Per the Committee's instructions, Draft #2 deleted the following language from Draft #1: "A restriction relating to the use of the names and addresses of the partners is not reasonable."

282. No charge is allowed for current general partners, because in almost all cases they would be entitled to reimbursement under Section 403(d).

283. At the Committee's March, 1998 meeting the Reporter was directed to refer to ULLCA § 408(b) and provide comparable protections for the estate of a deceased partner. Absent a contrary agreement, the legal representative of a deceased or incompetent general partner will have only the rights of a person dissociated as a general partner, because death and incompetency both cause dissociation. See Section 602(7). This Draft does not provide any "fall back" rule in case the partnership agreement changes the "death/incompentency => dissociation" rule but fails to consider the rights of the legal representative of the decedent/incompetent.

284. The "except" clause is necessary because a dissociated general partner is treated as a transferee of his, her or its own transferable interest. See Section 602B(4).

285. Sections 101B(a) (providing broad powers to the partnership agreement) and 403 (describing the management authority of general partners) make this provision unnecessary.

286. Per the Committee's instructions at its March, 1998 meeting, the new language is taken, essentially verbatim, from ULLCA § 401. Both the old, stricken language and the new language partially overlap Section 101(4)'s definition of "contribution." That overlap is present in RULPA as well.

287. At its March, 1998 meeting, the Committee decided to delete this provision, which was added to RULPA in 1985. ULLCA omits any comparable provision. See ULLCA § 402.

288. Per the Committee's instructions, given at the March, 1998 meeting, this subsection has been revised to follow ULLCA, which in turns derives from the RULPA language being modified here.

289. At its March, 1998 meeting, the Committee decided to use separate subsections here. The separation makes clear that the obligation to pay money applies whenever, and for whatever reason, the partner fails to make a required in-kind contribution.

290. The phrase "as stated in the partnership records required to be kept pursuant to Section 105" does not appear in ULLCA, because ULLCA has no comparable required records provision. Following ULLCA § 402(a), this subsection does not by its terms apply to a person who has promised to make a contribution, whose admission as a partner is contingent on making that contribution and who fails to make the contribution.

291. At its March, 1998 meeting the Committee decided to use the approach taken by ULLCA §§ 402(b) and 404(c)(4). These revisions implement that decision.

292. The revised language is taken essentially verbatim from ULLCA § 402(b).

293. Deleted from Draft #2, per the Committee's decision at its March, 1998 meeting: "annually and without distinction between general and limited partners,".

294. The stricken language is inconsistent with this draft's treatment of the partnership agreement.

295. At its March, 1998 meeting, the Committee discussed substituting the phrase "in proportion to" for the phrase "on the basis of" in order to handle situations in which all contributions have been returned. The Reporter does not recall a decision having been reached on this point.

296. The added language comes essentially verbatim from RULPA § 608(c). Section  608 has a new rule, taken from ULLCA, on liability for unlawful distributions, so this language is no longer appropriate there. Draft #2 sought to eliminate the recondite and byzantine language of RULPA § 608(c) and substitute a reference to generally accepted accounting principles. That effort met a underwhelming response; i.e., no one liked it. Therefore, Draft #3 returns to the language of RULPA § 608(c). (It appears that ULLCA, which uses the concept of un-returned contributions, has no rule for determining the extent to which a contribution has been returned. See ULLCA § 806(b).)

297. The changes are mostly for stylistic reasons, although this draft does state a different default rule on sharing -- namely that distribution allocation follows profit and loss allocation. Thus, any change in the default rule on profit and loss allocation will automatically change the distribution sharing rule.

298. Draft #2 included language establishing a formal mechanism by which a limited partnership would announce distributions. At its March, 1998 meeting, the Committee rejected that language. Draft #3 refers merely to the declaration of a distribution. See Black's Law Dictionary ("To make known, manifest, or clear. To signify, to show in any manner either by words or acts. To publish; to utter; to announce clearly some opinion or resolution. To solemnly assert a fact before witnesses, e.g., where a testator declares a paper signed by him to be his last will and testament.").

299. The major change is the elimination of any reference to a partner's "put" right, since in the default mode that right no longer exists. Others changes are stylistic or to conform with this draft's approach to the powers of a partnership agreement.

300. Draft #2's language has been revised per the Committee's instructions. Although it will be the limited partnership that actually makes any interim distributions, it will be the general partners who decide whether interim distributions will be made. See Section 403(a). As for the use of "declare," see note 298, above.

301. At its July, 1997 meeting, the Committee decided that, in the default mode, a general partner who ceases to be a general partner becomes a mere transferee of the transferable interest formerly associated with its status as a general partner. That decision made it possible to greatly simplify Re-RULPA's approach to general partners. It is no longer necessary to treat separately the termination of a general partner's management and ownership roles.

The change in the caption is to reflect Re-RULPA's use of "dissociation" rather than "withdrawal" and to recognize that, strictly speaking, general partner dissociation involves the dissociation of a person as a general partner rather than the dissociation of a general partner. This distinction, adopted at the Committee's March, 1998 meeting, is important because a person may be simultaneously a general and limited partner. See Section 404(Dual capacity). Dissociation therefore applies to the capacity rather than to the person.

302. As decided by the Committee at its July, 1997 meeting, this Draft adopts the RUPA provision essentially verbatim, see RUPA § 601, subject to the Committee's decision at its March, 1998 meeting to apply dissociation to a person's capacity as a general partner. See note 301, above.

