Wisconsin’s New Partnership Law: General Provisions
Peter Tirella | 08.24.22
This second article in Boardman Clark’s Wisconsin Uniform Limited Partnership Law Series highlights certain changes to Subchapter I of Chapter 179 (the Wisconsin Uniform Limited Partnership Law, which in this article will be referred to as the “New Partnership Law”) that will be of interest to those doing business in Wisconsin. This article is an overview of the changes to this subsection and does not substitute reading the New Partnership Law in its entirety.
On April 15, 2022, Governor Tony Evers signed Senate Bill 566/Act 258 into law (the “Act”), repealing and recreating Chapter 179, the Wisconsin Uniform Limited Partnership Law, which governs limited partnerships (“Partnerships”). Among the Act’s provisions, it generally adopts the Uniform Partnership Act, subject to certain intentional differences. All statutory references are to the new Wisconsin Chapter 179, unless otherwise noted.
In addition to amending Chapter 179, the Act also revised Wisconsin’s limited liability company laws. See an explanation of these revisions as part of Boardman Clark’s Wisconsin Uniform Limited Liability Company Law Series, accessible here and here.
The New Partnership Law’s provisions will apply to Partnerships on or after January 1, 2023 (the “effective date”). However, an existing Partnership may opt in to the New Partnership Law prior to the effective date by filing a statement of applicability with the Wisconsin Department of Financial Institutions (the “Department”). Any Partnership opting in to the New Partnership Law prior to the effective date should do so only after fully understanding the New Partnership Law, because the election is irrevocable upon filing. Alternatively, an existing Partnership may elect to not be bound by the New Partnership Law and to generally continue under prior law, Ch. 179, 2019 stats., in many material respects (the “opt-out”) by filing a statement of non-applicability with the Department prior to the effective date. Any existing Wisconsin Partnership should review the New Partnership Law in its entirety to determine whether to make an opt-out election.
Under the prior law, a Partnership name could not include the name of a limited partner. The New Partnership Law removes this prohibition, allowing the use of any limited or general partner’s name. Further, the New Partnership Law provides more freedom in choosing Partnership names that are similar to those of existing Partnerships, requiring only that the Partnership’s name be “distinguishable on the record” from other registered businesses.
In addition to providing greater naming freedom, the New Partnership Law provides a concrete definition as to what constitutes “knowledge.” For example, a person is deemed to “know” a fact if:
- They have actual knowledge
- They “know” a fact under other law
- In the case of limited authority to transfer real estate, a limitation on authority is filed with the Department
Importantly, for Partnerships formed after the effective date, the Partnership must maintain a wide range of information, including:
- Identifying information about all partners
- The initial partnership certificate and all amendments thereto
- Any articles of merger, interest exchange, conversion, or domestication
- All tax information for the past three years
- Any partnership agreement, including all amendments
- All financial statements for the past three years
- The three most recent annual reports given to the Department
- Any record from the past three years evidencing any consents or votes taken by a partner
- Unless otherwise contained in a partnership agreement, all partners’ original and additional contributions, in the case of a person who is both a general and limited partner, their contributions in each capacity, and the events which will cause Partnership dissolution.
Finally, the New Partnership Law provides that a Partnership will only be a limited Partnership if it delivers a certificate of limited partnership to the Department (to be discussed in a future article).
If you have any questions on the Act or the items discussed in this article, please contact your usual Boardman Clark attorney or any member of our business practice group.
DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.