SECTIONS 15906.01-15906.07 - California Statutes

CORPORATIONS CODE

SECTION 15906.01-15906.07

15906.01. (a) A person does not have a right to dissociate as a
limited partner before the termination of the limited partnership.
(b) A person is dissociated from a limited partnership as a
limited partner upon the occurrence of any of the following events:
(1) the limited partnership's having notice of the person's
express will to withdraw as a limited partner or on a later date
specified by the person;
(2) an event agreed to in the partnership agreement as causing the
person's dissociation as a limited partner;
(3) the person's expulsion as a limited partner pursuant to the
partnership agreement;
(4) the person's expulsion as a limited partner by the unanimous
consent of the other partners if:
(A) it is unlawful to carry on the limited partnership's
activities with the person as a limited partner;
(B) there has been a transfer of all of the person's transferable
interest in the limited partnership, other than a transfer for
security purposes, or a court order charging the person's interest,
which has not been foreclosed;
(C) the person is a corporation and, within 90 days after the
limited partnership notifies the person that it will be expelled as a
limited partner because it has filed a certificate of dissolution or
the equivalent, its charter has been revoked, or its right to
conduct business has been suspended by the jurisdiction of its
incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter or its right to
conduct business; or
(D) the person is a limited liability company or partnership that
has been dissolved and whose business is being wound up;
(5) on application by the limited partnership, the person's
expulsion as a limited partner by judicial order because:
(A) the person engaged in wrongful conduct that adversely and
materially affected the limited partnership's activities;
(B) the person willfully or persistently committed a material
breach of the partnership agreement or of the obligation of good
faith and fair dealing under subdivision (b) of Section 15903.05; or
(C) the person engaged in conduct relating to the limited
partnership's activities which makes it not reasonably practicable to
carry on the activities with the person as limited partner;
(6) in the case of a person who is an individual, the person's
death;
(7) in the case of a person that is a trust or is acting as a
limited partner by virtue of being a trustee of a trust, distribution
of the trust's entire transferable interest in the limited
partnership, but not merely by reason of the substitution of a
successor trustee;
(8) in the case of a person that is an estate or is acting as a
limited partner by virtue of being a personal representative of an
estate, distribution of the estate's entire transferable interest in
the limited partnership, but not merely by reason of the substitution
of a successor personal representative;
(9) termination of a limited partner that is not an individual,
partnership, limited liability company, corporation, trust, or
estate;
(10) the limited partnership's participation in a conversion or
merger under Article 11 (commencing with Section 15911.01), if the
limited 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 limited partner.

15906.02. (a) Upon a person's dissociation as a limited partner:
(1) subject to Section 15907.04, the person does not have further
rights as a limited partner;
(2) the person's obligation of good faith and fair dealing as a
limited partner under subdivision (b) of Section 15903.05 continues
only as to matters arising and events occurring before the
dissociation; and
(3) subject to Section 15907.04 and Article 11 (commencing with
Section 15911.01), any transferable interest owned by the person in
the person's capacity as a limited partner immediately before
dissociation is owned by the person as a mere transferee.
(b) A person's dissociation as a limited partner does not of
itself discharge the person from any obligation to the limited
partnership or the other partners which the person incurred while a
limited partner.

15906.03. A person is dissociated from a limited partnership as a
general partner upon the occurrence of any of the following events:
(a) the limited partnership's having notice of the person's
express will to withdraw as a general partner or on a later date
specified by the person;
(b) an event agreed to in the partnership agreement as causing the
persons dissociation as a general partner;
(c) the person's expulsion as a general partner pursuant to the
partnership agreement;
(d) the person's expulsion as a general partner by the unanimous
consent of the other partners if:
(1) it is unlawful to carry on the limited partnership's
activities with the person as a general partner;
(2) there has been a transfer of all or substantially all of the
person's transferable interest in the limited partnership, other than
a transfer for security purposes, or a court order charging the
person's interest, which has not been foreclosed;
(3) the person is a corporation and, within 90 days after the
limited partnership notifies the person that it will be expelled as a
general partner because it has filed a certificate of dissolution or
the equivalent, its charter has been revoked, or its right to
conduct business has been suspended by the jurisdiction of its
incorporation, there is no revocation of the certificate of
dissolution or no reinstatement of its charter or its right to
conduct business; or
(4) the person is a limited liability company or partnership that
has been dissolved and whose business is being wound up;
(e) on application by the limited partnership, the person's
expulsion as a general partner by judicial order because:
(1) the person engaged in wrongful conduct that adversely and
materially affected the limited partnership activities;
(2) the person willfully or persistently committed a material
breach of the partnership agreement or of a duty owed to the
partnership or the other partners under Section 15904.08; or
(3) the person engaged in conduct relating to the limited
partnership's activities which makes it not reasonably practicable to
carry on the activities of the limited partnership with the person
as a general partner;
(f) the person's:
(1) becoming a debtor in bankruptcy;
(2) execution of an assignment for the benefit of creditors;
(3) seeking, consenting to, or acquiescing in the appointment of a
trustee, receiver, or liquidator of the person or of all or
substantially all of the person's property; or
(4) failure, within 90 days after the appointment, to have vacated
or stayed the appointment of a trustee, receiver, or liquidator of
the general partner or of all or substantially all of the person's
property obtained without the person's consent or acquiescence, or
failing within 90 days after the expiration of a stay to have the
appointment vacated;
(g) in the case of a person who is an individual:
(1) the person's death;
(2) the appointment of a guardian or general conservator for the
person; or
(3) a judicial determination that the person has otherwise become
incapable of performing the person's duties as a general partner
under the partnership agreement;
(h) in the case of a person that is a trust or is acting as a
general partner by virtue of being a trustee of a trust, distribution
of the trust's entire transferable interest in the limited
partnership, but not merely by reason of the substitution of a
successor trustee;
(i) in the case of a person that is an estate or is acting as a
general partner by virtue of being a personal representative of an
estate, distribution of the estate's entire transferable interest in
the limited partnership, but not merely by reason of the substitution
of a successor personal representative;
(j) termination of a general partner that is not an individual,
partnership, limited liability company, corporation, trust, or
estate; or
(k) the limited partnership's participation in a conversion or
merger under Article 11 (commencing with Section 15911.01), if the
limited partnership:
(1) is not the converted or surviving entity; or
(2) is the converted or surviving entity but, as a result of the
conversion or merger, the person ceases to be a general partner.

