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92_SB2049eng SB2049 Engrossed LRB9216008DJgc 1 AN ACT concerning partnerships. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 ARTICLE 1 5 GENERAL PROVISIONS 6 Section 100. Short title. This Act may be cited as the 7 Uniform Partnership Act (1997). 8 Section 101. Definitions. In this Act: 9 (a) "Business" includes every trade, occupation, and 10 profession. 11 (b) "Debtor in bankruptcy" means a person who is the 12 subject of: 13 (1) an order for relief under Title 11 of the 14 United States Code or a comparable order under a 15 successor statute of general application; or 16 (2) a comparable order under federal, state, or 17 foreign law governing insolvency. 18 (c) "Distribution" means a transfer of money or other 19 property from a partnership to a partner in the partner's 20 capacity as a partner or to the partner's transferee. 21 (d) "Foreign limited liability partnership" means a 22 partnership that: 23 (1) is formed under laws other than the laws of 24 this State; and 25 (2) has the status of a limited liability 26 partnership under those laws. 27 (e) "Limited liability partnership" means a partnership 28 that has filed a statement of qualification under Section 29 1001 and does not have a similar statement in effect in any SB2049 Engrossed -2- LRB9216008DJgc 1 other jurisdiction. 2 (f) "Partnership" means an association of 2 or more 3 persons to carry on as co-owners a business for profit formed 4 under Section 202 of this Act, predecessor law, or comparable 5 law of another jurisdiction. 6 (g) "Partnership agreement" means the agreement, whether 7 written, oral, or implied, among the partners concerning the 8 partnership, including amendments to the partnership 9 agreement. 10 (h) "Partnership at will" means a partnership in which 11 the partners have not agreed to remain partners until the 12 expiration of a definite term or the completion of a 13 particular undertaking. 14 (i) "Partnership interest" or "partner's interest in the 15 partnership" means all of a partner's interests in the 16 partnership, including the partner's transferable interest 17 and all management and other rights. 18 (j) "Person" means an individual, corporation, business 19 trust, estate, trust, partnership, association, joint 20 venture, government, governmental subdivision, agency, or 21 instrumentality, or any other legal or commercial entity. 22 (k) "Property" means all property, real, personal, or 23 mixed, tangible or intangible, or any interest therein. 24 (l) "State" means a state of the United States, the 25 District of Columbia, the Commonwealth of Puerto Rico, or any 26 territory or insular possession subject to the jurisdiction 27 of the United States. 28 (m) "Statement" means a statement of partnership 29 authority under Section 303 of this Act, a statement of 30 denial under Section 304, a statement of dissociation under 31 Section 704, a statement of dissolution under Section 805, a 32 statement of merger under Section 907 or 908, a statement of 33 qualification under Section 1001, a statement of withdrawal 34 under Section 1001 or 1102, a statement of foreign SB2049 Engrossed -3- LRB9216008DJgc 1 qualification under Section 1102, or an amendment or 2 cancellation of any of the foregoing. 3 (n) "Transfer" includes an assignment, conveyance, 4 lease, mortgage, deed, and encumbrance. 5 Section 102. Knowledge and notice. 6 (a) A person knows a fact if the person has actual 7 knowledge of it. 8 (b) A person has notice of a fact if the person: 9 (1) knows of it; 10 (2) has received a notification of it; or 11 (3) has reason to know it exists from all of the 12 facts known to the person at the time in question. 13 (c) A person notifies or gives a notification to another 14 by taking steps reasonably required to inform the other 15 person in ordinary course, whether or not the other person 16 learns of it. 17 (d) A person receives a notification when the 18 notification: 19 (1) comes to the person's attention; or 20 (2) is duly delivered at the person's place of 21 business or at any other place held out by the person as 22 a place for receiving communications. 23 (e) Except as otherwise provided in subsection (f), a 24 person other than an individual knows, has notice, or 25 receives a notification of a fact for purposes of a 26 particular transaction when the individual conducting the 27 transaction knows, has notice, or receives a notification of 28 the fact, or in any event when the fact would have been 29 brought to the individual's attention if the person had 30 exercised reasonable diligence. The person exercises 31 reasonable diligence if it maintains reasonable routines for 32 communicating significant information to the individual 33 conducting the transaction and there is reasonable compliance SB2049 Engrossed -4- LRB9216008DJgc 1 with the routines. Reasonable diligence does not require an 2 individual acting for the person to communicate information 3 unless the communication is part of the individual's regular 4 duties or the individual has reason to know of the 5 transaction and that the transaction would be materially 6 affected by the information. 7 (f) A partner's knowledge, notice, or receipt of a 8 notification of a fact relating to the partnership is 9 effective immediately as knowledge by, notice to, or receipt 10 of a notification by the partnership, except in the case of a 11 fraud on the partnership committed by or with the consent of 12 that partner. 13 Section 103. Effect of partnership agreement; 14 nonwaivable provisions. 15 (a) Except as otherwise provided in subsection (b), 16 relations among the partners and between the partners and the 17 partnership are governed by the partnership agreement. To the 18 extent the partnership agreement does not otherwise provide, 19 this Act governs relations among the partners and between the 20 partners and the partnership. 21 (b) The partnership agreement may not: 22 (1) vary the rights and duties under Section 105 23 except to eliminate the duty to provide copies of 24 statements to all of the partners; 25 (2) unreasonably restrict the right of access to 26 books and records under Section 403(b); 27 (3) eliminate or reduce a partner's fiduciary 28 duties, but may: 29 (i) identify specific types or categories of 30 activities that do not violate these duties, if not 31 manifestly unreasonable; and 32 (ii) specify the number or percentage of 33 partners that may authorize or ratify, after full SB2049 Engrossed -5- LRB9216008DJgc 1 disclosure of all material facts, a specific act or 2 transaction that otherwise would violate these 3 duties; 4 (4) eliminate or reduce the obligation of good 5 faith and fair dealing under Section 404(d), but the 6 partnership agreement may prescribe the standards by 7 which the performance of the obligation is to be 8 measured, if the standards are not manifestly 9 unreasonable; 10 (5) vary the power to dissociate as a partner under 11 Section 602(a), except to require the notice under 12 Section 601(1) to be in writing; 13 (6) vary the right of a court to expel a partner in 14 the events specified in Section 601(5); 15 (7) vary the requirement to wind up the partnership 16 business in cases specified in Section 801(4), (5), or 17 (6); 18 (8) vary the law applicable to a limited liability 19 partnership under Section 106(b); or 20 (9) restrict the rights of a person, other than a 21 partner and transferee of a partner's transferable 22 interest under this Act. 23 Section 104. Supplemental principles of law. 24 (a) Unless displaced by particular provisions of this 25 Act, the principles of law and equity supplement this Act. 26 (b) If an obligation to pay interest arises under this 27 Act and the rate is not specified, the rate is that specified 28 in Section 4 of the Interest Act. 29 Section 105. Execution, filing, and recording of 30 statements. 31 (a) A statement may be filed in the office of the 32 Secretary of State. A certified copy of a statement that is SB2049 Engrossed -6- LRB9216008DJgc 1 filed in an office in another State may be filed in the 2 office of the Secretary of State. Either filing has the 3 effect provided in this Act with respect to partnership 4 property located in or transactions that occur in this State. 5 (b) A certified copy of a statement that has been filed 6 in the office of the Secretary of State and recorded in the 7 office for recording transfers of real property has the 8 effect provided for recorded statements in this Act. A 9 recorded statement that is not a certified copy of a 10 statement filed in the office of the Secretary of State does 11 not have the effect provided for recorded statements in this 12 Act. 13 (c) A statement filed by a partnership must be executed 14 by at least 2 partners. Other statements must be executed by 15 a partner or other person authorized by this Act. An 16 individual who executes a statement as, or on behalf of, a 17 partner or other person named as a partner in a statement 18 shall personally declare under penalty of perjury that the 19 contents of the statement are accurate. 20 (d) A person authorized by this Act to file a statement 21 may amend or cancel the statement by filing an amendment or 22 cancellation that names the partnership, identifies the 23 statement, and states the substance of the amendment or 24 cancellation. 25 (e) A person who files a statement pursuant to this 26 Section shall promptly send a copy of the statement to every 27 nonfiling partner and to any other person named as a partner 28 in the statement. Failure to send a copy of a statement to a 29 partner or other person does not limit the effectiveness of 30 the statement as to a person not a partner. 31 (f) The Secretary of State may collect a fee for filing 32 or providing a certified copy of a statement as provided in 33 Section 108. The officer responsible for recording transfers 34 of real property may collect a fee for recording a statement. SB2049 Engrossed -7- LRB9216008DJgc 1 Section 106. Governing law. 2 (a) Except as otherwise provided in subsection (b), the 3 law of the jurisdiction in which a partnership has its chief 4 executive office governs relations among the partners and 5 between the partners and the partnership. 6 (b) The law of this State governs relations among the 7 partners and between the partners and the partnership and the 8 liability of partners for an obligation of a limited 9 liability partnership. 10 Section 107. Partnership subject to amendment or repeal 11 of Act. A partnership governed by this Act is subject to any 12 amendment to or repeal of this Act. 13 Section 108. Fees. 14 (a) The Secretary of State shall charge and collect in 15 accordance with the provisions of this Act and rules 16 promulgated under its authority: 17 (1) fees for filing documents; 18 (2) miscellaneous charges; and 19 (3) fees for the sale of lists of filings, copies 20 of any documents, and the sale or release of any 21 information. 22 (b) The Secretary of State shall charge and collect: 23 (1) for furnishing a copy or certified copy of any 24 document, instrument, or paper relating to a registered 25 limited liability partnership, $1 per page, but not less 26 than $25, and $25 for the certificate and for affixing 27 the seal to the certificate; 28 (2) for the transfer of information by computer 29 process media to any purchaser, fees established by rule; 30 (3) for filing a statement of partnership 31 authority, $25; 32 (4) for filing a statement of denial, $25; SB2049 Engrossed -8- LRB9216008DJgc 1 (5) for filing a statement of dissociation, $25; 2 (6) for filing a statement of dissolution, $100; 3 (7) for filing a statement of merger, $100; 4 (8) for filing a statement of qualification for a 5 limited liability partnership organized under the laws of 6 this State, $100 for each partner, but in no event shall 7 the fee be less than $200 or exceed $5,000; 8 (9) for filing a statement of foreign 9 qualification, $500; 10 (10) for filing a renewal statement for a limited 11 liability partnership organized under the laws of this 12 State, $100 for each partner, but in no event shall the 13 fee be less than $200 or exceed $5,000; 14 (11) for filing a renewal statement for a foreign 15 limited liability partnership, $300. 16 (12) for filing an amendment or cancellation of a 17 statement, $25; 18 (13) for filing a statement of withdrawal, $100; 19 (14) for the purposes of changing the registered 20 agent name or registered office, or both, $25. 21 (c) All fees collected pursuant to this Act shall be 22 deposited into the Division of Corporations Limited Liability 23 Partnership Fund. 24 (d) There is hereby continued in the State treasury a 25 special fund to be known as the Division of Corporations 26 Limited Liability Partnership Fund. Moneys deposited into the 27 Fund shall, subject to appropriation, be used by the Business 28 Services Division of the Office of the Secretary of State to 29 administer the responsibilities of the Secretary of State 30 under this Act. The balance of the Fund at the end of any 31 fiscal year shall not exceed $200,000, and any amount in 32 excess thereof shall be transferred to the General Revenue 33 Fund. SB2049 Engrossed -9- LRB9216008DJgc 1 Section 109. Illinois Administrative Procedure Act. The 2 Illinois Administrative Procedure Act is expressly adopted 3 and incorporated in Articles 10 and 11 of this Act as if all 4 of the provisions of the Illinois Administrative Procedure 5 Act were included in Articles 10 and 11 of this Act, except 6 that the provisions of subsection (c) of Section 10-65 of the 7 Illinois Administrative Procedure Act, which provides that at 8 a hearing the licensee has the right to show compliance with 9 all lawful requirements for retention, continuation, or 10 renewal of the license, is specifically excluded, and for the 11 purposes of this Act, the notice required under Section 10-25 12 of the Illinois Administrative Procedure Act is deemed 13 sufficient when mailed to the last known address of a party. 