(a)  A transfer, in whole or in part, of a transferable interest:

(1)  Is permissible;

(2)  Does not by itself cause a person‘s dissociation as a partner or a dissolution and winding up of the partnership business; and

(3)  Subject to § 7-12.1-505, does not entitle the transferee to:

(i)  Participate in the management or conduct of the partnership’s business; or

(ii)  Except as otherwise provided in subsection (c) of this section, have access to records or other information concerning the partnership’s business.

Terms Used In Rhode Island General Laws 7-12.1-503

  • Business: includes every trade, occupation, and profession. See Rhode Island General Laws 7-12.1-102
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • Interest: means :

    (i)  A share in a business corporation;

    (ii)  A membership in a nonprofit corporation;

    (iii)  A partnership interest in a general partnership;

    (iv)  A partnership interest in a limited partnership;

    (v)  A membership interest in a limited liability company;

    (vi)  A share in a general cooperative association;

    (vii)  A member's interest in a limited cooperative association;

    (viii)  A membership in an unincorporated nonprofit association;

    (ix)  A beneficial interest in a statutory trust, business trust, or common-law business trust; or

    (x)  A governance interest or distributional interest in any other type of unincorporated entity. See Rhode Island General Laws 7-12.1-1101

  • Partner: means a person that:

    (i)  Has become a partner in a partnership under § 7-12. See Rhode Island General Laws 7-12.1-102

  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Partnership agreement: means the agreement, whether or not referred to as a partnership agreement and whether oral, implied, in a record, or in any combination thereof, of all the partners of a partnership concerning the matters described in § 7-12. See Rhode Island General Laws 7-12.1-102
  • Person: means an individual, business corporation, nonprofit corporation, partnership, limited partnership, limited liability company, general cooperative association, limited cooperative association, unincorporated nonprofit association, statutory trust, business trust, common-law business trust, estate, trust, association, joint venture, public corporation, government or governmental subdivision, agency, or instrumentality, or any other legal or commercial entity. See Rhode Island General Laws 7-12.1-102
  • Transfer: includes :

    (i)  An assignment;

    (ii)  A conveyance;

    (iii)  A sale;

    (iv)  A lease;

    (v)  An encumbrance, including a mortgage or security interest;

    (vi)  A gift; and

    (vii)  A transfer by operation of law. See Rhode Island General Laws 7-12.1-102

  • Transferable interest: means the right, as initially owned by a person in the person's capacity as a partner, to receive distributions from a partnership, whether or not the person remains a partner or continues to own any part of the right. See Rhode Island General Laws 7-12.1-102
  • Transferee: means a person to which all or part of a transferable interest has been transferred, whether or not the transferor is a partner. See Rhode Island General Laws 7-12.1-102

(b)  A transferee has the right to:

(1)  Receive, in accordance with the transfer, distributions to which the transferor would otherwise be entitled; and

(2)  Seek under § 7-12.1-801(5) a judicial determination that it is equitable to wind up the partnership business.

(c)  In a dissolution and winding up of a partnership, a transferee is entitled to an account of the partnership’s transactions only from the date of dissolution.

(d)  A partnership need not give effect to a transferee’s rights under this section until the partnership knows or has notice of the transfer.

(e)  A transfer of a transferable interest in violation of a restriction on transfer contained in the partnership agreement is ineffective if the intended transferee has knowledge or notice of the restriction at the time of transfer.

(f)  Except as otherwise provided in § 7-12.1-601(4)(ii), if a partner transfers a transferable interest, the transferor retains the rights of a partner other than the transferable interest transferred and retains all the duties and obligations of a partner.

(g)  If a partner transfers a transferable interest to a person that becomes a partner with respect to the transferred interest, the transferee is liable for the partner’s obligations under § 7-12.1-404 and § 7-12.1-407 known to the transferee when the transferee becomes a partner.

History of Section.
P.L. 2022, ch. 123, § 2, effective January 1, 2023; P.L. 2022, ch. 124, § 2, effective January 1, 2023.