SB276: Bill Text

SB276,1,9 An Act to renumber and amend 70.21, 178.12, 178.35 (1) and 178.35 (2); to amend 14.38 (14) (intro.), 178.03 (1), 178.15 (1), 178.31 (4), 178.35 (4), 180.0401 (2) (b), 180.0401 (3) (a), 180.1506 (2) (b), 180.1506 (3) (a), 181.06 (3) (intro.), 183.0102 (18), 183.0103 (2) (a), 183.0103 (2) (b), 183.0103 (3) and 183.0103 (4) (a); and to create 70.21 (2), 178.01 (2) (dm), 178.01 (2) (g), 178.12 (2), (3) and (4), 178.29 (3), 178.40, 178.41, 178.42, 178.43, 178.44, 178.45, 178.46, 178.47, 178.48, 178.49, 178.50, 178.51, 178.52, 178.53, 180.0401 (2) (a) 9., 180.1506 (2) (a) 9. and 183.1002 (3) (d) of the statutes; relating to: limited liability partnerships.

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:

SB276, s. 1 Section 1. 14.38 (14) (intro.) of the statutes is amended to read:

SB276,4,15 14.38 (14) Name of drafter on documents. (intro.) No articles of incorporation, articles of organization, articles of amendment, articles of merger, consolidation or share exchange, articles of dissolution, restated articles of incorporation, certificate of abandonment, or statement or articles of revocation of voluntary dissolution, provided for pursuant to ch. 180, 181, 183, 185 or 187; no registration statement, amendment of a registration statement, or written notice of withdrawal under s. 178.40; and no certificate of limited partnership, certificate of amendment, restated certificate of limited partnership or certificate of cancellation, provided for pursuant to ch. 179, shall be filed by the secretary of state unless the name of the individual who, or the governmental agency which, drafted such document is printed, typewritten, stamped or written thereon in a legible manner. A document complies with this subsection if it contains a statement in the following form: "This document was drafted by.... (Name)". This subsection shall not apply to a document executed prior to December 1, 1967, or to:

SB276, s. 2 Section 2. 70.21 of the statutes is renumbered 70.21 (1) and amended to read:

SB276,5,11 70.21 (1) The Except as provided in sub. (2), the personal property of a partnership may be assessed in the names of the persons composing such partnership, so far as known or in the firm name or title under which the partnership business is conducted, and each partner shall be liable for the taxes levied thereon. Undistributed personal property belonging to the estate of a person deceased shall be assessed to the executor or administrator if one shall have been appointed and qualified, on the first day of January in the year in which the assessment is made, otherwise it may be assessed to the estate of such deceased person, and the tax thereon shall be paid by the executor or administrator if one be thereafter appointed, otherwise by the person or persons in possession of such property at the time of the assessment.

SB276, s. 3 Section 3. 70.21 (2) of the statutes is created to read:

SB276,5,15 70.21 (2) The personal property of a limited liability partnership shall be assessed in the name of the partnership, and each partner shall be liable for the taxes levied thereon only to the extent permitted under s. 178.12.

SB276, s. 4 Section 4. 178.01 (2) (dm) of the statutes is created to read:

SB276,5,19 178.01 (2) (dm) "Foreign registered limited liability partnership" means a limited liability partnership formed pursuant to an agreement governed by the laws of another state or country and registered under the laws of that jurisdiction.

SB276, s. 5 Section 5. 178.01 (2) (g) of the statutes is created to read:

SB276,5,23 178.01 (2) (g) "Registered limited liability partnership" means a partnership formed pursuant to an agreement governed by the laws of this state and registered under s. 178.40.

SB276, s. 6 Section 6. 178.03 (1) of the statutes is amended to read:

SB276,6,3 178.03 (1) A partnership is an association of 2 or more persons to carry on as coowners a business for profit. A partnership includes a registered limited liability partnership and a foreign registered limited liability partnership.

SB276, s. 7 Section 7. 178.12 of the statutes is renumbered 178.12 (1) (intro.) and amended to read:

SB276,6,6 178.12 (1) (intro.) All Except as provided in sub. (2), all partners are liable:

SB276,6,8 (a) Jointly and severally for everything chargeable to the partnership under ss. 178.10 and 178.11;.

SB276,6,10 (b) jointly Jointly for all other debts and obligations of the partnership;, but any partner may enter into a separate obligation to perform a partnership contract.