303. This provision could be problematic when a sole general partner gives notice of dissociation, especially if the limited partnership has no employees or other agents of its own. The same problem might exist under ULLCA § 601(1) in the case of a manager-managed limited liability company with only one manager

304. At its March, 1998 meeting, the Committee discussed but did not decide whether affiliates of the would-be expelled person should be excluded from the vote.

305. Suppose the corporate general is dissolved and terminated, but the other partners cannot muster a unanimous vote to expel. Does the limited partnership continue with a non-existent general partner? Are the remaining partners forced to seek dissolution under Section 802?

306. Following RUPA, this provision originally included the phrase "or another partner." The Reporter recommended deleting the phrase, out of concern that the phrase would invite confusion as to the distinction between direct and derivative claims and undermine the general partner's authority to manage the business. At its March, 1998 meeting, the Committee accepted the Reporter's recommendation.

307. RUPA states "in partnership with the partner." Given the possible dual status of a general partner in a limited partnership, the RUPA phrasing would be overbroad.

308. In this respect, in the default mode a general partner has fewer rights than a limited partner. If a guardian or general conservator is appointed for a limited partner, that guardian or conservator may exercise the limited partner's rights ad infinitum. See Section 705. For a general partner, in contrast, the appointment causes dissociation, which in turns relegates the dissociated general partner to a mere transferee of the transferable interest associated with the general partnership interest.

309. RUPA's approach, replicated here, might seem anomalous when compared with the status of a general partner who transfers "all or substantially of that partner's transferable interest in the partnership." RUPA § 601(4)(ii), incorporated in Draft #3 as section 602(4)(ii). In that latter event, dissociation occurs only upon "the unanimous vote of the other partners." Why should a harsher rule apply to a trust, especially if the distribution of the trust's transferable interest was foreseeable (e.g., ordained by the terms of the trust) at the time the trust became a general partner? At the March, 1998 meeting, Committee members explained this approach as beneficial to the trust, since the trustee will not wish to remain a general partner once that trust has no further economic interest in the limited partnership.

310. The main impact of this subparagraph is to trigger the personal liability discharge provisions of Section 602D. Section 1104(c) states that such provisions continue to apply to former owners, even if the organization has disappeared through a merger. This subparagraph also triggers Section 602B(2)and (3), ending a dissociated general partner's fiduciary duties. The subparagraph is not necessary to "start the clock" on the dissociated general partner's lingering power to bind, Section 602C, because Section 1104(d) cuts off that power immediately when a constituent organization is merged out of existence.

311. This subparagraph triggers all the standard dissociation consequences, including: Section 602B(2) and (3), (dissociated general partner's fiduciary duties), Section 602C (dissociated general partner's lingering power to bind), and Section 602D (personal liability discharge provisions).

312. As decided by the Committee at its July, 1997 meeting, this section follows RUPA § 602 more closely than did Draft #1. Draft #3 has changed the caption slightly to reflect the notion that dissocation applies to capacity. See note 301, above.

313. This language limits the remedies available if a general partner's dissociation breaches the partner's fiduciary duty or obligation of good faith.

Following RUPA, this section does not refer to the duty of good faith and fair dealing. Compare section 603A(a)(2) (stating how limited partner dissociation affects that duty).

324. The "subject to" language refers to a merger in which, for example, the general partner dissociates because the limited partnership ceases to exist. In that event, no transferable interest of the old limited partnership will survive the merger.

325. As decided at the March, 1998 meeting, paragraph (4) has been changed to refer only to transferable interests owned by the dissociated person in the capacity of a general partner. Comparable language appears in Section 603A(3), in reference to a person's dissociation as a limited partner.

In Draft #2, the paragraph was a default rule that swept all of the dissociated general partner's transferable interest into "mere transferee" status. Under Draft #3, the paragraph remains a default rule but the "sweeping" occurs only to the extent the transferable interest is associated with the person's status as a general partner.

326. Discussion at the Committee's March, 1998 meeting suggested the need for this type of provision with regard to limited partners. The language is included here, as well, to preclude any misunderstanding that might result from a lack of parallel treatment. The word "discharge" is derived from RUPA § 703(a).

327. Draft #2 included a paragraph (5) -- " the limited partnership shall promptly amend the certificate of limited partnership to indicate the general partner is dissociated." That language has been deleted as redundant. See Section 202(b)(2) (requiring an appropriate amendment to the certificate of limited partnership).

328. As instructed by the Committee at its July, 1997 meeting, the Reporter prepared two versions of this Section for Draft #2. The first version followed RUPA § 702 as closely as possible. The second version reorganized and restated the RUPA provision for the sake of readability. To the best of the Reporter's recollection, at its March, 1998 meeting the Committee decided to use the second version. In this Draft, former Version #2 has been slightly revised so that that concept of dissociation refers to a person's capacity as general partner.

329. This clause is intended to function in a manner equivalent to RUPA § 702(a)(3).

330. The phrase "does not have notice" seems redundant. A party that has notice of a general partner's dissociation cannot reasonably believe that the dissociated general partner is still a general partner. The clause "is not deemed to have had knowledge under Section 208(c)of any relevant limitation" was added to Draft #3 pursuant to a decision made at the March, 1998 meeting. Nonetheless, that clause seems redundant of paragraph (a)(1). If the person "is . . . deemed to have had knowledge under Section 208(c)of any relevant limitation," then "the act would [not] have bound the limited partnership under Section 403A."

