that:
(1) arises before the partner's admission to the
partnership;
(2) relates to an action taken or omission occurring
before the partner's admission to the partnership; or
(3) arises before or after the partner's admission to
the partnership under a contract or commitment entered into before
the partner's admission.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.305. REMEDY. An action may be brought against a
partnership and any or all of the partners in the same action or in
separate actions.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.306. ENFORCEMENT OF REMEDY. (a) A judgment
against a partnership is not by itself a judgment against a partner.
A judgment may be entered against a partner who has been served with
process in a suit against the partnership.
(b) Except as provided by Subsection (c), a creditor may
proceed against one or more partners or the property of the partners
to satisfy a judgment based on a claim against the partnership only
if a judgment:
(1) is also obtained against the partner; and
(2) based on the same claim:
(A) is obtained against the partnership;
(B) has not been reversed or vacated; and
(C) remains unsatisfied for 90 days after:
(i) the date on which the judgment is
entered; or
(ii) the date on which the stay expires, if
the judgment is contested by appropriate proceedings and execution
on the judgment is stayed.
(c) Subsection (b) does not prohibit a creditor from
proceeding directly against one or more partners or the property of
the partners without first seeking satisfaction from partnership
property if:
(1) the partnership is a debtor in bankruptcy;
(2) the creditor and the partnership agreed that the
creditor is not required to comply with Subsection (b);
(3) a court orders otherwise, based on a finding that
partnership property subject to execution in the state is clearly
insufficient to satisfy the judgment or that compliance with
Subsection (b) is excessively burdensome; or
(4) liability is imposed on the partner by law
independently of the person's status as a partner.
(d) This section does not limit the effect of Section
152.801 with respect to a limited liability partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.307. EXTENSION OF CREDIT IN RELIANCE ON FALSE
REPRESENTATION. (a) The rights of a person extending credit in
reliance on a representation described by Section 152.054 are
determined by applicable law other than this chapter and the other
partnership provisions, including the law of estoppel, agency,
negligence, fraud, and unjust enrichment.
(b) The rights and duties of a person held liable under
Subsection (a) are also determined by law other than the law
described by Subsection (a).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER F. TRANSFER OF PARTNERSHIP INTERESTS
§ 152.401. TRANSFER OF PARTNERSHIP INTEREST. A partner
may transfer all or part of the partner's partnership interest.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.402. GENERAL EFFECT OF TRANSFER. A transfer of
all or part of a partner's partnership interest:
(1) is not an event of withdrawal;
(2) does not by itself cause a winding up of the
partnership business; and
(3) against the other partners or the partnership,
does not entitle the transferee, during the continuance of the
partnership, to participate in the management or conduct of the
partnership business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.403. EFFECT OF TRANSFER ON TRANSFEROR. After
transfer, the transferor continues to have the rights and duties of
a partner other than the interest transferred.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.404. RIGHTS AND DUTIES OF TRANSFEREE. (a) A
transferee of a partner's partnership interest is entitled to
receive, to the extent transferred, distributions to which the
transferor otherwise would be entitled.
(b) If an event requires a winding up of partnership
business under Subchapter I, a transferee is entitled to receive,
to the extent transferred, the net amount otherwise distributable
to the transferor.
(c) Until a transferee becomes a partner, the transferee
does not have liability as a partner solely as a result of the
transfer.
(d) For a proper purpose the transferee may require
reasonable information or an account of a partnership transaction
and make reasonable inspection of the partnership books. In a
winding up of partnership business, a transferee may require an
accounting only from the date of the latest account agreed to by all
of the partners.
(e) Until receipt of notice of a transfer, a partnership is
not required to give effect to a transferee's rights under this
section and Sections 152.401-152.403.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.405. POWER TO EFFECT TRANSFER OR GRANT OF SECURITY
INTEREST. A partnership is not required to give effect to a
transfer prohibited by a partnership agreement.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.406. EFFECT OF DEATH OR DIVORCE ON PARTNERSHIP
INTEREST. (a) For purposes of this code:
(1) on the divorce of a partner, the partner's spouse,
to the extent of the spouse's partnership interest, is a transferee
of the partnership interest from the partner;
(2) on the death of a partner, the partner's surviving
spouse, if any, and an heir, legatee, or personal representative of
the partner, to the extent of their respective partnership
interest, is a transferee of the partnership interest from the
partner; and
(3) on the death of a partner's spouse, an heir,
legatee, or personal representative of the spouse, to the extent of
their respective partnership interest, is a transferee of the
partnership interest from the partner.
(b) An event of the type described by Section 152.501
occurring with respect to a partner's spouse is not an event of
withdrawal.
(c) This chapter does not impair an agreement for the
purchase or sale of a partnership interest at any time, including
the death of an owner of the partnership interest.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER G. WITHDRAWAL OF PARTNER
§ 152.501. EVENTS OF WITHDRAWAL. (a) A person ceases
to be a partner on the occurrence of an event of withdrawal.
