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House File 642

Partial Bill History

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PAG LIN
  1  1                                             HOUSE FILE 642
  1  2 
  1  3                             AN ACT
  1  4 RELATING TO THE ORGANIZATION AND OPERATION OF CERTAIN
  1  5    LEGAL ENTITIES, INCLUDING LIMITED PARTNERSHIPS AND THE 
  1  6    RIGHTS AND DUTIES OF LIMITED PARTNERS, PARTNERSHIP 
  1  7    AGREEMENTS, DUTIES OF THE SECRETARY OF STATE WITH RESPECT 
  1  8    TO LIMITED PARTNERSHIPS, AND OTHER RELATED MATTERS 
  1  9    AFFECTING FOREIGN AND DOMESTIC LIMITED PARTNERSHIPS, AND 
  1 10    INCLUDING LIMITED LIABILITY COMPANIES AND THE CONVERSION OF 
  1 11    OTHER ENTITIES TO LIMITED LIABILITY COMPANIES, AND THE 
  1 12    RIGHTS, DUTIES, OBLIGATIONS, AND INTERESTS OF MEMBERS AND 
  1 13    MANAGERS WITH RESPECT TO SUCH COMPANIES, AND ESTABLISHING 
  1 14    FEES AND PENALTIES.  
  1 15 
  1 16 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 
  1 17 
  1 18    Section 1.  Section 487.101, subsections 1 and 6, Code
  1 19 1997, are amended to read as follows:
  1 20    1.  "Certificate of limited partnership" means the
  1 21 certificate referred to in section 487.201, and the
  1 22 certificate as amended or restated.
  1 23    6.  "Limited partner" means a person who has been admitted
  1 24 to a limited partnership as a limited partner in accordance
  1 25 with the partnership agreement and named in the certificate of
  1 26 limited partnership as a limited partner.
  1 27    Sec. 2.  Section 487.101, Code 1997, is amended by adding
  1 28 the following new subsections:
  1 29    NEW SUBSECTION.  11.  "Person" means as defined in section
  1 30 4.1.
  1 31    NEW SUBSECTION.  12.  "State" means a state, territory, or
  1 32 possession of the United States, the District of Columbia, or
  1 33 the Commonwealth of Puerto Rico.
  1 34    Sec. 3.  Section 487.102, subsection 3, Code 1997, is
  1 35 amended by striking the subsection.
  2  1    Sec. 4.  Section 487.102, subsection 4, Code 1997, is
  2  2 amended to read as follows:
  2  3    4.  Shall be distinguishable upon the records of the
  2  4 secretary of state from the name of a registered limited
  2  5 liability partnership, corporation, limited liability company,
  2  6 or limited partnership organized under the law of this state
  2  7 or licensed or registered as a foreign registered limited
  2  8 liability partnership, foreign corporation, foreign limited
  2  9 liability company, or foreign limited partnership in this
  2 10 state or a name the exclusive right to which is, at the time,
  2 11 reserved in the manner provided in this chapter, without the
  2 12 written consent of the registered limited liability
  2 13 partnership, corporation, limited liability company, or
  2 14 limited partnership, which consent shall be filed with the
  2 15 secretary of state, and provided the name is not identical.
  2 16    Sec. 5.  Section 487.102, Code 1997, is amended by adding
  2 17 the following new subsection:
  2 18    NEW SUBSECTION.  6.  This chapter does not control the use
  2 19 of fictitious names.  However, a limited partnership which
  2 20 uses a fictitious name in this state shall deliver to the
  2 21 secretary of state for filing a copy of the resolution of the
  2 22 limited partnership certified by its general partners,
  2 23 adopting the fictitious name.
  2 24    Sec. 6.  Section 487.103, subsection 2, Code 1997, is
  2 25 amended to read as follows:
  2 26    2.  The reservation shall be made by filing with the
  2 27 secretary of state an application to reserve a specified name.
  2 28 If the secretary of state finds that the name is available for
  2 29 use by a domestic or foreign limited partnership, the
  2 30 secretary shall reserve the name for the exclusive use of the
  2 31 applicant for a period of ninety one hundred twenty days.  The
  2 32 right to the exclusive use of a reserved name may be
  2 33 transferred to any other person by filing in the office of the
  2 34 secretary of state a notice of the transfer, executed by the
  2 35 applicant for whom the name was reserved and specifying the
  3  1 name and address of the transferee.
  3  2    Sec. 7.  Section 487.104, subsection 3, Code 1997, is
  3  3 amended to read as follows:
  3  4    3.  An agent for service of process may resign as agent
  3  5 upon filing and recording in accordance with section 487.206
  3  6 487.108 a written notice of resignation, executed in
  3  7 duplicate, with the secretary of state.  The secretary of
  3  8 state shall forthwith mail a copy of the resignation to the
  3  9 limited partnership at its principal place of business.  The
  3 10 appointment of the agent terminates upon the expiration of
  3 11 thirty days after receipt of the notice by the secretary of
  3 12 state.
  3 13    Sec. 8.  Section 487.105, Code 1997, is amended to read as
  3 14 follows:
  3 15    487.105  RECORDS TO BE KEPT.
  3 16    A limited partnership shall keep at the office required
  3 17 under section 487.104, subsection 1, all of the following:
  3 18    1.  A current list of the full name and last known business
  3 19 address of each partner separately identifying the general
  3 20 partners and the limited partners, each list being in
  3 21 alphabetical order.
  3 22    2.  A copy of the certificate of limited partnership and
  3 23 all amendments to the certificate certificates of amendment to
  3 24 the certificate of limited partnership, together with any
  3 25 executed copies of any powers of attorney pursuant to which a
  3 26 any certificate or amendment has been executed.
  3 27    3.  Copies of the limited partnership's federal, state, and
  3 28 local income tax returns and reports, if any, for the three
  3 29 most recent years.
  3 30    4.  Copies of any currently effective written partnership
  3 31 agreements in effect and of any financial statements of the
  3 32 limited partnership for the three most recent years.
  3 33    Any partner may inspect and copy the records required to be
  3 34 kept under subsections 1 to 4 provided that the partner's
  3 35 request to inspect and copy is reasonable and done at the
  4  1 partner's expense.
  4  2    5.  Unless contained in a written partnership agreement, a
  4  3 writing setting out all of the following:
  4  4    a.  The amount of cash and a description and statement of
  4  5 the agreed value of the other property or services contributed
  4  6 by each partner and which each partner has agreed to
  4  7 contribute.
  4  8    b.  The times at which or events on the happening of which
  4  9 any additional contributions agreed to be made by each partner
  4 10 are to be made.
  4 11    c.  Any right of a partner to receive, or of a general
  4 12 partner to make, distributions to a partner which include a
  4 13 return of all or any part of the partner's contribution.
  4 14    d.  Any events upon the happening of which the limited
  4 15 partnership is to be dissolved and its affairs wound up.
  4 16    Records kept under this section are subject to inspection
  4 17 and copying at the reasonable request and at the expense of
  4 18 any partner during ordinary business hours.
  4 19    Sec. 9.  NEW SECTION.  487.108  FILING REQUIREMENTS.
  4 20    1.  A document shall satisfy the requirements of this
  4 21 section, and of any other section that adds to or varies these
  4 22 requirements, to be entitled to filing.
  4 23    2.  The document shall be filed in the office of the
  4 24 secretary of state.
  4 25    3.  The document shall contain the information required by
  4 26 this chapter.  It may contain other information as well.
  4 27    4.  The document shall be typewritten or printed.  The
  4 28 typewritten or printed portion shall be black.  Manually
  4 29 signed photocopies, or other reproduced copies, including
  4 30 facsimiles or other electronically or computer-generated
  4 31 copies of typewritten or printed documents, may be filed.
  4 32    5.  The document shall be in the English language.  A
  4 33 limited partnership name need not be in English if written in
  4 34 English letters or Arabic or Roman numerals.
  4 35    6.  Except as provided in section 487.205, the document
  5  1 shall be executed by one of the following methods:
  5  2    a.  If a domestic limited partnership, the documents shall
  5  3 be executed by all of its general partners.
  5  4    b.  If a foreign limited partnership, the document shall be
  5  5 subscribed and sworn to by a general partner.
  5  6    c.  If the general partner is in the hands of a receiver,
  5  7 trustee, or other court-appointed fiduciary, by that
  5  8 fiduciary.
  5  9    7.  The person executing the document shall sign it and
  5 10 state beneath or opposite the person's signature, the person's
  5 11 name and the capacity in which the person signs.  The
  5 12 secretary of state may accept for filing a document containing
  5 13 a copy of a signature, however made.
  5 14    8.  If, pursuant to any provision of this chapter, the
  5 15 secretary of state has prescribed a mandatory form for the
  5 16 document, the document shall be in or on the prescribed form.
  5 17    9.  The document shall be delivered to the office of the
  5 18 secretary of state for filing and shall be accompanied by the
  5 19 correct filing fee.
  5 20    10.  The secretary of state may adopt rules for the
  5 21 electronic filing of documents and the certification of
  5 22 electronically filed documents.
  5 23    Sec. 10.  NEW SECTION.  487.109  FEES.
  5 24    1.  The secretary of state shall collect the following fees
  5 25 when the documents described in this subsection are delivered
  5 26 to the secretary's office for filing:  
  5 27    a.  Certificate of limited partnership ................. $100
  5 28    b.  Application for registration of foreign limited partner-
  5 29 ship and also issuance of a certificate of registration to
  5 30 transact business in this state ........................... $100
  5 31    c.  Amendment to certificate of limited partnership .... $100
  5 32    d.  Amendment to application for registration of foreign
  5 33 limited partnership ....................................... $100
  5 34    e.  Cancellation of certificate of limited 
  5 35 partnership ............................................... $ 20
  6  1    f.  Cancellation of registration of foreign limited partner-
  6  2 ship ...................................................... $ 20
  6  3    g.  A consent required to be filed under this chapter .. $ 20
  6  4    h.  Application to reserve a limited partnership name .. $ 10
  6  5    i.  A notice of transfer of reservation of name ........ $ 10
  6  6    j.  Articles of correction ............................. $  5
  6  7    k.  Application for certificate of existence or regis-
  6  8 tration ................................................... $  5
  6  9    l.  Any other document required or permitted to be
  6 10 filed ..................................................... $  5
  6 11    2.  The secretary of state shall collect a fee of five
  6 12 dollars each time process is served on the secretary under
  6 13 this chapter.  The party to a proceeding causing service of
  6 14 process is entitled to recover this fee as costs if the party
  6 15 prevails in the proceeding.
  6 16    3.  The secretary of state shall collect the following fees
  6 17 for copying and certifying the copy of any filed document
  6 18 relating to a domestic or foreign limited partnership:
  6 19    a.  One dollar per page for copying.
  6 20    b.  Five dollars for the certificate.
  6 21    Sec. 11.  NEW SECTION.  487.110  EFFECTIVE TIME AND DATE OF
  6 22 DOCUMENTS.
  6 23    1.  Except as provided in subsection 2 and section 487.112,
  6 24 subsection 3, a document accepted for filing is effective at
  6 25 the later of the following times:
  6 26    a.  At the time of filing on the date it is filed, as
  6 27 evidenced by the secretary of state's date and time
  6 28 endorsement on the original document.
  6 29    b.  At the time specified in the document as its effective
  6 30 time on the date it is filed.
  6 31    2.  A document may specify a delayed effective time and
  6 32 date, and if it does so the document becomes effective at the
  6 33 time and date specified.  If a delayed effective date but no
  6 34 time is specified, the document is effective at the close of
  6 35 business on that date.  A delayed effective date for a
  7  1 document shall not be later than the ninetieth day after the
  7  2 date it is filed.
  7  3    Sec. 12.  NEW SECTION.  487.111  CORRECTING FILED
  7  4 DOCUMENTS.
