Limited Partnership Interest Transfer and Assignee Admission in Kentucky

At a glance

Requirements one by one

Economic interest and admission

Section 362.2-701 makes the right to receive distributions the only transferable partner interest. Section 362.2-702(1) permits a whole or partial transfer without itself dissociating the partner or winding up the LP. Subsections (2)–(3) give the transferee assigned distributions, the winding-up amount otherwise payable to the transferor, and an account of transactions only from the dissolution date. Section 362.2-304(11) expressly excludes a transferee from the ordinary limited-partner information right.

Section 362.2-301 states the separate admission rule: a person becomes a limited partner as the agreement provides or with all partners’ consent. Transferred distribution rights alone do not grant management, records access, or admission under § 362.2-702(1).

What trips people up

A full transfer may support expulsion. Section 362.2-702(4) leaves the transferor’s other partner rights and all duties intact after transfer. But § 362.2-601(2)(d)2 allows unanimous consent of the other partners to expel a limited partner after transfer of the entire transferable interest, excluding a security transfer or an un-foreclosed charging order. Section 362.2-975(2)(b) preserves a different dissociation regime for pre-July 12, 2006 LPs that elect the current act unless the partners elect otherwise; subsection (1) leaves pre-2006 LPs outside this act unless they elect into it.

The recipient’s knowledge matters. Under § 362.2-702(6), a transfer contrary to an agreement restriction is ineffective as to a transferee who had notice of it at transfer. Subsection (5) lets the LP defer recognition of transferee rights until it has notice of the transfer.

Admission can carry prior obligations. Section 362.2-702(7) charges an admitted transferee with the transferor’s obligations under §§ 362.2-502 and 362.2-509, excluding liabilities the transferee did not know of on becoming a partner. Section 362.2-509(2) separately makes a transferee that knowingly receives an improper distribution liable for the excess received.

Common questions

Does a partial transfer take away the transferor’s vote or other partner rights? Section 362.2-702(4) preserves the transferor’s partner rights except for transferred distributions, along with partner duties.

Can the agreement change these rules? Section 362.2-110(1) makes the agreement the first source for relations among partners and the partnership, subject to the limits in subsection (2). The restriction and notice rule in § 362.2-702(6) remains important when a recipient did not know of a restriction.

