CREATION OF A LTD PARTNERSHIP

1. CREATION OF A LTD PARTNERSHIP Requires filing of a ltd. partnership certificate per state ltd partnership statute (Based on RULPA) ltd partnership exists only with state authorization same as corporation rule opposite of general partnership rule

2. CREATION OF A LTD PARTNERSHIP Purpose of filing: putting creditors on notice of the limited liability of the ltd partners. Consequences of defective filing: Loss of ltd. liability

3. CREATION OF A LTD PARTNERSHIP Must be at least one general partner. Why? General partner can be a corporation if adequately capitalized. if general partner is a corp., no natural person has unlimited liability.

4. Nature of Ltd Partnership Interest Limited Liability No Right to a Voice in Management Liability for Participation in Management Ltd Part not an A of pshp; has no fiduc. duties to pshp.

5. Management activities the ltd partner can perform agent employee contractor consultant surety voting on major changes.

6. Profits and Losses Profits shared according to the value of the capital contribution Forms of capital contribution -- property, services or promise of either Losses shared in accord with profits (absent contrary agreement)

7. Transfer of Ltd Partnership Int: Voluntary Assignment Terminates assignor's interest as a partner Assignee may become a partner if provided by the agreement or all other partners agree Right (to assign) may be restricted by partnership agreement, giving non-assigning partners a right of first refusal.

8. Transfer of Ltd Partnership Int:Charging Order No change in status of partnership: charging order does not affect debtor partner�s status; creditor does not become a partner Consequences same as with general partnership, i.e., creditor has the assignee�s rights to share in profits

9. DISSOLUTION Requires winding up & term. of business Any partner may request the court to dissolve, but have no unilateral right to bring about Partner creditors have the same priority rights as non-partner creditors when assets distributed.

10. DISSOLUTION--Events not req�g unless provided by agrmt. withdrawal of a ltd partner bankruptcy ' ' " " death ' ' " " insanity ' ' " � All in contrast w.gen pshp

11. Limited Liability Companies Must be state certified Separate legal entity Taxed as a partnership FULL LTD LIAB FOR ALL MEMBERS Member- or Manager-Managed Members vote in prop. to cap contribs.

12. Limited Liability Partnerships Must be state certified Taxed as a partnership Shields partners of prof service firms for liab. for acts of other partners. Retains pers liab for own torts + torts of those you supervise Liab for gen obligs of the pshp varies by state. None in CA.

13. Diff bet. LLCs & LLPs LLCs have option to be taxed as a corp. LLCs can have perpet. Existence (like a corp.); LLPs term like pshps: death., w/d, bkptcy, etc. of partners. LLC members have complete Ltd. Liab. LLP partners have unltd liab for their own torts + those of partners they supervise.

14. LTD LIAB COMPANIES 2 ADVANTAGE OVER LTD PSHP NO LIMITS ON MGMT PARTIC. RTS. IF MANAGED BY NON-MEMBERS, MEMBERS HAVE NO ACTUAL OR APP. AUTH & NO DUTIES TO THE LLC. ADVANTAGES OVER SUB S CORPS: CAN ALLOCATE PROFITS, LOSSES & DISTRIBS. IN ANY WAY FAVORABLE TO MEMBERS NO LIMITS ON # OR TYPE OF OWNERS* *SUB S CANNOT HAVE > 35 SHs; NO PSHPS, CORPS OR TRUSTS*SUB S CANNOT HAVE > 35 SHs; NO PSHPS, CORPS OR TRUSTS

15. LLLP IS A LTD PSHP WHERE GEN PART HAS SAME LIAB LIMS AS IN A LLP, i.e., not liable for other partners� negligence