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North Carolina General Statutes Chapter 59. Partnership § 59-304. Person erroneously believing himself limited partner

Current as of January 01, 2023 | Updated by Findlaw Staff

(a) Except as provided in subsection (b), 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 any rights of a limited partner, if, on ascertaining the mistake, he:

(1) Causes an appropriate certificate of limited partnership [or] certificate of amendment to be executed and filed; or

(2) Withdraws from future equity participation in the enterprise.

(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 in the case in which:

(1) The third party actually believed in good faith that the person was a general partner at the time of the transaction; and

(2) The third party transacted business with the enterprise before either:

a. An appropriate certificate has been filed pursuant to subsection (a) of this section to reflect that the person is not a general partner; or

b. The person has given notice to the partnership of withdrawal from future equity participation and before the withdrawal was effective.

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Cite this article: FindLaw.com - North Carolina General Statutes Chapter 59. Partnership § 59-304. Person erroneously believing himself limited partner - last updated January 01, 2023 | https://codes.findlaw.com/nc/chapter-59-partnership/nc-gen-st-sect-59-304/

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