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Limited Partnerships: whether directors of a general partner of a limited partnership can be responsible/should be responsible and liable to their limited partners? What is the best way to provide for such liability?, by Eugene Duhovnikoff BA/LLB

Introduction

In the first part of this opinion I will discuss as to whether directors of a general partner of a limited partnership can be responsible and liable to their limited partners. In the

second part of this opinion I will discuss as to whether directors of a general partner of a limited partnership should be responsible and liable to their limited partners and if so what is the best way to provide for such liability.

I. Is there liability?

Under the existing legal framework there are valid legal avenues which can be utilized in order to make directors of a general partner liable and responsible to limited partners of a to the limited partnerships:

  1. Partnership Agreement;
  2. General law of tort;
  3. Fiduciary Duties;
  4. Common law duties of the directors; and
  5. Companies Act 1993.

1. Partnership Agreement

The meaning of an enactment must be ascertained from its text and in the light of its purpose.[1]The matters that may be considered in ascertaining the meaning of an enactment include the indications provided in the enactment.[2] When considering the Limited Partnerships Act 2008 it becomes obvious that the Act is intended to be flexible. Many of the crucial matters are left to be provided for by the parties themselves. For Example[3]:

a) any restrictions on the ability of a partner to assign or otherwise dispose of that person's partnership interest, and the nature of that restriction;

(b) any restrictions on the business or other activities that the limited partnership may undertake, and the nature of that restriction;

(c) the entitlement of partners to distributions;

(i) whether the limited partnership has a conflict of interest policy, and the nature of that policy; and other crucial matters.[4]

 

Reeves/Duhovnikoff & Associates Ltd. 2017

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