(b) An event of withdrawal of a partner occurs on:
(1) receipt by the partnership of notice of the
partner's express will to withdraw as a partner on:
(A) the date on which the notice is received; or
(B) a later date specified by the notice;
(2) an event specified in the partnership agreement as
causing the partner's withdrawal;
(3) the partner's expulsion as provided by the
partnership agreement;
(4) the partner's expulsion by vote of a
majority-in-interest of the other partners if:
(A) it is unlawful to carry on the partnership
business with that partner;
(B) there has been a transfer of all or
substantially all of that partner's partnership interest, other
than:
(i) a transfer for security purposes that
has not been foreclosed; or
(ii) the substitution of a successor
trustee or successor personal representative;
(C) not later than the 90th day after the date on
which the partnership notifies an entity partner, other than a
nonfiling entity or foreign nonfiling entity partner, that it will
be expelled because it has filed a certificate of termination or the
equivalent, its existence has been involuntarily terminated or its
charter has been revoked, or its right to conduct business has been
terminated or suspended by the jurisdiction of its formation, if
the certificate of termination or the equivalent is not revoked or
its existence, charter, or right to conduct business is not
reinstated; or
(D) an event requiring a winding up has occurred
with respect to a nonfiling entity or foreign nonfiling entity that
is a partner;
(5) application by the partnership or another partner
for the partner's expulsion by judicial decree because the partner:
(A) engaged in wrongful conduct that adversely
and materially affected the partnership business;
(B) wilfully or persistently committed a
material breach of:
(i) the partnership agreement; or
(ii) a duty owed to the partnership or the
other partners under Sections 152.204-152.206; or
(C) engaged in conduct relating to the
partnership business that made it not reasonably practicable to
carry on the business in partnership with that partner;
(6) the partner's:
(A) becoming a debtor in bankruptcy;
(B) executing an assignment for the benefit of a
creditor;
(C) seeking, consenting to, or acquiescing in the
appointment of a trustee, receiver, or liquidator of that partner
or of all or substantially all of that partner's property; or
(D) failing, not later than the 90th day after
the appointment, to have vacated or stayed the appointment of a
trustee, receiver, or liquidator of the partner or of all or
substantially all of the partner's property obtained without the
partner's consent or acquiescence, or not later than the 90th day
after the date of expiration of a stay, failing to have the
appointment vacated;
(7) if a partner is an individual:
(A) the partner's death;
(B) the appointment of a guardian or general
conservator for the partner; or
(C) a judicial determination that the partner has
otherwise become incapable of performing the partner's duties under
the partnership agreement;
(8) termination of a partner's existence;
(9) if a partner has transferred all of the partner's
partnership interest, redemption of the transferee's interest
under Section 152.611;
(10) an agreement to continue the partnership under
Section 11.057(b) if the partnership has received a notice from the
partner under Section 11.057(a)(6) requesting that the partnership
be wound up; or
(11) a conversion of the partnership if the partner:
(A) did not consent to the conversion; and
(B) failed to notify the partnership in writing
of the partner's desire not to withdraw within 60 days after the
later of:
(i) the effective date of the conversion;
or
(ii) the date the partner receives actual
notice of the conversion.
(c) A withdrawal of a partner under the circumstances
described in Subsection (b)(11) is effective immediately before the
effective date of the conversion and is not considered a wrongful
withdrawal under Section 152.503.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.502. EFFECT OF EVENT OF WITHDRAWAL ON PARTNERSHIP
AND OTHER PARTNERS. A partnership continues after an event of
withdrawal. The event of withdrawal affects the relationships
among the withdrawn partner, the partnership, and the continuing
partners as provided by Sections 152.503-152.506 and Subchapter H.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.503. WRONGFUL WITHDRAWAL; LIABILITY. (a) At
any time before the occurrence of an event requiring a winding up of
partnership business, a partner may withdraw from the partnership
and cease to be a partner as provided by Section 152.501.
(b) A partner's withdrawal is wrongful only if:
(1) the withdrawal breaches an express provision of
the partnership agreement;
(2) in the case of a partnership for a definite term or
particular undertaking or for which the partnership agreement
provides for winding up on a specified event, before the expiration
of the term, the completion of the undertaking, or the occurrence of
the event, as appropriate:
(A) the partner withdraws by express will;
(B) the partner withdraws by becoming a debtor in
bankruptcy; or
(C) in the case of a partner that is not an
individual, a trust other than a business trust, or an estate, the
partner is expelled or otherwise withdraws because the partner
wilfully dissolved or terminated; or
(3) the partner is expelled by judicial decree under
Section 152.501(b)(5).
