LIMITED PARTNERSHIPS
Under §17-305 of the Delaware Revised Uniform Limited Partnership Act, 6 Del. C.§17-101, et seq. (the "Act"), a limited partner of a Delaware limited partnership has a statutory right to obtain information concerning the limited partnership. Section 17-305 of the Act provides that:
(a) Each limited partner has the right, subject to such reasonable standards (including standards governing what information and documents are to be furnished, at what time and location and at whose expense) as may be set forth in the partnership agreement or otherwise established by the general partners, to obtain from the general partners from time to time upon reasonable demand for any purpose reasonably related to the limited partner's interest as a limited partner:
(1) True and full information regarding the status of the business and financial condition of the limited partnership;
(2) Promptly after becoming available, a copy of the limited partnership's federal, state and local income tax returns for each year;
(3) A current list of the name and last known business, residence or mailing address of each partner;
(4) A copy of any written partnership agreement and certificate of limited partnership and all amendments thereto, together with executed copies of any written powers of attorney, pursuant to which the partnership agreement and any certificate and all amendments thereto have been executed;
(5) True and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each partner and which each partner has agreed to contribute in the future, and the date on which each became a partner; and
(6) Other information regarding the affairs of the limited partnership as is just and reasonable.
(b) A general partner shall have the right to keep confidential from limited partners, for such period of time as the general partner deems reasonable, any information which the general partner reasonably believes to be in the nature of trade secrets or other information, the disclosure of which the general partner in good faith believes is not in the best interest of the limited partnership or could damage the limited partnership or its business or which the limited partnership is required by law or by agreement with a third party to keep confidential.
(c) A limited partnership may maintain its records in other than a written form if such form is capable of conversion into written form within a reasonable time.
(d) Any demand under this section shall be in writing and shall state the purpose of such demand.
(e) Any action to enforce any right arising under this section shall be brought before the Court of Chancery. If a general partner refuses to permit a limited partner to obtain from the general partner the information described in subsection (a)(3) of this section or does not reply to the demand that has been made within 5 business days after the demand has been made, the limited partner may apply to the Court of Chancery for an order to compel such disclosure. The Court of Chancery is hereby vested with exclusive jurisdiction to determine whether or not the person seeking such information is entitled to the information sought. The Court of Chancery may summarily order the general partner to permit the limited partner to obtain the information described in subsection (a)(3) of this section and to make copies or abstracts therefrom; or the Court of Chancery may summarily order the general partner to furnish to the limited partner the information described in subsection (a)(3) of this section on the condition that the limited partner first pay to the limited partnership the reasonable cost of obtaining and furnishing such information and on such other conditions as the Court of Chancery deems appropriate. When a limited partner seeks to obtain the information described in subsection (a)(3) of this section, the limited partner shall first establish (1) that the limited partner has complied with the provisions of this section respecting the form and manner of making demand for obtaining such information, and (2) that the information the limited partner seeks is reasonably related to the limited partner's interest as a limited partner. The Court of Chancery may, in its discretion, prescribe any limitations or conditions with reference to the obtaining of information or award such other or further relief as the Court of Chancery may deem just and proper. The Court of Chancery may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within the State of Delaware and kept in the State of Delaware upon such terms and conditions as the order may prescribe.
Section 17-305 of the Act thus expressly provides for the provision of the names and addresses of the partners, the partnership's tax returns, and information regarding the financial condition of the partnership. More information may be able to be gleaned from a copy of the partnership agreement available under §17-305(a)(4) of the Act or from the contribution information available under §17-305(a)(5) of the Act. In addition, a limited partner may be able to obtain information under §17-305(a)(6) of the Act if the provision of such information is "just and reasonable." Note also that the name and address of each general partner is publicly available through the certificate of limited partnership filed with the office of the Secretary of State of the State of Delaware. § 17-201(a)(3) of the Act.
I. Persons Who May Make A Demand Upon A General Partner Of A Delaware Limited Partnership For Information Concerning The Partnership.
