Dissociation.

Ala. Code tit. 10A, ch. 9A, art. 6

in effect

Ala. Code § 10A-9A-6.01 Dissociation as a Limited Partner.

10A-9A-6.01. Dissociation as a Limited Partner. (a) A person does not have a right to dissociate as a limited partner before the dissolution and winding up of the limited partnership. (b) A person is dissociated from a limited partnership as a limited partner upon the occurrence of any of the following events: (1) an event stated in the partnership agreement as causing the person’s dissociation as a limited partner; (2) the person is expelled as a limited partner pursuant to the partnership agreement; (3) the person is expelled as a limited partner by the unanimous consent of the other partners if: (A) it is unlawful to carry on the limited partnership’s activities and affairs with the person as a limited partner; (B) there has been a transfer of all of the person’s transferable interest in the limited partnership, other than a transfer for security purposes; (C) the person is an organization and, within 90 days after the limited partnership notifies the person that it will be expelled as a limited partner because it has filed a statement of dissolution or the equivalent, or its right to conduct activities and affairs has been suspended by its jurisdiction of formation, the statement of dissolution or the equivalent has not been revoked or its right to conduct activities and affairs has not been reinstated; or (D) the person is an organization and, within 90 days after the limited partnership notifies the person that it will be expelled as a limited partner because the person has been dissolved and its activities and affairs are being wound up, the organization has not been reinstated or the dissolution and winding up have not been revoked or cancelled; (4) on application by the limited partnership, the person is expelled as a limited partner by judicial order because the person: (A) has engaged, or is engaging, in wrongful conduct that has adversely and materially affected, or will adversely and materially affect, the limited partnership’s activities and affairs; (B) has willfully or persistently committed, or is willfully or persistently committing, a material breach of the partnership agreement or the person’s duty or obligation under this chapter or other applicable law; or (C) has engaged, or is engaging, in conduct relating to the activities and affairs of the limited partnership that makes it not reasonably practicable to carry on the activities and affairs with the person as limited partner; (5) in the case of a person who is an individual, the person dies, there is appointed a guardian or general conservator for the person or there is a judicial determination that the person has otherwise become incapable of performing the person’s duties as a limited partner under this chapter or the partnership agreement; (6) the person becomes a debtor in bankruptcy, executes an assignment for the benefit of creditors, or seeks, consents, or acquiesces to the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property, but this subsection (6) shall not apply to a person who is the sole remaining limited partner of the limited partnership; (7) 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, the trust’s entire transferable interest in the limited partnership is distributed, but not solely by reason of the substitution of a successor trustee; (8) 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, the estate’s entire transferable interest in the limited partnership is distributed, but not solely by reason of the substitution of a successor personal representative; (9) in the case of a person that is not an individual, the legal existence of the person otherwise terminates; (10) the transfer of a limited partner’s entire remaining transferable interest to another partner; (11) the transfer of a limited partner’s entire remaining transferable interest to a transferee upon the transferee’s becoming a partner; or (12) the limited partnership’s participation in a conversion or merger under Article 10 of this chapter or Article 8 of Chapter 1 if the limited partnership: (A) is not the converted or surviving entity; or (B) is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a limited partner. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.02 Effect of Dissociation as Limited Partner.

10A-9A-6.02. Effect of Dissociation as Limited Partner. (a) Upon a person’s dissociation as a limited partner: (1) subject to Section 10A-9A-7.04, the person does not have further rights as a limited partner; (2) the person’s implied contractual covenant of good faith and fair dealing as a limited partner under Section 10A-9A-3.05(b) continues only as to matters arising and events occurring before the dissociation; and (3) subject to Section 10A-9A-7.04, and Article 10 of this chapter and Article 8 of Chapter 1, any transferable interest owned by the person in the person’s capacity as a limited partner immediately before dissociation is owned by the person immediately after dissociation as a mere transferee. (b) A person’s dissociation as a limited partner does not of itself discharge the person from any duty, debt, obligation, or liability to the limited partnership or the other partners that the person incurred while a limited partner. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.03 Dissociation as a General Partner.