  7  5    1.  A domestic or foreign limited partnership may correct a
  7  6 document filed by the secretary of state if the document
  7  7 satisfies one or both of the following requirements:
  7  8    a.  Contains an incorrect statement.
  7  9    b.  Was defectively executed, attested, sealed, verified,
  7 10 or acknowledged.
  7 11    2.  A document is corrected by preparing articles of
  7 12 correction that satisfy all of the following requirements:
  7 13    a.  Describe the document, including its filing date, or
  7 14 attach a copy of it to the articles.
  7 15    b.  Specify the incorrect statement and the reason it is
  7 16 incorrect or the manner in which the execution was defective.
  7 17    c.  Correct the incorrect statement or defective execution.
  7 18    3.  Articles of correction are effective on the effective
  7 19 date of the document they correct except as to persons relying
  7 20 on the uncorrected document and adversely affected by the
  7 21 correction.  As to those persons, articles of correction are
  7 22 effective when filed.
  7 23    Sec. 13.  NEW SECTION.  487.112  FILING DUTY OF SECRETARY
  7 24 OF STATE.
  7 25    1.  If a document delivered to the office of the secretary
  7 26 of state for filing satisfies the requirements of section
  7 27 487.108, the secretary of state shall file it.
  7 28    2.  The secretary of state files a document by stamping or
  7 29 otherwise endorsing "filed", together with the secretary's
  7 30 name and official title and the date and time of receipt, on
  7 31 both the document and the receipt for the filing fee.  After
  7 32 filing a document, and except as provided in section 487.104A,
  7 33 subsection 3, and section 487.909, the secretary of state
  7 34 shall deliver the document, with the filing fee receipt, or
  7 35 acknowledgment of receipt if no fee is required, attached to
  8  1 the domestic or foreign limited partnership or its
  8  2 representative.
  8  3    3.  If the secretary of state refuses to file a document,
  8  4 the secretary of state shall return it to the domestic or
  8  5 foreign limited partnership or its representative within ten
  8  6 days after the document was received by the secretary of
  8  7 state, together with a brief, written explanation of the
  8  8 reason for the refusal.
  8  9    4.  The secretary of state's duty to file documents under
  8 10 this section is ministerial.  Filing or refusing to file a
  8 11 document does not do any of the following:
  8 12    a.  Affect the validity or invalidity of the document in
  8 13 whole or part.
  8 14    b.  Relate to the correctness or incorrectness of
  8 15 information contained in the document.
  8 16    c.  Create a presumption that the document is valid or
  8 17 invalid or that information contained in the document is
  8 18 correct or incorrect.
  8 19    Sec. 14.  NEW SECTION.  487.113  APPEAL FROM SECRETARY OF
  8 20 STATE'S REFUSAL TO FILE DOCUMENT.
  8 21    1.  If the secretary of state refuses to file a document
  8 22 delivered to the secretary's office for filing, the domestic
  8 23 or foreign limited partnership may appeal the refusal, within
  8 24 thirty days after the return of the document, to the district
  8 25 court for the county in which the limited partnership's
  8 26 principal office or, if none in this state, its registered
  8 27 office is or will be located.  The appeal is commenced by
  8 28 petitioning the court to compel filing the document and by
  8 29 attaching to the petition the document and the secretary of
  8 30 state's explanation of the refusal to file.
  8 31    2.  The court may summarily order the secretary of state to
  8 32 file the document or take other action the court considers
  8 33 appropriate.
  8 34    3.  The court's final decision may be appealed as in other
  8 35 civil proceedings.
  9  1    Sec. 15.  NEW SECTION.  487.114  EVIDENTIARY EFFECT OF COPY
  9  2 OF FILED DOCUMENT.
  9  3    A certificate attached to a copy of a document filed by the
  9  4 secretary of state, bearing the secretary of state's
  9  5 signature, which may be in facsimile, and the seal of the
  9  6 secretary of state, is conclusive evidence that the original
  9  7 document is on file with the secretary of state.
  9  8    Sec. 16.  NEW SECTION.  487.115  CERTIFICATE OF EXISTENCE.
  9  9    1.  Anyone may apply to the secretary of state to furnish a
  9 10 certificate of existence for a domestic limited partnership or
  9 11 a certificate of registration for a foreign limited
  9 12 partnership.
  9 13    2.  A certificate of existence or a certificate of
  9 14 registration shall set forth all of the following:
  9 15    a.  The domestic limited partnership's name or the foreign
  9 16 limited partnership's name used in this state.
  9 17    b.  That one of the following apply:
  9 18    (1)  If it is a domestic limited partnership, that it is
  9 19 duly organized under the law of this state, the date of its
  9 20 organization, and the period of its duration.
  9 21    (2)  If it is a foreign limited partnership, that it is
  9 22 authorized to transact business in this state.
  9 23    c.  That all fees required by this chapter have been paid.
  9 24    d.  That a certificate of cancellation has not been filed.
  9 25    e.  Other facts of record in the office of the secretary of
  9 26 state that may be requested by the applicant.
  9 27    3.  Subject to any qualification stated in the certificate,
  9 28 a certificate of existence or certificate of registration
  9 29 issued by the secretary of state may be relied upon as
  9 30 conclusive evidence that the domestic or foreign limited
  9 31 partnership is in existence or is registered to transact
  9 32 business in this state.
  9 33    Sec. 17.  NEW SECTION.  487.116  PENALTY FOR SIGNING FALSE
  9 34 DOCUMENT.
  9 35    1.  A person commits an offense if that person signs a
 10  1 document the person knows is false in any material respect
 10  2 with intent that the document be delivered to the secretary of
 10  3 state for filing.
 10  4    2.  An offense under this section is a serious misdemeanor
 10  5 punishable by a fine of not to exceed one thousand dollars.
 10  6    Sec. 18.  NEW SECTION.  487.117  SECRETARY OF STATE –
 10  7 POWERS.
 10  8    The secretary of state has the power reasonably necessary
 10  9 to perform the duties required of the secretary of state by
 10 10 this chapter.
 10 11    Sec. 19.  Section 487.201, subsection 1, Code 1997, is
 10 12 amended to read as follows:
 10 13    1.  In order to form a limited partnership, two or more
 10 14 persons shall execute a certificate of limited partnership.
 10 15 The certificate shall be must be executed and filed in the
 10 16 office of the secretary of state and set forth all of the
 10 17 following.  The certificate shall set forth all of the
 10 18 following:
 10 19    a.  The name of the limited partnership.
 10 20    b.  The general character of its business.
 10 21    c. b.  The address of the office and the name and address
 10 22 of the agent for service of process required to be maintained
 10 23 by section 487.104, subsection 1, and the address of its
 10 24 principal place of business.
 10 25    d. c.  The name and the business address of each general
 10 26 partner, specifying separately the general partners and
 10 27 limited partners.
 10 28    e.  The amount of cash and a description and statement of
 10 29 the agreed value of the other property or services contributed
 10 30 by each partner and which each partner has agreed to
 10 31 contribute in the future.
 10 32    f.  The times at which or events on the happening of which
 10 33 any additional contributions agreed to be made by each partner
 10 34 are to be made.
 10 35    g.  A power of a limited partner to grant the right to
 11  1 become a limited partner to an assignee of any part of the
 11  2 partner's partnership interest, and the terms and conditions
 11  3 of the power.
 11  4    h.  If agreed upon, the time at which or the events on the
 11  5 happening of which a partner may withdraw from the limited
 11  6 partnership and the amount of, or the method of determining
 11  7 the amount of, the distribution to which the partner may be
 11  8 entitled respecting the partnership interest, and the terms
 11  9 and conditions of the termination and distribution.
 11 10    i.  A right of a partner to receive distributions of
 11 11 property, including cash from the limited partnership.
 11 12    j.  A right of a partner to receive, or of a general
 11 13 partner to make, distributions to a partner which include a
 11 14 return of all or any part of the partner's contribution.
 11 15    k.  A time at which, or an event upon the happening of
 11 16 which,
 11 17    d.  The latest date upon which the limited partnership is
 11 18 to be dissolved and its affairs wound up dissolve.
 11 19    l.  A right of the remaining general partners to continue
 11 20 the business on the happening of an event of withdrawal of a
 11 21 general partner.
 11 22    m. e.  Other Any other matters the general partners
 11 23 determine to include in the certificate.
 11 24    Sec. 20.  Section 487.202, Code 1997, is amended to read as
 11 25 follows:
 11 26    487.202  AMENDMENT TO CERTIFICATE.
 11 27    1.  A certificate of limited partnership is amended by
 11 28 filing a certificate of amendment to the certificate of
 11 29 limited partnership in the office of the secretary of state.
 11 30 The certificate of amendment shall set forth all of the
 11 31 following:
 11 32    a.  The name of the limited partnership.
 11 33    b.  The date of filing the certificate of limited
 11 34 partnership.
 11 35    c.  The amendment to the certificate of limited
 12  1 partnership.
 12  2    2.  Except as provided in subsection 5, within Within
 12  3 thirty days after the happening of any of the following
 12  4 events, an amendment to a certificate of limited partnership
 12  5 reflecting the occurrence of the event shall be filed:
 12  6    a.  A change in the amount or character of the contribution
 12  7 of a partner, or in a partner's obligation to make a
 12  8 contribution.
 12  9    b. a.  The admission of a new general partner.
 12 10    b.  The withdrawal of a general partner.
 12 11    c.  The continuation of the business under section 487.801
 12 12 after an event of withdrawal of a general partner.
 12 13    3.  A general partner who becomes aware that a any
 12 14 statement in a certificate of limited partnership was false
 12 15 when made or that any arrangements or other facts described
 12 16 have changed, making the certificate inaccurate in any
 12 17 respect, shall promptly amend the certificate.  An amendment
 12 18 to show the admission of or a change of address of a limited
 12 19 partner shall be filed within twelve months of the admission
 12 20 or change of address.
 12 21    4.  A certificate of limited partnership may be amended at
 12 22 any time for any other proper purpose the general partners
 12 23 determine.
 12 24    5.  An amendment is not required to reflect distributions
 12 25 made pursuant to rights described in section 487.201,
 12 26 subsection 1, paragraph "j".
 12 27    6. 5.  A limited partner person is not liable because an
 12 28 amendment to a certificate of limited partnership has not been
 12 29 filed to reflect the occurrence of an any event referred to in
 12 30 subsection 2 if the amendment is filed within the thirty-day
 12 31 period specified in subsection 2.
 12 32    6.  A restated certificate of limited partnership may be
 12 33 executed and filed in the same manner as a certificate of
 12 34 amendment.  The restated certificate must contain the
 12 35 information required in section 487.201 and may set forth any
 13  1 other provision consistent with law.
 13  2    Sec. 21.  Section 487.204, subsection 1, Code 1997, is
 13  3 amended to read as follows:
 13  4    1.  Each certificate required by this chapter to be filed
 13  5 in the office of the secretary of state shall be executed in
 13  6 the following manner:
 13  7    a.  An original A certificate of limited partnership shall
 13  8 be signed by all general partners named in the certificate.
 13  9    b.  A certificate of amendment shall be signed by at least
 13 10 one general partner and by each other general partner
 13 11 designated in the certificate as a new general partner or
 13 12 whose contribution is described as having been increased.
 13 13    c.  A certificate of cancellation shall be signed by all
 13 14 general partners.
 13 15    Sec. 22.  Section 487.205, Code 1997, is amended to read as
 13 16 follows:
 13 17    487.205  AMENDMENT OR CANCELLATION BY JUDICIAL ACT.
 13 18    If a person required by section 487.204 to execute a any
 13 19 certificate of amendment or cancellation fails or refuses to
 13 20 do so, any other partner, or any assignee of a partnership
 13 21 interest, person who is adversely affected by the failure or
 13 22 refusal may petition the Iowa district court for the county in
 13 23 which the office described in section 487.104 is located to
 13 24 direct the amendment or cancellation execution of the
 13 25 certificate.  If the court finds that the amendment or
 13 26 cancellation is proper and that a it is proper for the
 13 27 certificate to be executed and that any person so designated
 13 28 has failed or refused to execute the certificate, the court
 13 29 shall order the secretary of state to record accept for filing
 13 30 an appropriate certificate of amendment or cancellation.
