South Dakota Codified Laws 48-7-304. Person erroneously believing himself limited partner
(a) Except as provided in this section, 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 certificate of amendment to be executed and filed; or
Terms Used In South Dakota Codified Laws 48-7-304
- 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.
- 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: includes natural persons, partnerships, associations, cooperative corporations, limited liability companies, and corporations. See South Dakota Codified Laws 2-14-2
(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 subdivision (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.
Source: SL 1986, ch 391, §§ 304(a), 304(b).