MISSISSIPPI LEGISLATURE

1998 Regular Session

To: Judiciary A

By: Representative Simpson

AN ACT TO AMEND SECTION 79-12-29, MISSISSIPPI CODE OF 1972, TO BROADEN THE VICARIOUS LIABILITY SHIELD APPLICABLE TO PARTNERS IN A LIMITED LIABILITY PARTNERSHIP; TO AMEND SECTIONS 79-14-603 AND 79-14-604, MISSISSIPPI CODE OF 1972, TO ALLOW A LIMITED PARTNER TO WITHDRAW AND RECEIVE DISTRIBUTION UPON WITHDRAWAL AS SPECIFIED IN THE PARTNERSHIP AGREEMENT; TO CREATE SECTION 79-14-1108, MISSISSIPPI CODE OF 1972, TO SPECIFY THE LAW GOVERNING CERTAIN DOMESTIC LIMITED PARTNERSHIPS; TO AMEND SECTION 79-29-103, MISSISSIPPI CODE OF 1972, TO REVISE DEFINITIONS IN THE MISSISSIPPI LIMITED LIABILITY COMPANY ACT; TO AMEND SECTIONS 79-29-307, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT UNLESS PROVIDED IN THE CERTIFICATE OF FORMATION OR LIMITED LIABILITY COMPANY AGREEMENT A MEMBER HAS NO POWER TO WITHDRAW FROM A LIMITED LIABILITY COMPANY; TO AMEND SECTION 79-29-801, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT A LIMITED LIABILITY COMPANY IS NOT REQUIRED TO BE DISSOLVED UPON AN EVENT OF DISASSOCIATION OF A MEMBER UNLESS A MAJORITY OR OTHER SPECIFIED NUMBER CONSENT TO DO SO; TO CREATE SECTION 79-29-1205, MISSISSIPPI CODE OF 1972, TO PROVIDE CERTAIN TRANSITIONAL PROVISIONS; AND FOR RELATED PURPOSES. 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 79-12-29, Mississippi Code of 1972, is amended as follows:

79-12-29. (1) Except as provided in Section 79-12-29(2), all partners are liable jointly and severally for all debts and obligations of the partnership including those under Sections 79-12-25 and 79-12-27.

(2) Subject to Section 79-12-29(3) and subject to any agreement between the partners, a partner in a limited liability partnership is not liable directly or indirectly (including by way of indemnification, contribution, assessment or otherwise) for any debts, obligations or other liability of or chargeable to the partnership or another partner or partners, whether arising in tort, contract or otherwise, that is incurred, created or assumed while the partnership is a limited liability partnership * * *.

(3) Section 79-12-29(2) shall not affect the liability of a partner in a limited liability partnership for his own omissions, negligence, wrongful acts, misconduct and malpractice and that of any person under his direct supervision and control.

(4) A partner in a limited liability partnership is not a proper party to any proceeding by or against a limited liability partnership, the object of which is to recover damages or enforce any debt, obligation or other liability of the type described in Section 79-12-29(2), unless such partner is personally liable under Section 79-12-29(3).

SECTION 2. Section 79-14-603, Mississippi Code of 1972, is amended as follows:

79-14-603. A limited partner may withdraw from a limited partnership at the time or upon the occurrence of events specified in writing in the partnership agreement. * * *

SECTION 3. Section 79-14-604, Mississippi Code of 1972, is amended as follows:

79-14-604. Subject to contrary provision in the partnership agreement, a withdrawing * * * partner is entitled to receive * * *, within a reasonable time after * * * withdrawal, the fair value * * * as of the date of withdrawal of the interest in the limited partnership with respect to which the withdrawal has occurred.

SECTION 4. The following shall be codified as Section 79-14-1108, Mississippi Code of 1972:

79-14-1108. (a) This chapter governs all domestic limited partnerships formed on or after July 1, 1998, as amended.

(b) A domestic limited partnership formed before July 1, 1998, may voluntarily elect, in accordance with any provision in its partnership agreement permitting it to do so or by complying with the procedures provided in its partnership agreement for amending the partnership agreement, to adopt the provisions of this chapter, as amended, and thereafter may become subject to its provisions as of July 1, 1998, by filing with the Secretary of State at any time after May 1, 1998, of a certificate of amendment that would cause its certificate of limited partnership to comply with this chapter, as amended, and that, in each case, specifically states that the limited partnership is electing to adopt the provisions of this chapter as amended. Upon the later of July 1, 1998, or the filing of a document complying with the immediately preceding sentence, all provisions of this chapter, as amended, shall thereafter apply to such limited partnership.

(c) A domestic limited partnership formed before July 1, 1998, that does not adopt the provisions of this chapter pursuant to subsection (b) of this Code section shall continue to be governed by this chapter as it existed prior to July 1, 1998.

SECTION 5. Section 79-29-103, Mississippi Code of 1972, is amended as follows:

79-29-103. As used in this chapter, unless the context otherwise requires:

(a) "Certificate of formation" means the certificate referred to in Section 79-29-201, and the certificate as amended or restated.

(b) "Contribution" means any cash, property, services rendered, or a promissory note or other obligation to contribute cash or property or to perform services, which a person contributes to a limited liability company in his capacity as a member.

(c) "Deliver" or "delivery" means any method of delivery used in conventional commercial practice, including delivery by hand, mail, commercial delivery and electronic transmission. If delivery is to the Secretary of State, delivery may be made by electronic transmission, if, to the extent, and in the manner permitted by the Secretary of State.

(d) "Derivative proceeding" means a civil suit in the right of a limited liability company or, to the extent provided in Article 10 of this chapter, in the right of a foreign limited liability company.

(e) "Electronic transmission" or "electronically transmitted" means any process of communication not directly involving the physical transfer of paper that is suitable for the retention, retrieval and reproduction of information by the recipient.