The Act expressly provides that "[e]ach limited partner" has the right to obtain certain information from the general partners. See § 17-305(a) of the Act (emphasis added); see also Loew's Theatres, Inc. v. Commercial Credit Co., 243 A.2d 78, 81 (Del. Ch. 1968) (charter provision providing that stockholder must own minimum 25% of stock in corporation to request stocklist is void). Establishing oneself as a limited partner of record is probably a mandatory condition precedent to the right to make a demand for information under §17-305 of the Act. See Bortnick v. Equitable Capital Partners (Retirement Fund) L.P., C.A. No. 13305, Jacobs, V.C. (Del. Ch. Dec. 18, 1996), Record at 87 (beneficial owner of limited partner interest held by broker as custodian for beneficial owner's IRA lacked standing to bring books and records action); compare Monterey Investments, Inc. v. Healthcare Props., L.P., C.A. No. 15519, Steele, V.C. (June 26, 1997) (when limited partnership agreement limits access to the partnership's books and records to a specified class of unit holders, a purchaser of limited partnership units who is not within that class of unit holders has no contractual or statutory right of access to the partnership list) with In re American Tax Credit Props. Ltd. Partnerships, C.A. No. 15826, Lamb, V.C. (Del. Ch. Dec. 5, 1997) (assignee of limited partnership units complied with the procedures for becoming a "substitute limited partner" within the meaning of the limited partnership agreement and thus had a right of access to the partnership list). However, by analogy to Delaware corporate law, a limited partner's information rights under §17-305 of the Act may be exercisable through a limited partner's duly constituted agent, such as his attorney or accountant. See State ex rel. Bloch v. Sentry Safety Control Corporation, 24 A.2d 587, 590 (Del. 1942).
The "limited partner" should be the person whose name is reflected on the partnership's books and records as the limited partner of the limited partnership, even if such person is merely the nominee for the beneficial owner of the partnership interests. See §§ 17-101(5), (7) and (13) of the Act (custodians, nominees and other representatives may be partners); see also Bortnick, C.A. No. 13305, Record at 6, 87 (custodian of beneficial owner's IRA was limited partner of record for purposes of maintaining books and records action under the Act).
Conversely, a limited partner's statutory rights under §17-305 of the Act may not be exercisable by an assignee of such limited partner's partnership interest. "Partnership interest" is defined under the Act in terms of economic rights only. § 17-101(12) of the Act. The default rule of the Act provides that assignees are entitled to the economic rights possessed by an assignor limited partner but are not entitled to exercise any other rights or powers of a limited partner. See § 17-702(a) of the Act; U-H Acquisition Co. v. Barbo, C.A. No. 13279, Hartnett, V.C. (Del. Ch. Jan. 31, 1994) (assignee of limited partner interests lacked standing to bring derivative action).
This analysis is subject to the provisions of a partnership agreement and a specific factual setting. For example, it may be reasonable for a partnership agreement to provide restrictions on access to partnership information by agents of a limited partner. On the other hand, a partnership agreement may provide contractual rights to partnership information by assignees and others. See below for a fuller discussion of the importance of contractual provisions relating to access to information.
II. The Form Of A Limited Partner's Demand.
The Act provides two requirements in connection with a demand made by a limited partner to obtain information. First, the demand must be reasonable and directed to the general partner. §17-305(a) of the Act. Second, the demand must be in writing and state the purpose of the demand. §17-305(d) of the Act.
III. How The Delaware Court Of Chancery Would Consider The Merits Of A Request For Information.
In In re Paine Webber Ltd. Partnerships, C.A. No. 15043, Jacobs, V.C. (Del. Ch. Sept. 17, 1996), the Court of Chancery established its general approach to analyzing limited partner list cases. First, the court examines the plaintiff's (the limited partner who seeks the list) "true purpose." Second, the court examines whether this purpose violates the statutory "proper purpose" requirement established by §17-305(a) of the Act. Third, the court determines whether the language of the partnership agreement at issue requires the limited partner to demonstrate a proper purpose or whether the partnership agreement provides a limited partner with an unqualified right to a list of limited partners. Fourth, the court determines whether an "implied improper purpose" defense is available. That is, whether the general partner, and thus the court, may deny the plaintiff access to the limited partner list because the plaintiff partner's purpose is both personal and adverse to the partnership. In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 15. However, in order for this "implied improper purpose" defense to apply to deny the plaintiff access to a list of limited partners, the court must decide whether the defense may be implied into the partnership agreement(s) at issue. This essentially depends on whether or not the limited partnership was established prior to 1985. The Court of Chancery has held that the "implied improper purpose defense" cannot be implied in partnership agreements entered into pre-1985, "the year when the Delaware General Assembly amended the partnership law and no longer required partnerships to publicly file a list of partners along with the partnership certificate." In re Paine Webber Qualified Plan Property Fund Three, L.P. Litig., 698 A.2d 389, 393 (Del. Ch. 1997); see also In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 13-14.
