SB 186: "An Act relating to partnerships; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date."
00SENATE BILL NO. 186 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 32.05.030 is amended by adding a new subsection to read: 09 (e) A registered limited liability partnership shall hold title to all partnership 10 property in the name of the registered limited liability partnership. 11 * Sec. 3. AS 32.05.100 is amended to read: 12 Sec. 32.05.100. JOINT AND SEVERAL LIABILITY OF PARTNERS. 13 Except as provided in (b) of this section, all [ALL] partners are liable 14 (1) jointly and severally for everything chargeable to the partnership
01 under AS 32.05.080 and 32.05.090; 02 (2) jointly for all other debts and obligations of the partnership; but any 03 partner may enter into a separate obligation to perform a partnership contract. 04 * Sec. 4. AS 32.05.100 is amended by adding new subsections to read: 05 (b) A partner in a registered limited liability partnership that is in substantial 06 compliance with AS 32.05.416 and 32.05.500 - 32.05.600 is not liable, directly or 07 indirectly, including through indemnification, contribution, assessment, or other 08 manner, for the debts, obligations, and liabilities of, or chargeable to, the partnership, 09 whether in tort, in contract, or under another theory, that arise from negligence, 10 wrongful acts, wrongful omissions, malpractice, or misconduct committed by another 11 partner or by an employee or agent of the partnership 12 (1) while the partnership is a registered limited liability partnership; and 13 (2) in the course of the partnership business. 14 (c) The liability limitation in (b) of this section does not affect the liability of 15 a partner in a registered limited liability partnership for the 16 (1) partner's own negligence, wrongful acts, wrongful omissions, 17 malpractice, or misconduct; 18 (2) negligence, wrongful acts, wrongful omissions, malpractice, or 19 misconduct in the course of the partnership business of a person under the partner's 20 direct supervision and control; or 21 (3) loans, leases, and other ordinary commercial debts and obligations 22 entered into by the partnership or by a partner with apparent authority to bind the 23 partnership, even if the partner lacked actual authority or acted in breach of the 24 partnership agreement or of a duty owed to the partnership or other partners, unless 25 the creditor knew, or in the exercise of reasonable diligence should have known, that 26 the partner was acting without actual authority or in breach of the partnership 27 agreement or of a duty owed to the partnership or other partners. 28 (d) The liability limitation in (b) of this section may be waived by a registered 29 limited liability partnership. The waiver may not be made unless made by the 30 agreement of at least a majority in interest of the partners, or in a manner otherwise 31 provided in a written partnership agreement. The waiver is valid and binding upon all
01 partners, and may be relied upon by a person dealing with the partnership under 02 AS 32.05.040(a). The waiver may be modified or revoked by the agreement of at least 03 a majority in interest of the partners, or in a manner otherwise provided in a written 04 partnership agreement, except that the modification or revocation does not affect the 05 liability of a partner for the debts, obligations, or liabilities incurred, created, or 06 assumed by the partnership before the modification or revocation. 07 * Sec. 5. AS 32.05.130 is amended to read: 08 Sec. 32.05.130. RULES DETERMINING RIGHTS AND DUTIES OF 09 PARTNERS. The rights and duties of the partners in relation to the partnership shall 10 be determined, subject to any agreement between them, by the following rules: 11 (1) each partner shall be repaid the partner's contributions, whether by 12 way of capital or advances to the partnership property, and shares [SHARE] equally 13 in the profits and surplus remaining after all liabilities, including those to partners, are 14 satisfied; and, except as provided in AS 32.05.100(b), shall contribute towards the 15 losses, whether of capital or otherwise, sustained by the partnership according to the 16 partner's share in the profits; 17 (2) the partnership shall indemnify every partner in respect of payments 18 made and personal liabilities reasonably incurred by the partner in the ordinary and 19 proper conduct of its business, or for the preservation of its business or property; 20 (3) a partner who in aid of the partnership makes a payment or advance 21 beyond the amount of capital that the partner agreed to contribute shall be paid interest 22 from the date of the payment or advance; 23 (4) a partner shall receive interest on the capital contributed by the 24 partner only from the date when repayment should be made; 25 (5) all partners have equal rights in the management and conduct of the 26 partnership business; 27 (6) a partner is not entitled to remuneration for acting in the partnership 28 business, except that a surviving partner is entitled to reasonable compensation for 29 services in winding up the partnership affairs; 30 (7) a person may not become a member of a partnership without the 31 consent of all the partners;
