A limited partner shall not become liable as a general partner unless, 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.
Source: L. 31: p. 629, § 7. CSA: C. 123, § 50. CRS 53: § 104-2-7. C.R.S. 1963: § 104-2-7. L. 2004: Entire section amended, p. 1436, § 112, effective July 1.
ANNOTATION
This section provides for a limited liability if he who invokes its protection shows that he has both strictly and substantially complied with the conditions upon which immunity from common law liability is granted. Holliday v. Union Bag Co., 3 Colo. 342 (1877) (decided under repealed laws antecedent to CSA, C. 123, § 74).
This section does not impose silence on a limited partner who has a material interest in the success of a partnership business, especially so when his opinion and suggestions are sought by a general partner. Silvola v. Rowlett, 129 Colo. 522, 272 P.2d 287 (1954).
A limited partner cannot be treated as a general partner for purposes of dissolution and winding up even though he performed some functions of a general partner. Roeschlein v. Watkins, 686 P.2d 1347 (Colo. App. 1983).
Provisions of a limited partnership agreement structuring expenses and establishing net profit and loss distribution formulae do not in themselves render a limited partner liable as a general partner for partnership debts. Alzado v. Blinder, Robinson & Co., Inc., 752 P.2d 544 (Colo. 1988).
A limited partner may become liable to partnership creditors as a general partner if the limited partner assumes control of partnership business. Whether limited partner's conduct amounts to assumption of control must be determined by consideration of several factors, including the purpose of the partnership, the administrative activities undertaken, the manner in which the entity actually functioned, and the nature and frequency of the limited partner's purported activities. Alzado v. Blinder, Robinson & Co., Inc., 752 P.2d 544 (Colo. 1988).
Style of suit against limited partnership. A limited partnership may be used either in its common name or by naming the general partners and designating their capacity. Frazier v. Carlin, 42 Colo. App. 226, 591 P.2d 1348 (1979).
And notice to general partners satisfactory. Because the general partners possess sole management responsibility for a limited partnership, notice to them in their capacities as general partners affords that notice to the limited partnership which is necessary to satisfy the demands of due process. Frazier v. Carlin, 42 Colo. App. 226, 591 P.2d 1348 (1979).