331. RUPA's phrase "after dissociation" has been deleted as redundant. Subsection (a) refers exclusively to post-dissociation events. RUPA's phrase "an obligation incurred by the dissociated partner" has been deleted as ambiguous or at least unartful. Under subsection (a) a dissociated partner can cause the limited partnership to incur an obligation. On casual reading the RUPA language seems to refer to the dissociated partner incurring an obligation him, her or itself.

332. Upon dissolution, Section 803A takes over. RUPA may intend the same result, but its language refers only to dissolution caused by the partner's dissociation. Indeed, at the March, 1998 meeting some Commissioners interpreted RUPA to provide that: (i) if a partner's dissociation does not cause dissolution, and (ii) the partnership subsequently dissolves for some other reason, then (iii) the dissociated partner's management right "spring back" into existence. Version #2 rejects that approach for limited partnerships and defers to the dissolution provision even if the dissolution occurs for some reason other that the person's dissociation as a general partner.

333. In Draft #2 this section was written to follow RUPA § 703 essentially verbatim. When the Committee chose Version #2 of Section 602C (the reorganized and restated version), it directed the Reporter to make comparable changes in this section. The changes apply to subsection (b). However, given the strong preference to follow RUPA language, Draft #3 presents both a RUPA version and a restated version of subsection (b).

334. This language is taken from RUPA. It will be necessary to specify the applicable rule if dissolution does occur.

335. To the extent the limited partnership is an LLLP, this paragraph will bar any personal liability for the dissociated general partner.

336. This clause is intended to function in a manner equivalent to RUPA § 703(b)(3).

337. The phrase "does not have notice" seems redundant. A party that has notice of a general partner's dissociation cannot reasonably believe that the dissociated general partner is still a general partner.

338. RUPA § 703(c) reads: "the partners continuing the business." Re-RULPA's differing language reflects the Draft's entity view of limited partnerships.

339. If the creditor is not a partner, this notice will occur by operation of law 90 days after an appropriate amendment to the certificate of limited partnership. See Section 208(d).

340. For an explanation of the caption changes, see note 301, above. The causes of limited partner dissociation substantially overlap the causes of general partner dissociation. That overlap could be avoided (or, rather, exploited) by sacrificing some of RULPA's look and feel and having one section captioned "Partner Dissociation." That section would list separately events that cause dissociation of any partner and events that cause dissociation only for general partners.

341. As decided by the Committee at its March, 1998 meeting, this Draft adopts the RUPA provision essentially verbatim, except for the omission of provisions inappropriate to limited partners.

342. Suppose the corporate limited is dissolved and terminated, but the other partners cannot muster a unanimous vote to expel. Does the limited partnership continue with a non-existent limited partner? Are the remaining partners forced to seek dissolution under Section 802?

343. Following RUPA, this provision originally included the phrase "or another partner." The Reporter recommended deleting the phrase, out of concern that the phrase would invite confusion as to the distinction between direct and derivative claims and undermine the limited partner's authority to manage the business. At its March, 1998 meeting, the Committee accepted the Reporter's recommendation.

344. RUPA states "in partnership with the partner." Given the possible dual status of a limited partner in a limited partnership, the RUPA phrasing would be overbroad.

345. In contrast to the provision on dissociation as a general partner, this provision does not provide for dissociation on account of bankruptcy or insolvency.

346. In contrast to the provision on dissociation as a general partner, this provision does not provide for dissociation on account of an individual's incompetency.

347. This subparagraph is not as necessary here as in the provision on dissociation as a general partner. See note 310, above, explaining the subparagraph's function in that context. The subparagraph appears here nonetheless to avoid confusion likely to result from an absence of parallelism.

348. Derived from RUPA § 603(b)(1).

349. Section 602B (Effect of dissociation as a general partner) has no parallel provision, because RUPA § 603(b)(3) does not refer to the duty of good faith and fair dealing.

350. This paragraph will create a "bare transferable interest." The same language appears in Section 602B(4), relating to general partners. See note 324, above for a discussion of the "subject to" language.

351. Discussion at the Committee's March, 1998 meeting suggested the need for this type of provision with regard to limited partners. The language is included in Section 602B, as well, to preclude any misunderstanding that might result from a lack of parallel treatment. The word "discharge" is derived from RUPA § 703(a).

352. At its March, 1998 meeting, the Committee voted to delete subsection (b), which had provided:

(b) A limited partner who dissociates before the termination of the limited partnership is liable to the limited partnership and to other partners for any damages caused by the dissociation.

Compare Section 602A(c)(stating the rule for persons who dissociate as general partners).

353. Under sections 602B(4) (dissociation as a general partner) and 603A(a)(3) (dissociation as a limited partner), the person's status "degrades" to that of a transferee. (In Draft #2 this provision read: "A partner 's dissociation does not entitle that partner to any distribution." The change reflects a style suggestion made by a Committee member at the March, 1998 meeting.)

354. At its March, 1998 meeting, the Committee rejected Draft #2's stylistic changes to this provision. The Reporter considered using ULLCA § 404(b), which states succinctly a simple rule: "A member has not right ot recive, and may not be required to accept, a distirbution in kind." However, that rule constrains the entity more than Re-RULPA's current approach. The Reporter does not know (at least so far) any reason to restrict Re-RULPA's default rule, so Draft #3 uses Re-RULPA's language.

355. At its March, 1998 meeting, the Committee deleted the following proposed new language:

A partner is entitled to receive a distribution when the limited partnership notes in its required records the date on which the limited partnership made its decision to distribute, the date the distribution is to be made, the aggregate amount to be distributed, and, in the case of an in-kind distribution permitted by Section 605, a description of the fungible property to be distributed.

The Reporter had suggested the language might be necessary on account of Re-RULPA's new, more corporate-like approach to recapturing distributions.

356. The reference to "dissociated partner" is to encompass circumstances where the partner is gone and all that remains are the bare transferable interests.

357. The new language is derived mostly from ULLCA § 406, which appears to have derived, almost verbatim, from RMBCA § 6.40.

358. ULLCA § 406 does not include this provision, but ULLCA § 407 (Liability for unlawful distributions) establishes personal liability for anyone "who votes for or assents to a distribution made in violation of . . . the articles of organization, or the operating agreement." Similarly, RULPA § 608(b) imposes consequences for receiving a return of contribution "in violation of the partnership agreement." It makes for cleaner drafting to directly prohibit distributions that violate the partnership agreement.

359. Source: ULLCA § 406(a)(1).

360. Source: ULLCA § 406(a)(2).

361. Source: ULLCA § 406(b). N.b. -- this subsection imposes a more rigorous standard of care than the "gross negligence" standard applicable under Section 403D(c).

362. Source: ULLCA § 406(c).

363. The RMBCA has an alternate date, if earlier -- when the owner being redeemed ceases to be an owner. The Comment to ULLCA § 406 does not explain why ULLCA omits the alternate date.

364. The RMBCA has another category -- distributions of indebtedness not involved in a redemption. The Comment to ULLCA § 406 does not explain why ULLCA omits this additional category.

365. This subsection is redundant of Section 606. One or the other should be deleted. Assuming the Committee decides that the next draft will, like this draft, maintain as much of the basic structure of RULPA as possible, the Reporter recommends deleting this provision and retaining Section 606. If, instead, the Committee opts for a RUPA/ULLCA "look and feel," perhaps this subsection should remain.

366. This provision is stated as a separate subsection, to make clear that "indebtedness" is not limited to the types of indebtedness referred to in the immediately preceding sentence -- i.e., "indebtedness [whose terms] provide that payment of principal and interest are made only to the extent that a distribution could then be made to partners under this section."

367. Consistent with the Drafting Committee's tentative decision, this draft replaces RULPA's antiquated "clawback" provisions with a more modern approach derived from RMBCA § 8.33(a) and ULLCA § 407(a). (The ULLCA provision closely follows the RMBCA provision.)

368. RMBCA § 8.33 and ULLCA § 407 both use "Unlawful," but that term fits poorly with liability imposed for distributions that merely breach the partnership agreement or some comparable document (e.g., a corporation's articles of incorporation, an LLC's articles of organization, or operating agreement). Earlier drafts therefore used "Improper" instead of "Unlawful." Draft #3 uses "Unlawful" in light of instructions to follow ULLCA.

369. Note that a distribution that violates the partnership agreement violates Section 607(a).

370. Section 403D contains the general duties of general partners. Section 607(c) imposes a separate duty with regard to reliance on financial statements, accounting principles, etc.

N.b. -- section 607(c) imposes a higher standard of care than does Section 403D. This anomaly does not exist under the RMBCA (from which both this draft and ULLCA derive their respective provisions on liability for improper distributions). The RMBCA's general standard of care is ordinary care, RMBCA § 8.30(a)(2), not the mere avoidance of gross negligence. ULLCA does not expressly contain this anomaly. The ULLCA provision on "Limitations on distributions" states a reasonableness standard with regard to reliance on financial statements, accounting principles, etc., ULLCA § 406(b), but the ULLCA provision on "Liability for unlawful distributions" makes no reference to that standard. ULLCA § 407. The Reporter views that approach as anomalous, and therefore Draft #3 (like previous drafts) deviates from ULLCA in this regard.

371. This subsection comes essentially verbatim from ULLCA § 407(b). The Committee may wish to consider the following alternative language:

(b) A partner who receives a distribution that the partner knows violates Section 607 is personally liable to the limited partnership, but the partner's liability under this subsection is limited to the amount by which the distribution received by the partner exceeded the amount that could have been paid without causing the violation.

372. This section does not allow a limited partner to implead anyone else, because a limited partner's liability is limited to the amount by which the limited partner's distribution exceeded the permissible amount.

373. Following ULLCA, Draft #2 referred to "this section." At its March, 1998 meeting, the Committee approved the language shown here.

374. Source: ULLCA § 407(c). The ULLCA language is a bit imprecise. In particular, § 407(c)(2) refers first to "members" and then to "the member." It is important to make clear that the limitation applies to each member severally, not to all members jointly. The following alternative language makes that point and also makes clear that any funds paid by a recipient in a separate action (i.e., under subsection (b)) count against the recipient's contribution limit:

(c) A general partner against whom an action is brought under subsection (a) may implead in the action and obtain contribution from:

(1) any other general partner or person dissociated as a general partner who could be held liable under subsection (a) for the improper distribution; and

(2) any partner or dissociated partner who could be held liable under subsection (b), but a person's total liability under this paragraph and subsection (b) with respect to any distribution is limited to the total amount for which the person could be liable under subsection (b) for that distribution.

375. Strictly speaking, subsection (b) does not establish a prohibition that can be violated; it states a remedy. The implied prohibition is against receiving an improper distribution while knowing that the distribution is improper.

376. This subsection follows ULLCA § 407(d), which differs from the RMBCA. Under RMBCA § 8.33(c) the clock runs from "the date on which the effect of the distribution [is] measured" under the provision limiting distributions. The Comments to ULLCA do not explain ULLCA's departure from the RMBCA.

377. In RUPA and ULLCA roughly analogous provisions appear in Article 5, captioned "TRANSFEREES AND CREDITORS OF PARTNER [MEMBER]."

378. Draft #1 used "share" instead of "allocation." The change to "allocation" was made in Draft #2 and conforms with a change in the caption of Section 503. RULPA § 503 is captioned "Sharing of Profits and Losses," but the section's text refers to "allocation." Draft #1 changed Section 503's caption to follow the text but did not conform Section 701. Draft #2 maintained the change to Section 503's caption and revised Section 701 accordingly. Draft #3 continues the language used in Draft #2.

379. Source: RUPA § 502. The Comment will cross reference Section 606, which provides that a partner's right to distributions is subject to offset.

380. Source: RUPA § 503. Although for the most part RULPA's language "works," the formulation is oblique. In this instance, the benefits (especially for the uninitiated) of a more direct formulation outweigh the preference for retaining familiar language. Re-RULPA thereforer takes RUPA language in place of RULPA language. (Draft #1 rearranged the provisions of RUPA § 503 so that the affirmative aspects were stated first and the limitations or negative aspects were stated second. Consistent with the Committee's instructions at the July, 1997 meeting, Draft #2 provided the RUPA provisions without significant change, while preserving Draft #1's language as an alternative version. At its March, 1998 meeting, the Committee rejected the alternative version, and that version has therefore been omitted from Draft #3.)

381. The language relating to a bare transferable interest is not in RUPA. The Committee incorporated this language at the Committee's March, 1998 meeting. (The language originated in Draft #2, Version #2 of Section 702.)

382. RUPA § 503(c) reads: " the latest account agreed to by all of the partners." At its March, 1998 meeting, the Committee decided to deviate from RUPA.

383. The phrase beginning "including" does not appear in RUPA. See RUPA § 503(d). At its March, 1998 meeting, the Committee decided to append the language of RULPA § 704(c), which provides:

(c) If an assignee of a partnership interest becomes a limited partner, the assignor is not released from his [or her] liability to the limited partnership under Sections 207 and 502.

That language appears redundant, given the broad statement carried over from RUPA. Moreover, specifying this subset of continuing obligations might raise questions as to the status of other subsets; e.g., a transferor general partner's liability for breach of the duty of loyalty or care.

384. When Section numbers are revised, this reference will be changed to indicate specific sections.

385. This subsection is taken from RULPA § 704(b). Changes from that subsection are as follows:

An assignee who has become a limited partner has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a limited partner under the partnership agreement and this [Act]. An assignee A transferee who becomes a limited partner also is liable for the transferor's obligations of his [or her] assignor to make and return contributions as provided in Articles 5 and 6. However, the assignee transferee is not obligated for liabilities unknown to the assignee transferee at the time he [or she] the transferee became a limited partner.

At its March, 1998 meeting, the Committee instructed the Reporter to preserve the substance of RULPA § 704(b)'s second sentence.

386. RUPA captions its comparable section "PARTNER'S INTEREST SUBJECT TO CHARGING ORDER." RUPA § 504. ULLCA captions its comparable section "Rights of creditor." ULLCA § 504.

387. This expansion comports with both RUPA § 504(a) and ULLCA § 504(a).

388. This sentence originated in RUPA § 504(a). ULLCA § 504(a) incorporated the RUPA language but added the last phrase ("to give effect . . . ."), apparently in an effort to limit the extent to which the "or which" clause empowers a court to intervene in the entity's affairs. The Committee should consider why a receiver should have greater rights of inquiry than the judgment debtor.

389. Source: RUPA § 504(b).

390. Source: RUPA § 504(c) and ULLCA § 504(c).

391. Source: RUPA § 504(c)(3). According to the RUPA provision, the redemption is by "one or more of the other partners." At its March, 1998 meeting, the Committee substituted the phrase "the limited partnership," making clear that the entity does the redemption. The Committee rejected language that would have allowed disinterested general partners to make the redemption decision.

392. Source: RUPA § 504(e).

393. This Section dealt with matters now encompassed by Section 702. Portions of this Section have relocated there, as indicated in subsequent notes.

394. It is not necessary to provide that a transferee may become a partner if the partnership agreement gives the transferor the power to so provide, because the provisions on becoming a partner expressly refer to the partnership agreement. That agreement can create whatever mechanism may be desired.

395. This subsection has been relocated to Section 702(g) and slightly restyled.

396. As decided by the Committee at its March, 1998 meeting, this provision now appears in Section 702(d).

397. Neither RUPA nor ULLCA contains a comparable provision.

398. At its March, 1998 meeting, the Committee deleted the proposed phrase "for the purpose of settling the decedent's estate."

399. Under Sections 602B(4) (consequences of dissociation as a general partner) and 603A(3) (consequences of dissociation as a limited partner) the decedent partner's interest will convert to a bare transferable interest.

400. Incompetency does not cause a limited partner to dissociate. See Section 603. This power can therefore continue indefinitely.

401. The adjudication will cause the person's dissociation as a general partner. See Section 602(7)(ii) and (iii).

402. Dovetailing this section's approach to entity demise with the RUPA-based interrelationship of entity demise and partner dissociation will be quite complicated. At its March, 1998 meeting, the Committee discussed but did not decide whether to follow RUPA and ULLCA and omit this section entirely. The Reporter has therefore decided to leave to another day the complicated task of dovetailing. (If the provision does remain, this subsection will be expanded to encompass the dissolution of partnerships and limited liability companies.)

