Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1697805399953.pdf (Marshall Islands)
NITIJELA OF THE MARSHALL ISLANDS 2STH CONSTITUTIONAL REGULAR SESSION, 2004 BILL NO:28NDI _________________ AN ACT ""'!

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:l.lJbLf-/1 to amend certain sections of the Limited Partnership Act (the Act), and to insert additional language to modernize the Limited Partnership Act.

to clarify certain provisions, BE IT ENACTED BY THE NITIJELA OF THE MARSHALL ISLANDS Section 1.

Short Title.

11 This Act may be cited as the Limited Partnership (Amendment) Act 2004.
Section 2.

Amendments.

The Limited Partnership Act is hereby amended by amending the following sections as follows: (a) Section 180 is amended to read in the following manner: (1) Filing of certificate.

In order to form a limited partnership, one (1) or more persons (but not less than all of the general partners) must execute a certificate of limited partnership.
The certificate of limited partnership shall be filed with the appropriate Registrar or Deputy Registrar of Corporations and set forth: (a) The name of the limited partnership; (b) The address of the registered office and the name and address of the registered agent for service of process required to be maintained under subsection (4) of this section; (c) The name and the business, residence or mailing address of each general partner; and 1 ________________ BILL NO: 28 NDI ------.JP, L. af/6(f-/7 (d) Any other matters the partners determine to include therein.
(2) Contents of certificate.

A limited partnership is formed at the time of the filing of the initial certificate oflimited partnership with the Registrar of Corporations or at any later date or time specified in the certificate oflimited partnership if, in either case, there has been substantial compliance with the requirements of this section.
A limited partnership formed under this division shall be a separate legal entity, the existence of which as a separate legal entity shall continue until cancellation of the limited partnership's certificate of limited partnership.

(3) Filing fee.

On filing the certificate, a fee shall be paid to such Registrar in such amount as shall be provided from time to time by the Registrar.

(4) Registered agent.


A limited partnership registered under subsection (1) of this section, but not having a place of business in the Republic shall designate in the certificate, filed pursuant to this section, a registered agent in the Republic upon whom process or any notice or demand required or permitted by law to be served may be served.
The registered agent for a non-resident limited partnership shall be The Trust Company of the Marshall Islands, Inc. I BILL NO: 28 NDI r: J\~<I-11 (b) Section 181 of the Act is hereby amended to read as follows; A limited partnership may carry on any lawful business, purpose or activity with the exception of the business of granting policies of insurance or assuming insurance risks or banking.
(c) Section 182 is amended to read in the following manner: The contributions of a limited partner may be cash or other property or services.
(d) Section 184 is amended to read in the following manner: If a certificate contains a false statement, one who suffers loss by reliance on such statement may hold liable any of the general partners who made the statement and who knew the statement to be false: (a) (b) at the time any such general partner signed the certificate; or subsequently, but within a sufficient time before the statement was relied upon to enable such general partner to cancel or amend the certificate or to file a petition for its cancellation or amendment as provided in this division.
(e) Section 185 is amended to read in the following manner: 3 BILL NO: 28 NDI P. 1-.

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()b'l-/7 (1) A limited partner is not liable for the obligations of a limited partnership unless he or she is also a general partner or, in addition to the exercise of the rights and powers of a limited partner, he or she participates in the control of the business.

