18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS CHAPTER 27 LIMITED PARTNERSHIPS Article 1. Nature of Partnership

Article 2. Formation of Partnership

Article 3. Powers, Rights, Duties and Liabilities of Partners

Article 4. Alteration and Dissolution of the Partnership

Article 5. Miscellaneous Provisions

ARTICLE 1 NATURE OF PARTNERSHIP § 27101. Limited Partnership Defined

A limited partnership is a partnership formed by two or more persons under the provisions of § 27201, having as members one or more general partners and one or more limited partners. The limited partners as such shall not be bound by the obligations of the partnership. SOURCE: CC § 2477. NOTE: No CC §§ 2473-76 existed in the original Civil Code. ---------- ARTICLE 2 FORMATION OF PARTNERSHIP § 27201. Formation

(1) Two or more persons desiring to form a limited partnership shall: (a) Sign and swear to a certificate, which shall state -- i. The name of the partnership

ii. The character of the business

iii. The location of the principal place of the business

COL120106 1 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS iv. The name and place of residence of each member; general and limited partners being respectively designated

v. The term for which the partnership is to exist

vi. The amount of cash and a description of and the agreed value of the other property contributed by each limited partner

vii. The additional contributions, if any, agreed to be made by each limited partner and the times at which or the events on the happening of which they shall be made. viii.The time, if agreed upon, when the contribution of each limited partner is to be returned

ix. The share of the profits or the other compensation by way of income which each limited partner shall receive by reason of his contribution. x. The right, if given, of a limited partner to substitute an assignee as contributor in his place, and the terms and conditions of the substitution. xi. The right, if given, of the partners to admit additional limited partners. xii. The right, if given, of one or more of the limited partners to priority over other limited partners, as to contributions or to compensation by way of income, and the nature of such priority. as xiii.The right, if given, of the remaining general partner or partners to continue the business on the death, retirement insanity of a general partner, and or xiv. The right, if given, of a limited partner to demand and receive property other than cash in return for his contri bution. (b) File the said certificate in the Department of Revenue and Taxation, in a book to be kept for that purpose open to public inspection

COL120106 2 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (2) A limited partnership is formed if there has been substantial compliance in good faith with the requirements of paragraph (1) of this section. SOURCE: CC § 2478. ---------- POWERS, RIGHTS, DUTIES AND LIABILITIES OF PARTNERS ARTICLE 3 § 27301. Business Which may be Carried on. § 27302. Character of Limited Partner's Contribution

§ 27303. A Name not to Contain Surname of Limited Partner; Exceptions. § 27304. Liability for False Statements in Certificate

§ 27305. Limited Partner is not Liable to Creditors. § 27306. Admission of Additional Limited Partners. § 27307. Rights, Powers, and Liabilities of a General Partner. § 27308. Rights of Limited Partner. § 27309. Status of Person Erroneously Believing Himself a Limited Partner. § 27310. One Person both General and Limited Partner. § 27311. Loans and other Business Transactions with Limited Partner. § 27312. Relation of Limited Partners Inter Se. § 27313. Compensation of Limited Partner. § 27314. Withdrawal or Reduction of Limited Partner's Contribution. § 27315. Liability of Limited Partner to Partnership

§ 27316. Nature of Limited Partner's Interest in Partnership. § 27301. Business which may be Carried on. A limited partnership may carry on any business which a partnership without limited partners may carry on, except banking and insurance. SOURCE: CC § 2479. § 27302. Character of Limited Partner's Contribution. The contribution of a limited partner may be cash or other property, but not services. COL120106 3 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS SOURCE: CC § 2480

§ 27303. A Name not to Contain Surname of Limited Partner; Exceptions. (1) The surname of a limited partner shall not appear in the partnership name, unless: (a) It is also the surname of a general partner, or (b) Prior to the time when the limited partner became such the business had been carried on under a name in which his surname appeared

(2) A limited partner whose name appears in a partnership name contrary to the provisions of paragraph (1) of this section is liable as a general partner to partnership creditors who extend credit to the partnership without actual knowledge that he is not a general partner. SOURCE: CC § 2481. § 27304. Liability for False Statements in Certificate. If the certificate contains a false statement, one who suffers loss by reliance on such statement may hold liable any party to the certificate who knew the statement to be false: (a) At the time he signed the certificate or (b) Subsequently, but within a sufficient time before the statement was relied upon to enable him to cancel or amend the certificate, or to file a petition for its cancellation or amendment as provided in § 27407(3). SOURCE: CC § 2482

§ 27305. Limited Partner is not Liable to Creditors. A limited partner shall not become liable as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes a part in the control of the business