01 (8) any difference arising as to ordinary matters connected with the 02 partnership business may be decided by a majority of the partners; but an act in 03 contravention of an agreement between the partners may not be done rightfully without 04 the consent of all the partners. 05 * Sec. 6. AS 32.05.290 is amended to read: 06 Sec. 32.05.290. PARTNER'S RIGHT TO CONTRIBUTION FROM 07 COPARTNERS AFTER DISSOLUTION. Where the dissolution is caused by the act, 08 death, or bankruptcy of a partner, each partner is liable to the copartners for the 09 partner's share of any liability created by a partner acting for the partnership as if the 10 partnership had not been dissolved unless 11 (1) the dissolution being by act of a partner, the partner acting for the 12 partnership had knowledge of the dissolution; [OR] 13 (2) the dissolution being by the death or bankruptcy of a partner, the 14 partner acting for the partnership had knowledge or notice of the death or bankruptcy; 15 or 16 (3) the liability is for a debt, obligation, or liability for which the 17 partner is not liable under AS 32.05.100(b). 18 * Sec. 7. AS 32.05.310(d) is amended to read: 19 (d) The individual property of a deceased partner is liable for the [ALL] 20 obligations of the partnership incurred while the decedent was a partner and for which 21 the partner is liable under AS 32.05.100 but subject to the prior payment of the 22 decedent's separate debts. 23 * Sec. 8. AS 32.05.350 is amended to read: 24 Sec. 32.05.350. RULES FOR SETTLING ACCOUNTS FOLLOWING 25 DISTRIBUTION. In settling accounts between the partners after dissolution, the 26 following rules shall be observed, subject to any agreement to the contrary: 27 (1) the assets of the partnership are 28 (A) the partnership property; 29 (B) the contributions of the partners as [NECESSARY FOR 30 THE PAYMENT OF ALL THE LIABILITIES] specified in (4) [(2)] of this 31 section;
01 (2) the liabilities of the partnership [SHALL] rank in order of payment 02 as follows: 03 (A) those owing to creditors other than partners; 04 (B) those owing to partners other than for capital and profits; 05 (C) those owing to partners in respect of capital; 06 (D) those owing to partners in respect of profits; 07 (3) the assets shall be applied in the order of their declaration in (1) of 08 this section to the satisfaction of the liabilities; 09 (4) except to the extent the liability of a partner is limited under 10 AS 32.05.100(b), 11 (A) the partners shall contribute, as provided by 12 AS 32.05.130(1), the amount necessary to satisfy the liabilities; 13 (B) [, BUT] if any, but not all, of the partners is [ARE] 14 insolvent, or not being subject to process, refuses [REFUSE] to contribute, the 15 other partners shall contribute their share of the liabilities, and, in the relative 16 proportions in which they share the profits the additional amount necessary to 17 pay the liabilities; 18 (5) an assignee for the benefit of creditors or any person appointed by 19 the court may enforce the contributions specified in (4) of this section; 20 (6) a partner or the legal representative of a partner may enforce the 21 contributions specified in (4) of this section, to the extent of the amount that the 22 partner has paid in excess of the partner's share of the liability; 23 (7) the individual property of a deceased partner is liable for the 24 contributions specified in (4) of this section; 25 (8) when partnership property and the individual properties of the 26 partners are in the possession of a court for distribution, partnership creditors shall 27 have priority on partnership property and separate creditors on individual property, 28 saving the rights of lien or secured creditors as heretofore; 29 (9) where a partner has become bankrupt or the estate of a partner is 30 insolvent the claims against the partner's separate property [SHALL] rank in the 31 following order:
01 (A) those owing to separate creditors; 02 (B) those owing to partnership creditors; 03 (C) those owing to partners by way of contribution. 04 * Sec. 9. AS 32.05 is amended by adding a new section to read: 05 Sec. 32.05.405. COMMERCE OUTSIDE THE STATE. (a) A partnership that 06 is formed and operates under an agreement governed by this chapter may conduct its 07 business, carry on its operations, and has and may exercise the powers granted by this 08 chapter in a state, territory, district, or possession of the United States or in a foreign 09 country. 10 (b) It is the intent of this chapter that the legal existence of a partnership be 11 recognized outside the boundaries of the state and that a partnership transacting 12 business outside the state be granted the protection of art. IV, sec. 1, Constitution of 13 the United States, subject to a reasonable requirement of registration. 14 (c) The liability of the partners in a partnership for the debts, obligations, and 15 liabilities of the partnership shall at all times be determined solely and exclusively by 16 the laws of this state. 17 (d) In this section, "partnership" means a partnership that is formed and 18 operates under an agreement governed by this chapter. 19 * Sec. 10. AS 32.05 is amended by adding new sections to read: 20 Sec. 32.05.414. PARTNERS AS PARTIES TO ACTIONS. A partner in a 21 registered limited liability partnership or foreign limited liability partnership is not a 22 proper party to a proceeding by or against the partnership if the object of the 23 proceeding is to enforce or to recover damages for debts, obligations, or liabilities that 24 are of the type that the partner is not liable for under AS 32.05.100(b) or 32.05.600(e), 25 unless the debts, obligations, and liabilities are of the type for which the partner may 26 be held liable under AS 32.05.100(c) or 32.05.600(e). 27 Sec. 32.05.416. FINANCIAL RESPONSIBILITY. (a) A registered limited 28 liability partnership shall at all times have and maintain liability insurance or 29 qualifying assets in an amount of value not less than $1,000,000 to satisfy liabilities 30 described in AS 32.05.100(b). To the extent the partnership maintains insurance that 31 is subject to a deductible, it shall maintain qualifying assets in the deductible amount.
01 (b) A foreign limited liability partnership may conduct business in this state 02 under AS 32.05.600 if during the period it is conducting business in this state it has 03 and maintains liability insurance or qualifying assets in an amount of value not less 04 than $1,000,000 to satisfy liabilities that arise from 05 (1) acts or omissions in this state of the type described in 06 AS 32.05.100(b); or 07 (2) other conduct for which the liability of partners is limited under the 08 law of the jurisdiction in which the foreign limited liability partnership is organized. 09 (c) To the extent that a registered limited liability partnership or a foreign 10 limited liability partnership maintains liability insurance or qualifying assets under the 11 laws of another jurisdiction, the liability insurance or qualifying assets maintained 12 under those laws satisfy (a) - (b) of this section if the amount of the insurance or 13 assets is equal to or greater than the amount required by (a) - (b) of this section. 14 (d) In a court action against a registered limited liability partnership or foreign 15 limited liability partnership in the courts of this state, upon request of a party to the 16 court action and subject to an order of the court, the partnership shall provide a 17 certification stating that the partnership is in compliance with this section, describing 18 the method by which the partnership has complied with (a) - (c) of this section, and 19 identifying the depository institution holding the qualifying assets or insurance carrier 20 issuing the liability insurance specified in (a) - (c) of this section. 21 (e) If a registered limited liability partnership or foreign limited liability 22 partnership fails to maintain the insurance or qualifying assets required by (a) - (c) of 23 this section, the partners are jointly liable for the debts, obligations, and liabilities of 24 the partnership, except that the aggregate amount for which the partners are jointly 25 liable is limited to the amount of insurance or qualifying assets that would have been 26 required to satisfy the requirements of (a) - (c) of this section. 27 (f) In this section, "qualifying assets" means 28 (1) cash, federally insured deposits of a bank or other financial 29 institution, and obligations of the United States or one of its instrumentalities having 30 a maturity of not more than one year, if the partnership segregates the cash, deposits, 31 or obligations from other partnership property and specifically designates the cash,
01 deposits, or obligations for the exclusive purpose of satisfying liabilities described in 02 AS 32.05.100(b); or 03 (2) a letter of credit issued by a federally insured depository institution 04 for the benefit of persons in whose favor a judgment has been entered against the 05 partnership arising from liabilities described in AS 32.05.100(b). 06 * Sec. 11. AS 32.05.420 is amended to read: 07 Sec. 32.05.420. DEFINITIONS. In this chapter, 08 (1) "bankrupt" includes bankrupt under the Federal Bankruptcy Act or 09 insolvent under any state insolvent act; 10 (2) "business" includes every trade, occupation, or profession; 11 (3) "conveyance" includes every assignment, lease, mortgage, or 12 encumbrance; 13 (4) "court" includes every court and judge having jurisdiction in the 14 case; 15 (5) "department" means the Department of Commerce and 16 Economic Development; 17 (6) "foreign limited liability partnership" means a partnership that 18 is formed and operates under an agreement governed by the laws of another 19 jurisdiction and that is registered as a limited liability partnership in that 20 jurisdiction; 21 (7) "partnership" includes a registered limited liability partnership 22 unless the context indicates otherwise; 23 (8) ["PERSON" INCLUDES INDIVIDUALS, PARTNERSHIPS, 24 CORPORATIONS, AND OTHER ASSOCIATIONS; 25 (6)] "real property" includes land and any interest or estate in land; 26 (9) "registered limited liability partnership" means a partnership 27 that is registered in this state under AS 32.05.500 - 32.05.600 and that is formed 28 and operates under an agreement governed by this chapter. 29 * Sec. 12. AS 32.05 is amended by adding new sections to read: 30 ARTICLE 7. LIMITED LIABILITY PARTNERSHIPS. 31 Sec. 32.05.500. REGISTRATION REQUIRED. A partnership that is formed
