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HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
________________________________________________________________
________________________________________________________________


                   A  BILL  FOR  AN  ACT

RELATING TO LIMITED LIABILITY PARTNERSHIPS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  Chapter 425, Hawaii Revised Statutes, is amended
 
 2 by designating sections 425-151 to 425-168 as a new subpart of
 
 3 part IV, entitled "Limited Liability Partnership".
 
 4                  "LIMITED LIABILITY PARTNERSHIP
 
 5      §425-151  Statement of Qualification.(a)  A partnership
 
 6 which has filed a registration statement or files a registration
 
 7 statement simultaneously with the filing of a statement of
 
 8 qualification as described below and is in good standing pursuant
 
 9 to part I of this chapter may become a limited liability
 
10 partnership pursuant to this section.
 
11      (b)  The terms and conditions on which a partnership becomes
 
12 a limited liability partnership must be approved by the vote
 
13 necessary to amend the partnership agreement except, in the case
 
14 of a partnership agreement that expressly considers obligations
 
15 to contribute to the partnership, the vote necessary to amend
 
16 those provisions.
 
17      (c)  After the approval required by subsection (b), a
 
18 partnership which has filed a registration statement or files a
 
19 registration statement simultaneously with the filing of a
 

 
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 1 statement of qualification as described below and is in good
 
 2 standing pursuant to part I of this chapter may become a limited
 
 3 liability partnership by filing a statement of qualification.
 
 4 The statement must contain:
 
 5      (1)  The name of the partnership;
 
 6      (2)  The street address of the partnership's chief executive
 
 7           office and, if different, the street address of an
 
 8           office in this State, if any;
 
 9      (3)  If the partnership does not have an office in this
 
10           State, the name and street address of the partnership's
 
11           agent for service of process; and
 
12      (4)  A statement that the partnership elects to be a limited
 
13           liability partnership.
 
14      (d)  The agent of a limited liability partnership for
 
15 service of process must be an individual who is a resident of
 
16 this State or other person qualified or registered with the
 
17 director to do business in this State.
 
18      (e)  The status of a partnership as a limited liability
 
19 partnership shall be effective on the filing of the statement.
 
20 The status remains effective, regardless of changes in the
 
21 partnership, until it is canceled pursuant to section 425-14 or
 
22 revoked pursuant to 425-154.
 

 
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 1      (f)  The status of a partnership as a limited liability
 
 2 partnership and the liability of its partners is not affected by
 
 3 errors or later changes in the information required to be
 
 4 contained in the statement of qualification under subsection (c).
 
 5      (g)  The filing of a statement of qualification establishes
 
 6 that a partnership has satisfied all conditions precedent to the
 
 7 qualification of the partnership as a limited liability
 
 8 partnership.
 
 9      (h)  An amendment or cancellation of a statement of
 
10 qualification is effective when it is filed.
 
11      §425-152  Amendment to Statement of qualification.
 
12      (a)  A statement of qualification of limited liability
 
13 partnership is amended by delivering a statement of amendment of
 
14 limited liability partnership to the office of the director for
 
15 filing.  The statement of amendment shall set forth:
 
16           (1)  The name of the limited liability partnership;
 
17           (2)  The date of filing the statement; and
 
18           (3)  The amendment to the statement.
 
19      (b)  A partner who becomes aware that any statement in a
 
20 statement of qualification of limited liability partnership was
 
21 false when made or that arrangements or other facts described
 
22 have changed, making the statement inaccurate in any respect,
 

 
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 1 shall amend the statement within thirty days after the partner
 
 2 becomes aware of the inaccuracy.
 
 3      (c)  A statement of qualification of limited liability
 
 4 partnership may be amended at any time for any other proper
 
 5 purpose that the partners determine.  No person shall have any
 
 6 liability because an amendment to a statement of qualification of
 
 7 limited liability partnership has not been filed to reflect the
 
 8 occurrence of any event as required by subsection (b).
 
 9      (d)  A restated statement of qualification of limited
 
10 liability partnership may be executed and filed in the same
 
11 manner as a statement of amendment.  The restated statement shall
 
12 set forth all of the operative provisions of the statement as
 
13 amended.
 
14      §425-153  Name.  The name of a limited liability partnership
 
15 must end with Registered Limited Liability Partnership, Limited
 
16 Liability Partnership, R.L.L.P., L.L.P., RLLP, or LLP.
 
17      §425-154  Annual Report.
 
