2005 California Corporations Code Sections 15631-15638 Article 3. Limited Partners

CORPORATIONS CODE
SECTION 15631-15638

15631.  (a) After the filing of a certificate referred to in Section
15621, a person may become a limited partner:
   (1) In the case of a person acquiring a limited partnership
interest directly from the limited partnership, upon compliance with
the partnership agreement or, if the partnership agreement does not
so provide, upon the written consent of all of the partners.
   (2) In the case of an assignee of a partnership interest, upon
compliance with subdivision (a) of Section 15674 and at the time
provided in and upon compliance with the partnership agreement or, if
the partnership agreement does not so provide, when the person's
permitted admission is reflected in the records of the limited
partnership in accordance with subdivision (b).
   (b) In each case under subdivision (a), the person acquiring the
partnership interest shall be added by the general partners as a
limited partner to the list required by subdivision (a) of Section
15615.
15631.5.  (a) A partnership agreement may provide for the creation
of classes of limited partners.  The partnership agreement shall
define the rights, powers, and duties of those classes, including
rights, powers, and duties senior to other classes of limited
partners.
   (b) The partnership agreement may provide to all or certain
specified classes of limited partners the right to vote separately or
with all or any class or the general partners on any matter.
15632.  (a) A limited partner is not liable for any obligation of a
limited partnership unless named as a general partner in the
certificate or, in addition to the exercise of the rights and powers
of a limited partner, the limited partner participates in the control
of the business.  If a limited partner participates in the control
of the business without being named as a general partner, that
partner may be held liable as a general partner only to persons who
transact business with the limited partnership with actual knowledge
of that partner's participation in control and with a reasonable
belief, based upon the limited partner's conduct, that the partner is
a general partner at the time of the transaction.  Nothing in this
chapter shall be construed to affect the liability of a limited
partner to third parties for the limited partner's participation in
tortious conduct.
   (b) A limited partner does not participate in the control of the
business within the meaning of subdivision (a) solely by doing,
attempting to do, or having the right or power to do, one or more of
the following:
   (1) Being (A) an independent contractor for or an agent or
employee of, or transacting business with, the limited partnership or
a general partner of the limited partnership, (B) an officer,
director, or shareholder of a corporate general partner of the
limited partnership, (C) a member, manager, or officer of a limited
liability company that is a general partner of the limited
partnership, (D) a limited partner of a partnership that is a general
partner of the limited partnership, (E) a trustee, administrator,
executor, custodian, or other fiduciary or beneficiary of an estate
or trust that is a general partner, or (F) a trustee, officer,
advisor, shareholder, or beneficiary of a business trust that is a
general partner.
   (2) Consulting with and advising a general partner with respect to
the business of the limited partnership.
   (3) Acting as surety for the limited partnership or for a general
partner, guaranteeing one or more specific debts of the limited
partnership, or providing collateral for the limited partnership or
general partner, or borrowing money from the limited partnership or a
general partner, or lending money to the limited partnership or a
general partner.
   (4) Approving or disapproving an amendment to the partnership
agreement.
   (5) Voting on, proposing, or calling a meeting of the partners for
one or more of the  matters described in subdivision (f) of Section
15636.
   (6) Winding up the partnership pursuant to Section 15683.
   (7) Executing and filing a certificate pursuant to Section 15625
or a certificate of dissolution pursuant to  paragraph (3) of
subdivision (a) of Section 15624 or a certificate of cancellation of
certificate of limited partnership pursuant to paragraph (4) of
subdivision (a) of Section 15624.
   (8) Serving on an audit committee or committee performing the
functions of an audit committee.
   (9) Serving on a committee of the limited partnership or the
limited partners for the purpose of approving actions of the general
partner.
   (10) Calling, requesting, attending, or participating at any
meeting of the partners or the limited partners.
   (11) Taking any action required or permitted by law to bring,
pursue, settle, or terminate a derivative action on behalf of the
limited partnership.
   (12) Serving on the board of directors or a committee of,
consulting with or advising, being or acting as an officer, director,
stockholder, partner, member, manager, agent, or employee of, or
being or acting as a fiduciary for, any person in which the limited
partnership has an interest.
