(a) Except as provided in (b) of this section, a person who makes a contribution to a business enterprise and erroneously but in good faith believes that the 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 contribution, receiving distributions from the enterprise, or exercising the 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 commissioner a certificate declaring withdrawal under this section.
(b) A person who makes a contribution of the kind described in (a) of this section is liable as a general partner to a third party who transacts business with the enterprise before (1) the person withdraws and an appropriate certificate is filed to show withdrawal, or (2) an appropriate certificate is filed to show that the person is not a general partner, but in either case under (1) or (2) only if the third party actually believed in good faith that the person was a general partner at the time of the transaction.
Section: Previous 32.11.100 32.11.110 32.11.120 32.11.130 32.11.140 NextLast modified: November 15, 2016