LRB-4038/1
KSH:jrd:aj
1995 - 1996 LEGISLATURE
August 7, 1995 - Introduced by Representatives Green, Kaufert, Ainsworth,
Ziegelbauer, Urban, Hoven, Ladwig, Gard, Hahn, Schneiders, Zukowski,
Vrakas, La Fave, Albers, Goetsch, F. Lasee, Jensen, Olsen, Kreibich, Duff,
Kelso, Seratti, Ott, Klusman, Grothman and Baldus, cosponsored by
Senators Farrow, Fitzgerald, Petak, Chvala, Schultz, Jauch, Huelsman,
Wineke, Cowles, Burke and Plewa. Referred to Committee on Small Business
and Economic Development.
AB498,1,9
1An Act to renumber and amend 70.21, 178.12, 178.35 (1) and 178.35 (2);
to
2amend 14.38 (14) (intro.), 178.03 (1), 178.15 (1), 178.31 (4), 178.35 (4), 180.0401
3(2) (b), 180.0401 (3) (a), 180.1506 (2) (b), 180.1506 (3) (a), 181.06 (3) (intro.),
4183.0102 (18), 183.0103 (2) (a), 183.0103 (2) (b), 183.0103 (3) and 183.0103 (4)
5(a); and
to create 70.21 (2), 178.01 (2) (dm), 178.01 (2) (g), 178.12 (2), (3) and
6(4), 178.29 (3), 178.40, 178.41, 178.42, 178.43, 178.44, 178.45, 178.46, 178.47,
7178.48, 178.49, 178.50, 178.51, 178.52, 178.53, 180.0401 (2) (a) 9., 180.1506 (2)
8(a) 9. and 183.1002 (3) (d) of the statutes;
relating to: limited liability
9partnerships.
Analysis by the Legislative Reference Bureau
This bill permits a business entity to be organized as a limited liability
partnership (LLP) in this state. An LLP possesses most of the attributes of a
partnership, such as flexible organization and the ability to pass income and losses
through to the partners for income tax purposes. However, unlike a partner in a
general partnership, a partner in an LLP is generally not personally liable for a debt,
obligation or liability of the partnership, including any debt, obligation or liability
arising from omissions, negligence, wrongful acts, misconduct or malpractice that
arises while the partnership is a registered LLP. A partner in a registered LLP
remains liable for all of the following: the partner's own omissions, negligence,
wrongful acts, misconduct or malpractice; the omissions, negligence, wrongful acts,
misconduct or malpractice of any person acting under the partner's actual
supervision and control in the specific activity in which the omissions, negligence,
wrongful acts, misconduct or malpractice occurred; and any debts, obligations and
liabilities resulting from the partner's acts or conduct incurred other than while as
a partner. The bill also permits foreign LLPs to transact business in this state. The
internal affairs of these foreign registered LLPs, including the liability of partners
for debts, obligations and liabilities of the partnership, are governed by the laws of
the jurisdiction in which the foreign registered LLP was formed.
In order for the partners of a domestic LLP to have limited liability and in order
for a foreign LLP to transact business in this state, the LLP must file a registration
statement with the secretary of state. The registration statement must be
accompanied by a $100 filing fee and must include certain specified information,
such as the name of the partnership, the mailing address of the partnership's
principal office, the address of the registered office and the name and address of the
registered agent for service of process and a statement that the partnership is
registering as an LLP. This registration statement may be amended, by filing a
statement which includes the name of the partnership, the date on which the original
registration statement was filed and the amendment to the registration statement.
A $40 fee is required to amend a registration statement. The registration of the LLP
may be terminated by filing a written notice of withdrawal and paying a termination
fee of $40. Foreign registered LLPs must include the name of the state or country
under whose law the LLP was originally formed when filing a registration statement
or in an amendment of their registration statement and in any written notice of
withdrawal. The bill requires the secretary of state to prescribe, and furnish on
request, forms for registration statements, amendments to registration statements
and notices of withdrawal. The bill sets forth a number of technical requirements
for filing these documents.
The bill also requires registered LLPs and foreign registered LLPs to comply
with a number of requirements regarding their names, registered offices and agents.