SOURCE: CC § 2483. § 27306. Admission of Additional Limited Partners. COL120106 4 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS After the formation of a limited partnership, additional limited partners may be admitted upon filing an amendment to the original certificate in accordance with the requirements of § 27407. SOURCE: CC § 2484. § 27307. Rights, Powers, and Liabilities of a General Partner. (1) A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities of a partner in a partnership without limited partners, except that without the written consent or ratification of the specific act by all the limited partners, a general partner or all of the general partners have no authority to -- (a) Do any act in contravention of the certificate, (b) Do any act which would make it impossible to carry on the ordinary business of the partnership, (c) Confess a judgement against the partnership, (d) Possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose, (e) Admit a person as a general partner, (f) Admit a person as a limited partner, unless the right so to do is given in the certificate, (g) Continue the business with partnership property on the death, retirement, or insanity of a general partner, unless the right so to do is given in the certificate

SOURCE: CC § 2485

§ 27308. Rights of Limited Partner. (l) A limited partner shall have the same rights as a general partner to -- (a) Have the partnership books kept at the principal place of business of the partnership, and at all times to inspect and copy any of them

(b) Have on demand true and full information of all things affecting the partnership, and a formal account of partnership affairs whenever circumstances render it just and reasonable

COL120106 5 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (c) Have dissolution and winding up by decree of court

(2) A limited partner shall have the right to receive a share of the profits or other compensation by way of income, and to the return of his contribution as provided in '§ 27313 and 27314. SOURCE: CC § 2486. § 27309. Status of Person Erroneously Believing Himself a Limited Partner. A person who has contributed to the capital of a business conducted by a person or partnership erroneously believing that he has become a limited partner in a limited partnership, is not, by reason of his exercise of the rights of a limited partner, a general partner with the person or in the partnership carrying on the business, or bound by the obligations of such person or partnership; provided, that on ascertaining the mistake he promptly renounces his interest in the profits of the business or other compensation by way of income

SOURCE: CC § 2487. § 27310. One Person both General and Limited Partner. (1) A person may be a general partner and a limited partner in the same partnership at the same time

(2) A person who is a general, and also at the same time a limited partner, shall have all the rights and powers and be subject to all the restric- tions of a general partner; except that, in respect to his contribution he shall have the rights against the other members, which he would have had if he were not also a general partner. SOURCE: CC § 2488. § 27311. Loans and other Business Transactions with Limited Partner. (1) A limited partner also may loan money to and transact other business with the partnership, and, unless he is also a general partner, receive on account of resulting claims against the partnership, with general creditors, a pro rata share of the assets. No limited partner shall in respect to any such claim: (a) Receive or hold as collateral security any partnership property, or COL120106 6 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (b) Receive from a general partner of the partnership any payment, conveyance, or release from liability, if at the time the assets of the partnership are not sufficient to discharge partnership liabilities to persons not claiming as general or limited partners

(2) The receiving of collateral security, or a payment, conveyance, or release in violation of the provisions of paragraph (1) is a fraud on the credi- tors of the partnership. SOURCE: CC § 2489. § 27312. Relation of Limited Partners Inter Se. Where there are several limited partners, the members may agree that one or more of the limited partners shall have a priority over other limited partners as to the return of their contributions, as to their compensation by way of income, or as to any other matter. If such an agreement is made it shall be stated in the certificate, and in the absence of such a statement all the limited partners shall stand upon equal footing. SOURCE: CC § 2490. § 27313. Compensation of Limited Partner. A limited partner may receive from the partnership the share of the profits or the compensation by way of income stipulated for in the certificate; provided, that after such payment is made, whether from the property of the partnership or that of a general partner, the partnership assets are in excess of all liabilities of the partnership except liabilities to limited partners on account of their contributions and to general partners. SOURCE: CC § 2491. § 27314. Withdrawal or Reduction of Limited Partner's Contribution. (1) A limited partner shall not receive from a general partner or out of partnership property any part of his contribution until -- (a) All liabilities of the partnership, except liabilities to general partners and to limited partners on account of their contributions, have been paid or there remains property of the partnership sufficient to pay them

(b) The consent of all members is had, unless the return of the contribution may be rightfully demanded under the provisions of paragraph (2), and COL120106 7 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (c) The certificate is cancelled or so amended as to set forth the withdrawal or reduction

(2) Subject to the provisions of paragraph (1) of this section, a limited partner may rightfully demand the return of his contribution -- (a) On the dissolution of a partnership, or (b) When the date specified in the certificate for its return has arrived, or (c) After he has given six (6) months' notice in writing to all other members, if no time is specified in the certificate either for the return of the contribution or for the dissolution of the partnership

(3) In the absence of any statement in the certificate to the contrary or the consent of all members, a limited partner, irrespective of the nature of his contribution, has only the right to demand and receive cash in return for his contribution

