Office of the Revisor of Statutes
Minnesota Session Laws - 1994, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 539-H.F.No. 1985
An act relating to partnerships; providing for the
registration and operation of limited liability
partnerships; appropriating money; amending Minnesota
Statutes 1992, sections 319A.02, subdivision 5;
319A.05; 319A.06, subdivision 2; 319A.07; 319A.12,
subdivisions 1, 1a, and 2; 323.02, subdivision 8, and
by adding a subdivision; 323.06; 323.14; 323.17;
323.35; and 323.39; Minnesota Statutes 1993
Supplement, section 319A.02, subdivision 7; proposing
coding for new law in Minnesota Statutes, chapter 323.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1992, section 319A.02,
subdivision 5, is amended to read:
Subd. 5. "Foreign professional corporation" means a
corporation or, limited liability company, or limited liability
partnership organized under laws other than the laws of this
state for a purpose for which a professional corporation may be
organized hereunder.
Sec. 2. Minnesota Statutes 1993 Supplement, section
319A.02, subdivision 7, is amended to read:
Subd. 7. "Corporation" as used in this chapter includes a
limited liability company organized under chapter 322B and, a
limited liability partnership. With respect to a limited
liability company, references in this chapter to articles of
incorporation, bylaws, directors, officers, shareholders and
shares of stock shall refer to articles of organization,
operating agreement, governors, managers, members and membership
interests, respectively. With respect to a limited liability
partnership, references in this chapter to articles of
incorporation and bylaws refer to partnership agreement;
references to directors, officers, and shareholders refer to
partners; and references to shares of stock refer to partnership
interests.
Sec. 3. Minnesota Statutes 1992, section 319A.05, is
amended to read:
319A.05 [APPLICABILITY OF ACTS.]
A corporation incorporating or, a limited liability company
organizing, or a limited liability partnership registering,
under sections 319A.01 to 319A.22 and chapter 302A, 322B, or
317A, 322B, or 323 shall proceed in the manner specified in
chapter 302A, 322B, or 317A, 322B, or 323. After
incorporation or, organization, or registration, a professional
corporation or, limited liability company, or limited liability
partnership shall enjoy the powers and privileges and shall be
subject to the duties and liabilities of other corporations or,
limited liability companies, or limited liability partnerships,
respectively organized under chapter 302A, 322B, or 317A, 322B,
or 323, except insofar as the same may be limited or enlarged by
sections 319A.01 to 319A.22. If any provision of sections
319A.01 to 319A.22 conflicts with the provisions of chapter
302A, 322B, or 317A, 322B, or 323, sections 319A.01 to 319A.22
take precedence.
Sec. 4. Minnesota Statutes 1992, section 319A.06,
subdivision 2, is amended to read:
Subd. 2. A foreign professional corporation may provide
professional service in this state only upon compliance with
sections 303.01 to 303.24, or 322B.90 to 322B.955, regulating
foreign corporations and, foreign limited liability companies,
and foreign limited liability partnerships, respectively. The
secretary of state shall promulgate forms for such purpose. The
provisions of sections 319A.01 to 319A.22 relating to the
rendering of professional service by a professional corporation
apply to a foreign professional corporation. Sections 319A.01
to 319A.22 shall not be construed to prohibit the rendering of
professional service in this state by a person who is a
shareholder, director, officer, employee, or agent of a foreign
professional corporation, if the person could lawfully render
professional service in this state in the absence of any
relationship to the foreign professional corporation,
irrespective of whether the foreign professional corporation is
authorized to provide professional service in this state.
Sec. 5. Minnesota Statutes 1992, section 319A.07, is
amended to read:
319A.07 [CORPORATE NAME.]
The corporate name of any corporation organized under
sections 319A.01 to 319A.22 shall not be used to imply
superiority and, in the case of a corporation, other than a
limited liability company, shall end with the word "Chartered,"
or the word "Limited," or the abbreviation "Ltd.," or the words
"Professional Association," or the abbreviation "P.A." The name
of any limited liability company organized under sections
319A.01 to 319A.22 and chapter 322B shall end with the words
"Professional Limited Liability Company," or the abbreviation
"P.L.C." The name of any limited liability partnership
organized under sections 319A.01 to 319A.22 and chapter 323 must
end with the words "Professional Limited Liability Partnership,"
or the abbreviation "P.L.L.P."