SB276, s. 8 Section 8. 178.12 (2), (3) and (4) of the statutes are created to read:

SB276,6,18 178.12 (2) Except as provided in sub. (3), a partner in a registered limited liability partnership is not personally liable directly or indirectly, or by way of indemnification, contribution, assessment or otherwise, for any debt, obligation or liability of the partnership, whether in tort, contract or otherwise, and including any debt, obligation or liability arising from omissions, negligence, wrongful acts, misconduct or malpractice, arising while the partnership is a registered limited liability partnership.

SB276,6,20 (3) Subsection (2) does not affect the liability of a partner in a registered limited liability partnership for any of the following:

SB276,6,22 (a) The partner's own omissions, negligence, wrongful acts, misconduct or malpractice.

SB276,7,2 (b) 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.

SB276,7,4 (c) Any other debts, obligations and liabilities resulting from the partner's acts or conduct other than as a partner.

SB276,7,5 (d) Any liability that the partner may have under s. 13.69 (1).

SB276,7,9 (4) A partner in a registered limited liability partnership is not a proper defendant in a proceeding to recover damages or to enforce obligations of the type described in sub. (2) unless the partner is alleged in good faith to be personally liable under sub. (3).

SB276, s. 9 Section 9. 178.15 (1) of the statutes is amended to read:

SB276,7,16 178.15 (1) Each partner shall be repaid that partner's contributions, whether by way of capital or advances to the partnership property and share equally in the profits and surplus remaining after all liabilities, including those to partners, are satisfied; and, except as provided in s. 178.12 (2), each partner must contribute towards the losses, whether of capital or otherwise, sustained by the partnership according to that partner's share in the profits.

SB276, s. 10 Section 10. 178.29 (3) of the statutes is created to read:

SB276,7,19 178.29 (3) The liability is for a debt, obligation or liability for which the partner is not liable as provided in s. 178.12 (2).

SB276, s. 11 Section 11. 178.31 (4) of the statutes is amended to read:

SB276,7,24 178.31 (4) The individual property of a deceased partner shall be liable for all those obligations of the partnership incurred while the deceased partner was a partner and for which the deceased partner was liable under s. 178.12 but subject to the prior payment of the deceased partner's separate debts.

SB276, s. 12 Section 12. 178.35 (1) of the statutes is renumbered 178.35 (1) (intro.) and amended to read:

SB276,8,3 178.35 (1) (intro.) The assets of the partnership are all of the following:

SB276,8,4 (a) the partnership Partnership property,.

SB276,8,6 (b) the contributions Contributions of the partners specified in sub. (4) that are necessary for the payment of all the liabilities specified in sub. (2).

SB276, s. 13 Section 13. 178.35 (2) of the statutes is renumbered 178.35 (2) (intro.) and amended to read:

SB276,8,10 178.35 (2) (intro.) The liabilities of the partnership shall rank in order of payment, as follows:

SB276,8,11 (a) those Those owing to creditors other than partners;.

SB276,8,12 (b) those Those owing to partners other than for capital and profits;.

SB276,8,13 (c) those Those owing to partners in respect of capital;.

SB276,8,14 (d) those Those owing to partners in respect of profits.

SB276, s. 14 Section 14. 178.35 (4) of the statutes is amended to read:

SB276,8,21 178.35 (4) The Except as provided in s. 178.12 (2), the partners shall contribute, as provided by s. 178.15 (1), the amount necessary to satisfy the liabilities, but and if any, but not all, of the partners are insolvent, or, not being subject to process, refuse to contribute, the other partners shall contribute their share of the liabilities, and, in the relative proportions in which they share the profits, the additional amount necessary to pay the liabilities.

SB276, s. 15 Section 15. 178.40 of the statutes is created to read:

SB276,9,2 178.40 Registration of limited liability partnerships. (1) To become a registered limited liability partnership or a foreign registered limited liability partnership, a partnership shall file with the secretary of state the fee specified in s. 178.48 and a registration statement that includes all of the following:

SB276,9,3 (a) A name for the partnership that complies with s. 178.42.

SB276,9,5 (b) If a foreign registered limited liability partnership, the name of the state or country under whose law it is formed.

SB276,9,6 (c) The mailing address of its principal office.

SB276,9,8 (d) The street address of the registered office and the name and address of the registered agent at that office for service of process.

SB276,9,10 (e) A statement that the partnership registers as a registered limited liability partnership or a foreign registered limited liability partnership.

SB276,9,11 (f) Any other information that the partnership determines to include.

SB276,9,14 (2) A registered limited liability partnership or a foreign registered limited liability partnership may amend its registration statement at any time by filing with the secretary of state a statement that includes all of the following:

SB276,9,15 (a) The name of the partnership.

