Source: official Alabama Legislature ALISON GraphQL service (alison.legislature.state.al.us/graphql), CodeOfAlabamaPrintContent, retrieved 2026-07-07. Sections: 94
This chapter and the provisions of Chapter 1 to the extent applicable to partnerships, shall be known and may be cited as the Alabama Partnership Law.
(Act 2018-125, §7.)
As used in this chapter, unless the context otherwise requires, the following terms mean:
(1) BUSINESS includes every trade, occupation, and profession for profit.
(2) DISQUALIFIED PERSON means any person who is not a qualified person.
(3) DISTRIBUTION except as otherwise provided in Section 10A-8A-4.09(f), means a transfer of money or other property from a partnership to another person on account of a transferable interest.
(4) FOREIGN LIMITED LIABILITY PARTNERSHIP means a foreign partnership whose partners have limited liability for the debts, obligations, or other liabilities of the foreign partnership under a provision similar to Section 10A-8A-3.06(c).
(5) FOREIGN PARTNERSHIP means a partnership governed by the laws of a jurisdiction other than this state which would be a partnership if governed by the laws of this state. The term includes a foreign limited liability partnership.
(6) LIMITED LIABILITY PARTNERSHIP, except in the phrase “foreign limited liability partnership”, means a partnership that has filed a statement of limited liability partnership under Section 10A-8A-10.01, and does not have a similar statement in effect in any other jurisdiction.
(7) NOT FOR PROFIT ACTIVITY includes every undertaking not for profit.
(8) PARTNER means a person that:
(A) has become a partner in a partnership under Section 10A-8A-4.02 or was a partner in a partnership when the partnership became subject to this chapter; and
(B) has not dissociated as a partner under Section 10A-8A-6.01.
(9) PARTNERSHIP means an entity that is formed under this chapter or that is governed by this chapter. The term includes, for all purposes of the laws of this state, a limited liability partnership.
(10) PARTNERSHIP AGREEMENT means any agreement (whether referred to as a partnership agreement or otherwise), written, oral or implied, of the partners as to the business or not for profit activity of a partnership. The partnership agreement includes any amendments to the partnership agreement.
(11) PARTNERSHIP AT WILL means a partnership in which the partners have not agreed to remain partners until the expiration of a definite term or the completion of a particular undertaking.
(12) PERSON DISSOCIATED AS A PARTNER means a person dissociated as a partner of a partnership.
(13) QUALIFIED PERSON, with respect to a partnership rendering professional services in this state, means a person authorized by this state or a regulatory authority of this state to own a transferable interest in that partnership.
(14) REQUIRED INFORMATION means the information that a partnership is required to maintain under Section 10A-8A-1.11.
(15) STATEMENT means a statement of partnership under Section 10A-8A-2.02, a statement of not for profit partnership under Section 10A-8A-2.02, a statement of authority under Section 10A-8A-3.03, a statement of denial under Section 10A-8A-3.04, a statement of dissociation under Section 10A-8A-7.04, a statement of dissolution under Section 10A-8A-8.02 or under Section 10A-8A-8.03, a certificate of reinstatement under Section 10A-8A-8.11, a statement of limited liability partnership under Section 10A-8A-10.01, a statement of cancellation under Section 10A-8A-10.01, or any other document required or permitted to be delivered to the Secretary of State for filing under this chapter, or an amendment or cancellation of any of the foregoing.
(16) TRANSFER means an assignment, conveyance, deed, bill of sale, lease, mortgage, security interest, encumbrance, gift, or transfer by operation of law.
(17) TRANSFERABLE INTEREST means a partner’s right to receive distributions from a partnership.
(18) TRANSFEREE means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a partner.
(Act 2018-125, §7; Act 2019-304, §1; Act 2021-299, §5.)
(a) A person knows a fact when the person:
(1) has actual knowledge of it; or
(2) is deemed to know it under law other than this chapter.
(b) A person has notice of a fact when the person:
(1) knows of it;
(2) receives notice of it;
(3) has reason to know the fact from all of the facts known to the person at the time in question; or
(4) is deemed to have notice of the fact under subsection (d).
(c) A person notifies or gives notice to another person by taking steps reasonably required to inform the other person in ordinary course, whether or not the other person knows the fact.
(d) A person is deemed to have notice of a partnership’s:
(1) statement of partnership, 90 days after a statement of partnership under Section 10A-8A-2.02 becomes effective;
(2) statement of not for profit partnership, 90 days after a statement of not for profit partnership under Section 10A-8A-2.02 becomes effective;
(3) statement of authority, with respect to:
(i) authority not involving property and
(ii) property other than real property, 90 days after a statement of authority under Section 10A-8A-3.03 becomes effective; and with respect to real property in accordance with Section 10A-8A-3.03(g);
(4) statement of denial, with respect to property other than real property, 90 days after a statement of denial under Section 10A-8A-3.04 becomes effective;
(5) dissociation, 90 days after a statement of dissociation under Section 10A-9A-7.04 becomes effective;
(6) dissolution, 90 days after a statement of dissolution under Section 10A-9A-8.02 or Section 10A-9A-8.03 becomes effective;
(7) reinstatement, 90 days after a certificate of reinstatement under Section 10A-9A-8.11 becomes effective;
(8) merger or conversion under Article 9 or under Article 8 of Chapter 1, 90 days after the statement of merger or conversion becomes effective;
(9) statement of limited liability partnership, 90 days after a statement of limited liability partnership under Section 10A-8A-10.01 becomes effective; or
(10) statement of cancellation, 90 days after a statement of cancellation under Section 10A-8A-10.01 becomes effective.
(e) A partner’s knowledge, notice, or receipt of notice of a fact relating to the partnership is effective immediately as knowledge of, notice to, or receipt of notice by the partnership, except in the case of a fraud on the partnership committed by or with the consent of that partner.
(Act 2018-125, §7.)
(a) A partnership is a separate legal entity. A partnership’s status for tax purposes shall not affect its status as a separate legal entity formed under this chapter. A partnership is the same entity regardless of whether the partnership has a statement of limited liability partnership under Section 10A-8A-10.01 stating that the partnership is a limited liability partnership. A partner has no interest in any specific property of a partnership.
(b) A partnership may carry on any lawful business and may carry on any lawful not for profit activity if it complies with Section 10A-8A-2.02(b).
(Act 2018-125, §7.)
(a) A partnership shall possess and may exercise all the powers and privileges granted and enumerated by Chapter 1 or by any other law or by its partnership agreement, together with any powers incidental thereto, including those powers and privileges necessary or convenient to the conduct, promotion, or attainment of the business or not for profit activity of the partnership and including the power to sue, be sued, and defend in its own name and to maintain an action against a partner for harm caused to the partnership by a breach of the partnership agreement or violation of a duty to the partnership.
(b) A partnership may indemnify and hold harmless a partner or other person, pay in advance or reimburse expenses incurred by a partner or other person, and purchase and maintain insurance on behalf of a partner or other person.
(Act 2018-125, §7.)
(a) Except as otherwise provided in subsections (b), (c), and (d) of this section, the law of the jurisdiction in which the partnership has its principal office governs the partnership agreement and the relations among the partners and between the partners and the partnership.
(b) The law of this state governs the (i) internal affairs of a limited liability partnership, including the relations among the partners and between the partners and the partnership, (ii) the liability of a partner as a partner for the debts, obligations, or other liabilities of a limited liability partnership, and (iii) the authority of the partners of a limited liability partnership.
(c) The law of the jurisdiction in which a foreign limited liability partnership has filed its statement of limited liability partnership or similar writing governs the (i) internal affairs of that foreign limited liability partnership, including the relations among the partners and between the partners and the partnership, (ii) the liability of a partner as a partner for the debts, obligations, or other liabilities of a foreign limited liability partnership, and (iii) the authority of the partners of a foreign limited liability partnership.
(d) If (i) a partnership agreement provides for the application of the laws of this state, and (ii) the partnership delivers to the Secretary of State for filing a statement of partnership in accordance with Section 10A-8A-2.02(a), a statement of not for profit partnership in accordance with Section 10A-8A-2.02(b), or a statement of limited liability partnership in accordance with Section 10A-8A-10.01, then the partnership agreement shall be governed by and construed under the laws of this state.
(Act 2018-125, §7.)
(a) It is the policy of this chapter and this state to give maximum effect to the principles of freedom of contract and to the enforceability of partnership agreements.
(b) Unless displaced by particular provisions of this chapter, the principles of law and equity supplement this chapter.
(c) If an obligation to pay interest arises under this chapter and the rate is not specified, the rate is the applicable federal rate as determined from time to time by the United States Treasury pursuant to 26 U.S.C. § 1274(d) or any successor law.
(d) The rule that statutes in derogation of the common law are to be strictly construed shall have no application to this chapter.
(e) The use of any gender shall be applicable to all genders. The captions contained in this chapter are for purposes of convenience only and shall not control or affect the construction of this chapter.
(f) Sections 7-9A-406 and 7-9A-408 of the Uniform Commercial Code, and all successor statutes thereto, do not apply to any interest in a partnership, including all rights, powers, and interests arising under a partnership agreement or this chapter. This provision prevails over Sections 7-9A-406 and 7-9A-408 of the Uniform Commercial Code, and all successor statutes thereto, and is expressly intended to permit the enforcement of the provisions of a partnership agreement that would otherwise be ineffective under Sections 7-9A-406 and 7-9A-408 of the Uniform Commercial Code, and all successor statutes thereto.
(g) Division E of Article 3 of Chapter 1 shall have no application to this chapter.
(h) The terms president, vice president, secretary, and treasurer, as defined in Chapter 1, shall have no application to this chapter.
(i) Section 10A-1-2.13(c) shall have no application to this chapter.
(j) Action validly taken pursuant to one provision of this chapter shall not be deemed invalid solely because it is identical or similar in substance to an action that could have been taken pursuant to some other provision of this chapter but fails to satisfy one or more requirements prescribed by such other provision.
(Act 2018-125, §7; Act 2025-281, §6.)
(a) Except as otherwise provided in subsections (b) and (c):
(1) the partnership agreement governs relations among the partners as partners and between the partners and the partnership; and
(2) to the extent the partnership agreement does not otherwise provide for a matter described in subsection (a)(1), this chapter governs the matter.
(b)(1) To the extent that, at law or in equity, a partner or other person has duties, including fiduciary duties, to a partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement, the partner’s or other person’s duties may be expanded or restricted or eliminated by provisions in a written partnership agreement, but the implied contractual covenant of good faith and fair dealing may not be eliminated.
(2) A written partnership agreement may provide for the limitation or elimination of any and all liabilities for breach of contract and breach of duties, including fiduciary duties, of a partner or other person to a partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement, but a partnership agreement may not limit or eliminate liability for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing.
(3) A partner or other person shall not be liable to a partnership or to another partner or to another person that is a party to or is otherwise bound by a partnership agreement for breach of fiduciary duty for the partner’s or other person’s good faith reliance on the partnership agreement.
(4) A partnership agreement may provide that:
(A) a partner, dissociated partner, or transferee who fails to perform in accordance with, or to comply with the terms and conditions of, the partnership agreement shall be subject to specified penalties or specified consequences;
(B) at the time or upon the happening of events specified in the partnership agreement, a partner, dissociated partner, or transferee may be subject to specified penalties or specified consequences; and
(C) subject to Section 10A-8A-1.08(c), an act or transaction under the partnership agreement by the partnership, a partner, a dissociated partner, or a transferee is void or voidable.
(5) A penalty or consequence that may be specified under paragraph (4) of this subsection may include and take the form of reducing or eliminating the defaulting partner’s or transferee’s proportionate transferable interest in a partnership, subordinating the partner’s or transferee’s transferable interest to that of non-defaulting partners or transferees, forcing a sale of that transferable interest, forfeiting the defaulting partner’s or transferee’s transferable interest, the lending by other partners or transferees of the amount necessary to meet the defaulting partner’s or transferee’s commitment, a fixing of the value of the defaulting partner’s or transferee’s transferable interest by appraisal or by formula and redemption or sale of the transferable interest at that value, or other penalty or consequence.
(6) A written partnership agreement may supersede, in whole or in part, the provisions of Division C and Division D of Article 3 of Chapter 1.
(c) A partnership agreement may not:
(1) vary the nature of the partnership as a separate legal entity under Section 10A-8A-1.04(a);
(2) vary a partnership’s power under Section 10A-8A-1.05 to sue, be sued, and defend in its own name;
(3) vary the law applicable to a limited liability partnership under Section 10A-8A-1.06;
(4) restrict rights under this chapter of a person other than a partner, a dissociated partner, or a transferee;
(5) vary the requirements of Section 10A-8A-2.03;
(6) unreasonably restrict the right of access to books and records under Section 10A-8A-4.10, but the partnership agreement may impose reasonable restrictions on the availability and use of information obtained under those sections and may define appropriate remedies, including liquidated damages, for a breach of any reasonable restriction on use;
(7) eliminate the implied contractual covenant of good faith and fair dealing as provided under Section 10A-8A-1.08(b)(1);
(8) eliminate or limit the liability of a partner or other person for any act or omission that constitutes a bad faith violation of the implied contractual covenant of good faith and fair dealing as provided under Section 10A-8A-1.08(b)(2);
(9) waive the requirements of Section 10A-8A-4.04(e);
(10) reduce the limitations period specified under Section 10A-8A-4.09(e) for an action commenced under other applicable law;
(11) waive the prohibition on issuance of a certificate of a transferable interest in bearer form under Section 10A-8A-5.02(c);
(12) vary the power of a person to dissociate as a partner under Section 10A-8A-6.02(a) except that the partnership agreement may require that the notice under Section 10A-8A-6.01(1) be in a writing or in a specific form thereof;
(13) vary the right of a court to expel a partner in the events specified in Section 10A-8A-6.01(5);
(14) vary the power of a court to decree dissolution in the circumstances specified in Section 10A-8A-8.01(4) or (5);
(15) vary the requirement to wind up the partnership’s business or not for profit activity as specified in Section 10A-8A-8.01(4), (5), (6), or (7);
(16) vary the right of a partner to approve or consent to the cancellation of a statement of limited liability partnership as specified in Section 10A-8A-10.01(m);
(17) vary the rights of a partner under Section 10A-8A-9.10; or
(18) vary the provisions of Section 10A-8A-1.14(c), (d), or (e).
(Act 2018-125, §7; Act 2024-413, §1.)
(a) A partnership is bound by and may enforce the partnership agreement, whether or not the partnership has itself manifested assent to the partnership agreement.
(b) A person that is admitted as a partner of a partnership becomes a party to and assents to the partnership agreement except as provided in Section 10A-8A-5.02(g).
(c) Two or more persons intending to be the initial partners of a partnership may make an agreement providing that upon the formation of the partnership, the agreement will become the partnership agreement.
(Act 2018-125, §7.)
(a) If a partnership agreement provides for the manner in which it may be amended, including by requiring the approval of a person who is not a party to the partnership agreement or the satisfaction of conditions, it may be amended only in that manner or as otherwise permitted by law, except that the approval of any person may be waived by that person and any conditions may be waived by all persons for whose benefit those conditions were intended.
(b) A partnership agreement may provide rights to any person, including a person who is not a party to the partnership agreement, to the extent set forth in the partnership agreement.
(c) The obligations of a partnership and its partners to a person in the person’s capacity as a transferee or dissociated partner are governed by the partnership agreement. A transferee and a dissociated partner are bound by the partnership agreement.
(d) If a writing that has been delivered by a partnership for filing in accordance with Chapter 1 and has become effective conflicts with a provision of the partnership agreement:
(1) the partnership agreement prevails as to partners, dissociated partners, and transferees; and
(2) the writing prevails as to other persons to the extent they reasonably rely on the writing.
(Act 2018-125, §7.)
A partnership shall maintain the following information:
(1) A current list of the full name and last known street and mailing address of each partner, in alphabetical order.
(2) Copies of any filed statement.
(3) Copies of the partnership’s federal, state, and local income tax returns and reports, if any, for the three most recent years.
(4) Copies of the then effective partnership agreement and any amendment thereto, in each case to the extent made in a writing.
(5) Copies of any financial statement of the partnership for the three most recent years.
(6) Unless contained in a partnership agreement made in a writing, a writing stating:
(A) the amount of cash, and a description and statement of the agreed value of the other benefits, contributed and agreed to be contributed by each partner;
(B) the times at which, or events on the happening of which, any additional contributions agreed to be made by each partner are to be made; and
(C) any events upon the happening of which the partnership is to be dissolved and its business or not for profit activity wound up.
(Act 2018-125, §7.)
A partner may lend money to and transact other business or not for profit activity with the partnership and has the same rights and obligations with respect to the loan or other transaction as a person that is not a partner.
(Act 2018-125, §7.)
Action requiring the consent of partners under this chapter may be taken without a meeting, and a partner may appoint a proxy to consent or otherwise act for the partner by signing a writing of appointment, either personally or by the partner’s attorney in fact.
(Act 2018-125, §7.)
(a) If a partnership agreement provides that an act or transaction is void or voidable when taken, then that act or transaction may be ratified or waived by:
(1) the partners or other persons entitled to ratify or waive that act or transaction under the partnership agreement;
(2) if the partnership agreement does not specify the approval required for the ratification or waiver, then those partners or other persons entitled to approve the amendment of the partnership agreement; or
(3) if the partnership agreement does not specify the approval required for the amendment of the partnership agreement, then all of the partners.
(b) If the void or voidable act or transaction was the issuance or transfer of any transferable interest, then for purposes of determining who may ratify or waive any act or transaction, the transferable interest purportedly issued or transferred shall be deemed not to have been issued or transferred.