10A-9A-6.03. Dissociation as a General Partner. A person is dissociated from a limited partnership as a general partner when any of the following occurs: (1) the limited partnership has notice of the person’s express will to dissociate as a general partner, except that if the person specifies a dissociation date later than the date the limited partnership had notice, then the person is dissociated as a general partner on that later date; (2) an event stated in the partnership agreement as causing the person’s dissociation as a general partner occurs; (3) the person is expelled as a general partner pursuant to the partnership agreement; (4) the person is expelled as a general partner by the unanimous consent of the other partners if: (A) it is unlawful to carry on the limited partnership’s activities and affairs with the person as a general partner; (B) there has been a transfer of all of the person’s transferable interest in the limited partnership, other than a transfer for security purposes; (C) the person is an organization and, within 90 days after the limited partnership notifies the person that it will be expelled as a general partner because it has filed a statement of dissolution or the equivalent, or its right to conduct activities and affairs has been suspended by its jurisdiction of formation, the statement of dissolution or the equivalent has not been revoked or its right to conduct activities and affairs has not been reinstated; or (D) the person is a limited liability company or partnership that has been dissolved and whose activities and affairs are being wound up; (5) on application by the limited partnership, or a partner in a direct action under Section 10A-9A-9.01, the person’s expulsion as a general partner by judicial order because the person: (A) has engaged, or is engaging, in wrongful conduct that adversely and materially affected, or will adversely and materially affect, the limited partnership’s activities and affairs; (B) has willfully or persistently committed, or is willfully or persistently committing, a material breach of the partnership agreement or the person’s duty or obligation under this chapter or other applicable law; or (C) has engaged, or is engaging, in conduct relating to the limited partnership’s activities and affairs which makes it not reasonably practicable to carry on the activities and affairs with the person as a general partner; (6) in the case of a person who is an individual, the person dies, there is appointed a guardian or general conservator for the person or there is a judicial determination that the person has otherwise become incapable of performing the person’s duties as a general partner under this chapter or the partnership agreement; (7) the person becomes a debtor in bankruptcy, executes an assignment for the benefit of creditors, or seeks, consents, or acquiesces to the appointment of a trustee, receiver, or liquidator of the person or of all or substantially all of the person’s property; (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, the trust’s entire transferable interest in the limited partnership is distributed, 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, the estate’s entire transferable interest in the limited partnership is distributed, but not merely by reason of the substitution of a successor personal representative; (10) in the case of a general partner that is not an individual, the legal existence of the person otherwise terminates; (11) the transfer of a general partner’s entire remaining transferable interest to another partner; (12) the transfer of a general partner’s entire remaining transferable interest to a transferee upon the transferee’s becoming a partner; or (13) the limited partnership’s participation in a conversion or merger under Article 10 of this chapter or Article 8 of Chapter 1, if the limited partnership: (A) is not the converted or surviving entity; or (B) is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a general partner. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.04 Person’s Power to Dissociate as General Partner; Wrongful Dissociation.

10A-9A-6.04. Person’s Power to Dissociate as General Partner; Wrongful Dissociation. (a) A person has the power to dissociate as a general partner at any time, rightfully or wrongfully, by express will pursuant to Section 10A-9A-6.03(1). (b) A person’s dissociation as a general partner is wrongful only if: (1) it is in breach of an express provision of the limited partnership; or (2) it occurs before the completion of the winding up of the limited partnership, and: (A) the person dissociates as a general partner by express will; (B) the person is expelled as a general partner by judicial order under Section 10A-9A-6.03(5); (C) the person is dissociated as a general partner by becoming a debtor in bankruptcy; or (D) 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. (c) A person that wrongfully dissociates as a general partner is liable to the limited partnership and, subject to Section 10A-9A-9.01, 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. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.05 Effect of Dissociation as General Partner.

