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Maryland Code, Corporations and Associations § 10-303

Current as of January 01, 2025 | Updated by Findlaw Staff

(a) Except as provided in § 10-207(a) of this title and subsection (c) of this section, a limited partner is not liable for the obligations of a limited partnership unless the limited partner is also a general partner or, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business. However, if the limited partner takes part in the control of the business and is not also a general partner, the limited partner is liable only to persons who transact business with the limited partnership and who reasonably believe, based upon the limited partner's conduct, that the limited partner is a general partner.

(b)(1) A limited partner does not take part in the control of the business within the meaning of subsection (a) of this section solely by doing one or more of the following:

(i) Being a contractor for or an agent or employee of the limited partnership or of a general partner or being an officer, director, or stockholder of a corporate general partner, or any combination of these roles, whether solely or jointly with other officers, directors, or stockholders, and irrespective of whether that corporate general partner is the sole general partner of the limited partnership or is a general partner of one or more limited partnerships;

(ii) Consulting with or advising a general partner with respect to the business of the limited partnership;

(iii) Acting as surety for the limited partnership;

(iv) Approving or disapproving an amendment to the partnership agreement; or

(v) Voting on one or more of the following matters:

1. The dissolution and winding up of the limited partnership;

2. The sale, exchange, lease, mortgage, pledge, or other transfer of a material portion of the assets of the limited partnership;

3. The incurrence of indebtedness by the limited partnership other than in the ordinary course of its business;

4. A change in the nature of its business;

5. The removal of a general partner;

6. The admission of a general or limited partner;

7. The merger of the limited partnership with or into any other entity; or

8. Any matter related to the business of the limited partnership not otherwise enumerated in this subsection which the partnership agreement states in writing may be subject to the approval or disapproval of limited partners.

(2) The enumeration in subsection (b)(1) of this subsection does not necessarily mean that the possession or exercise of any other powers by a limited partner constitutes participation by the limited partner in the business of the limited partnership.

(c) A limited partner who knowingly permits his name to be used in the name of the limited partnership, except under circumstances permitted by Title 1, Subtitle 5 of this article, is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.

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Cite this article: FindLaw.com - Maryland Code, Corporations and Associations § 10-303 - last updated January 01, 2025 | https://codes.findlaw.com/md/corporations-and-associations/md-code-corp-and-assns-sect-10-303/

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