(c) Any act or transaction ratified, or with respect to which the failure to comply with any requirements of the partnership agreement is waived, pursuant to this section shall be deemed validly taken at the time of the act or transaction.
(d) Upon application of the partnership, any partner, or any person claiming to be substantially and adversely affected by a ratification or waiver pursuant to this section, the designated court, and if none, the circuit court for the county in which the partnership’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the partnership’s most recent registered office is located, may hear and determine the validity and effectiveness of the ratification of, or waiver with respect to, any void or voidable act or transaction effectuated pursuant to this section, and in any such application, the partnership shall be named as a party and service of the application upon the registered agent of the partnership shall be deemed to be service upon the partnership, and no other party need be joined in order for the court to adjudicate the validity and effectiveness of the ratification or waiver, and the court may make such order respecting further or other notice of the application as the court deems proper under the circumstances; provided, that nothing herein limits or affects the right to serve process in any other manner now or hereafter provided by law, and this sentence is an extension of and not a limitation upon the right otherwise existing of service of legal process upon nonresidents.
(e) The provisions of this section shall not be construed to limit the accomplishment of a ratification or waiver of a void or voidable act or transaction by other means permitted by law.
(Act 2024-413, §2.)
(a) Except as otherwise provided in subsection (b), the association of two or more persons:
(1) to carry on as co-owners a business for profit forms a partnership, whether or not the persons intend to form a partnership; or
(2) to carry on any not for profit activity, forms a partnership when (A) the persons intend to form a partnership and (B) the persons deliver to the Secretary of State for filing a statement of not for profit partnership in accordance with Section 10A-8A-2.02(b) setting forth their intention to form a partnership to carry on a not for profit activity.
(b) An association formed under a statute other than this chapter, a predecessor statute, or a comparable statute of another jurisdiction is not a partnership under this chapter.
(c) In determining whether a partnership is formed under Section 10A-8A-2.01(a)(1), the following rules apply:
(1) Joint tenancy, tenancy in common, tenancy by the entireties, joint property, common property, or part ownership does not by itself establish a partnership, even if the co-owners share profits made by the use of the property.
(2) The sharing of gross returns does not by itself establish a partnership, even if the persons sharing them have a joint or common right or interest in property from which the returns are derived.
(3) A person who receives a share of the profits of a business is presumed to be a partner in the business, unless the profits were received in payment:
(i) of a debt by installments or otherwise;
(ii) for services as an independent contractor or of wages or other compensation to an employee;
(iii) of rent;
(iv) of an annuity or other retirement or health benefit to a beneficiary, representative, or designee of a deceased or retired partner;
(v) of interest or other charge on a loan, even if the amount of payment varies with the profits of the business, including a direct or indirect present or future ownership of the collateral, or rights to income, proceeds, or increase in value derived from the collateral; or
(vi) for the sale of the goodwill of a business or other property by installments or otherwise.
(Act 2018-125, §7.)
(a) A partnership other than a partnership that has an effective statement of not for profit partnership or an effective statement of limited liability partnership on file with the Secretary of State may deliver to the Secretary of State for filing a statement of partnership for the purpose of having its partnership agreement governed by the laws of this state in accordance with Section 10A-8A-1.06(d) and providing notice of its existence in accordance with Section 10A-8A-1.03(d)(1). A statement of partnership must contain all of the following:
(1) the name of the partnership which name must comply with Article 5 of Chapter 1;
(2) a statement that the partnership is governed by this chapter;
(3) the street and mailing address of its principal office;
(4) the street and mailing address of a registered office and the name of the registered agent at that office for service of process in this state which the partnership shall be required to maintain;
(5) a statement that the partnership was formed for the purpose of carrying on a for profit business;
(6) a statement that the partnership has two or more partners; and
(7) a statement that the partnership agreement is governed by the laws of this state, and if the partnership agreement is a written partnership agreement, a declaration that the written partnership agreement has a provision stating that the partnership agreement is governed by the laws of this state.
(b) A partnership other than a partnership that has an effective statement of partnership or an effective statement of limited liability partnership on file with the Secretary of State may deliver to the Secretary of State for filing a statement of not for profit partnership for the purpose of setting forth the partners’ intention to form a partnership to carry on a not for profit activity in accordance with Section 10A-8A-2.01(a)(2), having its partnership agreement governed by the laws of this state in accordance with Section 10A-8A-1.06(d), and providing notice of its existence in accordance with Section 10A-8A-1.03(d)(2). A statement of not for profit partnership must contain all of the following:
(1) the name of the partnership which name must comply with Article 5 of Chapter 1;
(2) the date that the partnership was formed pursuant to, or became governed by, the laws of this state;
(3) the street and mailing address of its principal office;
(4) the street and mailing address of a registered office and the name of the registered agent at that office for service of process in this state which the partnership shall be required to maintain;
(5) a statement that the partnership was formed for the purpose of carrying on a not for profit activity in accordance with Section 10A-8A-2.01(a)(2);
(6) a statement that the partnership has two or more partners; and
(7) a statement that the partnership agreement is governed by the laws of this state, and if the partnership agreement is a written partnership agreement, a declaration that the written partnership agreement has a provision stating that the partnership agreement is governed by the laws of this state.
(c) A statement of partnership and a statement of not for profit partnership may be amended or restated from time to time in accordance with Section 10A-1-4.26.
(d) A statement of partnership and a statement of not for profit partnership shall be executed by two or more partners authorized to execute the statement of partnership or statement of not for profit partnership.
(e) A statement of partnership and a statement of not for profit partnership shall be accompanied by a fee for the Secretary of State in the amount prescribed by Section 10A-1-4.31.
(f) If a partnership complies with this section, the Secretary of State shall file the statement of partnership or the statement of not for profit partnership, as applicable.
(g) A statement of partnership or a statement of not for profit partnership, as applicable, takes effect as determined under Article 4 of Chapter 1.
(h) A partnership that has filed a statement of partnership is for all purposes the same entity that existed before the statement of partnership was filed and continues to be a partnership under the laws of this state.
(i) A statement of partnership and a statement of not for profit partnership are filing instruments for the purposes of Chapter 1.
(Act 2018-125, §7; Act 2025-281, §6.)
(a) A statement may be delivered to the Secretary of State for filing. A certified copy of a statement of authority that was filed by the Secretary of State may be delivered to a judge of probate for filing in accordance with Section 10A-8A-3.03(f) and (g). A certified copy of a statement that is filed in an office in another jurisdiction may be delivered to the Secretary of State for filing, and once filed by the Secretary of State, in the case of a statement of authority which is intended to have a similar effect to that of a statement of authority under Section 10A-8A-3.03(f) or (g), may be delivered to the judge of probate for filing in accordance with Section 10A-8A-3.03(f) or (g). Either filing has the effect provided in this chapter with respect to partnership property located in or transactions that occur in this state.
(b) A certified copy of statement of authority filed in the office of the Secretary of State and delivered to the judge of probate for filing in the county or counties in which the partnership has real property, without more, shall have the effect of a recorded statement under this chapter with respect to real property located in that county or those counties. Any statement of authority recorded under the preceding sentence that is not a certified copy of a statement of authority filed in the office of the Secretary of State does not have the effect provided for recorded statements of authority in this chapter.
(c) Except as specifically provided otherwise in this chapter, a statement filed by a partnership must be executed by at least two partners. Other statements must be executed by a partner or other person authorized by this chapter. An individual who executes a statement as, or on behalf of, a partner or other person named as a partner in a statement shall personally declare under penalty of perjury that the contents of the statement are accurate.
(d) Except as specifically provided otherwise in this chapter, a person authorized by this chapter to file a statement may amend or cancel the statement by filing an amendment or cancellation that names the partnership, identifies the statement, and states the substance of the amendment or cancellation.
(e) A person who files a statement pursuant to this section shall promptly send a copy of the statement to every partner and to any other person named in the statement. Failure to send a copy of a statement to a partner or other person does not limit the effectiveness of the statement as to a person not a partner.
(f) The Secretary of State may collect a fee for filing or providing a certified copy of a statement in the amount prescribed in Section 10A-1-4.31. The office of the judge of probate may collect a fee for recording a certified copy of statement in the amount prescribed in Section 10A-1-4.31.
(g) Each statement permitted or required under this chapter to be delivered for filing to the Secretary of State or judge of probate is a filing instrument.
(Act 2018-125, §7.)
Property acquired by a partnership is property of the partnership and not of the partners individually.
(Act 2018-125, §7.)
(a) Property is partnership property if acquired in the name of:
(1) the partnership; or
(2) one or more partners with an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership but without an indication of the name of the partnership.
(b) Property is acquired in the name of the partnership by a transfer to:
(1) the partnership in its name; or
(2) one or more partners in their capacity as partners in the partnership, if the name of the partnership is indicated in the instrument transferring title to the property.
(c) Property is presumed to be partnership property if purchased with partnership assets, even if not acquired in the name of the partnership or of one or more partners with an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership.
(d) Property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership and without use of partnership assets, is presumed to be separate property, even if used for partnership purposes.
(Act 2018-125, §7.)
Subject to the effect of a statement of authority under Section 10A-8A-3.03:
(1) Each partner is an agent of the partnership for the purpose of its business or not for profit activity. An act of a partner, including the execution of an instrument in the partnership name, for apparently carrying on in the ordinary course the partnership business or not for profit activity, or business or not for profit activity of the kind carried on by the partnership, binds the partnership, unless the partner had no authority to act for the partnership in the particular matter and the person with whom the partner was dealing knew or had notice that the partner lacked authority.
(2) An act of a partner which is not apparently for carrying on in the ordinary course the partnership business or not for profit activity, or business or not for profit activity of the kind carried on by the partnership, binds the partnership only if the act was authorized by the other partners.
(Act 2018-125, §7.)
(a) Partnership property may be transferred as follows:
(1) Subject to the effect of a statement of authority under Section 10A-8A-3.03, partnership property held in the name of the partnership may be transferred by an instrument of transfer executed by a partner in the partnership name.
(2) Partnership property held in the name of one or more partners with an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, but without an indication of the name of the partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.
(3) Partnership property held in the name of one or more persons other than the partnership, without an indication in the instrument transferring the property to them of their capacity as partners or of the existence of a partnership, may be transferred by an instrument of transfer executed by the persons in whose name the property is held.
(b) A partnership may recover partnership property from a transferee only if it proves that execution of the instrument of initial transfer did not bind the partnership under Section 10A-8A-3.01 and:
(1) as to a subsequent transferee who gave value for property transferred under subsections (a)(1) and (2), proves that the subsequent transferee knew or had received notice that the person who executed the instrument of initial transfer lacked authority to bind the partnership; or
(2) as to a transferee who gave value for property transferred under subsection (a)(3), proves that the transferee knew or had notice that the property was partnership property and that the person who executed the instrument of initial transfer lacked authority to bind the partnership.
(c) A partnership may not recover partnership property from a subsequent transferee if the partnership would not have been entitled to recover the property, under subsection (b), from any earlier transferee of the property.
(Act 2018-125, §7.)
(a) A partnership may deliver to the Secretary of State for filing a statement of authority, which:
(1) must include the name of the partnership and:
(A) if the partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, (i) the street and mailing addresses of its principal office, (ii) the name, street address, and mailing address of its registered agent, and (iii) if the Secretary of State has assigned a unique identifying number or other designation to the partnership, that number or designation; or
(B) if the partnership has filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, (i) the street address and mailing address of its principal office, (ii) the name, street address, and mailing address of its registered agent, and (iii) the unique identifying number or other designation assigned to the partnership by the Secretary of State.
(2) with respect to any position that exists in or with respect to the partnership, may state the authority, or limitations on the authority, of all persons holding the position to:
(A) sign an instrument transferring real property held in the name of the partnership; or
(B) enter into other transactions on behalf of, or otherwise act for or bind, the partnership; and
(3) may state the authority, or limitations on the authority, of a specific person to:
(A) sign an instrument transferring real property held in the name of the partnership; or
(B) enter into other transactions on behalf of, or otherwise act for or bind, the partnership.
(b) To amend or cancel a statement of authority filed by the Secretary of State, a partnership must deliver to the Secretary of State for filing an amendment or cancellation stating:
(1) the name of the partnership;
(2) if the partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, the street and mailing addresses of the partnership’s principal office;
(3) if the partnership has filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, the name and street and mailing addresses of its registered agent;
(4) the date the statement of authority being affected became effective;
(5) the contents of the amendment or a declaration that the statement of authority is canceled; and
(6) the unique identifying number or other designation assigned to the partnership by the Secretary of State.
(c) A statement of authority affects only the power of a person to bind a partnership to persons that are not partners.
(d) Subject to subsection (c) and Section 10A-8A-1.03(d)(3) and except as otherwise provided in subsections (f), (g), and (h), a limitation on the authority of a person or a position contained in an effective statement of authority is not by itself evidence of any person’s knowledge or notice of the limitation.
(e) Subject to subsection (c), a grant of authority not pertaining to transfers of real property and contained in an effective statement of authority is conclusive in favor of a person that gives value in reliance on the grant, except to the extent that when the person gives value:
(1) the person has knowledge to the contrary;
(2) the statement of authority has been canceled or restrictively amended under subsection (b); or
(3) a limitation on the grant is contained in another statement of authority that became effective after the statement of authority containing the grant became effective.
(f) Subject to subsection (c), an effective statement of authority that grants authority to transfer real property held in the name of the partnership, a certified copy of which statement of authority is recorded in the office of the judge of probate in the county in which the real property is located, is conclusive in favor of a person that gives value in reliance on the grant without knowledge to the contrary, except to the extent that when the person gives value:
(1) the statement of authority has been canceled or restrictively amended under subsection (b), and a certified copy of the cancellation or restrictive amendment has been recorded in the office of the judge of probate in the county in which the real property is located; or
(2) a limitation on the grant is contained in another statement of authority that became effective after the statement of authority containing the grant became effective, and a certified copy of the later-effective statement is recorded in the office of the judge of probate in the county in which the real property is located.
(g) Subject to subsection (c), if a certified copy of an effective statement of authority containing a limitation on the authority to transfer real property held in the name of a partnership is recorded in the office of the judge of probate in the county in which the real property is located, all persons are deemed to know of the limitation with respect to the real property located in that county.
(h) Subject to subsection (i), an effective statement of dissolution is a cancellation of any filed statement of authority for the purposes of subsection (f) and is a limitation on authority for purposes of subsection (g).
(i) After a statement of dissolution becomes effective, a partnership may deliver to the Secretary of State for filing and, if appropriate, may record a statement of authority that is designated as a post-dissolution statement of authority. The statement operates as provided in subsections (f) and (g).
(j) Unless canceled earlier, an effective statement of authority is canceled by operation of law five years after the date on which the statement, or its most recent amendment, becomes effective. The cancellation is effective without recording under subsection (f) or (g).
(k) An effective statement of denial operates as a restrictive amendment under this section and may be recorded by certified copy for purposes of subsection (f)(1).
(l) If a partnership has not filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership and the Secretary of State has not assigned a unique identifying number or other designation to that partnership, then the Secretary of State shall assign a unique identifying number or other designation to that partnership when that partnership delivers to the Secretary of State for filing that partnership’s statement of authority without the need of the partnership delivering to the Secretary of State for filing a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership.
(Act 2018-125, §7; Act 2025-281, §6.)
A person named in a filed statement of authority granting that person authority may deliver to the Secretary of State for filing a statement of denial that:
(1) provides:
(A) the name of the partnership;
(B) the date the statement of authority to which the statement of denial pertains was filed by the filing officer; and
(C) the unique identifying number or other designation assigned to the partnership by the Secretary of State; and
(2) denies the grant of authority.
A statement of denial is a limitation on authority as provided in Section 10A-8A-3.03.
(Act 2018-125, §7; Act 2025-281, §6.)
(a) A partnership is liable for loss or injury caused to a person, or for a penalty incurred, as a result of a wrongful act or omission, or other actionable conduct, of a partner acting in the ordinary course of business or not for profit activity of the partnership or with authority of the partnership.
(b) If, in the ordinary course of business or not for profit activity of the partnership’s business or not for profit activity, or while acting with authority of the partnership, a partner receives or causes the partnership to receive money or property of a person not a partner, and the money or property is misapplied by a partner, the partnership is liable for the loss.
(Act 2018-125, §7.)
(a) Except as otherwise provided in subsection (b) or subsection (c), all partners are liable jointly and severally for all obligations of the partnership unless otherwise agreed by the claimant or provided by law.
(b) A person admitted as a partner into an existing partnership is not personally liable for any partnership obligation incurred before the person’s admission as a partner.
(c) Except as set forth in subsection (b) of Section 10A-8A-10.02, a debt, obligation, or other liability of a partnership incurred while the partnership is a limited liability partnership is solely the debt, obligation, or other liability of the limited liability partnership. Except as set forth in subsection (b) of Section 10A-8A-10.02, a partner in a limited liability partnership is not personally liable or accountable, directly or indirectly, including by way of indemnification, contribution, assessment, or otherwise, for debts, obligations, and liabilities of, or chargeable to, the limited liability partnership, or another partner or partners, whether arising in tort, contract, or otherwise, solely by reason of being such a partner or acting, or omitting to act, in such capacity, which such debts, obligations and liabilities occur, are incurred or are assumed while the partnership is a limited liability partnership. This subsection applies (1) despite anything inconsistent in the partnership agreement that existed immediately before the partnership becomes a limited liability partnership, and (2) regardless of the dissolution of the limited liability partnership.
(d) Subsection (c) of this section shall not affect the liability of a limited liability partnership to the extent of partnership assets for partnership debts, obligations and liabilities.