10A-9A-6.05. Effect of Dissociation as General Partner. (a) Upon a person’s dissociation as a general partner: (1) the person’s right to participate as a general partner in the management and conduct of the partnership’s activities and affairs terminates; (2) the person’s duty to refrain from competing with the limited partnership in the conduct or winding up of the limited partnership’s activities and affairs terminates; (3) the person’s following duties continue only with regard to matters arising and events occurring before the person’s dissociation as a general partner: (A) the duty to account to the limited partnership and hold as trustee for it any property, profit, or benefit derived by the general partner in the conduct and winding up of the limited partnership’s activities and affairs or derived from a use by the general partner of limited partnership property, including the appropriation of a limited partnership opportunity; (B) the duty to refrain from dealing with the limited partnership in the conduct or winding up of the limited partnership’s activities and affairs as or on behalf of a party having an interest adverse to the limited partnership; and (C) the duty of care under Section 10A-9A-4.08; (4) the person may sign and deliver for filing in accordance with Article 4 of Chapter 1, a statement of dissociation pertaining to the person and, at the request of the limited partnership, if the limited partnership has not filed a statement of dissolution, shall sign an amendment to the certificate of formation which states that the person has dissociated; and (5) subject to Section 10A-9A-7.04, Article 10 of this chapter and Article 8 of Chapter 1, any transferable interest owned by the person immediately before dissociation in the person’s capacity as a general partner is owned immediately after dissociation by the person as a mere transferee. (b) A person’s dissociation as a general partner does not of itself discharge the person from any duty, debt, obligation, or liability to the limited partnership or the other partners which the person incurred while a general partner. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.06 Power to Bind and Liability to Limited Partnership Before Dissolution of Partnership of Person Dissociated as General Partner.

10A-9A-6.06. Power to Bind and Liability to Limited Partnership Before Dissolution of Partnership of Person Dissociated as General Partner. (a) After a person is dissociated as a general partner and before the limited partnership is dissolved, converted under Article 10 of this chapter or under Article 8 of Chapter 1, or merged out of existence under Article 10 of this chapter or Article 8 of Chapter 1, the limited partnership is bound by an act of the person only if: (1) the act would have bound the limited partnership under Section 10A-9A-4.02 before the dissociation; and (2) at the time the other party enters into the transaction the other party does not have notice of the dissociation and reasonably believes that the person is a general partner. (b) If a limited partnership is bound under subsection (a), the person dissociated as a general partner which caused the limited partnership to be bound is liable: (1) to the limited partnership for any damage caused to the limited partnership arising from the obligation incurred under subsection (a); and (2) 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. (Act 2016-379, §1.)

Ala. Code § 10A-9A-6.07 Liability to Other Persons of Person Dissociated as General Partner.

10A-9A-6.07. Liability to Other Persons of Person Dissociated as General Partner. (a) A person’s dissociation as a general partner does not of itself discharge the person’s liability as a general partner for a debt, obligation, or liability of the limited partnership incurred before dissociation. Except as otherwise provided in subsections (b) and (c), the person is not liable for a limited partnership’s debts, obligations, or liabilities incurred after dissociation. (b) A person whose dissociation as a general partner resulted in a dissolution and winding up of the limited partnership’s activities and affairs is liable to the same extent as a general partner under Section 10A-9A-4.04 on an obligation incurred by the limited partnership under Section 10A-9A-8.04. (c) 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 and affairs is liable on a transaction entered into by the limited partnership after the dissociation only if: (1) a general partner would be liable on the transaction; and (2) at the time the other party enters into the transaction the other party does not have notice of the dissociation and reasonably believes that the person is a general partner. (d) 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. (e) A person dissociated as a general partner is released from liability for a debt, obligation, or liability 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 debt, obligation, or liability. (Act 2016-379, §1.)

Source: Alabama Legislature (alison.legislature.state.al.us)URL: https://alison.legislature.state.al.us/code-of-alabamaFetched: 10/20/2026