§ 7-13-19 - Liability to third parties.
SECTION 7-13-19
§ 7-13-19 Liability to third parties.– (a) Except as provided in subsection (d), a limited partner is not liable forthe obligations of a limited partnership unless he or she is also a generalpartner or, in addition to the exercise of his or her rights and powers as alimited partner, he or she participates in the control of the business.However, if the limited partner participates in the control of the business, heor she is liable only to persons who establish by clear and convincing evidencethat they transacted business with the limited partnership reasonablybelieving, based on the limited partner's active conduct, that the limitedpartner is a general partner.
(b) A limited partner does not participate in the control ofthe business regardless of the nature, extent, scope, number or frequency ofthe limited partner's possessing or, regardless of whether or not the limitedpartner has the rights or powers, exercising or attempting to exercise one ormore of the rights or powers or having or, regardless of whether or not thelimited partner has the rights or powers, acting or attempting to act in one ormore of the following capacities:
(1) Being an independent contractor for or transactingbusiness with, including being a contractor for, or being an agent or employeeof, the limited partnership or a general partner, or being an officer, directoror stockholder of a corporate general partner, or being a partner of apartnership that is a general partner of the limited partnership, or being afiduciary or beneficiary or an estate or trust which is a general partner;
(2) Consulting with or advising a general partner regardingany matter, including the business of the limited partnership;
(3) Acting as surety, guarantor or endorser for the limitedpartnership or a general partner, guaranteeing or assuming one or moreobligations of a limited partnership or a general partner, borrowing money fromthe limited partnership or a general partner, lending money to the limitedpartnership or a general partner, or providing collateral for the limitedpartnership or a general partner;
(4) Approving or disapproving an amendment to the partnershipagreement;
(5) Acting or causing the taking or refraining from thetaking of any action, including by proposing, approving, consenting, ordisapproving, by voting or otherwise, with respect to one or more of thefollowing matters:
(i) The dissolution and winding up of the limited partnershipor an election to continue the limited partnership or an election to continuethe business of a limited partnership;
(ii) The sale, exchange, lease, mortgage, pledge, or othertransfer of or granting of a security interest in any asset or assets of thelimited partnership;
(iii) The incurrence, renewal, refinancing, or repayment orother discharge of indebtedness by the limited partnership;
(iv) A change in the nature of the business;
(v) The admission, removal, or retention of a general partner;
(vi) An amendment to the partnership agreement or certificateof limited partnership;
(vii) A matter related to the business of the limitedpartnership not otherwise enumerated in this subsection which the partnershipagreement states, in writing, is subject to the approval or disapproval oflimited partners;
(viii) Winding up the limited partnership pursuant to thischapter;
(ix) Exercising any right or power permitted to limitedpartners under this chapter and not specifically enumerated in this subsection;
(x) The admission, removal, or retention of a limited partner;
(xi) A transaction or other matter involving an actual orpotential conflict of interest;
(xii) The merger or consolidation of a limited partnership;
(xiii) As to a limited partnership which is registered as aninvestment company under the Investment Company Act of 1940, as amended, anymatter required by the Investment Company Act of 1940, 15 U.S.C. § 80a-1et seq., as amended, or the rules and regulations of the securities andexchange commission under that Act, to be approved by the holders of beneficialinterests in an investment company, including the election of directors ortrustees of the investment company, the approving or terminating of investmentadvisory or underwriting contracts, and the approving of auditors;
(xiv) The indemnification of any partner or any other person;or
(xv) Any other matters that are stated in the partnershipagreement or in any other agreement or in writing.
(6) Taking any action required or permitted by law to bringor pursue or settle or otherwise terminate a derivative action in the right ofthe limited partnership;
(7) Calling, requesting, attending, or participating in ameeting of partners or limited partners; or
(8) Serving on a committee of the limited partnership or thelimited partners.
(9) Serving on the board of directors or a committee of,consulting with or advising, being an officer, director, stockholder, partner,agent or employee of, or being a fiduciary for, any person in which the limitedpartnership has an interest; or
(10) Exercising any right or power granted or permitted tolimited partners under this chapter and not specifically enumerated in thissubsection.
(c) The enumeration in subsection (b) does not mean that thepossession or exercise of any other powers by a limited partner constitutesparticipation by him or her in the business of the limited partnership.
(d) A limited partner does not participate in the control ofthe business within the meaning of subsection (a) by virtue of the fact thatall or any part of the name of the limited partner is included in the name ofthe limited partnership.
(e) This section does not create rights or powers of limitedpartners. The rights and powers may be created only by a certificate of limitedpartnership, a partnership agreement or any other agreement or in writing, orby other sections of this chapter.