(e) A partner in a limited liability partnership is not a necessary or proper party to a proceeding by or against a limited liability partnership, the object of which is to recover any debts, obligations, or liabilities of, or chargeable to, the limited liability partnership, unless the partner is personally liable therefor under subsection (b) of Section 10A-8A-10.02.
(Act 2018-125, §7.)
(a) A partnership may sue and be sued in the name of the partnership.
(b) An action may be brought against the partnership and, except as provided in Section 10A-8A-3.06, against any or all of the partners in the same action or in separate actions.
(c) A judgment against a partnership is not by itself a judgment against a partner. A judgment against a partnership may not be satisfied from a partner’s assets unless there is also a judgment against the partner.
(d) A judgment creditor of a partner may not levy execution against the assets of the partner to satisfy a judgment based on a claim against the partnership unless the claim is for a debt, obligation, or liability for which the partner is personally liable as provided in Section 10A-8A-3.06 and either:
(1) a judgment based on the same claim has been obtained against the partnership and a writ of execution on the judgment has been returned unsatisfied in whole or in part;
(2) the partnership is a debtor in bankruptcy;
(3) the partner has agreed that the creditor need not exhaust partnership assets;
(4) a court grants permission to the judgment creditor to levy execution against the assets of a partner based on a finding that partnership assets subject to execution are clearly insufficient to satisfy the judgment, that exhaustion of partnership assets is excessively burdensome, or that the grant of permission is an appropriate exercise of the court’s equitable powers; or
(5) liability is imposed on the partner by law or contract independent of the existence of the partnership.
(e) This section applies to any partnership liability or obligation resulting from a representation by a partner or purported partner under Section 10A-8A-3.08.
(Act 2018-125, §7.)
Except as provided in Section 10A-8A-3.06:
(a) If a person, by words or conduct, purports to be a partner, or consents to being represented by another as a partner, in a partnership or with one or more persons not partners, the purported partner is liable to a person to whom the representation is made, if that person, relying on the representation, enters into a transaction with the actual or purported partnership. If the representation, either by the purported partner or by a person with the purported partner’s consent, is made in a public manner, the purported partner is liable to a person who relies upon the purported partnership even if the purported partner is not aware of being held out as a partner to the claimant. If partnership liability results, the purported partner is liable with respect to that liability as if the purported partner were a partner. If no partnership liability results, the purported partner is liable with respect to that liability jointly and severally with any other person consenting to the representation.
(b) If a person is thus represented to be a partner in an existing partnership, or with one or more persons not partners, the purported partner is an agent of persons consenting to the representation to bind them to the same extent and in the same manner as if the purported partner were a partner, with respect to persons who enter into transactions in reliance upon the representation. If all of the partners of the existing partnership consent to the representation, a partnership act or obligation results. If fewer than all of the partners of the existing partnership consent to the representation, the person acting and the partners consenting to the representation are jointly and severally liable.
(c) A person is not liable as a partner merely because the person is named by another in a statement of authority.
(d) A person does not continue to be liable as a partner merely because of a failure to file a statement of dissociation or to amend a statement of authority to indicate the partner’s dissociation from the partnership.
(e) Except as otherwise provided in subsections (a) and (b), persons who are not partners as to each other are not liable as partners to other persons.
(Act 2018-125, §7.)
(a) Each partner is deemed to have an account that is:
(1) credited with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, the partner contributes to the partnership and the partner’s share of the partnership profits; and
(2) charged with an amount equal to the money plus the value of any other property, net of the amount of any liabilities, distributed by the partnership to the partner and the partner’s share of the partnership losses provided that a partner shall not be charged with any share of partnership loss attributable to a debt, obligation, or liability for which the partner is not personally liable under Section 10A-8A-3.06 unless the loss is satisfied out of partnership assets.
(b) Each partner is entitled to an equal share of the partnership profits and, subject to the limitations in subsection (a)(2) of this section, is chargeable with a share of the partnership losses in proportion to the partner’s share of the profits.
(c) A partnership shall reimburse a partner for payments made and indemnify a partner for liabilities incurred by the partner in the ordinary course of the business or not for profit activity of the partnership or for the preservation of its business or not for profit activity or property; provided, however, no partner in a limited liability partnership shall be required as a consequence of the indemnification to make any payment on behalf of the limited liability partnership to any other partners to the extent that the payment would be inconsistent with Sections 10A-8A-3.06, 10A-8A-8.06, or 10A-8A-8.07.
(d) A partnership shall reimburse a partner for an advance beyond the amount of capital the partner agreed to contribute.
(e) A payment or advance made by a partner which gives rise to a partnership obligation under subsection (c) or (d) constitutes a loan to the partnership which accrues interest from the date of the payment or advance.
(f) Each partner has equal rights in the management and conduct of the partnership business or not for profit activity.
(g) A partner may use or possess partnership property only on behalf of the partnership.
(h) A partner is not entitled to remuneration for services performed for the partnership, except for reasonable compensation for services rendered in winding up the business or not for profit activity of the partnership.
(i) A difference arising as to a matter in the ordinary course of business or not for profit activity of a partnership may be decided by a majority of the partners. An act outside the ordinary course of business or not for profit activity of a partnership and an amendment to the partnership agreement may be undertaken only with the consent of all of the partners.
(j) This section does not affect the obligations of a partnership to other persons under Section 10A-8A-3.01.
(Act 2018-125, §7.)
(a) The initial partners of a partnership are admitted as partners upon the formation of the partnership.
(b) After formation, a person is admitted as a partner of the partnership:
(1) as provided in the partnership agreement;
(2) as the result of a transaction effective under Article 9 of this chapter or Article 8 of Chapter 1;
(3) with the consent of all the partners; or
(4) as provided in Section 10A-8A-8.01(6) or 10A-8A-8.01(7).
(c) Each person to be admitted as a partner to a partnership formed under either Section 10A-8A-2.01(a)(1) or 10A-8A-2.01(a)(2) may be admitted as a partner without:
(1) acquiring a transferable interest; or
(2) making or being obligated to make a contribution to the partnership.
(Act 2018-125, §7.)
A contribution by a partner may be made to a partnership as agreed by the partners.
(Act 2018-125, §7.)
(a) A partner’s obligation to make a contribution to a partnership is not excused by the partner’s death, disability, or other inability to perform personally.
(b) If a partner does not make a contribution required by an enforceable promise, the partner or the partner’s estate is obligated, at the election of the partnership, to contribute money equal to the value of the portion of the contribution that has not been made. The foregoing election shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the partnership may have under the partnership agreement or applicable law.
(c) The obligation of a partner to make a contribution to a partnership may be compromised only by consent of all partners. A conditional obligation of a partner to make a contribution to a partnership may not be enforced unless the conditions of the obligation have been satisfied or waived as to or by that partner. Conditional obligations include contributions payable upon a discretionary call of a partnership before the time the call occurs.
(d) A creditor of a limited liability partnership which extends credit or otherwise acts in reliance on an obligation described in subsection (a), without notice of any compromise under this subsection, may enforce the original obligation.
(e) A promise by a partner to make a contribution to a partnership is not enforceable unless set forth in a writing signed by the partner.
(Act 2018-125, §7.)
All partners shall share equally in any distributions made by a partnership before its dissolution and winding up.
(Act 2018-125, §7.)
Subject to Section 10A-8A-7.01, a partner has a right to a distribution before the dissolution and winding up of a partnership as provided in the partnership agreement. A decision to make a distribution before the dissolution and winding up of the partnership is a decision in the ordinary course of the business or not for profit activity of the partnership.
(Act 2018-125, §7.)
A partner does not have a right to demand and receive a distribution from a partnership in any form other than money. Except as otherwise provided in Section 10A-8A-8.07, a partnership may distribute an asset in kind if each partner receives a percentage of the asset in proportion to the partner’s share of distributions.
(Act 2018-125, §7.)
If a partner becomes entitled to receive a distribution, the partner has the status of, and is entitled to all remedies available to, a creditor of the partnership with respect to the distribution. However, the partnership’s obligation to make a distribution is subject to offset for any amount owed to the partnership by the partner or dissociated partner on whose account the distribution is made.
(Act 2018-125, §7.)
(a) A limited liability partnership shall not make a distribution to a partner to the extent that at the time of the distribution, after giving effect to the distribution, all liabilities of the limited liability partnership, other than liabilities to partners on account of their transferable interests and liabilities for which the recourse of creditors is limited to specific property of the limited liability partnership, exceed the fair value of the assets of the limited liability partnership, except that the fair value of the property that is subject to a liability for which recourse of creditors is limited shall be included in the assets of the limited liability partnership only to the extent that the fair value of the property exceeds that liability.
(b) A partner who consents to a distribution in violation of subsection (a) or the partnership agreement, and who knew at the time of the distribution that the distribution violated subsection (a) or the partnership agreement, shall be liable to the limited liability partnership for the amount of that distribution.
(c) A partner who receives a distribution in violation of subsection (a) or the partnership agreement, and who knew at the time of the distribution that the distribution violated subsection (a) or the partnership agreement, shall be liable to the limited liability partnership for the amount of the distribution received by that partner. A partner who receives a distribution in violation of subsection (a) or the partnership agreement, and who did not know at the time of the distribution that the distribution violated subsection (a) or the partnership agreement, shall not be liable for the amount of the distribution received by that partner.
(d) Except as provided in subsection (e), this section shall not affect any obligation or liability of a partner under other applicable law for the amount of a distribution.
(e) An action under this section or other applicable law is barred if not commenced within two years after the distribution.
(f) For purposes of subsection (a), “distribution” does not include amounts constituting reasonable compensation for present or past services or reasonable payments made in the ordinary course of the limited liability partnership’s business or not for profit activity under a bona fide retirement plan or other benefits program.
(g) This section shall not apply to distributions made in accordance with Section 10A-8A-8.09.
(Act 2018-125, §7.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) Subject to subsection (f), a partner, without having any particular purpose for seeking the information, may inspect and copy during regular hours at a reasonable location specified by the partnership, required information and any other records maintained by the partnership regarding the partnership’s business or not for profit activity and financial condition.
(b) Subject to subsection (f), each partner and the partnership shall furnish to a partner:
(1) without demand, any information concerning the partnership’s business or not for profit activity reasonably required for the proper exercise of the partner’s rights and duties under the partnership agreement or this chapter; and
(2) on demand, any other information concerning the partnership’s business or not for profit activity, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.
(c) Subject to subsections (e) and (f), on 10 days’ demand made in a writing received by the partnership, a person dissociated as a partner may have access to the information and records described in subsection (a) at the location specified in subsection (a) if:
(1) the information or writing pertains to the period during which the person was a partner;
(2) the person seeks the information or record in good faith; and
(3) it is determined that:
(i) the person seeks the information for a purpose reasonably related to the person’s interest as a partner;
(ii) the person’s demand describes with reasonable particularity the information sought and the purpose for seeking the information; and
(iii) the information sought is directly connected to the person’s purpose.
(d) Within 10 days after receiving a demand pursuant to subsection (c), the partnership in a writing shall inform the person that made the demand:
(1) what information the partnership will provide in response to the demand;
(2) when and where the partnership will provide the information;
(3) if the partnership declines to provide any demanded information, the partnership’s reasons for declining; and
(4) what, if any, restrictions will be imposed pursuant to the partnership agreement or subsection (f).
(e) If a partner dies, Section 10A-8A-5.04 applies.
(f) In addition to any restriction or condition stated in its partnership agreement, a partnership, as to a matter within the ordinary course of its business or not for profit activity, may:
(1) impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient; and
(2) keep confidential from the partners and any other person, for such period of time as the partnership deems reasonable, any information that the partnership reasonably believes to be in the nature of trade secrets or other information the disclosure of which the partnership in good faith believes is not in the best interest of the partnership or could damage the partnership or its business or not for profit activity, or that the partnership is required by law or by agreement with a third party to keep confidential.
In any dispute concerning the reasonableness of a restriction under this subsection, the partnership has the burden of proving reasonableness.
(g) A partnership may charge a person that makes a demand under this section reasonable costs of copying, limited to the costs of labor and material.
(h) A partner or person dissociated as a partner may exercise the rights under this section through an attorney or other agent. Any restriction imposed under subsection (f) or by the partnership agreement applies both to the attorney or other agent and to the partner or person dissociated as a partner.
(i) The rights under this section do not extend to a person as transferee, but the rights under subsection (c) of a person dissociated as a partner may be exercised by the legal representative of an individual who dissociated as a partner under Section 10A-8A-6.01(6).
(j) Any partner who, without reasonable cause, refuses to allow any partner or person dissociated as a partner, or his or her agent or attorney to inspect or copy any records of the partnership to which such partner or person dissociated as a partner is entitled under this section, shall be personally liable to the partner or person dissociated as a partner for a penalty in an amount not to exceed 10 percent of the fair market value of the transferable interest of the partner or person dissociated as a partner, in addition to any other damages or remedy.
(Act 2018-125, §7; Act 2021-299, §5.)
[Effective: 2026-08-01]
(a) Subject to subsection (f), a partner, without having any particular purpose for seeking the information, may inspect and copy during regular hours at a reasonable location specified by the partnership, required information and any other records maintained by the partnership regarding the partnership’s business or not for profit activity and financial condition.
(b) Subject to subsection (f), each partner and the partnership shall furnish to a partner:
(1) without demand, any information concerning the partnership’s business or not for profit activity reasonably required for the proper exercise of the partner’s rights and duties under the partnership agreement or this chapter; and
(2) on demand, any other information concerning the partnership’s business or not for profit activity, except to the extent the demand or the information demanded is unreasonable or otherwise improper under the circumstances.
(c) Subject to subsections (e) and (f), on 10 days’ demand made in a writing received by the partnership, a person dissociated as a partner may have access to the information and records described in subsection (a) at the location specified in subsection (a) if:
(1) the information or writing pertains to the period during which the person was a partner;
(2) the person seeks the information or record in good faith; and
(3) it is determined that:
(i) the person seeks the information for a purpose reasonably related to the person’s interest as a partner;
(ii) the person’s demand describes with reasonable particularity the information sought and the purpose for seeking the information; and
(iii) the information sought is directly connected to the person’s purpose.
(d) Within 10 days after receiving a demand pursuant to subsection (c), the partnership in a writing shall inform the person that made the demand:
(1) what information the partnership will provide in response to the demand;
(2) when and where the partnership will provide the information;
(3) if the partnership declines to provide any demanded information, the partnership’s reasons for declining; and
(4) what, if any, restrictions will be imposed pursuant to the partnership agreement or subsection (f).
(e) If a partner dies, Section 10A-8A-5.04 applies.
(f) In addition to any restriction or condition stated in its partnership agreement, a partnership, as to a matter within the ordinary course of its business or not for profit activity, may:
(1) impose reasonable restrictions and conditions on access to and use of information to be furnished under this section, including designating information confidential and imposing nondisclosure and safeguarding obligations on the recipient;
(2) keep confidential from the partners and any other person, for such period of time as the partnership deems reasonable, any information that the partnership reasonably believes to be in the nature of trade secrets or other information the disclosure of which the partnership in good faith believes is not in the best interest of the partnership or could damage the partnership or its business or not for profit activity, or that the partnership is required by law or by agreement with a third party to keep confidential; and
(3) redact portions of the records to be inspected and copied to the extent the portions so redacted are not directly related to the partner’s or other person’s purpose.
In any dispute concerning the reasonableness of a restriction under this subsection, the partnership has the burden of proving reasonableness.
(g) A partnership may charge a person that makes a demand under this section reasonable costs of copying, limited to the costs of labor and material.
(h) A partner or person dissociated as a partner may exercise the rights under this section through an attorney or other agent. Any restriction imposed under subsection (f) or by the partnership agreement applies both to the attorney or other agent and to the partner or person dissociated as a partner. If the demanding person’s agent or attorney is to inspect and copy the books and records of the partnership, the demand shall be accompanied by a power of attorney or other writing which authorizes the agent or attorney to so act on behalf of the demanding person.
(i) The rights under this section do not extend to a person as transferee, but the rights under subsection (c) of a person dissociated as a partner may be exercised by the legal representative of an individual who dissociated as a partner under Section 10A-8A-6.01(6).
(j) The rights under this section may be denied by the partnership if the partnership determines that the demanding person has within two years preceding his, her, or its demand improperly used any information secured through any prior examination of the records of the partnership.
(k) If a partnership does not within a reasonable time allow a person who complies with the requirements of this section to inspect and copy the records required by this section, the person who complies with this section may apply to the designated court, and if none, the circuit court for the county in which the partnership’s principal office is located in this state, and if none in this state, the circuit court for the county in which the partnership’s most recent registered office is located for an order to permit inspection and copying of the records demanded. The court shall dispose of an application under this subsection on an expedited basis. If the court orders inspection and copying of the records demanded under this section, it may impose reasonable restrictions on their confidentiality, use, or distribution by the demanding person and the court shall also order the partnership to pay the demanding person’s expenses incurred to obtain the order unless the partnership establishes that the partnership refused inspection in good faith because the partnership had:
(1) a reasonable basis for doubt about the right of the demanding person to inspect the records demanded; or
(2) required reasonable restrictions on the confidentiality, use, or distribution of the records demanded to which the demanding person had been unwilling to agree. If the partnership has declined to deliver or make available the records because the demanding person had been unwilling to agree to restrictions proposed by the partnership on the confidentiality, use, or distribution of the records, the partnership shall have the burden of demonstrating that the restrictions proposed by the partnership were reasonable.
(Act 2018-125, §7; Act 2021-299, §5; Act 2026-495, §1.)