403. Section 803(a) makes this phrase redundant.

404. This revision accords with new Section 200(b) (providing for a perpetual term, absent a contrary provision in the certificate of limited partnership) and revised Section 201(4) (requiring the certificate of limited partnership to state the limited partnership's term "if not perpetual"). If the certificate states no term, the term is perpetual and this provision is inapposite. If for some reason the certificate expressly states a perpetual term, this provision still does not apply. A perpetual term does not expire.

405. Draft #2 followed RULPA. Draft #3 shows the revision tenatively adopted at the end of the Committee's March, 1998 meeting. The reference to "profit interests owned by persons as limited partners" excludes profit interests that are "bare transferable interests" -- i.e., owned by transferees who are not also partners -- as well as profit interests owned by general partners in their capacity as general partners.

406. At its March, 1998 meeting, the Committee deleted the following proposed new language, which had been derived from RUPA § 801(4) and ULLCA § 801(3):

the passage of 90 days after the limited partnership has notice of an event that makes it unlawful for all or substantially all of the business of the limited partnership to be continued, unless the illegality is cured before the end of the 90 day period;

407. A remaining general partner can exercise this power to cause dissolution without thereby dissociating as a general partner. The "express will" to dissolve is different from the "express will" to dissociate.

408. Profit interests owned by transferees do not figure in this calculation. This exclusion encompasses profit interests formerly owned by a former general partner in his, her or its capacity of general partner. See Section 602B(4).

Query: should the majority be calculated against the profits interest owned by persons as limited partners immediately after dissolution (as in this Draft) or against the profits interests owned at the time the consent is obtained? The latter calculation would produce a different result if, prior to the consent, a second dissociation occurs and that dissociation causes a person to own a bare transferable interest.

409. This language requires that all of the following occur within the 90 days: consent to avoid dissolution, consent to appoint a new general partner and admission of a new general partner in accordance with that consent. This language is arguably too narrow. For example, suppose that the requisite consent is obtained within the 90 days, in contemplation of a particular person becoming a general partner. Shortly before the end of the 90 days, the person refuses to be admitted as a general partner. To avoid dissolution the limited partners would have to find a substitute general partner and obtain new consents before the 90 day period expires. The rule is, however, merely a default rule.

The query posed in the previous note applies here as well. The Act should take the same approach to both these provisions.

410. Although both earlier drafts included the concept of administrativd dissolution, this reference to the concept is new in Draft #3.

411. Both RUPA § 801 and ULLCA § 801 include nonjudicial and judicial dissolution in the same section. This draft preserves RULPA's approach, dividing the two types of dissolution into two sections.

412. The additions come from RUPA § 801(5), which is also the source of most of ULLCA § 801(4).

N.b. -- ULLCA § 801(4)(v) states as a basis for judicial dissolution a concept developed in the law of closely held corporations: "the managers or member in control of the company have acted in a manner that is illegal, oppressive, fraudulent, or unfairly prejudicial to the petitioner." This draft does not include any analogous provision.

413. For Comment -- Courts considering dissolution pursuant to this clause should also consider the less drastic remedy of dissociating the offending partner. Moreover, it would be unusual to invoke this clause in connection with the conduct of a limited partner, unless the partnership agreement gives that limited partner a substantial role in the limited partnership's affairs.

414. This provision is derived from RUPA § 801(6)(i), which was also the source for ULLCA § 801(5)(i). This provision does not protect transferees from the consequences of a merger in which the limited partnership is not the surviving organization.

415. RUPA § 801(6)(i) refers more simply to the expiration of the partnership's term. However, RUPA § 406(a) contemplates a term general partnership continuing its business after its term expires and "be[ing] treated as a partnership at will." RUPA § 801, Comment 5. No comparable provision exists in RULPA or Re-RULPA. The expiration of a limited partnership's term causes dissolution. Section 801(1). Therefore, Section 802(b)(1) refers to the roughly analogous situation of a limited partnership amending its certificate to extend its term. If a limited partnership declines the recognize its own dissolution, a transferee will have a remedy under Section 803(c)(2) (judicial supervision of winding up upon a partner's or transferee's showing of "other good cause").

416. Derived from RUPA § 802, which is also the source of ULLCA § 802. Both RUPA § 802(b) and ULLCA § 802(b) allow the unanimous consent of partners/members to "un-do" a dissolution. For two reasons this draft does not include that provision. First, both RUPA and ULLCA provide for the buy-out of a dissociated owner in the event that dissociation does not cause dissolution. This draft, in contrast, freezes in a dissociated owner (as a transferee of its own transferable interest) until dissolution. It seems inequitable, therefore, to allow a waiver of dissolution without some consent of those transferees who are former partners. Second, providing for transferee consent would require at best an intricate statutory provision, and -- given the limited partnership's durability in the default mode -- the intricacy hardly seems warranted.

417. Both RUPA § 802(a) and ULLCA § 802(a) use this language. Based on years of explaining the dissolution and termination to the uninitiated, the Reporter prefers: "A dissolved limited partnership is not terminated but continues its existence only for the purpose of winding up its business."

418. This Section has been changed to: (i) provide, as a default matter, that so long as a dissolved limited partnership has at least one general partner, the limited partnership management structure remains in place during winding up; and (ii) incorporate many of the mechanical refinements of RUPA § 803. (RUPA § 803 is also the source for ULLCA § 803.)