 13 31    Sec. 23.  Section 487.208, Code 1997, is amended to read as
 13 32 follows:
 13 33    487.208  SCOPE OF NOTICE.
 13 34    The fact that a certificate of limited partnership is on
 13 35 file in the office of the secretary of state is notice that
 14  1 the partnership claims to be is a limited partnership and the
 14  2 persons designated in such certificate as general partners are
 14  3 general partners, but it is not notice of any other fact.
 14  4    Sec. 24.  Section 487.301, Code 1997, is amended to read as
 14  5 follows:
 14  6    487.301  ADMISSION OF NEW LIMITED PARTNERS.
 14  7    1.  A person becomes a limited partner at either of the
 14  8 following times:
 14  9    a.  At the time the limited partnership is formed.
 14 10    b.  At any later time specified in the records of the
 14 11 limited partnership for becoming a limited partner.
 14 12    2.  After the filing of a limited partnership's original
 14 13 certificate of limited partnership, a person may be admitted
 14 14 as a new limited partner under the following conditions:
 14 15    a.  In the case of a person acquiring a partnership
 14 16 interest directly from the limited partnership, upon
 14 17 compliance with the partnership agreement or, if the
 14 18 partnership agreement does not so provide, upon the written
 14 19 consent of all partners.
 14 20    b.  In the case of an assignee of a partnership interest of
 14 21 a partner who has the power, as provided in section 487.704 to
 14 22 grant the assignee the right to become a limited partner, upon
 14 23 the exercise of that power and compliance with any conditions
 14 24 limiting the grant or exercise of the power.
 14 25    2.  Under both paragraphs "a" and "b" of subsection 1, the
 14 26 person acquiring the partnership interest becomes a limited
 14 27 partner at the time specified in the certificate of limited
 14 28 partnership or, if a time is not specified, upon amendment of
 14 29 the certificate of limited partnership to show the partnership
 14 30 interest.
 14 31    Sec. 25.  Section 487.303, Code 1997, is amended to read as
 14 32 follows:
 14 33    487.303  LIABILITY TO THIRD PARTIES.
 14 34    1.  Except as provided in subsection 4, a limited partner
 14 35 is not liable for the obligations of a limited partnership
 15  1 unless the limited partner is also a general partner or, in
 15  2 addition to the exercise of the limited partner's rights and
 15  3 powers as a limited partner, the limited partner takes part
 15  4 participates in the control of the business.  However, if the
 15  5 limited partner's participation partner participates in the
 15  6 control of the business is not substantially the same as the
 15  7 exercise of the powers of a general partner, the limited
 15  8 partner is liable only to persons who transact business with
 15  9 the limited partnership with actual knowledge of the limited
 15 10 partner's participation in control reasonably believing, based
 15 11 upon the limited partner's conduct, that the limited partner
 15 12 is a general partner.
 15 13    2.  A limited partner does not participate in the control
 15 14 of the business within the meaning of subsection 1 solely by
 15 15 doing one or more of the following:
 15 16    a.  Being a contractor for or an agent or employee of the
 15 17 limited partnership.
 15 18    b.  Being a contractor for or an agent, employee, manager,
 15 19 member, director, officer, or shareholder of or a limited
 15 20 partner of a general partner, or a partner in a limited
 15 21 liability partnership that is a general partner.
 15 22    c.  Consulting with and advising a general partner with
 15 23 respect to the business of the limited partnership.
 15 24    d.  Acting as surety for the limited partnership or
 15 25 guaranteeing or assuming one or more specific obligations of
 15 26 the limited partnership.
 15 27    e.  Approving or disapproving an amendment to the
 15 28 partnership agreement.  Taking any action required or
 15 29 permitted by law to bring or pursue a derivative action in the
 15 30 right of the limited partnership.
 15 31    f.  Voting on Requesting or attending a meeting of
 15 32 partners.
 15 33    g.  Proposing, approving, or disapproving, by voting or
 15 34 otherwise, one or more of the following matters:
 15 35    (1)  The dissolution and winding up of the limited
 16  1 partnership.
 16  2    (2)  The sale, exchange, lease, mortgage, pledge, or other
 16  3 transfer of all or substantially all the assets of the limited
 16  4 partnership other than in the ordinary course of its business.
 16  5    (3)  The incurrence of indebtedness by the limited
 16  6 partnership other than in the ordinary course of its business.
 16  7    (4)  A change in the nature of the business.
 16  8    (5)  The admission or removal of a general partner.
 16  9    (6)  The admission or removal of a limited partner.
 16 10    (7)  A transaction involving an actual or potential
 16 11 conflict of interest between a general partner and the limited
 16 12 partnership or the limited partners.
 16 13    (8)  An amendment to the partnership agreement or
 16 14 certificate of limited partnership.
 16 15    (9)  Matters related to the business of the limited
 16 16 partnership not otherwise enumerated in this subsection, which
 16 17 the partnership agreement states in writing may be subject to
 16 18 the approval or disapproval of limited partners.
 16 19    h.  Winding up the limited partnership pursuant to section
 16 20 487.803.
 16 21    i.  Exercising any right or power permitted to limited
 16 22 partners under this chapter and not specifically enumerated in
 16 23 this subsection.
 16 24    3.  The enumeration in subsection 2 does not mean that the
 16 25 possession or exercise of any other powers by a limited
 16 26 partner constitutes participation by the limited partner in
 16 27 the business of the limited partnership.
 16 28    4.  A limited partner who knowingly permits the limited
 16 29 partner's name to be used in the name of the limited
 16 30 partnership, except under circumstances permitted by section
 16 31 487.102, subsection 2, paragraph "a", is liable to creditors
 16 32 who extend credit to the limited partnership without actual
 16 33 knowledge that the limited partner is not a general partner.
 16 34    Sec. 26.  Section 487.304, Code 1997, is amended to read as
 16 35 follows:
 17  1    487.304  PERSON ERRONEOUSLY BELIEVING SELF TO BE A LIMITED
 17  2 PARTNER.
 17  3    1.  Except as provided in subsection 2, a person who makes
 17  4 a contribution to a business enterprise and erroneously but in
 17  5 good faith believes that the person has become a limited
 17  6 partner in the enterprise is not a general partner in the
 17  7 enterprise and is not bound by its obligations by reason of
 17  8 making the contribution, receiving distributions from the
 17  9 enterprise, or exercising any rights of a limited partner, if,
 17 10 on ascertaining the mistake, the person does either of the
 17 11 following:
 17 12    a.  Causes an appropriate certificate of limited
 17 13 partnership or a certificate of amendment to be executed and
 17 14 filed; or.
 17 15    b.  Withdraws from future equity participation in the
 17 16 enterprise by executing and filing in the office of the
 17 17 secretary of state a certificate declaring withdrawal under
 17 18 this section.
 17 19    2.  A person who makes a contribution of the kind described
 17 20 in subsection 1 is liable as a general partner to a third
 17 21 party who, believing the person to be a general partner,
 17 22 transacts business with the enterprise before an appropriate
 17 23 certificate is filed and before either of the following:
 17 24    a.  The person withdraws and an appropriate certificate is
 17 25 filed to show the withdrawal.
 17 26    b.  An appropriate certificate is filed to show the
 17 27 person's status as a limited partner and, in the case of an
 17 28 amendment, after expiration of the period for filing the
 17 29 amendment relating to the person as a limited partner under
 17 30 section 487.202 that the person is not a general partner.
 17 31    However, in either case referred to in paragraph "a" or
 17 32 "b", the person is liable as a general partner only if the
 17 33 third party actually believed in good faith that the person
 17 34 was a general partner at the time of the transaction.
 17 35    Sec. 27.  Section 487.401, Code 1997, is amended to read as
 18  1 follows:
 18  2    487.401  ADMISSION OF ADDITIONAL GENERAL PARTNERS.
 18  3    After the filing of a limited partnership's original
 18  4 certificate of limited partnership, additional general
 18  5 partners shall be admitted only with the specific written
 18  6 consent of each partner.  However, if the certificate of
 18  7 limited partnership or may be admitted as provided in writing
 18  8 in the partnership agreement names a person to be admitted as
 18  9 a general partner upon the occurrence of a specified
 18 10 circumstance or at a specified time, the consent required is
 18 11 deemed to have been given or, if the partnership agreement
 18 12 does not provide in writing for the admission of additional
 18 13 general partners, with the written consent of all partners.
 18 14    Sec. 28.  Section 487.402, Code 1997, is amended to read as
 18 15 follows:
 18 16    487.402  EVENTS OF WITHDRAWAL.
 18 17    Except as otherwise agreed in writing by approved by the
 18 18 specific written consent of all partners at the time of the
 18 19 event, a person ceases to be a general partner of a limited
 18 20 partnership upon the happening of any of the following events:
 18 21    1.  The general partner withdraws from the limited
 18 22 partnership as provided in section 487.602.
 18 23    2.  The general partner ceases to be a member of the
 18 24 limited partnership as provided in section 487.702.
 18 25    2. 3.  The general partner is removed as a general partner
 18 26 in accordance with the partnership agreement.
 18 27    3. 4.  Unless otherwise provided in the certificate of
 18 28 limited writing in the partnership agreement, the general
 18 29 partner does any of the following:
 18 30    a.  Makes an assignment for the benefit of creditors.
 18 31    b.  Files a voluntary petition in bankruptcy.
 18 32    c.  Is adjudicated a bankrupt or insolvent.
 18 33    d.  Files a petition or answer seeking for the general
 18 34 partner reorganization, arrangement, composition,
 18 35 readjustment, liquidation, dissolution, or similar relief
 19  1 under any statute, law, or regulation.
 19  2    e.  Files an answer or other pleading admitting or failing
 19  3 to contest material allegations of a petition filed against
 19  4 the general partner in a proceeding of a nature specified in
 19  5 paragraph "d".
 19  6    f.  Seeks, consents to, or acquiesces in the appointment of
 19  7 a trustee, receiver, or liquidator of the general partner or
 19  8 of all or a substantial part of the general partner's
 19  9 properties.
 19 10    4. 5.  Unless otherwise provided in the certificate of
 19 11 limited writing in the partnership agreement, upon the
 19 12 expiration of the following time periods:
 19 13    a.  One hundred twenty days after the commencement of a
 19 14 proceeding against the general partner seeking reorganization,
 19 15 arrangement, composition, readjustment, liquidation,
 19 16 dissolution, or similar relief, under any statute, law, or
 19 17 regulation, if the proceeding has not been dismissed within
 19 18 that time.
 19 19    b.  Ninety days after the appointment without the general
 19 20 partner's consent or acquiescence of a trustee, receiver, or
 19 21 liquidator of the general partner or of all or a substantial
 19 22 part of the general partner's properties, if the appointment
 19 23 is not vacated or stayed within that time.
 19 24    c.  If an appointment of the nature specified in paragraph
 19 25 "b" is stayed and if the appointment is not then vacated,
 19 26 ninety days after the expiration of the stay.
 19 27    5. 6.  If the general partner is a natural person when
 19 28 either of the following occur:
 19 29    a.  The general partner dies.
 19 30    b.  The district court finds the general partner incapable
 19 31 of managing the general partner's person or property.
 19 32    6. 7.  If the general partner is acting as a general
 19 33 partner by virtue of being a trustee of a trust, when the
 19 34 trust terminates.  Substitution of a new trustee is not
 19 35 termination of the trust.
 20  1    7. 8.  If the general partner is a separate partnership,
 20  2 the dissolution and commencement of winding up of the separate
 20  3 partnership.
 20  4    8. 9.  If the general partner is a corporation, the filing
 20  5 of a certificate of dissolution, or its equivalent, for the
 20  6 corporation or revocation of the corporation's charter.
