ICAEW BL · Chapter 7 · Question 9 of 10
Rowan is a limited partner in a limited partnership registered under the Limited Partnerships Act 1907. Frustrated with the business's performance, he begins negotiating supplier contracts and directing staff. What is the legal consequence?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) He becomes liable as a general partner for debts incurred while he takes part in management
Explanation
A limited partner must not take part in managing the business. Under s6 Limited Partnerships Act 1907, a limited partner who does so is liable for all debts and obligations of the firm incurred while they take part in management, as if they were a general partner. The partnership does not convert into an LLP, and a limited partner does not share the general partner's management rights.
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