Fifth, the court determines whether the defendant general partner may deny the requesting limited partner access to a list of limited partners under §17-305(b) of the Act. This defense, otherwise known as the "good faith" defense, may deny a limited partner access to the list, even if his purpose is "proper" under §17-305(a), if the general partner in good faith believes that disclosure of a list is not in the "best interest" of the partnership or "could damage" the partnership or its business. See In re Paine Webber Ltd. Partnerships, mem. op. at 9, n. 6; § 17-305(b) of the Act.
IV. Plaintiff's True Purpose.
In both of the recent PaineWebber decisions, In re Paine Webber Ltd. Partnerships, C.A. No. 15043, and In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d 389, the court looked behind the plaintiff limited partner's purpose, stated in its written demand, to discern the plaintiff's "true purpose." For example, in In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 3, the plaintiff limited partner's stated purpose was, inter alia, "to assist [it] in determining whether to seek additional interests." The court, however, looked behind this stated purpose and found that the plaintiff's true purpose was "to make the list available to the investment fund in return for an equity participation in that fund, should it ever be created." Id., mem. op. at 7.
Similarly, in In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 390, the plaintiffs' demand letter stated that its purpose "was to assist the plaintiffs and their 'affiliates in purchasing additional partnership interests.'" Again, the court looked behind this stated purpose and found that the plaintiffs' true purpose was to create a "new entity . . . to make the investment and hold the interest" and not to purchase additional limited partnership interests in its own name. Id.
V. Statutory Right To The Lists: § 17-305(a).
The Court of Chancery has stated that "[t]he plaintiffs' true purposes having been determined, the question then becomes whether they are legally sufficient under § 17-305." In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 7. Section 17-305(a) of the Act provides the following:
Each limited partner has the right, subject to such reasonable standards (including standards governing what information and documents are to be furnished, at what time and location at whose expense) as may be set forth in the partnership agreement or otherwise established by the general partners, to obtain from the general partners from time to time upon reasonable demand for any purpose reasonably related to the limited partner's interest as a limited partner . . . (3) A current list of the name and last known business, residence or mailing address of each partner . . ."
§ 17-305(a)(3) of the Act (emphasis added). Thus, the court's determination of the plaintiff's true purpose is necessary to get to the next step -- a determination of whether the true purpose is "reasonably related to the limited partner's interest as a limited partner." § 17-305(a)(3) of the Act.
In In re Paine Webber Ltd. Partnerships, Vice Chancellor Jacobs determined that the plaintiff's true purpose was not a purpose "reasonably related" to its interest as a limited partner in the defendant limited partnerships. The Vice Chancellor stated the following:
[The plaintiffs] are using the plaintiffs' nominal investment in the defendant limited partnerships purely as a legal vehicle to obtain the lists in anticipation of a possible tender offer, to be conducted by a separate entity and in which the plaintiffs' participation would at best be token. Thus, the use of the lists to aid in that tender offer is a purpose that relates solely to the investment fund's interest as a potential buyer, not to the plaintiffs' interest as limited partners. That purpose is therefore not proper under § 17-305.
In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 8-9. Similarly, in In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 391, then-Vice Chancellor Chandler found that because the plaintiffs "d[id] not intend to use the lists to increase their own interests in the partnerships" and instead intended to provide the list to an affiliate which would conduct the tender offer, their purpose was not a proper purpose within §17-305.