(4) A limited partner may have the partnership dissolved and its affairs wound up when -- (a) He rightfully but unsuccessfully demands the return of his contribution, or (b) The other liabilities of the partnership have not been paid, or the partnership property is insufficient for their payment as required by paragraph (1)(a) of this section and the limited partner would otherwise be entitled to the return of his contribution. SOURCE: CC § 2492. § 27315. Liability of Limited Partner to Partnership. (1) A limited partner is liable to the partnership: (a) For the difference between his contribution as actually made and that stated in the certificate as having been made, and (b) For any unpaid contribution which he agreed in the certificate to make in the future at the time and on the conditions stated in the certificate

(2) A limited partner holds as trustee for the partnership: COL120106 8 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (a) Specific property stated in the certificate as contributed by him, but which was not contributed or which has been wrongfully returned, and (b) Money or other property wrongfully paid or conveyed to him on account of his contribution

(3) The liabilities of a limited partner as set forth in this section can be waived or compromised only by the consent of all members; but a waiver or compromise shall not affect the right of the creditor of a partnership, who extended credit or whose claim arose after the filing and before the cancellation or amendment of the certificate, to enforce such liabilities

(4) When a contributor has rightfully received the return in whole or in part of the capital of his contribution, he is nevertheless liable to the part- nership for any sum, not in excess of such return with interest, necessary to discharge its liabilities to all creditors who extended credit or whose claims arose before such return. SOURCE: CC § 2493. § 27316. Nature of Limited Partner's Interest in Partnership. A limited partner's interest in the partnership is personal property. SOURCE: CC § 2494

---------- ARTICLE 4 ALTERATION AND DISSOLUTION OF THE PARTNERSHIP § 27401. Assignment of Limited Partner's Interest. § 27402. Effect of Retirement, Death, or Insanity of a General Partner. § 27403. Death of Limited Partner. § 27404. Rights of Creditors of Limited Partner. § 27405. Distribution of Assets. § 27406. When Certificate Shall be Canceled or Amended

§ 27407. Requirements for Amendments and for Cancellation of Certificates. § 27408. Parties to Actions. COL120106 9 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS § 27401. Assignment of Limited Partner's Interest

(1) A limited partner's interest is assignable

(2) A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership

(3) An assignee, who does not become a substituted limited partner, has no right to require any information or account of the partnership transactions or to inspect the partnership books; he is only entitled to receive the share of the profits or other compensation by way of income, or the return of his contributions, to which his assignor would otherwise be entitled

(4) An assignee shall have the right to become a substituted limited partner if all the members (except the assignor) consent thereto or if the assignor, being thereunto empowered by the certificate, gives the assignee that right

(5) An assignee becomes a substituted limited partner when the certificate is appropriately amended in accordance with § 27406. (6) The substituted limited partner has all the rights and powers, and is subject to all the restrictions and liabilities of the assignor, except those liabilities of which he was ignorant at the time he became a limited partner and which could not be ascertained from the certificate

(7) The substitution of the assignee as a limited partner does not release the assignor from liability to the partnership under '§ 27304 and 27315. SOURCE: CC § 2495. § 27402. Effect of Retirement, Death, or Insanity of a General Partner. The retirement, death, or insanity of a general partner dissolves the partnership, unless the business is continued by the remaining general partners: (a) Under a right so to do stated in the certificate, or (b) With the consent of all members. SOURCE: CC § 2496

§ 27403. Death of Limited Partner

(l) On the death of a limited partner, his executor or administrator shall have all the rights of a limited partner for the purpose of settling his estate, COL120106 10 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS and such power as the deceased had to constitute his assignee a substituted limited partner

(2) The estate of a deceased limited partner shall be liable for all his liabilities as a limited partner

SOURCE: CC § 2497. § 27404. Rights of Creditors of Limited Partner. (1) On due application to a court of competent jurisdiction by any creditor of a limited partner, the court may charge the interest of the indebt- ed limited partner with payment of the unsatisfied amount of such claim; and may appoint a receiver and make all other orders, directions, and inquiries which the circumstances of the case may require

(2) The interest may be redeemed with the separate property of any general partner, but may not be redeemed with the partnership property

(3) The remedies conferred by paragraph (1) of this section shall not be deemed exclusive of others which may exist

(4) Nothing in this Chapter shall be held to deprive a limited partner of his lawful exemption. SOURCE: CC § 2498. § 27405. Distribution of Assets. (1) In settling accounts after dissolution, the liabilities of the part- nership shall be entitled to payment in the following order: (a) Those to creditors, in the order of priority as provided by law, except those to limited partners on account of their contributions, and to general partners, (b) Those to limited partners in respect to their share of the profits and other compensation by way of income of their contributions, (c) Those to limited partners in respect to the capital of their contributions, (d) Those to general partners other than for capital and profits, (e) Those to general partners in respect to profits, (f) Those to general partners in respect to capital

