DISSOCIATION

Iowa Code tit. XII, ch. 488, art. 6

in effect

Iowa Code § 488.601 Dissociation as limited partner.

488.601. Dissociation as limited partner. 1. A person does not have a right to dissociate as a limited partner before the termination of the limited partnership. 2. A person is dissociated from a limited partnership as a limited partner upon the occurrence of any of the following events: a. The limited partnership’s having notice of the person’s express will to withdraw as a limited partner or on a later date specified by the person. b. An event agreed to in the partnership agreement as causing the person’s dissociation as a limited partner. c. The person’s expulsion as a limited partner pursuant to the partnership agreement. d. The person’s expulsion as a limited partner by the unanimous consent of the other partners if any of the following apply: (1) It is unlawful to carry on the limited partnership’s activities with the person as a limited partner. (2) There has been a transfer of all of the person’s transferable interest in the limited partnership, other than a transfer for security purposes, or a court order charging the person’s interest, which has not been foreclosed. (3) The person is a corporation and, within ninety days after the limited partnership notifies the person that it will be expelled as a limited partner because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, there is no revocation of the certificate of dissolution or no reinstatement of its charter or its right to conduct business. (4) The person is a limited liability company or partnership that has been dissolved and whose business is being wound up. e. On application by the limited partnership, the person’s expulsion as a limited partner by judicial order because of any of the following: (1) The person engaged in wrongful conduct that adversely and materially affected the limited partnership’s activities. (2) The person willfully or persistently committed a material breach of the partnership agreement or of the obligation of good faith and fair dealing under section 488.305, subsection 2. (3) The person engaged in conduct relating to the limited partnership’s activities which makes it not reasonably practicable to carry on the activities with the person as limited partner. f. In the case of a person who is an individual, the person’s death. g. In the case of a person that is a trust or is acting as a limited partner by virtue of being a trustee of a trust, distribution of the trust’s entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor trustee. h. In the case of a person that is an estate or is acting as a limited partner by virtue of being a personal representative of an estate, distribution of the estate’s entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor personal representative. i. Termination of a limited partner that is not an individual, partnership, limited liability company, corporation, trust, or estate. j. The limited partnership’s participation in a conversion or merger under article 11, if either of the following applies: (1) The limited partnership is not the converted or surviving entity. (2) The limited partnership is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a limited partner. 2004 Acts, ch 1021, §52, 118

Iowa Code § 488.602 Effect of dissociation as limited partner.

488.602. Effect of dissociation as limited partner. 1. Upon a person’s dissociation as a limited partner, all of the following apply: a. Subject to section 488.704, the person does not have further rights as a limited partner. b. The person’s obligation of good faith and fair dealing as a limited partner under section 488.305, subsection 2, continues only as to matters arising and events occurring before the dissociation. c. Subject to section 488.704 and article 11, any transferable interest owned by the person in the person’s capacity as a limited partner immediately before dissociation is owned by the person as a mere transferee. 2. A person’s dissociation as a limited partner does not of itself discharge the person from any obligation to the limited partnership or the other partners which the person incurred while a limited partner. 2004 Acts, ch 1021, §53, 118

Iowa Code § 488.603 Dissociation as general partner.

488.603. Dissociation as general partner. A person is dissociated from a limited partnership as a general partner upon the occurrence of any of the following events: 1. The limited partnership’s having notice of the person’s express will to withdraw as a general partner or on a later date specified by the person. 2. An event agreed to in the partnership agreement as causing the person’s dissociation as a general partner. 3. The person’s expulsion as a general partner pursuant to the partnership agreement. 4. The person’s expulsion as a general partner by the unanimous consent of the other partners if any of the following apply: a. It is unlawful to carry on the limited partnership’s activities with the person as a general partner. b. There has been a transfer of all or substantially all of the person’s transferable interest in the limited partnership, other than a transfer for security purposes, or a court order charging the person’s interest, which has not been foreclosed. c. The person is an entity which participates in a merger and is not the surviving entity. 5. On application by the limited partnership, the person’s expulsion as a general partner by judicial determination because of any of the following: a. The person engaged in wrongful conduct that adversely and materially affected the limited partnership activities. b. The person willfully or persistently committed a material breach of the partnership agreement or of a duty owed to the partnership or the other partners under section 488.408. c. The person engaged in conduct relating to the limited partnership’s activities which makes it not reasonably practicable to carry on the activities of the limited partnership with the person as a general partner. 6. The person does or is one of the following: a. Becomes a debtor in bankruptcy. b. Executes an assignment for the benefit of creditors. c. Seeks, consents to, or acquiesces in the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property. d. Fails, within ninety days after the appointment, to have vacated or stayed the appointment of a trustee, receiver, or liquidator of the general partner or of all or substantially all of the person’s property obtained without the person’s consent or acquiescence, or failing within ninety days after the expiration of a stay to have the appointment vacated. e. Is a corporation that has filed articles of dissolution or the equivalent, has had its charter revoked, or has had its right to conduct business suspended by the jurisdiction of its incorporation, and all of the following apply: (1) There is no revocation of the articles of dissolution or no reinstatement of its charter of its right to conduct business within ninety days after such filing, revocation, or suspension. (2) The limited partnership, or any partner, notifies the partners that such filing, revocation, or suspension has occurred, and no vote to retain the general partner occurs within ninety days of such notification. f. Is a limited liability company or partnership that has been dissolved and whose business is being wound up, and the limited partnership, or any partner, notifies the partners that such dissolution has occurred and no vote to retain the general partner occurs within ninety days of such notification. 7. In the case of a person who is an individual, any of the following: a. The person’s death. b. The appointment of a guardian or general conservator for the person. c. A judicial determination that the person has otherwise become incapable of performing the person’s duties as a general partner under the partnership agreement. 8. In the case of a person that is a trust or is acting as a general partner by virtue of being a trustee of a trust, distribution of the trust’s entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor trustee. 9. In the case of a person that is an estate or is acting as a general partner by virtue of being a personal representative of an estate, distribution of the estate’s entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor personal representative. 10. Termination of a general partner that is not an individual, partnership, limited liability company, corporation, trust, or estate. 11. The limited partnership’s participation in a conversion or merger under article 11, if either of the following applies: a. The limited partnership is not the converted or surviving entity. b. The limited partnership is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a general partner. 2004 Acts, ch 1021, §54, 118