15906.04. (a) A person has the power to dissociate as a general
partner at any time, rightfully or wrongfully, by express will
pursuant to subdivision (a) of Section 15906.03.
(b) A person's dissociation as a general partner is wrongful only
if:
(1) it is in breach of an express provision of the partnership
agreement; or
(2) it occurs before the termination of the limited partnership,
and:
(A) the person withdraws as a general partner by express will;
(B) the person is expelled as a general partner by judicial
determination under subdivision (e) of Section 15906.03;
(C) the person is dissociated as a general partner by becoming a
debtor in bankruptcy; or
(D) in the case of a person that is not an individual, trust other
than a business trust, or estate, the person is expelled or
otherwise dissociated as a general partner because it willfully
dissolved or terminated.
(c) A person that wrongfully dissociates as a general partner is
liable to the limited partnership and, subject to Section 15910.01,
to the other partners for damages caused by the dissociation. The
liability is in addition to any other obligation of the general
partner to the limited partnership or to the other partners.

15906.05. (a) Upon a person's dissociation as a general partner:
(1) the person's right to participate as a general partner in the
management and conduct of the partnership's activities terminates;
(2) the person's duty of loyalty as a general partner under
paragraph (3) of subdivision (b) of Section 15904.08 terminates;
(3) the person's duty of loyalty as a general partner under
paragraphs (1) and (2) of subdivision (b) of Section 15904.08 and
duty of care under subdivision (c) of Section 15904.08 continue only
with regard to matters arising and events occurring before the person'
s dissociation as a general partner;
(4) the person may sign and deliver to the Secretary of State for
filing , on a form prescribed by the Secretary of State, a
certificate of dissociation pertaining to the person and, at the
request of the limited partnership, shall sign an amendment to the
certificate of limited partnership which states that the person has
dissociated; and
(5) subject to Section 15907.04 and Article 11 (commencing with
Section 15911.01), any transferable interest owned by the person
immediately before dissociation in the person's capacity as a general
partner is owned by the person as a mere transferee.
(b) A person's dissociation as a general partner does not of
itself discharge the person from any obligation to the limited
partnership or the other partners which the person incurred while a
general partner.

15906.06. (a) After a person is dissociated as a general partner
and before the limited partnership is dissolved, converted under
Article 11 (commencing with Section 15911.01), or merged out of
existence under that article, the limited partnership is bound by an
act of the person only if:
(1) the act would have bound the limited partnership under Section
15904.02 before the dissociation; and
(2) at the time the other party enters into the transaction:
(A) less than two years have passed since the dissociation; and
(B) the other party does not have notice of the dissociation and
reasonably believes that the person is a general partner.
(b) If a limited partnership is bound under subdivision (a), the
person dissociated as a general partner which caused the limited
partnership to be bound is liable:
(1) to the limited partnership for any damage caused to the
limited partnership arising from the obligation incurred under
subdivision (a); and
(2) if a general partner or another person dissociated as a
general partner is liable for the obligation, to the general partner
or other person for any damage caused to the general partner or other
person arising from the liability.

15906.07. (a) A person's dissociation as a general partner does not
of itself discharge the person's liability as a general partner for
an obligation of the limited partnership incurred before
dissociation. Except as otherwise provided in subdivisions (b) and
(c), the person is not liable for a limited partnership's obligation
incurred after dissociation.
(b) A person whose dissociation as a general partner resulted in a
dissolution and winding up of the limited partnership's activities
is liable to the same extent as a general partner under Section
15904.04 on an obligation incurred by the limited partnership under
Section 15908.04.
(c) A person that has dissociated as a general partner but whose
dissociation did not result in a dissolution and winding up of the
limited partnership's activities is liable on a transaction entered
into by the limited partnership after the dissociation only if:
(1) a general partner would be liable on the transaction; and
(2) at the time the other party enters into the transaction:
(A) less than two years have passed since the dissociation; and
(B) the other party does not have notice of the dissociation and
reasonably believes that the person is a general partner.
(d) By agreement with a creditor of a limited partnership and the
limited partnership, a person dissociated as a general partner may be
released from liability to the creditor for an obligation of the
limited partnership.
(e) A person dissociated as a general partner is released from
liability for an obligation of the limited partnership if the limited
partnership's creditor, with notice of the person's dissociation as
a general partner but without the person's consent, agrees to a
material alteration in the nature or time of payment of the
obligation.