 20  7    10.  If the general partner is a limited liability company,
 20  8 the filing of a certificate of dissolution, or its equivalent,
 20  9 for the limited liability company or revocation of the limited
 20 10 liability company's charter.
 20 11    9. 11.  In the case of an estate, the distribution by the
 20 12 fiduciary of the estate's entire interest in the partnership.
 20 13    Sec. 29.  Section 487.403, Code 1997, is amended to read as
 20 14 follows:
 20 15    487.403  GENERAL POWERS AND LIABILITIES.
 20 16    1.  Except as provided in this chapter or in the
 20 17 partnership agreement, a general partner of a limited
 20 18 partnership has the rights and powers and is subject to the
 20 19 restrictions and liabilities of a general partner in a
 20 20 partnership without limited partners.
 20 21    2.  Except as provided in this chapter, a general partner
 20 22 of a limited partnership has the liabilities of a partner in a
 20 23 partnership without limited partners to persons other than the
 20 24 partnership and the other partners.  Except as provided in
 20 25 this chapter or in the partnership agreement, a general
 20 26 partner of a limited partnership has the liabilities of a
 20 27 partner in a partnership without limited partners to the
 20 28 partnership and to the other partners.
 20 29    Sec. 30.  Section 487.405, Code 1997, is amended to read as
 20 30 follows:
 20 31    487.405  VOTING.
 20 32    The partnership agreement may grant to all or certain
 20 33 identified general partners the right to vote on a per capita
 20 34 or any other basis, separately or with all or any class of the
 20 35 limited partners, on any matter.
 21  1    Sec. 31.  Section 487.502, Code 1997, is amended to read as
 21  2 follows:
 21  3    487.502  LIABILITY FOR CONTRIBUTION.
 21  4    1.  A promise by a limited partner to contribute to the
 21  5 limited partnership is not enforceable unless set out in a
 21  6 writing signed by the limited partner.
 21  7    2.  Except as provided in the certificate of limited
 21  8 partnership agreement, a partner is obligated to the limited
 21  9 partnership to perform a any enforceable promise to contribute
 21 10 cash or property or to perform services even if the partner is
 21 11 unable to perform because of death, disability, or any other
 21 12 reason.  If the a partner does not make the required
 21 13 contribution of property or services, the partner is obligated
 21 14 at the option of the limited partnership may require the
 21 15 partner to contribute cash equal to that portion of the value,
 21 16 as stated in the certificate of limited partnership,
 21 17 partnership records required to be kept pursuant to section
 21 18 487.105, of the stated contribution that which has not been
 21 19 made.
 21 20    3.  Unless otherwise provided in the partnership agreement,
 21 21 the obligation of a partner to make a contribution or return
 21 22 money or other property paid or distributed in violation of
 21 23 this chapter may be compromised only by consent of all
 21 24 partners.  Notwithstanding the compromise, a creditor of a
 21 25 limited partnership who extends credit or otherwise acts in
 21 26 reliance on that obligation after the partner signs a writing
 21 27 which reflects the obligation and before the amendment or
 21 28 cancellation of such obligation to reflect the compromise may
 21 29 enforce the original obligation.
 21 30    Sec. 32.  Section 487.503, Code 1997, is amended to read as
 21 31 follows:
 21 32    487.503  SHARING OF PROFITS AND LOSSES.
 21 33    The profits and losses of a limited partnership shall be
 21 34 allocated among the partners, and among classes of partners,
 21 35 in the manner provided in writing in the partnership
 22  1 agreement.  If the partnership agreement does not so provide
 22  2 in writing, profits and losses shall be allocated on the basis
 22  3 of the value, as stated in the certificate of limited
 22  4 partnership records required to be kept pursuant to section
 22  5 487.105, of the contributions made by each partner to the
 22  6 extent the contributions have been received by the partnership
 22  7 and have not been returned.
 22  8    Sec. 33.  Section 487.504, Code 1997, is amended to read as
 22  9 follows:
 22 10    487.504  SHARING OF DISTRIBUTIONS.
 22 11    Distributions of cash or other assets of a limited
 22 12 partnership shall be allocated among the partners, and among
 22 13 classes of partners, in the manner provided in writing in the
 22 14 partnership agreement.  If the partnership agreement does not
 22 15 so provide in writing, distributions shall be made on the
 22 16 basis of the value, as stated in the certificate of limited
 22 17 partnership records required to be kept pursuant to section
 22 18 487.105, of the contributions made by each partner to the
 22 19 extent the contributions have been received by the partnership
 22 20 and have not been returned.
 22 21    Sec. 34.  Section 487.601, Code 1997, is amended to read as
 22 22 follows:
 22 23    487.601  INTERIM DISTRIBUTIONS.
 22 24    Except as provided in this article, a partner is entitled
 22 25 to receive distributions from a limited partnership before the
 22 26 partner's withdrawal from the limited partnership and before
 22 27 the dissolution and winding up of the partnership subject to
 22 28 the following conditions:
 22 29    1.  To to the extent and at the times or upon the happening
 22 30 of the events specified in the partnership agreement.
 22 31    2.  If a distribution is a return of part of the partner's
 22 32 contribution under section 487.608, subsection 2, to the
 22 33 extent and at the times or upon the happening of the events
 22 34 specified in the certificate of limited partnership.
 22 35    Sec. 35.  Section 487.603, Code 1997, is amended to read as
 23  1 follows:
 23  2    487.603  WITHDRAWAL OF LIMITED PARTNER.
 23  3    A limited partner may withdraw from a limited partnership
 23  4 only at the time or upon the happening of events specified in
 23  5 the certificate of limited partnership and in accordance with
 23  6 writing in the partnership agreement.  If the certificate does
 23  7 not specify the time or the events upon the happening of which
 23  8 a limited partner may withdraw or a time for the dissolution
 23  9 and winding up of the limited partnership, a limited partner
 23 10 may withdraw upon not less than six months prior written
 23 11 notice directed or delivered to the partnership or to each
 23 12 general partner at the partner's address on the books of the
 23 13 limited partnership at its office in this state.
 23 14    Sec. 36.  Section 487.605, Code 1997, is amended to read as
 23 15 follows:
 23 16    487.605  DISTRIBUTION IN KIND.
 23 17    Except as provided in the certificate of limited writing in
 23 18 the partnership agreement, a partner, regardless of the nature
 23 19 of the partner's contribution, has no right to demand and
 23 20 receive any distribution from a limited partnership in any
 23 21 form other than cash.  Except as provided in writing in the
 23 22 partnership agreement, a partner shall not be compelled to
 23 23 accept a distribution of any asset in kind from a limited
 23 24 partnership to the extent that the percentage of the asset
 23 25 distributed to the partner exceeds a percentage of that asset
 23 26 which is equal to the percentage in which the partner shares
 23 27 in distributions from the limited partnership.
 23 28    Sec. 37.  Section 487.607, Code 1997, is amended to read as
 23 29 follows:
 23 30    487.607  LIMITATIONS ON DISTRIBUTION.
 23 31    A partner shall not receive a distribution if, after from a
 23 32 limited partnership to the extent that, after giving effect to
 23 33 the distribution, all liabilities of the limited partnership,
 23 34 other than liabilities to partners on account of their
 23 35 partnership interests, will exceed the fair value of the
 24  1 partnership assets.
 24  2    Sec. 38.  Section 487.608, subsection 3, Code 1997, is
 24  3 amended to read as follows:
 24  4    3.  A partner receives a return of the partner's
 24  5 contribution only to the extent that a distribution to the
 24  6 partner reduces the partner's share of the fair value, as
 24  7 specified in the certificate of the net assets of the limited
 24  8 partnership below the value, as set forth in the partnership
 24  9 records required to be kept pursuant to section 487.105, of
 24 10 the partner's contribution which has not been distributed to
 24 11 the partner.
 24 12    Sec. 39.  Section 487.702, Code 1997, is amended to read as
 24 13 follows:
 24 14    487.702  ASSIGNMENT OF PARTNERSHIP INTEREST.
 24 15    Except as provided in the partnership agreement, a
 24 16 partnership interest is assignable in whole or in part.  An
 24 17 assignment of a partnership interest does not dissolve a
 24 18 limited partnership or entitle the assignee to become or to
 24 19 exercise any rights of a partner.  An assignment entitles the
 24 20 assignee to receive, to the extent assigned, only the
 24 21 distribution to which the assignor would be entitled.  Except
 24 22 as provided in the partnership agreement, a partner ceases to
 24 23 be a partner upon assignment of all the partner's partnership
 24 24 interest.
 24 25    Sec. 40.  Section 487.704, Code 1997, is amended to read as
 24 26 follows:
 24 27    487.704  RIGHT OF ASSIGNEE TO BECOME LIMITED PARTNER.
 24 28    1.  An assignee of a partnership interest, including an
 24 29 assignee of a general partner, may become a limited partner
 24 30 under any of the following conditions if and to the extent
 24 31 that either of the following applies:
 24 32    a.  When the certificate of limited partnership so
 24 33 provides, if the The assignor gives the assignee the right to
 24 34 become a limited partner in the manner specified in the
 24 35 agreement. that right in accordance with authority described
 25  1 in
 25  2    b.  When the partnership agreement so provides, if persons
 25  3 required to consent to the assignee becoming a limited partner
 25  4 consent in the manner specified in the agreement.
 25  5    c. b.  All other partners other than the assignor of the
 25  6 interest consent to the assignee becoming a limited partner.
 25  7    2.  An assignee who has become a limited partner has, to
 25  8 the extent assigned, the rights and powers, and is subject to
 25  9 the restrictions and liabilities, of a limited partner under
 25 10 the partnership agreement and this chapter.  An assignee who
 25 11 becomes a limited partner also is liable for the obligations
 25 12 of the assignor to make and return contributions as provided
 25 13 in article articles 5 and 6 of this chapter.  However, the
 25 14 assignee is not obligated for liabilities unknown to the
 25 15 assignee at the time the assignee became a limited partner and
 25 16 which could not be ascertained from the certificate of limited
 25 17 partnership.
 25 18    3.  The fact that an assignee of a partnership interest has
 25 19 become a limited partner does not release the assignor from
 25 20 the assignor's liability to the limited partnership under
 25 21 sections 487.207 and 487.502.
 25 22    Sec. 41.  Section 487.801, subsection 1, Code 1997, is
 25 23 amended to read as follows:
 25 24    1.  A limited partnership is dissolved and its affairs
 25 25 shall be wound up when any of the following occur:
 25 26    a.  When events specified in the certificate of limited
 25 27 partnership occur.
 25 28    b.  When events specified in the partnership agreement
 25 29 occur.
 25 30    c.  When all partners consent in writing to the
 25 31 dissolution.
 25 32    c. d.  When a general partner withdraws unless at the time
 25 33 there is at least one other general partner and the
 25 34 certificate provisions of limited the partnership permits
 25 35 agreement permit the business of the limited partnership to be
 26  1 carried on by the remaining general partner and the remaining
 26  2 partner does so.
 26  3    d. e.  When a decree of judicial dissolution is entered
 26  4 under section 487.802.
 26  5    Sec. 42.  NEW SECTION.  487.810  GROUNDS FOR ADMINISTRATIVE
 26  6 DISSOLUTION.
 26  7    The secretary of state may commence a proceeding under
 26  8 section 487.811 to administratively dissolve a limited
 26  9 partnership if any of the following apply:
 26 10    1.  The limited partnership is without a registered agent
 26 11 or registered office in this state for sixty days or more.
 26 12    2.  The limited partnership does not notify the secretary
 26 13 of state within sixty days that its registered agent or
 26 14 registered office has been changed, that its registered agent
 26 15 has resigned, or that its registered office has been
 26 16 discontinued.
 26 17    Sec. 43.  NEW SECTION.  487.811  PROCEDURE FOR AND EFFECT
 26 18 OF ADMINISTRATIVE DISSOLUTION.