18      (a)  A limited liability partnership, and a foreign limited
 
19 liability partnership authorized to transact business in this
 
20 State, shall file an annual report in the office of the director
 
21 which contains:
 
22           (1)  The name of the limited liability partnership, and
 

 
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 1                the State or other jurisdiction under whose laws
 
 2                the foreign limited liability partnership is
 
 3                formed;
 
 4           (2)  The street address of the partnership's chief
 
 5                executive office and, if different, the street
 
 6                address of an office of the partnership in this
 
 7                State, if any; and
 
 8           (3)  If the partnership does not have an office in this
 
 9                State, the name and street address of the
 
10                partnership's current agent for service of
 
11                process.
 
12      (b)  An annual report as of the preceding December 31 must
 
13 be filed on or before March 31 of each year following the
 
14 calendar year in which a limited liability partnership files a
 
15 statement of qualification or a foreign limited liability
 
16 partnership becomes authorized to transact business in this
 
17 State.
 
18      (c)  The director may revoke the statement of qualification
 
19 of a partnership that fails to file an annual report for a period
 
20 of two years or pay the required filing fee.  To do so, the
 
21 director shall provide the partnership at least 60 days written
 
22 notice of intent to revoke the statement.  The notice must be
 

 
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 1 mailed to the partnership at its last known address appearing on
 
 2 the records of the director.  The notice must specify the annual
 
 3 report that has not been filed, the fee that has not been paid,
 
 4 and the effective date of the revocation.  The revocation is not
 
 5 effective if the annual report is filed and the fee is paid
 
 6 before the effective date of the revocation.
 
 7      (d)  A revocation under subsection (c) only affects a
 
 8 partnership's status as a limited liability partnership and is
 
 9 not an event of dissolution of the partnership.
 
10      (e)  A partnership whose statement of qualification has been
 
11 revoked may apply to the director for reinstatement within two
 
12 years after the effective date of the revocation.  The
 
13 application must state:
 
14           (1)  The name of the partnership and the effective date
 
15                of the revocation; and
 
16           (2)  That the ground for revocation either did not
 
17                exist or has been corrected.
 
18      (f)  A reinstatement under subsection (e) relates back to
 
19 and takes affect as of the effective date of the revocation, and
 
20 the partnership's status as a limited liability partnership
 
21 continues as if the revocation had never occurred.
 
22      §425-155  Law governing foreign limited liability
 

 
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 1 partnership.(a)  The law under which a foreign limited
 
 2 liability partnership is formed governs relations among the
 
 3 partners and between the partners and the partnership and the
 
 4 liability of partners for obligations of the partnership.
 
 5      (b)  A foreign limited liability partnership may not be
 
 6 denied a statement of foreign qualification by reason of any
 
 7 difference between the law under which the partnership was formed
 
 8 and the law of this State.
 
 9      (c)  A statement of foreign qualification does not authorize
 
10 a foreign limited liability partnership to engage in any business
 
11 or exercise any power that a partnership may not engage in or
 
12 exercise in this State as a limited liability partnership.
 
13      §425-156  Statement of foreign qualification.
 
14      (a)  Before transacting business in this State, a foreign
 
15 limited liability partnership must register pursuant to part I of
 
16 this chapter and file a statement of foreign qualification.  The
 
17 statement must contain:
 
18           (1)  The name of the foreign limited liability
 
19                partnership which satisfies the requirements of
 
20                the State or other jurisdiction under whose law it
 
21                is formed and ends with Registered Limited
 
22                Liability Partnership, Limited Liability
 

 
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 1                Partnership, R.L.L.P., L.L.P.,
 
 2                RLLP, or LLP.
 
 3           (2)  The street address of the partnership's chief
 
 4                executive office and, if different, the street
 
 5                address of an office of the partnership in this
 
 6                State, if any;
 
 7           (3)  The name and street address of the partnership's
 
 8                agent for service of process; and
 
 9           (4)  The total number of partners on the effective
 
10                date.
 
11      (b)  The agent of a foreign limited liability partnership
 
12 for service of process must be an individual who is a resident of
 
13 this State or other person qualified or registered with the
 
14 director to do business in the State.
 
15      (c)  The status of a partnership as a foreign limited
 
16 liability partnership is effective on the filing of the statement
 
17 of foreign qualification.  The status remains effective,
 
18 regardless of changes in the partnership, until it is canceled
 
19 pursuant to section 425-14 or revoked pursuant to section
 
20 425-154.
 
21      (d)  An amendment or cancellation of a statement of foreign
 
22 qualification is effective when it is filed.
 