The name of a registered LLP must contain the words "Registered Limited Liability
Partnership" or "Limited Liability Partnership" or the abbreviation "L.L.P" or "LLP"
as the last words or letters of its name. Foreign LLPs must meet the same
requirement, unless other words or abbreviations are required by the laws of the
jurisdiction in which the partnership is formed. The name of the LLP must be
distinguishable from certain other names, including the names of other domestic or
foreign LLPs, limited partnerships, limited liability companies that are existing,
registered or licensed to transact business in this state. If a name is not
distinguishable from another name, the LLP may register under a fictitious name
that is distinguishable. Registered LLPs and foreign registered LLPs must
continuously maintain a registered office and have a registered agent. The bill
requires registered agents to be one of the following: 1) a natural person residing in
the state whose business office is identical with the registered office, 2) a domestic
corporation, nonstock corporation, limited liability company, limited partnership or
registered LLP, or 3) a foreign corporation, foreign limited liability company, foreign
limited partnership or foreign registered LLP if that entity is authorized to transact
business in the state and has a business office that is identical with the registered
office. The registered agent is the agent of the registered LLP or foreign registered
LLP for service of process. The bill provides for alternative methods of the service
of process on registered LLPs and foreign LLPs if there is no registered agent or if
the agent cannot be served with reasonable diligence.
The bill imposes certain filing duties on the secretary of state. Upon receiving
a document from an LLP or foreign LLP for filing, the secretary of state is required
to endorse the document with the date and time of receipt. The secretary is also
required to file the document by endorsing it as "filed", unless the registered LLP or
foreign registered LLP is in default with the payment of a fee required under the bill
or unless the secretary of state determines that the document does not meet the
requirements specified in this bill for that filing. Upon request, the secretary of state
is also required to endorse a duplicate document copy as confirmation of the date and
time of receipt and of its filing. The bill contains specific provisions on the effect of
the secretary of state's refusal to file the document, the procedures that the secretary
of state must follow in refusing to file a document, and the procedures for appealing
the secretary of state's refusal to file a document.
The registration of the LLP by the secretary of state has a number of effects
under the bill. The filing of the registration statement with the secretary of state is
conclusive proof that the partnership is registered as a registered LLP, except in a
proceeding by the state to revoke the registration, and is notice of all other facts set
forth in the registration statement. Filing by the secretary of state of a registration
statement by a foreign registered LLP constitutes its certificate of authority to
transact business in this state. A partnership that registered as a registered LLP
is considered to be the same partnership that existed before that registration. If a
registered LLP or foreign LLP dissolves for any reason but continues to transact
business, the registration of the registered LLP or foreign LLP continues to apply to
the partnership that is transacting business and no new registration statement is
required. If the registered LLP or foreign LLP dissolves and winds up its affairs, the
registration statement remains in effect during this period and, if the partnership
is liquidated or terminated, the registration statement continues to remain in effect
with respect to the liability of the partners for liabilities of the partnership that were
incurred, assumed or arose before the effective date of the liquidation or termination.
The bill contains specific provisions dealing with the effect of the filing, by the
secretary of state, of a registration statement of a foreign registered LLP. If the
foreign registered LLP conducts business in this state without filing a registration
statement and without obtaining a certificate of authority, the bill provides that the
foreign registered LLP may not maintain a proceeding in a court of this state. The
failure of a foreign registered LLP to obtain a certificate of authority prior to
transacting business in this state does not impair the validity of any contract or act
of the LLP and does not affect the right of any other party to a contract to maintain
an action in a court in this state or the right of the foreign registered LLP to defend
itself in any civil, criminal, administrative or investigatory proceeding in any court
in the state. This failure does, however, result in the LLP's liability to the state for
the sum of a) all fees that would have been imposed under the bill if the foreign
registered LLP had applied for and received a certificate of authority and b) an
additional 50% of the amount of these fees or $5,000, whichever is less. The secretary
of state may not issue a certificate of authority to the foreign registered LLP until
this liability to the state has been paid. A partner of a foreign registered LLP is not
liable for the debts and obligations of the partnership solely because the partnership
transacted business in this state without a certificate of authority.
