Malaysia legislation
Section 19
of LABUAN LIMITED PARTNERSHIPS AND LIMITED LIABILITY PARTNERSHIPS ACT 2010
Section 19
Limited partner’s liability to creditors
(2)
A limited partner shall not be liable as a general partner unless the limited partner participates in the management of the
Labuan limited partnership.
(3)
Subject to subsection (4), if a limited partner participates in the management of the Labuan limited partnership in its dealings with persons who are not partners, that limited partner shall be liable, in the event of the insolvency of the Labuan limited partnership, for all debts and obligations of the Labuan limited partnership incurred during the period that the limited partner participated in the management of the Labuan limited partnership as though the limited partner were for that period a general partner.
(4)
A limited partner shall be liable under subsection (3) only to a person who transacts with the Labuan limited partnership with actual knowledge of the participation of the limited partner in the management of the Labuan limited partnership and who then reasonably believed the limited partner to be a general partner.
(5)
A limited partner shall not be deemed to participate in the management of a Labuan limited partnership within the meaning of this section by doing one or more of the following:
(a)
being a contractor for or an agent or employee of the
Labuan limited partnership or of a general partner or acting as a director, officer or shareholder of a corporate general partner;
Labuan Limited Partnerships and Limited
Liability Partnerships 27
(b)
consulting with and advising a general partner with respect to the activities of the Labuan limited partnership;
(c)
investigating, reviewing, approving or being advised as to the accounts or affairs of the Labuan limited partnership or exercising any right conferred by this Act;
(d)
acting as surety or guarantor for the Labuan limited partnership either generally or in respect of specific obligations;
(e)
approving or disapproving an amendment to the partnership agreement;
(f)
voting on, or otherwise signifying approval or disapproval of, one or more of the following:
(i)
the dissolution and winding-up of the Labuan limited partnership;
(ii)
the purchase, sale, exchange, lease, pledge, hypothecation, or creation of a security interest, or any other dealing in any asset by or of the
Labuan limited partnership;
(iii)
the creation or renewal of an obligation by the
Labuan limited partnership;
(iv)
a change in the nature of the activities of the
Labuan limited partnership;
(v)
the admission, removal or withdrawal of a general or a limited partner and the continuation of the
Labuan limited partnership thereafter;
(vi)
transactions in which one or more of the general partners have an actual or potential conflict of interest with one or more of the limited partners;
(g)
bringing an action on behalf of the Labuan limited partnership pursuant to subsection 22(3).
Act 707
(6)
Subsection (5) shall not be construed to imply that the possession or exercise of any other power by a limited partner will necessarily constitute the participation by such limited partner in the management of the Labuan limited partnership.
Admission of additional limited partners and general partners