SB657: Bill Text

SB657,53,21 (2) To the extent the partnership agreement of a limited liability partnership expressly relieves a partner of the authority and responsibility to consent to distributions and imposes that authority and responsibility on one or more other partners, the liability stated in sub. (1) applies to the other partners and not to the partner that the partnership agreement relieves of the authority and responsibility.

SB657,53,25 (3) A person that receives a distribution knowing that the distribution violated s. 178.0406 is personally liable to the limited liability partnership but only to the extent that the distribution received by the person exceeded the amount that could have been properly paid under s. 178.0406.

SB657,54,2 (4) A person against which an action is commenced because the person is liable under sub. (1) may do any of the following:

SB657,54,4 (a) Implead any other person that is liable under sub. (1) and seek to enforce a right of contribution from the person.

SB657,54,7 (b) Implead any person that received a distribution in violation of sub. (3) and seek to enforce a right of contribution from the person in the amount the person received in violation of sub. (3).

SB657,54,9 (5) An action under this section is barred unless commenced not later than 2 years after the distribution.

SB657,54,12 178.0408 Rights to information of partners and persons dissociated as partner. (1) A partnership shall keep its books and records, if any, at its principal office.

SB657,54,17 (2) On reasonable notice, a partner may inspect and copy during regular business hours, at a reasonable location specified by the partnership, any record maintained by the partnership regarding the partnership's business, financial condition, and other circumstances, to the extent the information is material to the partner's rights and duties under the partnership agreement or this chapter.

SB657,54,18 (3) The partnership shall furnish to each partner all of the following:

SB657,54,23 (a) Without demand, any information concerning the partnership's business, financial condition, and other circumstances which the partnership knows and is material to the proper exercise of the partner's rights and duties under the partnership agreement or this chapter, except to the extent the partnership can establish that it reasonably believes the partner already knows the information.

SB657,55,2 (b) On demand, any other information concerning the partnership's business, financial condition, and other circumstances, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.

SB657,55,5 (4) The duty to furnish information under sub. (3) also applies to each partner on whom a demand is made to the extent the partner knows any of the information described in sub. (3).

SB657,55,8 (5) Subject to sub. (10), on 10 days' demand made in a record received by a partnership, a person dissociated as a partner may have access to information to which the person was entitled while a partner if all of the following apply:

SB657,55,10 (a) The information pertains to the period during which the person was a partner.

SB657,55,11 (b) The person seeks the information in good faith.

SB657,55,12 (c) The person satisfies the requirements imposed on a partner by sub. (2).

SB657,55,15 (6) Not later than 10 days after receiving a demand under sub. (5), the partnership in a record shall inform the person that made the demand of all of the following:

SB657,55,17 (a) The information that the partnership will provide in response to the demand and when and where the partnership will provide the information.

SB657,55,19 (b) The partnership's reasons for declining, if the partnership declines to provide any demanded information.

SB657,55,21 (7) A partnership may charge a person that makes a demand under this section the reasonable costs of copying, limited to the costs of labor and material.

SB657,56,2 (8) A partner or person dissociated as a partner may exercise the rights under this section through an agent or, in the case of an individual under legal disability, a legal representative. Any restriction or condition imposed by the partnership agreement or under sub. (10) applies both to the agent or legal representative and to the partner or person dissociated as a partner.

SB657,56,4 (9) Subject to s. 178.0505, the rights under this section do not extend to a person as transferee.

SB657,56,11 (10) In addition to any restriction or condition stated in its partnership agreement, a partnership, as a matter within the ordinary course of its business, may impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient. In a dispute concerning the reasonableness of a restriction under this subsection, the partnership has the burden of proving reasonableness.

SB657,56,14 178.0409 Standards of conduct for partners. (1) A partner owes to the partnership and the other partners the duties of loyalty and care stated in subs. (2) and (3).

SB657,56,15 (2) The fiduciary duty of loyalty of a partner includes all of the following duties:

SB657,56,17 (a) The duty to account to the partnership and hold as trustee for it any property, profit, or benefit derived by the partner in or from any of the following:

SB657,56,18 1. The conduct or winding up of the partnership's business.

SB657,56,19 2. A use by the partner of the partnership's property.

SB657,56,20 3. The appropriation of a partnership opportunity.

SB657,56,23 (b) The duty to refrain from dealing with the partnership in the conduct or winding up of the partnership business as or on behalf of a person having an interest adverse to the partnership.