Sec. 6. Minnesota Statutes 1992, section 319A.12,
subdivision 1, is amended to read:
Subdivision 1. A professional corporation or foreign
professional corporation shall report to the board having
jurisdiction of the professional service which the corporation
is authorized to render the death of any of its shareholders or
members within 30 days of such death. Within 90 days following
the date of death of a shareholder of a professional corporation
or the loss of a license to render professional service, all of
the shares of stock owned by such shareholder or the member's
membership shall be transferred to and acquired by the
professional corporation or persons qualified to own such shares
of stock or membership. If the articles of incorporation,
bylaws, or a written agreement of the shareholders of a
professional corporation fail to state a price or a method of
determining a price at which the corporation or its shareholders
may purchase the shares of stock or membership of a deceased
shareholder or a shareholder no longer qualified to own shares
of stock in the corporation or membership, then the price for
the shares of stock or membership shall be the fair market value
as determined by the board of directors, or in the case of a
limited liability partnership, the partners, unless the
partnership agreement delegates the determination to one or more
managing partners, but not less than the book value as of the
end of the month immediately preceding the death or
disqualification of the shareholder or member. Book value shall
be determined from the books and records of the corporation in
accordance with its regular method of accounting. This
subdivision does not change the effect of sections 323.28 and
323.30, under which the dissociation of any partner from a
limited liability partnership causes the dissolution of that
partnership.
Sec. 7. Minnesota Statutes 1992, section 319A.12,
subdivision 1a, is amended to read:
Subd. 1a. A professional corporation may at any time by
amendment to its articles of incorporation relinquish the powers
and privileges conferred upon it by this chapter and elect to be
governed thereafter solely by the provisions of chapter 302A,
322B, or 317A, 322B, or 323, as the case may be.
Notwithstanding any provision of this chapter, the
representative of a deceased or incompetent shareholder of a
professional corporation shall have authority to vote the
deceased or incompetent shareholder's shares on the question of
adopting such an amendment.
Sec. 8. Minnesota Statutes 1992, section 319A.12,
subdivision 2, is amended to read:
Subd. 2. If within 90 days following the date of death of
a shareholder or member of a professional corporation or the
loss of a license to render professional service all of the
shares or membership owned by the deceased or disqualified
shareholder or member have not been transferred to and acquired
by the corporation or persons qualified to own the shares or
membership, the corporation shall thereafter be governed solely
by the provisions of chapter 302A, 322B, or 317A, 322B, or 323,
as the case may be and shall not enjoy any of the powers and
privileges conferred by sections 319A.01 to 319A.22. When the
corporation ceases to be authorized to render professional
service, its corporate name must be changed to comply with the
corporate name provision of chapter 302A, 322B, or 317A, 322B,
or 323, as the case may be, and any words, phrases or
abbreviations contained therein to comply with the provisions of
sections 319A.01 to 319A.22 shall be eliminated.
Sec. 9. Minnesota Statutes 1992, section 323.02, is
amended by adding a subdivision to read:
Subd. 7a. [LIMITED LIABILITY PARTNERSHIP.] "Limited
liability partnership" means a general partnership governed by
this chapter with a registration in effect under section 323.44.
Sec. 10. Minnesota Statutes 1992, section 323.02,
subdivision 8, is amended to read:
Subd. 8. [PARTNERSHIP.] A partnership is an association of
two or more persons to carry on as coowners a business for
profit and includes a limited liability partnership. Any
association formed under any other statutes of this state, or
any statute adopted by authority, other than the authority of
this state, is not a partnership under this chapter, unless such
association would have been a partnership in this state prior to
the adoption of this chapter; but this chapter shall apply to
limited partnerships, except in so far as the statutes relating
to such partnerships are inconsistent herewith.
Sec. 11. Minnesota Statutes 1992, section 323.06, is
amended to read:
323.06 [DETERMINATION OF WHETHER PARTNERSHIP EXISTS.]