VI. Contractual Right To The Lists -- The Partnership Agreement.
In both the PaineWebber litigations identified above, the Court of Chancery held that even if the plaintiff limited partner is not entitled to a list under § 17-305, the plaintiff may be entitled to a list of limited partners pursuant to the partnership agreement of the particular limited partnership at issue. See In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 9 ("Because the plaintiffs have no statutory right to the lists, any entitlement they may have must flow from the Partnership Agreements."); In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 392 ("plaintiffs are not required to demonstrate a proper purpose to enforce their contractual rights to the partnership lists because the partnership agreements of these four partnerships do not contain an express requirement concerning purpose").
In both the PaineWebber cases cited above, the partnership agreements of the defendant limited partners provided the following:
Any partner, or his duly authorized representatives . . . shall be entitled to a copy of the list of names and addresses of the Limited Partners (including the number of Units owned by each of them).
In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 10 (citing the relevant provisions of the defendant limited partnerships' partnership agreements); In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 391 (citing the relevant provisions of the defendant limited partnerships' partnership agreements). The court in both cases determined that the partnership agreements gave the plaintiff limited partners an unqualified right to the list of limited partners in each of the PaineWebber partnerships. In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 10 ("On their face the Partnership Agreements give plaintiffs the unqualified right to the lists they request without regard to purpose."); In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 391 ("These four partnership agreements do not explicitly condition plaintiffs' rights to the lists on the existence of a proper purpose"). Thus, if the proper purpose requirement is not explicitly mentioned in a limited partnership agreement that provides for a right to access limited partnership information, the proper purpose requirement is waived.
Moreover, a limited partner must adhere to any reasonable standards imposed by the partnership or the general partner regarding the furnishing of information by a general partner. "Reasonableness" is determined in light of the particular partnership and the particular facts and circumstances. The type of information and documents to be furnished, the time and location at which the information will be available, and responsibility for any expenses incurred when furnishing the information are areas which § 17-305(a) of the Act lists as areas in which reasonable standards may be set.
Standards can be imposed by the limited partnership agreement under § 17-305 of the Act. The general partner can also impose standards beyond those within the partnership agreements. Examples of possible standards include: restrictions on time (e.g., during business hours) or location (e.g., principle place of business); requirements that the limited partner pay for expenses (e.g., requesting party must pay photocopy costs); provisions regarding the form of information (e.g., electronic; originals or duplicates); and requiring the entering into of a confidentiality agreement. Note that each of these examples would have to meet a reasonableness requirement based on the circumstances in order to be upheld. No limited partnership cases have decided the issue of what factors enter into a court's reasonableness determination.
VII. Standards Imposed By The Courts.
Section 17-305(e) of the Act provides, inter alia, that "[t]he Court of Chancery may, in its discretion, prescribe any limitations or conditions with reference to the obtaining of information, or award such other or further relief as the Court of Chancery may deem just and proper." As with the standards imposed by the limited partnership agreement, the case law in this area is not well developed. Thus, arguing that the Court of Chancery should create a reasonable condition might be accomplished by analogy to corporate decisions.
VIII. The Improper Purpose Defense.
Furthermore, the defendant PaineWebber partnerships in In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 393, argued that "even if plaintiffs were otherwise entitled to the lists, that their request may be denied because the purpose is personal to the plaintiffs and is adverse to the partnership." Then-Vice Chancellor Chandler, in In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 393, stated this defense as follows:
A showing that a purpose is personal and has adverse effects does not make that purpose "improper" and a request for access to a partnership list may be justifiably denied upon showing that the purpose is personal and has adverse effects regardless of whether that purpose is "proper." Thus, the basis of the defense is more appropriately characterized as founded on "personal and adverse effects" rather than on an "improper purpose."
See also Skouras, 386 A.2d at 678 ("[E]ven if a proper purpose is shown to be reasonably related to a plaintiff's interest as a stockholder, nonetheless such demand must not be for a purpose adverse to the best interests of the corporation"). The Court of Chancery has, however, rejected this defense as applied to lists of limited partners of partnerships formed pre-1985.
