Marshall Islands Revised Partnership Act
TITLE 52 – ASSOCIATIONS LAW
CHAPTER 2 - REVISED PARTNERSHIP ACT
sRepublic of the Marshall Islands
Jepilpilin Ke Ejukaan
MARSHALL ISLANDS REVISED PARTNERSHIP ACT
Arrangement of Sections
Section Page
DIVISION I - GENERAL PROVISIONS. 5
§1. Definitions. ............................................................................................................................ 5
§2. Knowledge and notice. ........................................................................................................ 7
§3. Effect of partnership agreement; non-waivable provisions. .......................................... 8
§4. Supplemental principles of law. ......................................................................................... 9
§5. Execution, filing and recording of statements and certificates. ................................... 10
§6. Governing law. ................................................................................................................... 13
§7. Reserved power of the Marshall Islands to alter or repeal Act. .................................. 13
§8. Name of partnership. ......................................................................................................... 13
§9. Indemnification................................................................................................................... 14
§10. Registered agent for the service of process. .................................................................... 14
§11. Attorney-General as agent for service of process. ......................................................... 16
§12. Doing business. ................................................................................................................... 16
§13. Restated certificate of partnership existence. ................................................................. 17
§14. Execution, amendment or cancellation by judicial order. ............................................ 18
§15. Certificate of correction; corrected certificate. ................................................................ 18
§16. Business transactions of partner with the partnership. ................................................ 19
§17. Contractual appraisal rights. ............................................................................................ 19
§18. Contested matters relating to partners; contested votes. .............................................. 19
§19. Interpretation and enforcement of partnership agreement. ......................................... 21
DIVISION II - NATURE OF PARTNERSHIP 21
§20. Partnership as entity. ......................................................................................................... 21
§21. Formation of partnership; powers. .................................................................................. 21
§22. Partnership property. ......................................................................................................... 22
§23. When property is partnership property. ........................................................................ 22
§24. Admission without contribution or partnership interest. ............................................ 22
§25. Form of contribution. ........................................................................................................ 23
§26. Liability for contribution. .................................................................................................. 23
DIVISION III - RELATIONS OF PARTNERS TO PERSONS DEALING
WITH PARTNERSHIP 24
§27. Partner agent of partnership. ........................................................................................... 24
§28. Transfer of partnership property. .................................................................................... 24
§29. Certificate of partnership existence. ................................................................................ 25
§30. Denial of status as partner. ............................................................................................... 27
§31. Partnership liable for partner’s actionable conduct. ..................................................... 27
§32. Partner’s liability. ............................................................................................................... 27
§33. Actions by and against partnership and partners. ........................................................ 27
§34. Liability of purported partner. ......................................................................................... 29
DIVISION IV - RELATIONS OF PARTNERS TO EACH OTHER AND TO
PARTNERSHIP 30
§35. Partner’s rights and duties................................................................................................ 30
§36. Distributions in kind. ........................................................................................................ 31
§37. Requirement for keeping books of accounts, minutes, and records; partner’s
rights and duties with respect to information. .............................................................. 32
§38. General standards of partner’s conduct. ........................................................................ 35
§39. Actions by partnership and partners; derivative actions. ............................................ 37
§40. Continuation of partnership beyond definite term or particular undertaking. ........ 38
§41. Classes and voting. ............................................................................................................ 38
§42. Remedies for breach of partnership agreement............................................................. 40
DIVISION V - TRANSFEREES AND CREDITORS OF PARTNER 40
§43. Partner not co-owner of partnership property. ............................................................. 40
§44. Partner’s economic interest in partnership; personal property. .................................. 40
§45. Transfer of partner’s economic interest. ......................................................................... 40
§46. Partner’s economic interest subject to charging order. ................................................. 42
DIVISION VI – PARTNER’S DISSOCIATION 43
§47. Events causing partner’s dissociation. ............................................................................ 43
§48. Partner’s power to dissociate; wrongful dissociation. .................................................. 45
§49. Effect of partner’s dissociation. ........................................................................................ 46
DIVISION VII - PARTNER’S DISSOCIATION WHEN BUSINESS OR
AFFAIRS NOT WOUND UP 46
§50. Purchase of dissociated partner’s partnership interest. ............................................... 46
§51. Dissociated partner’s power to bind and liability to partnership. .............................. 49
§52. Dissociated partner’s liability to other persons.............................................................. 49
§53. Certificate of dissociation. ................................................................................................. 50
§54. Continued use of partnership name. ............................................................................... 50
DIVISION VIII - WINDING UP PARTNERSHIP BUSINESS OR AFFAIRS. 51
§55. Events causing dissolution and winding up of partnership business or affairs. ...... 51
§56. Partnership continues after dissolution. ......................................................................... 52
§57. Right to wind up partnership business or affairs. ......................................................... 53
§58. Partner’s power to bind partnership after dissolution.................................................. 53
§59. Certificate of dissolution. .................................................................................................. 53
§60. Partner’s liability to other partners after dissolution. ................................................... 54
§61. Settlement of accounts and contributions among partners. ......................................... 54
DIVISION IX - CONVERSION; MERGER; DOMESTICATION; AND
TRANSFER 56
§62. Conversion of certain entities to a domestic partnership. ............................................ 56
§63. Merger or consolidation. ................................................................................................... 58
§64. Approval of conversion of a domestic partnership. ...................................................... 63
§65. Domestication of non-Marshall Islands entities............................................................. 64
§66. Transfer of domestic partnerships. .................................................................................. 67
DIVISION X - MISCELLANEOUS 70
§67. Uniformity of application and construction. .................................................................. 70
§68. Short title. ............................................................................................................................ 70
§69. Severability clause. ............................................................................................................. 70
§70. Fees. ...................................................................................................................................... 70
§71. Cancellation of certificate of partnership existence for failure to pay annual
fee. ......................................................................................................................................... 71
§72. Reinstatement of partnership. .......................................................................................... 71
§73. Exemptions for non-resident entities............................................................................... 73
§74. Repeals. ................................................................................................................................ 73
§75. Applicability. ....................................................................................................................... 73
§76. Effective Date. ..................................................................................................................... 73
TITLE 52 – ASSOCIATIONS LAW
CHAPTER 2 - REVISED PARTNERSHIP ACT
sRepublic of the Marshall Islands
Jepilpilin Ke Ejukaan
MARSHALL ISLANDS REVISED PARTNERSHIP ACT
AN ACT to modernize the partnership law of the Republic of the Marshall Islands
by repealing the Partnership Act and replacing it with the Revised Partnership Act
in order to make it more amenable for businesses to organize in the Republic of the
Marshall Islands as a partnership.
Commencement: May 9, 2005
Source: P.L. 2005-28
Amended By:
DIVISION I - GENERAL PROVISIONS.
§1. Definitions.
As used in this Act, unless the context otherwise requires, the term:
(1) “business” includes every trade, occupation and profession, the
holding or ownership of property and any other activity for profit;
(2) “certificate” means a certificate of partnership existence under
section 29 of this Act, a certificate of dissociation under section 53 of
this Act, a certificate of dissolution under section 59 of this Act, an
amendment or cancellation of any of the foregoing under section 5 of
this division, a certificate of correction and a corrected certificate
under section 15 of this division, a certificate of conversion to
partnership under section 62 of this Act, a certificate of merger or
consolidation under section 63 of this Act, a certificate of partnership
domestication under section 65 of this Act, a certificate of transfer
under section 66 of this Act, and a certificate of termination of a
certificate with a future effective date and a certificate of amendment
of a certificate with a future effective date under section 5(8) of this
division;
(3) “distribution” means a transfer of money or other property from a
partnership to a partner in the partner’s capacity as a partner or to a
transferee of all or a part of a partner’s economic interest;
(4) “economic interest” means a partner’s share of the profits and losses
of a partnership and the partner’s right to receive distributions;
(5) “High Court” means the High Court of the Republic of the
Marshall Islands.
(6) “liquidating trustee” means a person, other than a partner, carrying
out the winding up of a partnership;
(7) “non-resident partnership” means a domestic partnership not doing
business in the Republic of the Marshall Islands. “Not doing
business in the Marshall Islands” will have the same meaning as
found in the Marshall Islands Business Corporations Act (BCA), 52
MIRC Part I;
(8) “partner” means a person who has been admitted to a partnership as
a partner of the partnership;
(9) “partnership” or “domestic partnership” means an association of
two or more persons formed under section 21 of this Act, to carry on
any business, purpose or activity.
(10) “partnership agreement” means the agreement, whether written,
oral or implied, among the partners concerning the partnership,
including amendments to the partnership agreement. A partnership
is not required to execute its partnership agreement. A partnership is
bound by its partnership agreement whether or not the partnership
executes the partnership agreement;
(11) “partnership at will” means a partnership that is not a partnership
for a definite term or particular undertaking;
(12) “partnership for a definite term or particular undertaking” means a
partnership in which the partners have agreed to remain partners
until the expiration of a definite term or the completion of a
particular undertaking;
(13) “partnership interest” or “partner’s interest in the partnership”
means all of a partner’s interests in the partnership, including the
partner’s economic interest and all management and other rights;
(14) “person” means a natural person, partnership, limited partnership,
trust, estate, limited liability company, association, corporation,
custodian, nominee or any other individual or entity in its own or
any representative capacity, in each case, whether domestic or
foreign;
(15) “property” means all property, real, personal or mixed, tangible or
intangible, or any interest therein;
(16) “Registrar of Corporations” means the Registrar of domestic
partnerships. The Registrar for resident partnerships is the Registrar
of Corporations responsible for resident domestic and authorized
foreign corporations. The Registrar for non-resident partnerships is
The Trust Company of the Marshall Islands, Inc;
(17) “resident domestic partnership” means a domestic partnership
doing business in the Republic of the Marshall Islands;
(18) “transfer” includes an assignment, conveyance, lease, mortgage,
deed, and encumbrance. [P.L. 2005-28, §1.]
§2. Knowledge and notice.
(1) A person knows a fact if the person has actual knowledge of it.
(2) A person has notice of a fact:
(a) if the person knows of it;
(b) if the person has received a notification of it;
(c) if the person has reason to know it exists from all of the facts
known to the person at the time in question; or
(d) by reason of a filing or recording of a certificate to the extent
provided by and subject to the limitations set forth in this Act.
(3) A person notifies or gives a notification to another by taking steps
reasonably required to inform the other person in the ordinary
course, whether or not the other person obtains knowledge of it.
(4) A person receives a notification when the notification:
(a) comes to the person’s attention; or
(b) is received at the person’s place of business or at any other
place held out by the person as a place for receiving
communications.
(5) Except as otherwise provided in subsection (6) of this section, a
person other than an individual knows, has notice, or receives a
notification of a fact for purposes of a particular transaction when the
individual conducting the transaction knows, has notice, or receives a
notification of the fact, or in any event when the fact would have been
brought to the individual’s attention if the person had exercised
reasonable diligence. The person exercises reasonable diligence if it
maintains reasonable routines for communicating significant
information to the individual conducting the transaction and there is
reasonable compliance with the routines. Reasonable diligence does
not require an individual acting for the person to communicate
information unless the communication is part of the individual’s
regular duties or the individual has reason to know of the transaction
and that the transaction would be materially affected by the
information.
(6) A partner’s knowledge, notice or receipt of a notification of a fact
relating to the partnership is effective immediately as knowledge by,
notice to or receipt of a notification by the partnership, except in the
case of a fraud on the partnership committed by or with the consent
of that partner. [P.L. 2005-28, §2.]
§3. Effect of partnership agreement; non-waivable provisions.
(1) Except as otherwise provided in subsection (2) of this section,
relations among the partners and between the partners and the
partnership are governed by the partnership agreement. To the extent
the partnership agreement does not otherwise provide, this Act
governs relations among the partners and between the partners and
the partnership.
(2) The partnership agreement may not:
(a) vary the rights and duties under section 5 of this division,
except to eliminate the duty to provide copies of certificates to
all of the partners;
(b) restrict a partner’s rights to obtain information as provided in
section 37 of this Act, except as permitted by section 37(6) of
this Act;
(c) eliminate the obligation of good faith and fair dealing under
section 38(4) of this Act, but the partnership agreement may
restrict the obligation or prescribe the standards by which the
performance of the obligation is to be measured;
(d) vary the power to dissociate as a partner under section 48(1) of
this Act, except to require the notice under section 47(1) of this
Act to be in writing;
(e) vary the right of a court to expel a partner in the events
specified in section 47(5) of this Act; or
(f) vary the requirement to wind up the partnership business in
cases specified in sections 55(4)-(6) of this Act.
(3) Notwithstanding anything to the contrary contained in this section,
sections 20, 22 and 43 of this Act may be modified only to the extent
provided in a certificate of partnership existence and in a partnership
agreement.
(4) It is the policy of this Act to give maximum effect to the principle of
freedom of contract and to the enforceability of partnership
agreements.
(5) A partner or another person shall not be liable to the partnership or
the other partners or another person that is a party to or otherwise
bound by a partnership agreement for the partner’s or other person’s
good faith reliance on the provisions of the partnership agreement.[P.L. 2005-28, §3.]
§4. Supplemental principles of law.
(1) In any case not provided for in this Act, the rules of law and equity
shall govern.
(2) No obligation of a partner to a partnership arising under a
partnership agreement or a separate agreement or writing, and no
note, instruction or other writing evidencing any such obligation of a
partner, shall be subject to the defense of usury, and no partner shall
interpose the defense of usury with respect to any such obligation in
any action. [P.L. 2005-28, §4.]
§5. Execution, filing and recording of statements and certificates.
(1) A certificate may be filed with the Registrar of Corporations by
delivery to the Registrar of Corporations of the signed copy of the
certificate.
(2) A certificate filed by a partnership must be executed by at least one
(1) partner or by one (1) or more authorized persons. The execution of
a certificate by an individual as, or on behalf of, a partner or other
person named as a partner in a certificate constitutes an oath or
affirmation, under the penalties of perjury, that, to the best of the
individual’s knowledge and belief, the facts stated therein are true. A
person who executes a certificate as an agent or fiduciary need not
exhibit evidence of his/her authority as a prerequisite to filing. Any
signature on any certificate authorized to be filed with the Registrar
of Corporations under any provision of this Act may be a facsimile, a
conformed signature or an electronically transmitted signature. Upon
delivery of any certificate, the Registrar of Corporations shall record
the date of its delivery. Unless the Registrar of Corporations finds
that any statement or certificate does not conform to law, upon
receipt of all filing fees required by law the Registrar of
Corporations shall:
(a) certify that the certificate has been filed with the Registrar of
Corporations by endorsing upon the original certificate the
word “Filed”, and the date of the filing. This endorsement is
conclusive of the date of its filing in the absence of
actual fraud;
(b) file and index the endorsed certificate;
(c) prepare and return to the person who filed it or the person’s
representative, a copy of the signed certificate similarly
endorsed, and shall certify such copy as a true copy of the
signed certificate; and
(d) cause to be entered such information from the certificate as the
Registrar of Corporations deems appropriate into the
Registrar, and such information and a copy of such certificate
shall be permanently maintained as a public record on a
suitable medium.
