COMMENT

Note to Georgia Revised Uniform Limited Partnership Act This section provides for the method and effect of assignment of a general or limited partner's partnership interest (defined in Section 14-9-101(11) to include only financial rights), and validates use of certificates of partnership interest.

Prior Georgia Law Section 14-9A-50 provides that a limited partner's interest is assignable; that a substituted limited partner has all the rights of the assignor and the liabilities of which he was aware when becoming a limited partner or which could be ascertained from the certificate; that an assignee who is not a substituted limited partner has no information rights; that an assignee can become a substituted limited partner as provided in the certificate or if all the members agree upon amendment of the certificate; and that the assignor is not relieved of liability by the substitution. Section 14-8-27(1) provides that an interest in a general partnership is assignable, and that the assignment does not dissolve the partnership and does not confer management rights on the assignee. This provision applied to the assignment of a general partner's interest in a limited partnership in the absence of an explicit provision to the contrary in the prior limited partnership statute.

Comparison With Official RULPA The provisions concerning not only assignability but also the effects of an assignment have been explicitly made subject to contrary agreement. One practical effect of this is that the partners can agree that an assignee automatically assumes the status of a limited partner so that, like corporate shares, a partner's entire status and not merely his financial rights would be fully transferable.

Subject to contrary agreement, the assignment transfers all financial rights of the assignor (see the definition of "partnership interest" in Section 14-9-101(11)), and not merely the right to receive distributions as under RULPA.

Subsection (a)(4) changes RULPA by providing that the assignor retains rights despite the assignment. This result appears to be consistent with current law under ULPA. See Kanarek v. Gadlex Associates, 115 A.D. 2d 592, 496 N.Y.S. 2d 253 (1985). The contrary result would result in creation of a financial interest without management power.

Subsection (a)(5) clarifies that the assignee assumes no liabilities as a result of the assignment alone. As to assumption of liabilities upon becoming a partner, see Section 14-9-704. RULPA provides only for assumption on becoming a limited partner and is silent on the effect of the assignment alone.

Under subsection (a)(6), the assignor is not released from liability (i.e., for failure to make an agreed contribution) as a result of the assignment. RULPA provides only for nonrelease where the assignee becomes a limited partner (this situation is covered by Section 14-9-704(c)). Although nonrelease may hamper transferability of limited partnership interests, this is a problem largely in publicly held partnerships which are in all events likely to have extensive customized agreements that can provide for release of liability. The parties to a closely held limited partnership are less likely to be governed by an extensive agreement and so are more likely to rely on the provisions of the partnership statute. In such a partnership, transferability of interests is not a major issue and the parties may have relied on the unique characteristics of a particular contributor.

The subsection on certificates of limited partnership is based on Section 17-702 of the Delaware Revised Uniform Limited Partnership Act, Del. Code Ann. tit. 6, Section 17-702 (Supp. 1986).

Cross-References Definition of "partnership interest" as referring only to limited partnership and including all financial items: § 14-9-101(11). Liability of partner on contribution obligation: § 14-9-502. Assignee becoming limited partner: § 14-9-704.

JUDICIAL DECISIONS

RESEARCH REFERENCES