 26 19    1.  If the secretary of state determines that one or more
 26 20 grounds exist under section 487.810 for dissolving a limited
 26 21 partnership, the secretary of state shall serve the limited
 26 22 partnership with written notice of the secretary of state's
 26 23 determination under section 487.104.
 26 24    2.  If the limited partnership does not correct each ground
 26 25 for dissolution or demonstrate to the reasonable satisfaction
 26 26 of the secretary of state that each ground determined by the
 26 27 secretary of state to exist does not exist within sixty days
 26 28 after service of the notice is perfected under section
 26 29 487.104, the secretary of state shall administratively
 26 30 dissolve the limited partnership by signing a certificate of
 26 31 dissolution that recites the ground or grounds for dissolution
 26 32 and its effective date.  The secretary of state shall file the
 26 33 original of the certificate and serve a copy on the limited
 26 34 partnership under section 487.104.
 26 35    3.  A limited partnership administratively dissolved
 27  1 continues its existence but shall not carry on any business
 27  2 except that necessary to wind up and liquidate its business
 27  3 and affairs under section 487.803.
 27  4    4.  The administrative dissolution of a limited partnership
 27  5 does not terminate the authority of its registered agent.
 27  6    5.  The secretary of state's administrative dissolution of
 27  7 a limited partnership pursuant to this section appoints the
 27  8 secretary of state the limited partnership's agent for service
 27  9 of process in any proceeding based on a cause of action which
 27 10 arose during the time the limited partnership was authorized
 27 11 to transact business in this state.  Service of process on the
 27 12 secretary of state under this subsection is service on the
 27 13 limited partnership.  Upon receipt of process, the secretary
 27 14 of state shall serve a copy of the process on the limited
 27 15 partnership as provided in section 487.104.  This subsection
 27 16 does not preclude service on the limited partnership's
 27 17 registered agent, if any.
 27 18    Sec. 44.  NEW SECTION.  487.812  REINSTATEMENT FOLLOWING
 27 19 ADMINISTRATIVE DISSOLUTION.
 27 20    1.  A limited partnership administratively dissolved under
 27 21 section 487.811 may apply to the secretary of state for
 27 22 reinstatement within two years after the effective date of
 27 23 dissolution.  The application must meet all of the following
 27 24 requirements:
 27 25    a.  Recite the name of the limited partnership at its date
 27 26 of dissolution and the effective date of its administrative
 27 27 dissolution.
 27 28    b.  State that the ground or grounds for dissolution have
 27 29 been eliminated.
 27 30    c.  State a name that satisfies the requirements of section
 27 31 487.102.
 27 32    2.  If the secretary of state determines that the
 27 33 application contains the information required by subsection 1,
 27 34 and that the information is correct, the secretary of state
 27 35 shall cancel the certificate of dissolution and prepare a
 28  1 certificate of reinstatement that recites the secretary of
 28  2 state's determination and the effective date of reinstatement,
 28  3 file the original of the certificate, and serve a copy on the
 28  4 limited partnership under section 487.104.  If the limited
 28  5 partnership's name in subsection 1, paragraph "c", is
 28  6 different than the limited partnership's name in subsection 1,
 28  7 paragraph "a", the certificate of reinstatement shall
 28  8 constitute an amendment to the articles of limited partnership
 28  9 insofar as it pertains to the limited partnership's name.
 28 10    3.  When the reinstatement is effective, it relates back to
 28 11 and takes effect as of the effective date of the
 28 12 administrative dissolution as if the administrative
 28 13 dissolution had never occurred.
 28 14    Sec. 45.  NEW SECTION.  487.813  APPEAL FROM DENIAL OF
 28 15 REINSTATEMENT.
 28 16    1.  If the secretary of state denies a limited
 28 17 partnership's application for reinstatement following
 28 18 administrative dissolution, the secretary of state shall serve
 28 19 the limited partnership under section 487.104 with a written
 28 20 notice that explains the reason or reasons for denial.
 28 21    2.  The limited partnership may appeal the denial of
 28 22 reinstatement to the district court within thirty days after
 28 23 service of the notice of denial is perfected.  The limited
 28 24 partnership appeals by petitioning the court to set aside the
 28 25 dissolution and attaching to the petition copies of the
 28 26 secretary of state's certificate of dissolution, the limited
 28 27 partnership's application for reinstatement, and the secretary
 28 28 of state's notice of denial.
 28 29    3.  The court may summarily order the secretary of state to
 28 30 reinstate the dissolved limited partnership or may take other
 28 31 action the court considers appropriate.
 28 32    4.  The court's final decision may be appealed as in other
 28 33 civil proceedings.
 28 34    Sec. 46.  Section 487.902, subsections 3 and 7, Code 1997,
 28 35 are amended by striking the subsections.
 29  1    Sec. 47.  Section 487.902, Code 1997, is amended by adding
 29  2 the following new subsections:
 29  3    NEW SUBSECTION.  6A.  The name and business address of each
 29  4 general partner.
 29  5    NEW SUBSECTION.  6B.  The address of the office at which is
 29  6 kept a list of the names and addresses of the limited partners
 29  7 and their capital contributions, together with an undertaking
 29  8 by the foreign limited partnership to keep those records until
 29  9 the foreign limited partnership's registration in this state
 29 10 is canceled or withdrawn.
 29 11    Sec. 48.  Section 487.905, Code 1997, is amended by
 29 12 striking the section and inserting in lieu thereof the
 29 13 following:
 29 14    487.905  AMENDED REGISTRATION.
 29 15    1.  A foreign limited partnership registered to transact
 29 16 business in this state shall obtain an amended certificate of
 29 17 registration from the secretary of state if either of the
 29 18 following conditions exist:
 29 19    a.  A statement in the application for registration was
 29 20 false when made.
 29 21    b.  An arrangement or other fact described in the
 29 22 application for registration has changed making the
 29 23 application inaccurate in any respect.
 29 24    2.  The requirements of section 487.902 for obtaining an
 29 25 original certificate of registration apply to obtaining an
 29 26 amended certificate under this section.
 29 27    Sec. 49.  Section 487.1002, Code 1997, is amended to read
 29 28 as follows:
 29 29    487.1002  PROPER PLAINTIFF.
 29 30    In a derivative action, the plaintiff shall must be a
 29 31 partner at the time of bringing the action and either shall
 29 32 must have been a partner at the time the cause of action arose
 29 33 or shall of the transaction of which the partner complains or
 29 34 must have acquired the status of partner by operation of law
 29 35 or pursuant to the terms of the partnership agreement from a
 30  1 person who was a partner at the time the cause of action arose
 30  2 of the transaction of which the partner complains.
 30  3    Sec. 50.  Section 487.1104, Code 1997, is amended to read
 30  4 as follows:
 30  5    487.1104  EFFECT ON EXISTING LIMITED PARTNERSHIPS.
 30  6    This chapter Except as specifically provided in this
 30  7 section, this chapter applies to all limited partnerships in
 30  8 existence on July 1, 1997, and does not invalidate provisions
 30  9 in limited partnership agreements or certificates executed
 30 10 prior to July 1, 1982 1997.  Unless otherwise agreed to by the
 30 11 partners, the applicable provisions of existing law, in effect
 30 12 prior to July 1, 1997, governing events of withdrawal of a
 30 13 general partner, withdrawal of a limited partner, and
 30 14 assignment of a partnership interest, govern limited
 30 15 partnerships formed before July 1, 1997.
 30 16    Sec. 51.  NEW SECTION.  487.1106  SAVINGS CLAUSE.
 30 17    The repeal of any statutory provision effective July 1,
 30 18 1997, does not impair or otherwise affect the organization or
 30 19 the continued existence of a limited partnership existing on
 30 20 July 1, 1997, nor does the repeal of any existing statutory
 30 21 provision effective July 1, 1997, impair any contract or any
 30 22 right accrued before July 1, 1997.
 30 23    Sec. 52.  Section 490.1109, subsection 3, paragraph e, as
 30 24 enacted in 1997 Iowa Acts, House File 628, if enacted, is
 30 25 amended to read as follows:
 30 26    e.  "Interested shareholder" means any person, other than
 30 27 the corporation and any direct or indirect majority-owned
 30 28 subsidiary of the corporation, that is the owner of fifteen
 30 29 ten percent or more of the outstanding voting stock of the
 30 30 corporation, or is an affiliate or associate of the
 30 31 corporation and was the owner of fifteen ten percent or more
 30 32 of the outstanding voting stock of the corporation at any time
 30 33 within the three-year period immediately prior to the date on
 30 34 which it is sought to be determined whether such person is an
 30 35 interested shareholder, and the affiliates and associates of
 31  1 such person.  "Interested shareholder" does not include either
 31  2 of the following:
 31  3    (1)  A person who owns shares in excess of the fifteen
 31  4 percent limitation and who acquired such shares as follows:
 31  5    (a)  Pursuant to a tender offer commenced prior to January
 31  6 1, 1998, or pursuant to an exchange offer announced prior to
 31  7 January 1, 1998, and commenced within ninety days after such
 31  8 date, if such person satisfies either of the following:
 31  9    (i)  Continues to own shares in excess of the fifteen
 31 10 percent limitation or would continue to own such shares but
 31 11 for action taken by the corporation.
 31 12    (ii)  Is an affiliate or associate of the corporation and
 31 13 continues, or would continue but for action taken by the
 31 14 corporation, to be the owner of fifteen percent or more of the
 31 15 outstanding voting stock of the corporation at any time within
 31 16 the three-year period immediately prior to the date on which
 31 17 it is sought to be determined whether such person is an
 31 18 interested shareholder.
 31 19    (b)  From a person subject to subparagraph subdivision (a)
 31 20 by gift, devise, or in a transaction in which no consideration
 31 21 for the shares was exchanged.
 31 22    (2)  A a person whose ownership of shares in excess of the
 31 23 fifteen ten percent limitation is the result of action taken
 31 24 solely by the corporation, provided that such person is an
 31 25 interested shareholder if, after such action by the
 31 26 corporation, the person acquires additional shares of voting
 31 27 stock of the corporation, other than as a result of further
 31 28 corporate action not caused, directly or indirectly, by such
 31 29 person.
 31 30    For purposes of determining whether a person is an
 31 31 interested shareholder, the outstanding voting stock of the
 31 32 corporation does not include any other unissued stock of the
 31 33 corporation which may be issuable pursuant to any agreement,
 31 34 arrangement, or understanding, or upon exercise of conversion
 31 35 rights, warrants, or options, or otherwise.
 32  1    Sec. 53.  Section 490A.102, subsections 13, 16, and 18,
 32  2 Code 1997, are amended to read as follows:
 32  3    13.  "Limited liability company" or "domestic limited
 32  4 liability company" means an entity that is an unincorporated
 32  5 association having two one or more members, and that is
 32  6 organized under or subject to this chapter.
 32  7    16.  "Member" means a person with a membership interest in
 32  8 a limited liability company under this chapter or, with
 32  9 respect to a foreign limited liability company, under the laws
 32 10 of the state, foreign country, or other foreign jurisdiction
 32 11 under which such company is organized.
 32 12    18.  "Operating agreement" means any agreement, written or
 32 13 oral, of the members as to the affairs of a limited liability
 32 14 company and the conduct of its business.
 32 15    Sec. 54.  Section 490A.202, subsection 17, Code 1997, is
 32 16 amended by striking the subsection and inserting in lieu
 32 17 thereof the following:
 32 18    17.  Indemnify and hold harmless a member, manager, or
 32 19 other person against a claim, liability, or other demand, as
 32 20 provided in an operating agreement.
 32 21    Sec. 55.  Section 490A.303, subsection 1, paragraph d, Code
 32 22 1997, is amended to read as follows:
 32 23    d.  The period of its duration, which shall not may be
 32 24 perpetual.
 32 25    Sec. 56.  NEW SECTION.  490A.304  CONVERSION OF CERTAIN
 32 26 ENTITIES TO A LIMITED LIABILITY COMPANY.
