2021 -- S 0674
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LC002208
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2021
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AN ACT
RELATING TO CORPORATIONS, ASSOCIATIONS, AND PARTNERSHIPS -- THE RHODE
ISLAND LIMITED PARTNERSHIP ACT
Introduced By: Senators Lombardi, and Coyne
Date Introduced: March 18, 2021
Referred To: Senate Judiciary
It is enacted by the General Assembly as follows:
1 SECTION 1. Title 7 of the General Laws entitled "CORPORATIONS, ASSOCIATIONS,
2 AND PARTNERSHIPS" is hereby amended by adding thereto the following chapter:
3 CHAPTER 13.1
4 THE RHODE ISLAND LIMITED PARTNERSHIP ACT
5 ARTICLE 1
6 GENERAL PROVISIONS
7 7-13.1-101. Short title.
8 This chapter shall be known and may be cited as the "Rhode Island Limited Partnership
9 Act".
10 7-13.1-102. Definitions.
11 As used in this chapter:
12 (1) "Certificate of limited partnership" means the certificate required by § 7-13.1-201. The
13 term includes the certificate as amended or restated.
14 (2) "Contribution", except in the phrase "right of contribution", means property or a benefit
15 described in § 7-13.1-501 which is provided by a person to a limited partnership to become a partner
16 or in the person's capacity as a partner.
17 (3) "Debtor in bankruptcy" means a person that is the subject of:
18 (i) An order for relief under Title 11 of the United States Code or a comparable order under
 1 a successor statute of general application; or
2 (ii) A comparable order under federal, state, or foreign law governing insolvency.
3 (4) "Distribution" means a transfer of money or other property from a limited partnership
4 to a person on account of a transferable interest or in the person's capacity as a partner. The term:
5 (i) Includes:
6 (A) A redemption or other purchase by a limited partnership of a transferable interest; and
7 (B) A transfer to a partner in return for the partner's relinquishment of any right to
8 participate as a partner in the management or conduct of the partnership's activities and affairs or
9 to have access to records or other information concerning the partnership's activities and affairs;
10 and
11 (ii) Does not include amounts constituting reasonable compensation for present or past
12 service or payments made in the ordinary course of business under a bona fide retirement plan or
13 other bona fide benefits program.
14 (5) "Foreign limited liability limited partnership" means a foreign limited partnership
15 whose general partners have limited liability for the debts, obligations, or other liabilities of the
16 foreign partnership under a provision similar to § 7-13.1-404(c).
17 (6) "Foreign limited partnership" means an unincorporated entity formed under the law of
18 a jurisdiction other than this state which would be a limited partnership if formed under the law of
19 this state. The term includes a foreign limited liability limited partnership.
20 (7) "General partner" means a person that:
21 (i) Has become a general partner under § 7-13.1-401 or was a general partner in a
22 partnership when the partnership became subject to this chapter under § 7-13.1-112; and
23 (ii) Has not dissociated as a general partner under § 7-13.1-603.
24 (8) "Jurisdiction", used to refer to a political entity, means the United States, a state, a
25 foreign country, or a political subdivision of a foreign country.
26 (9) "Jurisdiction of formation" means the jurisdiction whose law governs the internal
27 affairs of an entity.
28 (10) "Limited liability limited partnership", except in the phrase "foreign limited liability
29 limited partnership" and in article 11 of this chapter, means a limited partnership whose certificate
30 of limited partnership states that the partnership is a limited liability limited partnership.
31 (11) "Limited partner" means a person that:
32 (i) Has become a limited partner under § 7-13.1-301 or was a limited partner in a limited
33 partnership when the partnership became subject to this chapter under § 7-13.1-112; and
34 (ii) Has not dissociated under § 7-13.1-601.
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 1 (12) "Limited partnership", except in the phrase "foreign limited partnership" and in article
2 11 of this chapter, means an entity formed under this chapter or which becomes subject to this
3 chapter under article 11 of this chapter or § 7-13.1-112. The term includes a limited liability limited
4 partnership.
5 (13) "Partner" means a limited partner or general partner.
6 (14) "Partnership agreement" means the agreement, whether or not referred to as a
7 partnership agreement and whether oral, implied, in a record, or in any combination thereof, of all
8 the partners of a limited partnership concerning the matters described in § 7-13.1-105(a). The term
9 includes the agreement as amended or restated.
10 (15) "Person" means an individual, business corporation, nonprofit corporation,
11 partnership, limited partnership, limited liability company, general cooperative association, limited
12 cooperative association, unincorporated nonprofit association, statutory trust, business trust,
13 common-law business trust, estate, trust, association, joint venture, public corporation, government
14 or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity.
15 (16) "Principal office" means the principal executive office of a limited partnership or
16 foreign limited partnership, whether or not the office is located in this state.
