(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, he or she:
(1) Causes an appropriate certificate of limited partnership or a certificate of amendment to be executed and filed; or
(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 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 his or her status as a limited partner and, in the case of an amendment, after expiration of the thirty (30) day period for filing an amendment relating to the person as a limited partner under § 7-13-9, 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.
History of Section.
P.L. 1985, ch. 390, § 2.