Texas Partnership Types (4)
Partnership Type | State Filing Requirement |
---|---|
General Partnership (GP) | There are no registration requirements for general partnerships but, they are explicitly required to conform to naming requirements and partnership laws. Texas SOS Business Services |
Limited Partnership (LP) | Certificate of Formation of Limited Partnership (Filing Fee: $750.00) |
Limited Liability Partnership (LLP) | Registration of Limited Liability Partnership (Filing Fee: See Instructions – $200.00/ per general partner accordingly) |
Limited Liability Limited Partnership (LLLP) | Certificate of Formation of Limited Partnership (Filing Fee: See Instructions – $750.00) |
Fiduciary Duty
- Partners hold a duty to fully inform the partnership of every “profit or benefit” they receive from conducting (as well as winding up) partnership business; this applies to the use of partnership property or the receipt of property.[1]
- Partners cannot participate in any dealings with the partnership while they possess “an interest adverse” to the partnership’s goals or operations, nor can they act on behalf of such a person (i.e., legal entity, individual, other partner).[2]
- A partner owes the partnership their loyalty and thus are restricted from “competing” with or working against the partnership’s business.[3]
Duty of Care:
- Partners must act “in the best interest of the partnership” whenever they exercise their rights, carry out their duties, or exhibit their partnership authority. [4]
Partners must act in the “good faith” that is consistent with their partnership agreement obligations.[5]
Partners are not violating their duties “under the partnership agreement” when pursuing outside interests solely because they are partners.[6]
No partner is a trustee simply because of their “capacity as a partner” and thus do not generally owe such duty.[7]
Partners do not absorb liability “merely because” they pursue business interests outside the partnership but must always remain compliant with both the agreement and the law.[8]
Partnerships are responsible for each partner’s conduct; thus, they can be held “liable for loss” or injuries to persons, and this includes to other partners.[9]
A partnership is responsible for the misapplication of “money or property” its partners receive on its behalf or specifically in the course of ordinary business.[10]
Liability
Limited partners are excused from meeting the “obligations of a limited partnership”; however, this is not the case if they hold a dual status of being a limited partner and a general partner.[11]
Limited partners are potentially responsible for meeting a partnership’s obligations and liabilities whenever they act “in the control of the business” and outside the limitations of the partnership’s limited partner status.[12]
A limited partner that is acting to control the partnership business is “liable only to a person who transacts business” with the LP while (erroneously) believing the limited partner is a general partner.[13]
State Definitions (3)
A general partner is a partner (potentially) carrying “the liabilities of a partner in a partnership without limited partners,” whether in a general partnership or a limited partnership and named as such in the partnership agreement or as classified by Texas law.[14]
A limited partner means a person that is “acquiring a limited partnership interest” as the partnership agreement they sign dictates and under state law.[15]
Partnership agreement means a contract executed between partners to define their participation, roles, and obligations in a partnership that is legally executed whether “written, implied, or oral.”[16]
Sources
- TX Bus Orgs § 152.205(1) (2023)
- TX Bus Orgs § 152.205(2) (2023)
- TX Bus Orgs § 152.205(3) (2023)
- TX Bus Orgs § 152.205(b)(2) (2023)
- TX Bus Orgs § 152.205(b)(1) (2023)
- TX Bus Orgs § 152.204(c) (2023)
- TX Bus Orgs § 152.204(d) (2023)
- TX Bus Orgs § 152.204(c) (2023)
- TX Bus Orgs § 152.303(a) (2023)
- TX Bus Orgs § 152.303(b) (2023)
- TX Bus Orgs § 153.102(a)(1) (2023)
- TX Bus Orgs § 153.102(a)(2) (2023)
- TX Bus Orgs § 153.102(b) (2023)
- TX Bus Orgs § 153.152 (2023)
- TX Bus Orgs § 153.101 (2023)
- TX Bus Orgs § 151.001(5) (2023)