8.6 The liability of limited partners

The sixth chapter is the third and final part of the triptych on the actual control of companies. It focuses on the liability of the limited partner. Unlike the general partners of a limited partnership, the limited partner is not liable for the debts of the company and does not share in its losses above the amount of its contribution. Pursuant to section 20 of the Commercial Code (CC), the limited partner may not, among other things, get involved with the management of the company (the ‘management prohibition’). In the event of a violation of this prohibition, the limited partner is jointly and severally liable for the company’s debts on the basis of section 21 CC and thus loses the privilege of limited liability. The author considers the background and scope of this management prohibition as well as the current criteria for assessing the liability of a limited partner. In addition, the author compares the liability of the limited partner with that of the (co-)policymaker within the meaning of section 2:248 paragraph 7 DCC. At the end of this chapter, proposals for amendments to the current legislation on, among other things, the liability of limited partners are discussed.

The author argues that, in principle, the limited partner will have to be involved in matters that cannot be included in the day-to-day management of the company, so that the determination of the strategy of the limited partnership also falls within the competence of all partners jointly. Furthermore, the limited partner can indirectly influence the management of the limited partnership when certain decisions are subject to its approval or when the agreement of the partnership otherwise grants the authority to decide on internal matters. Finally, the limited partner is prohibited from representing the company. If the limited partner nevertheless acts in a representative capacity, this has two consequences: (i) the limited partner enters into the agreement with the other party instead of the company and (ii) the limited partner is jointly and severally liable for all obligations of the company.