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Subject Topic: Limited Partner Question ???????? (Topic Closed Topic Closed) Post ReplyPost New Topic
  
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cpa_in_pa
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Posted: 01 Sep 2009 at 04:07 | IP Logged  

If a Limited partner participates in management do they have unlimited liability like a GP?
 
I guess my questiion is  - can a Limited partner have the ability to participate in management of a Limited partnership and have no personal liability beyond their investment?.
 
Thanks.
 
 


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kj_nyc
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If the limited partner manages the partnership substantially as a general partner does, the limited partner has unlimited liability with respect to a third party who believes that the limited partner was a general partner.  But otherwise, the limited partner retains its limited liability.
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fightonusc
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Actually, the participation of limited partners in the management of a limited partnership can result in a loss of limited liability protection for that limited partner.  They DO NOT retain limited liability if they manage the partnership. They don't just lose liability protection with regard to certain 3rd parties, they lose it entirely.

 

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kj_nyc
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fightonusc, where did you get that information from?  I found the following in the Wiley software (although I think my Wiley software is 1 version older than the latest):

3.  Rights of partners in limited partnership

a.   General partners manage partnership

b.   Limited partners invest

(1)  Limited partner who manages partnership substantially like general partner obtains liability like general partner to third parties who believed s/he was general partner

(2)  Limited partner allowed to do following without risking loss of limited protection

(a)  Acting as an agent or employee of limited partnership or as a general partner

(b)  Consulting with and advising general partner about business

(c)  Approving or disapproving amendments to limited partnership agreement

(d)  Voting on dissolution or winding up of limited partnership

(e)  Voting on loans of limited partnership

(f)  Voting on change in nature of business

(g)  Voting on removal of a general partner

(h)  Bringing derivative lawsuit or limited partner on behalf of limited partnership

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cpa_in_pa
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fightonusc wrote:
Actually, the participation of limited partners in the management of a limited partnership can result in a loss of limited liability protection for that limited partner.  They DO NOT retain limited liability if they manage the partnership. They don't just lose liability protection with regard to certain 3rd parties, they lose it entirely.

 

I am confused.

Kaplan BEC 2009-2010 States, on Page 118,

#2.  That a limited partner , under the RULPA, now has the authority to participate in management and control of the business

#4. Under RULPA a limited partner may do all of the following acts without losing limited liabilty protection;

a. Allowing use of the limited partner's name in LP name.

b. Acting as a consultant to a General Partner.

c. Acting as a guarantor of an obligation of the limited partners.

d. Requesting or attending partnership meeting.

e. Making proposals and approving or disapproving certain matters.

This doesn't make sense. WHAT I'M I NOT UNDERSTANDING?

 

 



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