Statutes and sources

• Ky. Rev. Stat. § 362.2-110: “362.2-110 Effect of partnership agreement: Nonwaivable provisions. (1) Except as otherwise provided in subsection (2) of this section, the partnership agreement governs relations among the partners and between the partners and the partnership. To the extent the partnership agreement does not otherwise provide, this subchapter governs relations among the partners and between the partners and the partnership. (2) The partnership agreement shall not: (a) Vary a limited partnership's power under KRS 362.2-105 to sue, be sued, and defend in its own name; (b) Vary the law applicable to a limited partnership under KRS 362.2-106; (c) Vary the requirements of KRS 362.2-204; (d) Vary the information required under KRS 362.2-111 or unreasonably restrict the right to information under KRS 362.2-304 and 362.2-407, but the partnership agreement may provide a different location for the maintenance of the books and records, and impose reasonable limitations on the availability and use of information obtained under those sections, and may define appropriate remedies, including liquidated damages, for a breach of any reasonable limitation on use; (e) Eliminate the duty of loyalty under KRS 362.2-408, but the partnership agreement may: 1. Identify specific types or categories of activities that do not violate the duty of loyalty, if not manifestly unreasonable; and 2. Specify the number or percentage of partners which may authorize or ratify, after full disclosure to all partners of all material facts, a specific act or transaction that otherwise would violate the duty of loyalty; (f) Unreasonably reduce the duty of care under KRS 362.2-408(3); (g) Eliminate the obligation of good faith and fair dealing under KRS 362.2- 305(2) and 362.2-408(4), but the partnership agreement may prescribe the standards by which the performance of the obligation is to be measured, if the standards are not manifestly unreasonable; (h) Vary the power of a person to dissociate as a general partner under KRS 362.2-604(1), except to require that the notice under KRS 362.2-603(1) be in a record; (i) Vary the right of a court to decree dissolution in the circumstances specified in KRS 362.2-802; (j) Vary the requirement to wind up the partnership's business as specified in KRS 362.2-803; (k) Unreasonably restrict the right to bring an action under KRS 362.2-931 to 362.2-935; or (l) Restrict the right of a partner under KRS 362.2-960(1) to consent to a merger or conversion or the right of a general partner under KRS 362.2-960(2) to consent to an amendment to the certificate of limited partnership which deletes a statement that the limited partnership is a limited liability limited partnership. (3) If a written partnership agreement contains a provision to the effect that any amendment to the partnership agreement must be in writing and adopted in accordance with the provisions of the partnership agreement, that provision shall be enforceable in accordance with its terms, and any agreement among the partners concerning the partnership which is not in writing and adopted in accordance with the provisions of the partnership agreement shall not be part of the partnership agreement. (4) A partnership agreement may provide that the interest of any partner who fails to make any contribution that the partner is obligated to make or who otherwise violates an obligation undertaken in the partnership agreement shall be subject to specified penalties for, or specified consequences of, such failure. Such penalty or consequence may take the form of: (a) Reducing or eliminating the defaulting partner's proportionate interest in the partnership; (b) Subordinating the partner's interest to that of nondefaulting partners; (c) A forced sale of that interest; (d) Forfeiture of his or her interest; (e) The lending by other partners of the amount necessary to meet the defaulting partner's commitment; (f) A fixing of the value of his or her interest by appraisal or by formula and redemption or sale of the interest in the partnership at such value; or (g) Other penalty or consequence. (5) A partnership agreement may provide rights to any person, including a person who is not a partner or not otherwise a party to the partnership agreement, to the extent set forth therein. (6) No partner or other person shall have a vested property right resulting from any provision of a certificate of limited partnership or partnership agreement which may not be modified by its amendment or as otherwise permitted by law.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-301: “362.2-301 Admission of limited partner. A person becomes a limited partner: (1) As provided in the partnership agreement; (2) As the result of a merger or conversion under KRS 362.2-951 to 362.2-963; or (3) With the consent of all the partners.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-304: “362.2-304 Right to information of limited partner and former limited partner. (1) On ten (10) days' demand, made in a record received by the limited partnership, a limited partner may inspect and copy during regular business hours in the limited partnership's designated office the information required by KRS 362.2-111. A limited partner making demand pursuant to this subsection need not demonstrate, state, or have any particular purpose for seeking the information. (2) A limited partner, during regular business hours and at a reasonable location specified by the limited partnership, may obtain from the limited partnership and inspect and copy true and full information regarding the state of the activities and financial condition of the limited partnership and other information regarding the activities of the limited partnership as is just and reasonable if: (a) The limited partner seeks the information for a purpose reasonably related to the partner's interest as a limited partner; (b) The limited partner makes a demand in a record received by the limited partnership, describing with reasonable particularity the information sought and the purpose for seeking the information; and (c) The information sought is directly connected to the limited partner's purpose. (3) Within ten (10) days after receiving a demand pursuant to subsection (2) of this section, the limited partnership shall in a record inform the limited partner that made the demand: (a) What information the limited partnership will provide in response to the demand; (b) When and where the limited partnership will provide that information; and (c) If the limited partnership declines to provide any demanded information, the limited partnership's reasons for declining. (4) Subject to subsection (6) of this section, a person dissociated as a limited partner may inspect and copy during regular business hours in the limited partnership's designated office the information required by KRS 362.2-111 if: (a) The information pertains to the period during which the person was a limited partner; (b) The person seeks the information in good faith; and (c) The person meets the requirements of subsection (2) of this section. (5) The limited partnership shall respond to a demand made pursuant to subsection (4) of this section in the same manner as provided in subsection (3) of this section. (6) If a limited partner dies, then KRS 362.2-704 applies. (7) The limited partnership may impose reasonable limitations on the use of information obtained under this section. In a dispute concerning the reasonableness of a restriction under this subsection, the limited partnership has the burden of proving reasonableness. (8) A limited partnership may charge a limited partner or person dissociated as a limited partner who makes a demand under this section reasonable costs of copying, limited to the costs of labor and material. (9) Whenever this subchapter or a partnership agreement provides for a limited partner to give or withhold consent to a matter, before the consent is given or withheld, the limited partnership shall, without demand, provide the limited partner with all information that the limited partnership knows and is material to the limited partner's decision. (10) A limited partner or person dissociated as a limited partner may exercise the rights under this section through an attorney or other agent. In that event, any limitations on availability and use under subsection (7) of this section apply both to the limited partner or person and to the attorney or other agent. (11) The rights stated in this section do not extend to a transferee, but: (a) Subsection (4) of this section creates rights for a person dissociated as a limited partner; (b) Subsection (6) of this section recognizes the rights of the executor or administrator of a deceased limited partner; and (c) The rights under this section extend to the legal representative of an individual under legal disability who is a limited partner or person dissociated as a limited partner.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-502: “362.2-502 Liability for contribution. (1) A partner's obligation to contribute money, property, or other benefit to, or to perform services for, a limited partnership is not excused by the partner's death, disability, or other inability to perform personally. (2) If a partner does not make a promised contribution of property or services, then the partner is obligated at the option of the limited partnership to contribute money equal to that portion of the value, as stated in the required information, of the stated contribution which has not been made. (3) The obligation of a partner to make a contribution or return money or other property paid or distributed in violation of this subchapter may be compromised only by consent of all partners. A creditor of a limited partnership which extends credit or otherwise acts in reliance on an obligation described in subsection (1) of this section, and without notice of any compromise under this subsection, may enforce the original obligation.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-509: “362.2-509 Liability for improper distributions. (1) A general partner that consents to a distribution made in violation of KRS 362.2- 508 is personally liable to the limited partnership for the amount of the distribution which exceeds the amount that could have been distributed without the violation if it is established that in consenting to the distribution the general partner failed to comply with KRS 362.2-408. (2) A partner or transferee that knew a distribution was made in violation of KRS 362.2-508 is personally liable to the limited partnership but only to the extent that the distribution received by the partner or transferee exceeded the amount that could have been properly paid under KRS 362.2-508. (3) A general partner against which an action is brought under subsection (1) of this section may: (a) Implead in the action any other person that as a general partner consented to the distribution in violation of subsection (1) of this section and compel contribution from that person; and (b) Implead in the action any person that received a distribution in violation of subsection (2) of this section and compel contribution from that person in the amount that person received in violation of subsection (2) of this section. (4) A proceeding under this section is barred if it is not commenced within two (2) years after the distribution.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-601: “362.2-601 Dissociation as limited partner. (1) A person does not have a right to dissociate as a limited partner before the termination of the limited partnership. (2) A person is dissociated from a limited partnership as a limited partner upon the occurrence of any of the following events: (a) The limited partnership's having notice of the person's express will to withdraw as a limited partner or on a later date specified by the person; (b) An event agreed to in the partnership agreement as causing the person's dissociation as a limited partner; (c) The person's expulsion as a limited partner pursuant to the partnership agreement; (d) The person's expulsion as a limited partner by the unanimous consent of the other partners if: 1. It is unlawful to carry on the limited partnership's activities with that person as a limited partner; 2. There has been a transfer of all of the person's transferable interest in the limited partnership, other than a transfer for security purposes, or a court order charging the person's interest, which has not been foreclosed; 3. The person is a corporation and, within ninety (90) days after the limited partnership notifies the person that it will be expelled as a limited partner because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, there is no revocation of the certificate of dissolution or no reinstatement of its charter or its right to conduct business; or 4. The person is a limited liability company or partnership that has been dissolved and whose business is being wound up; (e) On application by the limited partnership, the person's expulsion as a limited partner by judicial determination because: 1. The person engaged in wrongful conduct that adversely and materially affected the limited partnership's activities; 2. The person willfully or persistently committed a material breach of the partnership agreement or of the obligation of good faith and fair dealing under KRS 362.2-305(2); or 3. The person engaged in conduct relating to the limited partnership's activities which makes it not reasonably practicable to carry on the activities with the person as limited partner; (f) In the case of a person who is an individual, the person's death; (g) In the case of a person that is a trust or is acting as a limited partner by virtue of being a trustee of a trust, distribution of the trust's entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor trustee; (h) In the case of a person that is an estate or is acting as a limited partner by virtue of being a personal representative of an estate, distribution of the estate's entire transferable interest in the limited partnership, but not merely by reason of the substitution of a successor personal representative; (i) Termination of a limited partner that is not an individual, partnership, limited liability company, corporation, trust, or estate; (j) The limited partnership's participation in a merger or conversion under KRS 362.2-951 to 362.2-963, if the limited partnership: 1. Is not the converted or surviving entity; or 2. Is the converted or surviving entity but, as a result of the conversion or merger, the person ceases to be a limited partner.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-701: “362.2-701 Partner's transferable interest. The only transferable interest of a partner is the partner's right to receive distributions. The interest is personal property.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-702: “362.2-702 Transfer of partner's transferable interest. (1) A transfer, in whole or in part, of a partner's transferable interest in the limited partnership: (a) Is permissible; (b) Does not by itself cause the partner's dissociation or a dissolution and winding up of the limited partnership's activities; and (c) Does not, as against the other partners or the limited partnership, entitle the transferee to participate in the management or conduct of the limited partnership's activities, to require access to information concerning the limited partnership's transactions except as provided in subsection (3) of this section, or to inspect or copy the required information or the limited partnership's other records. (2) A transferee has a right to receive, in accordance with the transfer: (a) Distributions to which the transferor would otherwise be entitled; and (b) Upon the dissolution and winding up of the limited partnership's activities the net amount otherwise distributable to the transferor. (3) In a dissolution and winding up, a transferee is entitled to an account of the limited partnership's transactions only from the date of dissolution. (4) Upon transfer, the transferor retains the rights of a partner other than the interest in distributions transferred and retains all duties and obligations of a partner. (5) A limited partnership need not give effect to a transferee's rights under this section until the limited partnership has notice of the transfer. (6) A transfer of a partner's transferable interest in the limited partnership in violation of a restriction on transfer contained in the partnership agreement is ineffective as to a person having notice of the restriction at the time of transfer. (7) A transferee that becomes a partner with respect to a transferable interest is liable for the transferor's obligations under KRS 362.2-502 and 362.2-509. However, the transferee is not obligated for liabilities unknown to the transferee at the time the transferee became a partner. (8) Limitations upon transfer set forth in KRS 362.2-701 to 362.2-704 or adopted by the partners in accordance with this subchapter are enforceable notwithstanding KRS 355.9-406 and 355.9-408.” (official Kentucky statute; accessed October 2, 2026).
• Ky. Rev. Stat. § 362.2-975: “362.2-975 Effective date. (1) This subchapter governs only: (a) A limited partnership formed on or after July 12, 2006; and (b) Except as otherwise provided in subsection (2)(c) and (d) of this section, a limited partnership formed before July 12, 2006, which elects, in the manner provided in its partnership agreement or by law for amending the partnership agreement, to be subject to this subchapter. The filing of an amended or an amended and restated certificate of limited partnership electing limited liability limited partnership status shall constitute an election to be governed by KRS 362.2-102 to 362.2-977. (2) With respect to a limited partnership formed before July 12, 2006, that elects to be governed by KRS 362.2-102 to 362.2-977, the following rules apply, except as the partners otherwise elect in the manner provided in the partnership agreement or by law for amending the partnership agreement: (a) KRS 362.2-104(3) does not apply and the limited partnership has whatever duration it had under the law applicable immediately before July 12, 2006; (b) KRS 362.2-601 and 362.2-602 do not apply and a limited partner has the same right and power to dissociate from the limited partnership, with the same consequences, as existed immediately before July 12, 2006; (c) KRS 362.2-603(4) does not apply; (d) KRS 362.2-603(4) does not apply and a court has the same power to expel a general partner as the court had before July 12, 2006; and (e) KRS 362.2-801(3) does not apply and the connection between a general partner's dissociation and the dissolution of the limited partnership is the same as existed before July 12, 2006. (3) With respect to a limited partnership that elects, pursuant to subsection (1)(b) of this section, to be subject to this subchapter, after the election takes effect, the provisions of this subchapter relating to the liability of the limited partnership's general partners to third parties apply: (a) Before January 1, 2009, to: 1. A third party that had not done business with the limited partnership in the year before the election took effect; and 2. A third party that had done business with the limited partnership in the year before the election took effect only if the third party knows or has received a notification of the election; and (b) On or after January 1, 2009, to all third parties.” (official Kentucky statute; accessed October 2, 2026).