   (13) Exercising any right or power permitted to limited partners
under this chapter and not specifically enumerated in this
subdivision.
   (c) The enumeration in subdivision (b) does not mean that any
other conduct or the possession or exercise of any other power by a
limited partner constitutes participation by the limited partner in
the control of the business of the limited partnership.
15633.  (a) Except as provided in subdivision (b), if a certificate
of limited partnership has not been filed, a person who makes a
contribution to the purported limited partnership and in good faith
believes that that person has become a limited partner is not liable
for the obligations of the purported limited partnership, if, on
ascertaining that the certificate has not been filed and after a
failure of the general partner or partners to file the certificate
within a reasonable time after request, that person promptly files
the certificate of limited partnership.  A limited partner executing
and filing a certificate of limited partnership shall send a copy of
the certificate so filed to each general partner at the general
partner's last known address.
   (b) A person who makes a contribution to the purported limited
partnership and in good faith believes that that person has become a
limited partner is liable only to any third party who transacted
business with the purported limited partnership before the
certificate is filed and who reasonably believed that the person was
a general partner at the time of the transaction.
15634.  (a) Upon the request of a limited partner, the general
partners shall promptly deliver to the limited partner, at the
expense of the partnership, a copy of the information required to be
maintained by subdivision (a), (b), or (d) of Section 15615.
   (b) Each limited partner has the right upon reasonable request to
each of the following:
   (1) Inspect and copy during normal business hours any of the
partnership records required to be maintained by Section 15615.
   (2) Obtain from the general partners, promptly after becoming
available, a copy of the limited partnership's federal, state and
local income tax or information returns for each year.
   (c) In the case of any limited partnership with more than 35
limited partners:
   (1) The general partners shall cause an annual report to be sent
to each of the partners not later than 120 days after the close of
the fiscal year.  That report shall contain a balance sheet as of the
end of the fiscal year and an income statement and statement of
changes in financial position for the fiscal year.
   (2) Limited partners representing at least 5 percent of the
interests of limited partners may make a written request to a general
partner for an income statement of the limited partnership for the
initial three-month, six-month, or nine-month period of the current
fiscal year ended more than 30 days prior to the date of the request
and a balance sheet of the partnership as of the end of that period.
The statement shall be delivered or mailed to the limited partners
within 30 days thereafter.
   (3) The financial statements referred to in this section shall be
accompanied by the report thereon, if any, of the independent
accountants engaged by the partnership or, if there is no such
report, the certificate of a general partner of the partnership that
such financial statements were prepared without audit from the books
and records of the limited partnership.
   (d) The general partners shall promptly furnish to a limited
partner a copy of any amendment to the partnership agreement executed
by a general partner pursuant to a power of attorney from the
limited partner.
   (e) The general partners shall send to each of the partners within
90 days after the end of each taxable year such information as is
necessary to complete federal and state income tax or information
returns, and, in the case of a limited partnership with 35 or fewer
limited partners, a copy of the limited partnership's federal, state,
and local income tax or information returns for the year.
   (f) In addition to any other remedies, a court of competent
jurisdiction may enforce the duty of making and mailing or delivering
the information and financial statements required by this section
and, for good cause shown, may extend the  time therefor.
   (g) In any action under this section, if the court finds the
failure of the partnership to comply with the requirements of this
section to have been without justification, the court may award an
amount sufficient to reimburse the partners bringing the action for
the reasonable expenses incurred by the partners, including attorneys'
fees, in connection with the action or proceeding.
   (h) Any waiver by a partner of the rights provided in this section
shall be unenforceable.
   (i) Any request, inspection, or copying by a limited partner may
be made by the limited partner or by the limited partner's agent or
attorney.
15635.  (a) The Attorney General, upon complaint that a limited
partnership is failing to comply with the provisions of Section
15634, or to afford to the partners rights given to them in the
partnership agreement, may in the name of the people of the State of
California send to the principal executive office, as specified
pursuant to paragraph (2) of subdivision (a) of Section 15621, notice
of the complaint.
