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Limited Partnerships Act 2008

General - Liability of limited partners

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

You could also call this:

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

Illustration for Limited Partnerships Act 2008

If you are a limited partner in a limited partnership, you do not have to take part in managing the business. You are not liable for the debts of the limited partnership if you do not take part in its management. This means you are not responsible for paying the partnership's debts.

The limitation on your liability applies even if the limited partnership does business overseas. It also applies if someone connected to the partnership, such as a partner or an employee, does something overseas that results in liability.

You can look at the activities listed in the Schedule to see what does not constitute taking part in the management of the limited partnership.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1139177.

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

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

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32: Name of limited partnership must include words limited partnership, or

"A limited partnership's name must include 'limited partnership' or 'LP' to avoid confusion."

Part 2General
Liability of limited partners

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

  1. A limited partner who does not take part in the management of the limited partnership is not liable for the debts and liabilities of the limited partnership.

  2. The limitation on the liability of a limited partner in subsection (1) extends to any liability incurred—

  3. in connection with the conduct of the limited partnership’s business overseas; or
    1. as a result of an act or omission overseas of—
      1. a partner; or
        1. the limited partnership; or
          1. any officer, employee, agent, or representative of a general partner; or
            1. any officer, employee, agent, or representative of the limited partnership.

            2. None of the activities listed in the Schedule constitutes taking part in the management of the limited partnership.