SECTIONS 15911.20-15911.33 - California Statutes

CORPORATIONS CODE

SECTION 15911.20-15911.33

15911.20. (a) For purposes of this article, "reorganization" refers
to any of the following:
(1) A conversion pursuant to Article 11 (commencing with Section
15911.01).
(2) A merger pursuant to Article 11 (commencing with Section
15911.10).
(3) The acquisition by one limited partnership in exchange, in
whole or in part, for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity that is in control of the acquiring limited partnership) of
partnership interests or equity securities of another limited
partnership or other business entity if, immediately after the
acquisition, the acquiring limited partnership has control of the
other limited partnership or other business entity.
(4) The acquisition by one limited partnership in exchange in
whole or in part for its partnership interests (or the partnership
interests or equity securities of a partnership or other business
entity which is in control of the acquiring limited partnership) or
for its debts securities (or debt securities of a limited partnership
or other business entity which is in control of the acquiring
limited partnership) which are not adequately secured and which have
a maturity date in excess of five years after the consummation of the
acquisition, or both, of all or substantially all of the assets of
another limited partnership or other business entity.
(b) For purposes of this article, "control" means the possession,
direct or indirect, of the power to direct or cause the direction of
the management and policies of a limited partnership or other
business entity.

15911.21. (a) If the approval of outstanding limited partnership
interests is required for a limited partnership to participate in a
reorganization, pursuant to the limited partnership agreement of the
partnership, or otherwise, then each limited partner of the limited
partnership holding those interests may, by complying with this
article, require the limited partnership to purchase for cash, at its
fair market value, the interest owned by the limited partner in the
limited partnership, if the interest is a dissenting interest as
defined in subdivision (b). The fair market value shall be determined
as of the day before the first announcement of the terms of the
proposed reorganization, excluding any appreciation or depreciation
in consequence of the proposed reorganization.
(b) As used in this article, "dissenting interest" means the
interest of a limited partner that satisfies all of the following
conditions:
(1) Either:
(A) Was not, immediately prior to the reorganization, either (i)
listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section 25100,
or (ii) listed on the list of OTC margin stocks issued by the Board
of Governors of the Federal Reserve System, provided that in either
such instance the limited partnership whose outstanding interests are
so listed provides, in its notice to limited partners requesting
their approval of the proposed reorganization, a summary of the
provisions of this section and Sections 15911.22, 15911.23, 15911.24,
and 15911.25.
(B) If the interest is of a class of interests listed as described
in clause (i) or (ii) of subparagraph (A), demands for payment are
filed with respect to 5 percent or more of the outstanding interests
of that class.
(2) Was outstanding on the date for the determination of limited
partners entitled to vote on the reorganization.
(3) (A) Was not voted in favor of the reorganization, or (B) if
the interest is described in clause (i) or (ii) of subparagraph (A)
of paragraph (1), was voted against the reorganization; provided,
however, that clause (A) rather than clause (B) of this paragraph
applies in any event where the approval for the proposed
reorganization is sought by written consent rather than at a meeting.
(4) The limited partner has demanded that it be purchased by the
limited partnership at its fair market value in accordance with
Section 15911.22.
(5) The limited partner has submitted it for endorsement, if
applicable, in accordance with Section 15911.23.
(c) As used in this article, "dissenting limited partner" means
the recordholder of a dissenting interest, and includes an assignee
of record of such an interest.

15911.22. (a) If limited partners have a right under Section
15911.21, subject to compliance with paragraphs (4) and (5) of
subdivision (b) thereof, to require the limited partnership to
purchase their limited partnership interests for cash, such limited
partnership shall mail to each such limited partner a notice of the
approval of the reorganization by the requisite vote or consent of
the limited partners, within 10 days after the date of such approval,
accompanied by a copy of this section and Sections 15911.21,
15911.23, 15911.24, and 15911.25, a statement of the price determined
by the limited partnership to represent the fair market value of its
outstanding interests, and a brief description of the procedure to
be followed if the limited partner desires to exercise the limited
partner's rights under such sections. The statement of price
constitutes an offer by the limited partnership to purchase at the
price stated any dissenting interests as defined in subdivision (b)
of Section 15911.21, unless they lose their status as dissenting
interests under Section 15911.30.
(b) Any limited partner who has a right to require the limited
partnership to purchase the limited partner's interest for cash under
Section 15911.21, subject to compliance with paragraphs (4) and (5)
of subdivision (b) thereof, and who desires the limited partnership
to purchase such interest, shall make written demand upon the limited
partnership for the purchase of such interest and the payment to the
limited partner in cash of its fair market value. The demand is not
effective for any purpose unless it is received by the limited
partnership or any transfer agent thereof (1) in the case of
interests described in clause (i) or (ii) of subparagraph (A) of
paragraph (1) of subdivision (b) of Section 15911.21, not later than
the date of the limited partners' meeting to vote upon the
reorganization, or (2) in any other case, within 30 days after the
date on which notice of the approval of the reorganization by the
requisite vote or consent of the limited partners is mailed by the
limited partnership to the limited partners.
(c) The demand shall state the number or amount of the limited
partner's interest in the limited partnership and shall contain a
statement of what such limited partner claims to be the fair market
value of that interest on the day before the announcement of the
proposed reorganization. The statement of fair market value
constitutes an offer by the limited partner to sell the interest at
such price.