The court in Schwartzberg, 685 A.2d at 365, concluded that the "improper purpose" defense could be implied into a partnership agreement if "given the terms of the express contract made and the circumstances of the contracting process, it is more likely than not . . . that if the parties had thought to address the subject, they would have agreed to create the obligation that is under consideration by the court ex post facto." As discussed above, the Court of Chancery has only considered the application of this defense to lists of limited partners of partnerships formed prior to 1985 and has in all cases rejected the defense as inapplicable to such partnerships based on the fact that they were formed at a time when Delaware limited partnerships were required to publicly disclose their limited partners. However, since 1985, the law has changed, negating the requirement of a public filing of the list of limited partners in a Delaware limited partnership. This may or may not raise an issue concerning whether the lists are intended to be confidential and indeed should be protected by the "improper purpose" defense.
If a Delaware Court were to imply the "improper purpose" defense on behalf of the partnership, the partnership may be able to deny a limited partner access to information on the grounds that a limited partner's request is both personal to the requesting limited partner and adverse to the interests of the partnership as a whole. In re Paine Webber Qualified Plan Property Fund Three, 698 A.2d at 393-94. The Court of Chancery, in In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 15, defined the "improper purpose" defense as follows:
Schwartzberg holds that in cases when [the improper purpose] defense can be implied, inspection relief may be denied if the partnership can demonstrate that the plaintiff partner's purpose (a) is personal to the plaintiff and (b) would actually harm the value of the joint investment.
However, the court failed to define what purpose could be considered "personal to the plaintiff" and what purpose could be defined as "actually harm[ing] the value of the joint investment." Id.
IX. Confidentiality.
While the Act provides broad informational rights to limited partners, the Act recognizes that, under certain circumstances, it is justifiable for a general partner to withhold information from limited partners. The right of limited partners to receive information is not only qualified by the reasonable standards that may be imposed on the exercise of such right and the requirement that information requests be for a proper purpose but also may be limited with respect to confidential information. Section 17-305(b) of the Act provides that
[a] general partner shall have the right to keep confidential from limited partners for such period of time as the general partner deems reasonable, any information which the general partner reasonably believes to be in the nature of trade secrets or other information the disclosure of which the general partner in good faith believes is not in the best interest of the limited partnership or could damage the limited partnership or its business or which the limited partnership is required by law or by agreement with a third party to keep confidential.
Section 17-305 of the Act thus represents a balancing of interests between a limited partner's right to receive information concerning its investment and the harm that could result to the other partners and the partnership and possibly third parties from the disclosure of certain information.
The provisions of § 17-305(b) of the Act should apply to the full spectrum of possible information requests under § 17-305(a) of the Act, including a request for a list of partners. However, it may be more difficult to demonstrate confidentiality concerns in the context of a request for a list of partners than it would in the context of a demand for other types of books and records. It would, of course, be difficult to maintain that the list of partners is a "trade secret," and, assuming a proper purpose, situations are probably limited in which a general partner could argue successfully that disclosure of such a list was "not in the best interest" of the partnership or "could damage" the partnership or its business. The most fruitful approach to denying a list of partners based on confidentiality concerns may be where disclosure would violate other applicable law or an agreement with third parties. It may be that, for purposes of § 17-305(b) of the Act, the other partners who do not wish disclosure of their names and addresses could be considered to be "third parties."
There is currently no Delaware case law arising under the Act concerning the invocation of confidentiality concerns relating to a request for a list of partners. But see In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 9, n.6 (confidentiality defense raised but not reached as court found lack of proper purpose). The GCL does not contain language that is analogous to § 17-305(b) of the Act. Nevertheless, a stockholder's demand to obtain confidential information under § 220 of the GCL is closely scrutinized by Delaware courts. Radwick Pty. Ltd. v. Medical, Inc., C.A. No. 7610, Berger, V.C. (Del. Ch. Nov. 7, 1984).
