1. Except as provided in subsection 4, a limited partner is not liable for the obligations of a limited partnership unless the limited partner is also a general partner or, in addition to the exercise of the limited partner's rights and powers as a limited partner, the limited partner takes part in the control of the business. However, if the limited partner's participation in the control of the business is not substantially the same as the exercise of the powers of a general partner, the limited partner is liable only to persons who transact business with the limited partnership with actual knowledge of the limited partner's participation in control.
2. A limited partner does not participate in the control of the business within the meaning of subsection 1 solely by doing one or more of the following:
a. Being a contractor for or an agent or employee of the limited partnership.
b. Being a contractor for or an agent, employee, director, officer, or shareholder of or a limited partner of a general partner.
c. Consulting with and advising a general partner with respect to the business of the limited partnership.
d. Acting as surety for the limited partnership.
e. Approving or disapproving an amendment to the partnership agreement.
f. Voting on one or more of the following matters:
(1) The dissolution and winding up of the limited partnership.
(2) The sale, exchange, lease, mortgage, pledge, or other transfer of all or substantially all the assets of the limited partnership other than in the ordinary course of its business.
(3) The incurrence of indebtedness by the limited partnership other than in the ordinary course of its business.
(4) A change in the nature of the business.
(5) The removal of a general partner.
3. The enumeration in subsection 2 does not mean that the possession or exercise of any other powers by a limited partner constitutes participation by the limited partner in the business of the limited partnership.
4. A limited partner who knowingly permits the limited partner's name to be used in the name of the limited partnership, except under circumstances permitted by section 487.102, subsection 2, paragraph "a", is liable to creditors who extend credit to the limited partnership without actual knowledge that the limited partner is not a general partner.
[C24, 27, 31, 35, 39, § 9812, 9814; C46, 50, 54, 58, 62, 66, 71, 73, 75, 77, 79, 81, § 545.7, 545.9; 82 Acts, ch 1103, § 303]
C93, § 487.303
Referred to in § 487.302
© 1997 Cornell College and League of Women Voters of Iowa
Last update: Mon Jan 27 16:05:08 CST 1997