[Parental Involvement] Lexie and Fernando, Both Artists, Discussed Forming a Partnership

question 15

Multiple Choice

[Parental Involvement] Lexie and Fernando, both artists, discussed forming a partnership to paint portraits. Fernando's parents were interested in investing in the partnership, but they wanted to avoid any liability. Fernando suggested forming a limited partnership. He told Lexie and his parents that they could do it very informally, that an oral agreement was sufficient, and that the parents would be protected from liability. However, Lexie insisted that a certificate of limited partnership be filed with the secretary of state, over Fernando's objection that it was a waste of money. After a few months, Lexie and Fernando decided that they wanted to add a new partner, Melissa, to the partnership as a general partner. Melissa had some expertise in the portrait field but she had also had some scrapes with local law enforcement. Fernando's parents objected strenuously to the admission of Melissa. Lexie and Fernando took the position that the parents, as limited partners, had no say in the admission of a new partner. Fernando's father, who had an interest in painting and was concerned that the partnership was not making very much money, decided to start coming to the partnership studio to manage the business and attempt to bring it into profitability.
-Are Fernando and Lexie correct that limited partners have no say regarding the admission of new partners?

• A) No, because in order to add a new partner, all partners, including limited partners, must agree.
• B) No, because in order to add a new partner, all general partners must agree and at least one half of limited partners must agree.
• C) No, because in order to add a new partner, at least one half of general partners and one half of limited partners must agree.
• D) They are correct only if all general partners agree that limited partners cannot vote on the matter.
• E) They are correct.

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