(c) In addition to other liability of the partner to the
partnership or to the other partners, a wrongfully withdrawing
partner is liable to the partnership and to the other partners for
damages caused by the withdrawal.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.504. WITHDRAWN PARTNER'S POWER TO BIND
PARTNERSHIP. (a) The action of a withdrawn partner occurring not
later than the first anniversary of the date of the person's
withdrawal binds the partnership if the transaction would bind the
partnership before the person's withdrawal and the other party to
the transaction:
(1) does not have notice of the person's withdrawal as
a partner;
(2) had done business with the partnership within one
year preceding the date of withdrawal; and
(3) reasonably believed that the withdrawn partner was
a partner at the time of the transaction.
(b) A withdrawn partner is liable to the partnership for
loss caused to the partnership arising from an obligation incurred
by the withdrawn partner after the withdrawal date and for which the
partnership is liable under Subsection (a).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.505. EFFECT OF WITHDRAWAL ON PARTNER'S EXISTING
LIABILITY. (a) Withdrawal of a partner does not by itself
discharge the partner's liability for an obligation of the
partnership incurred before the date of withdrawal.
(b) The estate of a deceased partner is liable for an
obligation of the partnership incurred while the deceased was a
partner to the same extent that a withdrawn partner is liable for an
obligation of the partnership incurred before the date of
withdrawal.
(c) A withdrawn partner is discharged from liability
incurred before the date of withdrawal by an agreement to that
effect between the partner and a partnership creditor.
(d) If a creditor of a partnership has notice of a partner's
withdrawal and without the consent of the withdrawn partner agrees
to a material alteration in the nature or time of payment of an
obligation of the partnership incurred before the date of
withdrawal, the withdrawn partner is discharged from the
obligation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.506. LIABILITY OF WITHDRAWN PARTNER TO THIRD
PARTY. A person who withdraws as a partner in a circumstance that
is not an event requiring a winding up of partnership business under
Section 11.051 or 11.057 is liable to another party as a partner in
a transaction entered into by the partnership or a surviving
partnership under Section 10.001 not later than the second
anniversary of the date of the partner's withdrawal only if the
other party to the transaction:
(1) does not have notice of the partner's withdrawal;
and
(2) reasonably believed that the withdrawn partner was
a partner at the time of the transaction.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER H. REDEMPTION OF WITHDRAWING PARTNER'S OR TRANSFEREE'S
INTEREST
§ 152.601. REDEMPTION IF PARTNERSHIP NOT WOUND UP. The
partnership interest of a withdrawn partner automatically is
redeemed by the partnership as of the date of withdrawal in
accordance with this subchapter if:
(1) the event of withdrawal occurs under Sections
152.501(b)(1)-(9) and an event requiring a winding up of
partnership business does not occur before the 61st day after the
date of the withdrawal; or
(2) the event of a withdrawal occurs under Section
152.501(b)(10).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.602. REDEMPTION PRICE. (a) Except as provided
by Subsection (b) , the redemption price of a withdrawn partner's
partnership interest is the fair value of the interest on the date
of withdrawal.
(b) The redemption price of the partnership interest of a
partner who wrongfully withdraws before the expiration of a
definite term, the completion of a particular undertaking, or the
occurrence of a specified event requiring a winding up of
partnership business is the lesser of:
(1) the fair value of the withdrawn partner's
partnership interest on the date of withdrawal; or
(2) the amount that the withdrawn partner would have
received if an event requiring a winding up of partnership business
had occurred at the time of the partner's withdrawal.
(c) Interest is payable on the amount owed under this
section.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.603. CONTRIBUTION OBLIGATION. If a wrongfully
withdrawing partner would have been required to make contributions
to the partnership under Section 152.707 or 152.708 if an event
requiring winding up of the partnership business had occurred at
the time of withdrawal, the withdrawn partner is liable to the
partnership to make contributions to the partnership in that amount
and pay interest on the amount owed.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.604. SETOFF FOR CERTAIN DAMAGES. The partnership
may set off against the redemption price payable to the withdrawn
partner the damages for wrongful withdrawal under Section
152.503(b) and all other amounts owed by the withdrawn partner to
the partnership, whether currently due, including interest.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.605. ACCRUAL OF INTEREST. Interest payable under
Sections 152.602-152.604 accrues from the date of the withdrawal to
the date of payment.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.606. INDEMNIFICATION FOR CERTAIN
LIABILITY. (a) A partnership shall indemnify a withdrawn partner
against a partnership liability incurred before the date of
withdrawal, except for a liability:
(1) that is unknown to the partnership at the time; or
(2) incurred by an act of the withdrawn partner under
Section 152.504.
