Michigan Business Partnership Laws

by Heather Frances Google
A business partnership may need more than a handshake to operate legally.

A business partnership may need more than a handshake to operate legally.

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Michigan has adopted the Uniform Partnership Act and Revised Uniform Limited Partnership Act, located in Chapter 449 of Michigan Codified Law along with several other partnership act provisions. This Act addresses a wide range of partnership issues, such as the types of partnerships available in Michigan, establishment of a partnership, winding up a partnership, and the rights of partners. Attorneys, online document preparation websites, and Michigan’s Bureau of Commercial Services offer assistance for persons wanting to establish partnerships under Michigan law.

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Copartnerships

Michigan law, section 449.101, defines a general, or copartnership, as a business conducted by two or more persons. Unlike a limited partnership, a copartnership does not provide protection for any partners against debts of the business. To establish a copartnership, a written agreement is not required, but Michigan law does require the partners to file a certificate, which contains basic information about the partnership, with the county clerk where the business is located.

Limited Partnerships

The principal distinction between a limited partnership and a general, or copartnership, is that a limited partnership may have "limited" partners who are not personally liable for the obligations of the partnership; limited partners cannot control or participate in management of the partnership's affairs. To form a limited partnership, The Certificate of Limited Partnership must be filed with the Michigan Department of Labor and Regulatory Affairs, Bureau of Commercial Services, Corporation Division. It must contain specific information concerning the partnership including the name and address for each partner, specifying the general partners and the limited partners, the capital contribution made by each limited partner or the contribution each limited partner has agreed to make in the future. It should also include the events, which will trigger dissolution of the limited partnership and the winding up of its affairs.

Foreign Limited Partnerships

Foreign limited partnerships are partnerships formed under another state’s laws. For most purposes, the laws of the state in which the foreign limited partnership was established will govern its operations. However, these partnerships are required to register with Michigan’s Bureau of Commercial Services to legally transact business in Michigan. Whether a foreign partnership is “transacting business” in Michigan is largely determined by application of Michigan case law.

Considerations

A partnership may find its operations impacted by other Michigan laws in addition to the Uniform Partnership Act. For example, the Michigan Uniform Securities Act governs the sale of limited partnership interests. An existing partnership may register as a limited liability partnership by filing an application with the Bureau of Commercial Services, Corporations Division.