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:

Terms Used In Arizona Laws 29-320

  • Amendment: A proposal to alter the text of a pending bill or other measure by striking out some of it, by inserting new language, or both. Before an amendment becomes part of the measure, thelegislature must agree to it.
  • Contribution: means any cash, property, services rendered, or promissory note or other binding obligation to contribute cash or property or to perform services, which a partner contributes to a limited partnership in his capacity as a partner. See Arizona Laws 29-301
  • General partner: means a person who has been admitted to a limited partnership as a general partner in accordance with the partnership agreement and named in the certificate of limited partnership as a general partner. See Arizona Laws 29-301
  • Limited partner: means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement. See Arizona Laws 29-301
  • Partner: means a limited or general partner. See Arizona Laws 29-301
  • Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
  • Person: means a natural person, partnership, domestic or foreign limited partnership, trust, estate, association, corporation or entity. See Arizona Laws 29-301
  • State: means a state, territory or possession of the United States, the District of Columbia or the Commonwealth of Puerto Rico. See Arizona Laws 29-301

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.

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