Article 3 - Limited Partners

California Corporations Code — §§ 15903.01-15903.07

Sections (7)

Added by Stats. 2006, Ch. 495, Sec. 20. Effective January 1, 2007. Section operative January 1, 2008, pursuant to Section 15912.04.

A person becomes a limited partner:

(a)as provided in the partnership agreement;

(b)as the result of a conversion or merger under Article 11 (commencing with Section 15911.01); or

(c)with the consent of all the partners.

§ 15903.02

Added by Stats. 2006, Ch. 495, Sec. 20. Effective January 1, 2007. Section operative January 1, 2008, pursuant to Section 15912.04.

A limited partner does not have the right or the power as a limited partner to act for or bind the limited partnership.

§ 15903.03

Amended by Stats. 2007, Ch. 130, Sec. 43. Effective January 1, 2008.

(a)A limited partner is not liable for any obligation of a limited partnership unless named as a general partner in the certificate or, in addition to exercising the rights and powers of a limited partner, the limited partner participates in the control of the business. If a limited partner participates in the control of the business without being named as a general partner, that partner may be held liable as a general partner only to persons who transact business with the limited partnership with actual knowledge of that partner’s participation in control and with a reasonable belief, based upon the limited partner’s conduct, that the partner is a general partner at the time of the transaction. Nothing in this chapter shall be construed to affect the liability of a limited partner to third parties for the limited partner’s participation in tortious conduct.

(b)A limited partner does not participate in the control of the business within the meaning of subdivision (a) solely by doing, attempting to do, or having the right or power to do, one or more of the following:

(1)Being any of the following:

(A)An independent contractor for, an agent or employee of, or transacting business with, the limited partnership or a general partner of the limited partnership.

(B)An officer, director, or shareholder of a corporate general partner of the limited partnership.

(C)A member, manager, or officer of a limited liability company that is a general partner of the limited partnership.

(D)A limited partner of a partnership that is a general partner of the limited partnership.

(E)A trustee, administrator, executor, custodian, or other fiduciary or beneficiary of an estate or trust that is a general partner.

(F)A trustee, officer, adviser, shareholder, or beneficiary of a business trust that is a general partner.

(2)Consulting with and advising a general partner with respect to the business of the limited partnership.

(3)Acting as surety for the limited partnership or for a general partner, guaranteeing one or more specific debts of the limited partnership, providing collateral for the limited partnership or general partner, borrowing money from the limited partnership or a general partner, or lending money to the limited partnership or a general partner.

(4)Approving or disapproving an amendment to the partnership agreement.

(5)Voting on, proposing, or calling a meeting of the partners.

(6)Winding up the partnership pursuant to Section 15908.03.

(7)Executing and filing a certificate pursuant to Section 15902.05, a certificate of withdrawal pursuant to paragraph (4) of subdivision (a) of Section 15902.04, or a certificate of cancellation of the certificate of limited partnership pursuant to paragraph (6) of subdivision (a) of Section 15902.04.

(8)Serving on an audit committee or committee performing the functions of an audit committee.

(9)Serving on a committee of the limited partnership or the limited partners for the purpose of approving actions of the general partner.

(10)Calling, requesting, attending, or participating at any meeting of the partners or the limited partners.

(11)Taking any action required or permitted by law to bring, pursue, settle, or terminate a derivative action on behalf of the limited partnership.

(12)Serving on the board of directors or a committee of, consulting with or advising, being or acting as an officer, director, stockholder, partner, member, manager, agent, or employee of, or being or acting as a fiduciary for, any person in which the limited partnership has an interest.

(13)Exercising any right or power permitted to limited partners under this chapter and not specifically enumerated in this subdivision.

(c)The enumeration in subdivision (b) does not mean that any other conduct or the possession or exercise of any other power by a limited partner constitutes participation by the limited partner in the control of the business of the limited partnership.

§ 15903.04

Amended by Stats. 2022, Ch. 617, Sec. 91. (SB 1202) Effective January 1, 2023.

(a)On 10 days’ demand, made in a record received by the limited partnership, a limited partner may inspect and copy any information required to be maintained pursuant to Section 15901.11 during regular business hours in the limited partnership’s principal office. The limited partner need not have any particular purpose for seeking the information.

(b)Subject to subdivision (g), during regular business hours and at a reasonable location specified by the limited partnership, a limited partner may obtain from the limited partnership, which may be transmitted via electronic transmission, and inspect and copy true and full information regarding the

state of the activities and financial condition of the limited partnership and other information regarding the activities of the limited partnership as is just and reasonable if:

(1)the limited partner seeks the information for a purpose reasonably related to the partner’s interest as a limited partner;

(2)the limited partner makes a demand in a record received by the limited partnership, describing with reasonable particularity the information sought and the purpose for seeking the information; and

(3)the information sought is directly connected to the limited partner’s purpose.