In determining whether a partnership exists, these rules
shall apply:
(1) Except as provided by section 323.15, persons who are
not partners as to each other are not partners as to third
persons;
(2) Joint tenancy, tenancy in common, tenancy by the
entireties, joint property, common property, or part ownership
does not of itself establish a partnership, whether such
coowners do or do not share any profits made by the use of the
property;
(3) The sharing of gross returns does not of itself
establish a partnership, whether or not the persons sharing them
have a joint or common right or interest in any property from
which the returns are derived;
(4) The receipt by a person of a share of the profits of a
business is prima facie evidence of partnership in the business,
but no such inference shall be drawn if such profits were
received in payment
(a) As a debt by installments or otherwise,
(b) As wages of an employee or rent to a landlord,
(c) As an annuity to a surviving spouse or representative
of a deceased partner,
(d) As interest on a loan, though the amount of payment
vary with the profits of the business, or
(e) As the consideration for the sale of a good will of a
business or other property by installments or otherwise.; and
(5) The following are not evidence that a partnership does
not exist:
(a) failure or omission to file an original or renewal
registration under section 323.44;
(b) the expiration of a partnership's status as a limited
liability partnership; or
(c) the filing of a withdrawal statement under section
323.44.
Sec. 12. Minnesota Statutes 1992, section 323.14, is
amended to read:
323.14 [NATURE OF PARTNER'S LIABILITY.]
Subdivision 1. [GENERAL RULE.] Except as otherwise
provided in this section, all partners are liable:
(1) Jointly and severally for everything chargeable to the
partnership under sections 323.12 and 323.13;
(2) Jointly for all other debts and obligations of the
partnership; but any partner may enter into a separate
obligation to perform a partnership contract.
Subd. 2. [LIMITED LIABILITY PARTNERSHIP SHIELD.] A partner
of a limited liability partnership is not, merely on account of
this status, personally liable for anything chargeable to the
partnership under sections 323.12 and 323.13, or for any other
debts or obligations of the limited liability partnership, if
the charge, debt, or obligation arose or accrued while the
partnership had a registration in effect under section 323.44.
This subdivision does not limit or impair the right of the
partnership or its partners to make claims against any
particular partner on the grounds that the particular partner:
(1) has, in its capacity as a partner, breached a duty to
the partnership or to the other partners; or
(2) is obligated to contribute so that partners share
losses of capital according to section 323.17 and share the
liabilities stated in section 323.39, clause (2), paragraphs (c)
and (d).
Subd. 3. [PIERCING THE VEIL.] (a) Except as provided in
paragraph (b), the case law that states the conditions and
circumstances under which the corporate veil of a corporation
may be pierced under Minnesota law also applies to limited
liability partnerships.
(b) The use of informal procedures or arrangements for
managing the limited liability partnership or conducting its
business is not a ground for piercing the veil of the limited
liability partnership.
Subd. 4. [LIMITED LIABILITY AFTER DISSOLUTION.] (a)
Subject to section 323.44, subdivision 7, the limited liability
described in subdivisions 2 and 3 continues in full force for
the dissolved partnership regardless of any dissolution, winding
up, and termination of a limited liability partnership.
(b) If a limited liability partnership dissolves and its
business is continued by a successor general partnership under
section 323.37, then the limited liability described in
subdivisions 3 and 4 also applies to that successor partnership
until the expiration of the registration that the dissolved
partnership had in effect under section 323.44 at the moment of
dissolution. The successor general partnership may at any time
file its own registration under section 323.44.
Subd. 5. [LIABILITY OF PARTNERS FOR ILLEGAL
DISTRIBUTIONS.] (a) A partner who receives a distribution from a
limited liability partnership that would have been in violation
of section 302A.551 had the limited liability partnership been a
corporation with a board of directors is liable to the limited
liability partnership, its receiver, or other person winding up
its affairs, but only to the extent that the distribution
received by the partner exceeded the amount that properly could
have been paid under section 302A.551.
(b) An action may not be commenced under this subdivision
more than two years from the date of the distribution.
Sec. 13. Minnesota Statutes 1992, section 323.17, is
amended to read:
323.17 [RIGHTS AND DUTIES OF PARTNERS.]
