North Carolina General Statutes 59-304. Person erroneously believing himself limited partner
(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 the person 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 North Carolina General Statutes 59-304
- 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.
- Business: means any lawful trade, investment, or other purpose or activity, whether or not the trade, investment, purpose, or activity is carried on for profit. See North Carolina General Statutes 59-102
- 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 North Carolina General Statutes 59-102
- 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 North Carolina General Statutes 59-102
- Limited partner: means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement. See North Carolina General Statutes 59-102
- Partner: means a limited or general partner. See North Carolina General Statutes 59-102
- 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, domestic or foreign partnership, domestic or foreign limited partnership, domestic or foreign limited liability company, trust, estate, unincorporated association, domestic or foreign corporation, domestic or foreign nonprofit corporation, or another entity. See North Carolina General Statutes 59-102
(2) Withdraws from future equity participation in the enterprise.
(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 enterprise in the case in which:
(1) The third party actually believed in good faith that the person was a general partner at the time of the transaction; and
(2) The third party transacted business with the enterprise before either:
a. An appropriate certificate has been filed pursuant to subsection (a) of this section to reflect that the person is not a general partner; or
b. The person has given notice to the partnership of withdrawal from future equity participation and before the withdrawal was effective. (1985 (Reg. Sess., 1986), c. 989, s. 2; 1999-362, s. 19.)