419. This amendment helps curtail the power of a general partner to bind the limited partnership during winding up, see Section 803A(b) and (c), and the statute must either allow any partner to file it (which would be at odds with the governance structure and require additional provisions re: limited partner filings) or obligate the limited partnership itself (in functional terms, the general partners) to do so.

operates as a statement, made pursuant to Section 201(b), limiting to circumstances appropriate for winding up the limited partnership business the authority of each general partner to execute an instrument transferring real property held in the name of the limited partnership.

428. Source: RUPA § 805(c).

429. Source: RUPA § 805(d).

430. Source: RUPA § 806(a). This section was new in Draft #2. Draft #1 included RUPA § 806(b) as part of Section 802 and omitted RUPA § 806(a) as unnecessary. (A limited partnership remains a limited partnership during winding up. The rules regarding loss sharing among general partners are not limited to a limited partnership's pre-dissolution phase.)

At its July, 1997 meeting, the Committee expressed a presumption in favor of RUPA provisions. Accordingly, Draft #2 incorporated RUPA § 806(a) and created a new section to parallel RUPA § 806. In order to maintain the temporary numbering system used in Draft #1, the new section was given an especially unusual, temporary section number.

431. Strictly speaking, the general partner does not "incur a limited partnership liability." The Reporter would therefore prefer: "causes the limited partnership to incur a liability under . . . ."

432. Source: RUPA § 806(b).

433. If this draft did not allow for LLLPs, Sections 803B and 803C would probably be unnecessary. The sections seem warranted, however, because many (and perhaps most) limited partnerships will be fully-shielded.

ULLCA lifted its provisions on this topic virtually verbatim from the RMBCA. This draft takes the same approach, making a few stylistic changes plus a few substantive additions necessitated by the personal liability of general partners in an ordinary (i.e., non-LLLP) limited partnership.

Section 803B is derived from ULLCA § 807 and RMBCA § 14.06.

434. This provision is needed due to the personal liability of general partners in an ordinary limited partnership and does not appear in the RMBCA/ULLCA formulation.

435. The phrase "against the limited partnership" is added to make clear that bringing a claim against an allegedly liable present or dissociated general partner does not save a claim against the limited partnership.

436. Section 803C is derived from ULLCA § 808 and RMBCA § 14.07.

437. This provision is needed due to the personal liability of general partners in an ordinary limited partnership and does not appear in the RMBCA/ULLCA formulation.

438. Arguably the reference should be "dissociated" partner, since the termination of a limited partnership ends partner status, but ULLCA uses "members" and RMBCA uses "shareholders."

439. ULLCA § 808(d)(2) does not include transferees.

commencement of the proceeding against the limited partnership) accomplishes the desired result -- i.e., preventing the bar.

445. The referenced provision provides for personal liability of general partners in an ordinary limited partnership.

446. Source: ULLCA § 809.

447. RMBCA includes three other grounds, omitted from ULLCA. See RMBCA § 14.20(3)-(5) (being without a registered agent or in-state office for 60 days or more; failing for 60 days or more to notify Secretary of State of certain changes in registered agent or in-state office; expiration of period of duration specified in articles of incorporation). Bert Black, the representative of the International Association of Corporation Administrators, suggests that "there needs to be some 'stick' to get the limited partnership to appoint a new agent" when the old agent resigns. He suggests administrative dissolution as that stick.

448. Source: ULLCA § 810, which closely follows RMBCA § 14.21.

449. ULLCA § 810(b) locates the "within" phrase in the middle of the sentence. The change from ULLCA is for ease in reading.

450. ULLCA § 801(b) refers to "service of the notice" -- an apparent residue from the RMBCA formulation.

451. ULLCA § 810(b) refers to a "certificate of dissolution." As much as possible, Re-RULPA reserves the term "certificate" for the certificate of limited partnership.

452. The same thing is true for non-administrative dissolution, but this draft does not say so. Query: should it?

453. Source: ULLCA § 811, which closely follows RMBCA § 14.22.

454. ULLCA § 811(a)(3) refers only to "ground." RMBCA § 14.22(a)(2) refers to "ground or grounds." The ULLCA version may reflect an oversight, since that version uses "have" -- i.e., "the ground for dissolution either did not exist or have [sic] been eliminated."

455. ULLCA § 811(b) refers to "certificate of reinstatement." As for why Re-RULPA uses "statement" instead of "certificate," see note 451, above.

456. ULLCA § 811(b) refers to "certificate of reinstatement." As for why Re-RULPA uses "statement" instead of "certificate," see note 451, above.

457. Source: ULLCA § 812. Earlier drafts omitted any parallel provision to ULLCA § 812 on the theory that, absent good reason to the contrary, a State's generally applicable provisions for appealing the actions of an administrative agency should apply to the Secretary of State's denial of reinstatement. Consistent with instructions to follow RUPA/ULLCA, Draft #3 includes an analog to ULLCA § 812.

458. This Section has been substantially revised to accord with RUPA § 807.

459. Source: RUPA § 807(a).

The reference to "threatened" harm is intended to encompass claims for injunctive relief and does not relax standards for proving injury.

483. Source: RUPA § 405(c).

484. This definition will allow limited partnerships to merge with organizations formed under the laws of other nations.

485. This definition does not encompass an owner's personal liability for approving or receiving improper distributions from the organization because that liability is not liability for an organization's debts and other obligations." (Emphasis added.)

486. Derived from RUPA § 905 and ULLCA § 904.

487. If another entity's governing law is silent on mergers with limited partnerships, this sentence purports to authorize the other entity's participation in the merger. This approach is certainly effective if the limited partnership acting under this Act and the other entity are both creatures of the same state. The approach is arguably problematic, however, if the other entity is a creature of another state. Even if that other state's law does not prohibit the merger, by what power does one state authorize another state's entity to participate in a merger? Nonetheless, a number of LLC statutes have taken this approach.