(3) A person authorized by this Act to file a certificate may amend or
cancel the certificate by filing an amendment or cancellation that
names the partnership, identifies the certificate, and states the
substance of the amendment or cancellation. A person authorized by
this Act to file a certificate who becomes aware that such certificate
was false when made, or that any matter described in the certificate
has changed, making the certificate false in any material respect, shall
promptly amend the certificate. Upon the filing of a certificate
amending or correcting a certificate (or judicial decree of
amendment) with the Registrar of Corporations, or upon the future
effective date of a certificate amending or correcting a certificate (or
judicial decree thereof), as provided for therein, the certificate being
corrected or amended shall be corrected or amended as set forth
therein. Upon the filing of a certificate of cancellation (or judicial
decree thereof), or a certificate of merger or consolidation which acts
as a certificate of cancellation, or a certificate of transfer, or upon the
future effective date of a certificate of cancellation (or a judicial
decree thereof) or of a certificate of merger or consolidation which
acts as a certificate of cancellation, or a certificate of transfer, as
provided for therein, or as specified in section 10(3) of this division,
the certificate of partnership existence is cancelled. A certificate of
partnership existence shall be cancelled upon the dissolution and the
completion of winding up of the partnership, or as provided in
section 10(3) of this division, or upon the filing of a certificate of
merger or consolidation if the domestic partnership is not the
surviving or resulting entity in a merger or consolidation, or upon the
filing of a certificate of transfer. A certificate of cancellation shall be
filed with the Registrar of Corporations to accomplish the
cancellation of a certificate of partnership existence upon the
dissolution and the completion of winding up of a domestic
partnership and shall set forth:
(a) the name of the partnership;
(b) the date of filing of its certificate of partnership existence; and
(c) any other information the person filing the certificate of
cancellation determines.
Upon the filing of a certificate of partnership domestication, or upon
the future effective date of a certificate of partnership domestication,
the entity filing the certificate of partnership domestication is
domesticated as a partnership with the effect provided in section 65
of this Act. Upon the filing of a certificate of conversion to
partnership, or upon the future effective date of a certificate of
conversion to partnership, the entity filing the certificate of
conversion to partnership is converted to a partnership with the
effect provided in section 62 of this Act.
(4) A person who files a certificate pursuant to this section shall
promptly send a copy of the certificate to every non-filing partner
and to any other person named as a partner in the certificate. Failure
to send a copy of a certificate to a partner or other person does not
limit the effectiveness of the certificate as to a person not a partner.
(5) The filing of a certificate of partnership existence under section 29 of
this Act with the Registrar of Corporations shall make it unnecessary
to file any other document.
(6) A certificate filed with the Registrar of Corporations shall be effective
if there has been substantial compliance with the requirements of
this Act.
(7) A certificate shall be effective at the time of its filing with the
Registrar of Corporations or at any later date specified in
the certificate.
(8) If any certificate filed in accordance with this Act provides for a
future effective date and if, prior to such future effective date set forth
in such certificate, the transaction is terminated or its terms are
amended to change the future effective date or any other matter
described in such certificate so as to make such certificate false or
inaccurate in any respect, such certificate shall, prior to the future
effective date set forth in such certificate, be terminated or amended
by the filing of a certificate of termination or certificate of amendment
of such certificate, executed in the same manner as the certificate
being terminated or amended is required to be executed in
accordance with this section, which shall identify the certificate
which has been terminated or amended and shall state that the
certificate has been terminated or the manner in which it has been
amended. Upon the filing of a certificate of amendment of a
certificate with a future effective date, the certificate identified in such
certificate of amendment is amended. Upon the filing of a certificate
of termination of a certificate with a future effective date, the
certificate identified in such certificate of termination is terminated.
(9) A fee as determined by the Registrar shall be paid at the time of the
filing of a certificate. [P.L. 2005-28, §5.]
§6. Governing law.
(1) The law of the Marshall Islands governs relations among the partners
and between the partners and the partnership.
(2) If (a) a partnership agreement provides for the application of the laws
of the Marshall Islands, and (b) the partnership files with the
Registrar of Corporations a certificate of partnership existence, then
the partnership agreement shall be governed by and construed under
the laws of the Marshall Islands. [P.L. 2005-28, §6.]
§7. Reserved power of the Marshall Islands to alter or repeal Act.
All provisions of this Act may be altered from time to time or repealed and
all rights of partners are subject to this reservation. Unless expressly stated
to the contrary in this Act, all amendments of this Act shall apply to
partnerships and partners whether or not existing at the time of the
enactment of any such amendment. [P.L. 2005-28, §7.]
§8. Name of partnership.
(1) The name of the partnership shall contain the words “Partnership.”
(2) The name of a partnership may contain the name of a partner.
(3) The name of a partnership to be included in the certificate of
partnership existence must be such as to distinguish it upon the
records of the Registrar of Corporations from the name on such
records of any partnership or limited partnership organized under
the laws of the Marshall Islands and reserved, registered, formed or
organized with the Registrar of Corporations; provided, however,
that a partnership may be registered under any name which is not
such as to distinguish it upon the records of the Registrar of
Corporations from the name on such records of any partnership or
limited partnership reserved, registered, formed or organized under
the laws of the Marshall Islands with the written consent of the other
partnership or limited partnership, which written consent shall be
filed with the Registrar of Corporations. [P.L. 2005-28, §8.]
§9. Indemnification.
Subject to such standards and restrictions, if any, as are set forth in its
partnership agreement, a partnership may, and shall have the power to,
indemnify and hold harmless any partner or other person from and against
any and all claims and demands whatsoever. [P.L. 2005-28, §9.]
§10. Registered agent for the service of process.
(1) Every domestic partnership formed under sections 21 and 29 of this
Act shall designate a registered agent in the Marshall Islands upon
whom process against such entity, or any notice or demand required
or permitted by law to be served, may be served. The agent for a
partnership having a place of business in the Marshall Islands shall
be a resident domestic corporation having a place of business in the
Marshall Islands or a natural person, resident of and having a
business address in the Marshall Islands.
(2) The registered agent for a non-resident partnership shall be The Trust
Company of the Marshall Islands, Inc.
(3) A domestic partnership which fails to maintain a registered agent as
required by this Act shall be dissolved or its authority to do business
or registration shall be revoked, as the case may be, in accordance
with section 71 of this Act.
(4) Manner of service:
(a) Resident domestic partnership. Service of process on a resident
domestic partnership may be made on the registered agent in
the manner provided by law for the service of summons as if
the registered agent were a defendant.
(b) Non-resident partnership:
(i) Service of process on a non-resident domestic
partnership may be made on the registered agent in the
manner provided by law for the service of summons as
if the registered agent were a defendant; or
(ii) Service of process may be sent to the registered agent
via registered mail or courier as if the registered agent
were a defendant.
(5) Any registered agent of a partnership may resign as such agent upon
filing a written notice thereof with the Registrar of Corporations;
provided, however, that the registered agent shall notify the
partnership not less than thirty (30) days prior to such filing and
resignation. The registered agent shall mail or cause to be mailed to
the partnership at the last known address of the partnership, within
or without the Marshall Islands, or at the last known address of the
person at whose request the partnership was formed, notice of the
resignation of the agent. No designation of a new registered agent
shall be accepted for filing until all charges owing to the former
registered agent shall have been paid.
(6) A designation of a registered agent under this section may be made,
revoked, or changed by filing an appropriate notification with the
Registrar of Corporations.
(7) The designation of a registered agent shall terminate upon filing a
notice of resignation provided that the registered agent certifies that
the partnership was notified not less than thirty (30) days prior to
such filing as provided by subsection (5) of this section.
(8) A registered agent, when served with process, notice or demand for
the partnership which it represents, shall transmit the same to the
partnership by personal notification or in the following manner:
Upon receipt of the process, notice or demand, the registered agent
shall cause a copy of such paper to be mailed to the partnership
named therein at its last known address. Such mailing shall be by
registered mail. As soon thereafter as possible if process was issued
in the Marshall Islands, the registered agent may file with the clerk of
the Marshall Islands court issuing the process, or with the agency of
the Government issuing the notice or demand, either the receipt of
such registered mailing or an affidavit stating that such mailing has
been made, signed by the registered agent, or if the agent is a
partnership, by an officer of the same, properly notarized.
Compliance with the provisions of this subsection shall relieve the
registered agent from any further obligation to the partnership for
service of the process, notice or demand, but the agent’s failure to
comply with the provisions of this subsection shall in no way affect
the validity of the service of the process, notice or demand.
(9) A registered agent for service of process acting pursuant to the
provisions of this section shall not be liable for the actions or
obligations of the partnership for whom it acts. The registered agent
shall not be a party to any suit or action against the partnership or
arising from the acts or obligations of the partnership. If the
registered agent is named in any such action, the action shall be
dismissed as to such agent. [P.L. 2005-28, §10.]
§11. Attorney-General as agent for service of process.
(1) Whenever a domestic partnership fails to maintain a registered agent
in the Marshall Islands, or whenever its registered agent cannot be
found at its business address, then the Attorney-General shall be an
agent of such partnership upon whom process or notice or demand
required or permitted by law to be served or may be served. The
Attorney-General shall also be agent for service of process of a
partnership whenever authorized under this Act.
(2) Service on the Attorney-General as agent of a domestic partnership
shall be made by personally delivering to and leaving with him or
his/her deputy or with any person authorized by the Attorney-
General to receive such service, at the office of the Attorney-General
in Majuro Atoll, duplicate copies of such process together with the
statutory fee. The Attorney-General shall promptly send one of such
copies by registered mail, return receipt requested, to such
partnership at the business address of its registered agent, or if there
is no such office, the Attorney-General shall mail such copy, in the
case of a resident domestic partnership, in care of the partner or
authorized person named in its certificate of partnership at his
address stated therein, or in the case of a non-resident domestic
partnership, at the address of the partnership without the Marshall
Islands, or if none, at the last known address of the partner or
authorized person in the certificate of partnership; or in the case of a
partnership which has transferred its domicile out of the Marshall
Islands to such partnership’s registered agent as shown in the
certificate of transfer of domicile. [P.L. 2005-28, §11.]
§12. Doing business.
A limited partnership, a partnership, a limited liability company, a business
or other trust or association, or a corporation formed or organized under the
laws of any foreign country or other foreign jurisdiction shall not be deemed
to be doing business in the Marshall Islands solely by reason of its being a
partner in a domestic partnership. [P.L. 2005-28, §12.]
§13. Restated certificate of partnership existence.
(1) A certificate of partnership existence may be restated by integrating
into a single instrument all of the provisions of the certificate of
partnership existence which are then in effect and operative as a
result of there having been theretofore filed one (1) or more
amendments pursuant to section 5(3) of this division or other
instruments having the effect of amending a certificate of partnership
existence and the certificate of partnership existence may be amended
or further amended by the filing of a restated certificate of
partnership existence. The restated certificate of partnership existence
shall be specifically designated as such in its heading and shall
set forth:
(a) the present name of the partnership and, if it has been
changed, the name under which the partnership was
originally formed;
(b) the date of filing of the original certificate of partnership
existence with the Registrar of Corporations;
(c) the information required to be included pursuant to section
29(1) of this Act; and
(d) any other information desired to be included therein.
(2) Upon the filing of the restated certificate of partnership existence
with the Registrar of Corporations, or upon the future effective date
of a restated certificate of partnership existence as provided for
therein, the initial certificate of partnership existence, as theretofore
amended, shall be superseded; thenceforth, the restated certificate of
partnership existence, including any further amendment made
thereby, shall be the certificate of partnership existence of the
partnership, but the original date of formation of the partnership
shall remain unchanged.
(3) Any amendment effected in connection with the restatement of the
certificate of partnership existence shall be subject to any other
provision of this Act, not inconsistent with this section, which would
apply if a separate amendment were filed to effect such amendment.[P.L. 2005-28, §13.]
§14. Execution, amendment or cancellation by judicial order.
(1) If a person required by this Act to execute any certificate fails or
refuses to do so, any other person who is adversely affected by the
failure or refusal, may petition the High Court to direct the execution
of the certificate. If the High Court finds that the execution of the
certificate is proper and that any person so designated has failed or
refused to execute the certificate, the High Court shall order the
Registrar of Corporations to file an appropriate certificate.
(2) If a person required to execute a partnership agreement or
amendment thereof fails or refuses to do so, any other person who is
adversely affected by the failure or refusal may petition the High
Court to direct the execution of the partnership agreement or
amendment thereof. If the High Court finds that the partnership
agreement or amendment thereof should be executed and that any
person so designated has failed or refused to do so, the High Court
shall enter an order granting appropriate relief. [P.L. 2005-28, §14.]
§15. Certificate of correction; corrected certificate.
(1) Whenever any certificate authorized to be filed with the Registrar of
Corporations under any provision of this Act has been so filed and is
an inaccurate record of the action therein referred to, or was
defectively or erroneously executed, such certificate may be corrected
by filing with the Registrar of Corporations a certificate of correction
of such certificate. The certificate of correction shall specify the
inaccuracy or defect to be corrected, shall set forth the portion of the
certificate in corrected form and shall be executed and filed as
required by this Act. The certificate of correction shall be effective as
of the date the original certificate was filed, except as to those persons
who are substantially and adversely affected by the correction, and as
to those persons the certificate of correction shall be effective from the
filing date.
(2) In lieu of filing a certificate of correction, a certificate may be
corrected by filing with the Registrar of Corporations a corrected
certificate which shall be executed and filed as if the corrected
certificate were the certificate being corrected, and a fee shall be paid
to and collected by the Registrar of Corporations for filing of the
corrected certificate. The corrected certificate shall be specifically
designated as such in its heading, shall specify the inaccuracy or
defect to be corrected, and shall set forth the entire certificate in
corrected form. A certificate corrected in accordance with this section
shall be effective as of the date the original certificate was filed,
except as to those persons who are substantially and adversely
affected by the correction and as to those persons the certificate as
corrected shall be effective from the filing date. [P.L. 2005-28, §15.]
§16. Business transactions of partner with the partnership.
