You have been retained to advise your clients in forming a limited partnership and to draft a limited partnership agreement. Where to begin? Always start with information gathering. To help organize the process for you, here’s a handy checklist of the information you’ll need from your clients.
Some of this information is basic and your clients will be able to provide it easily, but others will require some explanation and discussion on your part. Be prepared to explain what you seek and why, and the pros and cons of their response.
___ Name, address, and marital status of each general partner and limited partner
___ Name of limited partnership
___ Street address of limited partnership’s principal executive office in California and other offices
___ Term of limited partnership
___ Scope of limited partnership’s business
___ Business with affiliated entities
___ Financing of partnership’s business
___ Partners’ respective ownership interests in limited partnership
___ Initial capital contributions
___ Additional capital contributions
___ Interest on capital contribution
___ Return of capital
___ Rights and obligations of general and limited partners
___ Compensation to partners and affiliates
___ Right to reimbursement of expenses incurred in connection with limited partnership’s business
___ Liability and indemnification
___ Time general partners devote to limited partnership business and right of general partners to engage in competing activities
___ Maintenance and accessibility of books and records
___ Tax year (IRC §706)
___ Method of accounting
___ Transfers of partnership interests
___ Buy-out rights
___ Terms for admitting additional partners
___ Removal of general partner
___ Events of dissolution
___ Amendments to partnership agreement
___ Dispute and resolution procedures
This checklist is also an excellent basis for an agenda for the initial client meeting. You may also need this information to complete a Certificate of Limited Partnership (Secretary of State Form LP-1) and other documents on behalf of the limited partnership.
You’ll need a lot of information from your clients when they come to you seeking to form a limited partnership. Without a checklist of the information you need, you’ll inevitably forget to ask for something and have to embarrassingly go back to your clients.
Not yet up to speed on each of these points? CEB’s got your covered with its Advising California Partnerships. Also check out CEB’s program Buy-Sell Agreements for California Businesses, an essential element for most partnerships.
This material is reproduced from Julie Brook’s blog entry, Get While the Getting's Good: Checklist of Info You Need to Form a Limited Partnership, on the CEB Blog October 22, 2012. Copyright 2012 by the Regents of the University of California. Reproduced with permission of Continuing Education of the Bar - California. For information about CEB publications, telephone toll free 1-800-CEB-3444 or visit our Web site: CEB.com.