Dissenting Limited Partners’ Rights

Title 2, Chapter 4.5, Article 11.5 deals with dissenting limited partners’ rights under the California Uniform Limited Partnership Act of 2008.

Section 15911.20 defines the term “reorganization” to refer to any of four actions. The term “control” is defined.

Section 15911.21 provides that, if the approval of outstanding limited partnership interests is required for a limited partnership to participate in a reorganization, pursuant to the limited partnership agreement of the partnership, then each limited partner of the limited partnership holding those interests may, by complying with this article, require the limited partnership to purchase for cash, at its fair market value, the interest owned by the limited partner in the limited partnership, if the interest is a dissenting interest. The terms “dissenting interest” and “dissenting limited partner” are defined.

Section 15911.22 states that, if limited partners have a right to require the limited partnership to purchase their limited partnership interests for cash, the limited partnership mails to each limited partner a notice of the approval of the reorganization by the requisite vote or consent of the limited partners, within 10 days after the date of the approval, along with specified documents.

Section 15911.23 says that, within 30 days after the date on which notice of the approval of the outstanding interests of the limited partnership is mailed to the limited partner, the limited partner submits to the limited partnership at its principal office the limited partner’s certificate representing the interest which the limited partner demands that the limited partnership purchase.

Section 15911.24 specifies that, if the limited partnership and the dissenting limited partner agree that the limited partner’s interest is a dissenting interest and agree upon the price to be paid for the dissenting interest, the dissenting limited partner is entitled to the agreed price with interest at the legal rate on judgments from the date of consummation of the reorganization.

Section 15911.25 states that, if the limited partnership denies that a limited partnership interest is a dissenting interest, or the limited partnership and a dissenting limited partner fail to agree upon the fair market value of a dissenting interest, then the limited partner or any interested limited partnership, within six months, may file a complaint in the superior court to determine whether the interest is a dissenting interest, or the fair market value of the dissenting interest, or both, or may intervene in any action pending on such a complaint.

Section 15911.26 states that, if the court appoints an appraiser or appraisers, they proceed forthwith to determine the fair market value per interest of the outstanding limited partnership interests of the limited partnership, by class if necessary. Within the time fixed by the court, the appraisers, or a majority of them, makes and files a report in the office of the clerk of the court.

Section 15911.27 provides that, to the extent that the payment to dissenting limited partners of the fair market value of their dissenting interests would require the dissenting limited partners to return the payment or a portion thereof, then that payment or portion thereof is not to be made and the dissenting limited partners become creditors of the limited partnership for the amount not paid.

Section 16911.28 provides that any cash distributions made by a limited partnership to a dissenting limited partner after the date of consummation of the reorganization, but prior to any payment by the limited partnership for the dissenting limited partner’s interest, must be credited against the total amount to be paid by the limited partnership for the dissenting interest.

Section 15911.29 requires dissenting limited partners to continue to have all the rights and privileges incident to their interests immediately prior to the reorganization, including limited liability, until payment by the limited partnership for their dissenting interests. A dissenting limited partner may not withdraw a demand for payment unless the limited partnership consents thereto.

Section 15911.30 states that a dissenting interest loses its status as a dissenting interest and the holder thereof ceases to be a dissenting limited partner and ceases to be entitled to require the limited partnership to purchase the interest upon the happening of any of the four specified actions.

Section 15911.31 provides that, if litigation is instituted to test the sufficient or regularity of the vote or consent of the limited partners in authorizing a reorganization, any proceedings are to be suspended until final determination of that litigation.

Section 15911.33 specifies that no limited partner of a limited partnership who has a right under this article to demand payment of cash for the interest owned by such limited partner in a limited partnership has any right at law or in equity to attack the validity of the reorganization, or to have the reorganization set aside or rescinded, except in an action to test whether the vote or consent of limited partners required to authorize or approve the reorganization has been obtained in accordance with the procedures established.