(b) For purposes of this section, a liability is unknown to
the partnership if it is not known to a partner other than the
withdrawn partner.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.607. DEMAND OR PAYMENT OF ESTIMATED
REDEMPTION. (a) If a deferred payment is not authorized under
Section 152.608 and an agreement on the redemption price of a
withdrawn partner's interest is not reached before the 121st day
after the date a written demand for payment is made by either party,
not later than the 30th day after the expiration of the period, the
partnership shall:
(1) pay to the withdrawn partner in cash the amount the
partnership estimates to be the redemption price and any accrued
interest, reduced by any setoffs and accrued interest under Section
152.604; or
(2) make written demand for payment of its estimate of
the amount owed by the withdrawn partner to the partnership, minus
any amount owed to the withdrawn partner by the partnership.
(b) If a deferred payment is authorized under Section
152.608 or a contribution or other amount is owed by the withdrawn
partner to the partnership, the partnership may offer in writing to
pay, or deliver a written statement of demand for, the amount it
estimates to be the net amount owed, stating the amount and other
terms of the obligation.
(c) On request of the other party, the payment, tender,
offer, or demand required or allowed by Subsection (a) or (b) must
be accompanied or followed promptly by:
(1) if payment, tender, offer, or demand is made or
delivered by the partnership, a statement of partnership property
and liabilities from the date of the partner's withdrawal and the
most recent available partnership balance sheet and income
statement, if any; and
(2) an explanation of the computation of the estimated
payment obligation.
(d) The terms of a payment, tender, offer, or demand under
Subsection (a) or (b) govern a redemption if:
(1) accompanied by written notice that:
(A) the payment or tendered amount, if made,
fully satisfies a party's obligations relating to the redemption of
the withdrawn partner's partnership interest; and
(B) an action to determine the redemption price,
a contribution obligation or setoff under Section 152.603 or
152.604, or other terms of the redemption obligation must be
commenced not later than the first anniversary of the later of:
(i) the date on which the written notice is
given; or
(ii) the date on which the information
required by Subsection (c) is delivered; and
(2) the party receiving the payment, tender, offer, or
demand does not commence an action in the period described by
Subdivision (1)(B).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.608. DEFERRED PAYMENT ON WRONGFUL
WITHDRAWAL. (a) A partner who wrongfully withdraws before the
expiration of a definite term, the completion of a particular
undertaking, or the occurrence of a specified event requiring a
winding up of partnership business is not entitled to receive any
portion of the redemption price until the expiration of the term,
the completion of the undertaking, or the occurrence of the
specified event, as appropriate, unless the partner establishes to
the satisfaction of a court that earlier payment will not cause
undue hardship to the partnership.
(b) A deferred payment accrues interest.
(c) The withdrawn partner may seek to demonstrate to the
satisfaction of the court that security for a deferred payment is
appropriate.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.609. ACTION TO DETERMINE TERMS OF
REDEMPTION. (a) A withdrawn partner or the partnership may
maintain an action against the other party under Section 152.211 to
determine:
(1) the terms of redemption of that partner's
interest, including a contribution obligation or setoff under
Section 152.603 or 152.604; or
(2) other terms of the redemption obligations of
either party.
(b) The action must be commenced not later than the first
anniversary of the later of:
(1) the date of delivery of information required by
Section 152.607(c); or
(2) the date written notice is given under Section
152.607(d).
(c) The court shall determine the terms of the redemption of
the withdrawn partner's interest, any contribution obligation or
setoff due under Section 152.603 or 152.604, and accrued interest
and shall enter judgment for an additional payment or refund.
(d) If deferred payment is authorized under Section
152.608, the court shall also determine the security for payment if
requested to consider whether security is appropriate.
(e) If the court finds that a party failed to tender payment
or make an offer to pay or to comply with the requirements of
Section 152.607(c) or otherwise acted arbitrarily, vexatiously, or
not in good faith, the court may assess damages against the party,
including, if appropriate, in an amount the court finds equitable:
(1) a share of the profits of the continuing business;
(2) reasonable attorney's fees; and
(3) fees and expenses of appraisers or other experts
for a party to the action.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.610. DEFERRED PAYMENT ON WINDING UP
PARTNERSHIP. If a partner withdraws under Section 152.501 and not
later than the 60th day after the date of withdrawal an event
requiring winding up occurs under Section 11.051 or 11.057:
(1) the partnership may defer paying the redemption
price to the withdrawn partner until the partnership makes a
winding up distribution to the remaining partners; and
(2) the redemption price or contribution obligation is
the amount the withdrawn partner would have received or contributed
if the event requiring winding up had occurred at the time of the
partner's withdrawal.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.611. REDEMPTION OF TRANSFEREE'S PARTNERSHIP
INTEREST. (a) A partnership must redeem the partnership interest
of a transferee for its fair value if:
(1) the interest was transferred when:
(A) the partnership was for a definite term not
yet expired;
(B) the partnership was for a particular
undertaking not yet completed; or
(C) the partnership agreement provided for
winding up of the partnership business on a specified event that had
not yet occurred;
(2) the definite term of the partnership has expired,
the particular undertaking has been completed, or the specified
event has occurred; and
(3) the transferee makes a written demand for
redemption.