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However, if the limited partner does participate in the control of the business, he or she is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner.
(2) A limited partner does not participate in the control of the business within the meaning of subsection (1) of this section by virtue of possessing or, regardless of whether or not the limited partner has the rights or powers, exercising or attempting to exercise 1 or more of the following rights or powers or having or, regardless of whether or not the limited partner has the rights or powers, acting or attempting to act in one or more of the following capacities: (a) To be an independent contractor for or to transact business with, including being a contractor for, or to be an agent or employee of, the limited partnership or a general partner, or to be an officer, director or stockholder of a corporate general partner, or to be a limited partner of a partnership that is a general partner of the limited partnership, or to be a trustee, administrator, executor, custodian or other fiduciary or beneficiary of an estate or trust which is a 4 BILL NO: 28 NDI p. l.,.
~{){)t.f - , j general partner, or to be a trustee, officer, advisor, stockholder or beneficiary of a business trust or a statutory trust which is a general partner or to be a member, manager, agent or employee of a limited liability company which is a general partner; (b) To consult with or advise a general partner or any other person with respect to any matter, including the business of the limited partnership, or to act or cause a general partner or any other person to take or refrain from taking any action, including by proposing, approving, consenting or disapproving, by voting or otherwise, with respect to any matter, including the business of the limited partnership; (c)To act as surety, guarantor or endorser for the limited partnership or a general partner, to guaranty or assume I or more obligations of the limited partnership or a general partner, to borrow money from the limited partnership or a general partner, to lend money to the limited partnership or a general partner, or to provide collateral for the limited partnership or a general partner; (d) To call, request, or attend or participate at a meeting of the partners or the limited partners; (e) To wind up a limited partnership pursuant to section 201 of this division; 5 BILL NO: 28 NDI (f) To take any action required or permitted by law to bring, pursue or settle or otherwise terminate a derivative action in the right of the limited partnership; (g) To serve on a committee of the limited partnership or the limited partners or partners or to appoint, elect or otherwise participate in the choice of a representative or another person to serve on any such committee, and to act as a member of any such committee directly or by or through any such representative or other person; (h) To act or cause the taking or refraining from the taking of any action, including by proposing, approving, consenting or disapproving, by voting or otherwise, with respect to 1 or more of the following matters: (i).
The dissolution and winding up of the limited partnership or an election to continue the limited partnership or an election to continue the business of the limited partnership; (ii).

The sale, exchange, lease, mortgage, assignment, pledge or other transfer of, or granting of a security interest in, any asset or assets of the limited partnership; (iii).
The incurrence, renewal, refinancing or payment or other discharge of indebtedness by the limited partnership; 6 _______________ BILL NO: 28 NDI E-J.. ~f>btf-11 (iv).

A change in the nature ofthe business; (v).

The admission, removal or retention of a general partner; (vi).

The admission, removal or retention of a limited partner; (vii).

A transaction or other matter involving an actual or potential conflict of interest; (viii).
An amendment to the partnership agreement or certificate of limited partnership; (ix) The indemnification of any partner or other person; (x) The making of, or calling for, or the making of other determinations in connection with, contributions; (xi).
The making of, or the making of other determinations in connection with or concerning, investments, including investments in property, whether real, personal or mixed, either directly or indirectly, by the limited partnership; or (xii) Such other matters as are stated in the partnership agreement or in any other agreement or in writing; (i) To serve on the board of directors or a committee of, to consult with or advise, to be an officer, director, stockholder, partner (other than a general partner of a general partner of the limited partnership), member, manager, trustee, agent or 7 ________________ BILL NO: 28 NDI p,l".
3.06tf-/1 employee of, or to be a fiduciary or contractor for, any person in which the limited partnership has an interest or any person providing management, consulting, advisory, custody or other services or products for, to or on behalf of, or otherwise having a business or other relationship with, the limited partnership or a general partner of the limited partnership; or G) Any right or power granted or permitted to limited partners under this division and not specifically enumerated in this subsection.
(3) The enumeration in subsection (2) of this section does not mean that the possession or exercise of any other powers or having or acting in other capacities by a limited partner constitutes participation by him or her in the control of the business of the limited partnership.
(4) A limited partner does not participate in the control of the business within the meaning of subsection (1) of this section by virtue of the fact that all or any part of the surname of such limited partner is included in the name of the limited partnership, provided that such surname is also the surname of the general partner.

(5) This section does not create rights or powers oflimited partners.
Such rights and powers may be created only by a certificate of limited partnership, a partnership agreement or any other agreement or in writing, or other sections of this division.

(6) A limited partner does not participate in the control of the business within the 19 meaning of subsection (1) of this section regardless of the nature, extent, scope, number or 8 ________ -----,----- BILL NO: 28 NDI p. L-.
/l..v()tf -11 1 frequency ofthe limited partner's possessing or, regardless of whether or not the limited partner has 2 3 4 S the rights or powers, exercising or attempting to exercise 1 or more of the rights or powers or having or, regardless of whether or not the limited partner has the rights or powers, acting or attempting to act in 1 or more of the capacities which are permitted under this section.
(f) Section 186 is amended to read in the following manner: After the formation of a limited partnership, additional limited partners may be admitted at the time provided in and upon compliance with the partnership agreement.
(g) Section 187 is amended to read in the following manner: A general partner shall have all the rights and powers and be subject to all the restrictions and liabilities (except as set for in the partnership agreement with respect to restrictions or liabilities to the partnership and to the other partners) of a partner in a partnership without limited partners, except that without the written consent or ratification of the specific act by all the limited partners, a general partner or all of the general partners have no authority to: (a) (b) do any act in contravention of the certificate; do any act which would make it impossible to carry on the ordinary business of the partnership; (c) confess a judgment against the partnership, unless the right to do so is given 9 BILL NO: 28 NDI in the partnership agreement; (d) possess partnership property, or assign their rights in specific partnership property, for other than a partnership purpose; (e) admit a person as a general partner, unless the right to do so is given in the partnership agreement; (f) admit a person as a limited partner, unless the right to do so is given in the partnership agreement; (g) continue the business with partnership property on the death, retirement or disability of a general partner, unless the right to do so is given in the partnership agreement; or (h) amend the partnership agreement, unless the right to do so is given in the partnership agreement.
(h) Section 188 is amended to read in the following manner: (1) Disclosure and decree.

