LIMITED PARTNERSHIPS UNDER

THE TEXAS REVISED LIMITED PARTNERSHIP ACT

AND THE BUSINESS ORGANIZATIONS CODE:

WHAT DIFFERENCE DOES THE

BUSINESS ORGANIZATIONS CODE MAKE?

 

 

 

 

 

 

 

 

 

 

 

 

ELIZABETH S. MILLER

Professor of Law

Baylor University School of Law

 

 

 

 

 

 

 

 

 

State Bar of Texas

3RD ADVANCED BUSINESS LAW COURSE

November 3-4, 2005

Houston

 

CHAPTER 13.1

 

 

 

 


LIMITED PARTNERSHIPS UNDER

THE TEXAS REVISED LIMITED PARTNERSHIP ACT AND

THE TEXAS BUSINESS ORGANIZATIONS CODE:

WHAT DIFFERENCE DOES THE BUSINESS ORGANIZATIONS CODE MAKE?

 

 

TEXAS REVISED LIMITED PARTNERSHIP ACT (ATRLPA@)

 

BUSINESS ORGANIZATIONS CODE (ABOC@)

 

EFFECTIVENESS OF FORMATION:

Under TRLPA ' 2.01, a limited partnership is formed at the time of the filing of the initial certificate of limited partnership with the secretary of state or at a later date or time specified in the certificate if there has been Asubstantial compliance@ with the requirements of TRLPA ' 2.01.

 

 

EFFECTIVENESS OF FORMATION:

The existence of a filing entity (which includes a limited partnership) commences when the filing of a certificate of formation takes effect as provided by Chapter 4.  Except in a proceeding by the state to terminate the existence of a filing entity, an acknowledgment of the filing of a certificate of formation issued by the filing officer is conclusive evidence of the formation and existence of the filing entity, the satisfaction of all conditions precedent to the formation of the entity, and the authority of the entity to transact business in Texas.  BOC ' 3.001(c), (d).

Note:  The Asubstantial compliance@ standard for limited partnership formations was not carried forward in the BOC.  Under the Asubstantial compliance@ standard, courts have found that the failure to file the certificate of limited partnership does not necessarily preclude recognition of the limited partnership.  See Shindler v. Marr & Assocs., 695 S.W.2d 699 (Tex.App.BHouston [1st Dist.] 1985, writ ref=d n.r.e.); Garrett v. Koepke, 569 S.W.2d 568 (Tex.App.BDallas 1978, writ ref=d n.r.e.); Church v. United States, 85 A.F.T.R.2d 2000-804, aff=d without opinion, 268 F.3d 1063 (5th Cir. 2001).  The BOC provisions are similar to Article 3.04 of the Texas Business Corporation Act (ATBCA@).  The legislative history of Article 3.04 and Texas case law on the Ade facto corporation@ doctrine indicate that the corporate existence, whether de facto or de jure, does not commence until a certificate of incorporation is issued.

 

LIMITED PARTNERSHIP DESIGNATORS:

The name must contain the words ALimited Partnership,@ ALimited,@ or the abbreviation ALP,@ AL.P.@ or ALtd.@ as the last words or letters of the name.   TRLPA ' 1.03.

 

LIMITED PARTNERSHIP DESIGNATORS:

The name must contain the word Alimited,@ the phrase Alimited partnership,@ or an abbreviation of that word or phrase.  BOC ' 5.055(a). 

Note:  The BOC does not require the designators to be the last words or letters of the name and does not specify the permitted abbreviations.

 

LIMITED PARTNER=S NAME IN LIMITED PARTNERSHIP NAME:

The limited partnership name may not contain the name of a limited partner unless that name is also the name of a general partner or the business of the limited partnership was carried on under that name before admission of the limited partner.  TRLPA ' 1.03.  A limited partner may be held personally liable to a creditor of the limited partnership who does not know the limited partner is not a general partner if the limited partner=s name is included in the limited partnership name and one of the two exceptions does not apply.  TRLPA ' 3.03(d).

 

LIMITED PARTNER=S NAME IN LIMITED PARTNERSHIP NAME:

The BOC does not contain any provisions addressing use of a limited partner=s name in the limited partnership name.

Note: Elimination of the rule prohibiting the limited partnership name from containing the name of a limited partner eliminates one of the statutory bases for holding a limited partner liable and avoids questions that arise under TRLPA when a family business operating as a limited partnership contains the surname of one or more limited partners.

 

LIMITED PARTNERSHIP LLP NAME:

The last words or letters of the name must be ALimited Partnership@ or ALtd.@ followed by the words Aregistered limited liability partnership@ or Alimited liability partnership@ or the abbreviation ALLP@ or AL.L.P.@  TRLPA ' 2.14(a)(3).

 

LIMITED PARTNERSHIP LLP NAME:

The name must contain the word Alimited,@ the phrase Alimited partnership,@ or an abbreviation of that word or phrase, and must also contain the phrase Alimited liability partnership@ or Alimited liability limited partnership@ or an abbreviation of one of those phrases.  BOC ' 5.055.

Note:  The BOC permits the new combined designation Alimited liability limited partnership@ or an abbreviation of that phrase (e.g., ALLLP@).   The BOC does not require the designators to be the last words or letters of the name and does not specify the permitted abbreviations.