Significant Improvements to Colorado's Limited Partnership Act Adopted
| Publication year | 1986 |
| Pages | 1635 |
1986, September, Pg. 1635. Significant Improvements to Colorado's Limited Partnership Act Adopted
In light of the 1985 amendments to the Delaware Revised Uniform Limited Partnership Act ("DRULPA"), one nationally recognized commentator has advised lawyers who are engaged in organizing a limited partnership for the conduct of a substantial business seriously to consider Delaware as the state of organization.(fn1) With the July 1, 1986, effective date of amendments to the Colorado Uniform Limited Partnership Act of 1981 ("1986 CULPA"), Colorado became equally attractive as a state of organization.
This article focuses on the improvements to the Colorado Uniform Limited Partnership Act of 1981 ("1981 CULPA") embodied in 1986 CULPA. It also compares DRULPA and 1986 CULPA as to provisions generally considered critical in the choice of state of organization.
A combination of changes has significantly reduced the administrative burden of recordkeeping and filing requirements for limited partnerships. Of primary importance in this group of changes are those dealing with the contents of the certificate of limited partnership. It is basically reduced to a trade name certificate in that it is required to contain only the name of the partnership, the name and address of the agent for service of process, the name and address of each general partner and a statement that there are at least two partners in the partnership, at least one of whom is a limited partner.(fn2) DRULPA has essentially the same provision.
The certificate is no longer required to contain the name and address of each limited partner, the contribution of each partner, and a host of other information relating to membership in the partnership. All the information previously required to be set forth in the certificate of limited partnership is now required to be set forth either in a written partnership agreement or, in the case of an obligation to contribute, in a writing signed by the partner or in a statement prepared and certified as accurate by the general partners.(fn3) Thus, CRS § 7-62-201 will no longer serve as a laundry list of subjects to be covered in the partnership agreement.(fn4)
Furthermore, certain partnership records formerly required to be maintained at the registered office are now required to be maintained in the manner provided in the partnership agreement or, if none, at the registered office.(fn5) Accordingly, it is important to specify in the partnership agreement the office at which such records shall be kept.
A limited partner has the right to inspect and copy the records required to be kept by the partnership upon reasonable request and at the limited partner's expense during ordinary business hours. However, the right of a limited partner to obtain from the general partners true and full information regarding the state of the business, financial condition of the partnership and any other information regarding the affairs of the partnership, as well as a copy of the partnership's federal, state and local income tax returns, may be subjected to reasonable standards set forth in the partnership agreement or otherwise established by the general partners. Moreover, this right is limited to any purpose reasonably related to the limited partner's interest as a limited partner.(fn6)
Accordingly, limited partners should require that the partnership agreement set forth such standards to avoid leaving complete discretion in this regard with the general partners. Such a provision also enables the general partners to protect the partnership from damage by not allowing open access to limited partners who have adverse interests to the partnership's.
DRULPA takes a slightly different approach to this issue. Rather than requiring certain information to be kept at an office and providing a right to limited partners
The reduction in the...
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