Except as provided in the partnership agreement, a partner may lend money
to, borrow money from, act as a surety, guarantor or endorser for, guarantee
or assume one (1) or more specific obligations of, provide collateral for and
transact other business with, the partnership and, subject to other applicable
law, has the same rights and obligations with respect thereto as a person
who is not a partner. [P.L. 2005-28, §16.]
§17. Contractual appraisal rights.
A partnership agreement or an agreement of merger or consolidation may
provide that contractual appraisal rights with respect to a partnership
interest or another interest in a partnership shall be available for any class or
group of partners or partnership interests in connection with any
amendment of a partnership agreement, any merger or consolidation in
which the partnership is a constituent party to the merger or consolidation,
any conversion of the partnership to another business form, any transfer to
or domestication in any jurisdiction by the partnership, or the sale of all or
substantially all of the partnership’s assets. The High Court shall have
jurisdiction to hear and determine any matter relating to any such appraisal
rights for resident domestic partnerships. Any court which can assert
jurisdiction pursuant to its rules, shall have jurisdiction to hear and
determine any matter relating to any such appraisal rights for non-resident
domestic partnerships. [P.L. 2005-28,§17.]
§18. Contested matters relating to partners; contested votes.
(1) Upon application of any partner of a partnership which is formed
under the laws of the Marshall Islands, the High Court may hear and
determine the validity of any admission, election, appointment or
dissociation of a partner of the partnership, and the right of any
person to become or continue to be a partner of the partnership, and
to that end make such order or decree in any such case as may be just
and proper, with power to enforce the production of any books,
papers and records relating to the issue. In any such application, the
partnership shall be named as a party, and service of copies of the
application upon the partnership shall be deemed to be service upon
the partnership and upon the person or persons whose right to be a
partner is contested and upon the person or persons, if any, claiming
to be a partner or claiming the right to be a partner; and the person
upon whom service is made shall forward immediately a copy of the
application to the partnership and to the person or persons whose
right to be a partner is contested and to the person or persons, if any,
claiming to be a partner or the right to be a partner, in a postpaid,
sealed, registered letter addressed to such partnership and such
person or persons at their post-office addresses last known to the
person upon whom service is made or furnished to the person upon
whom service is made by the applicant partner. The High Court may
make such order respecting further or other notice of such
application as it deems proper under the circumstances.
(2) Upon application of any partner of a partnership which is formed
under the laws of the Marshall Islands, the High Court may hear and
determine the result of any vote of partners upon matters as to which
the partners of the partnership, or any class or group of partners,
have the right to vote pursuant to the partnership agreement or other
agreement or this Act (other than the admission, election,
appointment or dissociation of partners). In any such application, the
partnership shall be named as a party, and service of the application
upon the person upon whom service is made shall be deemed to be
service upon the partnership, and no other party need be joined in
order for the High Court to adjudicate the result of the vote. The
High Court may make such order respecting further or other notice
of such application as it deems proper under the circumstances.
(3) Nothing herein contained limits or affects the right to serve process in
any other manner now or hereafter provided by law. This section is
an extension of and not a limitation upon the right otherwise existing
of service of legal process upon non-residents.
§19. Interpretation and enforcement of partnership agreement.
Any action to interpret, apply or enforce the provisions of a partnership
agreement of a partnership which is formed under the laws of the Marshall
Islands or doing business in the Marshall Islands, or the duties, obligations
or liabilities of such partnership to the partners of the partnership, or the
duties, obligations or liabilities among partners or of partners to such
partnership, or the rights or powers of, or restrictions on, such partnership
or partners, including actions authorized by section 39 of this Act, may be
brought in the High Court. [P.L. 2005-28, §19.]
DIVISION II - NATURE OF PARTNERSHIP
§20. Partnership as entity.
A partnership is a separate legal entity which is an entity distinct from its
partners unless otherwise provided in a certificate of partnership existence
and in a partnership agreement. [P.L. 2005-28, §21.]
§21. Formation of partnership; powers.
(1) A partnership is formed when two (2) or more persons agree to carry
on as co-owners a business for profit and file a certificate of
partnership existence pursuant to section 29 of this division.
(2) A partnership shall possess and may exercise all the powers and
privileges granted by this Act or by any other law or by its
partnership agreement, together with any powers incidental thereto,
including such powers and privileges as are necessary or convenient
to the conduct, promotion or attainment of the business, purposes or
activities of the partnership.
(3) Notwithstanding any provision of this Act to the contrary, without
limiting the general powers enumerated in subsection (2) of this
section, a partnership shall, subject to such standards and restrictions,
if any, as are set forth in its partnership agreement, have the power
and authority to make contracts of guaranty and suretyship and enter
into interest rate, basis, currency, hedge or other swap agreements or
cap, floor, put, call, option, exchange or collar agreements, derivative
agreements or other agreements similar to any of the foregoing.[P.L. 2005-28, §1.]
§22. Partnership property.
Unless otherwise provided in a certificate of partnership existence and in a
partnership agreement, property acquired by a partnership is property of
the partnership and not of the partners individually. [P.L. 2005-28, §22.]
§23. When property is partnership property.
(1) Property is partnership property if acquired in the name of:
(a) the partnership; or
(b) one (1) or more persons with an indication in the instrument
transferring title to the property of the person’s capacity as a
partner or of the existence of a partnership but without an
indication of the name of the partnership.
(2) Property is acquired in the name of the partnership by a transfer to:
(a) the partnership in its name; or
(b) one (1) or more persons in their capacity as partners in the
partnership, if the name of the partnership is indicated in the
instrument transferring title to the property.
(3) Property is presumed to be partnership property if purchased with
partnership assets, even if not acquired in the name of the
partnership or of one (1) or more persons with an indication in the
instrument transferring title to the property of the person’s capacity
as a partner or of the existence of a partnership.
(4) Property acquired in the name of one (1) or more persons, without an
indication in the instrument transferring title to the property of the
person’s capacity as a partner or of the existence of a partnership and
without use of partnership assets, is presumed to be separate
property, even if used for partnership purposes. [P.L. 2005-28, §23.]
§24. Admission without contribution or partnership interest.
Each person to be admitted as a partner to a partnership formed under
section 21 of this division may be admitted as a partner and may receive a
partnership interest in the partnership without making a contribution or
being obligated to make a contribution to the partnership. Each person to be
admitted as a partner to a partnership formed under section 21 of this
division may be admitted as a partner without acquiring an economic
interest in the partnership. Nothing contained in this section shall affect a
partner’s liability under section 32 of this Act. [P.L. 2005-28, §24.]
§25. Form of contribution.
The contribution of a partner may be in cash, property or services rendered,
or a promissory note or other obligation to contribute cash or property or to
perform services. [P.L. 2005-28, §25.]
§26. Liability for contribution.
(1) A partner is obligated to the partnership to perform any promise to
contribute cash or property or to perform services, even if the partner
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, the partner is obligated at the option of the partnership to
contribute cash equal to that portion of the value of the contribution
that has not been made. The foregoing option shall be in addition to,
and not in lieu of, any other rights, including the right to specific
performance, that the partnership may have against such partner
under the partnership agreement or applicable law.
(2) A partnership agreement may provide that the partnership interest of
any partner who fails to make any contribution that the partner is
obligated to make shall be subject to specified penalties for, or
specified consequences of, such failure. Such penalty or consequence
may take the form of reducing or eliminating the defaulting partner’s
interest in the partnership, subordinating the partner’s partnership
interest to that of nondefaulting partners, a forced sale of the
partner’s partnership interest, forfeiture of the partner’s partnership
interest, the lending by other partners of the amount necessary to
meet the partner’s commitment, a fixing of the value of the partner’s
partnership interest by appraisal or by formula and redemption or
sale of the partner’s partnership interest at such value, or other
penalty or consequence. [P.L. 2005-28, §26.]
DIVISION III - RELATIONS OF PARTNERS TO PERSONS
DEALING WITH PARTNERSHIP
§27. Partner agent of partnership.
Subject to the effect of a certificate of partnership existence under section 29
of this division:
(1) each partner is an agent of the partnership for the purpose of its
business, purposes or activities. An act of a partner, including the
execution of an instrument in the partnership name, for apparently
carrying on in the ordinary course the partnership’s business,
purposes or activities or business, purposes or activities of the kind
carried on by the partnership binds the partnership, unless the
partner had no authority to act for the partnership in the particular
matter and the person with whom the partner was dealing had notice
that the partner lacked authority;
(2) an act of a partner which is not apparently for carrying on in the
ordinary course the partnership’s business, purposes or activities or
business, purposes or activities of the kind carried on by the
partnership binds the partnership only if the act was authorized by
the other partners. [P.L. 2005-28, §27.]
§28. Transfer of partnership property.
(1) Partnership property may be transferred as follows:
(a) subject to the effect of a certificate of partnership existence
under section 29 of this division, partnership property held in
the name of the partnership may be transferred by an
instrument of transfer executed by a partner in the partnership
name;
(b) partnership property held in the name of one (1) or more
partners with an indication in the instrument transferring the
property to them of their capacity as partners or of the
existence of a partnership, but without an indication of the
name of the partnership, may be transferred by an instrument
of transfer executed by the persons in whose name the
property is held; and
(c) partnership property held in the name of one (1) or more
persons other than the partnership, without an indication in
the instrument transferring the property to them of their
capacity as partners or of the existence of a partnership, may
be transferred by an instrument of transfer executed by the
persons in whose name the property is held.
(2) A partnership may recover partnership property from a transferee
only if it proves that execution of the instrument of initial transfer did
not bind the partnership under section 27 of this division and:
(a) as to a subsequent transferee who gave value for property
transferred under subsections (1)(a) and (b) of this section,
proves that the subsequent transferee had notice that the
person who executed the instrument of initial transfer lacked
authority to bind the partnership; or
(b) as to a transferee who gave value for property transferred
under subsection (1)(c) of this section, proves that the
transferee had notice that the property was partnership
property and that the person who executed the instrument of
initial transfer lacked authority to bind the partnership.
(3) A partnership may not recover partnership property from a
subsequent transferee if the partnership would not have been entitled
to recover the property, under subsection (2) of this section, from any
earlier transferee of the property.
(4) If a person holds all of the partners’ interests in the partnership, all of
the partnership property vests in that person. The person may
execute a document in the name of the partnership to evidence
vesting of the property in that person and may file or record the
document. [P.L. 2005-28, §28.]
§29. Certificate of partnership existence.
(1) A partnership must file a certificate of partnership existence, which:
(a) must include:
(i) the name of the partnership; and
(ii) the name and address of the registered agent for service
of process required to be maintained by section 10 of
this Act; and
(b) may state:
(i) the names of the partners authorized to execute an
instrument transferring real property held in the name
of the partnership;
(ii) the authority, or limitations on the authority, of some or
all of the partners to enter into other transactions on
behalf of the partnership; and
(iii) any other matter.
(2) A certificate of partnership existence supplements the authority of a
partner to enter into transactions on behalf of the partnership as
follows:
(a) except for transfers of real property, a grant of authority
contained in a certificate of partnership existence is conclusive
in favor of a person who gives value without knowledge to the
contrary, so long as and to the extent that a limitation on that
authority is not then contained in another certificate. A filed
cancellation of a limitation on authority revives the previous
grant of authority; or
(b) a grant of authority to transfer real property held in the name
of the partnership contained in a certified copy of a certificate
of partnership existence recorded in the office for recording
transfers of that real property is conclusive in favor of a person
who gives value without knowledge to the contrary, so long as
and to the extent that a certified copy of a statement containing
a limitation on that authority is not then of record in the office
for recording transfers of that real property. The recording in
the office for recording transfers of that real property of a
certified copy of a cancellation of a limitation on authority
revives the previous grant of authority.
(3) A person not a partner is deemed to know of a limitation on the
authority of a partner to transfer real property held in the name of the
partnership if a certified copy of the certificate containing the
limitation on authority is of record in the office for recording
transfers of that real property.
(4) Except as otherwise provided in subsections (2) and (3) of this section
and sections 53 and 59 of this Act, a person not a partner is not
deemed to know of a limitation on the authority of a partner merely
because the limitation is contained in a certificate. [P.L. 2005-28, §29.]
§30. Denial of status as partner.
If a person named in a certificate of partnership existence is or may be
adversely affected by being so named, the person may petition the High
Court to direct the correction of the certificate. If the High Court finds that
correction of the certificate is proper and that an authorized person has
failed or refused to execute and file a certificate of correction or a corrected
certificate, the High Court shall order the Registrar of Corporations to file an
appropriate correction. [P.L. 2005-28, §30.]
§31. Partnership liable for partner’s actionable conduct.
(1) A partnership is liable for loss or injury caused to a person, or for a
penalty incurred, as a result of a wrongful act or omission, or other
actionable conduct, of a partner acting in the ordinary course of
business of the partnership or with authority of the partnership.
(2) If, in the course of the partnership’s business or while acting with
authority of the partnership, a partner receives or causes the
partnership to receive money or property of a person not a partner,
and the money or property is misapplied by a partner, the
partnership is liable for the loss. [P.L. 2005-28, §31.]
§32. Partner’s liability.
(1) Except as otherwise provided in subsection (2) of this section, all
partners are liable jointly and severally for all obligations of the
partnership unless otherwise agreed by the claimant or provided
by law.
(2) A person admitted as a partner into an existing partnership is not
personally liable for any obligation of the partnership incurred before
the person’s admission as a partner.
§33. Actions by and against partnership and partners.
(1) A partnership may sue and be sued in the name of the partnership.
(2) An action may be brought against the partnership and, to the extent
not inconsistent with section 32 of this division, any or all of the
partners in the same action or in separate actions.
(3) A judgment against a partnership is not by itself a judgment against a
partner. A judgment against a partnership may not be satisfied from
the assets of a partner liable as provided in section 32 of this division
for a partnership obligation unless there is also a judgment against
the partner for such obligation.
(4) A judgment creditor of a partnership may not levy execution against
the assets of the partner to satisfy a judgment based on a claim
against the partnership unless:
(a) the claim is for an obligation of the partnership for which the
partner is liable as provided in section 32 of this division
and either:
(i) a judgment based on the same claim has been obtained
against the partnership and a writ of execution on the
judgment has been returned unsatisfied in whole or
in part;
(ii) the partnership is a debtor in bankruptcy;
(iii) the partner has agreed that the creditor need not
exhaust partnership assets; or
(iv) a court grants permission to the judgment creditor to
levy execution against the assets of a partner based on a
finding that partnership assets subject to execution are
clearly insufficient to satisfy the judgment, that
exhaustion of partnership assets is excessively
burdensome, or that the grant of permission is an
appropriate exercise of the court’s equitable powers; or
(b) liability is imposed on the partner by law or contract
independent of the existence of the partnership.
