§3424. Person erroneously believing himself or herself limited partner

Link to law: http://legislature.vermont.gov/statutes/section/11/023/03424
Published: 2015

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Title

11

:
Corporations, Partnerships and Associations






Chapter

023

:
LIMITED PARTNERSHIPS






Subchapter

003
:
LIMITED PARTNERS










 

§

3424. Person erroneously believing himself or herself limited partner

(a) Except as

provided in subsection (b) of this section, a person who makes a contribution

to a business enterprise and erroneously but in good faith believes that he or

she 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 the mistake, he or she:

(1) causes an

appropriate certificate of limited partnership 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) of this section is

liable as a general partner to any third party who transacts business with the

enterprise before the person withdraws and an appropriate certificate is filed

to show withdrawal, or before an appropriate certificate is filed to show that

he or she is not a general partner, but in either case only if the third party

actually believed in good faith that the person was a general partner at the

time of the transaction. (Added 1997, No. 149 (Adj. Sess.), § 4, eff. Jan. 1,

1999.)
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