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:

Terms Used In Virginia Code 50-73.25

  • 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.
  • Certificate of limited partnership: means the certificate referred to in § 50-73. See Virginia Code 50-73.1
  • Commission: means the State Corporation Commission. See Virginia Code 50-73.1
  • Contribution: means any cash, property, services rendered, or a 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 Virginia Code 50-73.1
  • 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 Virginia Code 50-73.1
  • Limited partner: means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement. See Virginia Code 50-73.1
  • Partner: means a limited or general partner. See Virginia Code 50-73.1
  • 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 an individual, partnership, limited partnership (domestic or foreign), trust, estate, association, corporation, or any other legal or commercial entity. See Virginia Code 50-73.1

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.

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