15911.23. Within 30 days after the date on which notice of the
approval of the outstanding interests of the limited partnership is
mailed to the limited partner pursuant to subdivision (a) of Section
15911.22, the limited partner shall submit to the limited partnership
at its principal office or at the office of any transfer agent
thereof, (a) if the interest is evidenced by a certificate, the
limited partner's certificate representing the interest which the
limited partner demands that the limited partnership purchase, to be
stamped or endorsed with a statement that the interest is a
dissenting interest or to be exchanged for certificates of
appropriate denominations so stamped or endorsed, or (b) if the
interest is not evidenced by a certificate, written notice of the
number or amount of interest which the limited partner demands that
the limited partnership purchase. Upon subsequent transfers of the
dissenting interest on the books of the limited partnership, the new
certificates or other written statement issued therefor shall bear a
like statement, together with the name of the original holder of the
dissenting interest.

15911.24. (a) If the limited partnership and the dissenting limited
partner agree that such limited partner's interest is a dissenting
interest and agree upon the price to be paid for the dissenting
interest, the dissenting limited partner is entitled to the agreed
price with interest thereon at the legal rate on judgments from the
date of consummation of the reorganization. All agreements fixing the
fair market value of any dissenting limited partner's interest as
between the limited partnership and such limited partner shall be in
writing and filed in the records of the limited partnership.
(b) Subject to the provisions of Section 15911.27, payment of the
fair market value for a dissenting interest shall be made within 30
days after the amount thereof has been agreed to or within 30 days
after any statutory or contractual conditions to the reorganization
are satisfied, whichever is later, and in the case of dissenting
interests evidenced by certificates of interest, subject to surrender
of such certificates of interest, unless provided otherwise by
agreement.

15911.25. (a) If the limited partnership denies that a limited
partnership interest is a dissenting interest, or the limited
partnership and a dissenting limited partner fail to agree upon the
fair market value of a dissenting interest, then such limited partner
or any interested limited partnership, within six months after the
date on which notice of the approval of the reorganization by the
requisite vote or consent of the limited partners was mailed to the
limited partner, but not thereafter, may file a complaint in the
superior court of the proper county praying the court to determine
whether the interest is a dissenting interest, or the fair market
value of the dissenting interest, or both, or may intervene in any
action pending on such a complaint.
(b) Two or more dissenting limited partners may join as plaintiffs
or be joined as defendants in any such action and two or more such
actions may be consolidated.
(c) On the trial of the action, the court shall determine the
issues. If the status of the limited partnership interest as a
dissenting interest is in issue, the court shall first determine that
issue. If the fair market value of the dissenting interest is in
issue, the court shall determine, or shall appoint one or more
impartial appraisers to determine, the fair market value of the
dissenting interest.

15911.26. (a) If the court appoints an appraiser or appraisers,
they shall proceed forthwith to determine the fair market value per
interest of the outstanding limited partnership interests of the
limited partnership, by class if necessary. Within the time fixed by
the court, the appraisers, or a majority of them, shall make and file
a report in the office of the clerk of the court. Thereupon, on the
motion of any party, the report shall be submitted to the court and
considered on any additional evidence as the court considers
relevant. If the court finds the report reasonable, the court may
confirm it.
(b) If a majority of the appraisers appointed fails to make and
file a report within 30 days from the date of their appointment, or
within any further time as may be allowed by the court, or the report
is not confirmed by the court, the court shall determine the fair
market value per interest of the outstanding limited partnership
interests of the limited partnership, by class if necessary.
(c) Subject to Section 15911.27, judgment shall be rendered
against the limited partnership for payment of an amount equal to the
fair market value, as determined by the court, of each dissenting
interest which any dissenting limited partner who is a party, or has
intervened, is entitled to require the limited partnership to
purchase, with interest thereon at the legal rate on judgments from
the date of consummation of the reorganization.
(d) Any judgment shall be payable forthwith, provided, however,
that with respect to limited partnership interests evidenced by
transferable certificates of interest, only upon the endorsement and
delivery to the limited partnership of those certificates
representing the interests described in the judgment. Any party may
appeal from the judgment.
(e) The costs of the action, including reasonable compensation for
the appraisers, to be fixed by the court, shall be assessed or
apportioned as the court considers equitable, but, if the appraisal
exceeds the price offered by the limited partnership, the limited
partnership shall pay the costs (including, in the discretion of the
court, if the value awarded by the court for the dissenting interest
is more than 125 percent of the price offered by the limited
partnership under subdivision (a) of Section 15911.22, attorney's
fees and fees of expert witnesses).