(5) This section applies to any obligation of the partnership resulting
from a representation by a partner or purported partner under
section 34 of this division. [P.L. 2005-28, §33.]
§34. Liability of purported partner.
(1) If a person, by words or conduct, purports to be a partner, or
consents to being represented by another as a partner, in a
partnership or with one or more persons not partners, the purported
partner is liable to a person to whom the representation is made, if
that person, relying on the representation, enters into a transaction
with the actual or purported partnership. If the representation, either
by the purported partner or by a person with the purported partner’s
consent, is made in a public manner, the purported partner is liable to
a person who relies upon the purported partnership even if the
purported partner is not aware of being held out as a partner to the
claimant. If a partnership obligation results, the purported partner is
liable with respect to that obligation as if the purported partner were
a partner. If no partnership obligation results, the purported partner
is liable with respect to that obligation jointly and severally with any
other person consenting to the representation.
(2) If a person is thus represented to be a partner in an existing
partnership, or with one or more persons not partners, the purported
partner is an agent of persons consenting to the representation to
bind them to the same extent and in the same manner as if the
purported partner were a partner, with respect to persons who enter
into transactions in reliance upon the representation. If all of the
partners of the existing partnership consent to the representation, a
partnership act or obligation results. If fewer than all of the partners
of the existing partnership consent to the representation, the person
acting and the partners consenting to the representation are jointly
and severally liable.
(3) A person is not liable as a partner merely because the person is
named by another in a certificate of partnership existence.
(4) A person does not continue to be liable as a partner merely because of
a failure to file a certificate of dissociation or to amend a certificate of
partnership existence to indicate the partner’s dissociation from the
partnership.
(5) Except as otherwise provided in subsections (1) and (2) of this
section, persons who are not partners as to each other are not liable as
partners to other persons. [P.L. 2005-28, §34.]
DIVISION IV - RELATIONS OF PARTNERS TO EACH OTHER
AND TO PARTNERSHIP
§35. Partner’s rights and duties.
(1) Each partner is deemed to have an account that is:
(a) credited with an amount equal to the money plus the value of
any other property, net of the amount of any liabilities, the
partner contributes to the partnership and the partner’s share
of the partnership profits; and
(b) charged with an amount equal to the money plus the value of
any other property, net of the amount of any liabilities,
distributed by the partnership to the partner and the partner’s
share of the partnership losses.
(2) Each partner is entitled to an equal share of the partnership profits
and is chargeable with a share of the partnership losses in proportion
to the partner’s share of the profits.
(3) In addition to indemnification under section 9 of this Act, a
partnership shall reimburse a partner for payments made and
indemnify a partner for liabilities incurred by the partner in the
ordinary course of the business of the partnership or for the
preservation of its business or property; however, no person shall be
required as a consequence of any such indemnification to make any
payment to the extent that the payment is inconsistent with section
32(2) of this Act.
(4) A partnership shall reimburse a partner for an advance to the
partnership beyond the amount of capital the partner agreed to
contribute.
(5) A payment or advance made by a partner which gives rise to a
partnership obligation under subsection (3) or (4) of this section
constitutes a loan to the partnership which accrues interest from the
date of the payment or advance.
(6) Each partner has equal rights in the management and conduct of the
partnership business and affairs.
(7) A partner may use or possess partnership property only on behalf of
the partnership.
(8) A partner is not entitled to remuneration for services performed for
the partnership, except for reasonable compensation for services
rendered in winding up the partnership.
(9) A person may become a partner only with the consent of all of the
partners.
(10) A difference arising as to a matter in the ordinary course of business
of a partnership may be decided by a majority of the partners. An act
outside the ordinary course of business of a partnership may be
undertaken only with the consent of all of the partners.
(11) This section does not affect the obligations of a partnership to other
persons under section 27 of this Act.
(12) A partner has the power and authority to delegate to one (1) or more
other persons the partner’s rights and powers to manage and control
the business and affairs of the partnership, including to delegate to
agents, officers and employees of the partner or the partnership, and
to delegate by a management agreement or other agreement with, or
otherwise to, other persons. Such delegation by a partner shall not
cause the partner to cease to be a partner of the partnership or cause
the person to whom any such rights and powers have been delegated
to be a partner of the partnership.
(13) Unless otherwise provided in a partnership agreement or another
agreement, a partner shall have no preemptive right to subscribe to
any additional issue of partnership interests or another interest in a
partnership. [P.L. 2005-28, §35.]
§36. Distributions in kind.
A partner, regardless of the nature of the partner’s contribution, has no right
to demand and receive any distribution from a partnership in kind. A
partner may not be compelled to accept a distribution of any asset in kind
from a partnership to the extent that the percentage of the asset distributed
to the partner exceeds a percentage of that asset which is equal to the
percentage in which the partner shares in distributions from the
partnership. A partner may be compelled to accept a distribution of any
asset in kind from a partnership to the extent that the percentage of the asset
distributed to the partner is equal to a percentage of that asset which is
equal to the percentage in which the partner shares in distributions from the
partnership. [P.L. 2005-28, §36.]
§37. Requirement for keeping books of accounts, minutes, and records;
partner’s rights and duties with respect to information.
(1) Requirement for keeping books of accounts, minutes, and records:
(a) Books of accounts and minutes. Every domestic partnership
shall keep correct and complete books and records of accounts,
and shall keep minutes of all meetings of partners and of
actions taken on consent by partners. A resident domestic
partnership shall keep such books and records in the Republic.
(b) Records of partners. Every domestic partnership shall keep a
record containing the names and addresses of all partners. A
resident domestic partnership shall keep the records required
to be maintained by this subsection at the office of the
partnership in the Republic or at the office of its agent in the
Republic.
(c) Forms of records. Any records maintained by a domestic
partnership in the regular course of its business, including its
record of partners, books of accounts, and minute books, may
be kept on, or be in the form of punch cards, magnetic tape,
photographs, microphotographs, or any other information
storage device, provided that the records so kept can be
converted into clearly legible written forms within a
reasonable time. Any domestic partnership shall convert any
records so kept upon the request if any person entitled to
inspect such records. When records are kept in such manner, a
clearly legible written form produced from the cards, tapes
photographs, microphotographs, or other information storage
device shall be admissible in evidence, and accepted for all
other purposes, to the same extend as an original written
record of the same information would have been, provided the
written form accurately portrays the record.
(d) Failure to maintain records. Any person who knowingly or
recklessly fails to keep, retain, and maintain accounts,
documents, or records as required under this Act shall be
liable to a fine not exceeding $5,000, or cancellation of the
certificate of partnership, or both.
(2) Partner’s rights and duties with respect to information.
(a) Each partner and the partnership shall provide partners,
former partners and the legal representative of a deceased
partner or partner under a legal disability and their agents and
attorneys, access to the books and records of the partnership
and other information concerning the partnership’s business
and affairs (in the case of former partners, only with respect to
the period during which they were partners) upon reasonable
demand, for any purpose reasonably related to the partner’s
interest as a partner in the partnership. The right of access
shall include access to:
(i) true and full information regarding the status of the
business and financial condition of the partnership;
(ii) promptly after becoming available, a copy of the
partnership’s financial statements or tax filings, if
applicable, for each year;
(iii) a current list of the name and last known business,
residence or mailing address of each partner;
(iv) a copy of any certificate and written partnership
agreement and all amendments thereto, together with
executed copies of any written powers of attorney
pursuant to which the certificate or the partnership
agreement and any amendments thereto have been
executed;
(v) true and full information regarding the amount of cash
and a description and statement of the agreed value of
any other property or services contributed by each
partner and which each partner has agreed to
contribute in the future, and the date on which each
partner became a partner; and
(vi) other information regarding the affairs of the
partnership as is just and reasonable. The right of access
includes the right to examine and make extracts from
books and records and other information concerning
the partnership’s business and affairs. The partnership
agreement may provide for, and in the absence of such
provision in the partnership agreement, the partnership
or the partner from whom access is sought may impose,
reasonable standards (including standards governing
what information and documents are to be furnished at
what time and location and at whose expense) with
respect to exercise of the right of access.
(b) A partnership agreement may provide that the partnership
shall have the right to keep confidential from partners for such
period of time as the partnership deems reasonable, any
information which the partnership reasonably believes to be in
the nature of trade secrets or other information the disclosure
of which the partnership in good faith believes is not in the
best interest of the partnership or could damage the
partnership or its business or affairs or which the partnership
is required by law or by agreement with a third party to keep
confidential.
(c) A partnership and its partners may maintain the books and
records and other information concerning the partnership in
other than a written form if such form is capable of conversion
into written form within a reasonable time.
(d) Any demand by a partner under this section shall be in writing
and shall state the purpose of such demand.
(e) Any action to enforce any right arising under this section may
be brought in the High Court. If the partnership or a partner
refuses to permit access as described in subsection (2)(a) of this
section or does not reply to a demand that has been made
within five (5) business days after the demand has been made,
the demanding partner, former partner, or legal representative
of a deceased partner or partner under a legal disability may
apply to the High Court for an order to compel such
disclosure. The High Court is hereby vested with jurisdiction
to determine whether or not the person making the demand is
entitled to the books and records or other information
concerning the partnership’s business and affairs sought. The
High Court may summarily order the partnership or partner
to permit the demanding partner, former partner or legal
representative of a deceased partner or partner under a legal
disability and their agents and attorneys to provide access to
the information described in subsection (2)(a) of this section
and to make copies or extracts therefrom; or the High Court
may summarily order the partnership or partner to furnish to
the demanding partner, former partner or legal representative
of a deceased partner or partner under a legal disability and
their agents and attorneys the information described in
subsection (2)(a) of this section on the condition that the
partner, former partner or legal representative of a deceased
partner or partner under a legal disability first pay to the
partnership or to the partner from whom access is sought the
reasonable cost of obtaining and furnishing such information
and on such other conditions as the High Court deems
appropriate. When a demanding partner, former partner or
legal representative of a deceased partner or partner under a
legal disability seeks to obtain access to information described
in subsection (2)(a) of this section, the demanding partner,
former partner or legal representative of a deceased partner or
partner under a legal disability shall first establish (a) that the
demanding partner, former partner or legal representative of a
deceased partner or partner under a legal disability has
complied with the provisions of this section respecting the
form and manner of making demand for obtaining access to
such information and (b) that the information the demanding
partner, former partner or legal representative of a deceased
partner or partner under a legal disability seeks is reasonably
related to the partner’s interest as a partner in the partnership.
The High Court may, in its discretion, prescribe any
limitations or conditions with reference to the access to
information, or award such other or further relief as the High
Court may deem just and proper.
(f) The rights of a partner to obtain information as provided in
this section may be restricted in an original partnership
agreement or in any subsequent amendment approved or
adopted by all of the partners and in compliance with any
applicable requirements of the partnership agreement.[P.L. 2005-28, §37.][Amended by P.L. 2014-31]
§38. General standards of partner’s conduct.
(1) The only fiduciary duties a partner owes to the partnership and the
other partners are the duty of loyalty and the duty of care set forth in
subsections (2) and (3) of this section.
(2) A partner’s duty of loyalty to the partnership and the other partners
is limited to the following:
(a) to account to the partnership and hold as trustee for it any
property, profit or benefit derived by the partner in the
conduct or winding up of the partnership business or affairs or
derived from a use by the partner of partnership property,
including the appropriation of a partnership opportunity;
(b) to refrain from dealing with the partnership in the conduct or
winding up of the partnership business or affairs as or on
behalf of a party having an interest adverse to the partnership;
and
(c) to refrain from competing with the partnership in the conduct
of the partnership business or affairs before the dissolution of
the partnership.
(3) A partner’s duty of care to the partnership and the other partners in
the conduct and winding up of the partnership business or affairs is
limited to refraining from engaging in grossly negligent or reckless
conduct, intentional misconduct, or a knowing violation of law.
(4) A partner shall discharge the duties to the partnership and the other
partners under this Act or under the partnership agreement and
exercise any rights consistently with the obligation of good faith and
fair dealing.
(5) A partner does not violate a duty or obligation under this Act or
under the partnership agreement solely because the partner’s
conduct furthers the partner’s own interest.
(6) A partner may lend money to, borrow money from, act as a surety,
guarantor or endorser for, guarantee or assume one (1) or more
specific obligations of, provide collateral for and transact other
business with, the partnership and, subject to other applicable law,
has the same rights and obligations with respect thereto as a person
who is not a partner.
(7) This section applies to a person winding up the partnership business
or affairs as the personal or legal representative of the last surviving
partner as if the person were a partner. [P.L. 2005-28, §38.]
§39. Actions by partnership and partners; derivative actions.
(1) A partnership may maintain an action against a partner for a breach
of the partnership agreement, or for the violation of a duty to the
partnership, causing harm to the partnership.
(2) A partner may maintain an action against the partnership or another
partner for legal or equitable relief, with or without an accounting as
to partnership business, to:
(a) enforce the partner’s rights under the partnership agreement;
(b) enforce the partner’s rights under this Act, including:
(i) the partner’s rights under sections 35, 37 or 38 of
this division;
(ii) the partner’s right on dissociation to have the partner’s
interest in the partnership purchased pursuant to
section 50 of this Act or enforce any other right under
Division VI or VII of this Act; or
(iii) the partner’s right to compel a dissolution and winding
up of the partnership business under section 55 of this
Act or enforce any other right under Division VIII of
this Act; or
(c) enforce the rights and otherwise protect the interests of the
partner, including rights and interests arising independently
of the partnership relationship.
(3) The accrual of, and any time limitation on, a right of action for a
remedy under this section is governed by other law. A right to an
accounting upon a dissolution and winding up does not revive a
claim barred by law.
(4) A partner may bring a derivative action in the High Court in the right
of a partnership to recover a judgment in the partnership’s favor.
(5) In a derivative action, the plaintiff must be a partner at the time of
bringing the action and:
(a) at the time of the transaction of which the partner
complains; or
(b) the partner’s status as a partner had devolved upon the
partner by operation of law or pursuant to the terms of the
partnership agreement from a person who was a partner at the
time of the transaction.
(6) In a derivative action, the complaint shall set forth with particularity
the effort, if any, of the plaintiff to secure initiation of the action by
the partnership or the reason for not making the effort.
(7) If a derivative action is successful, in whole or in part, as a result of a
judgment, compromise or settlement of any such action, the court
may award the plaintiff reasonable expenses, including reasonable
attorney’s fees, from any recovery in any such action or from a
partnership. [P.L. 2005-28, §39.]
§40. Continuation of partnership beyond definite term or particular
undertaking.