(c)Within 10 days after receiving a demand pursuant to subdivision

(b), the limited partnership in a record shall inform the limited partner that made the demand:

(1)what information the limited partnership will provide in response to the demand;

(2)when and where the limited partnership will provide the information; and

(3)if the limited partnership declines to provide any demanded information, the limited partnership’s reasons for declining.

(d)Subject to subdivision (f), a person dissociated as a limited partner may inspect and copy required information during regular business hours in the limited partnership’s principal office if:

(1)the information pertains

to the period during which the person was a limited partner;

(2)the person seeks the information in good faith; and

(3)the person meets the requirements of subdivision (b).

(e)The limited partnership shall respond to a demand made pursuant to subdivision (d) in the same manner as provided in subdivision (c).

(f)If a limited partner dies, Section 15907.04 applies.

(g)The limited partnership shall have the right to keep confidential from limited partners for such period of time as the limited partnership deems reasonable, any information which the limited partnership reasonably believes to be in the

nature of trade secrets or other information the disclosure of which the limited partnership in good faith believes is not in the best interest of the limited partnership or could damage the limited partnership or its business or which the limited partnership is required by law or by agreement with a third party to keep confidential.

(h)The limited partnership may impose reasonable restrictions on the use of information obtained under this section. In a dispute concerning the reasonableness of a restriction under this subdivision, the limited partnership has the burden of proving reasonableness.

(i)A limited partnership may charge a person that makes a demand under this section reasonable costs of copying, limited to the costs of labor and material.

(j)Whenever this chapter or a partnership agreement provides for a limited partner to give or withhold consent to a matter, before the consent is given or withheld, the limited partnership shall, without demand, provide the limited partner with all information material to the limited partner’s decision that the limited partnership knows.

(k)A limited partner or person dissociated as a limited partner may exercise the rights under this section through an attorney or other agent. Any restriction imposed under subdivision (g), subdivision (h) or by the partnership agreement applies both to the attorney or other agent and to the limited partner or person dissociated as a limited partner.

(l)The rights stated in this

section do not extend to a person as transferee, but may be exercised by the legal representative of an individual under legal disability who is a limited partner or person dissociated as a limited partner.

§ 15903.05

Added by Stats. 2006, Ch. 495, Sec. 20. Effective January 1, 2007. Section operative January 1, 2008, pursuant to Section 15912.04.

(a)A limited partner does not have any fiduciary duty to the limited partnership or to any other partner solely by reason of being a limited partner.

(b)A limited partner shall discharge the duties to the partnership and the other partners under this chapter or under the partnership agreement and exercise any rights consistently with the obligation of good faith and fair dealing.

(c)A limited partner does not violate a duty or obligation under this chapter or under the partnership agreement merely because the limited partner’s conduct furthers the limited partner’s own interest.

§ 15903.06

Amended by Stats. 2014, Ch. 834, Sec. 26. (SB 1041) Effective January 1, 2015.

(a)Except as otherwise provided in subdivision (b), a person that makes an investment in a business enterprise and erroneously but in good faith believes that the person has become a limited partner in the enterprise is not liable for the enterprise’s obligations by reason of making the investment, receiving distributions from the enterprise, or exercising any rights of or appropriate to a limited partner, if, on ascertaining the mistake, the person:

(1)causes an appropriate certificate of limited partnership, amendment, or certificate of correction to be signed and delivered to the Secretary of State for filing; or

(2)withdraws from future participation as an owner in the enterprise by signing and delivering to and on a form prescribed by the Secretary of State for filing a certificate of withdrawal containing the name of the limited partnership and the Secretary of State’s file number of the limited partnership under this section.

(b)A person that makes an investment described in subdivision (a) is liable to the same extent as a general partner to any third party that enters into a transaction with the enterprise, believing in good faith that the person is a general partner, before the Secretary of State files a certificate of withdrawal, certificate of limited partnership, amendment, or certificate of correction to show that the person is not a general partner.

(c)If a person makes a diligent effort in good faith to comply with paragraph (1) of subdivision (a) and is unable

to cause the appropriate certificate of limited partnership, amendment, or certificate of correction to be signed and delivered to the Secretary of State for filing, the person has the right to withdraw from the enterprise pursuant to paragraph (2) of subdivision (a) even if the withdrawal would otherwise breach an agreement with others that are or have agreed to become co-owners of the enterprise.

§ 15903.07

Added by Stats. 2006, Ch. 495, Sec. 20. Effective January 1, 2007. Section operative January 1, 2008, pursuant to Section 15912.04.

(a)The partnership agreement may provide for the creation of classes of limited partners. The partnership agreement shall define the rights, powers, and duties of those classes, including rights, powers, and duties senior to other classes of limited partners.

(b)The partnership agreement may provide to all or certain specified classes of limited partners the right to vote separately or with all or any class or the general partners on any matter.