(a) The duties that a partner has to the partnership and to the other partners include the duty of loyalty and the duty of care as described in subsections (b) and (c).
(b) A partner’s duty of loyalty to the partnership and to the other partners includes each of the following:
(1) To account to the partnership and to hold as trustee for it any property, profit, or benefit derived by the partner in the conduct or winding up of the partnership’s business or not-for-profit activity or derived from a use by the partner of partnership property, including the appropriation of a partnership opportunity.
(2) To refrain from dealing with the partnership in the conduct or winding up of the partnership’s business or not-for-profit activity as or on behalf of a party having an interest adverse to the partnership.
(3) To refrain from competing with the partnership in the conduct of the partnership’s business or not-for-profit activity before the dissolution of the partnership.
(c) A partner’s duty of care to the partnership and to the other partners in the conduct or winding up of the partnership’s business or not-for-profit activity includes refraining from engaging in grossly negligent or reckless conduct, intentional misconduct, or a knowing violation of law.
(d) A partner shall discharge the duties to the partnership and to the other partners under this chapter and under the partnership agreement and exercise any rights consistently with the implied contractual covenant of good faith and fair dealing.
(e) A partner does not violate a duty or obligation under this chapter or under the partnership agreement merely because the partner’s conduct furthers the partner’s own interest.
(Act 2018-125, §7; Act 2019-304, §1.)
A partner of a partnership shall be fully protected in relying in good faith upon the records of the partnership and upon information, opinions, reports, or statements presented by another partner or agent of the partnership, or by any other person as to matters the partner reasonably believes are within that other person’s professional or expert competence, including information, opinions, reports, or statements as to the value and amount of the assets, liabilities, profits, or losses of the partnership, or the value and amount of assets or reserves or contracts, agreements, or other undertakings that would be sufficient to pay claims and obligations of the partnership, or to make reasonable provision to pay those claims and obligations, or any other facts pertinent to the existence and amount of assets from which distributions to partners or creditors might properly be paid.
(Act 2018-125, §7.)
(a) Except as provided in Sections 10A-8A-3.06, 10A-8A-8.06, or 10A-8A-8.07, a partnership may maintain an action against a partner for a breach of the partnership agreement, or for the violation of a duty to the partnership, causing harm to the partnership.
(b) Except as provided in Sections 10A-8A-3.06, 10A-8A-8.06, or 10A-8A-8.07, a partner may maintain an action against the partnership or another partner for legal or equitable relief, with or without an accounting as to partnership business or not for profit activity, to:
(1) enforce the partner’s rights under the partnership agreement;
(2) enforce the partner’s rights under this chapter, including:
(i) the partner’s rights under Sections 10A-8A-4.01, 10A-8A-4.03, or 10A-8A-4.04;
(ii) the partner’s right on dissociation to have the partner’s transferable interest in the partnership purchased pursuant to Section 10A-8A-7.01 or enforce any other right under Article 6 or 7; or
(iii) the partner’s right to compel a dissolution and winding up of the partnership’s business or not for profit activity under Section 10A-8A-8.01 or enforce any other right under Article 8; or
(3) enforce the rights and otherwise protect the interests of the partner, including rights and interests arising independently of the partnership relationship.
(c) The accrual of, and any time limitation on, a right of action for a remedy under this section is governed by other law. A right to an accounting upon a dissolution and winding up does not revive a claim barred by law.
(Act 2018-125, §7.)
(a) If a partnership for a definite term or particular undertaking is continued, without an express agreement, after the expiration of the term or completion of the undertaking, the rights and duties of the partners remain the same as they were at the expiration or completion, so far as is consistent with a partnership at will.
(b) If the partners, or those of them who habitually acted in the business or not for profit activity during the term or undertaking, continue the business or not for profit activity without any settlement or liquidation of the partnership, they are presumed to have agreed that the partnership will continue.
(Act 2018-125, §7.)
The only interest of a partner which is transferable is the partner’s transferable interest. A transferable interest is personal property.
(Act 2018-125, §7.)
[Superseded: 2026-08-01]
AMENDED BY ACT 2026-495, EFFECTIVE AUGUST 1, 2026. SEE ACT FOR REVISED LANGUAGE.
(a) A transfer, in whole or in part, of a partner’s transferable interest:
(1) is permissible;
(2) does not by itself cause the partner’s dissociation;
(3) does not by itself cause a dissolution and winding up of the partnership; and
(4) subject to Section 10A-8A-5.05, does not entitle the transferee to:
(A) participate in the management or conduct of the partnership’s business or not for profit activity; or
(B) except as otherwise provided in subsection (d), have access to required information, records, or other information concerning the partnership’s business or not for profit activity.
(b) A transferee has a right:
(1) to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled;
(2) to receive upon the dissolution and winding up of the partnership, in accordance with the transfer, the net amount otherwise distributable to the transferor; and
(3) to seek under Section 10A-8A-8.01(5) a judicial determination that it is equitable to wind up the partnership business or not for profit activity.
(c) A transferable interest may be evidenced by a certificate of transferable interest issued by the partnership. A partnership agreement may provide for the transfer of the transferable interest represented by the certificate and make other provisions with respect to the certificate. No certificate of transferable interest shall be issued in bearer form.
(d) In a dissolution and winding up, a transferee is entitled to an account of the partnership’s transactions only from the date of dissolution.
(e) Except as otherwise provided in Sections 10A-8A-6.01(4), 10A-8A-6.01(11), and 10A-8A-6.01(12), when a partner transfers a transferable interest, the transferor retains the rights of a partner other than the right to distributions transferred and retains all duties and obligations of a partner.
(f) A partnership need not give effect to a transferee’s rights under this section until the partnership has notice of the transfer.
(g) When a partner transfers a transferable interest to a person that is admitted as a partner with respect to the transferred interest, the transferee is liable for the partner’s obligations under Sections 10A-8A-4.04 and 10A-8A-4.09 to the extent that the obligations are known to the transferee when the transferee voluntarily accepts admission as a partner.
(h) Notwithstanding anything in Title 43 to the contrary, a partnership agreement may provide that a transferable interest may or shall be transferred in whole or in part, with or without consideration, to one or more persons at the death of the holder of the transferable interest. Any transferable interest transferred pursuant to this subsection shall be subject to any outstanding charging order under Section 10A-8A-5.03. This subsection does not limit the rights of creditors of holders of transferable interests against transferees under this chapter or other laws of this state.
(Act 2018-125, §7; Act 2025-281, §6.)
[Effective: 2026-08-01]
(a) A transfer, in whole or in part, of a partner’s transferable interest:
(1) is permissible;
(2) does not by itself cause the partner’s dissociation;
(3) does not by itself cause a dissolution and winding up of the partnership; and
(4) subject to Section 10A-8A-5.04, does not entitle the transferee to:
(A) participate in the management or conduct of the partnership’s business or not for profit activity; or
(B) except as otherwise provided in subsection (d), have access to required information, records, or other information concerning the partnership’s business or not for profit activity.
(b) A transferee has a right:
(1) to receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled;
(2) to receive upon the dissolution and winding up of the partnership, in accordance with the transfer, the net amount otherwise distributable to the transferor; and
(3) to seek under Section 10A-8A-8.01(5) a judicial determination that it is equitable to wind up the partnership business or not for profit activity.
(c) A transferable interest may be evidenced by a certificate of transferable interest issued by the partnership. A partnership agreement may provide for the transfer of the transferable interest represented by the certificate and make other provisions with respect to the certificate. No certificate of transferable interest shall be issued in bearer form.
(d) In a dissolution and winding up, a transferee is entitled to an account of the partnership’s transactions only from the date of dissolution.
(e) Except as otherwise provided in Sections 10A-8A-6.01(4), 10A-8A-6.01(11), and 10A-8A-6.01(12), when a partner transfers a transferable interest, the transferor retains the rights of a partner other than the right to distributions transferred and retains all duties and obligations of a partner.
(f) A partnership need not give effect to a transferee’s rights under this section until the partnership has notice of the transfer.
(g) When a partner transfers a transferable interest to a person that is admitted as a partner with respect to the transferred interest, the transferee is liable for the partner’s obligations under Sections 10A-8A-4.04 and 10A-8A-4.09 to the extent that the obligations are known to the transferee when the transferee voluntarily accepts admission as a partner.
(h) Notwithstanding anything in Title 43 to the contrary, a partnership agreement may provide that a transferable interest may or shall be transferred in whole or in part, with or without consideration, to one or more persons at the death of the holder of the transferable interest. Any transferable interest transferred pursuant to this subsection shall be subject to any outstanding charging order under Section 10A-8A-5.03. This subsection does not limit the rights of creditors of holders of transferable interests against transferees under this chapter or other laws of this state.
(Act 2018-125, §7; Act 2025-281, §6; Act 2026-495, §1.)
(a) On application to a court of competent jurisdiction by any judgment creditor of a partner or transferee, the court may charge the transferable interest of the judgment debtor with payment of the unsatisfied amount of the judgment with interest. To the extent so charged and after the partnership has been served with the charging order, the judgment creditor has only the right to receive any distribution or distributions to which the judgment debtor would otherwise be entitled in respect of the transferable interest.
(b) The partnership, after being served with a charging order and its terms, shall be entitled to pay or deposit any distribution or distributions to which the judgment debtor would otherwise be entitled in respect of the charged transferable interest into the hands of the clerk of the court so issuing the charging order, and the payment or deposit shall discharge the partnership and the judgment debtor from liability for the amount so paid or deposited and any interest that might accrue thereon. Upon receipt of the payment or deposit, the clerk of the court shall notify the judgment creditor of the receipt of the payment or deposit. The judgment creditor, after any payment or deposit into the court, shall petition the court for payment of so much of the amount paid or deposited as is held by the court as may be necessary to pay the judgment creditor’s judgment. To the extent the court has excess amounts paid or deposited on hand after the payment to the judgment creditor, the excess amounts paid or deposited shall be distributed to the judgment debtor and the charging order shall be extinguished. The court, may in its discretion, order the clerk to deposit, pending the judgment creditor’s petition, any money paid or deposited with the clerk, in an interest bearing account at a bank authorized to receive deposits of public funds.
(c) A charging order constitutes a lien on the judgment debtor’s transferable interest.
(d) Subject to subsection (c):
(1) a judgment debtor that is a partner retains the rights of a partner and remains subject to all duties and obligations of a partner; and
(2) a judgment debtor that is a transferee retains the rights of a transferee and remains subject to all duties and obligations of a transferee.
(e) This chapter does not deprive any partner or transferee of the benefit of any exemption laws applicable to the partner’s or transferee’s transferable interest.
(f) This section provides the exclusive remedy by which a judgment creditor of a partner or transferee may satisfy a judgment out of the judgment debtor’s transferable interest and the judgment creditor shall have no right to foreclose, under this chapter or any other law, upon the charging order, the charging order lien, or the judgment debtor’s transferable interest. A judgment creditor of a partner or transferee shall have no right to obtain possession of, or otherwise exercise legal or equitable remedies with respect to, the property of a partnership. Court orders for actions or requests for accounts and inquiries that the judgment debtor might have made are not available to the judgment creditor attempting to satisfy the judgment out of the judgment debtor’s transferable interest and may not be ordered by a court.
(Act 2018-125, §7.)
If a partner dies, the deceased partner’s personal representative or other legal representative may:
(a) for the period of time, if any, that the deceased partner’s personal representative or other legal representative holds the deceased partner’s transferable interest:
(1) exercise the rights of a holder of transferable interests under this chapter;
(2) exercise the rights of a transferee under Section 10A-8A-5.02; and
(3) for purposes of settling the estate, exercise the rights of a current partner under Section 10A-8A-4.10; and
(b) for the period of time that the deceased partner’s personal representative or other legal representative does not hold the deceased partner’s transferable interest, for purposes of settling the estate, exercise the rights of a person dissociated as a partner under Section 10A-8A-4.10.
(Act 2018-125, §7; Act 2025-281, §6.)
A person is dissociated from a partnership as a partner upon the occurrence of any of the following events:
(1) the partnership has notice of the person’s express will to dissociate as a partner, except that if the person specifies a dissociation date later than the date the partnership had notice, then the person is dissociated as a partner on that later date;
(2) an event stated in the partnership agreement as causing the person’s dissociation as a partner occurs;
(3) the person is expelled as a partner pursuant to the partnership agreement;
(4) the person is expelled as a partner by the unanimous consent of the other partners if:
(A) it is unlawful to carry on the partnership’s business or not for profit activity with the person as a partner;
(B) there has been a transfer of all of the person’s transferable interest in the partnership, other than a transfer for security purposes;
(C) the person is an organization and, within 90 days after the partnership notifies the person that it will be expelled as a partner because it has filed a statement of dissolution or the equivalent, or its right to conduct business or not for profit activity has been suspended by its jurisdiction of formation, the statement of dissolution or the equivalent has not been revoked or its right to conduct business or not for profit activity has not been reinstated; or
(D) the person is an organization and, within 90 days after the partnership notifies the person that it will be expelled as a partner because the person has been dissolved and its business or not for profit activity is being wound up, the organization has not been reinstated or the dissolution and winding up have not been revoked or cancelled;
(5) on application by the partnership, the person is expelled as a partner by judicial order because the person:
(A) has engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the partnership’s business or not for profit activity;
(B) has willfully or persistently committed, or is willfully or persistently committing, a material breach of the partnership agreement or the person’s duty or obligation under this chapter or other applicable law; or
(C) has engaged, or is engaging, in conduct relating to the business or not for profit activity of the partnership that makes it not reasonably practicable to carry on the business or not for profit activity with the person as partner;
(6) in the case of a person who is an individual, and the person dies, there is appointed a guardian or general conservator for the person or there is a judicial determination that the person has otherwise become incapable of performing the person’s duties as a partner under this chapter or the partnership agreement;
(7) the person becomes a debtor in bankruptcy, executes an assignment for the benefit of creditors, or seeks, consents, or acquiesces to the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property;
(8) in the case of a person that is a trust or is acting as a partner by virtue of being a trustee of a trust, the trust’s entire transferable interest in the partnership is distributed, but not solely by reason of the substitution of a successor trustee;
(9) in the case of a person that is an estate or is acting as a partner by virtue of being a personal representative of an estate, the estate’s entire transferable interest in the partnership is distributed, but not solely by reason of the substitution of a successor personal representative;
(10) in the case of a person that is not an individual, the legal existence of the person otherwise terminates;
(11) the transfer of a partner’s entire remaining transferable interest to another partner;
(12) the transfer of a partner’s entire remaining transferable interest to a transferee upon the transferee’s becoming a partner; or
(13) the partnership’s participation in a conversion or merger under Article 9, or Article 8 of Chapter 1 of this title if the partnership:
(A) is not the converted or surviving entity; or
(B) is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a partner.
(Act 2018-125, §7.)
(a) A person has the power to dissociate as a partner at any time, rightfully or wrongfully, by express will pursuant to Section 10A-8A-6.01(1).
(b) A person’s dissociation is wrongful only if:
(1) it is in breach of an express provision of the partnership agreement; or
(2) in the case of a partnership for a definite term or particular undertaking, before the expiration of the term or the completion of the undertaking if any of the following apply:
(A) the person dissociates as a partner by express will, unless the dissociation follows not later than 90 days after another person’s dissociation by death or otherwise under Section 10A-8A-6.01(6) through (10) or wrongful dissociation under this subsection;
(B) the person is expelled as a partner by judicial order under Section 10A-8A-6.01(5);
(C) the person is dissociated under Section 10A-8A-6.01(7); or
(D) in the case of a person that is not a trust other than a business trust, an estate, or an individual, the person is expelled or otherwise dissociated because it willfully dissolved or terminated.
(c) A person that wrongfully dissociates as a partner is liable to the partnership and to the other partners for damages caused by the dissociation. The liability is in addition to any debt, obligation, or other liability of the partner to the partnership or the other partners.
(Act 2018-125, §7.)
(a) If a person’s dissociation results in a dissolution and winding up of the partnership business or not for profit activity, Article 8 applies; otherwise, Article 7 applies.
(b) Upon a person’s dissociation as a partner:
(1) the person’s right to participate in the management and conduct of the partnership business or not for profit activity terminates, except as provided in Section 10A-8A-8.03;
(2) the person’s duty of loyalty under Section 10A-8A-4.11(b)(3) terminates; and
(3) the person’s duty of loyalty under Section 10A-8A-4.11(b)(1) and (2) and duty of care under Section 10A-8A-4.11(c) continue only with regard to matters arising and events occurring before the person’s dissociation, unless the partner participates in winding up the partnership’s business or not for profit activity pursuant to Section 10A-8A-8.03.
(Act 2018-125, §7.)
(a) If a person is dissociated as a partner from a partnership without resulting in a dissolution and winding up of the partnership business or not for profit activity under Section 10A-8A-8.01, the partnership shall cause that person’s transferable interest in the partnership owned by that person at the time of dissociation to be purchased for a buyout price determined pursuant to subsection (b).
(b) The buyout price of the transferable interest owned by the person at the time of dissociation as a partner is an amount equal to the fair value of that person’s transferable interest as of the date of dissociation. Interest on the buyout price must be paid from the date of dissociation to the date of payment.
(c) Damages for wrongful dissociation under Section 10A-8A-6.02(b) and (c), and all other amounts owing, whether or not presently due, from the person dissociated as a partner to the partnership, must be offset against the buyout price. Interest on damages for wrongful dissociation must be paid from the date of the wrongful dissociation to the date of payment. Interest on all other amounts, whether or not presently due, must be paid from the date the amount owed becomes due to the date of payment.
