PARTNERSHIP ACT 1958 - SECT 98 Limited partner not to take part in the management of the incorporated limited partnership

PARTNERSHIP ACT 1958 - SECT 98

    (1)     A limited partner must not take part in the management of the business of the incorporated limited partnership.

    (2)     If a limited partner takes part in the management of the business of the incorporated limited partnership—

        (a)     the acts of the limited partner bind the partnership in circumstances where—

              (i)     they would be binding on the partnership if they were the acts of a general partner in the partnership; and

              (ii)     the person to whom the liability was incurred reasonably believed, having regard to the limited partner's conduct at the time the liability was incurred, that the limited partner was a general partner in the partnership; and

        (b)     where under paragraph (a) the partnership is bound by the acts of the limited partner, the limited partner is liable, as if a general partner, for any liability incurred by the partnership to a person as a direct result of the acts of the limited partner if the partnership is unable to satisfy the liability.

    (3)     A limited partner is not to be regarded as taking part in the management of the business of the incorporated limited partnership merely because the limited partner or a person acting on behalf of the limited partner—

        (a)     is an employee or an independent contractor of the partnership or of a general partner, or is an officer of a general partner that is a body corporate; or

        (b)     gives advice to, or on behalf of, the partnership or a general partner in the proper exercise of functions arising from the engagement of the limited partner in a professional capacity or arising from business dealings between the limited partner and the partnership or between the limited partner and a general partner; or

        (c)     gives a guarantee or indemnity in respect of any liability of the partnership or of a general partner; or

        (d)     takes any action, or participates in any action taken by any other limited partner, for the purpose of enforcing the rights, or safeguarding the interests, of the limited partner as a limited partner; or

        (e)     if permitted by the partnership agreement—

              (i)     calls, requisitions, convenes, chairs, participates in, postpones, adjourns or makes a record of a meeting of the partners or of the limited partners or of any of them; or

              (ii)     whether at the meeting or in writing or otherwise, requisitions, formulates, signs, approves, disapproves, proposes, moves, supports, opposes, speaks to or votes on any resolution, or an amendment to any resolution, whether or not considered or to be considered at a meeting of the partners or of the limited partners or of any of them; or

        (f)     exercises a power conferred on the limited partner by subsection (4) or under the partnership agreement or otherwise has, or exercises, a right to—

              (i)     have access to and inspect the books or records of the partnership or copy any of them; or

              (ii)     examine the state or prospects of the business of the partnership or advise, or consult with, other partners in relation to such matters; or

        (g)     gives advice to, or consults with, or is or acts as an officer, director, security holder, partner, agent, employee or independent contractor of, an associate of the partnership; or

        (h)     is or acts as a lender to, or fiduciary for, an associate of the partnership; or

              (i)     to the extent authorised by the partnership agreement, participates on, or has or exercises any right to appoint one or more persons to, or remove one or more persons from, a committee which considers, approves of, consents to or disapproves of any one or more of the following proposals from a general partner—

              (i)     a proposal involving a material change in the nature of the business of the partnership (including a change in, or departure from, any investment guidelines, policies or conditions relating to the business of the partnership); or

              (ii)     a proposal for the adoption of a method for valuing some or all of the assets of the partnership (including a change to, replacement of or variation from such a method); or

              (iii)     a proposal for an extension or reduction in the period in which, under the partnership agreement, investments (or certain types of investments) can be made by the partnership, or for any approval or disapproval of investments that the partnership does not otherwise have a right to make; or

              (iv)     a proposal relating to any actual or potential transaction or other matter involving any actual or potential conflict of interest; or

              (v)     a proposal relating to any actual or potential transaction, contract, arrangement or understanding between one or more of the partners, or their associates, and the general partner, the partnership or any associate of the general partner or of the partnership; or

              (vi)     a proposal for the delegation, waiver, release or variation of an authority, right, duty or obligation of the general partner; or

              (vii)     a proposal for the appointment of any person as a senior executive of the general partner or of an associate of the general partner—

but not so as to permit any direction of the general partner by a limited partner as to any matter regarding the management of the business of the partnership where the general partner is acting within the terms of the partnership agreement; or

        (j)     nominates, selects, investigates, evaluates or negotiates with, or participates on a committee which proposes, considers, approves of, consents to or disapproves of any nomination, selection, appointment, change in control or ownership, suspension, replacement or removal of a general partner or an associate of a general partner.

    (4)     Subject to the partnership agreement, a limited partner or a person authorised by the limited partner may at any time—

        (a)     have access to and inspect the books or records of the partnership or copy any of them; and

        (b)     examine the state or prospects of the business of the partnership and advise, or consult with, other partners in relation to such matters.

    (5)     The provisions of this section (other than subsection (4)) may not be varied by the partnership agreement or with the consent of the partners, whether given by or under the partnership agreement or otherwise.

Note

Section 96(4) enables partners to give consent by or under the partnership agreement.

S. 99 inserted by No. 99/2003 s. 4.