A limited partner shall have the same rights as a general partner to: (a) have the partnership books kept at the principal place of business of the partnership, and, at the limited partner's cost, at all reasonable times, and for just and 10 ___________________ BILL NO: 28 NDI p.~.
t.b6f.f-11 reasonable purposes, to inspect and copy any of them, subject to any reasonable provisions regarding confidentiality in the partnership agreement; (b) have on demand true and full information of all things affecting the partnership, and a formal account of partnership affairs whenever circumstances render it just and reasonable, subject to any reasonable provisions regarding confidentiality in the partnership agreement; and (c) subject to any limitation set forth in the partnership agreement, have dissolution and winding up by decree of court.
(2) Profits and contributions.

A limited partner shall have the right to receive a share of the profits or other compensation by way of income, and to the return of his contributions as provided for in this division.

(i) Section 191 is amended to read in the following manner: (1) Financial Transactions.
A limited partner also may loan money to transact other business with the partnership and, unless he is also a general partner, be treated with regard to such loans and any other business as if he were an unrelated party in all dealings with the partnership.

(j) Section 192 is amended to read in the following manner: 11 BILL NO: 28 ND1 p. L .
aO() If-f] Where there are several limited partners the members may agree that one or more of the limited partners shall have a priority over other limited partners as to the return of their contributions, as to their compensation by way of income, or as to any other matter.

If such an agreement is made it shall be stated in the partnership agreement, but in the absence of such a statement all the limited partners shall stand upon equal footing.
(k) Section 193 is amended to read in the following manner: A limited partner may receive from the partnership the share of the profits or the compensation by way ofincome stipulated for in the partnership agreement, provided that after such payment is made, 10 whether from the property of the partnership or that of a general partner, the partnership assets shall 11 be in excess of all liabilities of the partnership except liability to limited partners on account of their contributions, and to general partners.
(I) Section 194 is amended to read in the following manner: (1) Limitations thereon.

A limited partner shall not receive from a general partner or out of partnership property any part of his contribution: (a) unless all liabilities of the partnership, except liabilities to general partners and limited partners on account of their contributions, have been paid or there remains property of the partnership sufficient to pay them; and 12 --------------F- BILL NO: 28 ND1 t,.
MoCf-11 (b) unless otherwise provided in the partnership agreement, the consent of all members is had.

(2) Return of contribution.
Subject to the provisions of subsection (1)(a) ofthis section and the partnership agreement, a limited partner may rightfully demand the return of his contribution: (a) on the dissolution of the partnership unless its business is continued pursuant to the exercise by other partners of a right or power set forth in the certificate or the partnership agreement, or (b) after he has given six (6) months notice in writing to all other members, ifno time is specified in the partnership agreement either for the return of the contribution or the dissolution of the partnership.
(3) Cash.

In the absence of any statement in the partnership agreement to the contrary or the consent of all members, a limited partner, irrespective of the nature of his contributions, has only the right to demand and receive cash in return for his contributions.

(4) Right to dissolution.


A limited partner may have the partnership dissolved and its affairs wound up when: (a) he rightfully but unsuccessfully demands the return of his contribution; or (b) the other liabilities of the partnership have not been paid, or the partnership property is insufficient for their payment, and the limited partner would otherwise be entitled to the return of his contribution.
13 BILL NO: 28 ND 1 p. i. P..{J() It:f 1 (m) Section 195 is amended to read in the following manner: (1) Contributions.
A limited partner is liable to the partnership: (a) for the difference between his contribution as actually made and that stated in the partnership agreement or the records of the limited partnership as having been made; and (b) for any unpaid contributions which he agreed in the partnership agreement to make in the future at the time and on the conditions stated in the partnership agreement.