(d) A partnership shall indemnify a person dissociated as a partner whose transferable interest is being purchased against all partnership liabilities, whether incurred before or after the dissociation, except liabilities incurred by an act of the person dissociated as a partner under Section 10A-8A-7.02.
(e) If no agreement for the purchase of the transferable interests of a person dissociated as a partner is reached within 120 days after a written demand for payment, the partnership shall pay, or cause to be paid, in cash to the person dissociated as a partner the amount the partnership estimates to be the buyout price and accrued interest, reduced by any offsets and accrued interest under subsection (c).
(f) If a deferred payment is authorized under subsection (h), the partnership may tender a written offer to pay the amount it estimates to be the buyout price and accrued interest, reduced by any offsets under subsection (c), stating the time of payment, the amount and type of security for payment, and the other terms and conditions of the obligation.
(g) The payment or tender required by subsection (e) or (f) must be accompanied by the following:
(1) a written statement of partnership assets and liabilities as of the date of dissociation;
(2) the latest available partnership balance sheet and income statement, if any;
(3) a written explanation of how the estimated amount of the payment was calculated; and
(4) written notice which shall state that the payment is in full satisfaction of the obligation to purchase unless, within 120 days after the written notice, the person dissociated as a partner commences an action to determine the buyout price of that person’s transferable interest, any offsets under subsection (c), or other terms of the obligation to purchase.
(h) A person that wrongfully dissociates as a partner before the expiration of a definite term or the completion of a particular undertaking is not entitled to payment of any portion of the buyout price until the expiration of the term or completion of the undertaking, unless the person establishes to the satisfaction of the court that earlier payment will not cause undue hardship to the business or not for profit activity of the partnership. A deferred payment under this subsection must bear interest and, to the extent it would not cause undue hardship to the business or not for profit activity of the partnership, be adequately secured.
(i) A person dissociated as a partner may maintain an action against the partnership, pursuant to Section 10A-8A-4.13(b)(2)(ii), to determine the buyout price of that person’s transferable interest under subsection (b), any offsets under subsection (c), or other terms of the obligation to purchase. The action must be commenced within 120 days after the partnership has tendered payment or an offer to pay or within one year after written demand for payment if no payment or offer to pay is tendered. The court shall determine the buyout price of that person’s transferable interest under subsection (b), any offset due under subsection (c), and accrued interest, and enter judgment for any additional payment or refund. If deferred payment is authorized under subsection (h), the court shall also determine the security, if any, for payment and other terms of the obligation to purchase. The court may assess reasonable attorney’s fees and the fees and expenses of appraisers or other experts for a party to the action, in amounts the court finds equitable, against a party that the court finds acted arbitrarily, vexatiously, or not in good faith. The finding may be based on the partnership’s failure to tender payment or an offer to pay or to comply with subsection (g).
(Act 2018-125, §7.)
(a) For one year after a person dissociates as a partner without resulting in a dissolution and winding up of the partnership business or not for profit activity, the partnership, including a surviving partnership or other surviving entity under Article 9 of this chapter and Article 8 of Chapter 1, is bound by an act of the person dissociated as a partner which would have bound the partnership under Section 10A-8A-3.01 before dissociation only if at the time of entering into the transaction the other party:
(1) reasonably believed that the person dissociated as a partner was then a partner and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the person’s dissociation as a partner; and
(3) is not deemed to have had knowledge or notice under Section 10A-8A-1.03.
(b) A person dissociated as a partner is liable to the partnership for any damage caused to the partnership arising from an obligation incurred by the person dissociated as a partner after dissociation for which the partnership is liable under subsection (a).
(Act 2018-125, §7.)
(a) A person’s dissociation as a partner does not of itself discharge that person’s liability for a partnership obligation incurred before dissociation. A person dissociated as a partner is not liable for a partnership obligation incurred after dissociation, except as provided in subsection (b).
(b) A person that dissociates as a partner without resulting in a dissolution and winding up of the partnership business or not for profit activity is liable as a partner to the other party in a transaction entered into by the partnership, or a surviving partnership or other surviving entity under Article 9 of this chapter or Article 8 of Chapter 1, within one year after the partner’s dissociation, only if the partner is liable for the obligation under Section 10A-8A-3.06 and at the time of entering into the transaction the other party:
(1) reasonably believed that the person dissociated as a partner was then a partner and reasonably relied on such belief in entering into the transaction;
(2) did not have notice of the person’s dissociation; and
(3) is not deemed to have had knowledge or notice under Section 10A-8A-1.03 of the person’s dissociation.
(c) By agreement with the partnership creditor and the partners continuing the business or not for profit activity, a person dissociated as a partner may be released from liability for a partnership obligation.
(d) A person dissociated as a partner is released from liability for a partnership obligation if a partnership creditor, with notice of the person’s dissociation but without the person’s consent, agrees to a material alteration in the nature or time of payment of a partnership obligation.
(Act 2018-125, §7.)
(a) A person dissociated as a partner or the partnership may file a statement of dissociation stating the name of the partnership and that the person is dissociated as a partner from the partnership.
(b) A statement of dissociation is a limitation on the authority of a person dissociated as a partner for the purposes of Section 10A-8A-3.03.
(Act 2018-125, §7.)
Continued use of a partnership name, or a person’s name that is dissociated as a partner as part thereof, by partners continuing the business or not for profit activity does not of itself make the person dissociated as a partner liable for an obligation of the partners or the partnership continuing the business or not for profit activity.
(Act 2018-125, §7.)
A partnership is dissolved, and its business or not for profit activity must be wound up, upon the occurrence of the first of the following events:
(1) in a partnership at will, the partnership knows or has notice of a person’s express will to dissociate as a partner, other than a partner that has dissociated under Section 10A-8A-6.01(2) through (10), but, if the person has specified a dissociation date later than the date the partnership knew or had notice, on the later date;
(2) in a partnership for a definite term or particular undertaking:
(i) within 90 days after a partner’s dissociation by death or otherwise under Section 10A-8A-6.01(6) through (10), or a partner’s wrongful dissociation under Section 10A-8A-6.02(b), at least half of the remaining partners affirmatively consent to dissolve the partnership and wind up the partnership business or not for profit activity, for which purpose a partner’s rightful dissociation pursuant to Section 10A-8A-6.02(b)(2)(A) constitutes the expression of that partner’s will to wind up the business or not for profit activity of the partnership;
(ii) the consent of all of the partners to dissolve and wind up the partnership’s business or not for profit activity; or
(iii) the expiration of the term or the completion of the undertaking;
(3) an event or circumstance that the partnership agreement states causes dissolution;
(4) on application by a partner, the entry of an order by a court of competent jurisdiction dissolving the partnership on the grounds that it is not reasonably practicable to carry on the partnership’s business or not for profit activity in conformity with the partnership agreement;
(5) on application by a transferee of a partner’s transferable interest, a judicial determination that it is equitable to wind up the partnership business or not for profit activity:
(i) after the expiration of the term or completion of the undertaking, if the partnership was for a definite term or particular undertaking at the time of the transfer; or
(ii) at any time, if the partnership was a partnership at will at the time of the transfer;
(6) the passage of 90 consecutive days during which the partnership does not have at least two partners, unless either of the following applies:
(i) The remaining partner agrees in writing within 90 days after the dissociation of the last partner, to continue the business or not for profit activity of the partnership and to admit one or more new partners; or
(ii) The business or not for profit activity of the partnership is continued and one or more new partners are admitted in the manner stated in the partnership agreement; or
(7) the passage of 90 consecutive days during which the partnership does not have any remaining partners, unless either of the following applies:
(i) The holders of all of the transferable interests in the partnership agree in writing, within 90 days after the dissociation of the last partner, to continue the business or not for profit activity of the partnership and to admit two or more new partners; or
(ii) The business or not for profit activity of the partnership is continued and two or more new partners are admitted in the manner stated in the partnership agreement.
(Act 2018-125, §7.)
(a) A dissolved partnership continues its existence as a partnership but may not carry on any business or not for profit activity except as is appropriate to wind up and liquidate its business or not for profit activity, including:
(1) collecting its assets;
(2) disposing of its properties that will not be distributed in kind to persons owning transferable interests;
(3) discharging or making provisions for discharging its liabilities;
(4) distributing its remaining property in accordance with Section 10A-8A-8.09; and
(5) doing every other act necessary to wind up and liquidate its business or not for profit activity.
(b) In winding up its business or not for profit activity, a partnership may:
(1) deliver to the Secretary of State for filing a statement of dissolution setting forth:
(A) The name of the partnership;
(B) If the partnership has filed a statement of partnership, a statement of not for profit partnership, a statement of authority, or a statement of limited liability partnership, the unique identifying number or other designation as assigned by the Secretary of State;
(C) That the partnership has dissolved;
(D) The name, street address, and mailing address of the partner who will be winding up the business or not for profit activity of the partnership pursuant to Section 10A-8A-8.03(a), and if none, the name, street address, and mailing address of the person appointed pursuant to Section 10A-8A-8.03(b) or (c) to wind up the business or not for profit activity of the partnership;
(E) If the partnership has filed a statement of partnership, a statement of not for profit partnership, or a statement of limited liability partnership, the name, street address, and mailing address of the partnership’s registered agent; and
(F) Any other information the partnership deems appropriate;
(2) preserve the partnership’s business or not for profit activity as a going concern for a reasonable time;
(3) prosecute, defend, or settle actions or proceedings, whether civil, criminal, or administrative;
(4) transfer the partnership’s assets;
(5) resolve disputes by mediation or arbitration; and
(6) merge or convert in accordance with Article 9 of this chapter or Article 8 of Chapter 1.
(c) The dissolution of a partnership does not:
(1) transfer title to the partnership’s property;
(2) prevent the commencement of a proceeding by or against the partnership in its partnership name;
(3) terminate, abate, or suspend a proceeding pending by or against the partnership on the effective date of dissolution;
(4) terminate the authority of its registered agent; or
(5) abate, suspend, or otherwise alter the application of Section 10A-8A-3.06.
(d) A statement of dissolution is a filing instrument under Chapter 1.
(e) If a partnership has not filed a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, or a statement of authority and the Secretary of State has not assigned a unique identifying number or other designation to that partnership, then the Secretary of State shall assign a unique identifying number or other designation to that partnership when that partnership delivers to the Secretary of State for filing that partnership’s statement of dissolution without the need of that partnership delivering to the Secretary of State for filing a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, or a statement of authority.
(Act 2018-125, §7; Act 2020-73, §10; Act 2021-299, §5; Act 2025-281, §6.)
(a) If a dissolved partnership has a partner or partners that have not dissociated, that partner or those partners shall wind up the business or not for profit activity of the partnership and shall have the powers set forth in Section 10A-8A-8.04. A person whose dissociation as a partner resulted in the dissolution of the partnership may participate in the winding up as if still a partner, unless the dissociation was wrongful.
(b) If a dissolved partnership does not have a partner and no person has the right to participate in winding up under subsection (a), the personal or legal representative of the last person to have been a partner may wind up the partnership’s business or not for profit activity. If the representative does not exercise that right, a person to wind up the partnership’s business or not for profit activity may be appointed by the affirmative vote or consent of transferees owning a majority of the transferable interests at the time the consent is to be effective.
(c) A court of competent jurisdiction may order judicial supervision of the winding up of a dissolved partnership, including the appointment of a person to wind up the partnership’s business or not for profit activity:
(1) on application of a partner or any person entitled under the last sentence of subsection (a) to participate in the winding up of the dissolved partnership, if the applicant establishes good cause;
(2) on application of a transferee, if the partnership does not have a partner and within a reasonable time following the dissolution no person having the authority to wind up the business or not for profit activity of the partnership has been appointed pursuant to subsection (b);
(3) on application of a transferee, if the partnership does not have a partner and within a reasonable time following the dissolution the person appointed pursuant to subsection (b) is not winding up the business or not for profit activity of the partnership; or
(4) in connection with a proceeding under Section 10A-8A-8.01(4) or (5).
(d) A person appointed under subsection (b) or (c) is not a partner but:
(1) has the powers of a partner under Section 10A-8A-8.04 but is not liable for the debts, liabilities, and other obligations of the partnership solely by reason of having or exercising those powers or otherwise acting to wind up the business or not for profit activity of the dissolved partnership; and
(2) shall promptly deliver to the Secretary of State for filing a statement of dissolution setting forth the items listed in Section 10A-8A-8.02(b)(1) and the following:
(A) that the partnership does not have a partner;
(B) the name, street address, and mailing address of each person that has been appointed to wind up the business or not for profit activity of the partnership;
(C) that each person has been appointed pursuant to subsection (b) or (c), as applicable, to wind up the business or not for profit activity of the partnership;
(D) pursuant to this section, that each person has the powers of a partner under Section 10A-8A-8.04 but is not liable for the debts, liabilities, and other obligations of the partnership solely by reason of having or exercising those powers or otherwise acting to wind up the business or not for profit activity of the dissolved partnership; and
(E) if the partnership has filed a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership or a statement of authority, the unique identifying number or other designation as assigned by the Secretary of State.
(e) If a partnership has not filed a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, or statement of authority and the Secretary of State has not assigned a unique identifying number or other designation to that partnership, then the Secretary of State shall assign a unique identifying number or other designation to that partnership when the person required under subsection (d) delivers to the Secretary of State for filing the statement of dissolution for that partnership, without the need to deliver to the Secretary of State for filing a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, or a statement of authority.
(Act 2018-125, §7; Act 2025-281, §6.)
(a) After dissolution, a partnership is bound by the act of a partner or by the act of a dissociated partner acting as a partner under Section 10A-8A-8.03(a) which:
(1) is appropriate for winding up the partnership’s business or not for profit activity; or
(2) would have bound the partnership under Section 10A-8A-3.01 before dissolution, if, at the time the other party enters into the transaction, the other party does not have notice of the dissolution.
(b) Subject to subsection (a), a person dissociated as a partner binds a partnership through an act occurring after dissolution only if:
(1) at the time the other party enters into the transaction the other party does not have notice of the dissociation and reasonably believes that the person is a partner; and
(2) the act:
(A) is appropriate for winding up the partnership’s business or not for profit activity; or
(B) would have bound the partnership under Section 10A-8A-3.01 before dissolution and at the time the other party enters into the transaction the other party does not have notice of the dissolution.
(Act 2018-125, §7.)
(a) If a partner having knowledge of the dissolution causes a partnership to incur an obligation under Section 10A-8A-8.04(a) by an act that is not appropriate for winding up the partnership’s business or not for profit activity, the partner is liable:
(1) to the partnership for any damage caused to the partnership arising from the obligation; and
(2) if another partner or a person dissociated as a partner is liable for the obligation, to that other partner or person for any damage caused to that other partner or person arising from the liability.
(b) If a person dissociated as a partner causes a partnership to incur an obligation under Section 10A-8A-8.04(b), the person is liable:
(1) to the partnership for any damage caused to the partnership arising from the obligation; and
(2) if a partner or another person dissociated as a partner is liable for the obligation, to the partner or other person for any damage caused to the partner or other person arising from the liability.
(c) A person dissociated as a partner is not liable under subsection (b) if:
(1) the last sentence of Section 10A-8A-8.03(a) permits the person to participate in winding up; and
(2) the act that causes the partnership to be bound under Section 10A-8A-8.04(b) is appropriate for winding up the partnership’s business or not for profit activity.
(Act 2018-125, §7.)
(a) A dissolved partnership may dispose of any known claims against it by following the procedures described in subsection (b) at any time after the effective date of the dissolution of the partnership.
(b) A dissolved partnership may give notice of the dissolution in writing to the holder of any known claim. The notice must:
(1) identify the dissolved partnership;
(2) describe the information required to be included in a claim;
(3) provide a mailing address to which the claim is to be sent;
(4) state the deadline, which may not be fewer than 120 days from the effective date of the notice, by which the dissolved partnership must receive the claim;
(5) state that if not sooner barred, the claim will be barred if not received by the deadline; and
(6) unless the partnership has been throughout its existence a limited liability partnership, state that the barring of a claim against the partnership will also bar any corresponding claim against any partner or person dissociated as a partner which is based on Section 10A-8A-3.06.
(c) Unless sooner barred by any other statute limiting actions, a claim against a dissolved partnership is barred:
(1) if a claimant who was given notice under subsection (b) does not deliver the claim to the dissolved partnership by the deadline; or
(2) if a claimant whose claim was rejected by the dissolved partnership, does not commence a proceeding to enforce the claim within 90 days from the effective date of the rejection notice.
(d) For purposes of this section, “known claim” or “claim” includes unliquidated claims, but does not include a contingent liability that has not matured so that there is no immediate right to bring suit or a claim based on an event occurring after the effective date of dissolution.
(e) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(Act 2018-125, §7; Act 2021-299, §5.)
(a) A dissolved partnership may publish notice of its dissolution and request that persons with claims against the dissolved partnership present them in accordance with the notice.
(b) The notice authorized by subsection (a) must:
(1) be published at least one time in a newspaper of general circulation in the county in which the dissolved partnership’s principal office in this state is located, and if none, was last located;
(2) describe the information that must be included in a claim and provide a mailing address to which the claim is to be sent;
(3) state that if not sooner barred, a claim against the dissolved partnership will be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice; and
(4) unless the partnership has been throughout its existence a limited liability partnership, state that the barring of a claim against the partnership will also bar any corresponding claim against any partner or person dissociated as a partner which is based on Section 10A-8A-3.06.