COL120106 11 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (2) Subject to any statement in the certificate or to subsequent agreement, limited partners share in the partnership assets in respect to their claims for capital, and in respect to their claims for profits or for compensa- tion by way of income on their contributions respectively, in proportion to the respective amounts of such claims. SOURCE: CC § 2499

§ 27406. When Certificate shall be Canceled or Amended. (1) The certificate shall be canceled when the partnership is dissolved or all limited partners cease to be such

(2) A certificate shall be amended when: (a) There is a change in the name of the partnership or in the amount or character of the contribution of any limited partner, (b) A person is substituted as a limited partner, (c) An additional limited partner is admitted, (d) A person is admitted as a general partner, (e) A general partner retires, dies, or becomes insane, and the business is continued under § 27402, (f) There is a change in the character of the business of the partnership, (g) There is a false or erroneous statement in the certificate, (h) There is a change in the time as stated in the certificate for the dissolution of the partnership or for the return of a contribution, (i) A time is fixed for the dissolution of the partnership, or the return of a contribution, no time having been specified in the certificate, or (j) The members desire to make a change in any other statement in the certificate in order that it shall accurately represent the agreement between them. SOURCE: CC § 2500. § 27407. Requirements for Amendments and for Cancellation of Certificates. (1) The writing to amend a certificate shall: COL120106 12 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (a) Conform to the requirements of § 27201(a) as far as necessary to set forth clearly the change in the certificate which it is desired to make, and (b) Be signed and sworn to by all members, and an amendment substituting a limited partner or adding a limited or general partner shall be signed also by the member to be substituted or added, and when a limited partner is to be substituted, the amendment shall also be signed by the assigning limited partner

(2) The writing to cancel a certificate shall be signed by all members

(3) A person desiring the cancellation or amendment of a certificate, if any person designated in paragraphs (1) and (2) of this section as a person who must execute the writing refuses to do so, may petition the Superior Court to direct a cancellation or amendment thereof

(4) If the court finds that the petitioner has a right to have the writing executed by a person who refuses to do so, it shall order the Director of Revenue and Taxation to record the cancellation or amendment of the certificate; and where the certificate is to be amended, the court shall also cause to be filed for record in said office a certified copy of its decree setting forth the amendment

(5) A certificate is amended or cancelled when there is filed for record in the office where the certificate is filed and recorded: (a) A writing in accordance with the provisions of paragraph (1) or (2) of this section, or (b) A certified copy of the order of court in accordance with the provisions of paragraph (4) of this section

(6) After the certificate is duly amended in accordance with this section, the amended certificate shall thereafter be for all purposes the certificate provided for by this Chapter

SOURCE: CC § 2501. § 27408. Parties to Actions. A contributor, unless he is a general partner, is not a proper party to proceedings by or against a partnership, except where the object is to enforce a limited partner's right against or liability to the partnership. SOURCE: CC § 2502

COL120106 13 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS ---------- ARTICLE 5 MISCELLANEOUS PROVISIONS § 27501. Name of Act. § 27502. Rules of Construction. § 27503. Rules for Cases not Provided for in this Chapter. § 27504. Provisions for Existing Partnerships. § 27501. Name of Act

This Chapter may be cited as Uniform Limited Partnership Law

SOURCE: CC § 2503. § 27502. Rules of Construction. (1) The rule that laws in derogation of the common law are to be strictly construed shall have no application to this Chapter. (2) This Chapter shall be so interpreted and construed as to effect its general purpose to make uniform the law of those states which enact it. (3) This Chapter shall not be so construed as to impair the obligations of any contract existing when this Title goes into effect, nor to affect any action or proceedings begun or right accrued before this Title takes effect. SOURCE: CC § 2504. § 27503. Rules for Cases not Provided for in this Chapter. In any case not provided for in this Chapter, the rules of law and equity including the law merchant, shall govern. SOURCE: CC § 2505. § 27504. Provisions for Existing Partnerships. (1) A limited partnership formed under any law of Guam prior to the adoption of this Title, may become a limited partnership under this Chapter by complying with the provisions of § 27201, provided the Certificate sets forth: COL120106 14 18 GCA BUSINESS STRUCTURE & FUNCTION CH. 27 LIMITED PARTNERSHIPS (a) The amount of the original contribution of each limited partner, and the time when the contribution was made, and (b) That the property of the partnership exceeds the amount sufficient to discharge its liabilities to persons not claiming as general or limited partners by an amount greater than the sum of the contribu- tions of its limited partners. (2) A limited partnership formed under any law of Guam prior to the adoption of this Title, until or unless it becomes a limited partnership under this Chapter, shall continue to be governed by the provisions of law, as they existed prior to the repeal thereof, except that such partnership shall not be renewed unless so provided in the original agreement. SOURCE: CC § 2506. NOTE: No Civil Code sections §§ 2507 - 2771 existed in the 1970 Civil Code

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