(b) If an agreement for the redemption price of a
transferee's interest is not reached before the 121st day after the
date a written demand for redemption is made, the partnership must
pay to the transferee in cash the amount the partnership estimates
to be the redemption price and any accrued interest from the date of
demand not later than the 30th day after the expiration of the
period.
(c) On request of the transferee, the payment required by
Subsection (b) must be accompanied or followed by:
(1) a statement of partnership property and
liabilities from the date of the demand for redemption;
(2) the most recent available partnership balance
sheet and income statement, if any; and
(3) an explanation of the computation of the estimated
payment obligation.
(d) If the payment required by Subsection (b) is accompanied
by written notice that the payment is in full satisfaction of the
partnership's obligations relating to the redemption of the
transferee's interest, the payment, less interest, is the
redemption price unless the transferee, not later than the first
anniversary of the written notice, commences an action to determine
the redemption price.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.612. ACTION TO DETERMINE TRANSFEREE'S REDEMPTION
PRICE. (a) A transferee may maintain an action against a
partnership to determine the redemption price of the transferee's
interest.
(b) The court shall determine the redemption price of the
transferee's interest and accrued interest and enter judgment for
payment or refund.
(c) If the court finds that the partnership failed to make
payment or otherwise acted arbitrarily, vexatiously, or not in good
faith, the court may assess against the partnership in an amount the
court finds equitable:
(1) reasonable attorney's fees; and
(2) fees and expenses of appraisers or other experts
for a party to the action.
(d) The redemption of a transferee's interest under
Sections 152.611(a) and (b) may be deferred as determined by the
court if the partnership establishes to the satisfaction of the
court that failure to defer redemption will cause undue hardship to
the partnership business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER I. SUPPLEMENTAL WINDING UP AND TERMINATION PROVISIONS
§ 152.701. EFFECT OF EVENT REQUIRING WINDING UP. On the
occurrence of an event requiring winding up of a partnership
business under Section 11.051 or 11.057:
(1) the partnership continues until the winding up of
its business is completed, at which time the partnership is
terminated; and
(2) the relationship among the partners is changed as
provided by this subchapter.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.702. PERSONS ELIGIBLE TO WIND UP PARTNERSHIP
BUSINESS. (a) After the occurrence of an event requiring a
winding up of a partnership business, the partnership business may
be wound up by:
(1) the partners who have not withdrawn;
(2) the legal representative of the last surviving
partner; or
(3) a person appointed by the court to carry out the
winding up under Subsection (b).
(b) On application of a partner, a partner's legal
representative or transferee, or a withdrawn partner whose interest
is not redeemed under Section 152.608, a court, for good cause, may
appoint a person to carry out the winding up and may make an order,
direction, or inquiry that the circumstances require.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.703. RIGHTS AND DUTIES OF PERSON WINDING UP
PARTNERSHIP BUSINESS. (a) To the extent appropriate for winding
up, as soon as reasonably practicable, and in the name of and for
and on behalf of the partnership, a person winding up a
partnership's business may take the actions specified in Sections
11.052, 11.053, and 11.055.
(b) Section 11.052(a)(2) shall not be applicable to a
partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.704. BINDING EFFECT OF PARTNER'S ACTION AFTER
EVENT REQUIRING WINDING UP. After the occurrence of an event
requiring winding up of the partnership business, a partnership is
bound by a partner's act that:
(1) is appropriate for winding up; or
(2) would bind the partnership under Sections 152.301
and 152.302 before the occurrence of the event requiring winding
up, if the other party to the transaction does not have notice that
an event requiring winding up has occurred.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.705. PARTNER'S LIABILITY TO OTHER PARTNERS AFTER
EVENT REQUIRING WINDING UP. (a) Except as provided by Subsection
(b), after the occurrence of an event requiring winding up of the
partnership business, the losses with respect to which a partner
must contribute under Section 152.708(a) include losses from a
liability incurred under Section 152.704.
(b) A partner who incurs, with notice that an event
requiring a winding up of the partnership business has occurred, a
partnership liability under Section 152.704(2) by an act that is
not appropriate for winding up is liable to the partnership for a
loss caused to the partnership arising from that liability.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.706. DISPOSITION OF ASSETS. (a) In winding up
the partnership business, the property of the partnership,
including any required contributions of the partners under Sections
152.707 and 152.708, shall be applied to discharge its obligations
to creditors, including partners who are creditors other than in
the partners' capacities as partners.
(b) A surplus shall be applied to pay in cash the net amount
distributable to partners in accordance with their right to
distributions under Section 152.707.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.707. SETTLEMENT OF ACCOUNTS. (a) Each partner
is entitled to a settlement of all partnership accounts on winding
up the partnership business.