 32 27    1.  As used in this section, the term "other entity" means
 32 28 a corporation, business trust or association, real estate
 32 29 investment trust, common-law trust, or any other
 32 30 unincorporated business, including any partnership, whether
 32 31 general or limited, or a foreign limited liability company.
 32 32    2.  Any other entity may convert to a domestic limited
 32 33 liability company by complying with subsection 8 and filing in
 32 34 the office of the secretary of state both of the following:
 32 35    a.  Articles of conversion to a limited liability company
 33  1 executed by one or more authorized persons.
 33  2    b.  Articles of organization executed by one or more
 33  3 authorized persons.
 33  4    3.  The articles of conversion to a limited liability
 33  5 company shall state all of the following:
 33  6    a.  The date on which, and jurisdiction where, the
 33  7 converting entity was first created, formed, incorporated, or
 33  8 otherwise came into being and, if it has changed, its
 33  9 jurisdiction immediately prior to its conversion to a domestic
 33 10 limited liability company.
 33 11    b.  The name of the converting entity immediately prior to
 33 12 the filing of the articles of conversion to a limited
 33 13 liability company.
 33 14    c.  The name of the limited liability company.
 33 15    d.  The future effective date or time certain of the
 33 16 conversion to a limited liability company if it is not to be
 33 17 effective upon the filing of the articles of conversion and
 33 18 the articles of organization.
 33 19    4.  Upon the filing in the office of the secretary of state
 33 20 of the articles of conversion and the articles of organization
 33 21 or upon the future effective date or time of the articles of
 33 22 conversion and the articles of organization, the converting
 33 23 entity shall be converted into a domestic limited liability
 33 24 company and the limited liability company, from that date or
 33 25 time, is subject to this chapter, except that the existence of
 33 26 the limited liability company is deemed to have commenced on
 33 27 the date the converting entity commenced its existence in the
 33 28 jurisdiction in which the converting entity was first created,
 33 29 formed, incorporated, or otherwise came into being.
 33 30    5.  The conversion of an entity into a domestic limited
 33 31 liability company does not affect any obligations or
 33 32 liabilities of the other entity incurred prior to its
 33 33 conversion to a domestic limited liability company, or the
 33 34 personal liability of any person incurred prior to such
 33 35 conversion.
 34  1    6.  When a conversion is effective, for all purposes of the
 34  2 laws of this state, all of the rights, privileges, and powers
 34  3 of the converting entity, and all property, real, personal,
 34  4 and mixed, and all debts due to the converting entity, as well
 34  5 as all other things and causes of action belonging to such
 34  6 entity, are vested in the domestic limited liability company
 34  7 and are the property of the domestic limited liability company
 34  8 as they were of the converting entity.  The title to any real
 34  9 property vested by deed or otherwise in the converting entity
 34 10 shall not revert or be in any way impaired by reason of this
 34 11 chapter, and all rights of creditors and all liens upon any
 34 12 property of such other entity are preserved unimpaired, and
 34 13 all debts, liabilities, and duties of the converting entity
 34 14 shall attach to the domestic limited liability company, and
 34 15 may be enforced against it to the same extent as if the debts,
 34 16 liabilities, and duties had been incurred or contracted by the
 34 17 domestic limited liability company.
 34 18    7.  Unless otherwise agreed, or as required under the laws
 34 19 of a jurisdiction other than this state, the converting entity
 34 20 is not required to wind up its affairs or pay its liabilities
 34 21 and distribute its assets, and the conversion does not
 34 22 constitute a dissolution of the converting entity.
 34 23    8.  Prior to filing the articles of conversion to a limited
 34 24 liability company with the office of the secretary of state,
 34 25 an operating agreement must be approved in the manner provided
 34 26 for by the documents, instrument, agreement, or other writing,
 34 27 as the case may be, governing the internal affairs of the
 34 28 converting entity and the conduct of its business or by
 34 29 applicable law, as appropriate.
 34 30    9.  This section shall not be construed to limit the
 34 31 ability to change the law governing, or the domicile of, a
 34 32 converting entity to this state by any other means provided
 34 33 for in an operating agreement or as otherwise permitted by
 34 34 law, including by the amendment of an operating agreement.
 34 35    Sec. 57.  NEW SECTION.  490A.305  SERIES OF MEMBERS,
 35  1 MANAGERS, OR MEMBERSHIP INTERESTS.
 35  2    1.  An operating agreement may establish or provide for the
 35  3 establishment of designated series of members, managers, or
 35  4 membership interests having separate rights, powers, or duties
 35  5 with respect to specified property or obligations of the
 35  6 limited liability company or profits and losses associated
 35  7 with specified property or obligations, and, to the extent
 35  8 provided in the operating agreement, any such series may have
 35  9 a separate business purpose or investment objective.
 35 10    2.  Notwithstanding contrary provisions of this chapter,
 35 11 the debts, liabilities, and obligations incurred, contracted
 35 12 for, or otherwise existing with respect to a particular series
 35 13 shall be enforceable against the assets of that series only,
 35 14 and not against the assets of the limited liability company
 35 15 generally, if all of the following apply:
 35 16    a.  The operating agreement creates one or more series.
 35 17    b.  Separate and distinct records are maintained for the
 35 18 series and the assets associated with the series are held and
 35 19 accounted for separately from the other assets of the limited
 35 20 liability company, or from any other series of the limited
 35 21 liability company.
 35 22    c.  The operating agreement provides for such limitation on
 35 23 liabilities.
 35 24    d.  Notice of the limitation on liabilities of a series is
 35 25 set forth in the articles of organization of the limited
 35 26 liability company.  Filing of articles of organization
 35 27 containing a notice of the limitation on liabilities of a
 35 28 series in the office of the secretary of state constitutes
 35 29 notice of the limitation on liabilities of such series.
 35 30    3.  Notwithstanding section 490A.601, or a contrary
 35 31 provision in an operating agreement, a member or manager may
 35 32 agree to be obligated personally for any or all of the debts,
 35 33 obligations or liabilities of one or more series.
 35 34    4.  An operating agreement may provide for classes or
 35 35 groups of members or managers associated with a series having
 36  1 such relative rights, powers, and duties as the operating
 36  2 agreement may provide.  The operating agreement may provide
 36  3 for the future creation of additional classes or groups of
 36  4 members or managers associated with the series having such
 36  5 relative rights, powers, and duties as may from time to time
 36  6 be established, including rights, powers, and duties senior to
 36  7 existing classes and groups of members or managers associated
 36  8 with the series.  An operating agreement may provide for the
 36  9 taking of an action, including the amendment of the operating
 36 10 agreement, without the vote or approval of any member or
 36 11 manager or class or group of members or managers, including
 36 12 all action to create under the provisions of the operating
 36 13 agreement a class or group of the series of membership
 36 14 interests that was not previously outstanding.  An operating
 36 15 agreement may provide that any member or class or group of
 36 16 members associated with a series have no voting rights.
 36 17    5.  An operating agreement may grant to all or certain
 36 18 identified members or managers or a specified class or group
 36 19 of the members or managers associated with a series the right
 36 20 to vote on any matter separately or with all or any class or
 36 21 group of the members or managers associated with the series.
 36 22 Voting by members or managers associated with a series may be
 36 23 on a per capita, number, financial interest, class, group, or
 36 24 other basis.
 36 25    6.  Unless otherwise provided in an operating agreement,
 36 26 the management of a series shall be vested in the members
 36 27 associated with such series in proportion to the then-current
 36 28 percentage or other interest of members in the profits of the
 36 29 series owned by all of the members associated with such
 36 30 series.  The decision of members owning more than fifty
 36 31 percent of the series or other interest in the profits shall
 36 32 control.  However, if an operating agreement provides for the
 36 33 management of the series, in whole or in part, by a manager,
 36 34 the management of the series, to the extent so provided, is
 36 35 vested in the manager who shall be chosen as provided in the
 37  1 operating agreement.  The manager of the series shall also
 37  2 hold the offices and have the responsibilities accorded to
 37  3 managers as set forth in the operating agreement.  A series
 37  4 may have more than one manager.  A manager shall cease to be a
 37  5 manager with respect to a series as provided in the operating
 37  6 agreement.  Except as otherwise provided in the operating
 37  7 agreement, an event under this chapter or identified in an
 37  8 operating agreement that causes a manager to cease to be a
 37  9 manager with respect to a series, by itself, shall not cause
 37 10 the manager to cease to be a manager of the limited liability
 37 11 company or with respect to any other series of the limited
 37 12 liability company.
 37 13    7.  Notwithstanding any other provision of this chapter,
 37 14 except subsections 8 and 11 and unless otherwise provided in
 37 15 an operating agreement, at the time a member associated with a
 37 16 series that has been established pursuant to subsection 1
 37 17 becomes entitled to receive a distribution with respect to
 37 18 such series, the member has the status of, and is entitled to,
 37 19 all remedies available to a creditor of the series with
 37 20 respect to the distribution.  An operating agreement may
 37 21 provide for the establishment of a record date with respect to
 37 22 allocations and distributions with respect to a series.
 37 23    8.  Notwithstanding any other provision of this chapter, a
 37 24 limited liability company may make a distribution with respect
 37 25 to a series that has been established pursuant to subsection
 37 26 1.  However, a limited liability company shall not make a
 37 27 distribution with respect to a series that has been
 37 28 established pursuant to subsection 1 to the extent that at the
 37 29 time of the distribution, after giving effect to the
 37 30 distribution, all liabilities of such series, other than
 37 31 liabilities to members on account of their membership
 37 32 interests with respect to such series and liabilities for
 37 33 which the recourse of creditors is limited to specified
 37 34 property of such series, exceed the fair value of the assets
 37 35 associated with such series.  However, the fair value of an
 38  1 asset of the series that is subject to a liability for which
 38  2 the recourse of creditors is limited shall be included in the
 38  3 assets associated with such series only to the extent that the
 38  4 fair value of that asset exceeds that liability.  A member who
 38  5 receives a distribution in violation of this subsection, and
 38  6 who knew at the time of the distribution that the distribution
 38  7 violated this subsection, is liable for the amount of the
 38  8 distribution.  Subject to section 490A.807, which applies to
 38  9 any distribution made with respect to a series under this
 38 10 subsection, this subsection shall not affect any obligation or
 38 11 liability of a member under an agreement or other applicable
 38 12 law for the amount of a distribution.
 38 13    9.  Unless otherwise provided in the operating agreement, a
 38 14 member shall cease to be associated with a series and to have
 38 15 the power to exercise any rights or powers of a member with
 38 16 respect to such series upon the assignment of all of the
 38 17 member's membership interest with respect to such series.
 38 18 Except as otherwise provided in an operating agreement, an
 38 19 event under this chapter or identified in an operating
 38 20 agreement that causes a member to cease to be associated with
 38 21 a series, by itself, shall not cause such member to cease to
 38 22 be associated with any other series or terminate the continued
 38 23 membership of a member in the limited liability company.
 38 24    10.  Subject to section 490A.1301, except to the extent
 38 25 otherwise provided in the operating agreement, a series may be
 38 26 terminated and its affairs wound up without causing the
 38 27 dissolution of the limited liability company.  The termination
 38 28 of a series established pursuant to subsection 1 shall not
 38 29 affect the limitation on liabilities of such series provided
 38 30 by subsection 2.  A series is terminated and its affairs shall
 38 31 be wound up upon the dissolution of the limited liability
 38 32 company under section 490A.1301 or otherwise upon the first to
 38 33 occur of the following:
 38 34    a.  At the time specified in the operating agreement.
 38 35    b.  Upon the happening of events specified in the operating
 39  1 agreement.
 39  2    c.  Unless otherwise provided in the operating agreement,
 39  3 upon the written consent of all members associated with such
 39  4 series.
 39  5    d.  The termination of such series under subsection 10.