SB276,9,17 (b) If a foreign registered limited liability partnership, the name of the state or country under whose law it is formed.

SB276,9,18 (c) The date of the filing of the original registration statement.

SB276,9,19 (d) The amendment to the registration statement.

SB276,9,23 (3) A registered limited liability partnership or a foreign registered limited liability partnership may terminate its registration by filing with the secretary of state the fee specified in s. 178.48 and a written notice of withdrawal that includes all of the following:

SB276,9,24 (a) The name of the partnership.

SB276,10,2 (b) If a foreign registered limited liability partnership, the name of the state or country under whose law it is formed.

SB276,10,3 (c) A statement that the partnership withdraws its registration.

SB276, s. 16 Section 16. 178.41 of the statutes is created to read:

SB276,10,6 178.41 Effect of registration. (1) A registration of a limited liability partnership is effective when the registration statement takes effect under s. 178.49.

SB276,10,11 (a) The secretary of state's filing of a registration statement is conclusive proof that the partnership is registered as a registered limited liability partnership or a foreign registered limited liability partnership under this chapter, except in a proceeding by the state to revoke the registration, and is notice of all other facts set forth in the registration statement.

SB276,10,15 (b) The secretary of state's filing of a registration statement of a foreign registered limited liability partnership under s. 178.40 constitutes its certificate of authority to transact business in this state and is notice of all other facts set forth in the registration statement.

SB276,10,18 (2) (a) A partnership that registers as a registered limited liability partnership is for all purposes the same partnership that existed before the registration and continues to be a partnership under the laws of this state.

SB276,11,4 (b) If a registered limited liability partnership or a foreign registered limited liability partnership dissolves for any reason and its business continues without winding up the partnership affairs and without liquidating or terminating the partnership, and so long as the partnership continues to comply with s. 178.42, the registration of the registered limited liability partnership or the foreign registered limited liability partnership shall continue to be applicable to the partnership continuing the business, and the partnership shall not be required to file a new registration statement. The partnership continuing the business shall be considered to have filed any documents required or permitted under this chapter which were filed by the dissolved registered limited liability partnership or foreign registered limited liability partnership.

SB276,11,10 (3) If a registered limited liability partnership or a foreign registered limited liability partnership dissolves for any reason and winds up its affairs, liquidates or terminates, the registration statement remains in effect as to the partnership and partners during the period of winding up and remains in effect as to the partners after liquidation or termination with respect to liabilities of the partnership incurred, assumed or arising before the effective date of liquidation or termination.

SB276,11,17 (4) A partnership continues as a registered limited liability partnership or foreign registered limited liability partnership if there is substantial compliance with the requirements of this chapter. The status of a partnership as a registered limited liability partnership or foreign registered limited liability partnership and the liability of a partner of that registered limited liability partnership or foreign registered limited liability partnership shall not be adversely affected by errors or subsequent changes in the information stated in any filing under this chapter.

SB276, s. 17 Section 17. 178.42 of the statutes is created to read:

SB276,11,22 178.42 Name of registered limited liability partnership. (1) The name of a registered limited liability partnership shall 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.

SB276,12,2 (2) The name of a foreign registered limited liability partnership transacting business in this state shall contain the words "Registered Limited Liability Partnership" or "Limited Liability Partnership" or the abbreviation "L.L.P." or "LLP", or other words or abbreviations as may be required or authorized by the laws of the jurisdiction in which the partnership is formed.

SB276,12,5 (3) Except as provided in sub. (4), the name of a registered limited liability partnership shall be distinguishable upon the records of the secretary of state from all of the following names:

SB276,12,8 (a) The name of any other domestic or foreign registered limited liability partnership, limited partnership, or limited liability company existing, registered or licensed to transact business under the laws of this state.

SB276,12,9 (b) Any name reserved or registered under ch. 179 or 183.

SB276,12,14 (4) The name of a registered limited liability partnership is not distinguishable from a name referred to under sub. (3) (a) and (b) if the only difference between it and the other name is the inclusion or absence of a word or words referred to in sub. (1) or (2) or the words "limited partnership", "limited liability company" or abbreviations of these words.

SB276,12,18 (5) If the name of a domestic or foreign limited liability partnership is not distinguishable from a name referred to under sub. (3) (a) and (b), the domestic or foreign limited liability partnership may register under a fictitious name that is distinguishable from a name referred to under sub. (3) (a) and (b).

SB276, s. 18 Section 18. 178.43 of the statutes is created to read: