Code of Virginia § 50-73.25. Person erroneously believing himself limited partner.

236 words·~1 min read·/va/title-50/chapter-2-1/50-73-25

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

A. Except as provided in subsection B of this section, a person who makes a contribution to a partnership and erroneously but in good faith believes that he has become a limited partner in the partnership is not a general partner in the partnership and is not bound by its obligations by reason of making the contribution, receiving distributions from the partnership, 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 partnership by executing and filing with the Commission a certificate declaring his withdrawal under the provisions of 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 partnership prior to the occurrence of either of the events referred to in subsection A of this section if:

(i)such person knew or should have known either that no certificate has been filed or that the certificate inaccurately refers to him as a general partner and

(ii)the other person actually believed in good faith that the person was a general partner at the time of the transaction and acted in reliance on such belief.

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