Under current law, "security" is defined to include, among other things, stock
in corporations and limited partnership interests. This bill does not amend the
definition of security to specifically include interests in limited liability
partnerships.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB498, s. 1
1Section
1. 14.38 (14) (intro.) of the statutes is amended to read:
AB498,4,152
14.38
(14) Name of drafter on documents. (intro.) No articles of
3incorporation, articles of organization, articles of amendment, articles of merger,
4consolidation or share exchange, articles of dissolution, restated articles of
5incorporation, certificate of abandonment, or statement or articles of revocation of
6voluntary dissolution, provided for pursuant to ch. 180, 181, 183, 185 or 187
; no
7registration statement, amendment of a registration statement, or written notice of
8withdrawal under s. 178.40; and no certificate of limited partnership, certificate of
9amendment, restated certificate of limited partnership or certificate of cancellation,
10provided for pursuant to ch. 179, shall be filed by the secretary of state unless the
11name of the individual who, or the governmental agency which, drafted such
12document is printed, typewritten, stamped or written thereon in a legible manner.
13A document complies with this subsection if it contains a statement in the following
14form: "This document was drafted by.... (Name)". This subsection shall not apply to
15a document executed prior to December 1, 1967, or to:
AB498, s. 2
16Section
2. 70.21 of the statutes is renumbered 70.21 (1) and amended to read:
AB498,5,11
170.21
(1) The Except as provided in sub. (2), the personal property of a
2partnership may be assessed in the names of the persons composing such
3partnership, so far as known or in the firm name or title under which the partnership
4business is conducted, and each partner shall be liable for the taxes levied thereon.
5Undistributed personal property belonging to the estate of a person deceased shall
6be assessed to the executor or administrator if one shall have been appointed and
7qualified, on the first day of January in the year in which the assessment is made,
8otherwise it may be assessed to the estate of such deceased person, and the tax
9thereon shall be paid by the executor or administrator if one be thereafter appointed,
10otherwise by the person or persons in possession of such property at the time of the
11assessment.
AB498, s. 3
12Section
3. 70.21 (2) of the statutes is created to read:
AB498,5,1513
70.21
(2) The personal property of a limited liability partnership shall be
14assessed in the name of the partnership, and each partner shall be liable for the taxes
15levied thereon only to the extent permitted under s. 178.12.
AB498, s. 4
16Section
4. 178.01 (2) (dm) of the statutes is created to read:
AB498,5,1917
178.01
(2) (dm) "Foreign registered limited liability partnership" means a
18limited liability partnership formed pursuant to an agreement governed by the laws
19of another state or country and registered under the laws of that jurisdiction.
AB498, s. 5
20Section
5. 178.01 (2) (g) of the statutes is created to read:
AB498,5,2321
178.01
(2) (g) "Registered limited liability partnership" means a partnership
22formed pursuant to an agreement governed by the laws of this state and registered
23under s. 178.40.
AB498, s. 6
24Section
6. 178.03 (1) of the statutes is amended to read:
AB498,6,3
1178.03
(1) A partnership is an association of 2 or more persons to carry on as
2coowners a business for profit.
A partnership includes a registered limited liability
3partnership and a foreign registered limited liability partnership.
AB498, s. 7
4Section
7. 178.12 of the statutes is renumbered 178.12 (1) (intro.) and
5amended to read:
AB498,6,66
178.12
(1) (intro.)
All Except as provided in sub. (2), all partners are liable:
AB498,6,87
(a) Jointly and severally for everything chargeable to the partnership under ss.
8178.10 and 178.11
;.
AB498,6,109
(b)
jointly Jointly for all other debts and obligations of the partnership
;, but any
10partner may enter into a separate obligation to perform a partnership contract.
AB498, s. 8
11Section
8. 178.12 (2), (3) and (4) of the statutes are created to read:
AB498,6,1812
178.12
(2) Except as provided in sub. (3), a partner in a registered limited
13liability partnership is not personally liable directly or indirectly, or by way of
14indemnification, contribution, assessment or otherwise, for any debt, obligation or
15liability of the partnership, whether in tort, contract or otherwise, and including any
16debt, obligation or liability arising from omissions, negligence, wrongful acts,
17misconduct or malpractice, arising while the partnership is a registered limited
18liability partnership.
AB498,6,20
19(3) Subsection (2) does not affect the liability of a partner in a registered limited
20liability partnership for any of the following:
AB498,6,2221
(a) The partner's own omissions, negligence, wrongful acts, misconduct or
22malpractice.
