Limited Partnerships Act 2008 · 2020 Revised Edition · Part 2 · Rules of Law Relating Tolimited Partnerships
7. Distributions to limited partner
Feedback & supportSubject to the partnership agreement, a limited partner may during the continuance of the partnership, with the approval of the general partners —
limited partner
“limited partner”, in relation to a firm, means any partner who, under the terms of the partnership agreement, is not liable for the debts or obligations of the firm beyond the amount of the limited partner’s agreed contribution;
increase or reduce the amount of the limited partner’s agreed contribution; and
draw out or receive back the limited partner’s contributions, or any part of the contributions.
Despite subsection (1), the limited partner is liable to refund as partnership property of the firm any distribution of capital or profits of the firm made to the limited partner if —
firm
“firm” means an unincorporated body of —(a)2 or more individuals;(b)one or more individuals and one or more corporations; or(c)2 or more corporations,who have entered into partnership with one another with a view to carrying on business for profit;
every general partner at the time of the distribution (called in this subsection every partner) was insolvent at the time of the distribution or became insolvent as a result of the distribution;
the limited partner knew or ought to have known at the time of the distribution that every partner was insolvent or would become insolvent as a result of the distribution; and
every partner is adjudicated bankrupt or is ordered to be wound up within one year after the date of the distribution.
Despite subsection (1), an agreement to reduce the amount of the agreed contribution of a limited partner is of no effect if —
agreed contribution
“agreed contribution”, in relation to a limited partner, means any contribution (whether in the form of cash, property, services or otherwise) that the limited partner has agreed to make to the firm in the limited partner’s capacity as a partner;
every general partner at the time of the agreement (called in this subsection every partner) was insolvent at the time of the agreement or became insolvent as a result of the agreement;
the limited partner knew or ought to have known at the time of the agreement that every partner was insolvent or would become insolvent as a result of the agreement; and
every partner is adjudicated bankrupt or is ordered to be wound up within one year after the date of the agreement.