X. Good Faith Defense - § 17-305(b).
The so called "good faith" defense permits a general partner in a partnership to withhold the list if the general partner "reasonably believes [providing the list] to be in the nature of trade secrets or other information the disclosure of which the general partner in good faith believes is not in the best interest of the limited partnership or could damage the limited partnership or its business or which the limited partnership is required by law or by agreement with a third party to keep confidential." § 17-305(b) of the Act. According to the Court of Chancery, "[t]he statutory good faith defense is relevant only if the plaintiffs have established a proper statutory purpose." In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 9, n.6. However, a court has yet to analyze the validity and components of this defense.
Thus, the "good faith" defense, like the "improper purpose" defense, is untested and undefined by the Delaware courts.
XI. The Importance Of Contractual Provisions.
It cannot be overemphasized that the foregoing discussion has been based upon Delaware statutory provisions and Delaware case law arising under such provisions. A partnership agreement that is completely silent with respect to information rights should be deemed to have incorporated § 17-305 of the Act into its terms. In such a case, absent contractual agreements outside the partnership agreement, limited partners should still be bound by the proper purpose requirement and general partners should still be able to impose reasonable standards for disclosure and to raise confidentiality concerns.
However, many of the Act's provisions are default rules which apply only in the absence of a contrary agreement among the parties. In accordance with the freedom of contract that permeates the Act, the partners of a Delaware limited partnership have great flexibility in determining the nature and extent of their relationship. In many respects, the principles of freedom of contract will apply in the area of information rights.
It is unclear whether and, if so, to what extent and under what circumstances, partners can contract away their qualified right to the categories of information listed in § 17-305(a) of the Act. However, it is possible to grant partners by contract greater rights to information or less qualified rights to information than those provided for in § 17-305(a) of the Act. Such grants probably need not be in a partnership agreement but may be found elsewhere. Cf. Ostrow v. Bonney Forge Corp., C.A. No. 13270, Allen, C. (Del. Ch. Apr. 6, 1994), mem. op. at 19 (independent right granted in stockholders' agreement to which corporation was party). In such cases, limited partners may have independent contractual rights in addition to the rights provided by the Act.
Where contractual information rights are broader or less qualified than the rights available under the Act, they are likely to be enforced as written, without regard to the qualifications and conditions to which similar rights under the Act may have been subject. Delaware courts are reluctant to rewrite the contract of the parties to provide preconditions to the exercise of a contractually granted unqualified inspection right. Id., mem. op. at 24 (corporation could not require execution of confidentiality agreement prior to exercise of unqualified inspection right). However, where it appears that the parties intended to contract for rights broader than the statutory rights, courts will not allow a cramped reading of the contract provisions to frustrate such intentions. Id. (court rejected corporation's arguments that right to "examine" did not include right to photocopy and that right granted to stockholder did not permit right to be exercised by agents).
Similarly, if a contractual provision does not contain a proper purpose requirement, none will be required by the court. In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 10 ("there is no basis for [the] contention" that the Act, "which contains a proper purpose requirement, 'trumps' any partnership contract that does not."); Ostrow, C.A. No. 13270, mem. op. at 23 (similar result in corporate case). It follows that where there is a broad right in a contract to books and records, unqualified by a proper purpose requirement, the court can forego any analysis that would limit the categories of information to be provided to those that are necessary to achieve the proper purpose stated. Ostrow, C.A. No. 13270, mem. op. at 24.
However, even though Delaware courts may be reluctant to add a proper purpose requirement where none appears in the contract, a partnership may nonetheless have available to it a "proper purpose defense." Such defense may be available where a partnership can show that, had the contracting parties thought to address the subject, they would have agreed that information would not be provided to a partner that did not have a proper purpose. In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 12-13; Schwartzberg, 685 A.2d at 375-76. Such defense is unlikely to be available in partner list cases to partnerships formed prior to September 1, 1985, because, prior to that date, the identity of the limited partners was a matter of public record by virtue of the information contained in the certificate of limited partnership on file with the Delaware Secretary of State. In re Paine Webber Ltd. Partnerships, C.A. No. 15043, mem. op. at 13-14.
Thus, any analysis of a demand for information must encompass both the statutory rights of a limited partner and any agreement, including the partnership agreement, that provides contractual information rights. To the extent that contractual information rights exist, such analysis will have to account for the ways, if any, that the contractual rights differ from the rights available under the Act.