(1) If a partnership for a definite term or particular undertaking is
continued, without an express agreement, after the expiration of the
term or completion of the undertaking, the rights and duties of the
partners remain the same as they were at the expiration or
completion, so far as is consistent with a partnership at will.
(2) If the partners, or those of them who habitually acted in the business
or affairs during the term or undertaking, continue the business or
affairs without any settlement or liquidation of the partnership, they
are presumed to have agreed that the partnership will continue.[P.L. 2005-28, §40.]
§41. Classes and voting.
(1) A partnership agreement may provide for classes or groups of
partners having such relative rights, powers and duties as the
partnership agreement may provide, and may make provision for the
future creation in the manner provided in the partnership agreement
of additional classes or groups of partners having such relative rights,
powers and duties as may from time to time be established, including
rights, powers and duties senior to existing classes and groups of
partners. A partnership agreement may provide for the taking of an
action, including the amendment of the partnership agreement,
without the vote or approval of any partner or class or group of
partners, including an action to create under the provisions of the
partnership agreement a class or group of partnership interests that
was not previously outstanding. A partnership agreement may
provide that any partner or class or group of partners shall have no
voting rights.
(2) The partnership agreement may grant to all or certain identified
partners or a specified class or group of the partners the right to vote
separately or with all or any class or group of the partners on any
matter. Voting by partners may be on a per capita, number, financial
interest, class, group or any other basis.
(3) A partnership agreement may set forth provisions relating to notice
of the time, place or purpose of any meeting at which any matter is to
be voted on by any partners, waiver of any such notice, action by
consent without a meeting, the establishment of a record date,
quorum requirements, voting in person or by proxy, or any other
matter with respect to the exercise of any such right to vote.
(4) On any matter that is to be voted on, consented to or approved by
partners, the partners may take such action without a meeting,
without prior notice and without a vote, if a consent or consents in
writing, setting forth the action so taken, shall be signed by the
partners having not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at
which all partners entitled to vote thereon were present and voted.
On any matter that is to be voted on by partners, the partners may
vote in person or by proxy, and such proxy may be granted in
writing, by means of electronic transmission or as otherwise
permitted by applicable law. Unless otherwise provided in a
partnership agreement, a consent transmitted by electronic
transmission by a partner or by a person or persons authorized to act
for a partner shall be deemed to be written and signed for purposes
of this subsection. For purposes of this subsection, the term
“electronic transmission” means any form of communication not
directly involving the physical transmission of paper that creates a
record that may be retained, retrieved and reviewed by a recipient
thereof and that may be directly reproduced in paper form by such a
recipient through an automated process.
(5) If a partnership agreement provides for the manner in which it may
be amended, it may be amended in that manner or with the approval
of all the partners or as otherwise permitted by law. If a partnership
agreement does not provide for the manner in which it may be
amended, the partnership agreement may be amended with the
approval of all the partners or as otherwise permitted by law.[P.L. 2005-28, §41.]
§42. Remedies for breach of partnership agreement.
A partnership agreement may provide that (1) a partner who fails to
perform in accordance with, or to comply with the terms and conditions of,
the partnership agreement shall be subject to specified penalties or specified
consequences, and (2) at the time or upon the happening of events specified
in the partnership agreement, a partner shall be subject to specified penalties
or specified consequences. Such specified penalties or specified
consequences may include and take the form of any penalty or consequence
set forth in section 26(2) of this Act. [P.L. 2005-28, §42.]
DIVISION V - TRANSFEREES AND CREDITORS OF PARTNER
§43. Partner not co-owner of partnership property.
Unless otherwise provided in a certificate of partnership existence and in a
partnership agreement, a partner is not a co-owner of partnership property
and has no interest in specific partnership property. [P.L. 2005-28, §43.]
§44. Partner’s economic interest in partnership; personal property.
A partnership interest is personal property. Only a partner’s economic
interest may be transferred. [P.L. 2005-28, §44.]
§45. Transfer of partner’s economic interest.
(1) A transfer, in whole or in part, of a partner’s economic interest in the
partnership:
(a) is permissible;
(b) does not by itself cause the partner’s dissociation or a
dissolution and winding up of the partnership business or
affairs; and
(c) does not entitle the transferee to participate in the
management or conduct of the partnership business or affairs,
to require access to information concerning partnership
transactions, or to inspect or copy the partnership books or
records.
(2) A transferee of a partner’s economic interest in the partnership has
a right:
(a) to receive, in accordance with the transfer, distributions to
which the transferor would otherwise be entitled;
(b) to receive upon the dissolution and winding up of the
partnership business or affairs, in accordance with the transfer,
the net amount otherwise distributable to the transferor; and
(c) to seek under section 55(6) of this Act a judicial determination
that it is equitable to wind up the partnership business or
affairs.
(3) In a dissolution and winding up, a transferee is entitled to an account
of partnership transactions only from the date of the latest account
agreed to by all of the partners.
(4) Upon transfer, the transferor retains the rights and duties of a partner
other than the economic interest transferred.
(5) A partnership need not give effect to a transferee’s rights under this
section until it has notice of the transfer. Upon request of a
partnership or a partner, a transferee must furnish reasonable proof
of a transfer.
(6) A transfer of a partner’s economic interest in the partnership in
violation of a restriction on transfer contained in a partnership
agreement is ineffective.
(7) Notwithstanding anything to the contrary under applicable law, a
partnership agreement may provide that a partner’s economic
interest may not be transferred prior to the dissolution and winding
up of the partnership.
(8) A partnership interest in a partnership may be evidenced by a
certificate of partnership interest issued by the partnership. A
partnership agreement may provide for the transfer of any
partnership interest represented by such a certificate and make other
provisions with respect to such certificates.
(9) Except to the extent assumed by agreement, until a transferee of a
partnership interest becomes a partner, the transferee shall have no
liability as a partner solely as a result of the transfer.
(10) A partnership may acquire, by purchase, redemption or otherwise,
any partnership interest or other interest of a partner in the
partnership. Any such interest so acquired by the partnership shall be
deemed canceled. [P.L. 2005-28, §45.]
§46. Partner’s economic interest subject to charging order.
(1) On application by a judgment creditor of a partner or of a partner’s
transferee, a court having jurisdiction may charge the economic
interest of the judgment debtor to satisfy the judgment. The court
may appoint a receiver of the share of the distributions due or to
become due to the judgment debtor in respect of the partnership
which receiver shall have only the rights of a transferee, and the court
may make all other orders, directions, accounts and inquiries the
judgment debtor might have made or which the circumstances of the
case may require.
(2) A charging order constitutes a lien on the judgment debtor’s
economic interest in the partnership. The court may order a
foreclosure of the economic interest subject to the charging order at
any time. The purchaser at the foreclosure sale has only the rights of a
transferee.
(3) At any time before foreclosure, an economic interest charged may be
redeemed:
(a) by the judgment debtor;
(b) with property other than partnership property, by one (1) or
more of the other partners; or
(c) by the partnership with the consent of all of the partners
whose interests are not so charged.
(4) This Act does not deprive a partner of a right under exemption laws
with respect to the partner’s economic interest in the partnership.
(5) This section provides the exclusive remedy by which a judgment
creditor of a partner or partner’s transferee may satisfy a judgment
out of the judgment debtor’s economic interest in the partnership.
(6) No creditor of a partner shall have any right to obtain possession of,
or otherwise exercise legal or equitable remedies with respect to, the
property of the partnership. [P.L. 2005-28, §46.]
DIVISION VI – PARTNER’S DISSOCIATION
§47. Events causing partner’s dissociation.
A partner is dissociated from a partnership upon the occurrence of any of
the following events:
(1) the partnership’s having notice of the partner’s express will to
withdraw as a partner on a later date specified by the partner in the
notice or, if no later date is specified, then upon receipt of notice;
(2) an event agreed to in the partnership agreement as causing the
partner’s dissociation;
(3) the partner’s expulsion pursuant to the partnership agreement;
(4) the partner’s expulsion by the unanimous vote of the other
partners if:
(a) it is unlawful to carry on the partnership business or affairs
with that partner; or
(b) there has been a transfer of all or substantially all of that
partner’s economic interest, other than a transfer for security
purposes, or a court order charging the partner’s interest
which, in either case, has not been foreclosed;
(5) on application by or for the partnership or another partner to the
High Court, the partner’s expulsion by determination by the High
Court because:
(a) the partner engaged in wrongful conduct that adversely and
materially affected the partnership business or affairs; or
(b) the partner willfully or persistently committed a material
breach of either the partnership agreement or of a duty owed
to the partnership or the other partners; or
(c) the partner engaged in conduct relating to the partnership
business or affairs which makes it not reasonably practicable
to carry on the business or affairs in partnership with the
partner;
(6) the partner’s:
(a) making an assignment for the benefit of creditors;
(b) filing a voluntary petition in bankruptcy;
(c) being adjudged as bankrupt or insolvent, or having entered
against that partner an order for relief in any bankruptcy or
insolvency proceeding;
(d) filing a petition or answer seeking for that partner any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law
or regulation;
(e) filing an answer or other pleading admitting or failing to
contest the material allegations of a petition filed against that
partner in any proceeding of this nature;
(f) seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator of that partner or of all or any
substantial part of that partner’s properties; or
(g) failing, within one hundred twenty (120) days after its
commencement, to have dismissed any proceeding against
that partner seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, or failing, within
ninety (90) days after the appointment without that partner’s
consent or acquiescence, to have vacated or stayed the
appointment of a trustee, receiver or liquidator of that partner
or of all or any substantial part of that partner’s properties, or
failing, within ninety (90) days after the expiration of any such
stay, to have the appointment vacated;
(7) in the case of a partner who is an individual:
(a) the partner’s death;
(b) the appointment of a guardian or general conservator for the
partner; or
(c) a judicial determination that the partner has otherwise become
incapable of performing the partner’s duties under the
partnership agreement;
(8) in the case of a partner that is a trust or is acting as a partner by virtue
of being a trustee of a trust, distribution of the trust’s entire economic
interest, but not merely by reason of the substitution of a successor
trustee;
(9) in the case of a partner that is an estate or is acting as a partner by
virtue of being a personal representative of an estate, distribution of
the estate’s entire economic interest, but not merely by reason of the
substitution of a successor personal representative;
(10) the expiration of ninety (90) days after the partnership notifies a
corporate partner that it will be expelled because it has filed a
certificate of dissolution or the equivalent, its existence has been
terminated or its certificate of incorporation has been revoked, or its
right to conduct business has been suspended by the jurisdiction of
its incorporation, if there is no revocation of the certificate of
dissolution or no reinstatement of its existence, its certificate of
incorporation or its right to conduct business;
(11) a partnership, a limited liability company, a trust or a limited
partnership that is a partner has been dissolved and its business is
being wound up; or
(12) termination of a partner who is not an individual, partnership,
corporation, trust, limited partnership, limited liability company or
estate. [P.L. 2005-28, §47.]
§48. Partner’s power to dissociate; wrongful dissociation.
(1) A partner has the power to dissociate at any time, rightfully or
wrongfully, by express will pursuant to section 47(1) of this division.
(2) A partner’s dissociation is wrongful only if any of the
following apply:
(a) it is in breach of an express provision of the partnership
agreement; or
(b) in the case of a partnership for a definite term or particular
undertaking, before the expiration of the term or the
completion of the undertaking if any of the following apply:
(i) the partner withdraws by express will, unless the
withdrawal follows within ninety (90) days after
another partner’s dissociation by death or otherwise
under sections 47(6)-(12) of this division or wrongful
dissociation under this subsection;
(ii) the partner is expelled by judicial determination under
section 47(5) of this division;
(iii) the partner is dissociated under section 47(6) of this
division; or
(iv) in the case of a partner who is not an individual, trust
(other than a statutory trust), or estate, the partner is
expelled or otherwise dissociated because it willfully
dissolved or terminated.
(3) A partner who wrongfully dissociates is liable to the partnership and
to the other partners for damages caused by the dissociation. Such
liability is in addition to any other obligation of the partner to the
partnership or to the other partners. [P.L. 2005-28, §48.]
§49. Effect of partner’s dissociation.
(1) If a partner’s dissociation results in a dissolution and winding up of
the partnership business, Division VIII of this Act applies; otherwise,
Division VII of this Act applies.
(2) Upon a partner’s dissociation:
(a) the partner’s right to participate in the management and
conduct of the partnership business terminates, except as
otherwise provided in section 57 of this Act;
(b) the partner’s duty of loyalty under section 38(2)(c) of this Act
terminates; and
(3) the partner’s duty of loyalty under section 38(2)(a) and (b) of this Act
and duty of care under section 38(3) of this Act continue only with
regard to matters arising and events occurring before the partner’s
dissociation, unless the partner participates in winding up the
partnership’s business pursuant to section 57 of this Act. [P.L. 2005-28, §49.]
DIVISION VII - PARTNER’S DISSOCIATION WHEN BUSINESS
OR AFFAIRS NOT WOUND UP
§50. Purchase of dissociated partner’s partnership interest.
(1) If a partner is dissociated from a partnership without resulting in a
dissolution and winding up of the partnership business or affairs
under section 55 of this Act, the partnership shall cause the
dissociated partner’s interest in the partnership to be purchased for a
buyout price determined pursuant to subsection (2) of this section.
(2) The buyout price of a dissociated partner’s partnership interest is an
amount equal to the fair value of such partner’s economic interest as
of the date of dissociation based upon such partner’s right to share in
distributions from the partnership. Interest must be paid from the
date of dissociation to the date of payment.
(3) Damages for wrongful dissociation under section 48(2) of this Act,
and all other amounts owing, whether or not presently due, from the
dissociated partner to the partnership, must be offset against the
buyout price. Interest must be paid from the date the amount owed
becomes due to the date of payment.
(4) A partnership shall indemnify a dissociated partner whose
partnership interest is being purchased against all partnership
obligations, whether incurred before or after the dissociation, except
partnership obligations incurred by an act of the dissociated partner
under section 51 of this division.
(5) If no agreement for the purchase of a dissociated partner’s
partnership interest is reached within one hundred and twenty (120)
days after a written demand for payment, the partnership shall pay,
or cause to be paid, in cash to the dissociated partner the amount the
partnership estimates to be the buyout price and accrued interest,
reduced by any offsets and accrued interest under subsection (3) of
this section.
(6) If a deferred payment is authorized under subsection (8) of this
section, the partnership may tender a written offer to pay the amount
it estimates to be the buyout price and accrued interest, reduced by
any offsets under subsection (3) of this section, stating the time of
payment, the amount and type of security for payment, and the other
terms and conditions of the obligation.