14 ARTICLE 2 15 NATURE OF PARTNERSHIP 16 Section 201. Partnership as entity. 17 (a) A partnership is an entity distinct from its 18 partners. 19 (b) A limited liability partnership continues to be the 20 same entity that existed before the filing of a statement of 21 qualification under Section 1001 of this Act. 22 Section 202. Formation of partnership. 23 (a) Except as otherwise provided in subsection (b), the 24 association of 2 or more persons to carry on as co-owners a 25 business for profit forms a partnership, whether or not the 26 persons intend to form a partnership. 27 (b) An association formed under a statute other than 28 this Act, a predecessor statute, or a comparable statute of 29 another jurisdiction is not a partnership under this Act. 30 (c) In determining whether a partnership is formed, the 31 following rules apply: SB2049 Engrossed -10- LRB9216008DJgc 1 (1) Joint tenancy, tenancy in common, tenancy by 2 the entireties, joint property, common property, or part 3 ownership does not by itself establish a partnership, 4 even if the co-owners share profits made by the use of 5 the property. 6 (2) The sharing of gross returns does not by itself 7 establish a partnership, even if the persons sharing them 8 have a joint or common right or interest in property from 9 which the returns are derived. 10 (3) A person who receives a share of the profits of 11 a business is presumed to be a partner in the business, 12 unless the profits were received in payment: 13 (i) of a debt by installments or otherwise; 14 (ii) for services as an independent contractor 15 or of wages or other compensation to an employee; 16 (iii) of rent; 17 (iv) of an annuity or other retirement or 18 health benefit to a beneficiary, representative, or 19 designee of a deceased or retired partner; 20 (v) of interest or other charge on a loan, 21 even if the amount of payment varies with the 22 profits of the business, including a direct or 23 indirect present or future ownership of the 24 collateral, or rights to income, proceeds, or 25 increase in value derived from the collateral; or 26 (vi) for the sale of the goodwill of a 27 business or other property by installments or 28 otherwise. 29 Section 203. Partnership property. Property acquired by a 30 partnership is property of the partnership and not of the 31 partners individually. 32 Section 204. When property is partnership property. SB2049 Engrossed -11- LRB9216008DJgc 1 (a) Property is partnership property if acquired in the 2 name of: 3 (1) the partnership; or 4 (2) one or more partners with an indication in the 5 instrument transferring title to the property of the 6 person's capacity as a partner or of the existence of a 7 partnership but without an indication of the name of the 8 partnership. 9 (b) Property is acquired in the name of the partnership 10 by a transfer to: 11 (1) the partnership in its name; or 12 (2) one or more partners in their capacity as 13 partners in the partnership, if the name of the 14 partnership is indicated in the instrument transferring 15 title to the property. 16 (c) Property is presumed to be partnership property if 17 purchased with partnership assets, even if not acquired in 18 the name of the partnership or of one or more partners with 19 an indication in the instrument transferring title to the 20 property of the person's capacity as a partner or of the 21 existence of a partnership. 22 (d) Property acquired in the name of one or more of the 23 partners, without an indication in the instrument 24 transferring title to the property of the person's capacity 25 as a partner or of the existence of a partnership and without 26 use of partnership assets, is presumed to be separate 27 property, even if used for partnership purposes. 28 ARTICLE 3 29 RELATIONS OF PARTNERS TO 30 PERSONS DEALING WITH PARTNERSHIP 31 Section 301. Partner agent of partnership. Subject to the 32 effect of a statement of partnership authority under Section SB2049 Engrossed -12- LRB9216008DJgc 1 303 of this Act: 2 (1) Each partner is an agent of the partnership for 3 the purpose of its business. An act of a partner, 4 including the execution of an instrument in the 5 partnership name, for apparently carrying on in the 6 ordinary course the partnership business or business of 7 the kind carried on by the partnership binds the 8 partnership, unless the partner had no authority to act 9 for the partnership in the particular matter and the 10 person with whom the partner was dealing knew or had 11 received a notification that the partner lacked 12 authority. 13 (2) An act of a partner which is not apparently for 14 carrying on in the ordinary course the partnership 15 business or business of the kind carried on by the 16 partnership binds the partnership only if the act was 17 authorized by the other partners. 18 Section 302. Transfer of partnership property. 19 (a) Partnership property may be transferred as follows: 20 (1) Subject to the effect of a statement of 21 partnership authority under Section 303 of this Act, 22 partnership property held in the name of the partnership 23 may be transferred by an instrument of transfer executed 24 by a partner in the partnership name. 25 (2) Partnership property held in the name of one or 26 more partners with an indication in the instrument 27 transferring the property to them of their capacity as 28 partners or of the existence of a partnership, but 29 without an indication of the name of the partnership, may 30 be transferred by an instrument of transfer executed by 31 the persons in whose name the property is held. 32 (3) Partnership property held in the name of one or 33 more persons other than the partnership, without an SB2049 Engrossed -13- LRB9216008DJgc 1 indication in the instrument transferring the property to 2 them of their capacity as partners or of the existence of 3 a partnership, may be transferred by an instrument of 4 transfer executed by the persons in whose name the 5 property is held. 6 (b) A partnership may recover partnership property from 7 a transferee only if it proves that execution of the 8 instrument of initial transfer did not bind the partnership 9 under Section 301 and: 10 (1) as to a subsequent transferee who gave value 11 for property transferred under subsection (a)(1) and (2) 12 of this Section, proves that the subsequent transferee 13 knew or had received a notification that the person who 14 executed the instrument of initial transfer lacked 15 authority to bind the partnership; or 16 (2) as to a transferee who gave value for property 17 transferred under subsection (a)(3), proves that the 18 transferee knew or had received a notification that the 19 property was partnership property and that the person who 20 executed the instrument of initial transfer lacked 21 authority to bind the partnership. 22 (c) A partnership may not recover partnership property 23 from a subsequent transferee if the partnership would not 24 have been entitled to recover the property, under subsection 25 (b), from any earlier transferee of the property. 26 (d) If a person holds all of the partners' interests in 27 the partnership, all of the partnership property vests in 28 that person. The person may execute a document in the name of 29 the partnership to evidence vesting of the property in that 30 person and may file or record the document. 31 Section 303. Statement of partnership authority. 32 (a) A partnership may file a statement of partnership 33 authority, which: SB2049 Engrossed -14- LRB9216008DJgc 1 (1) must include: 2 (i) the name of the partnership; 3 (ii) the street address of its chief executive 4 office and of one office in this State, if there is 5 one; 6 (iii) the names and mailing addresses of all 7 of the partners or of an agent appointed and 8 maintained by the partnership for the purpose of 9 subsection (b); and 10 (iv) the names of the partners authorized to 11 execute an instrument transferring real property 12 held in the name of the partnership; and 13 (2) may state the authority, or limitations on the 14 authority, of some or all of the partners to enter into 15 other transactions on behalf of the partnership and any 16 other matter. 17 (b) If a statement of partnership authority names an 18 agent, the agent shall maintain a list of the names and 19 mailing addresses of all of the partners and make it 20 available to any person on request for good cause shown. 21 (c) If a filed statement of partnership authority is 22 executed pursuant to Section 105(c) and states the name of 23 the partnership but does not contain all of the other 24 information required by subsection (a) of this Section, the 25 statement nevertheless operates with respect to a person not 26 a partner as provided in subsections (d) and (e). 27 (d) Except as otherwise provided in subsection (g) of 28 this Section, a filed statement of partnership authority 29 supplements the authority of a partner to enter into 30 transactions on behalf of the partnership as follows: 31 (1) Except for transfers of real property, a grant 32 of authority contained in a filed statement of 33 partnership authority is conclusive in favor of a person 34 who gives value without knowledge to the contrary, so SB2049 Engrossed -15- LRB9216008DJgc 1 long as and to the extent that a limitation on that 2 authority is not then contained in another filed 3 statement. A filed cancellation of a limitation on 4 authority revives the previous grant of authority. 5 (2) A grant of authority to transfer real property 6 held in the name of the partnership contained in a 7 certified copy of a filed statement of partnership 8 authority recorded in the office for recording transfers 9 of that real property is conclusive in favor of a person 10 who gives value without knowledge to the contrary, so 11 long as and to the extent that a certified copy of a 12 filed statement containing a limitation on that authority 13 is not then of record in the office for recording 14 transfers of that real property. The recording in the 15 office for recording transfers of that real property of a 16 certified copy of a filed cancellation of a limitation on 17 authority revives the previous grant of authority. 18 (e) A person not a partner is deemed to know of a 19 limitation on the authority of a partner to transfer real 20 property held in the name of the partnership if a certified 21 copy of the filed statement containing the limitation on 22 authority is of record in the office for recording transfers 23 of that real property. 24 (f) Except as otherwise provided in subsections (d) and 25 (e) of this Section and Sections 704 and 805 of this Act, a 26 person not a partner is not deemed to know of a limitation on 27 the authority of a partner merely because the limitation is 28 contained in a filed statement. 29 (g) Unless earlier canceled, a filed statement of 30 partnership authority is canceled by operation of law 5 years 31 after the date on which the statement, or the most recent 32 amendment, was filed with the Secretary of State. 33 Section 304. Statement of denial. A partner or other SB2049 Engrossed -16- LRB9216008DJgc 1 person named as a partner in a filed statement of partnership 2 authority or in a list maintained by an agent pursuant to 3 Section 303(b) may file a statement of denial stating the 4 name of the partnership and the fact that is being denied, 5 which may include denial of a person's authority or status as 6 a partner. A statement of denial is a limitation on authority 7 as provided in Section 303(d) and (e). 8 Section 305. Partnership liable for partner's actionable 9 conduct. 10 (a) A partnership is liable for loss or injury caused to 11 a person, or for a penalty incurred, as a result of a 12 wrongful act or omission, or other actionable conduct, of a 13 partner acting in the ordinary course of business of the 14 partnership or with authority of the partnership. 15 (b) If, in the course of the partnership's business or 16 while acting with authority of the partnership, a partner 17 receives or causes the partnership to receive money or 18 property of a person not a partner, and the money or property 19 is misapplied by a partner, the partnership is liable for the 20 loss. 21 Section 306. Partner's liability. 22 (a) Except as otherwise provided in subsections (b) and 23 (c) of this Section, all partners are liable jointly and 24 severally for all obligations of the partnership unless 25 otherwise agreed by the claimant or provided by law. 26 (b) A person admitted as a partner into an existing 27 partnership is not personally liable for any partnership 28 obligation incurred before the person's admission as a 29 partner. 30 (c) An obligation of a partnership incurred while the 31 partnership is a limited liability partnership, whether 32 arising in contract, tort, or otherwise, is solely the SB2049 Engrossed -17- LRB9216008DJgc 1 obligation of the partnership. A partner is not personally 2 liable, directly or indirectly, by way of contribution or 3 otherwise, for such an obligation solely by reason of being 4 or so acting as a partner. This subsection applies 5 notwithstanding anything inconsistent in the partnership 6 agreement that existed immediately before the vote required 7 to become a limited liability partnership under Section 8 1001(b) of this Act. 9 Section 307. Actions by and against partnership and 10 partners. 