23      §425-157  Changes and amendments.  If any statement in the
 

 
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 1 statement of foreign qualification was false when made or any
 
 2 arrangement of other facts described have changed making the
 
 3 statement inaccurate in any material respect, the foreign limited
 
 4 liability partnership shall file, within thirty days after it
 
 5 becomes aware of the inaccuracy, in the office of the director a
 
 6 statement, certified and signed by a partner, correcting the
 
 7 statement.
 
 8      §425-158  Effect of failure to qualify.(a)  A foreign
 
 9 limited liability partnership transacting business in this State
 
10 may not maintain an action or proceeding in this State unless it
 
11 has in effect a statement of foreign qualification.
 
12      (b)  The failure of a foreign limited liability partnership
 
13 to have in effect a statement of foreign qualification does not
 
14 impair the validity of a contract or act of the foreign limited
 
15 liability partnership or preclude it from defending an action or
 
16 proceeding in this State.
 
17      (c)  A limitation on personal liability of a partner is not
 
18 waived solely by transacting business in this State without a
 
19 statement of foreign qualification.
 
20      (d)  If a foreign limited liability partnership transacts
 
21 business in this State without a statement of foreign
 
22 qualification, the director is its agent for service of process
 

 
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 1 with respect to a right of action arising out of the transaction
 
 2 of business in this State.
 
 3      §425-159  Activities not constituting transacting business.
 
 4 (a)  Activities of a foreign limited liability partnership which
 
 5 do not constitute transacting business for the purpose of this
 
 6 chapter include:
 
 7           (1)  Maintaining, defending, or settling an action or
 
 8                proceeding;
 
 9           (2)  Holding meetings of its partners or carrying on
 
10                any other activity concerning its affairs;
 
11           (3)  Maintaining bank accounts;
 
12           (4)  Maintaining offices or agencies for the transfer,
 
13                exchange, and registration of the partnership's
 
14                own securities or maintaining trustees or
 
15                depositories with respect to those securities;
 
16           (5)  Selling through independent contractors;
 
17           (6)  Soliciting or obtaining orders, whether by mail or
 
18                through employees or agents or otherwise, if the
 
19                orders require acceptance outside this State
 
20                before they become contracts;
 
21           (7)  Creating or acquiring indebtedness, with or
 
22                without a mortgage, or other security interest in
 

 
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 1                property;
 
 2           (8)  Collecting debts or foreclosing mortgages or other
 
 3                security interests in property securing the debts,
 
 4                and holding, protecting, and maintaining property
 
 5                so acquired;
 
 6           (9)  Conducting an isolated transaction that is
 
 7                completed within 30 days and is not one in the
 
 8                course of similar transactions; and
 
 9          (10)  Transacting business in interstate commerce.
 
10      (b)  For purposes of this chapter, the ownership in this
 
11 State of income-producing real property or tangible personal,
 
12 other than property excluded under subsection (a) constitutes
 
13 transacting business in this State.
 
14      (c)  This section does not apply in determining the
 
15 contracts or activities that may subject a foreign limited
 
16 liability partnership to service of process, taxation, or
 
17 regulation under any other law of this State.
 
18      §425-160  Action by director.  The director may maintain an
 
19 action to restrain a foreign limited liability partnership from
 
20 transacting business in this State in violation of this chapter.
 
21      §425-161  Execution of statements.
 
22      Each statement or document required by this part to be filed
 

 
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 1 in the office of the director shall be signed and certified by at
 
 2 least one partner.
 
 3      §425-162  Filing requirements; filing duty of the director.
 
 4 (a)  A document must satisfy the requirements of this part to be
 
 5 entitled to filing by the director.
 
 6      (b)  The document shall contain the information required by
 
 7 this part.  It may contain other information as well.
 
 8      (c)  If the director has prescribed a mandatory form for the
 
 9 document, the document must be in or on the prescribed form.
 
10      (d)  The director's duty to file documents under this
 
11 chapter is ministerial.  The filing or refusal to file a document
 
12 does not:
 
13           (1)  Affect the validity or invalidity of the document
 
14                in whole or part;
 
15           (2)  Relate to the correctness or incorrectness of
 
16                information contained in the document; or
 
17           (3)  Create a presumption that the documentation is
 
18                valid or invalid, or the information contained in
 
19                the document is correct or incorrect.
 
20      §425-163  Record of statements.  The director shall cause
 
21 books or files to be kept in the director's office, in which
 
22 shall be recorded the information required by this part to be
 

 
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 1 filed in the director's office; and these books or files shall be
 
 2 open to public inspection.
 