(7) The payment or tender required by subsection (5) or (6) of this section
must be accompanied by the following:
(a) a written statement of partnership assets and liabilities as of
the date of dissociation;
(b) the latest available partnership balance sheet and income
statement, if any;
(c) a written explanation of how the estimated amount of the
payment was calculated; and
(d) written notice which shall state that the payment is in full
satisfaction of the obligation to purchase unless, within one
hundred and twenty (120) days after the written notice, the
dissociated partner commences an action in the High Court
under subsection (9) of this section to determine the buyout
price of that partner’s partnership interest, any offsets under
subsection (3) of this section or other terms of the obligation to
purchase.
(8) A partner who wrongfully dissociates before the expiration of a
definite term or the completion of a particular undertaking is not
entitled to payment of any portion of the buyout price until the
expiration of the term or completion of the undertaking, unless the
partner establishes to the satisfaction of the High Court that earlier
payment will not cause undue hardship to the business of the
partnership. A deferred payment must bear interest and, to the extent
it would not cause undue hardship to the business of the partnership,
be adequately secured.
(9) A dissociated partner may maintain an action against the
partnership, pursuant to section 39(2)(b)(ii) of this Act, to determine
the buyout price of that partner’s partnership interest, any offsets
under subsection (3) of this section, or other terms of the obligation to
purchase. The action must be commenced within one hundred and
twenty (120) days after the partnership has tendered payment or an
offer to pay or within one (1) year after written demand for payment
if no payment or offer to pay is tendered. The High Court shall
determine the buyout price of the dissociated partner’s partnership
interest, any offset due under subsection (3) of this section, and
accrued interest, and enter judgment for any additional payment or
refund. If deferred payment is authorized under subsection (8) of this
section, the High Court shall also determine the security, if any, for
payment and other terms of the obligation to purchase. The High
Court may assess reasonable attorney’s fees and the fees and
expenses of appraisers or other experts for a party to the action, in
amounts the High Court finds equitable, against a party that the High
Court finds acted arbitrarily, vexatiously or not in good faith. The
finding may be based on the partnership’s failure to tender payment
or an offer to pay or to comply with subsection (7) of this section.[P.L. 2005-28, §50.]
§51. Dissociated partner’s power to bind and liability to partnership.
(1) For one (1) year after a partner dissociates without resulting in a
dissolution and winding up of the partnership business, the
partnership, including a surviving partnership under Division IX of
this Act, is bound by an act of the dissociated partner which would
have bound the partnership under section 27 of this Act before
dissociation only if at the time of entering into the transaction the
other party:
(a) reasonably believed that the dissociated partner was then a
partner and reasonably relied on such belief in entering into
the transaction;
(b) did not have notice of the partner’s dissociation; and
(c) is not deemed to have had knowledge under section 29(3) of
this Act or notice under section 53(3) of this division.
(2) A dissociated partner is liable to the partnership for any damage
caused to the partnership arising from an obligation incurred by the
dissociated partner after dissociation for which the partnership is
liable under subsection (1) of this section. [P.L. 2005-28, §51.]
§52. Dissociated partner’s liability to other persons.
(1) A partner’s dissociation does not of itself discharge the partner’s
liability for a partnership obligation incurred before dissociation. A
dissociated partner is not liable for a partnership obligation incurred
after dissociation, except as otherwise provided in subsection (2) of
this section.
(2) A partner who dissociates without resulting in a dissolution and
winding up of the partnership business is liable as a partner to the
other party in a transaction entered into by the partnership, or a
surviving partnership under Division IX of this Act, within one (1)
year after the partner’s dissociation, only if the partner is liable for
the obligation under section 32 of this Act and at the time of entering
into the transaction the other party:
(a) reasonably believed that the dissociated partner was then a
partner and reasonably relied on such belief in entering into
the transaction;
(b) did not have notice of the partner’s dissociation; and
(c) is not deemed to have had knowledge under section 29(3) of
this Act or notice under section 53(3) of this division.
(3) By agreement with the partnership creditor and the partners
continuing the business, a dissociated partner may be released from
liability for a partnership obligation.
(4) A dissociated partner is released from liability for a partnership
obligation if a partnership creditor, with notice of the partner’s
dissociation but without the partner’s consent, agrees to a material
alteration in the nature or time of payment of a partnership
obligation. [P.L. 2005-28, §52.]
§53. Certificate of dissociation.
(1) A dissociated partner or, after the filing by the partnership of a
certificate of partnership existence, the partnership may file a
certificate of dissociation stating the name of the partnership and that
the partner is dissociated from the partnership.
(2) A certificate of dissociation is a limitation on the authority of a
dissociated partner for the purposes of sections 29(2) and (3) of
this Act.
(3) For the purposes of sections 51(1)(c) and 52(2)(c) of this division, a
person not a partner is deemed to have notice of the dissociation sixty
(60) days after the certificate of dissociation is filed. [P.L. 2005-28, §53.]
§54. Continued use of partnership name.
Continued use of a partnership name, or a dissociated partner’s name as
part thereof, by partners continuing the business does not of itself make the
dissociated partner liable for an obligation of the partners or the
partnership. [P.L. 2005-28, §54.]
DIVISION VIII - WINDING UP PARTNERSHIP BUSINESS OR
AFFAIRS.
§55. Events causing dissolution and winding up of partnership business
or affairs.
A partnership is dissolved, and its business must be wound up, only upon
the occurrence of any of the following events:
(1) in a partnership at will, the partnership’s having notice from a
partner, other than a partner who is dissociated pursuant to sections
47(2)-(12) of this Act, of that partner’s express will to withdraw as a
partner, on a later date specified by the partner in the notice or, if no
later date is specified, then upon receipt of notice;
(2) in a partnership for a definite term or particular undertaking:
(a) within ninety (90) days after a partner’s dissociation by death
or otherwise under sections 47(6)-(12) of this act or wrongful
dissociation under section 48(2) of this Act, at least half of the
remaining partners express the will to wind up the partnership
business, for which purpose a partner’s rightful dissociation
pursuant to section 48(2)(b)(i) of this Act constitutes the
expression of that partner’s will to wind up the partnership
business;
(b) the express will of all of the partners to wind up the
partnership business or affairs; or
(c) the expiration of the term or the completion of the
undertaking;
(3) an event agreed to in the partnership agreement resulting in the
winding up of the partnership business or affairs;
(4) an event that makes it unlawful for all or substantially all of the
business or affairs of the partnership to be continued, but a cure of
such illegality within ninety (90) days after the partnership has notice
of the event is effective retroactively to the date of the event for
purposes of this section;
(5) on application by or for a partner to the High Court, the entry of a
decree of dissolution of a partnership by the High Court upon a
determination by the High Court that it is not reasonably practicable
to carry on the partnership business, purpose or activity in
conformity with the partnership agreement; or
(6) on application by a transferee of a partner’s economic interest to the
High Court, a determination by the High Court that it is equitable to
wind up the partnership business or affairs:
(a) after the expiration of the term or completion of the
undertaking, if the partnership was for a definite term or
particular undertaking at the time of the transfer or entry of
the charging order that gave rise to the transfer; or
(b) at any time, if the partnership was a partnership at will at the
time of the transfer or entry of the charging order that gave
rise to the transfer. [P.L. 2005-28, §55.]
§56. Partnership continues after dissolution.
(1) Subject to subsection (2) of this section, a partnership continues after
dissolution only for the purpose of winding up its business or affairs.
The partnership is terminated when the winding up of its business or
affairs is completed.
(2) At any time after the dissolution of a partnership and before the
winding up of its business or affairs is completed, all of the partners,
including any dissociating partner other than a wrongfully
dissociating partner, may waive the right to have the partnership’s
business or affairs wound up and the partnership terminated. In
that event:
(a) the partnership resumes carrying on its business or affairs as if
dissolution had never occurred, and any liability incurred by
the partnership or a partner after the dissolution and before
the waiver is determined as if dissolution had never
occurred; and
(b) the rights of a third party accruing under section 58(1) of this
division or arising out of conduct in reliance on the dissolution
before the third party knew or received a notification of the
waiver may not be adversely affected. [P.L. 2005-28, §56.]
§57. Right to wind up partnership business or affairs.
(1) A partner at the time of dissolution, including a partner who has
dissociated but not wrongfully, may participate in winding up the
partnership’s business or affairs, but on application of any partner or
a partner’s legal representative or transferee, the High Court for good
cause shown, may order judicial supervision of the winding up.
(2) The legal representative of the last surviving partner may wind up a
partnership’s business or affairs.
(3) The persons winding up the partnership’s business or affairs may, in
the name of, and for and on behalf of, the partnership, prosecute and
defend suits, whether civil, criminal or administrative, gradually
settle and close the partnership’s business or affairs, dispose of and
convey the partnership’s property, discharge or make reasonable
provision for the partnership’s liabilities, distribute to the partners
pursuant to section 61 of this division any remaining assets of the
partnership, and perform other acts which are necessary or
convenient to the winding up of the partnership’s business or affairs.[P.L. 2005-28, §57.]
§58. Partner’s power to bind partnership after dissolution.
Subject to section 59 of this division, a partnership is bound by a partner’s
act after dissolution that:
(1) is appropriate for winding up the partnership business or affairs; or
(2) would have bound the partnership under section 27 of this Act before
dissolution, if the other party to the transaction did not have notice of
the dissolution. [P.L. 2005-28, §58.]
§59. Certificate of dissolution.
(1) After dissolution, a partnership may file a certificate of dissolution
stating the name of the partnership and that the partnership has
dissolved and is winding up its business or affairs.
(2) A certificate of dissolution cancels a filed certificate of partnership
existence for the purposes of section 29(2) of this Act and is a
limitation on authority for the purposes of section 29(3) of this Act.
(3) For the purposes of sections 27 and 58 of this Act, a person not a
partner is deemed to have notice of the dissolution and the limitation
on the partners’ authority as a result of a certificate of dissolution
sixty (60) days after it is filed.
(4) After filing a certificate of dissolution, a dissolved partnership may
file a certificate of partnership existence which will operate with
respect to a person not a partner as provided in sections 29(2) and (3)
of this Act in any transaction, whether or not the transaction is
appropriate for winding up the partnership business or affairs.
(5) If a partnership which has dissolved fails or refuses to file a certificate
of dissolution, any partner or dissociated partner who is or may be
adversely affected by the failure or refusal may petition the High
Court to direct the filing. If the Court finds that the certificate of
dissolution should be filed and that the partnership has failed or
refused to do so, it shall enter an order granting appropriate relief.[P.L. 2005-28, §59.]
§60. Partner’s liability to other partners after dissolution.
(1) Except as otherwise provided in subsection (2) of this section and
section 32 of this Act, after dissolution, a partner is liable to the other
partners for the partner’s share of any partnership obligation
incurred under section 58 of this division.
(2) A partner who, with knowledge of the dissolution, causes the
partnership to incur an obligation under section 58(2) of this division
by an act that is not appropriate for winding up the partnership
business or affairs is liable to the partnership for any damage caused
to the partnership arising from the obligation. [P.L. 2005-28, §60.]
§61. Settlement of accounts and contributions among partners.
(1) In winding up a partnership’s business or affairs, the assets of the
partnership, including the contributions of the partners required by
this section, must be applied to pay or make reasonable provision to
pay the partnership’s obligations to creditors, including, to the extent
permitted by law, partners who are creditors. Any surplus must be
applied to pay in cash the net amount distributable to partners in
accordance with their right to distributions under subsection (2) of
this section.
(2) Each partner is entitled to a settlement of all partnership accounts
upon winding up the partnership business or affairs. In settling
accounts among the partners, profits and losses that result from the
liquidation of the partnership assets must be credited and charged to
the partners’ accounts. The partnership shall make a distribution to a
partner in an amount equal to any excess of the credits over the
charges in the partner’s account. A partner shall contribute to the
partnership an amount equal to any excess of the charges over the
credits in the partner’s account but excluding from the calculation
charges attributable to an obligation for which the partner is not
personally liable under section 32 of this Act.
(3) After the settlement of accounts, each partner shall contribute, in the
proportion in which the partner shares partnership losses, the
amount necessary to pay or make reasonable provision to pay
partnership obligations that were not known at the time of the
settlement and for which the partner is personally liable under
section 32 of this Act.
(4) If a partner fails to contribute, all of the other partners shall
contribute, in the proportions in which those partners share
partnership losses, the additional amount necessary to pay or make
reasonable provision to pay the partnership obligations for which
they are personally liable under section 32 of this Act.
(5) A partner or partner’s legal representative may recover from the
other partners any contributions the partner makes to the extent the
amount contributed exceeds that partner’s share of the partnership
obligations for which the partner is personally liable under section 32
of this Act.
(6) The estate of a deceased partner is liable for the partner’s obligation
to contribute to the partnership.
(7) An assignee for the benefit of creditors of a partnership or a partner,
or a person appointed by a court to represent creditors of a
partnership or a partner, may enforce a partner’s obligation to
contribute to the partnership. [P.L. 2005-28, §61.]
DIVISION IX - CONVERSION; MERGER; DOMESTICATION; AND
TRANSFER
§62. Conversion of certain entities to a domestic partnership.
(1) As used in this section, the term “other entity” means a domestic
corporation or any other unincorporated business, including a
limited partnership, or a limited liability company.
(2) Any other entity may convert to a domestic partnership by
complying with subsection (8) of this section and filing with the
Registrar of Corporations in accordance with section 5 of this Act:
(a) a certificate of conversion to partnership that has been
executed in accordance with section 5 of this Act; and
(b) a certificate of partnership existence that complies with
section 29 of this Act and has been executed in accordance
with section 5 of this Act.
(3) The certificate of conversion to partnership shall state:
(a) the date on which and jurisdiction where the other entity was
first created, formed or otherwise came into being;
(b) the name of the other entity immediately prior to the filing of
the certificate of conversion to partnership;
(c) the name of the partnership as set forth in its certificate of
partnership existence filed in accordance with subsection (2) of
this section; and
(d) the future effective date (which shall be a date certain) of the
conversion to a partnership if it is not to be effective upon the
filing of the certificate of conversion to partnership and the
certificate of partnership existence.
(4) Upon the filing with the Registrar of Corporations of the certificate of
conversion to partnership and the certificate of partnership existence
or upon the future effective date of the certificate of conversion to
partnership and the certificate of partnership existence, the other
entity shall be converted into a partnership and the partnership shall
thereafter be subject to all of the provisions of this Act, except that the
existence of the partnership shall be deemed to have commenced on
the date the other entity commenced its existence.
(5) The conversion of any other entity into a partnership shall not be
deemed to affect any obligations or liabilities of the other entity
incurred prior to its conversion to a partnership, or the personal
liability of any person incurred prior to such conversion.