11 (a) A partnership may sue and be sued in the name of the 12 partnership. 13 (b) An action may be brought against the partnership 14 and, to the extent not inconsistent with Section 306 of this 15 Act, any or all of the partners in the same action or in 16 separate actions. 17 (c) A judgment against a partnership is not by itself a 18 judgment against a partner. A judgment against a partnership 19 may not be satisfied from a partner's assets unless there is 20 also a judgment against the partner. 21 (d) A judgment creditor of a partner may not levy 22 execution against the assets of the partner to satisfy a 23 judgment based on a claim against the partnership unless the 24 partner is personally liable for the claim under Section 306 25 and: 26 (1) a judgment based on the same claim has been 27 obtained against the partnership and a writ of execution 28 on the judgment has been returned unsatisfied in whole or 29 in part; 30 (2) the partnership is a debtor in bankruptcy; 31 (3) the partner has agreed that the creditor need 32 not exhaust partnership assets; 33 (4) a court grants permission to the judgment SB2049 Engrossed -18- LRB9216008DJgc 1 creditor to levy execution against the assets of a 2 partner based on a finding that partnership assets 3 subject to execution are clearly insufficient to satisfy 4 the judgment, that exhaustion of partnership assets is 5 excessively burdensome, or that the grant of permission 6 is an appropriate exercise of the court's equitable 7 powers; or 8 (5) liability is imposed on the partner by law or 9 contract independent of the existence of the partnership. 10 (e) This Section applies to any partnership liability or 11 obligation resulting from a representation by a partner or 12 purported partner under Section 308 of this Act. 13 Section 308. Liability of purported partner. 14 (a) If a person, by words or conduct, purports to be a 15 partner, or consents to being represented by another as a 16 partner, in a partnership or with one or more persons not 17 partners, the purported partner is liable to a person to whom 18 the representation is made, if that person, relying on the 19 representation, enters into a transaction with the actual or 20 purported partnership. If the representation, either by the 21 purported partner or by a person with the purported partner's 22 consent, is made in a public manner, the purported partner is 23 liable to a person who relies upon the purported partnership 24 even if the purported partner is not aware of being held out 25 as a partner to the claimant. If partnership liability 26 results, the purported partner is liable with respect to that 27 liability as if the purported partner were a partner. If no 28 partnership liability results, the purported partner is 29 liable with respect to that liability jointly and severally 30 with any other person consenting to the representation. 31 (b) If a person is thus represented to be a partner in 32 an existing partnership, or with one or more persons not 33 partners, the purported partner is an agent of persons SB2049 Engrossed -19- LRB9216008DJgc 1 consenting to the representation to bind them to the same 2 extent and in the same manner as if the purported partner 3 were a partner, with respect to persons who enter into 4 transactions in reliance upon the representation. If all of 5 the partners of the existing partnership consent to the 6 representation, a partnership act or obligation results. If 7 fewer than all of the partners of the existing partnership 8 consent to the representation, the person acting and the 9 partners consenting to the representation are jointly and 10 severally liable. 11 (c) A person is not liable as a partner merely because 12 the person is named by another in a statement of partnership 13 authority. 14 (d) A person does not continue to be liable as a partner 15 merely because of a failure to file a statement of 16 dissociation or to amend a statement of partnership authority 17 to indicate the partner's dissociation from the partnership. 18 (e) Except as otherwise provided in subsections (a) and 19 (b) of this Section, persons who are not partners as to each 20 other are not liable as partners to other persons. 21 ARTICLE 4 22 RELATIONS OF PARTNERS TO EACH OTHER 23 AND TO PARTNERSHIP 24 Section 401. Partner's rights and duties. 25 (a) Each partner is deemed to have an account that is: 26 (1) credited with an amount equal to the money plus 27 the value of any other property, net of the amount of any 28 liabilities, the partner contributes to the partnership 29 and the partner's share of the partnership profits; and 30 (2) charged with an amount equal to the money plus 31 the value of any other property, net of the amount of any 32 liabilities, distributed by the partnership to the SB2049 Engrossed -20- LRB9216008DJgc 1 partner and the partner's share of the partnership 2 losses. 3 (b) Each partner is entitled to an equal share of the 4 partnership profits and is chargeable with a share of the 5 partnership losses in proportion to the partner's share of 6 the profits. 7 (c) A partnership shall reimburse a partner for payments 8 made and indemnify a partner for liabilities incurred by the 9 partner in the ordinary course of the business of the 10 partnership or for the preservation of its business or 11 property. 12 (d) A partnership shall reimburse a partner for an 13 advance to the partnership beyond the amount of capital the 14 partner agreed to contribute. 15 (e) A payment or advance made by a partner which gives 16 rise to a partnership obligation under subsection (c) or (d) 17 of this Section constitutes a loan to the partnership which 18 accrues interest from the date of the payment or advance. 19 (f) Each partner has equal rights in the management and 20 conduct of the partnership business. 21 (g) A partner may use or possess partnership property 22 only on behalf of the partnership. 23 (h) A partner is not entitled to remuneration for 24 services performed for the partnership, except for reasonable 25 compensation for services rendered in winding up the business 26 of the partnership. 27 (i) A person may become a partner only with the consent 28 of all of the partners. 29 (j) A difference arising as to a matter in the ordinary 30 course of business of a partnership may be decided by a 31 majority of the partners. An act outside the ordinary course 32 of business of a partnership and an amendment to the 33 partnership agreement may be undertaken only with the consent 34 of all of the partners. SB2049 Engrossed -21- LRB9216008DJgc 1 (k) This Section does not affect the obligations of a 2 partnership to other persons under Section 301 of this Act. 3 Section 402. Distributions in kind. A partner has no 4 right to receive, and may not be required to accept, a 5 distribution in kind. 6 Section 403. Partner's rights and duties with respect to 7 information. 8 (a) A partnership shall keep its books and records, if 9 any, at its chief executive office. 10 (b) A partnership shall provide partners and their 11 agents and attorneys access to its books and records. It 12 shall provide former partners and their agents and attorneys 13 access to books and records pertaining to the period during 14 which they were partners. The right of access provides the 15 opportunity to inspect and copy books and records during 16 ordinary business hours. A partnership may impose a 17 reasonable charge, covering the costs of labor and material, 18 for copies of documents furnished. 19 (c) Each partner and the partnership shall furnish to a 20 partner, and to the legal representative of a deceased 21 partner or partner under legal disability: 22 (1) without demand, any information concerning the 23 partnership's business and affairs reasonably required 24 for the proper exercise of the partner's rights and 25 duties under the partnership agreement or this Act; and 26 (2) on demand, any other information concerning the 27 partnership's business and affairs, except to the extent 28 the demand or the information demanded is unreasonable or 29 otherwise improper under the circumstances. 30 Section 404. General standards of partner's conduct. 31 (a) The fiduciary duties a partner owes to the SB2049 Engrossed -22- LRB9216008DJgc 1 partnership and the other partners include the duty of 2 loyalty and the duty of care set forth in subsections (b) and 3 (c) of this Section. 4 (b) A partner's duty of loyalty to the partnership and 5 the other partners includes the following: 6 (1) to account to the partnership and hold as 7 trustee for it any property, profit, or benefit derived 8 by the partner in the conduct and winding up of the 9 partnership business or derived from a use by the partner 10 of partnership property, including the appropriation of a 11 partnership opportunity; 12 (2) to act fairly when a partner deals with the 13 partnership in the conduct or winding up of the 14 partnership business as or on behalf of a party having an 15 interest adverse to the partnership; and 16 (3) to refrain from competing with the partnership 17 in the conduct of the partnership business before the 18 dissolution of the partnership. 19 (c) A partner's duty of care to the partnership and the 20 other partners in the conduct and winding up of the 21 partnership business is limited to refraining from engaging 22 in grossly negligent or reckless conduct, intentional 23 misconduct, or a knowing violation of law. 24 (d) A partner shall discharge his or her duties to the 25 partnership and the other partners under this Act or under 26 the partnership agreement and exercise any rights consistent 27 with the obligation of good faith and fair dealing. 28 (e) A partner does not violate a duty or obligation 29 under this Act or under the partnership agreement merely 30 because the partner's conduct furthers the partner's own 31 interest. 32 (f) This Section applies to a person winding up the 33 partnership business as the personal or legal representative 34 of the last surviving partner as if the person were a SB2049 Engrossed -23- LRB9216008DJgc 1 partner. 2 Section 405. Actions by partnership and partners. 3 (a) A partnership may maintain an action against a 4 partner for a breach of the partnership agreement, or for the 5 violation of a duty to the partnership, causing harm to the 6 partnership. 7 (b) A partner may maintain an action against the 8 partnership or another partner for legal or equitable relief, 9 with or without an accounting as to partnership business, to: 10 (1) enforce the partner's rights under the 11 partnership agreement; 12 (2) enforce the partner's rights under this Act, 13 including: 14 (i) the partner's rights under Section 401, 15 403, or 404; 16 (ii) the partner's right on dissociation to 17 have the partner's interest in the partnership 18 purchased pursuant to Section 701 or enforce any 19 other right under Article 6 or 7; or 20 (iii) the partner's right to compel a 21 dissolution and winding up of the partnership 22 business under or enforce any other right under 23 Article 8; or 24 (3) enforce the rights and otherwise protect the 25 interests of the partner, including rights and interests 26 arising independently of the partnership relationship. 27 (c) The accrual of, and any time limitation on, a right 28 of action for a remedy under this Section is governed by 29 other law. A right to an accounting upon a dissolution and 30 winding up does not revive a claim barred by law. 31 Section 406. Continuation of partnership beyond definite 32 term or particular undertaking. SB2049 Engrossed -24- LRB9216008DJgc 1 (a) If a partnership for a definite term or particular 2 undertaking is continued, without an express agreement, after 3 the expiration of the term or completion of the undertaking, 4 the rights and duties of the partners remain the same as they 5 were at the expiration or completion, so far as is consistent 6 with a partnership at will. 7 (b) If the partners, or those of them who habitually 8 acted in the business during the term or undertaking, 9 continue the business without any settlement or liquidation 10 of the partnership, they are presumed to have agreed that the 11 partnership will continue. 12 ARTICLE 5 13 TRANSFEREES AND CREDITORS OF PARTNER 14 Section 501. Partner not co-owner of partnership 15 property. A partner is not a co-owner of partnership property 16 and has no interest in partnership property which can be 17 transferred, either voluntarily or involuntarily. 18 Section 502. Partner's transferable interest in 19 partnership. The only transferable interest of a partner in 20 the partnership is the partner's share of the profits and 21 losses of the partnership and the partner's right to receive 22 distributions. The interest is personal property. 23 Section 503. Transfer of partner's transferable interest. 24 (a) A transfer, in whole or in part, of a partner's 25 transferable interest in the partnership: 26 (1) is permissible; 27 (2) does not by itself cause the partner's 28 dissociation or a dissolution and winding up of the 29 partnership business; and 30 (3) does not, as against the other partners or the SB2049 Engrossed -25- LRB9216008DJgc 1 partnership, entitle the transferee, during the 2 continuance of the partnership, to participate in the 3 management or conduct of the partnership business, to 4 require access to information concerning partnership 5 transactions, or to inspect or copy the partnership books 6 or records. 