SB657,56,25 (c) The duty to refrain from competing with the partnership in the conduct of the partnership's business before the dissolution of the partnership.

SB657,57,3 (3) The duty of care of a partner in the conduct or winding up of the partnership business is to refrain from engaging in conduct for which relief or exoneration from liability is not permitted under s. 178.0105 (3) (h).

SB657,57,6 (4) A partner shall discharge the duties and obligations under this chapter or under the partnership agreement and exercise any rights thereunder consistently with the contractual obligation of good faith and fair dealing.

SB657,57,9 (5) A partner does not violate a duty or obligation under this chapter or under the partnership agreement solely because the partner's conduct furthers the partner's own interest.

SB657,57,13 (6) All the partners, or one or more disinterested partners with authority to act in the matter, may authorize or ratify, after full disclosure of all material facts, a specific act or transaction by a partner that otherwise would violate the duty of loyalty.

SB657,57,15 (7) It is a defense to a claim under sub. (2) (b) and any comparable claim in equity or at common law that the transaction was fair to the partnership.

SB657,57,19 (8) If, as permitted by sub. (6) or the partnership agreement, a partner enters into a transaction with the partnership which otherwise would be prohibited by sub. (2) (b), the partner's rights and obligations arising from the transaction are the same as those of a person that is not a partner.

SB657,57,22 178.0410 Actions by partnership and partners. (1) A partnership may maintain an action against a partner for a breach of the partnership agreement, or for the violation of a duty to the partnership, causing harm to the partnership.

SB657,58,2 (2) A partner may maintain an action against the partnership or another partner, with or without an accounting as to partnership business, to enforce the partner's rights and protect the partner's interests, including rights and interests under the partnership agreement or this chapter or arising independently of the partnership relationship.

SB657,58,4 (3) A right to an accounting on dissolution and winding up does not revive a claim barred by law.

SB657,58,10 178.0411 Continuation of partnership beyond definite term or particular undertaking. (1) If a partnership for a definite term or particular undertaking is continued, without an express agreement, after the expiration of the term or completion of the undertaking, the rights and duties of the partners remain the same as they were at the expiration or completion, so far as is consistent with a partnership at will.

SB657,58,14 (2) If the partners, or those of them who habitually acted in the business during the term or undertaking, continue the business without any settlement or liquidation of the partnership, they are presumed to have agreed that the partnership will continue.

SB657,58,15 subchapter V

SB657,58,16 TRANSFERABLE INTERESTS AND

SB657,58,17 RIGHTS OF transferees and

SB657,58,18 creditors

SB657,58,21 178.0501 Partner not co-owner of partnership property. A partner is not a co-owner of partnership property and has no interest in partnership property which can be transferred, either voluntarily or involuntarily.

SB657,58,23 178.0502 Nature of transferable interest. A transferable interest is personal property.

SB657,58,25 178.0503 Transfer of transferable interest. (1) All of the following apply to a transfer, in whole or in part, of a transferable interest:

SB657,59,1 (a) It is permissible.

SB657,59,3 (b) It does not by itself cause a person's dissociation as a partner or a dissolution and winding up of the partnership business.

SB657,59,5 (c) Subject to s. 178.0505, it does not entitle the transferee to do any of the following:

SB657,59,6 1. Participate in the management or conduct of the partnership's business.

SB657,59,8 2. Except as otherwise provided in sub. (3), have access to records or other information concerning the partnership's business.

SB657,59,9 (2) A transferee has the right to all of the following:

SB657,59,11 (a) To receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled.

SB657,59,13 (b) To seek under s. 178.0801 (5) a judicial determination that it is equitable to wind up the partnership business.

SB657,59,15 (3) In a dissolution and winding up of a partnership, a transferee is entitled to an account of the partnership's transactions only from the date of dissolution.

SB657,59,17 (4) A partnership need not give effect to a transferee's rights under this section until the partnership knows or has notice of the transfer.

SB657,59,20 (5) A transfer of a transferable interest in violation of a valid restriction on transfer contained in the partnership agreement is ineffective if the intended transferee has knowledge or notice of the restriction at the time of transfer.

SB657,59,24 (6) Except as otherwise provided in s. 178.0601 (4) (b), if a partner transfers a transferable interest, the transferor retains the rights of a partner other than the transferable interest transferred and retains all the duties and obligations of a partner.