 3      §425-164  Fee for recording.(a)  The director shall
 
 4 collect the following fees for documents filed under this part:
 
 5           (1)  For each annual report filed, a fee of $50;
 
 6           (2)  For each statement of qualification of limited
 
 7                liability partnership, a fee of $100 for each
 
 8                partner, subject to a maximum fee of $10,000;
 
 9           (3)  For each statement of foreign qualification of
 
10                limited liability partnership, a fee of $1,000 if
 
11                the partnership has fewer than ten partners;
 
12                $5,000 if the partnership has ten or more but
 
13                fewer than fifty partners; and $10,000 if the
 
14                partnership has fifty or more partners;
 
15           (4)  For each statement of correction or statement of
 
16                amendment, a fee of $100;
 
17           (5)  For each certificate of good standing, a fee of
 
18                $100;
 
19           (6)  For review of articles of conversion, a fee of
 
20                $200;
 
21           (7)  For any other certificate, statement, or document,
 
22                a fee of $100; and
 

 
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 1           (8)  For each certification of domestic or foreign
 
 2                partnership, a fee of $100.
 
 3      (b)  The following special handling fees shall be assessed
 
 4 by the director for expeditious review of the following
 
 5 documents:
 
 6           (1)  For limited liability partnerships:
 
 7                (A)  Statement of qualification of limited
 
 8                     liability partnership, $100;
 
 9                (B)  Statement of correction, $100;
 
10                (C)  Certificate of amendment, $100;
 
11                (D)  Annual report, $100;
 
12                (E)  Certification of limited liability
 
13                     partnership, $1 a page;
 
14                (F)  Certificate of good standing, $100; and
 
15                (G)  Articles of conversion, $150;
 
16           (2)  For foreign limited liability partnerships:
 
17                (A)  Statement of foreign qualification, $100;
 
18                (B)  Certificate of correction, $100;
 
19                (C)  Annual report, $100;
 
20                (D)  Certification of foreign partnership, $1 a
 
21                     page;
 
22                (E)  Certificate of good standing, $100;
 
23                (F)  Filing articles of conversion, $150; and
 

 
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 1           (3)  For any other certificate or document authorized
 
 2                by this part, $100.
 
 3      (c)  All fees collected under this section shall be managed
 
 4 in accordance with section 26-9(l).
 
 5      §425-165  Personal liability and penalty.(a)  If a
 
 6 partnership neglects or fails to substantially comply with any
 
 7 provision of this part, each partner shall severally forfeit to
 
 8 the State $25 for each and every month while the default shall
 
 9 continue, to be recovered by action brought in the name of the
 
10 State by the director; provided that the director, for good cause
 
11 shown, may reduce or waive the same.
 
12      (b)  Any person who signs or certifies as correct any
 
13 statement or certificate filed pursuant to this part, or who
 
14 presents any statement or certificate for filing, knowing that
 
15 the statement or certificate is false in any material respect and
 
16 with the intent to deceive or defraud, shall be guilty of a class
 
17 C felony.
 
18      (c)  Any person who negligently, but without intent to
 
19 deceive or defraud, signs or certifies as correct any statement
 
20 or certificate filed pursuant to this part, which is in fact
 
21 false, may be punished by a civil fine not to exceed $500.
 
22      §425-166  Correction to filed documents.(a)  A limited
 

 
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 1 liability partnership or foreign limited liability partnership
 
 2 may correct a document filed by the director if the document:
 
 3           (1)  Contains an incorrect statement; or
 
 4           (2)  Was defectively executed, attested, sealed,
 
 5                verified, or acknowledged.
 
 6      (b)  A document is corrected:
 
 7           (1)  By preparing a certificate of correction that:
 
 8                (A)  Describes the document including its file
 
 9                     date or attaches a copy of it to the
 
10                     certificate;
 
11                (B)  Specifies the incorrect statement and the
 
12                     reason it is incorrect or the manner in which
 
13                     the execution was defective; and
 
14                (C)  Corrects the incorrect statement or defective
 
15                     execution; and
 
16           (2)  By delivering the certificate to the director for
 
17                filing.
 
18      (c)  A certificate of correction is effective on the
 
19 effective date of the document it corrects except as to persons
 
20 relying on the uncorrected document and adversely affected by the
 
21 correction.  As to those persons, a certificate of correction is
 
22 effective when filed.
 