7 (b) A transferee of a partner's transferable interest in 8 the partnership has a right: 9 (1) to receive, in accordance with the transfer, 10 distributions to which the transferor would otherwise be 11 entitled; 12 (2) to receive upon the dissolution and winding up 13 of the partnership business, in accordance with the 14 transfer, the net amount otherwise distributable to the 15 transferor; and 16 (3) to seek under a judicial determination that it 17 is equitable to wind up the partnership business. 18 (c) In a dissolution and winding up, a transferee is 19 entitled to an account of partnership transactions only from 20 the date of the latest account agreed to by all of the 21 partners. 22 (d) Upon transfer, the transferor retains the rights and 23 duties of a partner other than the interest in distributions 24 transferred. 25 (e) A partnership need not give effect to a transferee's 26 rights under this Section until it has notice of the 27 transfer. 28 (f) A transfer of a partner's transferable interest in 29 the partnership in violation of a restriction on transfer 30 contained in the partnership agreement is ineffective as to a 31 person having notice of the restriction at the time of 32 transfer. 33 Section 504. Partner's transferable interest subject to SB2049 Engrossed -26- LRB9216008DJgc 1 charging order. 2 (a) On application by a judgment creditor of a partner 3 or of a partner's transferee, a court having jurisdiction may 4 charge the transferable interest of the judgment debtor to 5 satisfy the judgment. The court may appoint a receiver of the 6 share of the distributions due or to become due to the 7 judgment debtor in respect of the partnership and make all 8 other orders, directions, accounts, and inquiries the 9 judgment debtor might have made or which the circumstances of 10 the case may require. 11 (b) A charging order constitutes a lien on the judgment 12 debtor's transferable interest in the partnership. The court 13 may order a foreclosure of the interest subject to the 14 charging order at any time. The purchaser at the foreclosure 15 sale has the rights of a transferee. 16 (c) At any time before foreclosure, an interest charged 17 may be redeemed: 18 (1) by the judgment debtor; 19 (2) with property other than partnership property, 20 by one or more of the other partners; or 21 (3) with partnership property, by one or more of 22 the other partners with the consent of all of the 23 partners whose interests are not so charged. 24 (d) This Act does not deprive a partner of a right under 25 exemption laws with respect to the partner's interest in the 26 partnership. 27 (e) This Section provides the exclusive remedy by which 28 a judgment creditor of a partner or partner's transferee may 29 satisfy a judgment out of the judgment debtor's transferable 30 interest in the partnership. 31 ARTICLE 6 32 PARTNER'S DISSOCIATION SB2049 Engrossed -27- LRB9216008DJgc 1 Section 601. Events causing partner's dissociation. A 2 partner is dissociated from a partnership upon the occurrence 3 of any of the following events: 4 (1) the partnership's having notice of the 5 partner's express will to withdraw as a partner or on a 6 later date specified by the partner; 7 (2) an event agreed to in the partnership agreement 8 as causing the partner's dissociation; 9 (3) the partner's expulsion pursuant to the 10 partnership agreement; 11 (4) the partner's expulsion by the unanimous vote 12 of the other partners if: 13 (i) it is unlawful to carry on the partnership 14 business with that partner; 15 (ii) there has been a transfer of all or 16 substantially all of that partner's transferable 17 interest in the partnership, other than a transfer 18 for security purposes, or a court order charging the 19 partner's interest, which has not been foreclosed; 20 (iii) within 90 days after the partnership 21 notifies a corporate partner that it will be 22 expelled because it has filed a certificate of 23 dissolution or the equivalent, its charter has been 24 revoked, or its right to conduct business has been 25 suspended by the jurisdiction of its incorporation, 26 there is no revocation of the certificate of 27 dissolution or no reinstatement of its charter or 28 its right to conduct business; or 29 (iv) a partnership that is a partner has been 30 dissolved and its business is being wound up; 31 (5) on application by the partnership or another 32 partner, the partner's expulsion by judicial 33 determination because: 34 (i) the partner engaged in wrongful conduct SB2049 Engrossed -28- LRB9216008DJgc 1 that adversely and materially affected the 2 partnership business; 3 (ii) the partner willfully or persistently 4 committed a material breach of the partnership 5 agreement or of a duty owed to the partnership or 6 the other partners under Section 404 of this Act; or 7 (iii) the partner engaged in conduct relating 8 to the partnership business which makes it not 9 reasonably practicable to carry on the business in 10 partnership with the partner; 11 (6) the partner's: 12 (i) becoming a debtor in bankruptcy; 13 (ii) executing an assignment for the benefit 14 of creditors; 15 (iii) seeking, consenting to, or acquiescing 16 in the appointment of a trustee, receiver, or 17 liquidator of that partner or of all or 18 substantially all of that partner's property; or 19 (iv) failing, within 90 days after the 20 appointment, to have vacated or stayed the 21 appointment of a trustee, receiver, or liquidator of 22 the partner or of all or substantially all of the 23 partner's property obtained without the partner's 24 consent or acquiescence, or failing within 90 days 25 after the expiration of a stay to have the 26 appointment vacated; 27 (7) in the case of a partner who is an individual: 28 (i) the partner's death; 29 (ii) the appointment of a guardian or general 30 conservator for the partner; or 31 (iii) a judicial determination that the 32 partner has otherwise become incapable of performing 33 the partner's duties under the partnership 34 agreement; SB2049 Engrossed -29- LRB9216008DJgc 1 (8) in the case of a partner that is a trust or is 2 acting as a partner by virtue of being a trustee of a 3 trust, distribution of the trust's entire transferable 4 interest in the partnership, but not merely by reason of 5 the substitution of a successor trustee; 6 (9) in the case of a partner that is an estate or 7 is acting as a partner by virtue of being a personal 8 representative of an estate, distribution of the estate's 9 entire transferable interest in the partnership, but not 10 merely by reason of the substitution of a successor 11 personal representative; or 12 (10) termination of a partner who is not an 13 individual, partnership, corporation, trust, or estate. 14 Section 602. Partner's power to dissociate; wrongful 15 dissociation. 16 (a) A partner has the power to dissociate at any time, 17 rightfully or wrongfully, by express will pursuant to Section 18 601(1) of this Act. 19 (b) A partner's dissociation is wrongful only if: 20 (1) it is in breach of an express provision of the 21 partnership agreement; or 22 (2) in the case of a partnership for a definite 23 term or particular undertaking, before the expiration of 24 the term or the completion of the undertaking: 25 (i) the partner withdraws by express will, 26 unless the withdrawal follows within 90 days after 27 another partner's dissociation by death or otherwise 28 under Section 601(6) through (10) or wrongful 29 dissociation under this subsection; 30 (ii) the partner is expelled by judicial 31 determination under Section 601(5); 32 (iii) the partner is dissociated by becoming a 33 debtor in bankruptcy; or SB2049 Engrossed -30- LRB9216008DJgc 1 (iv) in the case of a partner who is not an 2 individual, trust other than a business trust, or 3 estate, the partner is expelled or otherwise 4 dissociated because it willfully dissolved or 5 terminated. 6 (c) A partner who wrongfully dissociates is liable to 7 the partnership and to the other partners for damages caused 8 by the dissociation. The liability is in addition to any 9 other obligation of the partner to the partnership or to the 10 other partners. 11 Section 603. Effect of partner's dissociation. 12 (a) If a partner's dissociation results in a dissolution 13 and winding up of the partnership business, Article 8 of this 14 Act applies; otherwise, Article 7 applies. 15 (b) Upon a partner's dissociation: 16 (1) the partner's right to participate in the 17 management and conduct of the partnership business 18 terminates, except as otherwise provided in Section 803; 19 (2) except as provided in clause (3) of this 20 subsection, a partner's duties terminate; and 21 (3) the partner's duty of loyalty under Section 22 404(b)(1) and (2) and duty of care under Section 404(c) 23 continue only with regard to matters arising and events 24 occurring before the partner's dissociation, unless the 25 partner participates in winding up the partnership's 26 business pursuant to Section 803. 27 ARTICLE 7 28 PARTNER'S DISSOCIATION WHEN BUSINESS NOT WOUND UP 29 Section 701. Purchase of dissociated partner's interest. 30 (a) If a partner is dissociated from a partnership 31 without resulting in a dissolution and winding up of the SB2049 Engrossed -31- LRB9216008DJgc 1 partnership business under Section 801 of this Act, the 2 partnership shall cause the dissociated partner's interest in 3 the partnership to be purchased for a buyout price determined 4 pursuant to subsection (b) of this Section. 5 (b) The buyout price of a dissociated partner's interest 6 is the amount that would have been distributable to the 7 dissociating partner under Section 807(b) if, on the date of 8 dissociation, the assets of the partnership were sold at a 9 price equal to the greater of the liquidation value or the 10 value based on a sale of the entire business as a going 11 concern without the dissociated partner and the partnership 12 were wound up as of that date. Interest must be paid from the 13 date of dissociation to the date of payment. 14 (c) Damages for wrongful dissociation under Section 15 602(b), and all other amounts owing, whether or not presently 16 due, from the dissociated partner to the partnership, must be 17 offset against the buyout price. Interest must be paid from 18 the date the amount owed becomes due to the date of payment. 19 (d) A partnership shall indemnify a dissociated partner 20 whose interest is being purchased against all partnership 21 liabilities, whether incurred before or after the 22 dissociation, except liabilities incurred by an act of the 23 dissociated partner under Section 702. 24 (e) If no agreement for the purchase of a dissociated 25 partner's interest is reached within 120 days after a written 26 demand for payment, the partnership shall pay, or cause to be 27 paid, in cash to the dissociated partner the amount the 28 partnership estimates to be the buyout price and accrued 29 interest, reduced by any offsets and accrued interest under 30 subsection (c). 31 (f) If a deferred payment is authorized under subsection 32 (h), the partnership may tender a written offer to pay the 33 amount it estimates to be the buyout price and accrued 34 interest, reduced by any offsets under subsection (c), SB2049 Engrossed -32- LRB9216008DJgc 1 stating the time of payment, the amount and type of security 2 for payment, and the other terms and conditions of the 3 obligation. 4 (g) The payment or tender required by subsection (e) or 5 (f) must be accompanied by the following: 6 (1) a statement of partnership assets and 7 liabilities as of the date of dissociation; 8 (2) the latest available partnership balance sheet 9 and income statement, if any; 10 (3) an explanation of how the estimated amount of 11 the payment was calculated; and 12 (4) written notice that the payment is in full 13 satisfaction of the obligation to purchase unless, within 14 120 days after the written notice, the dissociated 15 partner commences an action to determine the buyout 16 price, any offsets under subsection (c), or other terms 17 of the obligation to purchase. 18 (h) A partner who wrongfully dissociates before the 19 expiration of a definite term or the completion of a 20 particular undertaking is not entitled to payment of any 21 portion of the buyout price until the expiration of the term 22 or completion of the undertaking, unless the partner 23 establishes to the satisfaction of the court that earlier 24 payment will not cause undue hardship to the business of the 25 partnership. A deferred payment must be adequately secured 26 and bear interest. 27 (i) A dissociated partner may maintain an action against 28 the partnership, pursuant to Section 405(b)(2)(ii), to 29 determine the buyout price of that partner's interest, any 30 offsets under subsection (c), or other terms of the 31 obligation to purchase. The action must be commenced within 32 120 days after the partnership has tendered payment or an 33 offer to pay or within one year after written demand for 34 payment if no payment or offer to pay is tendered. The court SB2049 Engrossed -33- LRB9216008DJgc 1 shall determine the buyout price of the dissociated partner's 2 interest, any offset due under subsection (c) of this 3 Section, and accrued interest, and enter judgment for any 4 additional payment or refund. If deferred payment is 5 authorized under subsection (h), the court shall also 6 determine the security for payment and other terms of the 7 obligation to purchase. The court may assess reasonable 8 attorney's fees and the fees and expenses of appraisers or 9 other experts for a party to the action, in amounts the court 10 finds equitable, against a party that the court finds acted 11 arbitrarily, vexatiously, or not in good faith. The finding 12 may be based on the partnership's failure to tender payment 13 or an offer to pay or to comply with subsection (g). 