LIMITED LIABILITY COMPANIES
The Delaware Limited Liability Company Act, 6 Del. C. § 18-101, et seq. (the "LLC Act") closely parallels the Act in many respects, and also provides for the right of a member of a Delaware limited liability company to obtain information under Delaware law. Section 18-305 of the LLC Act provides that:
(a) Each member of a limited liability company has the right, subject to such reasonable standards (including standards governing what information and documents are to be furnished at what time and location and at whose expense) as may be set forth in a limited liability company agreement or otherwise established by the manager or, if there is no manager, then by the members, to obtain from the limited liability company from time to time upon reasonable demand for any purpose reasonably related to the member's interest as a member of the limited liability company:
(1) True and full information regarding the status of the business and financial condition of the limited liability company;
(2) Promptly after becoming available, a copy of the limited liability company's federal, state and local income tax returns for each year;
(3) A current list of the name and last known business, residence or mailing address of each member and manager;
(4) A copy of any written limited liability company agreement and certificate of formation and all amendments thereto, together with executed copies of any written powers of attorney, pursuant to which the limited liability company agreement and any certificate and all amendments thereto have been executed;
(5) True and full information regarding the amount of cash and a description and statement of the agreed value of any other property or services contributed by each member and which each member has agreed to contribute in the future, and the date on which each became a member; and
(6) Other information regarding the affairs of the limited liability company as is just and reasonable.
(b) Each manager shall have the right to examine all of the information described in §18-305(a) of this chapter for a purpose reasonably related to his position as a manager.
(c) The manager of a limited liability company shall have the right to keep confidential from the members, for such period of time as the manager deems reasonable, any information which the manager reasonably believes to be in the nature of trade secrets or other information, the disclosure of which the manager in good faith believes is not in the best interest of the limited liability company or could damage the limited liability company or its business or which the limited liability company is required by law or by agreement with a third party to keep confidential.
(d) A limited liability company may maintain its records in other than a written form if such form is capable of conversion into written form within a reasonable time.
(e) Any demand by a member under this section shall be in writing and shall state the purpose of such demand.
(f) Any action to enforce any right arising under this section shall be brought before the Court of Chancery. If the limited liability company refuses to permit a member to obtain or a manager to examine the information described in subsection (a)(3) of this section or does not reply to the demand that has been made within 5 business days after the demand has been made, the demanding member or manager may apply to the Court of Chancery for an order to compel such disclosure. The Court of Chancery is hereby vested with exclusive jurisdiction to determine whether or not the person seeking such information is entitled to the information sought. The Court of Chancery may summarily order the limited liability company to permit the demanding member to obtain or the manager to examine the information described in subsection (a)(3) of this section and to make copies or abstracts therefrom; or the Court of Chancery may summarily order the limited liability company to furnish to the demanding member or manager the information described in subsection (a)(3) of this section on the condition that the demanding member or manager first pay to the limited liability company the reasonable cost of obtaining and furnishing such information and on such other conditions as the Court of Chancery deems appropriate. When a demanding member seeks to obtain or a manager seeks to examine the information described in subsection (a)(3) of this section, the demanding member or manager shall first establish (1) that the demanding member or manager has complied with the provisions of this section respecting the form and manner of making demand for obtaining or examining of such information, and (2) that the information the demanding member or manager seeks is reasonably related to the member's interest as a member or the manager's position as a manager, as the case may be. The Court of Chancery may, in its discretion, prescribe any limitations or conditions with reference to the obtaining or examining of information, or award such other or further relief as the Court of Chancery may deem just and proper. The Court of Chancery may order books, documents and records, pertinent extracts therefrom, or duly authenticated copies thereof, to be brought within the State of Delaware and kept in the State of Delaware upon such terms and conditions as the order may prescribe.
Although there has yet to be a case regarding a request for information from a limited liability company, it is likely that, given the similarity between § 18-305 of the LLC Act and § 17-305 of the Act, a Delaware Court would analyze a limited liability company information case in the same manner it would a limited partnership information case. As such, the foregoing analysis regarding limited partnerships should apply to limited liability companies as well.