(b) In settling accounts among the partners, the
partnership interest of a withdrawn partner that is not redeemed
under Subchapter H is credited with a share of any profits for the
period after the partner's withdrawal but is charged with a share of
losses for that period only to the extent of profits credited for
that period.
(c) The profits and losses that result from the liquidation
of the partnership property must be credited and charged to the
partners' capital accounts.
(d) The partnership shall make a distribution to a partner
in an amount equal to that partner's positive balance in the
partner's capital account. Except as provided by Section
152.304(b) or 152.801, a partner shall contribute to the
partnership an amount equal to that partner's negative balance in
the partner's capital account.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.708. CONTRIBUTIONS TO DISCHARGE
OBLIGATIONS. (a) Except as provided by Sections 152.304(b) and
152.801, to the extent not taken into account in settling the
accounts among partners under Section 152.707:
(1) each partner shall contribute, in the proportion
in which the partner shares partnership losses, the amount
necessary to satisfy partnership obligations, excluding
liabilities that creditors have agreed may be satisfied only with
partnership property without recourse to individual partners;
(2) if a partner fails to contribute, the other
partners shall contribute the additional amount necessary to
satisfy the partnership obligations in the proportions in which the
partners share partnership losses; and
(3) a partner or partner's legal representative may
enforce or recover from the other partners, or from the estate of a
deceased partner, contributions the partner or estate makes to the
extent the amount contributed exceeds that partner's or the
estate's share of the partnership obligations.
(b) The estate of a deceased partner is liable for the
partner's obligation to contribute to the partnership.
(c) The following persons may enforce the obligation of a
partner or the estate of a deceased partner to contribute to a
partnership:
(1) the partnership;
(2) an assignee for the benefit of creditors of a
partnership or a partner; or
(3) a person appointed by a court to represent
creditors of a partnership or a partner.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.709. CONTINUATION OF PARTNERSHIP. (a) If all
the partners in a partnership for a definite term or for a
particular undertaking or for which the partnership agreement
provides for winding up on a specified event agree to continue the
partnership business notwithstanding the expiration of the term,
the completion of the undertaking, or the occurrence of the event,
as appropriate, other than the withdrawal of a partner, the
partnership is continued and the partnership agreement is
considered amended to provide that the expiration, the completion,
or the occurrence of the event did not result in an event requiring
the winding up of the partnership business.
(b) A continuation of the business for 90 days by the
partners or those who habitually acted in the business during the
term or undertaking or preceding the event, without a settlement or
liquidation of the partnership business and without objection from
a partner, is prima facie evidence of agreement by all partners to
continue the business under Subsection (a).
(c) The continuation of the business by the other partners
or by those who habitually acted in the business before the notice
under Section 11.057(b), other than the partner giving the notice,
without any settlement or liquidation of the partnership business,
is prima facie evidence of an agreement to continue the partnership
under Section 11.057(b).
(d) To approve a revocation under Section 11.151 by a
partnership of a voluntary decision to wind up pursuant to the
express will of all the partners as specified in Section
11.057(a)(2) or (3), prior to completion of the winding up process,
all the partners must agree in writing to revoke the voluntary
decision to wind up and to continue the business of the partnership.
(e) To approve a revocation under Section 11.151 by a
partnership of a voluntary decision to wind up pursuant to the
express will of a majority-in-interest of the partners as specified
in Section 11.057(a)(1), prior to completion of the winding up
process, a majority-in-interest of the partners must agree in
writing to revoke the voluntary decision to wind up and to continue
the business of the partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.710. REINSTATEMENT. To approve a reinstatement
of a partnership under Section 11.202, all remaining partners, or
another group or percentage of partners as specified by the
partnership agreement, must agree in writing to reinstate and
continue the business of the partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER J. LIMITED LIABILITY PARTNERSHIPS
§ 152.801. LIABILITY OF PARTNER. (a) Except as
provided by Subsection (b), a partner in a limited liability
partnership is not personally liable, directly or indirectly, by
contribution, indemnity, or otherwise, for a debt or obligation of
the partnership incurred while the partnership is a limited
liability partnership.
(b) A partner in a limited liability partnership is not
personally liable for a debt or obligation of the partnership
arising from an error, omission, negligence, incompetence, or
malfeasance committed by another partner or representative of the
partnership while the partnership is a limited liability
partnership and in the course of the partnership business unless
the first partner:
(1) was supervising or directing the other partner or
representative when the error, omission, negligence, incompetence,
or malfeasance was committed by the other partner or
representative;
(2) was directly involved in the specific activity in
which the error, omission, negligence, incompetence, or
malfeasance was committed by the other partner or representative;
or
(3) had notice or knowledge of the error, omission,
negligence, incompetence, or malfeasance by the other partner or
representative at the time of the occurrence and then failed to take
reasonable action to prevent or cure the error, omission,
negligence, incompetence, or malfeasance.