(2) Waiver and compromise.


Unless otherwise provided in the partnership agreement, the liabilities of a limited partner as set forth in this section can be waived or compromised only by the consent of all members.

(3) Rights of partnership.


(a) A limited partnership shall not make a distribution to a partner unless all liabilities of the partnership, except liabilities to general partners and limited partners on account of their contributions, have been paid or remains property of the partnership sufficient to pay them.
(b) A limited partner who receives a distribution in violation of Section 194(1) or Section 195(3)(a) of this Act, and who knew at the time of the distribution that the distribution violated Section 194(1) or Section 195(3)(a) of this Act, shall be liable to 14 _____________ BILL NO: 28 ND1 ----'P,L.

UJotf-11 the limited partnership for the amount of the distribution.
A limited partner who receives a distribution in violation of Section 194(1) or Section 195(3)(a) of this Act, and who did not know at the time of the distribution that the distribution violated Section 194(1) or 195(3)(a) of this Act, shall not be liable for the amount of the distribution.

Subject to Section 194(1) or Section 195(3)( c) of this Act, this subsection shall not affect any obligation or liability of a limited partner under an agreement or other applicable law for the amount of a distribution.
(c) Unless otherwise agreed, a limited partner who receives a distribution from a limited partnership shall have no liability under this division or other applicable law for the amount of the distribution after the expiration ofthree (3) years from the date of the distribution.

(n) Section 197 is amended to read in the following manner: (1) Assignable.

A limited partner's interest is assignable.


Unless otherwise provided in a partnership agreement, a partner's interest in a limited partnership may be evidenced by a certificate of partnership interest issued by the limited partnership.

A partnership agreement may provide for the assignment of any partnership interest represented by such a certificate and make other provisions with respect to such certificates.
BILL NO: 28 NDI p.L.

U>l>tf-/7 (2) Substituted limited partner A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has assigned his interest in a partnership.

(3) Assignee.
(3) Assignee.

An assignee who does not become a substituted limited partner has no right to require any information or account of the partnership transactions or to inspect the partnership books; he is only entitled to receive the share of the profits or other compensation by way of income, or the return of his contribution, to which his assignor would otherwise be entitled.

(4) Assignee as substituted limited partner.


An assignee becomes a substituted limited partner at the time provided in and upon compliance with the partnership agreement or, if the partnership agreement does not so provide, upon the consent of all of the partners and at the time such assignee's permitted admission is reflected in the records of the limited partnership, (5) Rights of substituted limited partner.
The substituted limited partner has all the rights and powers, and is subject to all the restrictions and liabilities of his assignor except those liabilities of which he was ignorant at the time he became a limited partner and which could not be ascertained from the partnership agreement and except those liabilities provided in Section 195.

16 (6) Assignor's liability.
The substitution of the assignee as a limited partner does not release the assignor from liability to the partnership when it would otherwise attach.

BILL NO: 28 NDI p.l,.
2txJi -/1 (0) Section 198 is amended to read in the following manner: The partnership shall be dissolved upon the occurrence of any of the following: (1) upon the expiration of the term of the limited partnership as provided in the partnership agreement; (2) by the express will of all of the limited partners and general partners when no term is provided in the partnership agreement; (3) by the express will of all of the limited partners and general partners who have not assigned their interests or suffered them to be charged for their separate debts, before the expiration of any specified term in the partnership agreement; (4) upon the retirement, bankruptcy or death of the sale remaining general partner, provided, however, that if the general partner is replaced within 180 days of such dissolution as provided in the partnership agreement, the dissolution shall cease and the limited partnership's affairs shall not be wound up; (5) upon the occurrence of any other events specified in the partnership agreement; or (6) on application by or for a general partner or a limited partner the High Court 17 BILL NO: 28 NDI may decree dissolution of the limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.
(p) Section 200 subsection (2) is amended to read in the following manner: (2) Redemption.

Unless otherwise provided in the partnership agreement, the interest may be redeemed with the separate property of any general partner, but may not be redeemed with partnership property.