488. What protection exists for holders of such "bare" interests? They have no right to vote and no right to seek appraisal. Contrast the situation for partners who lack enough votes to block a merger. Suppose, for example, that: (i) a limited partnership has two classes of limited partner interests, (ii) the partnership agreement allows a merger to occur if a majority of all interests, voting in the aggregate, concur, and (iii) a merger is proposed and approved with provisions that significantly prejudice one of the classes. At least the owners of interests of the disadvantaged class can claim breach of the duty of good faith and fair dealing. Transferees do not even have that recourse. One possible solution -- extend the obligation of good faith and fair dealing to transferees, but only in the context of a merger.

489. The partnership agreement can vary this default rule. Query: should the Act provide that the vote or consent necessary to approve a merger must be no less than the vote necessary to amend the partnership agreement? Otherwise, a craftily or clumsily drafted agreement might allow circumvention of the agreement's amendment provision.

490. This provision is nonwaivable, giving a partner veto rights over any merger that would increase the partner's exposure to owner vicarious liability. The provision does not protect a limited partner who desires to have the general partners remain personally liable for the debts of the entity. That desire is not nearly so fundamental as a person's own exposure to owner vicarious liability and can be adequately addressed by the limited partner insisting on appropriate protections in the partnership agreement.

491. N.b. -- this general principle triggers the nonwaivable veto right for each particular partner only to the extent the weaker shield affects that particular partner. For example, if a Re-RULPA limited partnership merges into a RULPA limited partnership, this clause will not trigger a veto right for the Re-RULPA limited partnership's general partners. Their shield is not degraded, although the shield for the Re-RULPA limited partners would be.

492. The increased susceptibility described in this paragraph could happen in two ways: (1) The surviving organization could have a lesser shield than the limited partnership (e.g., a limited partnership merging into a general partnership, an LLLP merging into an ordinary limited partnership, a Re-RULPA limited partnership merging into a RULPA limited partnership [the Re-RULPA shield is more protective for limited partners]). (2) The merger might cause a partner to change to an ownership capacity with a lesser shield (e.g., a limited partner becoming a general partner).

493. Derived from ULLCA § 905.

494. ULLCA § 905(4) refers to "the name and address of the surviving limited liability company." RMBCA § 11.03 does not require any address for the surviving corporation.

495. Neither RUPA nor ULLCA requires the articles of merger to include the plan of merger. See RUPA §§ 905(e)(2) (providing merely that a merger does not take effect until "the filing of all documents required by law to be filed as a condition to the effectiveness of the merger" but not requiring the filing of the plan) and 907 (providing for the optional filing of a statement of merger and not requiring that statement to contain the plan of merger) and ULLCA § 905(a) (listing the required contents of the articles of merger and omitting any reference to the contents of the plan of merger). In contrast, RMBCA § 11.05(a)(1) does require the articles of merger to include the of plan of merger.

496. This Act would mandate the approval process either if the constituent organization is a limited partnership formed under this Act or if the organization's own governing statute provides no approval process. See Section 1102(d)(2) (providing in the latter circumstances for approval by unanimous consent of the owners)

497. The effective date may simply be the date upon which Section 1104(a)(1) is satisfied.

498. Derived from RUPA §§ 905(e) and 906 and ULLCA § 906.

499. Under this provision the merger is not effective as to a Re-RULPA limited partnership until the merger is effective as to each constituent organization. The provision aims principally at filing requirements imposed by other governing statutes.

500. ULLCA has this exception, but applies it only to transfer of rights. ULLCA § 906(a)(5). If the exception makes sense, it should apply equally to property. Indeed, property ownership is often viewed as comprising a bundle of rights. In contrast, RMBCA § 11.06 makes no reference to the transfer of non-property rights and states no exception for the property transfer.

501. For Comment -- This provision encompasses any obligations created by appraisal rights that may be contained in a constituent organization's governing statute.

502. RMBCA § 11.06(a)(4), RUPA § 906(a)(4), and ULLCA 906(a)(4) all have this disjunctive provision, but none explain who makes the choice between the two options.

503. The reference to "interests" rather than "ownership interests" is purposeful. The merger might involve conversion of bare transferable interests.

504. This subsection may seem unnecessary, because no one can have the power to bind a nonexistent organization. However, a contrary argument is possible under Section 1104(b)(3). That section, derived from ULLCA § 906(a)(3), provides that "all obligations of each constituent organization become the obligations of the surviving organization." It could be argued that:

• where a constituent organization's governing statute provides for a former owner's lingering power to bind, and

• where the merger statute makes the surviving organization liable for the debts of the non-surviving organization, then

• the lingering power to bind should bind the surviving organization.

This subsection negates and precludes that argument.

505. The contrary agreement could occur in the partnership agreement or in the plan of merger.

506. Since the merger is not an event of dissolution, there is no obligation to marshall assets, pay off creditors, settle accounts among partners, or deliver to the Secretary of State a declaration of termination. Presumably the Secretary of State's records will connect the articles of merger with the limited partnership's certificate of limited partnership.

507. This subsection will be re-worked in conjunction with the revisions to Article 9.

508. For Comment -- A foreign surviving organization will be the successor in interest to a domestic limited partnership (which of course is authorized to do business in the State) and perhaps to other organizations authorized to do business in the State. The foreign surviving organization does not succeed to that authorization but must instead comply with the applicable state statute granting authority to transact business.