(6) When any conversion shall have become effective under this section,
for all purposes of the laws of the Marshall Islands, all of the rights,
privileges and powers of the other entity that has converted, and all
property, real, personal and mixed, and all debts due to such other
entity, as well as all other things and causes of action belonging to
such other entity, shall remain vested in the domestic partnership to
which such other entity has converted and shall be the property of
such domestic partnership, and the title to any real property vested
by deed or otherwise in such other entity shall not revert or be in any
way impaired by reason of this Act; but all rights of creditors and all
liens upon any property of such other entity shall be preserved
unimpaired, and all debts, liabilities and duties of the other entity
that has converted shall remain attached to the domestic partnership
to which such other entity has converted, and may be enforced
against it to the same extent as if said debts, liabilities and duties had
originally been incurred or contracted by it in its capacity as a
domestic partnership.
(7) Unless otherwise agreed, the converting other entity shall not be
required to wind up its affairs or pay its liabilities and distribute its
assets, and the conversion shall not be deemed to constitute a
dissolution of such other entity and shall constitute a continuation of
the existence of the converting other entity in the form of a domestic
partnership. When another entity has been converted to a domestic
partnership pursuant to this section, the domestic partnership shall,
for all purposes of the laws of the Marshall Islands, be deemed to be
the same entity as the converting other entity.
(8) Prior to filing a certificate of conversion to partnership with the
Registrar of Corporations, the conversion shall be approved in the
manner provided for by the document, instrument, agreement or
other writing, as the case may be, governing the internal affairs of the
other entity and the conduct of its business or by applicable law, as
appropriate, and a partnership agreement shall be approved by the
same authorization required to approve the conversion; provided,
that in any event, such approval shall include the approval of any
person who, at the effective date of the conversion, shall be a partner
of the partnership.
(9) In connection with a conversion hereunder, rights or securities of, or
interests in, the other entity which is to be converted to a domestic
partnership may be exchanged for or converted into cash, property,
rights or securities of or interests in such domestic partnership or, in
addition to or in lieu thereof, may be exchanged for or converted into
cash, property, rights or securities of or interests in another domestic
partnership or other entity.
(10) In connection with the conversion of any other entity to a domestic
partnership, a person is admitted as a partner of the domestic
partnership at the time provided in and upon compliance with the
partnership agreement. For the purpose of section 32(2) of this Act, a
person who, at the effective date of the conversion of any other entity
to a domestic partnership, is a partner of the partnership, shall be
deemed admitted as a partner of the partnership at the effective date
of such conversion. [P.L. 2005-28, §62.]
§63. Merger or consolidation.
(1) As used in this section, “other business entity” means a corporation,
association, or an unincorporated business, including a limited
liability company, a limited partnership and a foreign partnership,
but excluding a domestic partnership.
(2) Pursuant to an agreement of merger or consolidation, one (1) or more
domestic partnerships may merge or consolidate with or into one (1)
or more domestic partnerships or one (1) or more other business
entities formed or organized under the laws of the Marshall Islands
or any foreign country or other foreign jurisdiction, or any
combination thereof, with such domestic partnership or other
business entity as the agreement shall provide being the surviving or
resulting domestic partnership or other business entity. Unless
otherwise provided in the partnership agreement, a merger or
consolidation shall be approved by each domestic partnership which
is to merge or consolidate by all of its partners. In connection with a
merger or consolidation hereunder, rights or securities of, or interests
in, a domestic partnership or other business entity which is a
constituent party to the merger or consolidation may be exchanged
for or converted into cash, property, rights or securities of, or
interests in, the surviving or resulting domestic partnership or other
business entity or, in addition to or in lieu thereof, may be exchanged
for or converted into cash, property, rights or securities of, or
interests in a domestic partnership or other business entity which is
not the surviving or resulting domestic partnership or other business
entity in the merger or consolidation. Notwithstanding prior
approval, an agreement of merger or consolidation may be
terminated or amended pursuant to a provision for such termination
or amendment contained in the agreement of merger or
consolidation.
(3) If a domestic partnership is merging or consolidating under this
section, the domestic partnership or other business entity surviving
or resulting in or from the merger or consolidation shall file a
certificate of merger or consolidation executed by at least one (1)
partner on behalf of the domestic partnership when it is the surviving
or resulting entity with the Registrar of Corporations. The certificate
of merger or consolidation shall state:
(a) the name and jurisdiction of formation or organization of each
of the domestic partnerships and other business entities which
is to merge or consolidate;
(b) that an agreement of merger or consolidation has been
approved and executed by each of the domestic partnerships
and other business entities which is to merge or consolidate;
(c) the name of the surviving or resulting domestic partnership or
other business entity;
(d) the future effective date (which shall be a date certain) of the
merger or consolidation if it is not to be effective upon the
filing of the certificate of merger or consolidation;
(e) that the agreement of merger or consolidation is on file at a
place of business of the surviving or resulting domestic
partnership or other business entity, and shall state the
address thereof;
(f) that a copy of the agreement of merger or consolidation will be
furnished by the surviving or resulting domestic partnership
or other business entity, on request and without cost, to any
partner of any domestic partnership or any person holding an
interest in any other business entity which is to merge or
consolidate; and
(g) if the surviving or resulting entity is not formed, organized or
created under the laws of the Marshall Islands, a statement
that such surviving or resulting entity agrees that it may be
served with process in the Marshall Islands in any action, suit
or proceeding for the enforcement of any obligation of any
domestic partnership which is to merge or consolidate,
irrevocably appointing the Attorney-General as its agent to
accept service of process in any such action, suit or proceeding
and specifying the address to which a copy of such process
shall be mailed to it by the Attorney-General. In the event of
service hereunder upon the Attorney-General, the procedures
set forth in section 11 of this Act shall be applicable, except
that the plaintiff in any such action, suit or proceeding shall
furnish the Attorney-General with the address specified in the
certificate of merger or consolidation provided for in this
section and any other address which the plaintiff may elect to
furnish, together with copies of each process as required by the
Attorney-General, and the Attorney-General shall notify such
surviving or resulting entity at all such addresses furnished by
the plaintiff in accordance with the procedures set forth in
section 11 of this Act.
(4) Unless a future effective date is provided in a certificate of merger or
consolidation, in which event a merger or consolidation shall be
effective at any such future effective date, a merger or consolidation
shall be effective upon the filing with the Registrar of Corporations of
a certificate of merger or consolidation.
(5) A certificate of merger or consolidation shall act as a certificate of
cancellation of the certificate of partnership existence for a domestic
partnership which is not the surviving or resulting entity in the
merger or consolidation. Whenever this section requires the filing of a
certificate of merger or consolidation, such requirement shall be
deemed satisfied by the filing of an agreement of merger or
consolidation containing the information required by this section to
be set forth in the certificate of merger or consolidation.
(6) An agreement of merger or consolidation approved in accordance
with subsection (2) of this section may (a) effect any amendment to
the partnership agreement or (b) effect the adoption of a new
partnership agreement for a domestic partnership if it is the
surviving or resulting partnership in the merger or consolidation.
Any amendment to a partnership agreement or adoption of a new
partnership agreement made pursuant to the foregoing sentence shall
be effective at the effective date of the merger or consolidation. The
provisions of this subsection shall not be construed to limit the
accomplishment of a merger or of any of the matters referred to
herein by any other means provided for in a partnership agreement
or other agreement or as otherwise permitted by law, including that
the partnership agreement of any constituent domestic partnership to
the merger or consolidation (including a domestic partnership
formed for the purpose of consummating a merger or consolidation)
shall be the partnership agreement of the surviving or resulting
domestic partnership.
(7) When any merger or consolidation shall have become effective under
this section, for all purposes of the laws of the Marshall Islands, all of
the rights, privileges and powers of each of the domestic partnerships
and other business entities that have merged or consolidated, and all
property, real, personal and mixed, and all debts due to any of said
domestic partnerships and other business entities, as well as all other
things and causes of action belonging to each of such domestic
partnerships and other business entities, shall be vested in the
surviving or resulting domestic partnership or other business entity,
and shall thereafter be the property of the surviving or resulting
domestic partnership or other business entity as they were of each of
the domestic partnerships and other business entities that have
merged or consolidated, and the title to any real property vested by
deed or otherwise, under the laws of the Marshall Islands, in any of
such domestic partnerships and other business entities, shall not
revert or be in any way impaired by reason of this Act; but all rights
of creditors and all liens upon any property of any of said domestic
partnerships and other business entities shall be preserved
unimpaired, and all debts, liabilities and duties of each of the said
domestic partnerships and other business entities that have merged
or consolidated shall thenceforth attach to the surviving or resulting
domestic partnership or other business entity, and may be enforced
against it to the same extent as if said debts, liabilities and duties had
been incurred or contracted by it. Unless otherwise agreed, a merger
or consolidation of a domestic partnership, including a domestic
partnership which is not the surviving or resulting entity in the
merger or consolidation, shall not require such domestic partnership
to wind up its affairs or pay its liabilities and distribute its assets
under Division VIII of this Act.
(8) Except as provided by agreement with a person to whom a partner of
a domestic partnership is obligated, a merger or consolidation of a
domestic partnership that has become effective shall not affect any
obligation or liability existing at the time of such merger or
consolidation of a partner of a domestic partnership which is merging
or consolidating.
(9) If a domestic partnership is a constituent party to a merger or
consolidation that shall have become effective, but the domestic
partnership is not the surviving or resulting entity of the merger or
consolidation, then a judgment creditor of a partner of such domestic
partnership may not levy execution against the assets of the partner
to satisfy a judgment based on a claim against the surviving entity of
the merger or consolidation unless:
(a) the claim is for an obligation of the domestic partnership for
which the partner is liable as provided in section 32 of this Act
and either:
(i) a judgment based on the same claim has been obtained
against the surviving or resulting entity of the merger
or consolidation and a writ of execution on the
judgment has been returned unsatisfied in whole or
in part;
(ii) the surviving or resulting entity of the merger or
consolidation is a debtor in bankruptcy;
(iii) the partner has agreed that the creditor need not
exhaust the assets of the domestic partnership that was
not the surviving or resulting entity of the merger or
consolidation;
(iv) the partner has agreed that the creditor need not
exhaust the assets of the surviving or resulting entity of
the merger or consolidation; or
(v) a court grants permission to the judgment creditor to
levy execution against the assets of the partner based on
a finding that the assets of the surviving or resulting
entity of the merger or consolidation that are subject to
execution are clearly insufficient to satisfy the
judgment, that exhaustion of the assets of the surviving
or resulting entity of the merger or consolidation is
excessively burdensome, or that the grant of permission
is an appropriate exercise of the court’s equitable
powers; or
(b) liability is imposed on the partner by law or contract
independent of the existence of the surviving or resulting
entity of the merger or consolidation.
(10) Unless otherwise provided in an agreement of merger or
consolidation, a person acquiring an economic interest in a surviving
or resulting domestic partnership pursuant to a merger or
consolidation approved in accordance with subsection (2) of this
section is admitted as a partner of the surviving or resulting domestic
partnership at the time provided in and upon compliance with the
partnership agreement of the surviving or resulting domestic
partnership. [P.L. 2005-28, §63.]
§64. Approval of conversion of a domestic partnership.
(1) Upon compliance with this section, a partnership may convert to a
domestic corporation or any other unincorporated business,
including a limited partnership, or a limited liability company of the
Marshall Islands.
(2) If the partnership agreement specifies the manner of authorizing a
conversion of the partnership, the conversion shall be authorized as
specified in the partnership agreement. If the partnership agreement
does not specify the manner of authorizing a conversion of the
partnership and does not prohibit a conversion of the partnership,
the conversion shall be authorized in the same manner as is specified
in the partnership agreement for authorizing a merger or
consolidation that involves the partnership as a constituent party to
the merger or consolidation. If the partnership agreement does not
specify the manner of authorizing a conversion of the partnership or
a merger or consolidation that involves the partnership as a
constituent party and does not prohibit a conversion of the
partnership, the conversion shall be authorized by the approval by all
the partners.
(3) Unless otherwise agreed, the conversion of a domestic partnership to
another business form pursuant to this section shall not require such
partnership to wind up its affairs or pay its liabilities and distribute
its assets under Division VIII of this Act.
(4) In connection with a conversion of a domestic partnership to another
business form pursuant to this section, rights or securities of or
interests in the domestic partnership which is to be converted may be
exchanged for or converted into cash, property, rights or securities of
or interests in the business form into which the domestic partnership
is being converted or, in addition to or in lieu thereof, may be
exchanged for or converted into cash, property, rights or securities of
or interests in another business form. [P.L. 2005-28, §64.]
§65. Domestication of non-Marshall Islands entities.
(1) As used in this section, “non-Marshall Islands entity” means a
foreign limited partnership, or a corporation, association, or any
other unincorporated business, including a general partnership or a
limited liability company, formed, incorporated, created or that
otherwise came into being under the laws of any foreign country or
other foreign jurisdiction.
(2) Any non-Marshall Islands entity may become domesticated as a
partnership in the Marshall Islands by complying with subsection (7)
of this section and filing with the Registrar of Corporations:
(a) a certificate of partnership domestication that has been
executed in accordance with section 5 of this Act; and
(b) a certificate of partnership existence that complies with
section 29 of this Act and has been executed in accordance
with section 5 of this Act.
(3) The certificate of partnership domestication shall state:
(a) the date on which and jurisdiction where the non-Marshall
Islands entity was first formed, incorporated, created or
otherwise came into being;
(b) the name of the non-Marshall Islands entity immediately prior
to the filing of the certificate of partnership domestication;
(c) the name of the partnership as set forth in the certificate of
partnership existence filed in accordance with subsection (2) of
this section;
(d) the future effective date (which shall be a date certain) of the
domestication as a partnership if it is not to be effective upon
the filing of the certificate of partnership domestication and
the certificate of partnership existence;
(e) the jurisdiction that constituted the seat, siege social, or
principal place of business or central administration of the
non-Marshall Islands entity, or any other equivalent thereto
under applicable law, immediately prior to the filing of the
certificate of partnership domestication;
(f) that the transfer of the domicile has been approved by all
necessary action;
(g) that the transfer of domicile is not expressly prohibited under
the laws of the foreign domicile;
(h) that the transfer of domicile is made in good faith and will not
serve to hinder, delay or defraud existing partners, creditors,
claimants or other parties in interest; and
(i) the name and address of the partnership’s registered agent in
the Marshall Islands.