(q) Section 201 is amended to read in the following manner: (1) Order of payment.
In settling accounts after dissolution of the partnership the liabilities of the partnership shall be entitled to payment in the following order: (a) those to creditors, in the order of priority as provided by law, except those to limited partners on account oftheir contributions, and to general partners; (b) those to general partners and limited partners in the order of priority provided for in the partnership agreement, provided that ifthe partnership agreement does not provide for an order of priority payment shall be made in the following order of priority; (i)those to limited partners in respect to their share of the profits and other compensation by way of income on their contributions.
18 --------------------1p.

BILL NO: 28 ND1 J-, .

Abotf- 11__ (ii) those to limited partners in respect to the capital of their contributions; ( iii)those to general partners other than for capital and profits; (iv)those to general partners in respect to profits; and (v) those to general partners in respect to capital.

(2) Sharing.
(2) Sharing.

Subject to any statement in the partnership agreement, limited partners share in the partnership assets in respect to their claims for capital, and in respect to their claims for profits or for compensation by way of income on their contributions respectively, in proportion to the respective amounts of such claims.

(r) Section 202 is amended to read in the following manner: (1) Cancellation.
The certificate shall be canceled when the partnership is dissolved or all limited partners cease to be such.

(2) Amendment to the Certificate.
A certificate shall be amended when: (a) (b) (c) continued; (d) (e) there is a change in the name of the partnership; a person is admitted as a general partner; a general partner retires, dies or becomes disabled and the business is there 1::;a dmllge iri the location of thc principal place of business; there is a false or erroneous statement in the certificate; BILL NO: 28 NDI (f) the general partners desire to make a change in any other statement in the certificate.
(s) Section 203 is amended to read in the following manner: (1) Amendment to the Certificate.

The writing to the amend a certificate shall: (a) conform to the requirements of section 180 of this Act as far as necessary to set forth clearly the change in the certificate which it desires to make; and (b) be signed and sworn to by all general partners.

Any amendment substituting a general partner or adding a general partner shall be signed and sworn to also by the general partner to be substituted or added.
(2) Cancellation.

The writing to cancel a certificate shall be signed and sworn to by all general partners.

(3) When amended or canceled A certificate is amended or canceled when the provisions of subsections (1) and (2) of this section have been complied with and such document is filed in the office of the appropriate Registrar of Corporations referred to in section 4 of the Business Corporations Act.

(4) Amendment certificate.


After the certificate has been duly amended in accordance with this section, the amended certificate shall thereafter be for all purposes the certificate provided for by this division .. 20 ________________ BILL NO: 28 NDI p,~.Mbt{-f7 (5) Amendment to the partnership agreement.

An amendment to the partnership agreement of a limited partnership under this Act shall require the unanimous vote of all of the partners, unless otherwise provided in the partnership agreement.
(t) Section 206 is amended to read in the following manner: (1) Common Law.

The rule that statutes in derogation of the common law are to be strictly construed, shall have no application to this division.

It is the policy of this Act to give maximum effect to the principle of freedom of contract and to the enforceability of partnership agreements.

(2) Construction.
(2) Construction.

Insofar as it does not conflict with any other provisions of this division, or any other law of the Republic of the Marshall Islands, the non-statutory law of the State of New York and those of other states of the United States of America with substantially similar legislative provisions shall be referred to when appropriate, as precedent.

(3) Impairment of obligations.


This division shall not be so construed as to impair the obligations of any contract existing when this division takes effect, nor to affect any action or proceeding begun or right accrued before this division takes effect.

2 _________________ BILL NO: 28 ND 1 p.t.. P..IJ~t/-lj (u) Section 208 is hereby amended to read in the following manner: (1) Prior Limited Partnership.
A limited partnership heretofore formed prior to the adoption of this division shall become a limited partnership under this division by complying with the provisions of Section 180 of this Act.

(2) The provisions of this division, or its repeal shall not affect or impair any act done or right accrued, acquired or established by a limited partnership formed prior to its adoption.

Section 3.
Section 3.

Effective Date This Act shall take effect upon certification, in accordance with Article IV Section 21 of the 11 Constitution and the Rules of Procedures of the Nitijela.
CERTIFICATE I hereby Certify: (1) that the above Nitijela Bill No:28NDI was passed by the Nitijela of the Marshall Islands on the J~~day of OL-ItJbw" 2004; and (2) that I am satisfied that Nitijela Bill No:28NDI was passed in accordance with the provisions of the Constitution and the Rules of Procedures of the Nitijela.

22 BILL NO: 28 NDI P. L. J./J() Y:- 11 I hereby place my signature before the Clerk of the Nitijela this~ay fJpv'~W2004.
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