LP
what is the central feature of a limited partnership?
limited partners, which have no liability for the debts of venture beyond the loss of their investments
what is the catch of limited liability partnerships?
Provides limited liability protection to ALL its partners, shielding them from personal responsibility for the negligence or malpractice of other partners
define limited liability company
a business structure that separates personal assets from business debts, offering liability protection to its owners, known as members
designed to be a combo of Corps and Pships
what are the elements for a De Facto LLC
1 - statute in the state allows LLC creation
2 - good faith effort from LLC to create itself
3 - it is using LLC power/privilege (signing Ks on behalf of the LLC)
T/F: fiduciary duties for an LLC can be overwritten/modified by the company agreement.
True, 101.401
T/F: Limited Partnerships must be filed with a certificate of formation to the secretary of state
True
do LLPs have general partners?
no
what are the 2 approaches to controlling an LLC?
1: to have managers (like a BoD, they run the company)
2: the people that own the LLC, called members (looks like Pship management)
explain LLC by Estoppel and De Jure LLC
LLC by Estoppel - the 3rd party thinks its dealing with an LLC and is looking for the LLC to be liable, and not the signer
De Jure - from the law; the LCC is formed via acknowledgment letter from the Secretary of State
an action that would make it impossible for an LLC to carry out the ordinary business of the company requires what?
(assume default Texas statute)
affirmative vote by majority of all members
what are the two kinds of partners all LPs have? Describe them.
at least 1 general partner - act as a regular partner in a partnership, no Limited Liability benefits
at least 1 limited partner - only thing these guys are gonna lose is what they put into the pship
T/F: the partnership act controls everything for the LLP, with gap fillers from the TX statute.
False, the act controls everything EXCEPT a partner's liability
describe LLC company agreements
similar to pship agreements; can be written, oral, or implied
LLCs can have agent actual and apparent authority. When is an act committed by an agent of an LLC for the purpose of apparently carrying out the ordinary course of business not binding on the company? (2 steps)
1 - the agent does not have actual authority
2 - the 3rd party has knowledge of the agent's lack of actual authority
members must approve the creation of the agreement
the court may decide against extreme choices in favor of fair and equal agreements
Do LPs have full protection for losses?
No, general partner is liable for all damages
How do you get and maintain an LLP?
file a certificate of service to the secretary of state to get one.
only lasts one year, you must continually pay an annual fee to keep it (like a subscription), and make an annual report to the sec of state.
when can an LLC not make a distribution to a member of the company?
if immediately after the distribution, the company total liabilities exceed the fair value of the company (if it goes bankrupt)
define a closely held LLC.
fewer than 35 members
no membership interest listed on a national securities exchange or over the regularly quoted over the market
you can't make a distribution if the distribution will result in the net worth of the LLC becoming ______
negative
How can a limited partner be held liable to 3rd parties?
they have to exercise control of the business (3rd party reasonably believes they are general partner bc of their conduct)
though 153.103 explains scenarios in which that still doesn't impose liability
What happens if you don't pay your LLP annual fee?
T/F: a member OR manager is not liable for the debt, obligation, or liability of a LLC. Even if those come from a judgment, decree, or order of a court?
True, 101.114
Can you make a derivative lawsuit for LLCs?
yes, but not closely held ones
assets are looked at by ___ _____ _____
Fair Market Basis