The rights and duties of the partners in relation to the
partnership shall be determined, subject to any agreement
between them, by the following rules:
(1) Except as provided in section 323.14, subdivision 2,
each partner shall be repaid contributions, whether by way of
capital or advances to the partnership property and share
equally in the profits and surplus remaining after all
liabilities, including those to partners, are satisfied; and
must contribute towards the losses, whether of capital or
otherwise, sustained by the partnership according to each
partner's share in the profits;
(2) The partnership must indemnify every partner in respect
of payments made and personal liabilities reasonably incurred by
that partner in the ordinary and proper conduct of its business,
or for the preservation of its business or property;
(3) A partner, who in aid of the partnership makes any
payment or advance beyond the amount of capital which the
partner agreed to contribute, shall be paid interest from the
date of the payment or advance;
(4) A partner shall receive interest on the capital
contributed only from the date when repayment should be made;
(5) All partners have equal rights in the management and
conduct of the partnership business;
(6) No partner is entitled to remuneration for acting in
the partnership business, except that a surviving partner is
entitled to reasonable compensation for services in winding up
the partnership affairs;
(7) No person can become a member of a partnership without
the consent of all the partners;
(8) Any difference arising as to ordinary matters connected
with the partnership business may be decided by a majority of
the partners; but no act in contravention of any agreement
between the partners may be done rightfully without the consent
of all the partners.
Sec. 14. Minnesota Statutes 1992, section 323.35, is
amended to read:
323.35 [DISCHARGE OF EXISTING LIABILITIES ON DISSOLUTION.]
The dissolution of the partnership does not of itself
discharge the existing liability of any partner.
A partner is discharged from any existing liability upon
dissolution of the partnership by an agreement to that effect
between that partner, the partnership creditor and the person or
partnership continuing the business; and such agreement may be
inferred from the course of dealing between the creditor having
knowledge of the dissolution and the person or partnership
continuing the business.
Where a person agrees to assume the existing obligations of
a dissolved partnership, the partners whose obligations have
been assumed shall be discharged from any liability to any
creditor of the partnership who, knowing of the agreement,
consents to a material alteration in the nature or time of
payment of such obligations.
The individual property of a deceased partner shall be
liable for all those obligations of the partnership incurred
while the deceased was a partner and for which the deceased was
liable under section 323.14, but subject to the prior payment of
the deceased's separate debts.
Sec. 15. Minnesota Statutes 1992, section 323.39, is
amended to read:
323.39 [DISTRIBUTION ON DISSOLUTION.]
In settling accounts between the partners after
dissolution, the following rules shall be observed, subject to
any agreement to the contrary:
(1) The assets of the partnership are:
(a) The partnership property;
(b) The contributions of the partners necessary for the
payment of all the liabilities specified in clause (2) (4);
(2) The liabilities of the partnership shall rank in order
of payment, as follows:
(a) Those owing to creditors other than partners;
(b) Those owing to partners other than for capital and
profits;
(c) Those owing to partners in respect to capital;
(d) Those owing to partners in respect to profits;
(3) The assets shall be applied in the order of their
declaration in clause (1) to the satisfaction of the
liabilities;
(4) Except as provided in section 323.14, subdivision 2:
(a) The partners shall contribute, as provided by section
323.17, clause (1), the amount necessary to satisfy the
liabilities; and
(b) but If any, but not all, of the partners are insolvent,
or, not being subject to process, refuse to contribute, the
other partners shall contribute their share of the liabilities,
and, in the relative proportions in which they share the
profits, the additional amount necessary to pay the liabilities;
(5) An assignee for the benefit of creditors of any person
appointed by the court shall have the right to enforce the
contributions specified in clause (4);
(6) Any partner or the partner's legal representative shall
have the right to enforce the contributions specified in clause
(4), to the extent of the amount paid in excess of that
partner's share of the liability;
(7) The individual property of a deceased partner shall be
liable for the contributions specified in clause (4);
(8) When partnership property and the individual properties
of the partners are in the possession of a court for
distribution, partnership creditors shall have priority on
partnership property and separate creditors on individual
property, saving the rights of lien or secured creditors as
heretofore;
(9) Where a partner has become bankrupt or the partner's
estate is insolvent, the claims against the partner's separate
property shall rank in the following order:
(a) Those owing to separate creditors;
(b) Those owing to partnership creditors; and
(c) Those owing to partners by way of contribution.
