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New Jersey Statutes Title 42. Partnerships and Partnership Associations 42 § 2A-28

Current as of January 01, 2024 | Updated by Findlaw Staff

Person erroneously believing himself a limited partner.

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 he 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 that no certificate of limited partnership was ever filed with the Secretary of State or a certificate of limited partnership has been filed which names the person as a general partner in the enterprise he promptly:

(1) Causes an appropriate certificate of limited partnership, certificate of correction 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 State a certificate declaring withdrawal under this section.

b. A person who makes a contribution of the kind described in subsection a. is liable as a general partner to any third party who transacted business with the enterprise if the third party actually believed in good faith that the person was a general partner at the time of the transaction and no certificate of limited partnership was ever filed or a certificate of limited partnership was filed which names the person as a general partner, and:

(1) The business is transacted before an appropriate certificate of limited partnership is filed stating that the enterprise is a limited partnership and indicating in effect that the person is not a general partner;

(2) In the case of an amendment, it is after expiration of the 30-day period for filing an amendment indicating in effect that the person is not a general partner under section 16 of P.L. 1983, c. 489 (C. 42:2A-17) and the amendment has not been filed;

(3) Before the person withdraws, and an appropriate certificate, as provided in section 27 of P.L. 1983, c. 489 (C. 42:2A-28), is filed to show the withdrawal; or

(4) The business is transacted before an appropriate certificate of correction is filed indicating in effect that the person is not a general partner and the third party actually relied in good faith upon the foregoing inaccuracy and is adversely affected by the correction.

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Cite this article: FindLaw.com - New Jersey Statutes Title 42. Partnerships and Partnership Associations 42 § 2A-28 - last updated January 01, 2024 | https://codes.findlaw.com/nj/title-42-partnerships-and-partnership-associations/nj-st-sect-42-2a-28/

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