14 Section 702. Dissociated partner's power to bind and 15 liability to partnership. 16 (a) For 2 years after a partner dissociates without 17 resulting in a dissolution and winding up of the partnership 18 business, the partnership, including a surviving partnership 19 under Article 9 of this Act, is bound by an act of the 20 dissociated partner which would have bound the partnership 21 under Section 301 before dissociation only if at the time of 22 entering into the transaction the other party: 23 (1) reasonably believed that the dissociated 24 partner was then a partner; 25 (2) did not have notice of the partner's 26 dissociation; and 27 (3) is not deemed to have had knowledge under 28 Section 303(e) or notice under Section 704(c). 29 (b) A dissociated partner is liable to the partnership 30 for any damage caused to the partnership arising from an 31 obligation incurred by the dissociated partner after 32 dissociation for which the partnership is liable under 33 subsection (a) of this Section. SB2049 Engrossed -34- LRB9216008DJgc 1 Section 703. Dissociated partner's liability to other 2 persons. 3 (a) A partner's dissociation does not of itself 4 discharge the partner's liability for a partnership 5 obligation incurred before dissociation. A dissociated 6 partner is not liable for a partnership obligation incurred 7 after dissociation, except as otherwise provided in 8 subsection (b) of this Section. 9 (b) A partner who dissociates without resulting in a 10 dissolution and winding up of the partnership business is 11 liable as a partner to the other party in a transaction 12 entered into by the partnership, or a surviving partnership 13 under Article 9 of this Act, within 2 years after the 14 partner's dissociation, only if the partner is liable for the 15 obligation under Section 306 and at the time of entering into 16 the transaction the other party: 17 (1) reasonably believed that the dissociated 18 partner was then a partner; 19 (2) did not have notice of the partner's 20 dissociation; and 21 (3) is not deemed to have had knowledge under 22 Section 303(e) or notice under Section 704(c). 23 (c) By agreement with the partnership creditor and the 24 partners continuing the business, a dissociated partner may 25 be released from liability for a partnership obligation. 26 (d) A dissociated partner is released from liability for 27 a partnership obligation if a partnership creditor, with 28 notice of the partner's dissociation but without the 29 partner's consent, agrees to a material alteration in the 30 nature or time of payment of a partnership obligation. 31 Section 704. Statement of dissociation. 32 (a) A dissociated partner or the partnership may file a 33 statement of dissociation stating the name of the partnership SB2049 Engrossed -35- LRB9216008DJgc 1 and that the partner is dissociated from the partnership. 2 (b) A statement of dissociation is a limitation on the 3 authority of a dissociated partner for the purposes of 4 Section 303(d) and (e). 5 (c) For the purposes of Sections 702(a)(3) and 703(b)(3) 6 of this Act, a person not a partner is deemed to have notice 7 of the dissociation 90 days after the statement of 8 dissociation is filed. 9 Section 705. Continued use of partnership name. Continued 10 use of a partnership name, or a dissociated partner's name as 11 part thereof, by partners continuing the business does not of 12 itself make the dissociated partner liable for an obligation 13 of the partners or the partnership continuing the business. 14 ARTICLE 8 15 WINDING UP PARTNERSHIP BUSINESS 16 Section 801. Events causing dissolution and winding up of 17 partnership business. A partnership is dissolved, and its 18 business must be wound up, only upon the occurrence of any of 19 the following events: 20 (1) in a partnership at will, the partnership's 21 having notice from a partner, other than a partner who is 22 dissociated under Section 601(2) through (10), of that 23 partner's express will to withdraw as a partner, or on a 24 later date specified by the partner; 25 (2) in a partnership for a definite term or 26 particular undertaking: 27 (i) within 90 days after a partner's 28 dissociation by death or otherwise under Section 29 601(6) through (10) or wrongful dissociation under 30 Section 602(b), the express will of at least half of 31 the remaining partners to wind up the partnership SB2049 Engrossed -36- LRB9216008DJgc 1 business, for which purpose a partner's rightful 2 dissociation pursuant to Section 602(b)(2)(i) 3 constitutes the expression of that partner's will to 4 wind up the partnership business; 5 (ii) the express will of all of the partners 6 to wind up the partnership business; or 7 (iii) the expiration of the term or the 8 completion of the undertaking; 9 (3) an event agreed to in the partnership agreement 10 resulting in the winding up of the partnership business; 11 (4) an event that makes it unlawful for all or 12 substantially all of the business of the partnership to 13 be continued, but a cure of illegality within 90 days 14 after notice to the partnership of the event is effective 15 retroactively to the date of the event for purposes of 16 this Section; 17 (5) on application by a partner, a judicial 18 determination that: 19 (i) the economic purpose of the partnership is 20 likely to be unreasonably frustrated; 21 (ii) another partner has engaged in conduct 22 relating to the partnership business which makes it 23 not reasonably practicable to carry on the business 24 in partnership with that partner; or 25 (iii) it is not otherwise reasonably 26 practicable to carry on the partnership business in 27 conformity with the partnership agreement; or 28 (6) on application by a transferee of a partner's 29 transferable interest, a judicial determination that it 30 is equitable to wind up the partnership business: 31 (i) after the expiration of the term or 32 completion of the undertaking, if the partnership 33 was for a definite term or particular undertaking at 34 the time of the transfer or entry of the charging SB2049 Engrossed -37- LRB9216008DJgc 1 order that gave rise to the transfer; or 2 (ii) at any time, if the partnership was a 3 partnership at will at the time of the transfer or 4 entry of the charging order that gave rise to the 5 transfer. 6 Section 802. Partnership continues after dissolution. 7 (a) Subject to subsection (b) of this Section, a 8 partnership continues after dissolution only for the purpose 9 of winding up its business. The partnership is terminated 10 when the winding up of its business is completed. 11 (b) At any time after the dissolution of a partnership 12 and before the winding up of its business is completed, all 13 of the partners, including any dissociating partner other 14 than a wrongfully dissociating partner, may waive the right 15 to have the partnership's business wound up and the 16 partnership terminated. In that event: 17 (1) the partnership resumes carrying on its 18 business as if dissolution had never occurred, and any 19 liability incurred by the partnership or a partner after 20 the dissolution and before the waiver is determined as if 21 dissolution had never occurred; and 22 (2) the rights of a third party accruing under 23 Section 804(1) of this Act or arising out of conduct in 24 reliance on the dissolution before the third party knew 25 or received a notification of the waiver may not be 26 adversely affected. 27 Section 803. Right to wind up partnership business. 28 (a) After dissolution, a partner who has not wrongfully 29 dissociated may participate in winding up the partnership's 30 business, but on application of any partner, partner's legal 31 representative, or transferee, the appropriate court, for 32 good cause shown, may order judicial supervision of the SB2049 Engrossed -38- LRB9216008DJgc 1 winding up. 2 (b) The legal representative of the last surviving 3 partner may wind up a partnership's business. 4 (c) A person winding up a partnership's business may 5 preserve the partnership business or property as a going 6 concern for a reasonable time, prosecute and defend actions 7 and proceedings, whether civil, criminal, or administrative, 8 settle and close the partnership's business, dispose of and 9 transfer the partnership's property, discharge the 10 partnership's liabilities, distribute the assets of the 11 partnership pursuant to Section 807, settle disputes by 12 mediation or arbitration, and perform other necessary acts. 13 Section 804. Partner's power to bind partnership after 14 dissolution. Subject to Section 805 of this Act, a 15 partnership is bound by a partner's act after dissolution 16 that: 17 (1) is appropriate for winding up the partnership 18 business; or 19 (2) would have bound the partnership under Section 20 301 before dissolution, if the other party to the 21 transaction did not have notice of the dissolution. 22 Section 805. Statement of dissolution. 23 (a) After dissolution, a partner who has not wrongfully 24 dissociated may file a statement of dissolution stating the 25 name of the partnership and that the partnership has 26 dissolved and is winding up its business. 27 (b) A statement of dissolution cancels a filed statement 28 of partnership authority for the purposes of Section 303(d) 29 and is a limitation on authority for the purposes of Section 30 303(e). 31 (c) For the purposes of Sections 301 and 804, a person 32 not a partner is deemed to have notice of the dissolution and SB2049 Engrossed -39- LRB9216008DJgc 1 the limitation on the partners' authority as a result of the 2 statement of dissolution 90 days after it is filed. 3 (d) After filing and, if appropriate, recording a 4 statement of dissolution, a dissolved partnership may file 5 and, if appropriate, record a statement of partnership 6 authority which will operate with respect to a person not a 7 partner as provided in Section 303(d) and (e) in any 8 transaction, whether or not the transaction is appropriate 9 for winding up the partnership business. 10 Section 806. Partner's liability to other partners after 11 dissolution. 12 (a) Except as otherwise provided in subsection (b) of 13 this Section and Section 306 of this Act, after dissolution a 14 partner is liable to the other partners for the partner's 15 share of any partnership liability incurred under Section 16 804. 17 (b) A partner who, with knowledge of the dissolution, 18 incurs a partnership liability under Section 804(2) by an act 19 that is not appropriate for winding up the partnership 20 business is liable to the partnership for any damage caused 21 to the partnership arising from the liability. 22 Section 807. Settlement of accounts and contributions 23 among partners. 24 (a) In winding up a partnership's business, the assets 25 of the partnership, including the contributions of the 26 partners required by this Section, must be applied to 27 discharge its obligations to creditors, including, to the 28 extent permitted by law, partners who are creditors. Any 29 surplus must be applied to pay in cash the net amount 30 distributable to partners in accordance with their right to 31 distributions under subsection (b) of this Section. 32 (b) Each partner is entitled to a settlement of all SB2049 Engrossed -40- LRB9216008DJgc 1 partnership accounts upon winding up the partnership 2 business. In settling accounts among the partners, profits 3 and losses that result from the liquidation of the 4 partnership assets must be credited and charged to the 5 partners' accounts. The partnership shall make a distribution 6 to a partner in an amount equal to any excess of the credits 7 over the charges in the partner's account. A partner shall 8 contribute to the partnership an amount equal to any excess 9 of the charges over the credits in the partner's account but 10 excluding from the calculation charges attributable to an 11 obligation for which the partner is not personally liable 12 under Section 306 of this Act. 13 (c) If a partner fails to contribute the full amount 14 required under subsection (b) of this Section, all of the 15 other partners shall contribute, in the proportions in which 16 those partners share partnership losses, the additional 17 amount necessary to satisfy the partnership obligations for 18 which they are personally liable under Section 306. A partner 19 or partner's legal representative may recover from the other 20 partners any contributions the partner makes to the extent 21 the amount contributed exceeds that partner's share of the 22 partnership obligations for which the partner is personally 23 liable under Section 306. 24 (d) After the settlement of accounts, each partner shall 25 contribute, in the proportion in which the partner shares 26 partnership losses, the amount necessary to satisfy 27 partnership obligations that were not known at the time of 28 the settlement and for which the partner is personally liable 29 under Section 306. 30 (e) The estate of a deceased partner is liable for the 31 partner's obligation to contribute to the partnership. 