29-320. Person erroneously believing himself limited partner
209 words·~1 min read·
/az/title-29/29-320A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
A. Except as provided in subsection B, a person who makes a contribution to a business enterprise and erroneously but in good faith believes that he 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:
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 is liable as a general partner to any third party who transacts business with the enterprise:
1. Before the person withdraws and an appropriate certificate is filed to show withdrawal; or
2. Before an appropriate certificate is filed to show that he 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.