SB657,60,4 (7) If a partner transfers a transferable interest to a person that becomes a partner with respect to the transferred interest, the transferee is liable for the partner's obligations under ss. 178.0404 and 178.0407 known to the transferee when the transferee becomes a partner.

SB657,60,10 178.0504 Charging order. (1) On application by a judgment creditor of a partner or transferee, a court may enter a charging order against the transferable interest of the judgment debtor for the unsatisfied amount of the judgment. A charging order constitutes a lien on a judgment debtor's transferable interest and requires the partnership to pay over to the person to which the charging order was issued any distribution that otherwise would be paid to the judgment debtor.

SB657,60,12 (2) To the extent necessary to effectuate the collection of distributions pursuant to a charging order in effect under sub. (1), the court may do any of the following:

SB657,60,14 (a) Appoint a receiver of the distributions subject to the charging order, with the power to make all inquiries the judgment debtor might have made.

SB657,60,15 (b) Make all other orders necessary to give effect to the charging order.

SB657,60,20 (3) Upon a showing that distributions under a charging order will not pay the judgment debt within a reasonable time, the court may foreclose the lien and order the sale of the transferable interest. The purchaser at the foreclosure sale obtains only the transferable interest, does not thereby become a partner, and is subject to s. 178.0503.

SB657,60,24 (4) At any time before foreclosure under sub. (3), the partner or transferee whose transferable interest is subject to a charging order under sub. (1) may extinguish the charging order by satisfying the judgment and filing a certified copy of the satisfaction with the court that issued the charging order.

SB657,61,4 (5) At any time before foreclosure under sub. (3), a partnership or one or more partners whose transferable interests are not subject to the charging order may pay to the judgment creditor the full amount due under the judgment and thereby succeed to the rights of the judgment creditor, including the charging order.

SB657,61,6 (6) This chapter does not deprive any partner or transferee of the benefit of any exemption law applicable to the transferable interest of the partner or transferee.

SB657,61,10 (7) This section provides the exclusive remedy by which a person seeking, in the capacity of a judgment creditor, to enforce a judgment against a partner or transferee may satisfy the judgment from the judgment debtor's transferable interest.

SB657,61,12 178.0505 Power of legal representative of deceased partner. If a partner dies, the deceased partner's legal representative may exercise any of the following:

SB657,61,13 (1) The rights of a transferee provided in s. 178.0503 (3).

SB657,61,15 (2) For purposes of settling the estate, the rights the deceased partner had under s. 178.0408.

SB657,61,16 subchapter vi

SB657,61,17 dissociation

SB657,61,19 178.0601 Events causing dissociation. A person is dissociated as a partner when any of the following applies:

SB657,61,22 (1) The partnership knows or has notice of the person's express will to withdraw as a partner, but, if the person has specified a withdrawal date later than the date the partnership knew or had notice, on that later date.

SB657,61,24 (2) An event stated in the partnership agreement as causing the person's dissociation occurs.

SB657,61,25 (3) The person is expelled as a partner pursuant to the partnership agreement.

SB657,62,2 (4) The person is expelled as a partner by the affirmative vote or consent of all the other partners if any of the following applies:

SB657,62,4 (a) It is unlawful to carry on the partnership business with the person as a partner.

SB657,62,7 (b) There has been a transfer of all of the person's transferable interest in the partnership, other than a transfer for security purposes or the entry of a charging order that is in effect under s. 178.0504 and that has not been foreclosed.

SB657,62,8 (c) The person is an entity and all of the following apply:

SB657,62,13 1. The partnership notifies the person that it will be expelled as a partner because the person has filed a statement of dissolution or the equivalent, the person has been administratively dissolved, the person's charter or the equivalent has been revoked, or the person's right to conduct business has been suspended by the jurisdiction of the person's governing law.

SB657,62,17 2. The statement of dissolution or the equivalent has not been withdrawn, rescinded, or revoked, or the person's charter or the equivalent or right to conduct business has not been reinstated, within 90 days after the notification under subd. 1.

SB657,62,19 (d) The person is an unincorporated entity that has been dissolved and whose activities and affairs are being wound up.

SB657,62,21 (5) On application by the partnership or another partner, the person is expelled as a partner by judicial order because the person has done any of the following:

SB657,62,23 (a) Engaged, or is engaging, in wrongful conduct that has affected adversely and materially, or will affect adversely and materially, the partnership's business.