17 (17) "Property" means all property, whether real, personal, or mixed or tangible or
18 intangible, or any right or interest therein.
19 (18) "Record", used as a noun, means information that is inscribed on a tangible medium
20 or that is stored in an electronic or other medium and is retrievable in perceivable form.
21 (19) "Registered agent" means an agent of a limited partnership or foreign limited
22 partnership which is authorized to receive service of any process, notice, or demand required or
23 permitted by law to be served on the partnership.
24 (20) "Registered foreign limited partnership" means a foreign limited partnership that is
25 registered to do business in this state pursuant to a statement of registration filed by the secretary
26 of state.
27 (21) "Required information" means the information that a limited partnership is required
28 to maintain under § 7-13.1-108.
29 (22) "Sign" means, with present intent to authenticate or adopt a record:
30 (i) To execute or adopt a tangible symbol; or
31 (ii) To attach to or logically associate with the record an electronic symbol, sound, or
32 process.
33 (23) "State" means a state of the United States, the District of Columbia, Puerto Rico, the
34 United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the
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 1 United States.
2 (24) "Transfer" includes:
3 (i) An assignment;
4 (ii) A conveyance;
5 (iii) A sale;
6 (iv) A lease;
7 (v) An encumbrance, including a mortgage or security interest;
8 (vi) A gift; and
9 (vii) A transfer by operation of law.
10 (25) "Transferable interest" means the right, as initially owned by a person in the person's
11 capacity as a partner, to receive distributions from a limited partnership, whether or not the person
12 remains a partner or continues to own any part of the right. The term applies to any fraction of the
13 interest, by whomever owned.
14 (26) "Transferee" means a person to which all or part of a transferable interest has been
15 transferred, whether or not the transferor is a partner. The term includes a person that owns a
16 transferable interest under §§ 7-13.1-602(a)(3) or 7-13.1-605(a)(4).
17 7-13.1-103. Knowledge; Notice.
18 (a) A person knows a fact if the person:
19 (1) Has actual knowledge of it; or
20 (2) Is deemed to know it under law other than this chapter.
21 (b) A person has notice of a fact if the person:
22 (1) Has reason to know the fact from all the facts known to the person at the time in
23 question; or
24 (2) Is deemed to have notice of the fact under subsections (c) or (d) of this section.
25 (c) A certificate of limited partnership on file in the office of the secretary of state is notice
26 that the partnership is a limited partnership and the persons designated in the certificate as general
27 partners are general partners. Except as otherwise provided in subsection (d) of this section, the
28 certificate is not notice of any other fact.
29 (d) A person not a partner is deemed to have notice of:
30 (1) A person's dissociation as a general partner ninety (90) days after an amendment to the
31 certificate of limited partnership which states that the other person has dissociated becomes
32 effective or ninety (90) days after a statement of dissociation pertaining to the other person becomes
33 effective, whichever occurs first;
34 (2) A limited partnership's:
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 1 (i) Dissolution ninety (90) days after an amendment to the certificate of limited partnership
2 stating that the limited partnership is dissolved becomes effective;
3 (ii) Termination ninety (90) days after a statement of termination under § 7-13.1-
4 802(b)(2)(vi) becomes effective; and
5 (iii) Participation in a merger, interest exchange, conversion, or domestication, ninety (90)
6 days after articles of merger, interest exchange, conversion, or domestication under article 11 of
7 this chapter become effective.
8 (e) Subject to § 7-13.1-210(f), a person notifies another person of a fact by taking steps
9 reasonably required to inform the other person in ordinary course, whether or not those steps cause
10 the other person to know the fact.
11 (f) A general partner's knowledge or notice of a fact relating to the limited partnership is
12 effective immediately as knowledge of or notice to the partnership, except in the case of a fraud on
13 the partnership committed by or with the consent of the general partner. A limited partner's
14 knowledge or notice of a fact relating to the partnership is not effective as knowledge of or notice
15 to the partnership.
16 7-13.1-104. Governing law.
17 The law of this state governs:
18 (1) The internal affairs of a limited partnership; and
19 (2) The liability of a partner as partner for a debt, obligation, or other liability of a limited
20 partnership.
21 7-13.1-105. Partnership agreement; Scope, function, and limitations.
22 (a) Except as otherwise provided in subsections (c) and (d) of this section, the partnership
23 agreement governs:
24 (1) Relations among the partners as partners and between the partners and the limited
25 partnership;
26 (2) The activities and affairs of the partnership and the conduct of those activities and
27 affairs; and
28 (3) The means and conditions for amending the partnership agreement.
29 (b) To the extent the partnership agreement does not provide for a matter described in
30 subsection (a) of this section, this chapter governs the matter.
