Limited Partnerships Act 2008

General - Liability of limited partners

30: Liability of limited partner who takes part in management of limited partnership

You could also call this:

"What happens if a limited partner helps manage the business and it gets into debt"

Illustration for Limited Partnerships Act 2008

If you are a limited partner in a limited partnership and you take part in managing it, you can be liable to someone who deals with the partnership. This means you can be responsible for debts or liabilities owed to that person, just like a general partner would be. You are liable if, when the debt was incurred, you were involved in managing the partnership, the other person knew you were involved, and they believed you were a general partner.

If these conditions are met, some other rules, like those in sections 23 and 28, do not apply. You are only liable to the extent that this section says you are, so if someone deals with the limited partnership and there is a breach of section 20(1), you are not liable unless this section specifically says you are.

You should understand that being a limited partner usually means you have limited liability, but taking part in management can change this.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1139174.


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"General partners must follow the rules and make sure things get done on time"


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31: Liability of limited partner who does not take part in management of limited partnership, or

"What happens if you're a limited partner and don't help manage the business"

Part 2General
Liability of limited partners

30Liability of limited partner who takes part in management of limited partnership

  1. A limited partner (A) is liable, to the same extent as a general partner, to a person (B) who deals with the limited partnership if, at the time that the debt or liability of the limited partnership to B was incurred, all of the following applied:

  2. A took part in the management of the limited partnership; and
    1. B knew that A took part in the management of the limited partnership; and
      1. B believed on reasonable grounds that A was a general partner.
        1. Sections 23 and 28 do not apply in a case where subsection (1) applies.

        2. A limited partner is not liable to a person who deals with a limited partnership for breach of section 20(1) except to the extent provided by this section.