32 (f) An assignee for the benefit of creditors of a 33 partnership or a partner, or a person appointed by a court to 34 represent creditors of a partnership or a partner, may SB2049 Engrossed -41- LRB9216008DJgc 1 enforce a partner's obligation to contribute to the 2 partnership. 3 ARTICLE 9 4 CONVERSIONS AND MERGERS 5 Section 901. Definitions. In this article: 6 (1) "General partner" means a partner in a 7 partnership and a general partner in a limited 8 partnership. 9 (2) "Limited partner" means a limited partner in a 10 limited partnership. 11 (3) "Limited partnership" means a limited 12 partnership created under the Revised Uniform Limited 13 Partnership Act, predecessor law, or comparable law of 14 another jurisdiction. 15 (4) "Partner" includes both a general partner and a 16 limited partner. 17 Section 902. Conversion of partnership to limited 18 partnership. 19 (a) A partnership may be converted to a limited 20 partnership pursuant to this Section. 21 (b) The terms and conditions of a conversion of a 22 partnership to a limited partnership must be approved by all 23 of the partners or by a number or percentage specified for 24 conversion in the partnership agreement. 25 (c) After the conversion is approved by the partners, 26 the partnership shall file a certificate of limited 27 partnership in the jurisdiction in which the limited 28 partnership is to be formed. The certificate must include: 29 (1) a statement that the partnership was converted 30 to a limited partnership from a partnership; 31 (2) its former name; and SB2049 Engrossed -42- LRB9216008DJgc 1 (3) a statement of the number of votes cast by the 2 partners for and against the conversion and, if the vote 3 is less than unanimous, the number or percentage required 4 to approve the conversion under the partnership 5 agreement. 6 (d) The conversion takes effect when the certificate of 7 limited partnership is filed or at any later date specified 8 in the certificate. 9 (e) A general partner who becomes a limited partner as a 10 result of the conversion remains liable as a general partner 11 for an obligation incurred by the partnership before the 12 conversion takes effect. If the other party to a transaction 13 with the limited partnership reasonably believes when 14 entering the transaction that the limited partner is a 15 general partner, the limited partner is liable for an 16 obligation incurred by the limited partnership within 90 days 17 after the conversion takes effect. The limited partner's 18 liability for all other obligations of the limited 19 partnership incurred after the conversion takes effect is 20 that of a limited partner as provided in the Revised Uniform 21 Limited Partnership Act. 22 Section 903. Conversion of limited partnership to 23 partnership. 24 (a) A limited partnership may be converted to a 25 partnership pursuant to this Section. 26 (b) Notwithstanding a provision to the contrary in a 27 limited partnership agreement, the terms and conditions of a 28 conversion of a limited partnership to a partnership must be 29 approved by all of the partners. 30 (c) After the conversion is approved by the partners, 31 the limited partnership shall cancel its certificate of 32 limited partnership. 33 (d) The conversion takes effect when the certificate of SB2049 Engrossed -43- LRB9216008DJgc 1 limited partnership is canceled. 2 (e) A limited partner who becomes a general partner as a 3 result of the conversion remains liable only as a limited 4 partner for an obligation incurred by the limited partnership 5 before the conversion takes effect. Except as otherwise 6 provided in Section 306, the partner is liable as a general 7 partner for an obligation of the partnership incurred after 8 the conversion takes effect. 9 Section 904. Effect of conversion; entity unchanged. 10 (a) A partnership or limited partnership that has been 11 converted pursuant to this article is for all purposes the 12 same entity that existed before the conversion. 13 (b) When a conversion takes effect: 14 (1) all property owned by the converting 15 partnership or limited partnership remains vested in the 16 converted entity; 17 (2) all obligations of the converting partnership 18 or limited partnership continue as obligations of the 19 converted entity; and 20 (3) an action or proceeding pending against the 21 converting partnership or limited partnership may be 22 continued as if the conversion had not occurred. 23 Section 905. Merger of partnerships. 24 (a) Pursuant to a plan of merger approved as provided in 25 subsection (c) of this Section, a partnership may be merged 26 with one or more partnerships or limited partnerships. 27 (b) The plan of merger must set forth: 28 (1) the name of each partnership or limited 29 partnership that is a party to the merger; 30 (2) the name of the surviving entity into which the 31 other partnerships or limited partnerships will merge; 32 (3) whether the surviving entity is a partnership SB2049 Engrossed -44- LRB9216008DJgc 1 or a limited partnership and the status of each partner; 2 (4) the terms and conditions of the merger; 3 (5) the manner and basis of converting the 4 interests of each party to the merger into interests or 5 obligations of the surviving entity, or into money or 6 other property in whole or part; and 7 (6) the street address of the surviving entity's 8 chief executive office. 9 (c) The plan of merger must be approved: 10 (1) in the case of a partnership that is a party to 11 the merger, by all of the partners, or a number or 12 percentage specified for merger in the partnership 13 agreement; and 14 (2) in the case of a limited partnership that is a 15 party to the merger, by the vote required for approval of 16 a merger by the law of the State or foreign jurisdiction 17 in which the limited partnership is organized and, in the 18 absence of such a specifically applicable law, by all of 19 the partners, notwithstanding a provision to the contrary 20 in the partnership agreement. 21 (d) After a plan of merger is approved and before the 22 merger takes effect, the plan may be amended or abandoned as 23 provided in the plan. 24 (e) The merger takes effect on the later of: 25 (1) the approval of the plan of merger by all 26 parties to the merger, as provided in subsection (c); 27 (2) the filing of all documents required by law to 28 be filed as a condition to the effectiveness of the 29 merger; or 30 (3) any effective date specified in the plan of 31 merger. 32 Section 906. Effect of merger. 33 (a) When a merger takes effect: SB2049 Engrossed -45- LRB9216008DJgc 1 (1) the separate existence of every partnership or 2 limited partnership that is a party to the merger, other 3 than the surviving entity, ceases; 4 (2) all property owned by each of the merged 5 partnerships or limited partnerships vests in the 6 surviving entity; 7 (3) all obligations of every partnership or limited 8 partnership that is a party to the merger become the 9 obligations of the surviving entity; and 10 (4) an action or proceeding pending against a 11 partnership or limited partnership that is a party to the 12 merger may be continued as if the merger had not 13 occurred, or the surviving entity may be substituted as a 14 party to the action or proceeding. 15 (b) The Secretary of State of this State is the agent 16 for service of process in an action or proceeding against a 17 surviving foreign partnership or limited partnership to 18 enforce an obligation of a domestic partnership or limited 19 partnership that is a party to a merger. The surviving entity 20 shall promptly notify the Secretary of State of the mailing 21 address of its chief executive office and of any change of 22 address. Upon receipt of process, the Secretary of State 23 shall mail a copy of the process to the surviving foreign 24 partnership or limited partnership. 25 (c) A partner of the surviving partnership or limited 26 partnership is liable for: 27 (1) all obligations of a party to the merger for 28 which the partner was personally liable before the 29 merger; 30 (2) all other obligations of the surviving entity 31 incurred before the merger by a party to the merger, but 32 those obligations may be satisfied only out of property 33 of the entity; and 34 (3) except as otherwise provided in Section 306 of SB2049 Engrossed -46- LRB9216008DJgc 1 this Act, all obligations of the surviving entity 2 incurred after the merger takes effect, but those 3 obligations may be satisfied only out of property of the 4 entity if the partner is a limited partner. 5 (d) If the obligations incurred before the merger by a 6 party to the merger are not satisfied out of the property of 7 the surviving partnership or limited partnership, the general 8 partners of that party immediately before the effective date 9 of the merger shall contribute the amount necessary to 10 satisfy that party's obligations to the surviving entity, in 11 the manner provided in Section 807 or in the Limited 12 Partnership Act of the jurisdiction in which the party was 13 formed, as the case may be, as if the merged party were 14 dissolved. 15 (e) A partner of a party to a merger who does not become 16 a partner of the surviving partnership or limited partnership 17 is dissociated from the entity, of which that partner was a 18 partner, as of the date the merger takes effect. The 19 surviving entity shall cause the partner's interest in the 20 entity to be purchased under Section 701 of this Act or 21 another statute specifically applicable to that partner's 22 interest with respect to a merger. The surviving entity is 23 bound under Section 702 by an act of a general partner 24 dissociated under this subsection, and the partner is liable 25 under Section 703 for transactions entered into by the 26 surviving entity after the merger takes effect. 27 Section 907. Statement of merger. 28 (a) After a merger, the surviving partnership or limited 29 partnership may file a statement that one or more 30 partnerships or limited partnerships have merged into the 31 surviving entity. 32 (b) A statement of merger must contain: 33 (1) the name of each partnership or limited SB2049 Engrossed -47- LRB9216008DJgc 1 partnership that is a party to the merger; 2 (2) the name of the surviving entity into which the 3 other partnerships or limited partnerships were merged; 4 (3) the street address of the surviving entity's 5 chief executive office and of an office in this State, if 6 any; and 7 (4) whether the surviving entity is a partnership 8 or a limited partnership. 9 (c) Except as otherwise provided in subsection (d) of 10 this Section, for the purposes of Section 302, property of 11 the surviving partnership or limited partnership which before 12 the merger was held in the name of another party to the 13 merger is property held in the name of the surviving entity 14 upon filing a statement of merger. 15 (d) For the purposes of Section 302, real property of 16 the surviving partnership or limited partnership which before 17 the merger was held in the name of another party to the 18 merger is property held in the name of the surviving entity 19 upon recording a certified copy of the statement of merger in 20 the office for recording transfers of that real property. 21 (e) A filed and, if appropriate, recorded statement of 22 merger, executed and declared to be accurate pursuant to 23 Section 105(c), stating the name of a partnership or limited 24 partnership that is a party to the merger in whose name 25 property was held before the merger and the name of the 26 surviving entity, but not containing all of the other 27 information required by subsection (b) of this Section, 28 operates with respect to the partnerships or limited 29 partnerships named to the extent provided in subsections (c) 30 and (d). 31 Section 908. Merger of partnership and limited liability 32 company. 33 (a) Under a plan of merger approved under subsection (c) SB2049 Engrossed -48- LRB9216008DJgc 1 of this Section, any one or more partnerships of this State 2 may merge with or into one or more limited liability 3 companies of this State, any other state or states of the 4 United States, or the District of Columbia, if the laws of 5 the other state or states or the District of Columbia permit 6 the merger. The partnership or partnerships and the limited 7 liability company or companies may merge with or into a 8 partnership, which may be any one of these partnerships, or 9 they may merge with or into a limited liability company, 10 which may be any one of these limited liability companies, 11 which shall be a partnership or limited liability company of 12 this State, any other state of the United States, or the 13 District of Columbia, which permits the merger. 14 (b) A plan of merger must set forth all of the 15 following: 16 (1) The name of each entity that is a party to the 17 merger. 18 (2) The name of the surviving entity into which the 19 other entities will merge. 20 (3) The type of organization of the surviving 21 entity. 22 (4) The terms and conditions of the merger. 23 (5) The manner and basis for converting the 24 interests of each party to the merger into interests, 25 obligations, or other securities of the surviving entity, 26 or into money or other property in whole or in part. 27 (6) The street address of the surviving entity's 28 principal place of business. 29 (c) The plan of merger required by subsection (b) of 30 this Section must be approved by each party to the merger in 31 accordance with all of the following: 32 (1) In the case of a partnership, by all of the 33 partners or by the number or percentage of the partners 34 required to approve a merger specified in the partnership SB2049 Engrossed -49- LRB9216008DJgc 1 agreement. 2 (2) In the case of a limited liability company, by 3 all members or by the number or percentage of members 4 required to approve a merger specified in the operating 5 agreement. 6 (d) After a plan of merger is approved and before the 7 merger takes effect, the plan may be amended or abandoned as 8 provided in the plan of merger. 9 (e) After approval of the plan of merger under this 10 Section, unless the merger is abandoned under subsection (d) 11 of this Section, a statement of merger must be signed on 12 behalf of each party to the merger and delivered to the 13 Secretary of State of this State for filing. The statement of 14 merger must set forth all of the following: 15 (1) The name and, in the case of a limited 16 liability partnership, jurisdiction of each partnership 17 and the name and jurisdiction of organization of each 18 limited liability company that is a party to the merger. 19 (2) That a plan of merger has been approved and 20 signed by each partnership and each limited liability 21 company that is a party to the merger. 22 (3) The name and address of the surviving 23 partnership or surviving limited liability company. 24 (4) The effective date of the merger. 25 (5) If a party to the merger is a foreign limited 26 liability company or a foreign limited liability 27 partnership, the jurisdiction and date of the filing of 28 its articles of organization or statement of 29 qualification, as the case may be, and the date when its 30 application for authority was filed with the Secretary of 31 State of this State or, if an application has not been 32 filed, a statement to that effect. 33 (6) If the surviving entity is not a partnership or 34 limited liability company organized under the laws of SB2049 Engrossed -50- LRB9216008DJgc 1 this State, an agreement that the surviving entity may be 2 served with process in this State and is subject to 3 liability in any action or proceeding for the enforcement 4 of any liability or obligation of any partnership or 5 limited liability company which is a party to the merger 6 or which was previously subject to suit in this State, 7 and for the enforcement, as provided in this Act, of the 8 right of partners of any partnership or members of any 9 limited liability company to receive payment for their 10 interests in the partnership or limited liability 11 company, as the case may be, against the surviving 12 entity. 13 (f) If a foreign limited liability company or a foreign 14 limited liability partnership is the surviving entity of a 15 merger, it may not do business in this State until an 16 application for that authority is filed with the Secretary of 17 State. 18 (g) The surviving partnership or other entity shall 19 furnish a copy of the plan of merger, on request, and without 20 cost, to any person holding an interest in an entity that is 21 to merge. 22 (h) To the extent that the statement of merger is 23 inconsistent with the articles of organization of a limited 24 liability company or the statement of qualification of a 25 limited liability partnership, the statement of merger shall 26 operate as an amendment to the articles of organization or 27 statement of qualification, as the case may be. 28 (i) The merger is effective upon the filing of the 29 statement of merger with the Secretary of State of this 30 State, or on a later date as specified in the statement of 31 merger not later than 30 days subsequent to the filing of the 32 statement of merger under subsection (e) of this Section. 33 (j) When any merger becomes effective under this 34 Section: SB2049 Engrossed -51- LRB9216008DJgc 1 (1) the separate existence of each partnership and 2 each limited liability company that is a party to the 3 merger, other than the surviving entity, terminates; 4 (2) all property owned by each partnership and each 5 limited liability company that is a party to the merger 6 vests in the surviving entity; 7 (3) all debts, liabilities, and other obligations 8 of each partnership and each limited liability company 9 that is a party to the merger become the obligations of 10 the surviving entity; 11 (4) an action or proceeding by or against a 12 partnership or limited liability company that is a party 13 to the merger may be continued as if the merger had not 14 occurred or the surviving entity may be substituted as a 15 party to the action or proceeding; and 16 (5) except as prohibited by other law, all the 17 rights, privileges, immunities, powers, and purposes of 18 each partnership and limited liability company that is a 19 party to the merger vest in the surviving entity. 20 (k) The Secretary of State of this State is an agent for 21 service of process in an action or proceeding against any 22 surviving foreign entity to enforce an obligation of any 23 party to a merger if the surviving foreign entity fails to 24 appoint or maintain an agent designated for service of 25 process in this State or the agent for service of process 26 cannot with reasonable diligence be found at the designated 27 office. Service is effected under this subsection (k) at the 28 earliest of: 29 (1) the date the surviving entity receives the 30 process notice or demand; 31 (2) the date shown on the return receipt, if signed 32 on behalf of the surviving entity; or 33 (3) 5 days after its deposit in the mail, if mailed 34 postpaid and correctly addressed. SB2049 Engrossed -52- LRB9216008DJgc 1 (l) Service under subsection (k) of this Section shall 2 be made by the person instituting the action by doing all of 3 the following: 4 (1) Serving on the Secretary of State of this 5 State, or on any employee having responsibility for 6 administering this Act in his or her office, a copy of 7 the process, notice, or demand, together with any papers 8 required by law to be delivered in connection with 9 service and paying the fee prescribed by Section 108 of 10 this Act. 11 (2) Transmitting notice of the service on the 12 Secretary of State of this State and a copy of the 13 process, notice, or demand and accompanying papers to the 14 surviving entity being served, by registered or certified 15 mail at the address set forth in the statement of merger. 16 (3) Attaching an affidavit of compliance with this 17 Section, in substantially the form that the Secretary of 18 State of this State may by rule prescribe, to the 19 process, notice, or demand. 20 (m) Nothing contained in this Section shall limit or 21 affect the right to serve any process, notice, or demand 22 required or permitted by law to be served upon a partnership 23 in any other manner now or hereafter permitted by law. 24 (n) The Secretary of State of this State shall keep, for 25 a period of 5 years from the date of service, a record of all 26 processes, notices, and demands served upon him or her under 27 this Section and shall record the time of the service and the 28 person's action with reference to the service. 29 (o) Except as provided by agreement with a person to 30 whom a partner of a partnership is obligated, a merger of a 31 partnership that has become effective shall not affect any 32 obligation or liability existing at the time of the merger of 33 a partner of a partnership that is merging. SB2049 Engrossed -53- LRB9216008DJgc 1 Section 909. Approval of conversion into a limited 2 liability company. A partnership may convert into a limited 3 liability company organized, formed, or created under the 4 laws of this State, upon approval of the conversion in 5 accordance with this Section. The terms and conditions of a 6 conversion of a partnership to a limited liability company 7 must be approved by all of the partners or by a number or 8 percentage of the partners required for conversion in the 9 partnership agreement. 10 After a conversion is approved, the partnership shall 11 file articles of organization in the Office of the Secretary 12 of State in accordance with subsection (d) of Section 37-10 13 of the Limited Liability Company Act. 14 Section 910. Nonexclusive. This Article is not exclusive. 15 Partnerships or limited partnerships may be converted or 16 merged in any other manner provided by law. 17 ARTICLE 10 18 LIMITED LIABILITY PARTNERSHIP 19 Section 1001. Statement of qualification. 20 (a) A partnership may become a limited liability 21 partnership pursuant to this Section. 22 (b) The terms and conditions on which a partnership 23 becomes a limited liability partnership must be approved by 24 the vote necessary to amend the partnership agreement except, 25 in the case of a partnership agreement that expressly 26 considers obligations to contribute to the partnership, the 27 vote necessary to amend those provisions. 28 (c) After the approval required by subsection (b) of 29 this Section, a partnership may become a limited liability 30 partnership by filing a statement of qualification with the 31 Secretary of State. The statement must contain: SB2049 Engrossed -54- LRB9216008DJgc 1 (1) the name of the partnership; 2 (2) the street address of the partnership's chief 3 executive office and, if different, the street address of 4 an office in this State, if any; 5 (3) the name and street address of the 6 partnership's agent for service of process; 7 (4) the number of partners; 8 (5) a brief statement of the business in which the 9 partnership engages; 10 (6) a statement that the partnership applies for 11 qualification as a limited liability partnership; and 12 (7) a deferred effective date, if any, of an 13 application for status as a limited liability 14 partnership. 15 (d) The agent of a limited liability partnership for 16 service of process must be an individual who is a resident of 17 this State or other person authorized to do business in this 18 State. 19 (e) The status of a partnership as a limited liability 20 partnership is effective on the later of the filing of the 21 statement or a date specified in the statement and the 22 receipt by the Secretary of State of the required fee. The 23 status remains effective for one year after the date a 24 statement of qualification is filed, regardless of changes in 25 the partnership, unless the partnership voluntarily withdraws 26 by filing a statement of withdrawal, in which event the 27 status of the partnership as a limited liability partnership 28 shall terminate on the date such statement is filed or, if 29 later, a date specified on the statement. 30 (f) The status of a partnership as a limited liability 31 partnership and the liability of its partners is not affected 32 by errors or later changes in the information required to be 33 contained in the statement of qualification under subsection 34 (c) of this Section. SB2049 Engrossed -55- LRB9216008DJgc 1 (g) The filing of a statement of qualification 2 establishes that a partnership has satisfied all conditions 3 precedent to the qualification of the partnership as a 4 limited liability partnership. 5 (h) An amendment or cancellation of a statement of 6 qualification is effective when it is filed or on a deferred 7 effective date specified in the amendment or cancellation. 8 (i) The Secretary of State shall register as a limited 9 liability partnership any partnership that submits a 10 completed application with the required fee. 11 (j) The Secretary of State shall provide statements for 12 registration application, renewal of registration and 13 voluntary cancellation. 14 Section 1002. Name. The name of a limited liability 15 partnership must end with "Registered Limited Liability 16 Partnership", "Limited Liability Partnership", "R.L.L.P.", 17 "L.L.P.", "RLLP", or "LLP". 18 Section 1003. Renewal statements. 19 (a) A limited liability partnership, and a foreign 20 limited liability partnership authorized to transact business 21 in this State, shall file a renewal statement in the Office 22 of the Secretary of State which contains: 23 (1) the name of the partnership; 24 (2) the street address of the partnership's chief 25 executive office and, if different, the street address of 26 an office in this State, if any; 27 (3) the name and street address of the 28 partnership's agent for service of process; 29 (4) if the partnership is a domestic limited 30 liability partnership, the number of partners; 31 (5) a brief statement of the business in which the 32 partnership engages; and SB2049 Engrossed -56- LRB9216008DJgc 1 (6) if the partnership is a foreign limited 2 liability partnership, a current certificate of status in 3 good standing as a registered limited liability 4 partnership under the laws of that state or jurisdiction. 5 (b) Qualification as a limited liability partnership, 6 whether pursuant to an original statement or a renewal 7 statement, is renewed if, during the 60 day period preceding 8 the date the initial statement or renewal statement otherwise 9 would have expired, the partnership files with the Secretary 10 of State a renewal statement. A renewal statement expires one 11 year after the date an original statement would have expired 12 if the last renewal of the statement had not occurred. 13 (c) The Secretary of State shall renew the registration 14 of any limited liability partnership of any partnership that 15 submits a renewal statement with the required fee. 16 ARTICLE 11 17 FOREIGN LIMITED LIABILITY PARTNERSHIP 18 Section 1101. Law governing foreign limited liability 19 partnership. 20 (a) The law under which a foreign limited liability 21 partnership is formed governs relations among the partners 22 and between the partners and the partnership and the 23 liability of partners for obligations of the partnership. 