   (b) If the answer of the limited partnership is not received
within 30 days of the date the notice was transmitted, or if the
answer is not satisfactory, and if the enforcement of the rights of
the aggrieved persons by private civil action, by class action or
otherwise, would be so burdensome or expensive as to be
impracticable, the Attorney General may institute, maintain, or
intervene in their suits, actions or proceedings in any court of
competent jurisdiction or before any administrative agency for relief
by way of injunction, the dissolution of entities, the appointment
of receivers, or any other temporary, preliminary, provisional, or
final remedies as may be appropriate to protect the rights of
partners or to restore the position of the partners for the failure
to comply with the requirements of Section 15634 or the partnership
agreement.  In any such action, suit, or proceeding there may be
joined as parties all persons and entities responsible for or
affected by the activity.
15636.  The rights and duties of the partners in relation to the
limited partnership shall be determined by the following rules:
   (a) No limited partner shall be required to make any additional
contribution to the limited partnership.
   (b) Except for distributions made pursuant to Section 15664, no
limited partner shall have a priority over any other limited partner,
as to return of contributions or as to compensation as a limited
partner by way of income.
   (c) The obligation of a partner to make a contribution or return
money or property distributed in violation of this chapter may be
compromised only by the written consent of all the partners.
   (d) No limited partner shall have the right to receive property
other than money upon any distribution.
   (e) A partner may not be compelled to accept a distribution of any
asset in kind from a limited partnership in lieu of a proportionate
distribution of money being made to other partners.
   (f) With respect to any of the following matters upon which the
limited partners shall have the right to vote, the limited partners
also shall have the right in accordance with Section 15637 to call
and give notice of meetings and to prepare and solicit written
consents:
   (1) The limited partners shall have the right to vote on the
following matters, and the actions specified herein may be taken only
by the general partners and then only with the affirmative vote of a
majority in interest of the limited partners:
   (A) The dissolution and winding up of the limited partnership.
   (B) The merger of the limited partnership or the sale, exchange,
lease, mortgage, pledge, or other transfer of, or the granting of a
security interest in, all or a substantial part of the assets of the
limited partnership other than in the ordinary course of its
business.
   (C) The incurrence of indebtedness by the limited partnership
other than in the ordinary course of its business.
   (D) A change in the nature of the business.
   (E) Transactions in which the general partners have an actual or
potential conflict of interest with the limited partners or the
partnership.
   (F) An election to continue the business of the limited
partnership other than under the circumstances described in paragraph
(3).
   (G) The admission of a general partner other than under the
circumstances described in paragraph (3); provided, that
notwithstanding any other provision of this chapter or any provision
of the partnership agreement to the contrary, the action specified in
this subparagraph may only be taken with the affirmative vote of a
majority in interest of the limited partners or the greater interest
provided in the partnership agreement.
   (2) The limited partners shall have the right to vote on the
removal of a general partner, and that action shall be effective
without further action upon the vote or written consent of a majority
in interest of all partners and, if that action is taken by written
consent, written notice to the general partners (including any
general partner being removed) that the action has been taken.  Any
such notice shall be given in the same manner as described in
subdivision (c) of Section 15637.
   (3) The limited partners shall have the right to vote on the
admission of a general partner or an election to continue the
business of the limited partnership after a general partner ceases to
be a general partner where there is no remaining or surviving
general partner; provided that, notwithstanding any other provision
of this chapter or any provision of the partnership agreement to the
contrary, that action may only be taken by the affirmative vote of a
majority in interest of the limited partners or the greater interest
provided in the partnership agreement.
   (4) The limited partners shall have the right to vote on the
following matters, and the actions specified therein shall require
the affirmative vote of those partners as shall be provided under the
partnership agreement:
   (A) With respect to a limited partnership that is registered as an
investment company under the Investment Company Act of 1940, as
amended, or the rules and regulations of the Securities and Exchange
Commission under that act, any matter to be approved by the holders
of beneficial interests in an investment company, including the
electing of directors or trustees of the investment company, the
approving or terminating of investment advisory or underwriting
contracts, and the approving of auditors.
