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I want to form LP for investors to invest for my distribution pharmaceutical products. i have s corp.

Ontario, CA |

i have contacted one lawyer but charge is too much for my new business. i am wondering if i can buy some aggrement forms like partnership aggrement, non disclosure and anything that legally required to have for LP. i will have my s corp to be GENERAL partner and all contracts will be under s corp and LP will have all investors so i can control. please advise where can i get aggrement forms so i can meanwhile make LP. later on when i jave money i can seek lawyer's advise. please guide. thank you.

Attorney Answers 6

Posted

If you think a lawyer is expensive now, just wait until (a) no one invests, because they do not trust you because your documents are haphazard at best, or (b) someone sues you for fraud after investing.
The cheapest way is to do it right at the beginning. Don't wait -- get a good lawyer to do it right NOW.

This answer does not create an attorney-client relationship. It is not legal advice. Please contact a lawyer qualified in your jurisdiction to discuss your situation in confidence, using your factual details. Avvo answers are only general legal responses. Item 9 of Avvo.com's Terms and Conditions are incorporated in this disclaimer as though it were printed here.

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Posted

First, virtually no one uses Limited Partnerships anymore. They are using LLCs with one Manager and everyone else a Member.
Second, if securities (like limited partnership interests, membership interests, stock) are improperly issued the consequences (damages) are huge.
A non-disclosure agreement is not required and is probably useless. A buy-sell agreement is not required but is highly useful since there is no public market for the securities.
Before legal documents, you need a budget. If there is no budget for a CPA and a lawyer and insurance, then something is wrong with the budget or the business plan.
Finally, you could pick a more complex and regulated industry besides pharmaceuticals, but it wouldn't be easy.

That being said, good luck.

The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

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3 comments

Asker

Posted

thank you but when i have counselled one lawyer last year to find out the cost & everything, i remembered he said, you form s-corp as general partner and form another LIMITED PARTNERS so you control all work and decisions for LP because i will put my sweat equity because i donot have hard cash or enough money to invest. LP WILL HAVE INVESTORS AND THEY WILL INVEST ON MY IDEAS AND BRINGING ALL CONTRACTS TO MAKE PROFIT IN BUSINESS. IF I FORM LLC, I WILL NOT BE ABLE TO CONTROL SINCE I DONOT HAVE ENOUGH MONEY AND RIGHTS OVER OTHER INVESTORS OR PROMOTERS. PLEASE ADVISE.

Michael Charles Doland

Michael Charles Doland

Posted

If you sell limited partnership interests without a lawyer you will do it wrong. Your offering memorandum will be deficient. You partnership interest issuance will be defective. There is no reason you would know that in securities law, fraud is not a misstatement of fact, but even failure to state a fact that an investor would find "material" in making his/her investment decision. I don't want to argue, but you could achieve the same managerial goal by being the sole Manager and having all investors be Members.

Charles R Smith

Charles R Smith

Posted

I agree with Mr. Doland. The asker needs to consult with a business attorney who is familiar with the beneficial options of utilizing an LLC.

Posted

I agree with my colleagues. The fact that you have to ask this question makes it clear that you cannot form an entity - let alone one that will have investors - properly on your own. If you are unwilling or unable to pay for the required legal services, then you need to develop a new business plan.

This information does not constitute legal advice and does not establish an attorney-client relationship.

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Posted

As pointed out by colleagues not best idea to attempt a root canal procedure on yourself.

In addition to AVVO's disclaimer, please note that by this answer no attorney client relationship is intended mor entered into and unless there is a signed retainer agreement in place, neither me nor anyone in our office has intended to solicit clients nor reprints them. The answers are general in nature and without weighing specifics of particular query. No answer should be relied on in whole or in part, directly or otherwise to act or not to act in pursue of any of your potential claims in law or equity. You should consult with and obtain advise or representation of an attorney to protect your rights regarding your case or matter.

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Posted

Just keep in mind LPs are considered securities so you will have to navigate Reg D and state registration of securities or find an exemption.

I am licensed to practice only in California and the 9th Circuit. This response is informational only and is based only on the general inquiry posted, which may differ from the advice that would be given if further facts were given, or if the inquiry implicates laws which are state specific. In addition, no response to any posted inquiry should be deemed to constitute legal advice, nor to constitute the existence of an attorney/client or other contractual or fiduciary relationship, inasmuch as legal advice can only be provided in circumstances in which the attorney is able to ask questions of the person seeking legal advice and to thus gather appropriate information to provide a more complete, or even a completely different, answer.

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Posted

Your proposed path appears to be one on the way to SEC Enforcement or to the California Attorney General. Don't let the "crowdfunding" hype lead you to believe that what you wish to do requires "forms" and boilerplate. You will be offering interests in a company in a very complex area. Are you insured? Did you plan on being insured? Not just liability for the products but also Directors/Officers? Have you ascertained who your investors are? Where are they? You have to file the appropriate registration paperwork. And no, a broad disclaimer will not help you with your investors - you need a PPM to protect you.

All of this can and should be done with the assistance of counsel. The money you spend now will save you money later down the road. Unless of course you plan on the arbitrage of profits to pay for your defense before the SEC and other authorities.

The foregoing is not legal advice nor is it in any manner whatsoever meant to create or impute an attorney/client relationship.

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