(f) "Event of dissociation" means an event that causes a person to cease to be a member as provided in Section 79-29-307.

(g) "Foreign limited liability company" means an entity that is an unincorporated association organized under laws other than the laws of this state that affords to each of its members, pursuant to the laws under which it is organized, limited liability with respect to liabilities of the entity.

(h) "Limited liability company" and "domestic limited liability company" mean an entity having one or more members that is an unincorporated association that is formed and existing under this chapter.

(i) "Limited liability company agreement" means an agreement of the members as to the affairs of a limited liability company and the conduct of its business.

(j) "Limited liability company interest" means a member's share of the profits and losses of a limited liability company and the right to receive distributions of limited liability company assets.

(k) "Manager" or "managers" means a person or persons who are named in, or selected or designated pursuant to, the certificate of formation or limited liability company agreement to manage the limited liability company to the extent and as provided in the certificate of formation or limited liability company agreement.

(l) "Member" means a person that has been admitted to a limited liability company as provided in Section 79-29-301 or, in the case of a foreign limited liability company, in accordance with the laws under which the foreign limited liability company is organized, and that has not dissociated from the limited liability company.

(m) "Person" means an individual, corporation, nonprofit corporation, business trust, estate, trust, partnership, limited partnership, association, joint venture, limited liability company, government, governmental subdivision or agency, any other legal or commercial entity, nominee or any individual or entity in any representative capacity.

(n) "Professional limited liability company" is a limited liability company formed and existing under Article 9 of this chapter.

(o) "Sign" or "signature" includes any manual, facsimile, conformed or electronic signature.

SECTION 6. Section 79-29-307, Mississippi Code of 1972, is amended as follows:

79-29-307. (1) A person ceases to be a member of a limited liability company upon the occurrence of one or more of the following events:

(a) The member withdraws by voluntary act from the limited liability company in accordance with the limited liability company agreement;

(b) The member ceases to be a member of the limited liability company as provided in Section 79-29-702;

(c) The member is removed as a member in accordance with the certificate of formation or limited liability company agreement;

(d) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, the member (i) makes an assignment for the benefit of creditors; (ii) files a voluntary petition in bankruptcy; (iii) is adjudicated a bankrupt or insolvent; (iv) files a petition or answer seeking for himself any reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation; (v) files an answer or other pleading admitting or failing to contest the material allegations of a petition filed against him in any proceeding of the nature described in this paragraph (1)(d); or (vi) seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the member or of all or any substantial part of his properties;

(e) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, if one hundred twenty (120) days after the commencement of any proceeding against the member seeking reorganization, arrangement, composition, readjustment, liquidation, dissolution, or similar relief under any statute, law, or regulation, the proceeding has not been dismissed, or if within ninety (90) days after the appointment without his consent or acquiescence of a trustee, receiver, or liquidator of the member or of all or any substantial part of his properties, the appointment is not vacated or stayed or within ninety (90) days after the expiration of any stay, the appointment is not vacated;

(f) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, in the case of a member who is an individual:

(i) His death; or

(ii) The entry of an order by a court of competent jurisdiction adjudicating him incompetent to manage his person or his estate;

(g) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, in the case of a member who is a trust or is acting as a member by virtue of being a trustee of a trust, the termination of the trust, but not merely the substitution of a new trustee;

(h) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, in the case of a member that is a partnership, limited partnership or limited liability company, the dissolution and commencement of winding up thereof;

(i) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, in the case of a member that is a corporation, the filing of a certificate of its dissolution or the equivalent for the corporation or the revocation of its charter and the lapse of one hundred eighty (180) days after notice to the corporation of revocation without a reinstatement of its charter; or

(j) Subject to contrary provision in the certificate of formation or limited liability company agreement, or consent of all members at the time, in the case of an estate, the distribution by the fiduciary of the estate's entire interest in the limited liability company.

(2) The certificate of formation or limited liability company agreement may provide for other events the occurrence of which result in a person ceasing to be a member of the limited liability company.

(3) Unless the certificate of formation or limited liability company agreement provides * * * that a member has the power to do so, a member has no power to withdraw * * * from a limited liability company * * *.

SECTION 7. Section 79-29-801, Mississippi Code of 1972, is amended as follows:

79-29-801. A limited liability company is dissolved and its affairs must be wound up upon the first of the following to occur:

(a) At the time specified in the certificate of formation;

(b) Upon the occurrence of the event specified in the certificate of formation or limited liability company agreement;

(c) Upon the * * * consent of all members, or such lesser number as may be provided in the certificate of formation or limited liability company agreement;

(d) Upon an event of dissociation of a member as provided in Section 79-29-307, if a majority of * * * the remaining members or such other number as may be provided in the certificate of formation or limited liability company agreement; or

(e) Upon the entry of a decree of judicial dissolution under Section 79-29-802.

SECTION 8. The following shall be codified as Section 79-29-1205, Mississippi Code of 1972:

79-29-1205. (1) Sections 79-29-307 and 79-29-801 of this chapter shall govern all domestic limited liability companies formed on or after July 1, 1998.

(2) A domestic limited liability company formed before July 1, 1998, may voluntarily elect to become subject to the provisions of Sections 79-29-307 and 79-29-801 by the filing with the Secretary of State of a certificate of amendment specifically stating that the limited liability company is electing to be subject to such provisions.

(3) A domestic limited liability company formed before July 1, 1998, that does not elect to become subject to the provisions of Sections 79-29-307 and 79-39-801 shall continue to be governed by the provisions of Sections 79-29-307 and 79-29-801 as such provisions existed before July 1, 1998.

SECTION 9. This act shall take effect and be in force from and after July 1, 1998.