(c) Sections 2.101(1), 152.305, and 152.306 do not limit the
effect of Subsection (a) in a limited liability partnership.
(d) In this section, "representative" includes an agent,
servant, or employee of a limited liability partnership.
(e) Subsections (a) and (b) do not affect:
(1) the liability of a partnership to pay its debts and
obligations from partnership property;
(2) the liability of a partner, if any, imposed by law
or contract independently of the partner's status as a partner; or
(3) the manner in which service of citation or other
civil process may be served in an action against a partnership.
(f) This section controls over the other parts of this
chapter and the other partnership provisions regarding the
liability of partners of a limited liability partnership, the
chargeability of the partners for the debts and obligations of the
partnership, and the obligations of the partners regarding
contributions and indemnity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.802. REGISTRATION. (a) In addition to complying
with Sections 152.803 and 152.804, a partnership, to become a
limited liability partnership, must file an application with the
secretary of state in accordance with Chapter 4 and this section.
The application must:
(1) set out:
(A) the name of the partnership;
(B) the federal tax identification number of the
partnership;
(C) the street address of the partnership's
principal office in this state or outside of this state, as
applicable; and
(D) the number of partners at the date of
application; and
(2) contain a brief statement of the partnership's
business.
(b) The application must be signed by:
(1) a majority-in-interest of the partners; or
(2) one or more partners authorized by a
majority-in-interest of the partners.
(c) A partnership is registered as a limited liability
partnership by the secretary of state on:
(1) the date on which a completed initial or renewal
application is filed in accordance with Chapter 4; or
(2) a later date specified in the application.
(d) A registration is not affected by subsequent changes in
the partners of the partnership.
(e) The registration of a limited liability partnership is
effective until the first anniversary of the date of registration
or a later effective date, unless the application is:
(1) withdrawn or revoked at an earlier time; or
(2) renewed in accordance with Subsection (g).
(f) A registration may be withdrawn by filing a withdrawal
notice with the secretary of state in accordance with Chapter 4. A
withdrawal notice terminates the status of the partnership as a
limited liability partnership from the date on which the notice is
filed or a later date specified in the notice, but not later than
the expiration date under Subsection (e). A withdrawal notice
must:
(1) contain:
(A) the name of the partnership;
(B) the federal tax identification number of the
partnership;
(C) the date of registration of the partnership's
last application under this subchapter; and
(D) the current street address of the
partnership's principal office in this state and outside this
state, if applicable; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
(g) An effective registration may be renewed before its
expiration by filing an application with the secretary of state in
accordance with Chapter 4. A renewal application filed under this
subsection continues an effective registration for one year after
the date the registration would otherwise expire. The renewal
application must contain:
(1) current information required for an initial
application; and
(2) the most recent date of registration of the
partnership.
(h) The secretary of state may remove from its active
records the registration of a partnership the registration of which
has:
(1) been withdrawn or revoked; or
(2) expired and not been renewed.
(i) The secretary of state is not responsible for
determining whether a partnership is in compliance with the
requirements of Section 152.804(a).
(j) A document filed under this subchapter may be amended by
filing an application for amendment of registration with the
secretary of state in accordance with Chapter 4 and this
subsection. The application for amendment must:
(1) contain:
(A) the name of the partnership;
(B) the tax identification number of the
partnership;
(C) the identity of the document being amended;
(D) the date on which the document being amended
was filed;
(E) a reference to the part of the document being
amended; and
(F) the amendment or correction; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.803. NAME. The name of a limited liability
partnership must comply with Section 5.063.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.804. INSURANCE OR FINANCIAL
RESPONSIBILITY. (a) A limited liability partnership must:
(1) carry at least $100,000 of liability insurance of
a kind that is designed to cover the kind of error, omission,
negligence, incompetence, or malfeasance for which liability is
limited by Section 152.801(b); or
(2) provide $100,000 specifically designated and
segregated for the satisfaction of judgments against the
partnership for the kind of error, omission, negligence,
incompetence, or malfeasance for which liability is limited by
Section 152.801(b) by:
(A) deposit of cash, bank certificates of
deposit, or United States Treasury obligations in trust or bank
escrow;
(B) a bank letter of credit; or
(C) insurance company bond.
(b) If the limited liability partnership is in compliance
with Subsection (a), the requirements of this section may not be
admissible or be made known to the jury in determining an issue of
liability for or extent of:
(1) the debt or obligation in question; or
(2) damages in question.