Iowa Code § 488.604 Person’s power to dissociate as general partner — wrongful dissociation.

488.604. Person’s power to dissociate as general partner — wrongful dissociation. 1. A person has the power to dissociate as a general partner at any time, rightfully or wrongfully, by express will pursuant to section 488.603, subsection 1. 2. A person’s dissociation as a general partner is wrongful only if either of the following applies: a. The dissociation is in breach of an express provision of the partnership agreement. b. The dissociation occurs before the termination of the limited partnership, and at least one of the following also applies: (1) The person withdraws as a general partner by express will. (2) The person is expelled as a general partner by judicial determination under section 488.603, subsection 5. (3) The person is dissociated as a general partner by becoming a debtor in bankruptcy. (4) In the case of a person that is not an individual, trust other than a business trust, or estate, the person is expelled or otherwise dissociated as a general partner because it willfully dissolved or terminated. 3. A person that wrongfully dissociates as a general partner is liable to the limited partnership and, subject to section 488.1001, to the other partners for damages caused by the dissociation. The liability is in addition to any other obligation of the general partner to the limited partnership or to the other partners. 2004 Acts, ch 1021, §55, 118

Iowa Code § 488.605 Effect of dissociation as general partner.

488.605. Effect of dissociation as general partner. 1. Upon a person’s dissociation as a general partner, all of the following apply: a. The person’s right to participate as a general partner in the management and conduct of the partnership’s activities terminates. b. The person’s duty of loyalty as a general partner under section 488.408, subsection 2, paragraph “c”, terminates. c. The person’s duty of loyalty as a general partner under section 488.408, subsection 2, paragraphs “a” and “b”, and duty of care under section 488.408, subsection 3, continue only with regard to matters arising and events occurring before the person’s dissociation as a general partner. d. The person may sign and deliver to the secretary of state for filing a statement of dissociation pertaining to the person and, at the request of the limited partnership, shall sign an amendment to the certificate of limited partnership which states that the person has dissociated. e. Subject to section 488.704 and article 11, any transferable interest owned by the person immediately before dissociation in the person’s capacity as a general partner is owned by the person as a mere transferee. 2. A person’s dissociation as a general partner does not of itself discharge the person from any obligation to the limited partnership or the other partners which the person incurred while a general partner. 2004 Acts, ch 1021, §56, 118

Iowa Code § 488.606 Power to bind — liability to limited partnership before dissolution of partnership of person dissociated as general partner.

488.606. Power to bind — liability to limited partnership before dissolution of partnership of person dissociated as general partner. 1. After a person is dissociated as a general partner and before the limited partnership is dissolved, converted under article 11, or merged out of existence under article 11, the limited partnership is bound by an act of the person only if all of the following apply: a. The act would have bound the limited partnership under section 488.402 before the dissociation. b. At the time the other party enters into the transaction, all of the following apply: (1) Less than two years have passed since the dissociation. (2) The other party does not have notice of the dissociation and reasonably believes that the person is a general partner. 2. If a limited partnership is bound under subsection 1, the person dissociated as a general partner which caused the limited partnership to be bound is liable to the following: a. To the limited partnership for any damage caused to the limited partnership arising from the obligation incurred under subsection 1. b. If a general partner or another person dissociated as a general partner is liable for the obligation, to the general partner or other person for any damage caused to the general partner or other person arising from the liability. 2004 Acts, ch 1021, §57, 118

Iowa Code § 488.607 Liability to other persons of person dissociated as general partner.

488.607. Liability to other persons of person dissociated as general partner. 1. A person’s dissociation as a general partner does not of itself discharge the person’s liability as a general partner for an obligation of the limited partnership incurred before dissociation. Except as otherwise provided in subsections 2 and 3, the person is not liable for a limited partnership’s obligation incurred after dissociation. 2. A person whose dissociation as a general partner resulted in a dissolution and winding up of the limited partnership’s activities is liable to the same extent as a general partner under section 488.404 on an obligation incurred by the limited partnership under section 488.804. 3. A person that has dissociated as a general partner but whose dissociation did not result in a dissolution and winding up of the limited partnership’s activities is liable on a transaction entered into by the limited partnership after the dissociation only if all of the following apply: a. A general partner would be liable on the transaction. b. At the time the other party enters into the transaction, all of the following apply: (1) Less than two years have passed since the dissociation. (2) The other party does not have notice of the dissociation and reasonably believes that the person is a general partner. 4. By agreement with a creditor of a limited partnership and the limited partnership, a person dissociated as a general partner may be released from liability for an obligation of the limited partnership. 5. A person dissociated as a general partner is released from liability for an obligation of the limited partnership if the limited partnership’s creditor, with notice of the person’s dissociation as a general partner but without the person’s consent, agrees to a material alteration in the nature or time of payment of the obligation. 2004 Acts, ch 1021, §58, 118