01 and operates under an agreement governed by this chapter may register as a registered 02 limited liability partnership by filing a registration document with the Department of 03 Commerce and Economic Development. 04 Sec. 32.05.510. CONTENTS OF REGISTRATION DOCUMENT. (a) A 05 registration document under AS 32.05.500 must provide 06 (1) the name of the partnership; 07 (2) the address of the partnership's principal office, if the partnership's 08 principal office is not located in this state; 09 (3) the address of the partnership's registered office in this state; 10 (4) the name and address of the partnership's registered agent in the 11 state for the service of process; 12 (5) a brief description of the partnership's business; and 13 (6) a statement that the partnership is applying for registration. 14 (b) A registered limited liability partnership may include other information in 15 the registration document. 16 Sec. 32.05.520. EFFECTIVE DATE AND DURATION OF REGISTRATION. 17 Registration under AS 32.05.500 is effective immediately when the registration 18 document is filed under AS 32.05.500. The registration remains effective until the 19 earlier of the date when the partnership 20 (1) voluntarily withdraws its registration under AS 32.05.570; or 21 (2) fails to file the report required under AS 32.05.530(a) within 30 22 days after the partnership receives a notice from the department under 23 AS 32.05.530(b). 24 Sec. 32.05.530. ANNUAL REPORT REQUIRED. (a) A registered limited 25 liability partnership or foreign limited liability partnership shall file an annual report 26 with the department that indicates any material changes from the information contained 27 in the partnership's registration document filed under AS 32.05.500 or notice of foreign 28 limited liability partnership filed under AS 32.05.600. The partnership shall file the 29 report during the last 60 days of each calendar year that follows the calendar year 30 when the registration document is filed under AS 32.05.500 or the notice of foreign 31 limited liability partnership is filed under AS 32.05.600.
01 (b) If the department does not receive a report required by (a) of this section 02 within the filing period, the department shall notify the partnership by certified mail, 03 return receipt requested, that the department has not received the report. 04 Sec. 32.05.540. EXECUTION OF REGISTRATION DOCUMENT. A 05 registration document filed under AS 32.05.500 or an annual report filed under 06 AS 32.05.530 shall be executed by a partner authorized to execute the registration 07 document or annual report. 08 Sec. 32.05.550. REGISTERED AGENT AND OFFICE. A registered limited 09 liability partnership and a foreign limited liability partnership shall maintain in the 10 state a registered office and an agent for the 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, for filing a report under AS 32.05.530, or for 25 filing a notice of a foreign limited liability partnership under AS 32.05.600. 26 Sec. 32.05.600. FOREIGN LIMITED LIABILITY PARTNERSHIPS. (a) 27 Subject to another statute that applies to or regulates the partnership and to 28 AS 32.05.416, a foreign limited liability partnership may conduct business in this state. 29 The partnership shall file with the department a notice of foreign limited liability 30 partnership. The notice must state the information specified in AS 32.05.510(a)(1) - 31 (5), the jurisdiction where it is formed and registered as a limited liability partnership,
01 and a statement that the partnership is filing the notice. The notice shall be executed 02 by a partner authorized to execute it. 03 (b) The name of a foreign limited liability partnership must contain the words 04 "Limited Liability Partnership," the abbreviation "L.L.P.," or the abbreviation "LLP," 05 as the last words or letters of its name, or other similar words or abbreviations that are 06 required or permitted by the laws of the jurisdiction where it is formed and registered 07 as a limited liability partnership. 08 (c) A foreign limited liability partnership may voluntarily withdraw its notice 09 of foreign limited liability partnership by filing with the department a written 10 withdrawal notice that is executed by a partner authorized to execute the withdrawal 11 notice. 12 (d) A notice of foreign limited liability partnership is effective immediately 13 when filed and remains effective until the earlier of the date when the partnership 14 (1) voluntarily withdraws the notice under (c) of this section; or 15 (2) fails to file the report required under AS 32.05.530(a) within 30 16 days after the partnership receives a notice from the department under 17 AS 32.05.530(b). 18 (e) The internal affairs of foreign limited liability partnerships, and the liability 19 of partners for the debts, obligations, and liabilities of, or chargeable to, the 20 partnership, are subject to and governed by the laws of the state where the partnership 21 is formed as a limited liability partnership. This subsection is not intended to affect 22 the choice of law applicable to the liability of the partnership or to the liability of 23 partners for their own acts or omissions. 24 * Sec. 13. AMENDMENT OF COURT RULES. AS 32.05.414, enacted by sec. 10 of this 25 Act, amends 26 (1) Alaska Rule of Civil Procedure 20 because it effectively prohibits the 27 joinder of a partner in a registered limited liability partnership as a party in certain civil 28 actions; and 29 (2) Alaska Rule of Civil Procedure 24 because it effectively prohibits the 30 intervention of a partner in a registered limited liability partnership as a party in certain civil 31 actions.