   (B) Matters related to the business of the limited partnership not
otherwise enumerated in this subdivision, which the partnership
agreement states in writing may be subject to the approval or
disapproval of limited partners.
15637.  (a) Meetings of partners may be held at any place within or
without this state selected by the person or persons calling the
meeting or as may be stated in or fixed in accordance with the
partnership agreement.  If no other place is stated or so fixed,
partners' meetings shall be held at the principal executive office of
the partnership.
   (b) A meeting of the partners may be called by any of the general
partners or by limited partners representing more than 10 percent of
the interests of limited partners for any matters on which the
limited partners may vote.
   (c) (1) Whenever partners are required or permitted to take any
action at a meeting, a written notice of the meeting shall be given
not less than 10, nor more than 60, days before the date of the
meeting to each partner entitled to vote at the meeting.  The notice
shall state the place, date, and hour of the meeting and the general
nature of the business to be transacted, and no other business may be
transacted.
   (2) Notice of a partners' meeting or any report shall be given
either personally or by mail or other means of written communication,
addressed to the partner at the address of the partner appearing on
the books of the partnership or given by the partner to the
partnership for the purpose of notice, or, if no address appears or
is given, at the place where the principal executive office of the
partnership is located or by publication at least once in a newspaper
of general circulation in the county in which the principal
executive office is located.  The notice or report shall be deemed to
have been given at the time when delivered personally or deposited
in the mail or sent by other means of written communication.  An
affidavit of mailing of any notice or report in accordance with the
provisions of this article, executed by a general partner, shall be
prima facie evidence of the giving of the notice or report.
   If any notice or report addressed to the partner at the address of
the partner appearing on the books of the partnership is returned to
the partnership by the United States Postal Service marked to
indicate that the United States Postal Service is unable to deliver
the notice or report to the partner at the address, all future
notices or reports shall be deemed to have been duly given without
further mailing if they are available for the partner at the
principal executive office of the partnership for a period of one
year from the date of the giving of the notice or report to all other
partners.
   (3) Upon written request to the general partners by any person
entitled to call a meeting of partners, the general partners
immediately shall cause notice to be given to the partners entitled
to vote that a meeting will be held at a time requested by the person
calling the meeting, not less than 10, nor more than 60, days after
the receipt of the request.  If the notice is not given within 20
days after receipt of the request, the person entitled to call the
meeting may give the notice or, upon the application of that person,
the superior court of the  county in which the principal executive
office of the limited partnership is located, or if the principal
executive office is not in this state, the county in which the
limited partnership's address in this state is located, shall
summarily order the giving of the notice, after notice to the
partnership giving it an opportunity to be heard.  The procedure
provided in subdivision (c) of Section 305 of the Corporations Code
shall apply to the application.  The court may issue any order as may
be appropriate, including, without limitation, an order designating
the time and place of the meeting, the record date for determination
of partners entitled to vote, and the form of notice.
   (d) When a partners' meeting is adjourned to another time or
place, except as provided in this subdivision, notice need not be
given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken.  At the
adjourned meeting the partnership may transact any business which
might have been transacted at the original meeting.  If the
adjournment is for more than 45 days or if after the adjournment a
new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each partner of record entitled
to vote at the meeting.
   (e) The transactions of any meeting of partners, however called
and noticed, and wherever held, are as valid as though had at a
meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after
the meeting, each of the persons entitled to vote, not present in
person or by proxy, signs a written waiver of notice or a consent to
the holding of the meeting or an approval of the minutes thereof.
All waivers, consents, and approvals shall be filed with the
partnership records or made a part  of the minutes of the meeting.
Attendance of a person at a meeting shall constitute a waiver of
notice of the meeting, except when the person objects, at the
beginning of the meeting to the transaction of any business because
the meeting is not lawfully called or convened and except that
attendance at a meeting is not a waiver of any right to object to the
consideration of matters required by this chapter to be included in
the notice but not so included, if the objection is expressly made at
the meeting.  Neither the business to be transacted at nor the
purpose of any meeting of partners need be specified in any written
waiver of notice, except as provided in subdivision (g).