(c) If a dissolved partnership publishes a newspaper notice in accordance with subsection (b), unless sooner barred by any other statute limiting actions, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved partnership within two years after the publication date of the newspaper notice:
(1) a claimant who was not given notice under Section 10A-8A-8.06;
(2) a claimant whose claim was timely sent to the dissolved partnership but not acted on by the dissolved partnership; and
(3) a claimant whose claim is contingent at the effective date of the dissolution of the partnership, or is based on an event occurring after the effective date of the dissolution of the partnership.
(d) A claim that is not barred under this section, any other statute limiting actions, or Section 10A-8A-8.06 may be enforced:
(1) against a partnership, to the extent of its undistributed assets;
(2) except as provided in subsection (h), if the assets of a dissolved partnership have been distributed after dissolution, against the person or persons owning the transferable interests to the extent of that person’s proportionate share of the claim or of the assets distributed to that person after dissolution, whichever is less, but a person’s total liability for all claims under subsection (d) may not exceed the total amount of assets distributed to that person after dissolution of the partnership; or
(3) against any person liable on the claim under Sections 10A-8A-3.06, 10A-8A-7.03, and 10A-8A-8.05.
(e) A dissolved partnership that published a notice under this section may file an application with a court of competent jurisdiction for a determination of the amount and form of security to be provided for payment of claims that are contingent or have not been made known to the dissolved partnership or that are based on an event occurring after the effective date of the dissolution of the partnership but that, based on the facts known to the dissolved partnership, are reasonably estimated to arise after the effective date of the dissolution of the partnership. Provision need not be made for any claim that is or is reasonably anticipated to be barred under subsection (c).
(f) Within 10 days after the filing of the application provided for in subsection (e), notice of the proceeding shall be given by the dissolved partnership to each potential claimant as described in subsection (e).
(g) The court under subsection (e) may appoint a guardian ad litem to represent all claimants whose identities are unknown in any proceeding brought under this section. The reasonable fees and expenses of the guardian, including all reasonable expert witness fees, shall be paid by the dissolved partnership.
(h) Provision by the dissolved partnership for security in the amount and the form ordered by the court under subsection (e) shall satisfy the dissolved partnership’s obligation with respect to claims that are contingent, have not been made known to the dissolved partnership, or are based on an event occurring after the effective date of the dissolution of the partnership, and those claims may not be enforced against a person owning a transferable interest to whom assets have been distributed by the dissolved partnership after the effective date of the dissolution of the partnership.
(i) Nothing in this section shall be deemed to extend any otherwise applicable statute of limitations.
(j) If a claim has been satisfied, disposed of, or barred under Section 10A-8A-8.06, this section, or other law, the person or persons designated to wind up the business or not for profit activity of a partnership, and the owners of the transferable interests receiving assets from the partnership, shall not be liable for that claim.
(Act 2018-125, §7; Act 2020-73, §10; Act 2021-299, §5.)
If a claim against a dissolved partnership is barred under Section 10A-8A-8.06 or 10A-8A-8.07, any corresponding claim under Sections 10A-8A-3.06, 10A-8A-7.03, and 10A-8A-8.05 is also barred.
(Act 2018-125, §7.)
Upon the winding up of a partnership, the assets of the partnership, including any obligation under Sections 10A-8A-4.03, 10A-8A-4.04, and 10A-8A-4.09, and any contribution required by this section, shall be applied as follows:
(a) Payment, or adequate provision for payment, shall be made to creditors, including, to the extent permitted by law, partners who are creditors, in satisfaction of liabilities of the partnership.
(b) After a partnership complies with subsection (a), any surplus must be distributed:
(1) first, to each person owning a transferable interest that reflects contributions made on account of the transferable interest and not previously returned, an amount equal to the value of the person’s unreturned contributions; and
(2) then to each person owning a transferable interest in the proportions in which the owners of transferable interests share in distributions before dissolution.
(c) If the partnership does not have sufficient surplus to comply with subsection (b)(1), any surplus must be distributed among the owners of transferable interests in proportion to the value of their respective unreturned contributions.
(d) If a partnership’s assets are insufficient to satisfy all of its obligations under subsection (a), with respect to each unsatisfied obligation incurred when the partnership was not a limited liability partnership, the following rules apply:
(1) Each person that was a partner when the obligation was incurred and that has not been released from the obligation under Section 10A-8A-7.03(c) and (d) shall contribute to the partnership for the purpose of enabling the partnership to satisfy the obligation. The contribution due from each of those persons is in proportion to the right to receive distributions in the capacity of partner in effect for each of those persons when the obligation was incurred.
(2) If a person does not contribute the full amount required under paragraph (1) with respect to an unsatisfied obligation of the partnership, the other persons required to contribute by paragraph (1) on account of the obligation shall contribute the additional amount necessary to discharge the obligation. The additional contribution due from each of those other persons is in proportion to the right to receive distributions in the capacity of partner in effect for each of those other persons when the obligation was incurred.
(3) If a person does not make the additional contribution required by paragraph (2), further additional contributions are determined and due in the same manner as provided in that paragraph.
(e) A person that makes an additional contribution under subsection (d)(2) or (3) may recover from any person whose failure to contribute under subsection (d)(1) or (2) necessitated the additional contribution. A person may not recover under this subsection more than the amount additionally contributed. A person’s liability under this subsection may not exceed the amount the person failed to contribute.
(f) The estate of a deceased individual is liable for the person’s obligations under this section.
(g) An assignee for the benefit of creditors of a partnership or a partner, or a person appointed by a court to represent creditors of a partnership or a partner, may enforce a person’s obligation to contribute under subsection (d).
(Act 2018-125, §7; Act 2021-299, §5.)
A partnership that has been dissolved may be reinstated upon compliance with the following conditions:
(a) the consent shall have been obtained from the partners or other persons entitled to consent at the time that is:
(1) required for reinstatement under the partnership agreement; or
(2) if the partnership agreement does not state the consent required for reinstatement, sufficient for dissolution under the partnership agreement; or
(3) if the partnership agreement neither states the consent required for reinstatement nor for dissolution, sufficient for dissolution under this chapter;
(b) in the case of a written objection to reinstatement having been delivered to the partnership before or at the time of the consent required by subsection (a) by the partners or other persons having authority under the partnership agreement to bring about or prevent dissolution of the partnership, those partners or persons withdrawing that written objection effective at the time of the consent required by subsection (a);
(c) in the case of a partnership dissolved in a judicial proceeding initiated by one or more of the partners pursuant to Section 10A-8A-8.01(4), the consent of each of those partners shall have been obtained and shall be included in the consent required by subsection (a);
(d) in the case of a partnership dissolved in a judicial proceeding initiated by one or more of transferees pursuant to Section 10A-8A-8.01(5), the consent of each of those transferees shall have been obtained and shall be included in the consent required by subsection (a); and
(e) in the case of a partnership that has filed a statement of dissolution, the filing of a certificate of reinstatement in accordance with Section 10A-8A-8.11.
(Act 2018-125, §7; Act 2021-299, §5.)
A partnership that has dissolved, has filed a statement of dissolution, and is seeking to reinstate in accordance with Section 10A-8A-8.10, shall deliver to the Secretary of State for filing a certificate of reinstatement in accordance with the following:
(a) A certificate of reinstatement shall be delivered to the Secretary of State for filing. The certificate of reinstatement shall state:
(1) the name of the partnership before reinstatement;
(2) the name of the partnership following reinstatement, which partnership name shall comply with Section 10A-8A-8.12;
(3) the date of formation of the partnership if known;
(4) the date of filing its statement of dissolution, if any, and all amendments and restatements thereof, and the office or offices where filed;
(5) if the partnership has filed a statement of partnership, a statement of not for profit partnership, a statement of authority, or a statement of limited liability partnership, the unique identifying number or other designation as assigned by the Secretary of State;
(6) the date of dissolution of the partnership, if known;
(7) a statement that all applicable conditions of Section 10A-8A-8.10 have been satisfied; and
(8) the address of the registered office and the name of the registered agent at that address in compliance with Article 5 of Chapter 1.
(b) If a partnership has not filed a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, or a statement of dissolution and the Secretary of State has not assigned a unique identifying number or other designation to that partnership, then the Secretary of State shall assign a unique identifying number or other designation to that partnership when the partnership delivers to the Secretary of State for filing the certificate of reinstatement for that partnership, without the need to deliver to the Secretary of State for filing a statement of partnership, a statement of not for profit partnership, a statement of limited liability partnership, a statement of authority, or a statement of dissolution.
(c) A certificate of reinstatement is a filing instrument under Chapter 1.
(Act 2018-125, §7; Act 2020-73, §10; Act 2025-281, §6.)
The name of a partnership following the filing of a certificate of reinstatement shall be determined as follows:
(a) if the partnership is listed in the Secretary of State’s records as a partnership that has been dissolved, then the name of a partnership following reinstatement shall be that partnership name at the time of reinstatement if that partnership name complies with Article 5 of Chapter 1 at the time of reinstatement; and
(b) if that partnership name does not comply with Article 5 of Chapter 1, the name of the partnership following reinstatement shall be that partnership name followed by the word “reinstated.”
(Act 2018-125, §7.)
(a) Subject to subsection (b), upon reinstatement, the partnership shall be deemed for all purposes to have continued its business or not for profit activity as if dissolution had never occurred; and each right inuring to, and each debt, obligation, and liability incurred by, the partnership after the dissolution shall be determined as if the dissolution had never occurred.
(b) The rights of persons acting in reliance on the dissolution before those persons had notice of the reinstatement shall not be adversely affected by the reinstatement.
(Act 2018-125, §7.)
As used in this article, unless the context otherwise requires, the following terms mean:
(1) CONSTITUENT ORGANIZATION means an organization that is party to a merger under this article.
(2) CONSTITUENT PARTNERSHIP means a constituent organization that is a partnership.
(3) CONVERTED ORGANIZATION means the organization into which a converting organization converts pursuant to this article.
(4) CONVERTING ORGANIZATION means an organization that converts into another organization pursuant to this article.
(5) CONVERTING PARTNERSHIP means a converting organization that is a partnership.
(6) GOVERNING STATUTE of an organization means the statute that governs the organization’s internal affairs.
(7) ORGANIZATION means a partnership, including a limited liability partnership; limited partnership, including a limited liability limited partnership; limited liability company; business trust; corporation; nonprofit corporation; professional corporation; or any other person having a governing statute. The term includes domestic and foreign organizations whether or not organized for profit.
(8) ORGANIZATIONAL DOCUMENTS means:
(A)(i) for a partnership, its partnership agreement and, if applicable, its statement of partnership, statement of not for profit partnership, or statement of limited liability partnership; and (ii) for a foreign partnership, its partnership agreement and, if applicable, its statement of foreign limited liability partnership;
(B) for a limited partnership or foreign limited partnership, its certificate of formation and partnership agreement, or comparable writings as provided in its governing statute;
(C) for a limited liability company or foreign limited liability company, its certificate of formation and limited liability company agreement, or comparable writings as provided in its governing statute;
(D) for a business or statutory trust or foreign business or statutory trust its agreement of trust and declaration of trust, or comparable writings as provided in its governing statute;
(E) for a corporation for profit or foreign corporation for profit, its certificate of formation, bylaws, and other agreements among its shareholders that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(F) for a nonprofit corporation or foreign nonprofit corporation, its certificate of formation, bylaws, and other agreements that are authorized by its governing statute, or comparable writings as provided in its governing statute;
(G) for a professional corporation or foreign professional corporation, its certificate of formation, bylaws, and other agreements among its shareholders that are authorized by its governing statute, or comparable writings as provided in its governing statute; and
(H) for any other organization, the basic writings that create the organization and determine its internal governance and the relations among the persons that own it, have an interest in it, or are members of it.
(9) PLAN OF MERGER. Except as set forth in Section 10A-8A-9.06(e), a plan of merger, whether referred to as a plan of merger, an agreement of merger, a merger agreement, a plan and agreement of merger, an agreement and plan of merger, or otherwise, means a writing described in Section 10A-8A-9.06 and includes any agreement, instrument, or other document referenced therein or associated therewith that sets forth the terms and conditions of the merger.
(10) SURVIVING ORGANIZATION means an organization into which one or more other organizations are merged under this article, whether the organization pre-existed the merger or was created pursuant to the merger.
(Act 2018-125, §7; Act 2021-299, §5; Act 2025-281, §6.)
(a) An organization other than a partnership may convert to a partnership, and a partnership may convert to an organization other than a partnership pursuant to this section, Sections 10A-8A-9.03 through 10A-8A-9.05, and a plan of conversion, if:
(1) the governing statute of the organization that is not a partnership authorizes the conversion;
(2) the law of the jurisdiction governing the converting organization and the converted organization does not prohibit the conversion; and
(3) the converting organization and the converted organization each comply with the governing statute and organizational documents applicable to that organization in effecting the conversion.
(b) A plan of conversion must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of the converting organization, and its unique identifying number or other designation as assigned by the Secretary of State, if any, before conversion;
(2) the name, type of organization, and mailing address of the principal office of the converted organization after conversion;
(3) the terms and conditions of the conversion, including the manner and basis for converting interests in the converting organization into any combination of money, interests in the converted organization, and other consideration allowed in Section 10A-8A-9.02(c); and
(4) the organizational documents of the converted organization.
(c) In connection with a conversion, rights or securities of or interests in the converting organization may be exchanged for or converted into cash, property, or rights or securities of or interests in the converted organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or rights or securities of or interests in another organization or may be cancelled.
(d) At the time of the approval of the plan of conversion in accordance with Section 10A-8A-9.03, the plan of conversion is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of conversion that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of conversion.
(e) If a partnership is the converting organization and that partnership does not have an effective statement of partnership, statement of not for profit partnership, or statement of limited liability partnership on file with the Secretary of State, then that partnership must, before proceeding with a conversion deliver to the Secretary of State for filing, a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership simultaneously with the delivery to the Secretary of State for filing, of a statement of conversion.
(f) If an organization is converting to a partnership, the converting organization must deliver to the Secretary of State for filing a statement of partnership, statement of not for profit partnership, or a statement of limited liability partnership in accordance with Section 10A-8A-9.04.
(Act 2018-125, §7; Act 2019-94, §2; Act 2025-281, §6.)
(a) Subject to Section 10A-8A-9.10, a plan of conversion must be consented to by all the partners of a converting partnership.
(b) Subject to Section 10A-8A-9.10 and any contractual rights, after a conversion is approved, and at any time before a filing is made under Section 10A-8A-9.04, a converting partnership may amend the plan or abandon the planned conversion:
(1) as provided in the plan; and
(2) except as prohibited by the plan, by the same consent as was required to approve the plan.
(Act 2018-125, §7.)
(a) After a plan of conversion is approved:
(1) if the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, the converting organization shall file a statement of conversion in accordance with subsection (c), which statement of conversion must be signed in accordance with Section 10A-8A-2.03 and which must include:
(A) the name, type of organization, and mailing address of the principal office of the converting organization, and its unique identifying number or other designation as assigned by the Secretary of State, if any, before conversion;
(B) the date of the filing of the certificate of formation of the converting organization, if any, and all prior amendments and the filing office or offices, if any, where such is filed;
(C) a statement that the converting organization has been converted into the converted organization;
(D) the name and type of organization of the converted organization and the jurisdiction of its governing statute;
(E) the street and mailing address of the principal office of the converted organization;
(F) the date the conversion is effective under the governing statute of the converted organization;
(G) a statement that the conversion was approved as required by this chapter;
(H) a statement that the conversion was approved as required by the governing statute of the converted organization;
(I) a statement that a copy of the plan of conversion will be furnished by the converted organization, on request and without cost, to any owner of the converting organization; and
(J) if the converted organization is a foreign organization not authorized to conduct business or not for profit activity in this state, the street and mailing address of an office for the purposes of Section 10A-8A-9.05(b); and
(2) if the converted organization is a partnership, the converting organization shall deliver to the Secretary of State for filing a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership, as applicable, which statement of partnership, statement of not for profit partnership, or statement of limited liability partnership must include, in addition to the information required by Section 10A-8A-2.02 or 10A-8A-10.01, as applicable:
(A) a statement that the partnership was converted from the converting organization;
(B) the name and type of organization of the converting organization, the jurisdiction of the converting organization’s governing statute, and the converting organization’s unique identifying number or other designation as assigned by the Secretary of State, if any; and
(C) a statement that the conversion was approved in a manner that complied with the converting organization’s governing statute.
(3) if the converting organization is a partnership and that partnership does not have an effective statement of partnership, statement of not for profit partnership, or statement of limited liability partnership on file with the Secretary of State, then the converting organization must deliver to the Secretary of State for filing, a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership simultaneously with the delivery to the Secretary of State for filing, of a statement of conversion.
(b) A conversion becomes effective:
(1) if the converted organization is a partnership, when the statement of partnership, statement of not for profit partnership, or statement of limited liability partnership takes effect; and
(2) if the converted organization is not a partnership, as provided by the governing statute of the converted organization.
(c) If the converting organization is an organization formed under, or its internal affairs are governed by, the laws of this state, then the converting organization shall deliver for filing the statement of conversion required under subsection (a)(1) and the statement, if any, required under subsection (a)(3) to the Secretary of State.
(d) If the converted organization is a partnership, the converting organization shall deliver for filing a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership required under subsection (a)(2) to the Secretary of State.
(e) If the converting organization is required to deliver for filing a statement of conversion and a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership to the Secretary of State, then the converting organization shall deliver for filing the statement of conversion and the statement of partnership, statement of not for profit partnership, or statement of limited liability partnership to the Secretary of State simultaneously.