Sec. 16. [323.44] [LIMITED LIABILITY PARTNERSHIPS.]
Subdivision 1. [REQUIREMENT OF FILING; AUTOMATIC
EXPIRATION; RENEWAL.] (a) To have the status of a limited
liability partnership, a general partnership must have in effect
and filed with the secretary of state a registration that
complies with this section. A general partnership's
registration establishes the status of a limited liability
partnership for one year from the date of filing. At the end of
the one-year period, the registration and the partnership's
status as a limited liability partnership expire unless a
renewal registration is properly filed with the secretary of
state under paragraph (b).
(b) The limited liability partnership may file a renewal
registration that complies with this section no earlier than 60
days before the expiration of the one-year period under
paragraph (a). A proper renewal registration extends the
partnership's status as a limited liability partnership for
another year, measured from the end of the previous one-year
period. At the end of any renewal period, the renewal
registration automatically expires. A limited liability
partnership registration may be renewed for an unlimited number
of one-year periods.
Subd. 2. [CONTENTS OF REGISTRATION.] A general
partnership's registration to obtain or renew the status of a
limited liability partnership must contain:
(1) the name of the partnership;
(2) a statement that the partnership applies to obtain
status as a limited liability partnership or to renew that
status;
(3) an acknowledgment that the status of limited liability
partnership will automatically expire, unless the partnership
files a proper renewal registration;
(4) the address of the partnership's principal place of
business; and
(5) if the partnership's principal place of business is not
located in this state, the name and street address of a person
located in this state that the partnership authorizes to act as
the partnership's agent for service of process.
Subd. 3. [FILING FEE.] Each registration, whether original
or for renewal, must be accompanied by a fee of $135.
Subd. 4. [AUTHORITY TO FILE.] A general partnership's
decision to file a registration is an ordinary matter under
section 323.17, clause (8). The decision to withdraw or not
renew a registration is treated as an act in contravention of an
agreement between the partners under section 323.17, clause (8).
Subd. 5. [CHANGES IN REGISTRATION INFORMATION.] If the
information contained in a registration becomes inaccurate after
the registration is filed, the general partnership is not
required to amend or correct the registration and the inaccuracy
has no effect on the partnership's status as a limited liability
partnership. The partnership must provide accurate information
in any subsequently filed renewal registration.
Subd. 6. [VOLUNTARY WITHDRAWAL OF STATUS.] A partnership
may end its status as a limited liability partnership at any
time by filing with the secretary of state a withdrawal
statement that names the partnership, states that the
partnership is withdrawing its current registration, and
acknowledges that the withdrawal ends the partnership's status
as a limited liability partnership. The withdrawal statement
may state a delayed effective date, if that date is before the
expiration date of the partnership's current registration. If
the withdrawal statement does not state an effective date, the
statement is effective when filed.
Subd. 7. [FILING AFTER DISSOLUTION.] (a) A dissolved
limited liability partnership may continue its status as a
limited liability partnership through termination either by:
(1) continuing to file annual renewal registrations until
termination; or
(2) filing a final renewal registration that, in addition
to providing the information required by subdivision 3:
(i) states that the partnership is dissolved and is winding
up its affairs;
(ii) identifies the cause of the dissolution; and
(iii) states that the renewal registration is the final
renewal registration and will remain in effect until termination.
A final renewal registration that complies with clause (2)
must not contain the statement required by subdivision 2, clause
(3).
(b) When the dissolved limited liability partnership has
wound up its affairs, it shall file with the secretary of state
a termination notice that contains the following information:
(1) the name of the limited liability partnership;
(2) that the limited liability partnership has dissolved
and wound up its affairs; and
(3) that the limited liability partnership is terminated.
The notice must be signed by one former general partner who
has not wrongfully dissolved the partnership. There is no fee
for the termination filing.
Sec. 17. [323.45] [NAME OF LIMITED LIABILITY
PARTNERSHIPS.]
Subdivision 1. [REQUIREMENTS; PROHIBITIONS.] The name of a
limited liability partnership must meet all of the requirements
of section 302A.115, subdivision 1, except that the acceptable
words required by section 302A.115, subdivision 2, are "limited
liability partnership" or the abbreviation "L.L.P."