31 (c) A partnership agreement may not:
32 (1) Vary the law applicable under § 7-13.1-104;
33 (2) Vary a limited partnership's capacity under § 7-13.1-111 to sue and be sued in its own
34 name;
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 1 (3) Vary any requirement, procedure, or other provision of this chapter pertaining to:
2 (i) Registered agents; or
3 (ii) The secretary of state, including provisions pertaining to records authorized or required
4 to be delivered to the secretary of state for filing under this chapter;
5 (4) Vary the provisions of § 7-13.1-204;
6 (5) Vary the right of a general partner under § 7-13.1-406(b)(2) to vote on or consent to an
7 amendment to the certificate of limited partnership which deletes a statement that the limited
8 partnership is a limited liability limited partnership;
9 (6) Alter or eliminate the duty of loyalty or the duty of care except as otherwise provided
10 in subsection (d) of this section;
11 (7) Eliminate the contractual obligation of good faith and fair dealing under §§ 7-13.1-
12 305(a) and 7-13.1-409(d), but the partnership agreement may prescribe the standards, if not
13 manifestly unreasonable, by which the performance of the obligation is to be measured;
14 (8) Relieve or exonerate a person from liability for conduct involving bad faith, willful or
15 intentional misconduct, or knowing violation of law;
16 (9) Vary the information required under § 7-13.1-108 or unreasonably restrict the duties
17 and rights under §§ 7-13.1-304 or 7-13.1-407, but the partnership agreement may impose
18 reasonable restrictions on the availability and use of information obtained under those sections and
19 may define appropriate remedies, including liquidated damages, for a breach of any reasonable
20 restriction on use;
21 (10) Vary the grounds for expulsion specified in § 7-13.1-603(5)(ii);
22 (11) Vary the power of a person to dissociate as a general partner under § 7-13.1-604(a),
23 except to require that the notice under § 7-13.1-603(1) be in a record;
24 (12) Vary the causes of dissolution specified in § 7-13.1-801(a)(6);
25 (13) Vary the requirement to wind up the partnership's activities and affairs as specified in
26 §§ 7-13.1-802(a), (b)(1), and 7-13.1-802(d);
27 (14) Unreasonably restrict the right of a partner to maintain an action under article 9 of this
28 chapter;
29 (15) Vary the provisions of § 7-13.1-905, but the partnership agreement may provide that
30 the partnership may not have a special litigation committee;
31 (16) Vary the right of a partner to approve a merger, interest exchange, conversion, or
32 domestication under §§ 7-13.1-11.23(a)(2), 7-13.1-11.33(a)(2), 7-13.1-11.43(a)(2), or 7-13.1-
33 11.53(a)(2);
34 (17) Vary the required contents of a plan of merger under § 7-13.1-11.22(a), plan of interest
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 1 exchange under § 7-13.1-11.32(a), plan of conversion under § 7-13.1-11.42(a), or plan of
2 domestication under § 7-13.1-11.52(a); or
3 (18) Except as otherwise provided in §§ 7-13.1-106 and 7-13.1-107(b), restrict the rights
4 under this chapter of a person other than a partner.
5 (d) Subject to subsection (c)(8) of this section, without limiting other terms that may be
6 included in a partnership agreement, the following rules apply:
7 (1) The partnership agreement may:
8 (i) Specify the method by which a specific act or transaction that would otherwise violate
9 the duty of loyalty may be authorized or ratified by one or more disinterested and independent
10 persons after full disclosure of all material facts; and
11 (ii) Alter the prohibition in § 7-13.1-504(a)(2) so that the prohibition requires only that the
12 partnership's total assets not be less than the sum of its total liabilities.
13 (2) If not manifestly unreasonable, the partnership agreement may:
14 (i) Alter or eliminate the aspects of the duty of loyalty stated in § 7-13.1-409(b);
15 (ii) Identify specific types or categories of activities that do not violate the duty of loyalty;
16 (iii) Alter the duty of care, but may not authorize conduct involving bad faith, willful or
17 intentional misconduct, or knowing violation of law; and
18 (iv) Alter or eliminate any other fiduciary duty.
19 (e) The Providence County superior court shall decide as a matter of law whether a term of
20 a partnership agreement is manifestly unreasonable under subsection (c)(7) or (d)(2) of this section.
21 The Providence County superior court:
22 (1) Shall make its determination as of the time the challenged term became part of the
23 partnership agreement and by considering only circumstances existing at that time; and
24 (2) May invalidate the term only if, in light of the purposes, activities, and affairs of the
25 limited partnership, it is readily apparent that:
26 (i) The objective of the term is unreasonable; or
27 (ii) The term is an unreasonable means to achieve its objective.
28 7-13.1-106. Partnership agreement -- Effect on limited partnership and person
29 becoming partner -- Preformation agreement.
30 (a) A limited partnership is bound by and may enforce the partnership agreement, whether
31 or not the partnership has itself manifested assent to the agreement.
32 (b) A person that becomes a partner is deemed to assent to the partnership agreement.
33 (c) Two