Section 104. Nature, Purpose, and Duration of Entity

(a) A limited partnership is an entity distinct from its partners. A limited partnership is the same entity regardless of whether its certificate states that the limited partnership is a limited liability limited partnership.

(b) A limited partnership may be organized under this [Act] for any lawful purpose.

(c) A limited partnership has a perpetual duration.

Comment

Subsection (a) – Acquiring or relinquishing an LLLP shield changes only the rules governing a general partner’s liability for subsequently incurred obligations of the limited partnership. The underlying entity is unaffected.

Subsection (b) – In contrast with RULPA Section 106, this Act does not require a limited partnership to have a business purpose. However, many of the Act’s default rules presuppose at least a profit-making purpose. See, e.g., Section 503 (providing for the sharing of distributions in proportion to the value of contributions), 701 (defining a transferable interest in terms of the right to receive distributions), 801 (allocating the right to consent to cause or avoid dissolution in proportion to partners’ rights to receive distributions), and 812 (providing that, after a dissolved limited partnership has paid its creditors, “[a]ny surplus remaining . . . must be paid in cash as a distribution” to partners and transferees). If a limited partnership is organized for an essentially non-pecuniary purpose, the organizers should carefully review the Act’s default rules and override them as necessary via the partnership agreement.

Subsection (c) – The partnership agreement has the power to vary this subsection, either by stating a definite term or by specifying an event or events which cause dissolution. Sections 110(a) and 801(1). Section 801 also recognizes several other occurrences that cause dissolution. Thus, the public record pertaining to a limited partnership will not necessarily reveal whether the limited partnership actually has a perpetual duration.

The public record might also fail to reveal whether the limited partnership has in fact dissolved. A dissolved limited partnership may amend its certificate of limited partnership to indicate dissolution but is not required to do so. Section 803(b)(1).

Predecessor law took a somewhat different approach. RULPA Section 201(4) required the certificate of limited partnership to state “the latest date upon which the limited partnership is to dissolve.” Although RULPA Section 801(2) provided for a limited partnership to dissolve “upon the happening of events specified in writing in the partnership agreement,” RULPA Section 203 required the limited partnership to file a certificate of cancellation to indicate that dissolution had occurred.