How do I address limited partners in an LLLP Agreement?
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In a Limited Liability Limited Partnership (LLLP), it is essential to clearly distinguish between general partners and limited partners within the partnership agreement, as their rights, duties, and liabilities differ substantially under applicable law—typically governed by the Revised Uniform Limited Partnership Act (RULPA), adopted in most states.
Limited partners generally contribute capital and share in profits but do not participate in the control or day-to-day operations of the business. Importantly, they are shielded from personal liability for the debts and obligations of the partnership, provided they refrain from taking on managerial roles that would blur the line between limited and general partner status.
To properly reflect this legal structure, your partnership agreement should include a section that lists all limited partners, defines their capital contributions, describes their share of profits and losses, and explicitly states their non-management role and liability limitations pursuant to your state’s partnership laws.
Additionally, the agreement should contain language specifying the procedure for admitting new limited partners, transferring interests, and addressing withdrawal or dissolution in relation to limited partners. These provisions are crucial for maintaining compliance with statutory formalities that preserve the liability shield and avoid unintended recharacterization of a limited partner’s role.
By failing to include such a section, a generic template—like the one from eForms—may leave the partnership exposed to disputes or misinterpretations, especially in the absence of clearly defined expectations. Therefore, your edits should aim not only to list the limited partners by name and contribution but also to expressly incorporate the limitations on their liability and clarify the extent of their rights and restrictions in governance matters.
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Hi. How can I help?
I need help editing my LLLP partnership agreement.
I understand you need help editing your LLLP partnership agreement. Are there specific sections or terms you are looking to change?
Yes, the template I have does not address limited partners.
Have you already identified the changes you want to make, or do you need assistance in reviewing the entire agreement for potential edits?
I have identified them.
Is there anything else the lawyer should know before I connect you? Rest assured they’ll be able to help with your edits.
The template I have does not provide a section about limited partners and their responsibilities to the partnership, so I want to add that section as well as a section to list the limited partners.
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Okay, thank you. Were you able to see my issue?
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In a Limited Liability Limited Partnership (LLLP), it is essential to clearly distinguish between general partners and limited partners within the partnership agreement, as their rights, duties, and liabilities differ substantially under applicable law—typically governed by the Revised Uniform Limited Partnership Act (RULPA), adopted in most states.
Limited partners generally contribute capital and share in profits but do not participate in the control or day-to-day operations of the business. Importantly, they are shielded from personal liability for the debts and obligations of the partnership, provided they refrain from taking on managerial roles that would blur the line between limited and general partner status.
To properly reflect this legal structure, your partnership agreement should include a section that lists all limited partners, defines their capital contributions, describes their share of profits and losses, and explicitly states their non-management role and liability limitations pursuant to your state’s partnership laws.
Additionally, the agreement should contain language specifying the procedure for admitting new limited partners, transferring interests, and addressing withdrawal or dissolution in relation to limited partners. These provisions are crucial for maintaining compliance with statutory formalities that preserve the liability shield and avoid unintended recharacterization of a limited partner’s role.
By failing to include such a section, a generic template—like the one from eForms—may leave the partnership exposed to disputes or misinterpretations, especially in the absence of clearly defined expectations. Therefore, your edits should aim not only to list the limited partners by name and contribution but also to expressly incorporate the limitations on their liability and clarify the extent of their rights and restrictions in governance matters.
Does that make sense?
Yes, it does. I added this clause and labeled the partners as general and limited.
Liability and Indemnification of Limited Partners
Liability of Limited Partners: Except as required by applicable law, the liability of each Limited Partner (in its capacity as a limited partner in the Partnership) for the losses, debts, and obligations of the Partnership shall be limited to the unpaid capital contributions such Partner is required to make to the Partnership pursuant to this Agreement.
Indemnification of Limited Partners: The Partnership shall, solely from the assets of the Partnership and without recourse to any Partner, indemnify and hold harmless each Limited Partner, its respective affiliates, and its respective agents, officers, employees, directors, and shareholders (collectively, the “Limited Partner Indemnitees”) from and against any and all claims, liabilities, damages, losses, costs, and expenses (including amounts paid in satisfaction of judgments, in compromises and settlements, or as fines and penalties, and legal or other costs).
Looks great.
