§ 34-15 — Liability of limited partners to third parties.

Connecticut § 34-15

• Jurisdiction: Connecticut
• Title 34: Limited Partnerships, Partnerships, Professional Associations, Limited Liability Companies and Statutory Trusts
• Ch. 610: Uniform Limited Partnership Act

Text

(a) Except as provided in subsection (d) of this section, a limited partner is not liable for the obligations of a limited partnership unless he is also a general partner or, in addition to the exercise of his rights and powers as a limited partner, he participates in the control of the business; provided, if the limited partner does participate in the control of the business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner. (b) A limited partner does not participate in the control of the business within the meaning of subsection (a) of this section by virtue of his possessing or exercising one or more of the following powers: (1) Being a contractor for or an agent or employee of the limited partnership or of a general partner or being an officer, director or shareholder of a general partner that is a corporation; (2) Consulting with and advising a general partner with respect to the business of the limited partnership; (3) Acting as surety for the limited partnership or guaranteeing or assuming one or more specific obligations of the limited partnership; (4) Taking any action required or permitted by law to bring or pursue a derivative action in the right of the limited partnership; (5) Requesting or attending a meeting of partners; or (6) Proposing, approving or disapproving, by voting or otherwise, one or more of the following matters: (i) The dissolution and winding up of the limited partnership; (ii) The sale, exchange, lease, mortgage, pledge or other transfer of all or substantially all of the assets of the limited partnership; (iii) The incurrence of indebtedness by the limited partnership other than in the ordinary course of its business; (iv) A change in the nature of the business; (v) The removal of a general partner or limited partner; (vi) The admission of a general partner or limited partner; (vii) A transaction involving an actual or potential conflict of interest between a general partner and the limited partnership or the limited partners; (viii) An amendment to the partnership agreement or certificate of limited partnership; (ix) A merger or consolidation of a limited partnership; or (x) Matters 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; (7) Winding up the limited partnership pursuant to section 34-28c ; or (8) Exercising any right or power permitted to limited partners under this chapter and not specifically enumerated in this subsection. (c) The enumeration in subsection (b) of this section does not mean that the possession or exercise of any other powers by a limited partner constitutes participation by him in the control of the business of the limited partnership. (d) A limited partner who knowingly permits his name to be used in the name of the limited partnership, except under circumstances permitted by subdivision (2) of section 34-13 , is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner. See Sec. 34-38b re inapplicability of provisions as amended by P.A. 86-379 to partnerships existing before October 1, 1986.

Legislative History

(1961, P.A. 79, S. 7; P.A. 79-440, S. 18; P.A. 85-197, S. 3; 85-613, S. 130; P.A. 86-379, S. 8; P.A. 93-363, S. 20.) History: P.A. 79-440 replaced previous provisions which stated that limited partner is not liable “as a general partner unless, in addition to the exercise of his rights and powers as a limited partner, he takes part in the control of the business”; P.A. 85-197 amended Subsec. (a) to revise provisions re liability of a limited partner to persons who transact business with the limited partnership by replacing “but, if the limited partner's participation in the control of the business is not substantially the same as the exercise of the powers of the general partner” with “provided, if the partner does participate in the control of the business,” and by replacing the standard of knowledge required of such other persons, i.e. replacing “with actual knowledge of his participation in control” with “reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner”, amended Subsec. (b) to replace “solely by doing” with “by virtue of his possessing or exercising” and to add Subdivs. (5)(vi) and (5)(vii) re voting on the admission of a general or limited partner and on such material matters stated in the certificate or agreement, and amended Subsec. (c) to add “control of the” before “business”; P.A. 85-613 made technical changes in Subsec. (b); P.A. 86-379 amended Subsec. (b) by adding “or being an officer, director or shareholder of a general partner that is a corporation” in Subdiv. (1), adding “or guaranteeing or assuming one or more specific obligations of the limited partnership” in Subdiv. (3), deleting provision in Subdiv. (4) re approval or disapproval of amendment and adding “taking any action required or permitted by law to bring or pursue a derivative action in the right of the limited partnership”, adding provision in Subdiv. (5) re requesting or attending meeting of partners, deleting in Subdiv. (6)(ii) “other than in the ordinary course of its business” and deleting former provisions of Subdiv. (6)(vii) re material matters of partnership and adding provision re transaction involving actual or potential conflict of interest and adding new provisions in Subdiv. (6)(viii), (ix) and Subdivs. (7) and (8); P.A. 93-363 added Subsec. (b)(6)(ix) re merger or consolidation of a limited partnership.