 39  6    11.  Notwithstanding section 490A.1303, unless otherwise
 39  7 provided in the operating agreement, any of the following
 39  8 persons may wind up the affairs of the series:
 39  9    a.  A manager associated with a series who has not
 39 10 wrongfully terminated the series.
 39 11    b.  If there is no manager of a series, the members
 39 12 associated with the series or a person approved by the members
 39 13 associated with the series.
 39 14    c.  If there is more than one class or group of members
 39 15 associated with the series, then by each class or group of
 39 16 members associated with the series, in either case, by members
 39 17 who own more than fifty percent of the then-current percentage
 39 18 or other interest in the profits of the series owned by all of
 39 19 the members associated with the series or by the members of
 39 20 each class or group associated with the series.
 39 21    However, if the series has been established pursuant to
 39 22 subsection 1, the district court of the county in which the
 39 23 limited liability company has its principal place of business,
 39 24 upon cause shown, may wind up the affairs of the series upon
 39 25 application of any member associated with the series or the
 39 26 member's legal representative or assignee, and in connection
 39 27 with such winding up, may appoint a liquidating trustee.  The
 39 28 persons winding up the affairs of a series, in the name of the
 39 29 limited liability company and for and on behalf of the limited
 39 30 liability company and such series, may take all actions with
 39 31 respect to the series as are permitted under section
 39 32 490A.1303.  The persons winding up the affairs of a series
 39 33 shall provide for the claims and obligations of the series as
 39 34 provided in section 490A.1304 and distribute the assets of the
 39 35 series as provided in section 490A.1304.  Actions taken
 40  1 pursuant to this subsection shall not affect the liability of
 40  2 members and shall not impose liability on a liquidating
 40  3 trustee.
 40  4    12.  On application by or for a member or manager
 40  5 associated with a series established pursuant to subsection 1,
 40  6 the district court in the county in which the limited
 40  7 liability company has its principal place of business may
 40  8 enter an order for dissolution of such series if it is not
 40  9 reasonably practicable to carry on the business of the series
 40 10 in conformity with the operating agreement.
 40 11    13.  A foreign limited liability company that is
 40 12 registering to do business in this state under this chapter
 40 13 which is governed by an operating agreement that establishes
 40 14 or provides for the establishment of designated series of
 40 15 members, managers, or membership interests having separate
 40 16 rights, powers, or duties with respect to specified property
 40 17 or obligations of the foreign limited liability company, or
 40 18 profits and losses associated with the specified property or
 40 19 obligations, shall indicate that fact on the application for
 40 20 registration as a foreign limited liability company.  In
 40 21 addition, the foreign limited liability company shall state on
 40 22 the application whether the debts, liabilities, and
 40 23 obligations incurred, contracted for, or otherwise existing
 40 24 with respect to a particular series, if any, are enforceable
 40 25 against the assets of such series only, and not against the
 40 26 assets of the foreign limited liability company generally.
 40 27    Sec. 58.  NEW SECTION.  490A.306  ADMISSION OF MEMBERS.
 40 28    1.  In connection with the formation of a limited liability
 40 29 company, a person is admitted as a member of the limited
 40 30 liability company upon the later to occur of the following:
 40 31    a.  The formation of the limited liability company.
 40 32    b.  The time provided in, and upon compliance with, the
 40 33 operating agreement or, if the operating agreement does not so
 40 34 provide, when the person's admission is reflected in the
 40 35 records of the limited liability company.
 41  1    2.  After the formation of a limited liability company, a
 41  2 person is admitted as a member of the limited liability
 41  3 company as follows:
 41  4    a.  In the case of a person who is not an assignee of a
 41  5 membership interest, including a person acquiring a membership
 41  6 interest directly from the limited liability company and a
 41  7 person to be admitted as a member of the limited liability
 41  8 company without acquiring a membership interest in the limited
 41  9 liability company, at the time provided in and upon compliance
 41 10 with the operating agreement or, if the operating agreement
 41 11 does not so provide, upon the consent of all members and the
 41 12 person's admission being reflected in the records of the
 41 13 limited liability company.
 41 14    b.  In the case of an assignee of a membership interest, as
 41 15 provided in section 490A.903 and at the time provided in and
 41 16 upon compliance with the operating agreement, or if the
 41 17 operating agreement does not so provide, when any such
 41 18 person's permitted admission is reflected in the records of
 41 19 the limited liability company.
 41 20    c.  Unless otherwise provided in an agreement of merger, in
 41 21 the case of a person acquiring a membership interest in a
 41 22 surviving or resulting limited liability company pursuant to a
 41 23 merger approved pursuant to section 490A.1203, at the time
 41 24 provided in and upon compliance with the operating agreement
 41 25 of the surviving or resulting limited liability company.
 41 26    3.  A person may be admitted to a limited liability company
 41 27 as a member of the limited liability company and may receive a
 41 28 membership interest in the limited liability company without
 41 29 making a contribution or being obligated to make a
 41 30 contribution to the limited liability company.  Unless
 41 31 otherwise provided in an operating agreement, a person may be
 41 32 admitted to a limited liability company as a member of the
 41 33 limited liability company without acquiring a membership
 41 34 interest in the limited liability company.
 41 35    Sec. 59.  NEW SECTION.  490A.307  CLASSES AND VOTING.
 42  1    1.  An operating agreement may provide for classes or
 42  2 groups of members and the relative rights, powers, and duties
 42  3 of such members, and may provide for the future creation of
 42  4 additional classes or groups of members having such relative
 42  5 rights, powers, and duties as may from time to time be
 42  6 established, including rights, powers, and duties senior to
 42  7 existing classes and groups of members.  An operating
 42  8 agreement may provide for taking action, including the
 42  9 amendment of the operating agreement, without the vote or
 42 10 approval of any member or class or group of members, including
 42 11 an action to create a class or group of membership interests
 42 12 that was not previously outstanding.  An operating agreement
 42 13 may provide that any member or class or group of members has
 42 14 no voting rights.
 42 15    2.  An operating agreement may grant to all or certain
 42 16 identified members or a specified class or group of the
 42 17 members the right to vote separately or with all or any class
 42 18 or group of members or managers on any matter.  Voting by
 42 19 members may be on a per capita, number, financial interest,
 42 20 class, group, or any other basis.
 42 21    3.  An operating agreement which grants a right to vote may
 42 22 set forth provisions relating to notice of the time, place, or
 42 23 purpose of any meeting at which any matter is to be voted on
 42 24 by any members, waiver of any notice, action by consent
 42 25 without meeting, the establishment of a record date, quorum
 42 26 requirements, voting in person or by proxy, or any other
 42 27 matter with respect to the exercise of any such right to vote.
 42 28    Sec. 60.  NEW SECTION.  490A.603  LIABILITY OF MEMBERS.
 42 29    1.  Except as otherwise provided in this chapter or by
 42 30 written agreement of a member, a member or manager of a
 42 31 limited liability company is not personally liable solely by
 42 32 reason of being a member or manager of the limited liability
 42 33 company under any judgment, or in any other manner, for any
 42 34 debt, obligation, or liability of the limited liability
 42 35 company, whether that liability or obligation arises in
 43  1 contract, tort, or otherwise.
 43  2    2.  A member of a limited liability company is personally
 43  3 liable under a judgment or for any debt, obligation, or
 43  4 liability of the limited liability company, whether that
 43  5 liability or obligation arises in contract, tort, or
 43  6 otherwise, under the same or similar circumstances and to the
 43  7 same extent as a shareholder of a corporation may be
 43  8 personally liable for any debt, obligation, or liability of
 43  9 the corporation, except that the failure to hold meetings of
 43 10 members or managers or the failure to observe formalities
 43 11 pertaining to the calling or conduct of meetings shall not be
 43 12 considered a factor tending to establish that the members have
 43 13 personal liability for any debt, obligation, or liability of
 43 14 the limited liability company.
 43 15    3.  Nothing in this section shall be construed to affect
 43 16 the liability of a member of a limited liability company to
 43 17 third parties for the member's participation in tortious
 43 18 conduct.
 43 19    Sec. 61.  Section 490A.702, subsection 4, Code 1997, is
 43 20 amended by striking the subsection and inserting in lieu
 43 21 thereof the following:
 43 22    4.  Except as provided in subsection 4A, the validity of an
 43 23 act of a limited liability company is not challengeable on the
 43 24 ground that the limited liability company lacks or lacked the
 43 25 power or authority to act.
 43 26    Sec. 62.  Section 490A.702, Code 1997, is amended by adding
 43 27 the following new subsections:
 43 28    NEW SUBSECTION.  4A.  A limited liability company's power
 43 29 to act may be challenged in the following proceedings:
 43 30    a.  In an action by a member against the limited liability
 43 31 company to enjoin an unauthorized act.
 43 32    b.  In an action by the limited liability company against
 43 33 an incumbent or former manager, employee, or agent of the
 43 34 limited liability company, either directly, derivatively, or
 43 35 through a receiver, trustee, or other legal representative.
 44  1    c.  By the attorney general under section 490A.1409.
 44  2    NEW SUBSECTION.  4B.  In a member's proceeding under
 44  3 subsection 4A, paragraph "a", to enjoin an unauthorized act,
 44  4 the court may enjoin or set aside the act if equitable and if
 44  5 all affected persons are parties to the proceeding.  The court
 44  6 may award damages, other than anticipated profits, for loss
 44  7 suffered by the limited liability company or another party as
 44  8 a result of the unauthorized act being enjoined.
 44  9    Sec. 63.  Section 490A.703, Code 1997, is amended by adding
 44 10 the following new subsection:
 44 11    NEW SUBSECTION.  2A.  a.  A written operating agreement or
 44 12 other writing may provide for a person to be admitted as a
 44 13 member of a limited liability company, or to become an
 44 14 assignee of a limited liability company membership interest or
 44 15 other rights or powers of a member, to the extent that either
 44 16 of the following occurs:
 44 17    (1)  If the person, or a representative authorized by the
 44 18 person orally, in writing, or by other action such as payment
 44 19 for a limited liability company interest, executes the
 44 20 operating agreement or any other writing evidencing the intent
 44 21 of such person to become a member or assignee.
 44 22    (2)  Without execution of the operating agreement or
 44 23 similar writing, if the person or such authorized
 44 24 representative of the person complies with the conditions for
 44 25 becoming a member or assignee as set forth in the operating
 44 26 agreement or any other writing and requests orally, in
 44 27 writing, or by other action such as payment for a limited
 44 28 liability company interest, that the records of the limited
 44 29 liability company reflect such admission or assignment.
 44 30    b.  A written operating agreement or another written
 44 31 agreement or writing is not unenforceable by reason of its not
 44 32 having been signed by a person being admitted as a member or
 44 33 becoming an assignee, or the member's or assignee's
 44 34 representative, as provided in paragraph "a".
 44 35    Sec. 64.  NEW SECTION.  490A.704A  RESIGNATION OR
 45  1 WITHDRAWAL OF MEMBER.
 45  2    1.  a.  This section applies to a limited liability company
 45  3 whose original articles of organization are filed with the
 45  4 secretary of state on or after July 1, 1997.
 45  5    b.  This section applies to a limited liability company
 45  6 whose original articles of organization are filed with the
 45  7 secretary of state and effective on or prior to June 30, 1997,
 45  8 if such company's operating agreement provides that it is
 45  9 subject to this section.
 45 10    c.  If no provision is made in the operating agreement, a
 45 11 limited liability company whose original articles of
 45 12 organization were filed with the secretary of state and
 45 13 effective on or prior to June 30, 1997, is subject to section
 45 14 490A.704.
 45 15    2.  A member may resign or withdraw from a limited
 45 16 liability company only at the time or upon the happening of an
 45 17 event specified in an operating agreement and pursuant to the
 45 18 operating agreement.
