Section: Effective date
Liability to third parties. a. Except as provided in subsection d., 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 takes part in the control of the business. However, if the limited partner's participation in the control of the business is not substantially the same as the exercise of the powers of a general partner, he is liable only to persons who transact business with the limited partnership with actual knowledge of, and reliance on, his participation in control.
b. A limited partner does not participate in the control of the business within the meaning of subsection a. solely by doing one or more of the following:
(1) Being a contractor for or an agent or employee of the limited partnership or being a contractor, agent, employee, corporate officer, corporate director, or shareholder of a general partner;
(2) Consulting with or advising a general partner with respect to any matter, including the business of the limited partnership;
(3) Acting as surety, guarantor, or endorser for the limited partnership or assuming one or more specific obligations of the limited partnership or providing collateral for the partnership;
(4) (Deleted by amendment, P.L. 1988, c. 130.)
(5) (Deleted by amendment, P.L. 1988, c. 130.)
(6) Serving as an officer, director or shareholder of a corporate general partner; or
(7) Approving or disapproving matters related to the business of the partnership as shall be stated in the certificate and partnership agreement;
(8) Calling, requesting, attending or participating at a meeting of the partners or the limited partners;
(9) Winding up a limited partnership pursuant to section 52 of P.L. 1983, c. 489 (C. 42:2A-53);
(10) Taking any action required or permitted by law to bring or pursue a derivative action in the right of the limited partnership;
(11) Serving on a committee of the limited partnership or the limited partners;
(12) Proposing, approving or disapproving, by voting (by number, financial interest, class, group or as otherwise provided in the partnership agreement) or otherwise, on one or more of the following matters:
(a) The dissolution and winding up of the limited partnership;
(b) The sale, exchange, lease, mortgage, pledge, or other transfer of all or substantially all the assets of the limited partnership other than in the ordinary course of its business;
(c) The incurrence of indebtedness by the limited partnership other than in the ordinary course of its business;
(d) A change in the nature of the business;
(e) The admission, removal or retention of a partner;
(f) A transaction or other matter involving an actual or potential conflict of interest;
(g) An amendment to the partnership agreement or certificate of limited partnership; or
(13) Exercising any right or power granted or permitted to limited partners under this chapter and not specifically enumerated in this subsection.
c. The enumeration in subsection b. does not mean that the possession or exercise of any other powers by a limited partner constitutes participation by him in 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 subsection a. (2) of section 6 of P.L. 1983, c. 489 (C. 42:2A-6), is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.
L. 1983, c. 489, s. 26; amended 1988,c.130,s.14.
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