(4) Upon the filing with the Registrar of Corporations of the certificate of
partnership domestication and the certificate of partnership existence
or upon the future effective date of the certificate of partnership
domestication and the certificate of partnership existence, the non-
Marshall Islands entity shall be domesticated as a partnership in the
Marshall Islands and the partnership shall thereafter be subject to all
of the provisions of this Act, provided that the existence of the
partnership shall be deemed to have commenced on the date the non-
Marshall Islands entity commenced its existence in the jurisdiction in
which the non-Marshall Islands entity was first formed, incorporated,
created or otherwise came into being.
(5) The domestication of any non-Marshall Islands entity as a
partnership in the Registrar of Corporations shall not be deemed to
affect any obligations or liabilities of the non-Marshall Islands entity
incurred prior to its domestication as a partnership in the Marshall
Islands, or the personal liability of any person therefor.
(6) The filing of a certificate of partnership domestication shall not affect
the choice of law applicable to the non-Marshall Islands entity, except
that from the effective date of the domestication, the laws of the
Marshall Islands, including the provisions of this Act, shall apply to
the non-Marshall Islands entity to the same extent as if the non-
Marshall Islands entity had been formed as a partnership on that
date.
(7) Prior to filing a certificate of partnership domestication with the
Registrar of Corporations, the domestication shall be approved in the
manner provided for by the document, instrument, agreement or
other writing, as the case may be, governing the internal affairs of the
non-Marshall Islands entity and the conduct of its business or by
applicable non-Marshall Islands law, as appropriate, and a
partnership agreement shall be approved by the same authorization
required to approve the domestication; provided that, in any event,
such approval shall include the approval of any person who, at the
effective date of the domestication, shall be a partner of the
partnership.
(8) When any domestication shall have become effective under this
section, for all purposes of the laws of the Marshall Islands, all of the
rights, privileges and powers of the non-Marshall Islands entity that
has been domesticated, and all property, real, personal and mixed,
and all debts due to such non-Marshall Islands entity, as well as all
other things and causes of action belonging to such non-Marshall
Islands entity, shall remain vested in the domestic partnership to
which such non-Marshall Islands entity has been domesticated and
shall be the property of such domestic partnership, and the title to
any real property vested by deed or otherwise in such non-Marshall
Islands entity shall not revert or be in any way impaired by reason of
this Act; but all rights of creditors and all liens upon any property of
such non-Marshall Islands entity shall be preserved unimpaired, and
all debts, liabilities and duties of the non-Marshall Islands entity that
has been domesticated shall remain attached to the domestic
partnership to which such non-Marshall Islands entity has been
domesticated, and may be enforced against it to the same extent as if
said debts, liabilities and duties had originally been incurred or
contracted by it in its capacity as a domestic partnership. The rights,
privileges, powers and interests in property of the non-Marshall
Islands entity, as well as the debts, liabilities and duties of the non-
Marshall Islands entity, shall not be deemed, as a consequence of the
domestication, to have been transferred to the domestic partnership
to which such non-Marshall Islands entity has domesticated for any
purpose of the laws of the Marshall Islands.
(9) When a non-Marshall Islands entity has become domesticated as a
domestic partnership pursuant to this section, the domestic
partnership shall, for all purposes of the laws of the Marshall Islands,
be deemed to be the same entity as the domesticating non-Marshall
Islands entity. Unless otherwise agreed, or as required under
applicable non-Marshall Islands law, the domesticating non-Marshall
Islands entity shall not be required to wind up its affairs or pay its
liabilities and distribute its assets, and the domestication shall not be
deemed to constitute a dissolution of such non-Marshall Islands
entity and shall constitute a continuation of the existence of the
domesticating non-Marshall Islands entity in the form of a domestic
partnership.
(10) In connection with a domestication hereunder, rights or securities of,
or interests in, the non-Marshall Islands entity that is to be
domesticated as a domestic partnership may be exchanged for or
converted into cash, property, rights or securities of, or interests in,
such domestic partnership or, in addition to or in lieu thereof, may be
exchanged for or converted into cash, property, rights or securities of,
or interests in, another domestic partnership or other entity.
(11) In connection with the domestication of a non-Marshall Islands entity
as a partnership in the Marshall Islands, a person is admitted as a
partner of the domestic partnership at the time provided in and upon
compliance with the partnership agreement. For the purpose of
section 32(2) of this Act, a person who, at the effective date of the
domestication of any non-Marshall Islands entity as a domestic
partnership, is a partner of the partnership, shall be deemed admitted
as a partner of the partnership at the effective date of such
domestication. [P.L. 2005-28, §65.]
§66. Transfer of domestic partnerships.
(1) Upon compliance with the provisions of this section, any domestic
partnership may transfer to or domesticate in any jurisdiction that
permits the transfer or domestication in such jurisdiction of a
partnership.
(2) Unless otherwise provided in a partnership agreement, the transfer
or domestication described in subsection (1) of this section shall be
approved in writing by all of the partners. If all of the partners of the
partnership or such other vote as may be stated in a partnership
agreement shall approve the transfer or domestication described in
subsection (1) of this section, a certificate of transfer shall be filed
with the Registrar of Corporations in accordance with section 5 of this
Act. The certificate of transfer shall state:
(a) the name of the partnership and, if it has been changed, the
name under which its certificate of partnership existence was
originally filed;
(b) the date of the filing of its original certificate of partnership
existence with the Registrar of Corporations;
(c) the jurisdiction to which the partnership shall be transferred or
in which it shall be domesticated;
(d) the future effective date (which shall be a date certain) of the
transfer or domestication to the jurisdiction specified in
subsection (2)(c) of this section if it is not to be effective upon
the filing of the certificate of transfer;
(e) that the transfer or domestication of the partnership has been
approved in accordance with the provisions of this section;
(f) in the case of a certificate of transfer;
(i) that the existence of the partnership as a partnership of
the Marshall Islands shall cease when the certificate of
transfer becomes effective; and
(ii) the agreement of the partnership that it may be served
with process in the Marshall Islands in any action, suit
or proceeding for enforcement of any obligation of the
partnership arising while it was a partnership of the
Marshall Islands, and that it irrevocably appoints the
Attorney General as its agent to accept service of
process in any such action, suit or proceeding; and
(g) The address to which a copy of the process shall be mailed to it
by the Attorney-General. In the event of service hereunder
upon the Attorney-General, the procedures set forth in section
11 of this Act shall be applicable, except that the plaintiff in
any such action, suit or proceeding shall furnish the Attorney-
General with address specified in this subsection and any
other address that the plaintiff may elect to furnish, together
with copies of such process as required by the Attorney-
General, and the Attorney-General shall notify the partnership
that has transferred or domesticated out of the Marshall
Islands at all such addresses furnished by the plaintiff in
accordance with the procedures set forth in section 11 of
the Act.
(3) Upon the filing with the Registrar of Corporations of the certificate of
transfer or upon the future effective date of the certificate of transfer
and payment to the Registrar of Corporations of all fees prescribed in
this Act, the Registrar of Corporations shall certify that the
partnership has filed all documents and paid all fees required by this
Act, and thereupon the partnership shall cease to exist as a
partnership of the Marshall Islands. Such certificate of Registrar of
Corporations shall be prima facie evidence of the transfer or
domestication by such partnership out of the Marshall Islands.
(4) The transfer or domestication of a partnership out of the Marshall
Islands in accordance with this section and the resulting cessation of
its existence as a partnership of the Marshall Islands pursuant to a
certificate of transfer shall not be deemed to affect any obligations or
liabilities of the partnership incurred prior to such transfer or
domestication or the personal liability of any person incurred prior to
such transfer or domestication, nor shall it be deemed to affect the
choice of law applicable to the partnership with respect to matters
arising prior to such transfer or domestication. Unless otherwise
agreed, the transfer or domestication of a partnership out of the
Marshall Islands in accordance with this section shall not require
such partnership to wind up its affairs or pay its liabilities and
distribute its assets under Division VIII of this Act.
(5) In connection with a transfer or domestication of a domestic
partnership to or in another jurisdiction pursuant to subsection (1) of
this section, rights or securities of, or interests in, such partnership
may be exchanged for or converted into cash, property, rights or
securities of, or interests in, the business form in which the
partnership will exist in such other jurisdiction as a consequence of
the transfer or domestication or, in addition to or in lieu thereof, may
be exchanged for or converted into cash, property, rights or securities
of, or interests in, another business form. [P.L. 2005-28, §66.]
DIVISION X - MISCELLANEOUS
§67. Uniformity of application and construction.
(1) This Act shall be applied and construed to effectuate its general
purpose to make uniform the law with respect to the subject of this
Act. The rule that statutes in derogation of the common law are to be
strictly construed shall have no application to this Act.
(2) This Act shall be applied and construed to make the laws of the
Marshall Islands, with respect to the subject matter hereof, uniform
with the laws of the State of Delaware of the United States of
America. Insofar as it does not conflict with any other provision of
this Act, or the decisions of the High and Supreme Courts of the
Republic of the Marshall Islands which takes precedence, the non-
statutory law of the State of Delaware is hereby adopted as the law of
the Marshall Islands. This subsection shall not apply to resident
domestic partnerships. [P.L. 2005-28, §67.]
§68. Short title.
This Act may be cited as the “Marshall Islands Revised Partnership Act”.[P.L. 2005-28, §68.]
§69. Severability clause.
If any provision of this Act or its application to any person or circumstance
is held invalid, the invalidity does not affect other provisions or applications
of this Act which can be given effect without the invalid provision or
application, and to this end the provisions of this Act are severable.[P.L. 2005-28, §69.]
§70. Fees.
(1) No document required to be filed under this Act shall be effective
until the applicable fee required by this Registrar of Corporations is
paid. An annual fee must be paid to the Registrar of Corporations for
the continued existence of the partnership.
(2) The annual fee shall be due and payable on the anniversary date of
the filing of a certificate of partnership existence. The Registrar of
Corporations shall receive the annual fee. [P.L. 2005-28, §70.]
§71. Cancellation of certificate of partnership existence for failure to pay
annual fee.
The certificate of partnership existence of a partnership shall be deemed to
be canceled if the partnership shall fail to pay the annual fee due under
section 70 of this division for a period of one (1) year from the date it is due,
such cancellation to be effective on the first anniversary of such due date.[P.L. 2005-28, §71.]
§72. Reinstatement of partnership.
(1) A partnership whose certificate of partnership existence has been
canceled pursuant to sections 10(3) or 71 of this Act may be reinstated
by filing with the Registrar of Corporations a certificate of
reinstatement accompanied by payment of the annual fee due under
section 70 of this division and all penalties thereon for each year for
which such partnership neglected, refused or failed to pay such
annual fee, including each year between the cancellation of its
certificate of partnership existence and its revival. The certificate of
reinstatement shall set forth:
(a) the name of the partnership at the time its certificate of
partnership existence was canceled and, if such name is not
available at the time of reinstatement, the name under which
the partnership is to be reinstated;
(b) the date of filing of the original certificate of partnership
existence of the partnership;
(c) the name and address of the partnership’s registered agent in
the Marshall Islands;
(d) a statement that the certificate of reinstatement is filed by one
or more partners of the partnership authorized to execute and
file the certificate of reinstatement to reinstate the partnership;
(e) that the reinstatement will not cause injury to any person
including without limitations the partners, former partners, or
creditors of the partnership;
(f) the petitioners agree to hold harmless the Registrar of
Corporations for any costs, fees or expenses for any claims or
liabilities arising from the reinstatement of the
partnership; and
(g) any other matters the partner or partners executing the
certificate of reinstatement determine to include therein.
(2) The certificate of reinstatement shall be deemed to be an amendment
to the certificate of partnership existence of the partnership, and the
partnership shall not be required to take any further action to amend
its certificate of partnership existence under section 5 of this Act with
respect to the matters set forth in the certificate of reinstatement.
(3) Upon the filing of a certificate of reinstatement, a partnership shall be
reinstated with the same force and effect as if its certificate of
partnership existence had not been canceled pursuant to sections
10(3) or 71 of this Act. Such reinstatement shall validate all contracts,
acts, matters and things made, done and performed by the
partnership, its partners, employees and agents during the time when
its certificate of partnership existence was canceled pursuant to
sections 10(3) or 71 of this Act, with the same force and effect and to
all intents and purposes as if the certificate of partnership existence
had remained in full force and effect. All real and personal property,
and all rights and interests, which belonged to the partnership at the
time its certificate of partnership existence was canceled pursuant to
sections 10(3) or 71 of this Act, or which were acquired by the
partnership following the cancellation of its certificate of partnership
existence pursuant to sections 10(3) or 71 of this Act, and which were
not disposed of prior to the time of its reinstatement, shall be vested
in the partnership after its reinstatement as fully as they were held by
the partnership at, and after, as the case may be, the time its
certificate of partnership existence was canceled pursuant to sections
10(3) or 71 of this Act. After its reinstatement, the partnership and its
partners shall have the same liability for all contracts, acts, matters
and things made, done or performed in the partnership’s name and
on its behalf by its partners, employees and agents as the partnership
and its partners would have had if the partnership’s certificate of
partnership existence had at all times remained in full force and
effect. [P.L. 2005-28, §72.]
§73. Exemptions for non-resident entities.
(1) Notwithstanding any provision of the Income Act of 1989 (11 MIRC,
Chapter 1A), or any other law or regulation imposing taxes or fees
now in effect or hereinafter enacted, a non-resident partnership; and
(solely for the purposes of this section) the Administrator and Trust
Company duly appointed by the Cabinet to act in the capacity of the
Registrar of Corporations for non-resident entities pursuant to this
Act and as the Maritime Administrator created pursuant to the
Marshall Islands Maritime Act 1990 (34 MIRC, Chapter 3A), shall be
exempt from any corporate tax, net income tax on unincorporated
businesses, corporate profit tax, income tax, withholding tax on
revenues of the entity, asset tax, tax reporting requirements on
revenues of the entity, stamp duty, exchange controls or other fees or
taxes other than those imposed by section 70 of this division.
(2) Interest, dividends, royalties, rents, payments (including payments to
creditors), compensation or other distributions of income paid by a
non-resident partnership to another non-resident partnership or to
individuals or entities which are not citizens or residents of the
Marshall Islands are exempt from any tax or withholding provisions
of the laws of the Marshall Islands. [P.L. 2005-28, §73.]
§74. Repeals.
As of the effective date of the Marshall Islands Revised Partnership Act, the
Partnership Act, P.L. 1990-91, §20.1 – §20.49, is repealed. [P.L. 2005-28, §74.]
§75. Applicability.
On and after the effective date of the Marshall Islands Revised Partnership
Act, this Act governs all partnerships. [P.L. 2005-28, §75.]
§76. Effective Date.
This Act shall take effect in accordance with the relevant provisions of Rules
of Procedures of the Nitijela and the relevant provisions of the Constitution
of the Republic of the Marshall Islands.