KRS § 362.437 — KY Code / Title XXIX / Chapter 362 / Section 362.437
362.437 Liability of limited partners to third parties
Status: in_force

362.437 Liability of limited partners to third parties.

(1) Except as provided in subsection (4) of this section, a limited partner shall not be

liable for the obligations of a limited partnership unless he is also a general partner

or, in addition to the exercise of his rights and powers as a limited partner, he

participates in the control of the business. However, if the limited partner

participates in the control of the business, he shall be liable only to persons who

transact business with the limited partnership reasonably believing, based upon the

limited partner's conduct, that the limited partner is a general partner.

(2) A limited partner shall not participate in the control of the business within the

meaning of subsection (1) solely by doing one (1) or more of the following things:

(a) Being a contractor for, or an agent or employee of, the limited partnership or

of a general partner or being an officer, director, or shareholder of a general

partner that is a corporation;

(b) Consulting with or advising a general partner with respect to the business of

the limited partnership;

(c) Acting as surety, guarantor or endorser for the limited partnership,

guaranteeing or assuming one (1) or more specific obligations of the limited

partnership or providing collateral for the limited partnership;

(d) Taking any action required or permitted by law to bring or pursue a derivative

action in the right of the limited partnership;

(e) Requesting, attending or participating in a meeting of partners;

(f) Proposing, approving, or disapproving, by voting or otherwise, one (1) or

more of the following matters:

1. The dissolution and winding up of the limited partnership;

2. The sale, exchange, lease, mortgage, assignment, pledge, or other

transfer of, or granting of a security interest in, all, or substantially all, of

the assets of the limited partnership;

3. The incurrence, renewal, refinancing, payment or other discharge 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 admission or removal of a general partner;

6. The admission or removal of a limited partner;

7. A transaction involving an actual or potential conflict of interest

between a general partner and the limited partnership or the limited

partners;

8. An amendment to the partnership agreement or certificate of limited

partnership; and

9. A matter related to the business of the limited partnership not otherwise

enumerated in this subsection which the partnership agreement states in

writing is subject to the approval or disapproval of limited partners;

(g) Winding up the limited partnership pursuant to KRS 362.491; or

(h) Exercising any right or power permitted to limited partners under KRS

362.403 to 362.525 and not specifically enumerated in this subsection.

(3) The enumeration in subsection (2) of this section shall not mean that the possession

or exercise by a limited partner of any power other than a power enumerated in that

subsection constitutes participation by him in the business of the limited

partnership.

(4) A limited partner who knowingly permits his name to be used in the name of the

limited partnership, except under a circumstance permitted by KRS 362.403(2),

shall be liable to creditors who extend credit to the limited partnership without

actual knowledge that the limited partner is not a general partner.