(f) After a conversion becomes effective, if the converted organization is a partnership, then, except for (I) certified copies of documents permitted to be delivered to the judge of probate for filing pursuant to subsection (h) and (II) certified copies of statements of authority, denial, and cancellations thereof permitted to be delivered to the judge of probate for filing pursuant to Sections 10A-8A-3.03 and 10A-8A-3.04, all filing instruments required to be filed under this title regarding that converted organization shall be filed with the Secretary of State.
(g) If:
(1) the converting organization is a filing entity, a partnership with an effective statement of partnership, statement of not for profit partnership, or statement of limited liability partnership on file with the Secretary of State, a foreign filing entity registered to conduct business or not for profit activity in this state or a qualified foreign limited liability partnership;
(2) the converted organization will be a filing entity, a partnership with an effective statement of partnership, statement of not for profit partnership, or statement of limited liability partnership on file with the Secretary of State, a foreign filing entity registered to conduct business or not for profit activity in this state or a qualified foreign limited liability partnership;
(3) the name of the converting organization and the converted organization are to be the same, other than words, phrases or abbreviations indicating the type of entity; and
(4) the name of the converted organization complies with Division A of Article 5 of Chapter 1 or Section 10A-1-7.07, as the case may be; then notwithstanding Division B of Article 5 of Chapter 1, no name reservation shall be required and the converted organization shall for all purposes of this title be entitled to utilize the name of the converting organization without any further action by the converting organization or the converted organization.
(h) A certified copy of any document required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which the converting organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate shall, however, be entitled to collect a filing fee of five dollars ($5). Any such filing shall evidence chain of title, but lack of filing shall not affect the converted organization’s title to such real property.
(i) A statement of conversion is a filing instrument under Chapter 1.
(j) The filing fees for a statement of conversion shall be as set forth in Chapter 1.
(Act 2018-125, §7; Act 2019-94, §2.)
(a) When a conversion takes effect:
(1) all property and contract rights owned by the converting organization remains vested in the converted organization without transfer, reversion, or impairment and the title to any property vested by deed or otherwise in the converting organization shall not revert or be in any way impaired by reason of the conversion;
(2) all debts, obligations, or other liabilities of the converting organization continue as debts, obligations, or other liabilities of the converted organization and neither the rights of creditors, nor the liens upon the property of the converting organization shall be impaired by the conversion;
(3) an action or proceeding pending by or against the converting organization continues as if the conversion had not occurred and the name of the converted entity may, but need not, be substituted for the name of the converting entity in any pending action or proceeding;
(4) except as prohibited by law other than this chapter, all of the rights, privileges, immunities, powers, and purposes of the converting organization remain vested in the converted organization;
(5) except as otherwise provided in the plan of conversion, the terms and conditions of the plan of conversion take effect;
(6) except as otherwise agreed, for all purposes of the laws of this state, the converting organization shall not be required to wind up its business or not for profit activity or pay its liabilities and distribute its assets, and the conversion shall not be deemed to constitute a dissolution of the converting organization;
(7) for all purposes of the laws of this state, the rights, privileges, powers, interests in property, debts, liabilities and duties of the converting organization, shall be the rights, privileges, powers, interests in property, debts, liabilities and duties of the converted organization, and shall not be deemed as a consequence of the conversion, to have been transferred to the converted organization;
(8) if the converted organization is a partnership, for all purposes of the laws of this state, the partnership shall be deemed to be the same organization as the converting organization, and the conversion shall constitute a continuation of the existence of the converting organization in the form of a partnership;
(9) if the converted organization is a partnership, the existence of the partnership shall be deemed to have commenced on the date the converting organization commenced its existence in the jurisdiction in which the converting organization was first created, formed, organized, incorporated, or otherwise came into being;
(10) the conversion shall not affect the choice of law applicable to matters arising prior to conversion; and
(11) If the Secretary of State has assigned a unique identifying number or other designation to the converting organization and
(i) the converted organization is formed pursuant to, or its internal affairs are governed by, the laws of this state or
(ii) the converted organization is, within 30 days after the effective date of the conversion, registered to transact business in this state, then that unique identifying number or other designation shall continue to be assigned to the converted organization.
(b) A converted organization that is a foreign entity consents to the jurisdiction of the courts of this state to enforce any debt, obligation, or other liability for which the converting partnership is liable if, before the conversion, the converting partnership was subject to suit in this state on the debt, obligation, or other liability. If a converted organization that is a foreign entity fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then service of process on that converted organization for the purposes of enforcing a debt, obligation, or other liability under this subsection may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35.
(Act 2018-125, §7; Act 2019-94, §2.)
(a) A partnership may merge with one or more other constituent organizations pursuant to this section, Sections 10A-8A-9.07 through 10A-8A-9.09, and a plan of merger, if:
(1) the governing statute of each of the other organizations authorizes the merger;
(2) the merger is not prohibited by the law of a jurisdiction that enacted any of those governing statutes; and
(3) each of the other organizations complies with its governing statute in effecting the merger.
(b) A plan of merger must be in writing and must include:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying numbers or other designations as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is to be created pursuant to the merger, a statement to that effect;
(3) the terms and conditions of the merger, including the manner and basis for converting the interests in each constituent organization into any combination of money, interests in the surviving organization, and other consideration as allowed by subsection (c);
(4) if the surviving organization is to be created pursuant to the merger, the surviving organization’s organizational documents; and
(5) if the surviving organization is not to be created pursuant to the merger, any amendments to be made by the merger to the surviving organization’s organizational documents.
(c) In connection with a merger, rights or securities of or interests in a constituent organization may be exchanged for or converted into cash, property, or rights or securities of or interests in the surviving organization, or, in addition to or in lieu thereof, may be exchanged for or converted into cash, property, or rights or securities of or interests in another organization or may be cancelled.
(d) In addition to the requirements of subsection (b), a plan of merger may:
(1) provide that (i) a constituent organization or any other party to the plan of merger that fails to perform its obligations under the plan of merger in accordance with the terms and conditions of the plan of merger, or that otherwise fails to comply with the terms and conditions of the plan of merger, in each case, required to be performed or complied with prior to the time the merger becomes effective, or that otherwise fails to consummate, or fails to cause the consummation of, the merger (whether prior to a specified date, upon satisfaction or, to the extent permitted by law, waiver of all conditions to consummation set forth in the plan of merger, or otherwise) shall be subject, in addition to any other remedies available at law or in equity, to the penalties or consequences as are set forth in the plan of merger (which penalties or consequences may include an obligation to pay to the other party or parties to the plan of merger an amount representing, or based on the loss of, any premium or other economic entitlement the owners of the other party would be entitled to receive pursuant to the terms of the plan of merger if the merger were consummated in accordance with the terms of the plan of merger) and (ii) if, pursuant to the terms of the plan of merger, a constituent organization is entitled to receive payment from another party to the plan of merger of any amount representing a penalty or consequence (as specified in clause (i) of this Section 10A-8A-9.06(d)(1)), the constituent organization shall be entitled to enforce the other party’s payment obligation and, upon receipt of any payment, shall be entitled to retain the amount of the payment so received;
(2) provide (i) for the appointment, at or after the time at which the plan of merger is adopted by the owners of a constituent organization in accordance with the requirements of Section 10A-8A-9.07, of one or more persons (which may include the surviving or resulting entity or any officer, partner, representative, or agent thereof) as representative of the owners of a constituent organization, including those whose ownership interests shall be cancelled, converted, or exchanged in the merger, and for the delegation to that person or persons of the sole and exclusive authority to take action on behalf of the owners pursuant to the plan of merger, including taking such actions as the representative determines to enforce (including by entering into settlements with respect to) the rights of the owners under the plan of merger, on the terms and subject to the conditions set forth in the plan of merger, (ii) that any appointment pursuant to clause (i) of this Section 10A-8A-9.06(d)(2) shall be irrevocable and binding on all owners from and after the adoption of the plan of merger by the requisite vote of the partners pursuant to Section 10A-8A-9.07, and (iii) that any provision adopted pursuant to this Section 10A-8A-9.06(d)(2) may not be amended after the merger has become effective or may be amended only with the consent or approval of persons specified in the plan of merger; and
(3) contain any other provision not prohibited by law.
(e) At the time of the approval of the plan of merger in accordance with Section 10A-8A-9.07, the plan of merger is not required to contain or have attached thereto any disclosure letter, disclosure schedules, or similar documents or instruments contemplated by the plan of merger that modify, supplement, qualify, or make exceptions to representations, warranties, covenants, or conditions contained in the plan of merger.
(Act 2018-125, §7; Act 2019-94, §2; Act 2025-281, §6.)
(a) Subject to Section 10A-8A-9.10, a plan of merger must be consented to by all the partners of a constituent partnership.
(b) Subject to Section 10A-8A-9.10 and any contractual rights, after a merger is approved, and at any time before a filing is made under Section 10A-8A-9.08, a constituent partnership may amend the plan or abandon the merger:
(1) as provided in the plan; and
(2) except as prohibited by the plan, with the same consent as was required to approve the plan.
(Act 2018-125, §7.)
(a) After each constituent organization has approved the plan of merger, a statement of merger must be signed on behalf of:
(1) each constituent partnership, as provided in Section 10A-8A-2.03(a); and
(2) each other constituent organization, as provided by its governing statute.
(b) A statement of merger under this section must include:
(1) the name, type of organization, and mailing address of the principal office of each constituent organization, the jurisdiction of the governing statute of each constituent organization, and the respective unique identifying numbers or other designations as assigned by the Secretary of State, if any, of each constituent organization;
(2) the name, type of organization, and mailing address of the principal office of the surviving organization, the unique identifying number or other designation as assigned by the Secretary of State, if any, of the surviving organization, the jurisdiction of the governing statute of the surviving organization, and, if the surviving organization is created pursuant to the merger, a statement to that effect;
(3) the date of the filing of the statement of partnership, statement of not for profit partnership, or statement of limited liability partnership, if any, and all prior amendments and the filing office or offices, if any, and where such is filed of each constituent organization which is a partnership;
(4) the date the merger is effective under the governing statute of the surviving organization;
(5) if the surviving organization is to be created pursuant to the merger:
(A) if it will be a partnership, the partnership’s statement of partnership, statement of not for profit partnership, or statement of limited liability partnership; or
(B) if it will be an organization other than a partnership, any organizational document that creates the organization that is required to be in a public writing;
(6) if the surviving organization exists before the merger, any amendments provided for in the plan of merger for the organizational document that are required to be in a public writing;
(7) a statement as to each constituent organization that the merger was approved as required by the organization’s governing statute;
(8) a statement that a copy of the plan of merger will be furnished by the surviving organization, on request and without cost, to any owner of any constituent organization which is a party to the merger;
(9) if the surviving organization is a foreign organization not authorized to conduct business or not for profit activity in this state, the street and mailing address of an office for the purposes of Section 10A-8A-9.09(b); and
(10) any additional information required by the governing statute of any constituent organization.
(c) Prior to the statement of merger being delivered for filing to the Secretary of State in accordance with subsection (d), all constituent organizations that are partnerships, other than a partnership that is created pursuant to the merger, must have on file with the Secretary of State a statement of partnership, statement of not for profit partnership, or statement of limited liability partnership.
(d) The statement of merger shall be delivered for filing to the Secretary of State.
(e) A merger becomes effective under this article:
(1) if the surviving organization is a partnership, upon the later of:
(A) the filing of the statement of merger with the Secretary of State; or
(B) as specified in the statement of merger; or
(2) if the surviving organization is not a partnership, as provided by the governing statute of the surviving organization.
(f) A certified copy of the statement of merger required to be filed under this section may be filed in the real estate records in the office of the judge of probate in any county in which any constituent organization owned real property, without payment and without collection by the judge of probate of any deed or other transfer tax or fee. The judge of probate, however, shall be entitled to collect the filing fee of five dollars ($5). Any such filing shall evidence chain of title, but lack of filing shall not affect the surviving organization’s title to such real property.
(g) A statement of merger is a filing instrument under Chapter 1.
(h) The filing fees for a statement of merger shall be as set forth in Chapter 1.
(Act 2018-125, §7; Act 2019-94, §2; Act 2023-503, §6.)
(a) When a merger becomes effective:
(1) the surviving organization continues or, in the case of a surviving organization created pursuant to the merger, comes into existence;
(2) each constituent organization that merges into the surviving organization ceases to exist as a separate entity;
(3) except as provided in the plan of merger, all property owned by, and every contract right possessed by, each constituent organization that ceases to exist vests in the surviving organization without transfer, reversion, or impairment and the title to any property and contract rights vested by deed or otherwise in the surviving organization shall not revert, be in any way impaired, or be deemed to be a transfer by reason of the merger;
(4) all debts, obligations, and other liabilities of each constituent organization, other than the surviving organization, are debts, obligations, and other liabilities of the surviving organization, and neither the rights of creditors, nor any liens upon the property of any constituent organization, shall be impaired by the merger;
(5) an action or proceeding pending by or against any constituent organization continues as if the merger had not occurred and the name of the surviving organization may be, but need not be, substituted in any pending proceeding for the name of any constituent organization whose separate existence ceased in the merger;
(6) except as prohibited by law other than this chapter, or as provided in the plan of merger, all of the rights, privileges, franchises, immunities, powers, and purposes of each constituent organization, other than the surviving organization, vest in the surviving organization;
(7) except as otherwise provided in the plan of merger, the terms and conditions of the plan of merger take effect;
(8) except as otherwise agreed, if a constituent partnership ceases to exist, the merger does not dissolve the partnership;
(9) if the surviving organization is created pursuant to the merger:
(A) if it is a partnership, the statement of partnership, statement of not for profit partnership or statement of limited liability partnership becomes effective; or
(B) if it is an organization other than a partnership, the organizational documents that create the organization become effective;
(10) if the surviving organization existed before the merger, any amendments provided for in the statement of merger for the organizational documents of that organization become effective;
(11) the transferable interests of each partnership that is a constituent organization to the merger, and the ownership interests of each organization that is not a partnership, but is a constituent organization to the merger, that are to be converted in accordance with the terms of the merger into transferable interests, ownership interests, other securities, obligations, rights to acquire transferable interests, ownership interests, or other securities, cash, other property, or any combination of the foregoing, are converted, and the former holder of such transferable interests or ownership interests is entitled only to the rights provided to that former holder by those terms or the statute governing that former holder’s constituent organization; and
(12) if the surviving organization exists before the merger:
(i) except as provided in the plan of merger, all the property and contract rights of the surviving organization remain its property and contract rights without transfer, reversion, or impairment;
(ii) the surviving organization remains subject to all its debts, obligations, and other liabilities; and
(iii) except as provided by law other than this chapter, or the plan of merger, the surviving organization continues to hold all of its rights, privileges, franchises, immunities, powers, and purposes.
(b) A surviving organization that is a foreign entity consents to the jurisdiction of this state to enforce any debt, obligation, or other liability owed by a constituent organization, if before the merger the constituent organization was subject to suit in this state on the debt, obligation, or other liability. If a surviving organization that is a foreign entity fails to designate or maintain a registered agent, or the designated registered agent cannot with reasonable diligence be served, then the service of process on that surviving organization for the purposes of enforcing a debt, obligation, or other liability under this subsection may be made in the same manner and has the same consequences as provided in Section 10A-1-5.35.
(Act 2018-125, §7; Act 2019-94, §2.)
(a) If a partner of a converting or constituent partnership will have personal liability with respect to a converted or surviving organization, approval and amendment of a plan of conversion or plan of merger are ineffective without that partner’s consent to the plan.
(b) A statement of cancellation of the statement of limited liability partnership filed in connection with a conversion or merger is ineffective without each partner’s written consent to such amendment.
(c) A partner does not give the consent required by subsection (a) or (b) merely by consenting to a provision of the partnership agreement that permits the partnership agreement to be amended with the consent of fewer than all the partners.
(Act 2018-125, §7.)
(a) A conversion or merger under this article does not discharge any liability under Section 10A-8A-3.06, 10A-8A-7.02, or 10A-8A-7.03 of a person that was a partner in or dissociated as a partner from a converting or constituent partnership, but:
(1) the provisions of this chapter pertaining to the collection or discharge of the liability continue to apply to the liability;
(2) for the purposes of applying those provisions, the converted or surviving organization is deemed to be the converting or constituent partnership; and
(3) if a person is required to pay any amount under this subsection:
(A) the person has a right of contribution from each other person that was liable as a partner under Section 10A-8A-3.06 when the obligation was incurred and has not been released from the obligation under Section 10A-8A-7.02 or 10A-8A-7.03; and
(B) the contribution due from each of those persons is in proportion to the right to receive distributions in the capacity of partner in effect for each of those persons when the obligation was incurred.
(b) In addition to any other liability provided by law:
(1) a person that immediately before a conversion or merger became effective was a partner in a converting or constituent partnership that was not a limited liability partnership is personally liable for each obligation of the converted or surviving organization arising from a transaction with a third party after the conversion or merger becomes effective, if, at the time the third party enters into the transaction, the third party:
(A) does not have notice of the conversion or merger; and
(B) reasonably believes that:
(i) the converted or surviving business is the converting or constituent partnership;
(ii) the converting or constituent partnership is not a limited liability partnership; and
(iii) the person is a partner in the converting or constituent partnership; and
(2) a person that was dissociated as a partner from a converting or constituent partnership before the conversion or merger became effective is personally liable for each obligation of the converted or surviving organization arising from a transaction with a third party after the conversion or merger becomes effective, if:
(A) immediately before the conversion or merger became effective the converting or surviving partnership was not a limited liability partnership; and
(B) at the time the third party enters into the transaction the third party:
(i) does not have notice of the dissociation;
(ii) does not have notice of the conversion or merger; and
(iii) reasonably believes that the converted or surviving organization is the converting or constituent partnership, the converting or constituent partnership is not a limited liability partnership, and the person is a partner in the converting or constituent partnership.
