REVISED LIMITED PARTNERSHIP ACT

A new Article 8-A, known as the Revised Limited Partnership Act (the "RLPA") , has been added to the Partnership Law, effective July 1,1991, pursuant to Chapters 950, 951 and 952 of the Laws of 1990, and Chapter 33 of the Laws of 1991. Domestic (New York) limited partnerships formed on or after its effective date, foreign limited partnerships whenever formed, and previously organized domestic limited partnerships electing to be governed by the RLPA will be subject to the RLPA.

PARTNERS

Partnership Law, Section 2, remaining applicable to general partnerships and to domestic limited partnerships not electing to be governed by the RLPA, limits partners to individuals, partnerships, corporations and other associations. The RLPA would expand the definition of those who are "persons" eligible to be admitted to a limited partnership as either general or limited partners to include domestic or foreign limited partnerships, trusts, estates, custodians, nominees and any other individual or entity in its own or any representative capacity.

Another change is in the nature of the contributions of a limited partner. Section 93 of the Partnership Law, remaining applicable to domestic limited partnerships not electing to be governed by the RLPA, limits the allowable contributions of a limited partner to cash or property; services of a limited partner are specially excluded. Under Section 121-101 of the RLPA, a partner may contribute to a limited partnership services rendered, or a promissory note or other binding obligation to contribute cash or property or to render services.

Section 121-110 of the RLPA requires that a limited partnership have a partnership agreement. The agreement is to be signed by all general partners, in person or by attorneys-in-fact. It may, but need not be, signed by the limited partners.

CERTIFICATES

A Certificate of Limited Partnership is required to be filed for a newly organized domestic limited partnership with the Department of State. It must be signed by each general partner individually or by an attorney-in-fact. Other than as regards execution of a Certificate of Cancellation in certain instances, there is no requirements that any Certificate be signed by a limited partner. Under the RLPA as presently enacted, subject to the possibility of further amendment as discussed in the section of this discussion captioned "Publication," the limited partnership is deemed formed on the filing of its Certificate or on a date no later than sixty (60) days therefrom as specified in the Certificate, subject to compliance with a requirement for the publication of notice of formation.

A foreign limited partnership not previously authorized to do business in New York under Partnership Law, Section 120-a is required to file an Application for Authority in the Department of State. Once its Application is filed, a foreign limited partnership will be authorized to do business in New York. The failure of a foreign limited partnership to comply with the RLPA does not, however, impair the validity of any of its contracts or acts or prevent it from defending any action or proceeding in New York.

A domestic limited partnership organized prior to the effective date of RLPA may elect to be governed by the Act by filing a Certificate of Adoption of Revised Limited Partnership Act in the Department of State. A notice stating that such a Certificate has been filed is required to be filed in the County Clerk's office wherein the partnership's certificates were previously filed. Unless provided otherwise in the partnership agreement, the general partners have the authority to elect to have the limited partnership adopt the RLPA.

PUBLICATION

The RLPA provides for publication of a notice advertising the formation of a domestic limited partnership or the qualification of a foreign limited partnership, as the case may be, immediately after the filing of the Certificate or the Application for Authority. Notice is to be published once in each week for six successive weeks in two newspapers in the county in which the office of the domestic or foreign limited partnership is to be located. The newspapers are designated by the County Clerk. Proof of publication by the affidavit of the printer or publisher of each such newspaper is required to be filed with the original Certificate of Application.

The RLPA, as amended by Chapter 33 of the Laws of 1991, presently conditions the formation of a domestic limited partnership on "subsequent compliance with the notice provisions." This author has been advised that this matter may be taken up by the legislature prior to July 1.

AMENDMENT TO CERTIFICATES

A Certificate of Amendment to the Certificate of a domestic limited partnership formed under, or having elected to be governed by, the RLPA must be filed with the Department of State within ninety (90) days of the occurrence of such an event as the admission or withdrawal of a general partner, a change in the name of the limited partnership, and the continuation of the partnership in the event of the withdrawal of a general partner.

A foreign limited partnership must file a certificate amending its Application for Authority within ninety (90) days of a change in any of the information set forth in the Application.

Domestic limited partnerships formed prior to the RLPA's effective date not electing to be governed by new Article 8-A must file any further amendments to their Certificate of Limited Partnership with the Department of State. A notice that the amendment has been filed with the Department of State must be filed as to the first such amendment only in the County Clerk's office wherein its Certificate was filed.

Each Certificate of Amendment must be signed by at least one general partner and by those general partners designated in the Certificate as new general partners.

CANCELLATION OF CERTIFICATES

A certificate of Cancellation signed by all general partners or, if there is no remaining general partner, by a majority in interest of the limited partners (unless otherwise provided in the partnership agreement) is required to be filed in the Department of State within ninety (90) days of the dissolution and commencement of the winding up of a domestic limited partnership subject to the RLPA, or at any other time that there are no limited partners.

An authorized foreign limited partnership may file a Certificate of Surrender of Authority with the Department of State, signed and verified by a general partner, or by a trustee, receiver or other person authorized by law to wind up the partnership. On such filing, the authority of the foreign limited partnership to do business in New York terminates.

It is also required that there be filed in the Department of State a certified copy of an order of dissolution of a domestic limited partnership subject to the RLPA. As to an authorized foreign limited partnership, a certified copy of a court order or decree of the dissolution or other termination of the authority to do business in its jurisdiction of origin (or a certificate of the Secretary of State of the jurisdiction or origin attesting to the fact of dissolution or the termination of authority) must be filed in the Department of State, which filing acts as a surrender of its authority to do business in New York.

MERGERS AND CONSOLIDATIONS

One or more domestic limited partnerships, either formed under the RLPA or electing to be governed by new Article 8-A, and a foreign limited partnership authorized to do business in New York may merge with or consolidate into a domestic or foreign limited partnership on adoption of a plan of merger or consolidation by the partners of each constituent limited partnership. The merger or consolidation is effective upon filing a Certificate of Merger (or Consolidation) in the Department of State, unless the Certificate specifies a later effective date which may be not later than (30) days subsequent to the date of filing.

When a foreign limited partnership not authorized to do business in New York is the surviving partnership in a merger or the resulting partnership in a consolidation, the Certificate of Merger or Consolidation must state that the foreign limited partnership is not to do business in New York until it has filed an Application for Authority. A foreign limited partnership authorized to do business in New York merged or consolidated into another entity must file proof of the termination of its existence.

On effectuation of a merger or consolidation, all property of each constituent limited partnership vests by operation of law without the requirement of a conveyance into the surviving or resulting limited partnership. The RLPA does not, however, exempt mergers and consolidations from the imposition of any otherwise applicable transfer taxes. To the extent provided in the plan of merger or consolidation, the partners of each constituent limited partnership become partners in the surviving or resulting entity.

LOANS WITH PARTNERS

Under Section 121-108 of the RLPA, except to the extent provided otherwise in the partnership agreement, a general or limited partner may lend money to and transact other business with the limited partnership of which it is a member and such partner "subject to other applicable law has the same rights and obligations with respect thereto as a person who is not a partner". Further, on the winding up of a limited partnership, assets are first distributed under Section 121-804 to creditors "including partners who are creditors, to the extent permitted by law, in satisfaction of liabilities of the limited partnership."

By: Michael J. Berey, Esq. Published in the Real Property Law Section Newsletter, New York State Bar Association, Volume 19, No. 3, July, 1991.