00 SENATE BILL NO. 348 01 "An Act relating to partnerships; amending Alaska Rules of Civil Procedure 20 02 and 24; and providing for an effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 32.05.010(a) is amended to read: 05  (a) A partnership is an association of two or more persons to carry on as 06 co-owners a business for profit, and includes a registered limited liability 07 partnership. 08 * Sec. 2. AS 32.05.100 is amended to read: 09  Sec. 32.05.100. JOINT AND SEVERAL LIABILITY OF PARTNERS. 10 Except as provided in (b) of this section, all [ALL] partners are liable 11  (1) jointly and severally for everything chargeable to the partnership 12 under AS 32.05.080 and 32.05.090; 13  (2) jointly for all other debts and obligations of the partnership; but any 14 partner may enter into a separate obligation to perform a partnership contract. 01 * Sec. 3. AS 32.05.100 is amended by adding new subsections to read: 02  (b) A partner in a registered limited liability partnership is not liable, directly 03 or indirectly, including through indemnification, contribution, assessment, or other 04 manner, for the debts, obligations, and liabilities of, or chargeable to, the partnership, 05 whether in tort, in contract, or under another theory that arise from negligence, 06 wrongful acts, wrongful omissions, malpractice, or misconduct committed by another 07 partner or by an employee or agent of the partnership 08  (1) while the partnership is a registered limited liability partnership; and 09  (2) in the course of the partnership business. 10  (c) The liability limitation in (b) of this section does not affect the liability of 11 a partner in a registered limited liability partnership for the partner's own negligence, 12 wrongful acts, wrongful omissions, malpractice, or misconduct, or the negligence, 13 wrongful acts, wrongful omissions, malpractice, or misconduct of a person under the 14 partner's direct supervision and control. 15 * Sec. 4. AS 32.05.130 is amended to read: 16  Sec. 32.05.130. RULES DETERMINING RIGHTS AND DUTIES OF 17 PARTNERS. The rights and duties of the partners in relation to the partnership shall 18 be determined, subject to any agreement between them, by the following rules: 19  (1) each partner shall be repaid the partner's contributions, whether by 20 way of capital or advances to the partnership property, and shares [SHARE] equally 21 in the profits and surplus remaining after all liabilities, including those to partners, are 22 satisfied; and, except as provided in AS 32.05.100(b), shall contribute towards the 23 losses, whether of capital or otherwise, sustained by the partnership according to the 24 partner's share in the profits; 25  (2) the partnership shall indemnify every partner in respect of payments 26 made and personal liabilities reasonably incurred by the partner in the ordinary and 27 proper conduct of its business, or for the preservation of its business or property; 28  (3) a partner who in aid of the partnership makes a payment or advance 29 beyond the amount of capital that the partner agreed to contribute shall be paid interest 30 from the date of the payment or advance; 31  (4) a partner shall receive interest on the capital contributed by the 01 partner only from the date when repayment should be made; 02  (5) all partners have equal rights in the management and conduct of the 03 partnership business; 04  (6) a partner is not entitled to remuneration for acting in the partnership 05 business, except that a surviving partner is entitled to reasonable compensation for 06 services in winding up the partnership affairs; 07  (7) a person may not become a member of a partnership without the 08 consent of all the partners; 09  (8) any difference arising as to ordinary matters connected with the 10 partnership business may be decided by a majority of the partners; but an act in 11 contravention of an agreement between the partners may not be done rightfully without 12 the consent of all the partners. 13 * Sec. 5. AS 32.05.290 is amended to read: 14  Sec. 32.05.290. PARTNER'S RIGHT TO CONTRIBUTION FROM 15 COPARTNERS AFTER DISSOLUTION. Where the dissolution is caused by the act, 16 death, or bankruptcy of a partner, each partner is liable to the copartners for the 17 partner's share of any liability created by a partner acting for the partnership as if the 18 partnership had not been dissolved unless 19  (1) the dissolution being by act of a partner, the partner acting for the 20 partnership had knowledge of the dissolution; [OR] 21  (2) the dissolution being by the death or bankruptcy of a partner, the 22 partner acting for the partnership had knowledge or notice of the death or bankruptcy; 23 or 24  (3) the liability is for a debt, obligation, or liability for which the 25 partner is not liable under AS 32.05.100(b). 26 * Sec. 6. AS 32.05.310(d) is amended to read: 27  (d) The individual property of a deceased partner is liable for the [ALL] 28 obligations of the partnership incurred while the decedent was a partner and for which 29 the partner is liable under AS 32.05.100 but subject to the prior payment of the 30 decedent's separate debts. 31 * Sec. 7. AS 32.05.350 is amended to read: 01  Sec. 32.05.350. RULES FOR SETTLING ACCOUNTS FOLLOWING 02 DISTRIBUTION. In settling accounts between the partners after dissolution, the 03 following rules shall be observed, subject to any agreement to the contrary: 04  (1) the assets of the partnership are 05  (A) the partnership property; 06  (B) the contributions of the partners as [NECESSARY FOR 07 THE PAYMENT OF ALL THE LIABILITIES] specified in (4) [(2)] of this 08 section; 09  (2) the liabilities of the partnership [SHALL] rank in order of payment 10 as follows: 11  (A) those owing to creditors other than partners; 12  (B) those owing to partners other than for capital and profits; 13  (C) those owing to partners in respect of capital; 14  (D) those owing to partners in respect of profits; 15  (3) the assets shall be applied in the order of their declaration in (1) of 16 this section to the satisfaction of the liabilities; 17  (4) except to the extent the liability of a partner is limited under 18 AS 32.05.100(b), 19  (A) the partners shall contribute, as provided by 20 AS 32.05.130(1), the amount necessary to satisfy the liabilities; 21  (B) [, BUT] if any, but not all, of the partners is [ARE] 22 insolvent, or not being subject to process, refuses [REFUSE] to contribute, the 23 other partners shall contribute their share of the liabilities, and, in the relative 24 proportions in which they share the profits the additional amount necessary to 25 pay the liabilities; 26  (5) an assignee for the benefit of creditors or any person appointed by 27 the court may enforce the contributions specified in (4) of this section; 28  (6) a partner or the legal representative of a partner may enforce the 29 contributions specified in (4) of this section, to the extent of the amount that the 30 partner has paid in excess of the partner's share of the liability; 31  (7) the individual property of a deceased partner is liable for the 01 contributions specified in (4) of this section; 02  (8) when partnership property and the individual properties of the 03 partners are in the possession of a court for distribution, partnership creditors shall 04 have priority on partnership property and separate creditors on individual property, 05 saving the rights of lien or secured creditors as heretofore; 06  (9) where a partner has become bankrupt or the estate of a partner is 07 insolvent the claims against the partner's separate property [SHALL] rank in the 08 following order: 09  (A) those owing to separate creditors; 10  (B) those owing to partnership creditors; 11  (C) those owing to partners by way of contribution. 12 * Sec. 8. AS 32.05 is amended by adding a new section to read: 13  Sec. 32.05.405. COMMERCE OUTSIDE THE STATE. (a) A partnership that 14 is formed and operates under an agreement governed by this chapter may conduct its 15 business, carry on its operations, and has and may exercise the powers granted by this 16 chapter in a state, territory, district, or possession of the United States or in a foreign 17 country. 18  (b) It is the intent of this chapter that the legal existence of a partnership be 19 recognized outside the boundaries of the state and that a partnership transacting 20 business outside the state be granted the protection of art. IV, sec. 1, Constitution of 21 the United States, subject to a reasonable requirement of registration. 22  (c) The liability of the partners in a partnership for the debts, obligations, and 23 liabilities of the partnership shall at all times be determined solely and exclusively by 24 the laws of this state. 25  (d) In this section, "partnership" means a partnership that is formed and 26 operates under an agreement governed by this chapter. 27 * Sec. 9. AS 32.05.420 is amended by adding new paragraphs to read: 28  (7) "partnership" includes a registered limited liability partnership; 29  (8) "registered limited liability partnership" means a partnership that is 30 registered under AS 32.05.500 - 32.05.600 and that is formed and operates under an 31 agreement governed by this chapter. 01 * Sec. 10. AS 32.05 is amended by adding new sections to read: 02 ARTICLE 7. LIMITED LIABILITY PARTNERSHIPS. 03  Sec. 32.05.500. REGISTRATION REQUIRED. A partnership that is formed 04 and operates under an agreement governed by this chapter may register as a registered 05 limited liability partnership by filing a registration document with the Department of 06 Commerce and Economic Development. 07  Sec. 32.05.510. CONTENTS OF REGISTRATION DOCUMENT. (a) A 08 registration document under AS 32.05.500 must provide 09  (1) the name of the partnership; 10  (2) the address of the partnership's principal office, if the partnership's 11 principal office is not located in this state; 12  (3) the address of the partnership's registered office; 13  (4) the name and address of the partnership's registered agent in the 14 state for the service of process; 15  (5) a brief description of the partnership's business; and 16  (6) a statement that the partnership is applying for the registration. 17  (b) A registered limited liability partnership may include other information in 18 the registration document. 19  Sec. 32.05.520. EFFECTIVE DATE AND DURATION OF REGISTRATION. 20 Registration under AS 32.05.500 is effective immediately when the registration 21 document is filed under AS 32.05.500. The registration remains effective until the 22 earlier of the date when the partnership 23  (1) voluntarily withdraws its registration under AS 32.05.570; or 24  (2) fails to file the report required under AS 32.05.530(a) within 30 25 days after the partnership receives a notice from the department under 26 AS 32.05.530(b). 27  Sec. 32.05.530. ANNUAL REPORT REQUIRED. (a) A registered limited 28 liability partnership shall file an annual report with the department that indicates any 29 material changes from the information contained in the partnership's registration 30 document filed under AS 32.05.500. The partnership shall file the report during the 31 last 60 days of each calendar year that follows the calendar year when the registration 01 document is filed under AS 32.05.500. 02  (b) If the department does not receive a report required by (a) of this section 03 within the filing period, the department shall notify the partnership by certified mail, 04 return receipt requested, that the department has not received the report. 05  Sec. 32.05.540. EXECUTION OF REGISTRATION DOCUMENT. A 06 registration document filed under AS 32.05.500 or 32.05.530 shall be executed by a 07 partner authorized to execute the application. 08  Sec. 32.05.550. REGISTERED AGENT AND OFFICE. A registered limited 09 liability partnership shall maintain in the state a registered office and an agent for the 10 service of process. 11  Sec. 32.05.560. NAME. The name of a registered limited liability partnership 12 must contain the words "Limited Liability Partnership," the abbreviation "L.L.P.," or 13 the abbreviation "LLP," as the last words or letters of its name. 14  Sec. 32.05.570. VOLUNTARY WITHDRAWAL OF REGISTRATION. A 15 registered limited liability partnership may withdraw its registration by filing with the 16 department a written withdrawal notice that is signed by a partner authorized to 17 execute the withdrawal notice. 18  Sec. 32.05.580. STATUS UNAFFECTED BY ERRORS OR SUBSEQUENT 19 CHANGES. The registration status of a registered limited liability partnership is not 20 affected by errors in the information provided in a registration application or by 21 changes that occur in the information provided in the registration application after the 22 application is filed. 23  Sec. 32.05.590. DEPARTMENT FORMS. The department may provide forms 24 for registration under AS 32.05.500 or for filing of a report under AS 32.05.530. 25  Sec. 32.05.600. FOREIGN LIMITED LIABILITY PARTNERSHIPS. (a) 26 Subject to another statute that applies to or regulates the partnership, a foreign limited 27 liability partnership may conduct business in this state. The partnership is not required 28 to register with the department under this chapter. 29  (b) The name of a foreign limited liability partnership must contain the words 30 "Limited Liability Partnership," the abbreviation "L.L.P.," or the abbreviation "LLP," 31 as the last words or letters of its name. 01  (c) The internal affairs of foreign limited liability partnerships, including the 02 liability of partners for the debts, obligations, and liabilities of, or chargeable to, the 03 partnership, are subject to and governed by the laws of the state where the partnership 04 is formed as a limited liability partnership. 05  (d) In this section, "foreign limited liability partnership" means a limited 06 liability partnership formed under an agreement governed by the laws of another 07 jurisdiction and conducting business in this state. 08  Sec. 32.05.610. PARTNERS AS PARTIES TO ACTIONS. A partner in a 09 registered limited liability partnership is not a proper party to a proceeding by or 10 against the partnership if the object of the proceeding is to enforce or to recover 11 damages for debts, obligations, or liabilities that are of the type that the partner is not 12 liable for under AS 32.05.100(b), unless the debts, obligations, and liabilities are of the 13 type for which the partner may be held liable under AS 32.05.100(c). 14 * Sec. 11. AMENDMENT OF COURT RULES. AS 32.05.610, enacted by sec. 10 of this 15 Act, amends 16 (1) Alaska Rule of Civil Procedure 20 because it effectively prohibits the 17 joinder of a partner in a registered limited liability partnership as a party in certain civil 18 actions; and 19 (2) Alaska Rule of Civil Procedure 24 because it effectively prohibits the 20 intervention of a partner in a registered limited liability partnership as a party in certain civil 21 actions. 22 * Sec. 12. This Act takes effect July 1, 1994.