 45 19    3.  Unless an operating agreement provides otherwise, a
 45 20 member may not resign or withdraw from a limited liability
 45 21 company prior to the dissolution and winding up of the limited
 45 22 liability company.  However, if the articles of organization
 45 23 or an operating agreement do not specify the time or the
 45 24 events upon the happening of which a member may resign or
 45 25 withdraw, a member may resign or withdraw from the limited
 45 26 liability company in the event any amendment to the articles
 45 27 of organization or operating agreement that is adopted over
 45 28 the member's written dissent adversely affects the rights or
 45 29 preferences of the dissenting member's membership interest in
 45 30 any of the ways described in paragraphs "a" through "e".  A
 45 31 resignation or withdrawal in the event of such dissent and
 45 32 adverse effect is deemed to have occurred as of the effective
 45 33 date of the amendment, if the member gives notice to the
 45 34 limited liability company not more than sixty days after the
 45 35 date of the amendment.  In valuing the member's distribution
 46  1 pursuant to this subsection, any depreciation in anticipation
 46  2 of the amendment shall be excluded.  An amendment that does
 46  3 any of the following is subject to this subsection:
 46  4    a.  Alters or abolishes a member's right to receive a
 46  5 distribution.
 46  6    b.  Alters or abolishes a member's right to voluntarily
 46  7 withdraw or resign.
 46  8    c.  Alters or abolishes a member's right to vote on any
 46  9 matter, except as the rights may be altered or abolished
 46 10 through the acceptance of contributions or the making of
 46 11 contribution agreements.
 46 12    d.  Alters or abolishes a member's preemptive right to make
 46 13 contributions.
 46 14    e.  Establishes or changes the conditions for or
 46 15 consequences of expulsion.
 46 16    4.  A member withdrawing under this section is not liable
 46 17 for damages for the breach of any agreement not to withdraw.
 46 18    5.  An operating agreement may provide that a membership
 46 19 interest may be assigned prior to the dissolution and winding
 46 20 up of the limited liability company.
 46 21    Sec. 65.  NEW SECTION.  490A.705A  CLASSES OF MANAGERS AND
 46 22 VOTING.
 46 23    1.  An operating agreement may provide for classes or
 46 24 groups of managers having such relative rights, powers, and
 46 25 duties as the operating agreement may provide, and may make
 46 26 provision for the future creation of additional classes or
 46 27 groups of managers having such relative rights, powers, and
 46 28 duties as may from time to time be established, including
 46 29 rights, powers, and duties senior to existing classes and
 46 30 groups of managers.  An operating agreement may provide for
 46 31 taking action, including the amendment of the operating
 46 32 agreement, without the vote or approval of any manager or
 46 33 class or group of managers, including an action to create a
 46 34 class or group of membership interests that was not previously
 46 35 outstanding.
 47  1    2.  An operating agreement may grant to all or certain
 47  2 identified managers or a specified class or group of managers
 47  3 the right to vote on any matter, separately or with all or any
 47  4 class or group of managers or members.  Voting by managers may
 47  5 be on a per capita, number, financial interest, class, group,
 47  6 or any other basis.
 47  7    3.  An operating agreement which grants a right to vote may
 47  8 set forth provisions relating to notice of the time, place, or
 47  9 purpose of any meeting at which any matter is to be voted on
 47 10 by any manager or class or group of managers, waiver of any
 47 11 such notice, action by consent without a meeting, the
 47 12 establishment of a record date, quorum requirements, voting in
 47 13 person or by proxy, or any other matter with respect to the
 47 14 exercise of any such right to vote.
 47 15    Sec. 66.  Section 490A.709, subsection 2, unnumbered
 47 16 paragraph 1, Code 1997, is amended to read as follows:
 47 17    Each member has the right for any purpose reasonably
 47 18 related to the member's interest as a member of the limited
 47 19 liability company, upon reasonable request and subject to
 47 20 reasonable standards as may be set forth in an operating
 47 21 agreement, to do any of the following:
 47 22    Sec. 67.  NEW SECTION.  490A.710  DELEGATION OF RIGHTS AND
 47 23 POWERS TO MANAGE.
 47 24    Unless otherwise provided in the operating agreement, a
 47 25 member or manager of a limited liability company may delegate
 47 26 to one or more other persons the member's or manager's rights
 47 27 and powers to manage and control the business and affairs of
 47 28 the limited liability company, including to agents and
 47 29 employees of a member or manager of the limited liability
 47 30 company, and to delegate by a management agreement or another
 47 31 agreement with other persons.  Unless otherwise provided in
 47 32 the operating agreement, such delegation by a member or
 47 33 manager of a limited liability company shall not cause the
 47 34 member or manager to cease to be a member or manager of the
 47 35 limited liability company.
 48  1    Sec. 68.  NEW SECTION.  490A.711  CONTRACTUAL APPRAISAL
 48  2 RIGHTS.
 48  3    An operating agreement or an agreement of merger may
 48  4 provide that contractual appraisal rights with respect to a
 48  5 membership interest or another interest in a limited liability
 48  6 company are available for any class or group of members or
 48  7 membership interests in connection with an amendment of an
 48  8 operating agreement, a merger in which the limited liability
 48  9 company is a constituent party to the merger, or the sale of
 48 10 all or substantially all of the limited liability company's
 48 11 assets.  The district court of the county in which the limited
 48 12 liability company has its principal place of business has
 48 13 jurisdiction to hear and determine any matter relating to such
 48 14 appraisal rights.
 48 15    Sec. 69.  NEW SECTION.  490A.712  CESSATION OF MEMBERSHIP.
 48 16    A person ceases to be a member of a limited liability
 48 17 company upon the occurrence of any of the following events:
 48 18    1.  The person withdraws or resigns from the limited
 48 19 liability company.
 48 20    2.  The person is removed as a member pursuant to the
 48 21 operating agreement.
 48 22    3.  Unless otherwise provided in the operating agreement or
 48 23 with the consent of all other members, the person does any of
 48 24 the following:
 48 25    a.  Makes an assignment for the benefit of creditors.
 48 26    b.  Files a voluntary petition in bankruptcy.
 48 27    c.  Is adjudged bankrupt or insolvent or has entered
 48 28 against the person an order for relief in any bankruptcy or
 48 29 insolvency proceeding.
 48 30    d.  Files a petition or answer seeking for that person any
 48 31 reorganization, arrangement, composition, readjustment,
 48 32 liquidation, dissolution, or similar relief under any statute
 48 33 or rule.
 48 34    e.  Seeks, consents to, or acquiesces in the appointment of
 48 35 a trustee, receiver, or liquidator for the member or for all
 49  1 or any substantial part of the member's properties.
 49  2    f.  Files an answer or other pleading admitting or failing
 49  3 to contest the material allegations of a petition filed
 49  4 against the person in any proceeding described in this
 49  5 subsection.
 49  6    4.  Unless otherwise provided in the operating agreement,
 49  7 or with the consent of all other members, the continuation of
 49  8 any proceeding against the person seeking reorganization,
 49  9 arrangement, composition, readjustment, liquidation,
 49 10 dissolution, or similar relief under any statute or rule for
 49 11 one hundred twenty days after the commencement of such
 49 12 proceeding, or the appointment of a trustee, receiver, or
 49 13 liquidator for the member or for all or any substantial part
 49 14 of the member's properties without the member's agreement or
 49 15 acquiescence, which appointment is not vacated or stayed for
 49 16 one hundred twenty days or, if the appointment is stayed, for
 49 17 one hundred twenty days after the expiration of the stay
 49 18 during which period the appointment is not vacated.
 49 19    5.  Unless otherwise provided in the operating agreement or
 49 20 with the consent of all other members, in the case of a member
 49 21 who is an individual, the individual's death or adjudication
 49 22 by a court of competent jurisdiction as incompetent to manage
 49 23 the individual's person or property.
 49 24    6.  Unless otherwise provided in the operating agreement or
 49 25 with the consent of all other members, in the case of a member
 49 26 who is acting as a member by virtue of being a trustee of a
 49 27 trust, the termination of the trust.
 49 28    7.  Unless otherwise provided in the operating agreement or
 49 29 with the consent of all other members, in the case of a member
 49 30 that is a partnership or another limited liability company,
 49 31 the dissolution and commencement of winding up of the
 49 32 partnership or limited liability company.
 49 33    8.  Unless otherwise provided in the operating agreement or
 49 34 with the consent of all other members, in the case of a member
 49 35 that is a corporation, the dissolution of the corporation or
 50  1 the revocation of its articles of incorporation.
 50  2    9.  Unless otherwise provided in the operating agreement or
 50  3 with the consent of all other members, in the case of a member
 50  4 that is an estate, the distribution by the fiduciary of the
 50  5 estate's entire interest in the limited liability company.
 50  6    Sec. 70.  Section 490A.801, Code 1997, is amended by adding
 50  7 the following new subsection:
 50  8    NEW SUBSECTION.  4.  An operating agreement may provide
 50  9 that the interest of any member who fails to make a
 50 10 contribution that the member is obligated to make is subject
 50 11 to specified penalties for, or specified consequences of, such
 50 12 failure.  The penalty or consequence may take the form of
 50 13 reducing or eliminating the defaulting member's proportionate
 50 14 interest in a limited liability company, subordinating the
 50 15 member's membership interest to that of a nondefaulting
 50 16 member, a forced sale of the member's membership interest,
 50 17 forfeiture of the member's membership interest, the lending by
 50 18 other members of the amount necessary to meet the member's
 50 19 commitment, a fixing of the value of the member's membership
 50 20 interest by appraisal or by formula and redemption, or sale of
 50 21 the member's membership interest at such value or other
 50 22 penalty or consequence.
 50 23    Sec. 71.  NEW SECTION.  490A.809  RIGHT TO DISTRIBUTION.
 50 24    Subject to sections 490A.807 and 490A.1304, and unless
 50 25 otherwise provided in an operating agreement, at the time a
 50 26 member becomes entitled to receive a distribution, the member
 50 27 has the status of, and is entitled to all remedies available
 50 28 to, a creditor of the limited liability company with respect
 50 29 to the distribution.  An operating agreement may provide for
 50 30 the establishment of a record date with respect to allocations
 50 31 and distributions by a limited liability company.
 50 32    Sec. 72.  Section 490A.902, unnumbered paragraph 1, Code
 50 33 1997, is amended to read as follows:
 50 34    Unless otherwise provided in the articles of organization
 50 35 or an operating agreement, a membership interest in a limited
 51  1 liability company is assignable in whole or in part.  An
 51  2 assignment of an interest in a limited liability company does
 51  3 not of itself dissolve the limited liability company.  An
 51  4 Except as provided in the articles of organization or an
 51  5 operating agreement, an assignment does not entitle the
 51  6 assignee to participate in the management and affairs of the
 51  7 limited liability company or to become or to exercise any
 51  8 rights of a member.  Such Except as provided in the articles
 51  9 of organization or an operating agreement, an assignment
 51 10 entitles the assignee to receive, to the extent assigned, only
 51 11 the distribution to which the assignor would be entitled.
 51 12 Except as provided in the articles of organization or an
 51 13 operating agreement, a member ceases to be a member upon
 51 14 assignment of the member's entire membership interest.
 51 15    Sec. 73.  Section 490A.1301, subsection 3, Code 1997, is
 51 16 amended by striking the subsection.
 51 17    Sec. 74.  Sections 487.206, 487.903, and 487.1105, Code
 51 18 1997, are repealed.  
 51 19 
 51 20 
 51 21                                                             
 51 22                               RON J. CORBETT
 51 23                               Speaker of the House
 51 24 
 51 25 
 51 26                                                             
 51 27                               MARY E. KRAMER
 51 28                               President of the Senate
 51 29 
 51 30    I hereby certify that this bill originated in the House and
 51 31 is known as House File 642, Seventy-seventh General Assembly.
 51 32 
 51 33 
 51 34                                                             
 51 35                               ELIZABETH ISAACSON
 52  1                               Chief Clerk of the House
 52  2 Approved                , 1997
 52  3 
 52  4 
 52  5                         
 52  6 TERRY E. BRANSTAD
 52  7 Governor
     
Text: HF00641                           Text: HF00643
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