 
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 1      §425-167  Revocation if instrument dishonored.  The director
 
 2 may revoke the filing of a document filed under this part if the
 
 3 director determines that the filing fee for the document was paid
 
 4 by an instrument that was dishonored when presented by the State
 
 5 for payment.  The director shall return the document and give
 
 6 notice of revocation to the filing party by regular mail.
 
 7 Failure to give or receive notice does not invalidate the
 
 8 revocation.  A revocation of a filing does not affect an earlier
 
 9 filing.
 
10      §425-168  Transition rules for limited liability
 
11 partnerships and foreign limited liability partnerships under
 
12 prior law.(a)  Upon the effective date of section 425-151, all
 
13 entities which were limited liability partnerships on the
 
14 preceding date under the law in effect on such preceding date
 
15 shall be converted into and be deemed to be partnerships which
 
16 have registered under Part I of this chapter and filed a
 
17 statement of qualification of limited liability partnership under
 
18 section 425-151.
 
19      (b)  Upon the effective date of section 425-156, all
 
20 entities which were foreign limited liability partnerships
 
21 registered as such with the director on the preceding date under
 
22 the law in effect on such preceding date shall be converted into
 

 
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 1 and be deemed to be foreign limited liability partnerships which
 
 2 have registered under part I of this chapter and filed a
 
 3 statement of foreign qualification under section 425-156."
 
 4      SECTION 2.  Section 425, Hawaii Revised Statutes is amended
 
 5 by adding a new part V, to be appropriately designated and to
 
 6 read as follows:
 
 7                    "MISCELLLANEOUS PROVISIONS
 
 8      §425-201  Uniformity of application and construction.  This
 
 9 chapter shall be applied and construed to effectuate its general
 
10 purpose to make uniform the law with respect to the subject of
 
11 this chapter among States enacting it.
 
12      §425-202  Short title.  This chapter may be cited as the
 
13 Uniform Partnership Act (1977).
 
14      §425-203  Severability Clause.  If any provision of this
 
15 chapter or its application to any person or circumstance is held
 
16 invalid, the invalidity does not affect other provisions or
 
17 applications of this chapter which can be given effect without
 
18 the invalid provision or application, and to this end the
 
19 provisions of this chapter are severable.
 
20      §425-204  Effective date.  This chapter takes effect on
 
21 July 1, 2000.
 
22      §425-205  Repeals.  Effective July 1,2000, the following
 

 
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 1 acts and parts of acts are repealed:  Part V of the Hawaii
 
 2 Limited Liability Partnership Act as amended and in effect
 
 3 immediately before the effective date of this bill.
 
 4      §425-206  Savings clause.  This chapter does not affect an
 
 5 action or proceeding commenced or right accrued before this
 
 6 chapter takes effect."
 
 7      SECTION 3.  Act 284, Session Laws of Hawaii 1999, section 1,
 
 8 is amended by amending the words "Limited liability partnership"
 
 9 and "Statement" in Section 425-101, Hawaii Revised Statutes, to
 
10 read as follows:
 
11      ""Limited liability partnership" means a partnership that
 
12 has filed a [certificate of limited liability partnership under
 
13 section 425-153]  statement of qualification under section 425-
 
14 151 and does not have a similar statement in effect in any other
 
15 jurisdiction"
 
16      "Statement" means a registration or annual statement filed
 
17 under section 425-1, a statement of correction filed under
 
18 section 425-1.7, a statement of change filed under section 425-7,
 
19 a statement of dissolution filed under section 425-9, a statement
 
20 of denial filed under section 425-115, a statement of
 
21 dissociation filed under section 425-136 a statement of
 
22 qualification under section 425-151, a statement of foreign
 

 
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 1 qualification under section 425-156, an amendment, or any other
 
 2 document filed under this chapter."
 
 3      SECTION 4. Act 284, Session Laws of Hawaii 1999, section 1,
 
 4 is amended by repealing Section 425-145, Hawaii Revised Statutes.
 
 5                    "[MISCELLANEOUS PROVISIONS
 
 6      "§425-145  Short title.  This part may be cited as the
 
 7 Uniform Partnership Act.]"
 
 8      SECTION 5.  Chapter 425, part V, Hawaii Revised Statutes, is
 
 9 repealed.
 
10      SECTION 6.  Statutory material to be repealed is bracketed.
 
11 New statutory material is underscored.
 
12      SECTION 7.  This Act shall take effect on July 1, 2000.
 
13 
 
14                           INTRODUCED BY:  _______________________
 

 
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