15911.27. To the extent that the payment to dissenting limited
partners of the fair market value of their dissenting interests would
require the dissenting limited partners to return such payment or a
portion thereof by reason of Section 15905.09 or the Uniform
Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of
Title 2 of Part 2 of Division 4 of the Civil Code), then that payment
or portion thereof shall not be made and the dissenting limited
partners shall become creditors of the limited partnership for the
amount not paid, together with interest thereon at the legal rate on
judgments until the date of payment, but subordinate to all other
creditors in any proceeding relating to the winding up and
dissolution of the limited partnership, such debt to be payable when
permissible.

15911.28. Any cash distributions made by a limited partnership to a
dissenting limited partner after the date of consummation of the
reorganization, but prior to any payment by the limited partnership
for such dissenting limited partner's interest, shall be credited
against the total amount to be paid by the limited partnership for
such dissenting interest.

15911.29. Except as expressly limited by this article, dissenting
limited partners shall continue to have all the rights and privileges
incident to their interests immediately prior to the reorganization,
including limited liability, until payment by the limited
partnership for their dissenting interests. A dissenting limited
partner may not withdraw a demand for payment unless the limited
partnership consents thereto.

15911.30. A dissenting interest loses its status as a dissenting
interest and the holder thereof ceases to be a dissenting limited
partner and ceases to be entitled to require the limited partnership
to purchase the interest upon the happening of any of the following:
(a) The limited partnership abandons the reorganization. Upon
abandonment of the reorganization, the limited partnership shall pay,
on demand, to any dissenting limited partner who has initiated
proceeding in good faith under this article, all reasonable expenses
incurred in such proceedings and reasonable attorneys' fees.
(b) The interest is transferred prior to its submission for
endorsement in accordance with Section 15911.23.
(c) The dissenting limited partner and the limited partnership do
not agree upon the status of the interest as a dissenting interest or
upon the purchase price of the dissenting interest, and neither
files a complaint nor intervenes in a pending action, as provided in
Section 15911.25, within six months after the date upon which notice
of the approval of the reorganization by the requisite vote or
consent of limited partners was mailed to the limited partner.
(d) The dissenting limited partner, with the consent of the
limited partnership, withdraws such limited partner's demand for
purchase of the dissenting interest.

15911.31. If litigation is instituted to test the sufficient or
regularity of the vote or consent of the limited partners in
authorizing a reorganization, any proceedings under Sections 15911.25
and 15911.26 shall be suspended until final determination of that
litigation.

15911.32. (a) This article applies to the following:
(1) A domestic limited partnership formed on or after January 1,
1991.
(2) A foreign limited partnership if (A) the foreign limited
partnership was formed on or after January 1, 1991, or filed an
application to qualify to do business on or after January 1, 1991,
and (B) limited partners holding more than 50 percent of the voting
power held by all limited partners of the foreign limited partnership
reside in this state.
(3) A limited partnership if the partnership agreement so provides
or if all general partners and a majority in interest of the limited
partners determine that this article shall apply.
(b) This article does not apply to limited partnership interests
governed by limited partnership agreements whose terms and provisions
specifically set forth the amount to be paid in respect of such
interests in the event of a reorganization of the limited
partnership, or to limited partnerships with 35 or fewer limited
partners, unless the partnership agreement provides that this article
shall apply or unless all general partners and a majority in
interest of the limited partners agree that this article shall apply.

15911.33. (a) No limited partner of a limited partnership who has a
right under this article to demand payment of cash for the interest
owned by such limited partner in a limited partnership shall have any
right at law or in equity to attack the validity of the
reorganization, or to have the reorganization set aside or rescinded,
except in an action to test whether the vote or consent of limited
partners required to authorize or approve the reorganization has been
obtained in accordance with the procedures established therefor by
the partnership agreement of the limited partnership.
(b) If one of the parties to a reorganization is directly or
indirectly controlled by, or under common control with, another party
to the reorganization, subdivision (a) shall not apply to any
limited partner of such controlled party who has not demanded payment
of cash for such limited partner's interest pursuant to this
article; but if such limited partner institutes any action to attack
the validity of the reorganization or to have the reorganization set
aside or rescinded, the limited partner shall not thereafter have any
right to demand payment of cash for such limited partner's interest
pursuant to this article.
(c) If one of the parties to a reorganization is directly or
indirectly controlled by, or under common control with, another party
to the reorganization, then, in any action to attack the validity of
the reorganization or to have the reorganization set aside or
rescinded, (1) a party to a reorganization which controls another
party to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the limited partners of the
controlled party, and (2) a person who controls two or more parties
to a reorganization shall have the burden of proving that the
transaction is just and reasonable as to the limited partners of any
party so controlled.
(d) Subdivisions (b) and (c) shall not apply if a majority in
interest of the limited partners other than limited partners who are
directly or indirectly controlled by, or under common control with,
another party to the reorganization approve or consent to the
reorganization.
(e) This section shall not prevent a partner of a limited
partnership that is a party to a reorganization from bringing an
action against a general partner of the limited partnership, the
limited partnership, or any person controlling a general partner at
law or in equity as to any matters (including, without limitation, an
action for breach of fiduciary obligation or fraud) other than to
attack the validity of the reorganization or to have the
reorganization set aside or rescinded.