AB498,7,223
(b) The omissions, negligence, wrongful acts, misconduct or malpractice of any
24person acting under the partner's actual supervision and control in the specific
1activity in which the omissions, negligence, wrongful acts, misconduct or
2malpractice occurred.
AB498,7,43
(c) Any other debts, obligations and liabilities resulting from the partner's acts
4or conduct other than as a partner.
AB498,7,55
(d) Any liability that the partner may have under s. 13.69 (1).
AB498,7,9
6(4) A partner in a registered limited liability partnership is not a proper
7defendant in a proceeding to recover damages or to enforce obligations of the type
8described in sub. (2) unless the partner is alleged in good faith to be personally liable
9under sub. (3).
AB498, s. 9
10Section
9. 178.15 (1) of the statutes is amended to read:
AB498,7,1611
178.15
(1) Each partner shall be repaid that partner's contributions, whether
12by way of capital or advances to the partnership property and share equally in the
13profits and surplus remaining after all liabilities, including those to partners, are
14satisfied; and
, except as provided in s. 178.12 (2), each partner must contribute
15towards the losses, whether of capital or otherwise, sustained by the partnership
16according to that partner's share in the profits.
AB498, s. 10
17Section
10. 178.29 (3) of the statutes is created to read:
AB498,7,1918
178.29
(3) The liability is for a debt, obligation or liability for which the partner
19is not liable as provided in s. 178.12 (2).
AB498, s. 11
20Section
11. 178.31 (4) of the statutes is amended to read:
AB498,7,2421
178.31
(4) The individual property of a deceased partner shall be liable for
all 22those obligations of the partnership incurred while the deceased partner was a
23partner
and for which the deceased partner was liable under s. 178.12 but subject
24to the prior payment of the deceased partner's separate debts.
AB498, s. 12
1Section
12. 178.35 (1) of the statutes is renumbered 178.35 (1) (intro.) and
2amended to read:
AB498,8,33
178.35
(1) (intro.) The assets of the partnership are
all of the following:
AB498,8,44
(a)
the partnership Partnership property
,.
AB498,8,65
(b)
the contributions Contributions of the partners
specified in sub. (4) that are 6necessary for the payment of all the liabilities
specified in sub. (2).
AB498, s. 13
7Section
13. 178.35 (2) of the statutes is renumbered 178.35 (2) (intro.) and
8amended to read:
AB498,8,109
178.35
(2) (intro.) The liabilities of the partnership shall rank in order of
10payment, as follows:
AB498,8,1111
(a)
those Those owing to creditors other than partners
;.
AB498,8,1212
(b)
those Those owing to partners other than for capital and profits
;.
AB498,8,1313
(c)
those Those owing to partners in respect of capital
;.
AB498,8,1414
(d)
those Those owing to partners in respect of profits.
AB498, s. 14
15Section
14. 178.35 (4) of the statutes is amended to read:
AB498,8,2116
178.35
(4) The Except as provided in s. 178.12 (2), the partners shall contribute,
17as provided by s. 178.15 (1), the amount necessary to satisfy
the liabilities,
but and 18if any, but not all, of the partners are insolvent, or, not being subject to process, refuse
19to contribute, the other partners shall contribute their share of the liabilities, and,
20in the relative proportions in which they share the profits, the additional amount
21necessary to pay the liabilities.
AB498, s. 15
22Section
15. 178.40 of the statutes is created to read:
AB498,9,2
23178.40 Registration of limited liability partnerships. (1) To become a
24registered limited liability partnership or a foreign registered limited liability
1partnership, a partnership shall file with the secretary of state the fee specified in
2s. 178.48 and a registration statement that includes all of the following:
AB498,9,33
(a) A name for the partnership that complies with s. 178.42.
AB498,9,54
(b) If a foreign registered limited liability partnership, the name of the state
5or country under whose law it is formed.
AB498,9,66
(c) The mailing address of its principal office.
AB498,9,87
(d) The street address of the registered office and the name and address of the
8registered agent at that office for service of process.
AB498,9,109
(e) A statement that the partnership registers as a registered limited liability
10partnership or a foreign registered limited liability partnership.
AB498,9,1111
(f) Any other information that the partnership determines to include.
AB498,9,14
12(2) A registered limited liability partnership or a foreign registered limited
13liability partnership may amend its registration statement at any time by filing with
14the secretary of state a statement that includes all of the following: