50-73.25 - Person erroneously believing himself limited partner. - Virginia Statutes

§ 50-73.25. Person erroneously believing himself limited partner.

A. Except as provided in subsection B of this section, a person who makes acontribution to a partnership and erroneously but in good faith believes thathe has become a limited partner in the partnership is not a general partnerin the partnership and is not bound by its obligations by reason of makingthe contribution, receiving distributions from the partnership, or exercisingany rights of a limited partner, if, on ascertaining the mistake, he:

1. Causes an appropriate certificate of limited partnership or a certificateof amendment to be executed and filed; or

2. Withdraws from future equity participation in the partnership by executingand filing with the Commission a certificate declaring his withdrawal underthe provisions of this section.

B. A person who makes a contribution of the kind described in subsection A ofthis section is liable as a general partner to any third party who transactsbusiness with the partnership prior to the occurrence of either of the eventsreferred to in subsection A of this section if: (i) such person knew orshould have known either that no certificate has been filed or that thecertificate inaccurately refers to him as a general partner and (ii) theother person actually believed in good faith that the person was a generalpartner at the time of the transaction and acted in reliance on such belief.

(1985, c. 607; 1987, c. 702.)