Michigan Laws 449.1304 – Liability of person erroneously but in good faith believing he or she is limited partner
Current as of: 2024 | Check for updates
|
Other versions
(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 or she 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, the person does either of the following:
(1) Causes an appropriate certificate of limited partnership, certificate of amendment, or restated certificate of limited partnership to be executed and filed.
Terms Used In Michigan Laws 449.1304
- Administrator: means the chief officer of the Michigan department of commerce or his or her designated representative. See Michigan Laws 449.1101
- 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, and the certificate as amended or restated, referred to in section 201. See Michigan Laws 449.1101
- 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 the capacity of a partner. See Michigan Laws 449.1101
- 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 Michigan Laws 449.1101
- Limited partner: means a person who has been admitted to a limited partnership as a limited partner in accordance with the partnership agreement and named in the certificate of limited partnership as a limited partner. See Michigan Laws 449.1101
- Partner: means a limited or general partner. See Michigan Laws 449.1101
- 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, or corporation, or any other legal entity. See Michigan Laws 449.1101
(2) Withdraws from future equity participation in the enterprise. With respect to any limited partnership for which a certificate of limited partnership has been filed, the withdrawal may be accomplished by executing and filing with the office of the administrator 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: (i) before the person withdraws and an appropriate certificate is filed to show withdrawal or (ii) before an appropriate certificate is filed to show the person’s status as a limited partner and, in the case of an amendment, after expiration of the 60-day period for filing an amendment relating to the person as a limited partner under section 202, 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.