(a) Except as provided in subsection (b) of this section, a person who makes a contribution to a business enterprise and erroneously but in good faith believes that such person has become a limited partner in the enterprise is not a general partner in the enterprise and is not bound by its obligations by reason of making the contributions, receiving distributions from the enterprise or exercising any rights of a limited partner, if, on ascertaining the mistake, the person:
(1) Causes an appropriate certificate of limited partnership or a certificate of amendment to be executed and filed; or
(2) Withdraws from future equity participation in the enterprise by executing and filing in the office of the Secretary of the State a certificate declaring withdrawal under this section.
(b) A person who makes a contribution of the kind described in subsection (a) of this section is liable as a general partner to any third party who transacts business with the enterprise (1) before the person withdraws and an appropriate certificate is filed to show withdrawal, or (2) before an appropriate certificate is filed to show that the person is not a general partner, but in either case only if the third party actually believed in good faith that the person was a general partner at the time of the transaction.
(1961, P.A. 79, S. 11; P.A. 79-440, S. 19; P.A. 83-74, S. 2; P.A. 86-379, S. 11; P.A. 07-217, S. 150.)
History: P.A. 79-440 rephrased previous provisions, adding requirement that person who erroneously believes he is a limited partner is not a general partner if he causes an appropriate certificate to be executed and filed as Subsec. (a)(1) and added Subsec. (b); P.A. 83-74 amended Subsec. (a)(2) re execution and filing of certificate declaring withdrawal; P.A. 86-379 amended Subsec. (b)(ii) by deleting requirement that certificate show status as limited partner and substituted “that he is not a general partner”; P.A. 07-217 made technical changes, effective July 12, 2007.
See Sec. 34-38b re inapplicability of provisions as amended by P.A. 86-379 to partnerships existing before October 1, 1986.
Cited. 210 C. 71.
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