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2007 California Corporations Code Article 3. Limited Partners
CA Codes (corp:15631-15638)
CORPORATIONS CODESECTION 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 a statement of cashflows 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 report, the certificate of a general partner of the partnership that the 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 the information 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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