   (f) Partners may participate in a meeting of the partnership
through the use of conference telephones or similar communications
equipment, so long as all partners participating in the meeting can
hear one another.  Participation in a meeting pursuant to this
provision constitutes presence in person at that meeting.
   (g) Any partner approval at a meeting, other than unanimous
approval by those entitled to vote, shall be valid only if the
general nature of the proposal so approved was stated in the notice
of meeting or in any written waiver of notice.
   (h) (1) A majority in interest of the limited partners represented
in person or by proxy shall constitute a quorum at a meeting of
partners.
   (2) The partners present at a duly called or held meeting at which
a quorum is present may continue to transact business until
adjournment notwithstanding the withdrawal of enough partners to
leave less than a quorum, if any action taken (other than
adjournment) is approved by the requisite percentage of interests of
limited partners specified in this chapter.
   (3) In the absence of a quorum, any meeting of partners may be
adjourned from time to time by the vote of a majority of the
interests represented either in person or by proxy, but no other
business may be transacted, except as provided in paragraph (2).
   (i) Any action that may be taken at any meeting of the partners
may be taken without a meeting if a consent in writing, setting forth
the action so taken, shall be signed by partners having not less
than the minimum number of votes that would be necessary to authorize
or take that action at a meeting at which all entitled to vote
thereon were present and voted.  In the event the limited partners
are requested to consent on a matter without a meeting, each partner
shall be given notice of the matter to be voted upon in the same
manner as described in subdivision (c).  In the event any general
partner, or limited partners representing more than 10 percent of the
interests of the limited partners, request a meeting for the purpose
of discussing or voting on the matter, the notice of a meeting shall
be given in accordance with subdivision (c) and no action shall be
taken until the meeting is held. Unless delayed in accordance with
the provisions of the preceding sentence, any action taken without a
meeting will be effective 15 days after the required minimum number
of voters have signed the consent, however, the action will be
effective immediately if all general partners and limited partners
representing at least 90 percent of the interests of the limited
partners have signed the consent.
   (j) The use of proxies in connection with this section will be
governed in the same manner as in the case of corporations formed
under the General Corporation Law.
   (k) In order that the limited partnership may determine the
partners of record entitled to notices of any meeting or to vote, or
entitled to receive any distribution or to exercise any rights in
respect of any other lawful action, the general partners, or limited
partners representing more than 10 percent of the interests of
limited partners, may fix, in advance, a record date, which is not
more than 60 or less than 10 days prior to the date of the meeting
and not more than 60 days prior to any other action.  If no record
date is fixed:
   (1) The record date for determining partners entitled to notice of
or to vote  at a meeting of partners shall be at the close of
business on the business day next preceding the day on which notice
is given or, if notice is waived, at the close of business on the
business day next preceding the day on which the meeting is held.
   (2) The record date for determining partners entitled to give
consent to partnership action in writing without a meeting shall be
the day on which the first written consent is given.
   (3) The record date for determining partners for any other purpose
shall be at the close of business on the day on which the general
partners adopt it, or the 60th day prior to the date of the other
action, whichever is later.
   (4) The determination of partners of record entitled to notice of
or to vote at a meeting of partners shall apply to any adjournment of
the meeting unless the general partners, or the limited partners who
called the meeting, fix a new record date for the adjourned meeting,
but the general partners, or the limited partners who called the
meeting, shall fix a new record date if the meeting is adjourned for
more than 45 days from the date set for the original meeting.
15638.  The partnership agreement may provide that the interest of a
partner or assignee in a limited partnership may be evidenced by a
certificate of interest issued by the limited partnership, may
provide for the assignment or transfer  of any interest represented
by such a certificate and the admission of transferees of
certificates as additional or substituted limited partners, and may
make other provisions with respect to the form of those certificates
not inconsistent with this chapter.  A certificate of interest may
be, but is not required to be, a security as defined in Section 8102
of the Commercial Code.


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