(Act 2018-125, §7.)
(a) An act of a person that immediately before a conversion or merger became effective was a partner in a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:
(1) before the conversion or merger became effective, the act would have bound the converting or constituent partnership under Section 10A-8A-3.01; and
(2) at the time the third party enters into the transaction, the third party:
(A) does not have notice of the conversion or merger; and
(B) reasonably believes that the converted or surviving organization is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.
(b) An act of a person that before a conversion or merger became effective was dissociated as a partner from a converting or constituent partnership binds the converted or surviving organization after the conversion or merger becomes effective, if:
(1) before the conversion or merger became effective, the act would have bound the converting or constituent partnership under Section 10A-8A-3.01 if the person had been a partner; and
(2) at the time the third party enters into the transaction, the third party:
(A) does not have notice of the dissociation;
(B) does not have notice of the conversion or merger; and
(C) reasonably believes that the converted or surviving organization is the converting or constituent partnership and that the person is a partner in the converting or constituent partnership.
(c) If a person having knowledge of the conversion or merger causes a converted or surviving organization to incur an obligation under subsection (a) or (b), the person is liable:
(1) to the converted or surviving organization for any damage caused to the organization arising from the obligation; and
(2) if another person is liable for the obligation, to that other person for any damage caused to that other person arising from the liability.
(Act 2018-125, §7.)
This article is not exclusive. This article does not preclude an entity from being converted or merged under law other than this chapter.
(Act 2018-125, §7.)
(a) A partnership may be formed as, or may become, a limited liability partnership pursuant to this section.
(b) In order to form a limited liability partnership, the original partnership agreement of the partnership shall state that the partnership is formed as a limited liability partnership, and the partnership shall deliver to the Secretary of State for filing a statement of limited liability partnership in accordance with subsection (d) of this section.
(c) In order for an existing partnership to become a limited liability partnership, the terms and conditions on which the partnership becomes a limited liability partnership must be approved by the affirmative approval necessary to amend the partnership agreement and, in the case of a partnership agreement that expressly considers obligations to contribute to the partnership, also the affirmative approval necessary to amend those provisions, and after such approval, the partnership shall deliver to the Secretary of State for filing a statement of limited liability partnership in accordance with subsection (d).
(d) A statement of limited liability partnership must contain all of the following:
(1) the name of the limited liability partnership which must comply with Article 5 of Chapter 1;
(2) the street, and mailing, if different, address of its principal office;
(3) the street and mailing address of the registered office and the name of the registered agent at that office for service of process in this state in accordance with Chapter 1;
(4) a statement that the partnership was formed as a limited liability partnership in accordance with subsection (b) or a statement that the statement of limited liability partnership was approved in accordance with subsection (c);
(5) a statement that the partnership is a limited liability partnership; and
(6) the unique identifying number or other designation, if any, as assigned to the partnership by the Secretary of State.
(e) A statement of limited liability partnership may be amended or restated from time to time in accordance with Section 10A-1-4.26.
(f) The statement of limited liability partnership shall be executed by one or more partners authorized to execute the statement of limited liability partnership.
(g) The statement of limited liability partnership shall be accompanied by a fee for the Secretary of State in the respective amounts prescribed by Section 10A-1-4.31.
(h) The Secretary of State shall file the statement of limited liability partnership of any partnership as a limited liability partnership that submits a completed statement of limited liability partnership with the required fees. The filing by the Secretary of State of a statement of limited liability partnership is conclusive evidence that the partnership has satisfied all conditions required to be a limited liability partnership.
(i) The statement of limited liability partnership is effective, and a partnership becomes a limited liability partnership, immediately on the date the statement of limited liability partnership is filed with the Secretary of State or at any later date or time specified in the statement of limited liability partnership in compliance with Article 4 of Chapter 1. The status as a limited liability partnership remains effective, regardless of changes in the partnership, and partnership continues as a limited liability partnership until a statement of cancellation is voluntarily filed in accordance with subsection (m).
(j) The fact that a statement of limited liability partnership is on file with the Secretary of State is notice that the partnership is a limited liability partnership and as notice of the facts required to be set forth in the statement of limited liability partnership.
(k) A partnership that has filed a statement of limited liability partnership as a limited liability partnership is for all purposes, except as provided in Section 10A-8A-3.06, the same entity that existed before the statement of limited liability partnership was filed and continues to be a partnership under the laws of this state subject to the limited liability partnership provisions of this chapter. If a limited liability partnership dissolves and its business or not for profit activity, or a portion of its business or not for profit activity is continued without the complete winding up of partnership’s business or not for profit activity, a partnership which is a successor to the limited liability partnership shall not be required to file a new statement of limited liability partnership.
(l) The status of the partnership as a limited liability partnership and the liability of a partner of the limited liability partnership shall not be adversely affected by error or subsequent changes in the information stated in the statement of limited liability partnership under subsection (d).
(m) The decision to file a statement of cancellation shall require the approval of all of the partners of the partnership. The statement of cancellation must be delivered for filing to the Secretary of State and must contain the following:
(1) the name of the limited liability partnership;
(2) the unique identifying number or other designation as assigned to the partnership by the Secretary of State;
(3) the street and mailing address of its principal office;
(4) the street and mailing address of its registered office and the name of the registered agent at that office for service of process in this state which the partnership was required to maintain;
(5) a statement that the statement of cancellation was approved in accordance with this subsection; and
(6) any other information that the partners determine to include.
(n) A statement of cancellation must be executed by one or more partners authorized to execute the statement of cancellation.
(o) The statement of cancellation is effective, and a partnership ceases to be a limited liability partnership, immediately on the date the statement of cancellation is delivered to the Secretary of State for filing or at any later date or time specified in the statement of cancellation in compliance with Article 4 of Chapter 1. The statement of cancellation shall not cause the dissolution of the partnership.
(p) The filing of a statement of cancellation of a limited liability partnership does not affect the limited liability of partners for debts, obligations or liabilities of the partnership which occur or were incurred prior to the filing of the statement of cancellation.
(q) A dissolved limited liability partnership shall continue its status as a limited liability partnership unless a statement of cancellation is voluntarily filed in accordance with subsection (m).
(r) The statement of limited liability partnership and the statement of cancellation are filing instruments for the purposes of Chapter 1.
(Act 2018-125, §7; Act 2025-281, §6.)
(a) A limited liability partnership shall have the power to render professional services if it complies with the rules of the licensing authority for such profession.
(b) Every individual who renders professional services as a partner or as an employee of a limited liability partnership shall be liable for any negligent or wrongful act or omission in which the individual personally participates to the same extent the individual would be liable if the individual rendered the services as a sole practitioner.
(c) Except as otherwise provided in subsection (b), the personal liability of a partner of any limited liability partnership engaged in providing professional services shall be governed by Section 10A-8A-3.06.
(d) Except as otherwise provided in subsection (b), the personal liability of a partner or employee of a foreign limited liability partnership engaged in providing professional services shall be determined under the law of the jurisdiction which governs the foreign limited liability partnership.
(e) Nothing in this article shall restrict or limit in any manner the authority or duty of a licensing authority with respect to individuals rendering a professional service within the jurisdiction of the licensing authority. Nothing in this article shall restrict or limit any law, rule, or regulation pertaining to standards of professional conduct.
(f) Nothing in this article shall limit the authority of a licensing authority to impose requirements in addition to those stated in this chapter on any limited liability partnership or foreign limited liability partnership rendering professional services within the jurisdiction of the licensing authority.
(g) A partner’s transferable interest in a limited liability partnership organized to render professional services may be voluntarily transferred only to a qualified person.
(Act 2018-125, §7; Act 2024-413, §1.)
(a) In the case of a limited liability partnership performing professional services, upon the death of a partner, upon a partner becoming a disqualified person, or upon a transferable interest being transferred by operation of law or court decree to a disqualified person, the transferable interest of the deceased partner or of the disqualified person may be transferred to a qualified person and, if not so transferred, subject to Section 10A-8A-4.09, shall be purchased by the limited liability partnership as provided in this section.
(b) If the purchase price of the transferable interest is not determined in accordance with the partnership agreement, the limited liability partnership, within six months after the death or 30 days after the disqualification or transfer, as the case may be, shall make a written offer to pay for the transferable interest a specified price deemed by the limited liability partnership to be the fair value of the transferable interest as of the date of the death, disqualification, or transfer. The offer shall be delivered to the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and shall be accompanied by a balance sheet of the limited liability partnership, as of the latest available date and not more than 12 months prior to the making of the offer, and a profit and loss statement of the limited liability partnership for the 12-month period ended on the date of the balance sheet.
(c) If the fair value of the transferable interest is agreed upon between the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and the limited liability partnership, payment therefor shall be made within 90 days, or such other period as the parties may agree. Upon payment of the agreed value, the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall cease to have any interest in, or claim to, the transferable interest.
(d) If the fair value of the transferable interest is not agreed upon between the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, and the limited liability partnership within 30 days of the delivery of the written offer, then either party may commence a civil action in the designated court, and if none, in the circuit court for the county in which the limited liability partnership’s principal office within this state is located, and if the limited liability partnership does not have a principal office within this state, then in the circuit court for the county in which the limited liability partnership’s most recent registered office is located requesting that the fair value of the transferable interest be found and determined. If the limited liability partnership does not deliver a written offer in accordance with subsection (b), then the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, may commence a civil action in the designated court, and if none, in the circuit court for the county in which the limited liability partnership’s principal office is located in this state, and if none in this state, in the circuit court for the county in which the limited liability partnership’s most recent registered office is located requesting that the fair value of the transferable interest be found and determined. The personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, wherever residing, shall be made a party to the proceeding as an action against that person’s transferable interest quasi in rem. Service shall be made in accordance with the rules of civil procedure. The personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall be entitled to a judgment against the limited liability partnership for the amount of the fair value of that person’s transferable interest as of the date of death, disqualification, or transfer. The court may order that the judgment be paid in installments and with interest and on terms as the court may determine. The court, if it so elects, may appoint one or more persons as appraisers to receive evidence and recommend a decision on the question of fair value. The appraisers shall have the power and authority as shall be specified in the order of their appointment or an amendment thereof.
(e) The judgment shall include an allowance for interest at the rate the court finds to be fair and equitable in all the circumstances, from the date of death, disqualification, or transfer.
(f)(1) The court in a proceeding commenced under subsection (d) shall determine all court costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the court costs against the limited liability partnership, except that the court may assess court costs against the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, in amounts which the court finds equitable, to the extent the court finds the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this section.
(2) The court in a proceeding commenced under subsection (d) may also assess the expenses of the respective parties in amounts the court finds equitable:
(A) against the limited liability partnership and in favor of the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, if the court finds the limited liability partnership did not substantially comply with the requirements of this section; or
(B) against either the limited liability partnership or the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, in favor of the other party, if the court finds the party against whom expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by this section.
(3) For purposes of this subsection (f), expenses means reasonable expenses of any kind that are incurred in connection with a proceeding brought under subsection (d).
(g) If the purchase or transfer of the transferable interest of a deceased partner, a disqualified person, or a transferee is not completed within 12 months after the death of the deceased partner or 12 months after the disqualification or transfer, as the case may be, the limited liability partnership shall forthwith cancel the transferable interest on its books and the personal representative of the estate of the deceased partner, the disqualified person, or the transferee, as the case may be, shall have no further interest in the transferable interest other than that person’s right to payment for the transferable interest under this section.
(h) This section shall not require a limited liability partnership to purchase a transferable interest of a disqualified person if the disqualification is for less than 12 months from the date of disqualification. A limited liability partnership may require the disqualified person to sell the disqualified person’s transferable interest to the limited liability partnership upon any disqualification.
(i) Any provision of a partnership agreement regarding the purchase or transfer of a transferable interest of a limited liability partnership performing professional services shall be specifically enforceable in the courts of Alabama.
(j) Nothing in this section shall prevent or relieve a limited liability partnership from paying pension benefits or other deferred compensation for services rendered to or on behalf of a former partner as otherwise permitted by law.
(Act 2018-125, §7; Act 2020-73, §10; Act 2025-281, §6.)
(a) Beginning January 1, 2019, this chapter governs all partnerships and all foreign partnerships.
(b) With respect to a partnership formed before January 1, 2019, and governed by the laws of this state, the following rules apply:
(1) a registration of a limited liability partnership which is current and effective as of December 31, 2018, shall remain effective without further action on the part of the limited liability partnership, and a partnership having the status of a limited liability partnership, under predecessor law, shall have the status of a limited liability partnership under this chapter and to the extent such partnership has not filed a statement of limited liability partnership pursuant to this chapter, the registration or latest annual notice filed by such partnership under predecessor law shall constitute a statement of limited liability partnership filed under this chapter;
(2) a partnership’s partnership agreement existing as of December 31, 2018, shall be deemed to be that partnership’s partnership agreement under this chapter;
(3) a statement of partnership authority is deemed to be a statement of authority and each statement of partnership authority existing as of December 31, 2018, shall remain effective without further action on the part of the partnership for the remainder of the period of time authorized under predecessor law, unless earlier amended, in which case, such statement of partnership authority shall comply with Section 10A-8A-3.03;
(4) a statement of denial, statement of dissociation, and statement of dissolution existing as of December 31, 2018, shall be deemed to be a statement of denial, statement of dissociation, and statement of dissolution under this chapter respectively;
(5) a registration of a foreign limited liability partnership which is current and effective as of December 31, 2018, shall remain effective without further action on the part of the foreign limited liability partnership, and a foreign limited liability partnership having the status of a qualified foreign limited liability partnership, under predecessor law, shall have the status of a qualified foreign limited liability partnership under this chapter and to the extent such partnership has not filed a statement of foreign limited liability partnership pursuant to this chapter, the registration or latest annual notice filed by such partnership under predecessor law shall constitute a statement of foreign limited liability partnership filed under this chapter; and
(6) if a limited liability partnership or foreign limited liability partnership is using the phrase “registered limited liability partnership” or the abbreviation “RLLP” or “R.L.L.P.,” in its name as of December 31, 2018, such phrase or abbreviation shall continue to comply with Article 5 of Chapter 1 unless and until it changes or amends, by whatever means, its name on or after January 1, 2019, at which point it may only use the term “limited liability partnership” or the abbreviation “LLP” or “L.L.P.,” in its name in compliance with Article 5 of Chapter 1. No limited liability partnership which is formed or elects to become a limited liability partnership on or after January 1, 2019, and no foreign limited liability partnership which delivers to the Secretary of State for filing, a statement of foreign limited liability partnership, may use the phrase “registered limited liability partnership” or the abbreviation “RLLP” or “R.L.L.P.,” in its name.
(Act 2018-125, §7.)
If any provision of this chapter or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are severable.
(Act 2018-125, §7.)
This chapter modifies, limits, or supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001 et seq., but this chapter does not modify, limit, or supersede Section 101(c) of that act or authorize electronic delivery of any of the notices described in Section 103(b) of that act.
(Act 2018-125, §7.)
This chapter takes effect January 1, 2019.
(Act 2018-125, §7.)
Effective January 1, 2019, the following parts of the Code of Alabama 1975, are repealed: Section 10A-1-7.33 and Chapter 8 of Title 10A, comprised of Sections 10A-8-1.01 to 10A-8-11.04, inclusive, as amended and in effect immediately before the effective date of this act.
(Act 2018-125, §7.)
(a) Except as provided in subsection (b), the repeal of a statute by this chapter does not affect:
(1) the operation of the statute or any action taken under it before its repeal;
(2) any ratification, right, remedy, privilege, obligation, or liability acquired, accrued, or incurred under the statute before its repeal;
(3) any violation of the statute, or any penalty, forfeiture, or punishment incurred because of the violation, before its repeal; or
(4) any proceeding, reorganization, or dissolution commenced under the statute before its repeal, and the proceeding, reorganization, or dissolution may be completed in accordance with the statute as if it had not been repealed.
(b) If a penalty or punishment imposed for violation of a statute repealed by this chapter is reduced by this chapter, the penalty or punishment if not already imposed shall be imposed in accordance with this chapter.
(Act 2018-125, §7.)
The Alabama Department of Revenue shall promulgate rules and regulations similar to those provided under Section 40-18-176, relating to Alabama S corporations, to permit the filing of annual composite income tax returns for one or more nonresident partners, who are individuals, of a partnership, limited liability partnership, or foreign limited liability partnership with an effective statement of foreign limited liability partnership on file with the Secretary of State, as well as one or more nonresident members, who are individuals, of a limited liability company or foreign limited liability company and one or more nonresident beneficiaries, who are individuals, of a business trust, organized under or recognized by the laws of this state.
(Act 2018-125, §7.)
A limited liability partnership and a foreign limited liability partnership shall be taxed as a partnership in accordance with Section 40-18-24, as amended from time to time, will file partnership returns as required by Section 40-18-28, as amended from time to time, and shall for all other tax purposes be taxed as a partnership, all being subject to the limited liability partnership and a foreign limited liability partnership maintaining its status as a partnership under federal income tax law.
(Act 2018-125, §7.)
All provisions of this chapter may be altered from time to time or repealed and all rights of partners, partnerships, and agents are subject to this reservation. Unless expressly stated to the contrary in this chapter, all amendments of this chapter shall apply to partners, partnerships, and agents whether or not existing as such at the time of the enactment of any such amendment.
(Act 2018-125, §7.)
A limited liability partnership governed by this chapter may conduct its business or not for profit activity, carry on its operations, and have and exercise the powers granted by this chapter in any state, foreign country, or other jurisdiction.
(Act 2018-125, §7.)