Subd. 2. [DETERMINATION.] The secretary of state shall
determine whether a name is distinguishable from another name
for purposes of this section.
Subd. 3. [CONTEST OF REGISTRATION OF NAME.] A person doing
business in this state may contest the subsequent registration
of a name with the office of the secretary of state as provided
in section 5.22.
Subd. 4. [CONSENT TO USE OF NAME.] The procedures
described in section 302A.115, subdivision 1, paragraph (d),
apply to a name registered under this section.
Subd. 5. [FAILURE TO USE REQUIRED NAME.] If a person
purports to enter into a contract or other undertaking on behalf
of a general partnership that is a limited liability partnership
and does not disclose to the other party that part of the
limited liability partnership's name that complies with
subdivision 1, then that person is personally liable on the
contract or undertaking, unless that person can show that in
making the contract or accepting the undertaking the other party
did not rely on the partnership being an ordinary general
partnership. Any partner of a limited liability partnership who
consents to a person not making the disclosure described in this
subdivision is also personally liable on the contract or
undertaking, unless that partner can make the showing described
in this subdivision.
Sec. 18. [323.46] [APPLICABILITY TO FOREIGN AND INTERSTATE
COMMERCE.]
Subdivision 1. [CONDUCTING BUSINESS.] A partnership,
including a limited liability partnership, formed and existing
under this chapter, may conduct its business, carry on its
operations, and have and exercise the powers granted by chapter
323 in any state, territory, district, or possession of the
United States or in any foreign country.
Subd. 2. [GOVERNING LAW.] It is the policy of this state
that the internal affairs of partnerships, including limited
liability partnerships, existing under this chapter, including
the liability of partners for debts and obligations of
partnerships, are subject to and governed by the laws of this
state.
Sec. 19. [323.47] [SERVICE OF PROCESS ON LIMITED LIABILITY
PARTNERSHIPS.]
Subdivision 1. [WHO MAY BE SERVED.] A process, notice, or
demand required or permitted by law to be served on a limited
liability partnership may be served either on the registered
agent of the limited liability partnership, if any, or on any
responsible person found at the registered office of the limited
liability partnership or on the secretary of state as provided
in this section.
Subd. 2. [SERVICE ON SECRETARY OF STATE; WHEN
PERMITTED.] If a limited liability partnership has appointed and
maintained a registered agent in this state but neither its
registered agent nor a responsible person can be found at the
registered office, or if a limited liability partnership fails
to appoint or maintain a registered agent in this state and a
responsible person affiliated with the limited liability
partnership cannot be found at the principal place of business
in this state, then the secretary of state is the agent of the
limited liability partnership on whom the process, notice, or
demand may be served. The return of the sheriff, or the
affidavit of a person not a party, that no registered agent or
responsible person may be found at either the registered office
of the registered agent or its principal place of business in
this state is conclusive evidence that the limited liability
partnership has no registered agent or responsible person at its
registered office or its principal place of business in this
state. Service on the secretary of state of any process,
notice, or demand is deemed personal service on the limited
liability partnership and may be made by filing with the
secretary of state duplicate copies of the process, notice, or
demand and paying a fee of $35. The secretary of state shall
immediately forward, by certified mail addressed to the limited
liability partnership at its registered office or principal
place of business in this state, a copy of the process, notice,
or demand. Service on the secretary of state is returnable in
not less than 30 days, notwithstanding a shorter period
specified in the process, notice, or demand.
Subd. 3. [RECORD OF SERVICE.] The secretary of state shall
maintain a record of all processes, notices, and demands served
on the secretary of state under this section, including the date
of service and the action taken with reference to it.
Subd. 4. [OTHER METHODS OF SERVICE.] Nothing in this
section limits the right of a person to serve process, notice,
or demand required or permitted by law to be served on a limited
liability partnership in any other manner permitted by law.
Sec. 20. [APPROPRIATION.]
$19,000 is appropriated from the general fund to the
secretary of state for implementation of this act.
Presented to the governor April 28, 1994
Signed by the governor April 29, 1994, 2:35 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes