Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Section 1 of chapter 109 of the General Laws, as appearing in the 1986 Official Edition, is hereby amended by striking out paragraph (1) and inserting in place thereof the following paragraph:-

(1) "Certificate of limited partnership", the certificate referred to in section eight, and the certificate as amended or restated.

SECTION 2. Said section 1 of said chapter 109, as so appearing, is hereby further amended by striking out paragraph (6) and inserting in place thereof the following paragraph:-

(6) "Limited partner", a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement.

SECTION 3. Said chapter 109 is hereby further amended by striking out section 5, as so appearing, and inserting in place thereof the following section:-

Section 5. (a) Each limited partnership shall keep at the office referred to in clause (1) of section four the following:

(1) a current list of the full name and last known business address of each partner, separately identifying in alphabetical order the general partners and the limited partners;

(2) a copy of the certificate of limited partnership and all certificates of amendment thereto, together with executed copies of any powers of attorney pursuant to which any certificate has been executed;

(3) copies of the limited partnership's federal, state, and local income tax returns and reports, if any, for the three most recent years;

(4) copies of any then effective written partnership agreements and of any financial statements of the limited partnership for the three most recent years; and

(5) unless contained in a written partnership agreement, a writing setting out:

(i) the amount of cash and a description and statement of the agreed value of the other property or services contributed by each partner and which each partner has agreed to contribute;

(ii) the times at which or events on the happening of which any additional contributions agreed to be made by each partner are to be made;

(iii) any right of a partner to receive, or of a general partner to make distributions to a partner which include a return of all or any part of the partner's contribution; and

(iv) any events upon the happening of which the limited partnership is to be dissolved and its affairs closed.

(b) Records kept under this section shall be subject to inspection and copying at the reasonable request and at the expense of any partner during ordinary business hours.

(c) The current list of names and addresses of the limited partners shall be made available to the secretary of state within five business days of receipt of a written request by said secretary or by the director of the securities division of the secretary of state's office stating that such information is required in connection with an investigatory or enforcement proceeding.

SECTION 4. Section 8 of said chapter 109, as so appearing, is hereby amended by striking out subsection (a) and inserting in place thereof the following subsection:-

(a) In order to form a limited partnership a certificate of limited partnership shall be executed. The certificate shall be filed in the office of the secretary of state and shall set forth:

(1) the name of the limited partnership;

(2) the general character of its business;

(3) the address of the office and the name and address of the agent for service of process required to be maintained by section four;

(4) the name and the business address of each general partner;

(5) the latest date upon which the limited partnership is to dissolve; and

(6) any other matters the general partners determine to include therein.

SECTION 5. Subsection (b) of section 9 of said chapter 109, as so appearing, is hereby amended by striking out clauses (1) to (4), inclusive, and inserting in place thereof the following three clauses:-

(1) the admission of a new general partner;

(2) the withdrawal of a general partner; or

(3) the continuation of the business under section forty-four after an event of withdrawal of a general partner.

SECTION 6. Said section 9 of said chapter 109, as so appearing, is hereby further amended by striking out subsection (c) and inserting in place thereof the following subsection:-

(c) A general partner who becomes aware that any statement in a certificate of limited partnership was false when made or that any arrangements or other facts described have changed, making the certificate inaccurate in any respect, shall promptly amend the certificate.

SECTION 7. Said section 9 of said chapter 109, as so appearing, is hereby further amended by adding the following subsection:-

(f) A restated certificate of a limited partnership may be executed and filed in the same manner as a certificate of amendment.

SECTION 8. Section 11 of said chapter 109, as so appearing, is hereby amended by striking out subsections (a) and (b) and inserting in place thereof the following two subsections:-

(a) Each certificate required by sections eight to sixteen, inclusive, to be filed in the office of the secretary of state shall be executed in the following manner:

(1) an original certificate of limited partnership must be signed by all general partners;

(2) a certificate of amendment must be signed by at least one general partner and by each other general partner designated in the certificate as a new general partner; and

(3) a certificate of cancellation must be signed by all general partners.

(b) Any person may sign a certificate by an attorney-in-fact, but a power of attorney to sign a certificate relating to the admission of a general partner must specifically describe the admission.

SECTION 9. Said chapter 109 is hereby further amended by striking out section 12, as so appearing, and inserting in place thereof the following section:-

Section 12. If a person required by section eleven to execute a certificate fails or refuses to do so, any other person who is adversely affected by the failure or refusal may petition the superior court department of the trial court to direct the execution of the certificate. If the court finds that it is proper for the certificate to be executed and that any person so designated has failed or refused to execute the certificate, it shall order the secretary of state to record an appropriate certificate.

SECTION 10. Said chapter 109 is hereby further amended by striking out section 15, as so appearing, and inserting in place thereof the following section:-

Section 15. The fact that a certificate of limited partnership is on file in the office of the secretary of state is notice that the partnership is a limited partnership and the persons designated therein as general partners are general partners, but it is not notice of any other fact.

SECTION 11. Said chapter 109 is hereby further amended by striking out sections 17 and 18, as so appearing, and inserting in place thereof the following two sections:-

Section 17. (a) A person becomes a limited partner on the later of:

(1) the date the original certificate of limited partnership is filed; or

(2) the date stated in the records of the limited partnership as the date that person becomes a limited partner.

(b) After the filing of a limited partnership's original certificate of limited partnership, a person may be admitted as an additional limited partner:

(1) in the case of a person acquiring a 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 partners; and

(2) in the case of an assignee of a partnership interest of a partner who has the power, as provided in section forty-two, to grant the assignee the right to become a limited partner, upon the exercise of that power and compliance with any conditions limiting the grant or exercise of the power.

Section 18. (a) Subject to section nineteen, the partnership agreement may grant to all or a specified group of the limited partners the right to vote, on a per capita or other basis, upon any matter.

(b) When the limited partnership is an investment company registered under the Investment Company Act of 1940, 15 USC 80a, the limited partner shall have the right to vote (i) in the election of general partners, directors, or trustees of the investment company, (ii) to approve or terminate investment advisory or underwriting contracts, (iii) for approval of auditors, and (iv) on any matters that the said Investment Company Act of 1940, or rules and regulations promulgated thereunder, requires to be approved by the holders of beneficial interests in the investment company.

SECTION 12. Section 19 of said chapter 109, as so appearing, is hereby amended by striking out subsections (a) and (b) and inserting in place thereof the following two subsections:-

(a) Except as provided in subsection (d), a limited partner is not liable for the obligations of a limited partnership unless he is also a general partner or, in addition to the exercise of his rights and powers as a limited partner, he participates in the control of the business; provided, however, that if the limited partner participates in the control of the business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner.

(b) A limited partner does not participate in the control of the business within the meaning of subsection (a) solely by doing one or more of the following:

(1) being a contractor for or an agent or employee of the limited partnership or of a general partner, or being an officer, director or shareholder of a general partner which is a corporation;

(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 guaranteeing or assuming one or more specific obligations of the limited partnership;

(4) taking any action required or permitted by law to bring or pursue a derivative action in the right of the limited partnership;

(5) requesting or attending a meeting of partners;

(6) proposing, or approving or disapproving, by voting or otherwise, one or more of the following matters:

(i) the dissolution and closing of the limited partnership;

(ii) the sale, exchange, lease, mortgage, pledge, or other transfer of all or substantially all of the assets of the limited partnership;

(iii) the incurrence of indebtedness by the limited partnership other than in the ordinary course of its business;

(iv) a change in the nature of the business;

(v) the admission or removal of a general partner;

(vi) the admission or removal of a limited partner;

(vii) a transaction involving an actual or potential conflict of interest between a general partner and the limited partnership or the limited partners;

(viii) an amendment to the partnership agreement or certificate of limited partnership; or

(ix) matters related to the business of the limited partnership not otherwise set forth in this subsection, which the partnership agreement states in writing may be subject to the approval or disapproval of limited partners;

(7) closing of the affairs of the limited partnership pursuant to the provisions of section forty-six; or

(8) exercising any right or power permitted to limited partners under this chapter and not specifically enumerated in this subsection.

SECTION 13. Section 20 of said chapter 109, as so appearing, is hereby amended by striking out subsection (b) and inserting in place thereof the following subsection:-

(b) A person who makes a contribution of the kind described in subsection (a) is liable as a general partner to any third party who transacts business with the enterprise (i) before the person withdraws and an appropriate certificate is filed to show withdrawal, or (ii) before an appropriate certificate is filed to show that he is not a general partner, but in either case only if the third party actually believed in good faith that the person was a general partner at the time of the transaction.

SECTION 14. Said chapter 109 is hereby further amended by striking out section 22, as so appearing, and inserting in place thereof the following section:-

Section 22. After the filing of a limited partnership's original certificate of limited partnership, additional general partners may be admitted as provided in the partnership agreement or, if the partnership agreement does not provide for the admission of additional general partners, with the written consent of all partners.

SECTION 15. Section 23 of said chapter 109, as so appearing, is hereby amended by striking out clauses (4) and (5) and inserting in place thereof the following two clauses:-

(4) Unless otherwise provided in writing in the partnership agreement the general partner: (i) makes an assignment for the benefit of creditors, (ii) files a voluntary petition in bankruptcy; (iii) is adjudicated a bankrupt or insolvent; (iv) files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against him in any proceeding of this nature; or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the general partner or of all or any substantial part of his properties;

(5) unless otherwise provided in writing in the partnership agreement one hundred and twenty days after the commencement of any proceeding against the general partner seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any statute, law, or regulation, the proceeding has not been dismissed, or if within ninety days after the appointment without his consent or acquiescence of a trustee, receiver, or liquidator of the general partner or of all or any substantial part of his properties, the appointment is not vacated or stayed or within ninety days after the expiration of any such stay, the appointment is not vacated;.

SECTION 16. Said chapter 109 is hereby further amended by striking out sections 28 to 31, inclusive, as so appearing, and inserting in place thereof the following four sections:- Section 28. (a) No promise by a limited partner to contribute to the limited partnership is enforceable unless set out in a writing signed by the limited partner.

(b) Except as provided in the partnership agreement, a partner is obligated to the limited partnership to perform any enforceable promise to contribute cash or property or to perform services, even if he is unable to perform because of death, disability or any other reason. If a partner does not make the required contribution of property or services, he is obligated at the option of the limited partnership to contribute cash equal to that portion of the value, as stated in the partnership records required to be kept pursuant to section five, of the stated contribution that has not been made.

(c) Unless otherwise provided in the partnership agreement, the obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this chapter may be compromised only by consent of all the partners. Notwithstanding the compromise, a creditor of a limited partnership who extends credit, or otherwise acts in reliance on that obligation after the partner signs a writing which reflects the obligation, and before the amendment or cancellation thereof to reflect the compromise, may enforce the original obligation.

Section 29. The profits and losses of a limited partnership shall be allocated among the partners, and among classes of partners, in the manner provided in writing in the partnership agreement. If the partnership agreement does not so provide in writing, profits and losses shall be allocated on the basis of the value, as stated in the partnership records to be kept pursuant to section five, of the contributions made by each partner to the extent they have been received by the partnership and have not been returned.

Section 30. Distributions of cash or other assets of a limited partnership shall be allocated among the partners, and among classes of partners, in the manner provided in writing in the partnership agreement. If the partnership agreement does not so provide in writing, distributions shall be made on the basis of the value, as stated in the partnership records to be kept pursuant to section five, of the contributions made by each partner to the extent they have been received by the partnership and have not been returned.

Section 31. Except as provided in sections thirty-one to thirty-eight, inclusive, a partner is entitled to receive distributions from a limited partnership before his withdrawal from the limited partnership and before the dissolution and closing of its affairs to the extent and at the times or upon the happening of the events specified in the partnership agreement.

SECTION 17. Said chapter 109 is hereby further amended by striking out section 33, as so appearing, and inserting in place thereof the following section:-

Section 33. A limited partner may withdraw from a limited partnership at the time or upon the happening of events specified in writing in the partnership agreement. If the agreement does not specify the time or the events upon the happening of which a limited partner may withdraw or a definite time for the dissolution and closing of the affairs of the limited partnership, a limited partner may withdraw upon not less than six months' prior written notice to each general partner at his address on the books of the limited partnership at its office in the commonwealth.

SECTION 18. Said chapter 109 is hereby further amended by striking out section 35, as so appearing, and inserting in place thereof the following section:-

Section 35. Except as provided in writing in the partnership agreement, a partner, regardless of the nature of his contribution, has no right to demand and receive any distribution from a limited partnership in any form other than cash. Except as provided in writing in the partnership agreement, a partner may not be compelled to accept a distribution of any asset in kind from a limited partnership to the extent that the percentage of the asset distributed to him exceeds a percentage of that asset which is equal to the percentage in which he shares in distributions from the limited partnership.

SECTION 19. Section 38 of said chapter 109, as so appearing, is hereby amended by striking out subsection (c) and inserting in place thereof the following subsection:-

(c) A partner receives a return of his contribution to the extent that a distribution to him reduces his shares of the fair value of the net assets of the limited partnership below the value, as set forth in the partnership records required to be kept pursuant to section five, of his contribution which has not been distributed to him.

SECTION 20. Section 42 of said chapter 109, as so appearing, is hereby amended by striking out subsections (a) and (b) and inserting in place thereof the following two subsections:-

(a) An assignee of a partnership interest, including an assignee of a general partner, may become a limited partner if and to the extent that (1) the assignor gives the assignee that right in accordance with authority described in the partnership agreement, or (2) all other partners consent.

(b) An assignee who has become a limited partner has, to the extent assigned, the rights and powers, and is subject to the restrictions and liabilities, of a limited partner under the partnership agreement and this chapter. An assignee who becomes a limited partner also is liable for the obligations of his assignor to make and return contributions as provided in sections twenty-seven to thirty-eight, inclusive; provided, however, that the assignee is not obligated for liabilities unknown to the assignee at the time he became a limited partner.

SECTION 21. Said chapter 109 is hereby further amended by striking out section 44, as so appearing, and inserting in place thereof the following section:-

Section 44. A limited partnership is dissolved and its affairs shall be closed upon the happening of the first to occur of the following:

(1) at the time specified in writing in the partnership agreement;

(2) upon the happening of events specified in writing in the partnership agreement;

(3) written consent of all partners;

(4) an event of withdrawal of a general partner unless at the time there is at least one other general partner and the written provisions of the partnership agreement permit the business of the limited partnership to be carried on by the remaining general partner and that partner does so, but the limited partnership is not dissolved and is not required to close its affairs by reason of any event of withdrawal, if, within ninety days after the withdrawal, all partners agree in writing to continue the business of the limited partnership and to the appointment of one or more additional general partners if necessary or desired; or

(5) entry of a decree of judicial dissolution under section forty-five.

SECTION 22. The second paragraph of section 49 of said chapter 109, as so appearing, is hereby amended by striking out clauses (6) and (7) and inserting in place thereof the following three clauses:-

(6) the business address of its principal office in the commonwealth, if any;

(7) the name and business address of its resident agent; and

(8) the address of the office at which is kept a list of the names and addresses of the limited partners and their capital contributions, together with an undertaking by the foreign limited partnership to keep those records until the foreign limited partnership's registration in the commonwealth is cancelled.

SECTION 23. This act shall take effect on March first, nineteen hundred and eighty-nine.