(c) If compliance with Subsection (a) is disputed:
(1) compliance must be determined separately from the
trial or proceeding to determine:
(A) the partnership debt or obligation in
question;
(B) the amount of the debt or obligation; or
(C) partner liability for the debt or obligation;
and
(2) the burden of proof of compliance is on the person
claiming limitation of liability under Section 152.801(b).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.805. LIMITED PARTNERSHIP. A limited partnership
may become a limited liability partnership by complying with
applicable provisions of Chapter 153.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER K. FOREIGN LIMITED LIABILITY PARTNERSHIPS
§ 152.901. GENERAL. (a) A foreign limited liability
partnership is subject to Section 2.101 with respect to its
activities in this state to the same extent as a domestic limited
liability partnership.
(b) A foreign limited liability partnership may not be
denied registration because of a difference between the laws of the
state under which the partnership is formed and the laws of this
state.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.902. NAME. The name of a foreign limited
liability partnership must:
(1) satisfy the requirements of the state of
formation; and
(2) comply with Section 5.063.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.903. ACTIVITIES NOT CONSTITUTING TRANSACTING
BUSINESS. Without excluding other activities that do not
constitute transacting business in this state, a foreign limited
liability partnership is not considered to be transacting business
in this state for purposes of this code because it carries on in
this state one or more of the activities listed by Section 9.251.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.904. REGISTERED AGENT. A foreign limited
liability partnership subject to this chapter shall maintain a
registered office and registered agent in this state in accordance
with Chapter 5.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.905. STATEMENT OF FOREIGN
QUALIFICATION. (a) Before transacting business in this state, a
foreign limited liability partnership must file an application for
registration in accordance with this section and Chapters 4 and 9.
(b) The application must be signed by:
(1) a majority-in-interest of the partners; or
(2) one or more partners authorized by a
majority-in-interest of the partners.
(c) A partnership is registered as a foreign limited
liability partnership on:
(1) the date on which a completed initial or renewal
statement of foreign qualification is filed with the secretary of
state in accordance with Chapter 4; or
(2) a later date specified in the statement.
(d) A registration is not affected by subsequent changes in
the partners of the partnership.
(e) The registration of a foreign limited liability
partnership is effective until the first anniversary of the date
after the date of registration or a later effective date, unless the
statement is:
(1) withdrawn or revoked at an earlier time; or
(2) renewed in accordance with Section 152.908.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.906. CANCELLATION OF REGISTRATION. (a) A
registration may be canceled by filing a certificate of
cancellation.
(b) The certificate of cancellation must:
(1) contain:
(A) the federal tax identification number of the
partnership; and
(B) the date of effectiveness of the
partnership's last application for registration under this
subchapter; and
(2) be signed by:
(A) a majority-in-interest of the partners; or
(B) one or more partners authorized by a
majority-in-interest of the partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.907. EFFECT OF CERTIFICATE OF CANCELLATION. A
certificate of cancellation terminates the registration of the
partnership as a foreign limited liability partnership as of the
date on which the notice is filed or a later date specified in the
notice, but not later than the expiration date under Section
152.905(e).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.908. RENEWAL OF REGISTRATION. (a) An effective
registration may be renewed before its expiration by filing a
renewal application for registration with the secretary of state in
accordance with Chapter 4.
(b) The renewal application must contain:
(1) current information required for an initial
statement of qualification; and
(2) the most recent date of registration of the
partnership.
(c) An application for registration filed under this
section continues an effective registration for one year after the
date the registration would otherwise expire.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.909. ACTION BY SECRETARY OF STATE. The secretary
of state may remove from its active records the registration of a
foreign limited liability partnership the registration of which
has:
(1) been withdrawn or revoked; or
(2) expired and not been renewed.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.910. EFFECT OF FAILURE TO QUALIFY. (a) A foreign
limited liability partnership that transacts business in this state
without being registered is subject to Subchapter B, Chapter 9.
(b) A partner of a foreign limited liability partnership is
not liable for a debt or obligation of the partnership solely
because the partnership transacted business in this state without
being registered.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.911. AMENDMENT. (a) A document filed under this
subchapter may be amended by filing with the secretary of state an
application for amendment of registration in accordance with
Chapter 4.
(b) The application for amendment must contain:
(1) the name of the partnership;
(2) the tax identification number of the partnership;
(3) the identity of the document being amended;
(4) a reference to the date on which the document being
amended was filed;
(5) the part of the document being amended; and
(6) the amendment or correction.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.912. EXECUTION OF APPLICATION FOR AMENDMENT. The
application for amendment must be signed by:
(1) a majority-in-interest of the partners; or
(2) one or more partners authorized by a
majority-in-interest of the partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 152.913. EXECUTION OF STATEMENT OF CHANGE OF
REGISTERED OFFICE OR REGISTERED AGENT. A statement filed by a
foreign limited liability partnership in accordance with Section
5.202 must be signed by:
(1) a majority-in-interest of the partners; or
(2) one or more partners authorized by a
majority-in-interest of the partners.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
