(a)  When an interest exchange in which the acquired entity is a domestic partnership becomes effective:

(1)  The interests in the acquired partnership which are the subject of the interest exchange are converted, and the partners holding those interests are entitled only to the rights provided to them under the plan of interest exchange and to any appraisal rights they have under § 7-12.1-1106;

(2)  The acquiring entity becomes the interest holder of the interests in the acquired partnership stated in the plan of interest exchange to be acquired by the acquiring entity; and

(3)  The provisions of the partnership agreement of the acquired partnership that are to be in a record, if any, are amended to the extent provided in the plan of interest exchange.

lawyer at desk

Ask a business law question, get an answer ASAP!
Thousands of highly rated, verified business lawyers.
Click here to chat with a lawyer about your rights.

Terms Used In Rhode Island General Laws 7-12.1-1136

  • Acquired entity: means the entity, all of one or more classes or series of interests of which are acquired in an interest exchange. See Rhode Island General Laws 7-12.1-1101
  • Acquiring entity: means the entity that acquires all of one or more classes or series of interests of the acquired entity in an interest exchange. See Rhode Island General Laws 7-12.1-1101
  • Appraisal: A determination of property value.
  • Interest: means :

    (i)  A share in a business corporation;

    (ii)  A membership in a nonprofit corporation;

    (iii)  A partnership interest in a general partnership;

    (iv)  A partnership interest in a limited partnership;

    (v)  A membership interest in a limited liability company;

    (vi)  A share in a general cooperative association;

    (vii)  A member's interest in a limited cooperative association;

    (viii)  A membership in an unincorporated nonprofit association;

    (ix)  A beneficial interest in a statutory trust, business trust, or common-law business trust; or

    (x)  A governance interest or distributional interest in any other type of unincorporated entity. See Rhode Island General Laws 7-12.1-1101

  • Interest exchange: means a transaction authorized by Rhode Island General Laws 7-12.1-1101
  • Interest holder: means :

    (i)  A shareholder of a business corporation;

    (ii)  A member of a nonprofit corporation;

    (iii)  A general partner of a general partnership;

    (iv)  A general partner of a limited partnership;

    (v)  A limited partner of a limited partnership;

    (vi)  A member of a limited liability company;

    (vii)  A shareholder of a general cooperative association;

    (viii)  A member of a limited cooperative association;

    (ix)  A member of an unincorporated nonprofit association;

    (x)  A beneficiary or beneficial owner of a statutory trust, business trust, or common-law business trust; or

    (xi)  Any other direct holder of an interest. See Rhode Island General Laws 7-12.1-1101

  • Interest holder liability: means :

    (i)  Personal liability for a liability of an entity which is imposed on a person:

    (A)  Solely by reason of the status of the person as an interest holder; or

    (B)  By the organic rules of the entity which make one or more specified interest holders or categories of interest holders liable in their capacity as interest holders for all or specified liabilities of the entity; or

    (ii)  An obligation of an interest holder under the organic rules of an entity to contribute to the entity. See Rhode Island General Laws 7-12.1-1101

  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • Organic law: means the law of an entity's jurisdiction of formation governing the internal affairs of the entity. See Rhode Island General Laws 7-12.1-1101
  • Partner: means a person that:

    (i)  Has become a partner in a partnership under Rhode Island General Laws 7-12.1-102

  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Partnership agreement: means the agreement, whether or not referred to as a partnership agreement and whether oral, implied, in a record, or in any combination thereof, of all the partners of a partnership concerning the matters described in Rhode Island General Laws 7-12.1-102
  • Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Rhode Island General Laws 7-12.1-102
  • Plan: means a plan of merger, plan of interest exchange, plan of conversion, or plan of domestication. See Rhode Island General Laws 7-12.1-1101
  • Plan of interest exchange: means a plan under Rhode Island General Laws 7-12.1-1101

(b)  Except as otherwise provided in the partnership agreement of a domestic acquired partnership, the interest exchange does not give rise to any rights that a partner or third party would have upon a dissolution, liquidation, or winding up of the acquired partnership.

(c)  When an interest exchange becomes effective, a person that did not have interest holder liability with respect to a domestic acquired partnership and becomes subject to interest holder liability with respect to a domestic entity as a result of the interest exchange has interest holder liability only to the extent provided by the organic law of the entity and only for those debts, obligations, and other liabilities that are incurred after the interest exchange becomes effective.

(d)  When an interest exchange becomes effective, the interest holder liability of a person that ceases to hold an interest in a domestic acquired partnership with respect to which the person had interest holder liability is subject to the following rules:

(1)  The interest exchange does not discharge any interest holder liability under this chapter to the extent the interest holder liability was incurred before the interest exchange became effective.

(2)  The person does not have interest holder liability under this chapter for any debt, obligation, or other liability that is incurred after the interest exchange becomes effective.

(3)  This chapter continues to apply to the release, collection, or discharge of any interest holder liability preserved under subsection (d)(1) of this section as if the interest exchange had not occurred.

(4)  The person has whatever rights of contribution from any other person as are provided by this chapter, law other than this chapter, or the partnership agreement of the domestic acquired partnership with respect to any interest holder liability preserved under subsection (d)(1) of this section as if the interest exchange had not occurred.

History of Section.
P.L. 2022, ch. 123, § 2, effective January 1, 2023; P.L. 2022, ch. 124, § 2, effective January 1, 2023.