24 (b) A foreign limited liability partnership may not be 25 denied a statement of foreign qualification by reason of any 26 difference between the law under which the partnership was 27 formed and the law of this State. 28 (c) A statement of foreign qualification does not 29 authorize a foreign limited liability partnership to engage 30 in any business or exercise any power that a partnership may 31 not engage in or exercise in this State as a limited 32 liability partnership. SB2049 Engrossed -57- LRB9216008DJgc 1 Section 1102. Statement of foreign qualification. 2 (a) Before transacting or continuing to transact 3 business in this State, a foreign limited liability 4 partnership must file a statement of qualification or a 5 renewal statement under Section 1001; provided, however, that 6 the statement must contain: 7 (1) the name of the foreign limited liability 8 partnership which satisfies the requirements of the state 9 or other jurisdiction under whose law it is formed and 10 ends with "Registered Limited Liability Partnership", 11 "Limited Liability Partnership", "R.L.L.P.", "L.L.P.", 12 "RLLP", or "LLP"; 13 (2) the street address of the partnership's chief 14 executive office and, if different, the street address of 15 an office of the partnership in this State, if any; 16 (3) the name and street address of the 17 partnership's agent for service of process; 18 (4) a brief statement of the business in which the 19 partnership engages; 20 (5) a deferred effective date, if any; and 21 (6) a document or documents sufficient under the 22 laws of the state or jurisdiction in which the limited 23 liability partnership is organized to constitute official 24 certification of current status in good standing as a 25 registered limited liability partnership under the laws 26 of that state or jurisdiction. 27 (b) A foreign partnership may not use an assumed or 28 fictitious name in the conduct of its business to 29 intentionally misrepresent the geographic origin or location 30 of the partnership. This subsection (b) does not apply to any 31 foreign limited liability partnership that has gross annual 32 revenues in excess of $100,000,000. 33 (c) A person shall not advertise or cause to be listed 34 in a telephone directory an assumed or fictitious business SB2049 Engrossed -58- LRB9216008DJgc 1 name that intentionally misrepresents where the business is 2 actually located or operating or falsely states that the 3 business is located or operating in the area covered by the 4 telephone directory. This subsection (c) does not apply to a 5 telephone service provider or to the publisher or distributor 6 of a telephone service directory, unless the conduct 7 prescribed in this subsection (c) is on behalf of that 8 telephone service provider or that publisher or distributor. 9 This subsection (c) does not apply to any foreign limited 10 liability partnership that has gross annual revenues in 11 excess of $100,000,000. 12 (d) A foreign limited liability partnership that 13 violates this Section is guilty of a petty offense and must 14 be fined not less than $501 and not more than $1,000. A 15 foreign limited liability partnership is guilty of an 16 additional offense for each additional day in violation of 17 this Section. 18 (e) The agent of a foreign limited liability partnership 19 for service of process must be an individual who is a 20 resident of this State or other person authorized to do 21 business in this State. 22 (f) The status of a partnership as a foreign limited 23 liability partnership is effective on the later of the filing 24 of the statement of foreign qualification or a date specified 25 in the statement. The status remains effective, regardless of 26 changes in the partnership, unless the partnership 27 voluntarily withdraws by filing a statement of withdrawal, in 28 which event the status of the partnership as a foreign 29 limited liability partnership shall terminate on the date 30 such statement is filed or, if later, a date specified on the 31 statement. 32 (g) An amendment or cancellation of a statement of 33 foreign qualification is effective when it is filed or on a 34 deferred effective date specified in the amendment or SB2049 Engrossed -59- LRB9216008DJgc 1 cancellation. 2 (h) The Secretary of State shall register as a limited 3 liability partnership any foreign limited liability 4 partnership that submits a completed application with the 5 required fee. 6 Section 1103. Effect of failure to qualify. 7 (a) A foreign limited liability partnership transacting 8 business in this State may not maintain an action or 9 proceeding in this State unless it has in effect a statement 10 of foreign qualification. 11 (b) The failure of a foreign limited liability 12 partnership to have in effect a statement of foreign 13 qualification does not impair the validity of a contract or 14 act of the foreign limited liability partnership or preclude 15 it from defending an action or proceeding in this State. 16 (c) A limitation on personal liability of a partner is 17 not waived solely by transacting business in this State 18 without a statement of foreign qualification. 19 (d) If a foreign limited liability partnership transacts 20 business in this State without a statement of foreign 21 qualification, the Secretary of State is its agent for 22 service of process with respect to a right of action arising 23 out of the transaction of business in this State. 24 Section 1104. Activities not constituting transacting 25 business. 26 (a) Activities of a foreign limited liability 27 partnership which do not constitute transacting business for 28 the purpose of this Article include: 29 (1) maintaining, defending, or settling an action 30 or proceeding; 31 (2) holding meetings of its partners or carrying on 32 any other activity concerning its internal affairs; SB2049 Engrossed -60- LRB9216008DJgc 1 (3) maintaining bank accounts; 2 (4) maintaining offices or agencies for the 3 transfer, exchange, and registration of the partnership's 4 own securities or maintaining trustees or depositories 5 with respect to those securities; 6 (5) selling through independent contractors; 7 (6) soliciting or obtaining orders, whether by mail 8 or through employees or agents or otherwise, if the 9 orders require acceptance outside this State before they 10 become contracts; 11 (7) creating or acquiring indebtedness, with or 12 without a mortgage, or other security interest in 13 property; 14 (8) collecting debts or foreclosing mortgages or 15 other security interests in property securing the debts, 16 and holding, protecting, and maintaining property so 17 acquired; 18 (9) conducting an isolated transaction that is 19 completed within 30 days and is not one in the course of 20 similar transactions; and 21 (10) transacting business in interstate commerce. 22 (b) For purposes of this Article, the ownership in this 23 State of income-producing real property or tangible personal 24 property, other than property excluded under subsection (a) 25 of this Section, constitutes transacting business in this 26 State. 27 (c) This Section does not apply in determining the 28 contacts or activities that may subject a foreign limited 29 liability partnership to service of process, taxation, or 30 regulation under any other law of this State. 31 Section 1105. Action by Attorney General. The Attorney 32 General may maintain an action to restrain a foreign limited 33 liability partnership from transacting business in this State SB2049 Engrossed -61- LRB9216008DJgc 1 in violation of this Article. 2 ARTICLE 12 3 MISCELLANEOUS PROVISIONS 4 Section 1201. Uniformity of application and construction. 5 This Act shall be applied and construed to effectuate its 6 general purpose to make uniform the law with respect to the 7 subject of this Act among States enacting it. 8 Section 1202. Short title. (See Section 100 for short 9 title.) 10 Section 1203. Severability clause. If any provision of 11 this Act or its application to any person or circumstance is 12 held invalid, the invalidity does not affect other provisions 13 or applications of this Act which can be given effect without 14 the invalid provision or application, and to this end the 15 provisions of this Act are severable. 16 Section 1204. Effective date. (See Section 1299 for 17 effective date.) 18 Section 1205. Repealer. (See Section 1290 for repeals.) 19 Section 1206. Applicability. 20 (a) Before January 1, 2008, this Act governs only a 21 partnership formed: 22 (1) on or after January 1, 2003, except a 23 partnership that is continuing the business of a 24 dissolved partnership under Section 33 of the superseded 25 Uniform Partnership Act; and 26 (2) before January 1, 2003, that elects, as 27 provided by subsection (c) of this Section, to be SB2049 Engrossed -62- LRB9216008DJgc 1 governed by this Act. 2 (b) On and after January 1, 2008, this Act governs all 3 partnerships. 4 (c) Before January 1, 2008, a partnership voluntarily 5 may elect, in the manner provided in its partnership 6 agreement or by law for amending the partnership agreement, 7 to be governed by this Act. The provisions of this Act 8 relating to the liability of the partnership's partners to 9 third parties apply to limit those partners' liability to a 10 third party who had done business with the partnership within 11 one year before the partnership's election to be governed by 12 this Act only if the third party knows or has received a 13 notification of the partnership's election to be governed by 14 this Act. 15 Section 1207. Savings clause. This Act does not affect an 16 action or proceeding commenced or right accrued before this 17 Act takes effect. 18 Section 1290. The Uniform Partnership Act is amended by 19 adding Part VII as follows: 20 (805 ILCS 205/Part VII heading new) 21 PART VII. APPLICABILITY; REPEAL 22 (805 ILCS 205/90 new) 23 Sec. 90. Applicability of Act. 24 (a) Except as provided in subsection (b), this Act 25 governs a partnership formed before January 1, 2003. This 26 Act governs a partnership formed after December 31, 2002 and 27 before January 1, 2008 only if that partnership is continuing 28 the business of a dissolved partnership under Section 33. A 29 partnership may not be formed under this Act on or after 30 January 1, 2003 unless it is continuing the business of a SB2049 Engrossed -63- LRB9216008DJgc 1 dissolved partnership under Section 33. 2 (b) A partnership formed before January 1, 2003 may 3 voluntarily elect to be governed, before January 1, 2008, by 4 the Uniform Partnership Act (1997) as provided in Section 5 1206 of that Act. 6 (805 ILCS 205/95 new) 7 Sec. 95. Repeal. This Act is repealed on January 1, 8 2008. 9 Section 1295. The Revised Uniform Limited Partnership 10 Act is amended by changing Sections 201 and 1204 and adding 11 Section 805 as follows: 12 (805 ILCS 210/201) (from Ch. 106 1/2, par. 152-1) 13 Sec. 201. Certificate of Limited Partnership. 14 (a) In order to form a limited partnership, a 15 certificate of limited partnership must be executed and filed 16 in the office of the Secretary of State in Springfield or 17 Chicago. Certificates may be filed in such additional 18 offices as the Secretary of State may designate. The 19 certificate shall set forth: 20 (1) the name of the limited partnership; 21 (2) the purposes for which the partnership is 22 formed, which may be stated to be, or to include, the 23 transaction of any or all lawful businesses for which 24 limited partnerships may be formed under this Act; 25 (3) the address of the office at which the records 26 required to be maintained by Section 104 are kept and the 27 name of its registered agent and the address of its 28 registered office required to be maintained by Section 29 103; 30 (4) the name and business address of each general 31 partner; SB2049 Engrossed -64- LRB9216008DJgc 1 (5) the latest date, if any, upon which the limited 2 partnership is to dissolve; 3 (6) any other matters the partners determine to 4 include therein; and 5 (7) any other information the Secretary of State 6 shall by rule deem necessary to administer this Act. 7 (b) A limited partnership is formed at the time of the 8 filing of the certificate of limited partnership in the 9 office of the Secretary of State or at any later time, not 10 more than 60 days subsequent to the filing of the certificate 11 of limited partnership, specified in the certificate of 12 limited partnership if, in either case, there has been 13 substantial compliance with the requirements of this Section. 14 (c) A limited partnership may be formed by converting a 15 partnership to a limited partnership as provided in Section 16 902 of the Uniform Partnership Act (1997). 17 (Source: P.A. 92-33, eff. 7-1-01.) 18 (805 ILCS 210/805 new) 19 Sec. 805. Conversion to partnership. A limited 20 partnership may be converted to a partnership as provided in 21 Section 903 of the Uniform Partnership Act (1997). 22 (805 ILCS 210/1204) (from Ch. 106 1/2, par. 162-4) 23 Sec. 1204. Rules for Cases Not Provided for in this Act. 24 Before January 1, 2008, in any case not provided for in this 25 Act the provisions of the Uniform Partnership Act govern if 26 that Act is otherwise applicable as provided in Section 90 of 27 that Act. After December 31, 2002, in any case not provided 28 for in this Act, the provisions of the Uniform Partnership 29 Act (1997) govern if that Act is otherwise applicable as 30 provided in Section 1206 of that Act. 31 (Source: P.A. 84-1412.) SB2049 Engrossed -65- LRB9216008DJgc 1 Section 1299. Effective date. This Act takes effect on 2 January 1, 2003.