8.6.1 The management prohibition

The management prohibition for limited partners is based on two principles. Firstly, it must be prevented that a limited partner abuses its privileged position resulting from limited liability by taking unacceptable risks when participating in legal transactions. Secondly, the management prohibition aims to prevent third parties from being misled by the limited partner. These third parties could easily mistake a limited partner for a general partner. Only the latter is jointly and severally liable for the obligations of the limited partnership. Keeping this background in mind, the author discusses the scope of the management prohibition. He observes that, currently, there are two main views on the scope of the management prohibition. The first, narrow interpretation of this scope limits the prohibited actions to purely external actions (i.e. towards third parties). Within the second, broader interpretation, the limited partner is completely forbidden to perform managerial acts, regardless of the involvement of third parties. In a more nuanced variant of this broad view it is assumed that internal acts of the limited partner are only prohibited in so far as these acts also have consequences for third parties. The author concludes that the limited partner is not entirely forbidden to be involved with the management of the company and in any case a certain degree of influence on the management is permitted internally. However, a dominant internal action of the limited partner must always lead to a violation of the management prohibition, insofar as this prohibition must (also) be considered as a provision aimed at preventing abuse and reckless actions under the protection of limited liability.

Until 2015, a violation of the management prohibition for the limited partner had far-reaching consequences. This was the result of the characterisation of section 21 CC as a penalty provision. According to the author, there was no reason to characterise the provision as such. However, it also offers the limited partner some protection, because a requirement of culpability is derived from this characterisation. The author concludes that liability also requires an active act on the part of the limited partner. Since 2015, liability of the limited partner pursuant to section 21 CC is only justified if and to the extent that this liability is in accordance with the aforementioned background of the management prohibition. For this reason, its application may not be disproportionate to the nature and seriousness of the violation by the limited partner. Moreover, section 21 CC cannot be applied if and insofar as the sanction is not, or not fully, justified by the actions of the limited partner. In addition, judges may deviate from the principle that a limited partner becomes liable for all obligations of the company. Finally, it may now also be of importance whether third parties were aware that they were dealing with a limited partner instead of a general partner. The author provides the relevant case law with general commentary in this respect and, within this framework, further clarifies the notions of ‘disproportionality’ and ‘unjustified sanction’. With the framework for the liability of limited partners in mind, the author then considers whether the liability of limited partners is comparable to the liability of (co-)policymakers of legal persons. He does not consider this to be the case, because the relevant provisions differ too much from each other in design. This is despite the fact that both provisions partly share the same background and the fact that, since 2015, the assessment of the liability of limited partners shows similarities with the assessment of the liability of (co-)policymakers. There is, however, some convergence with regard to the nature of the relevant conduct: both the qualification as a (co-)policymaker and a violation of the management prohibition require an active action on the part of the (co-)policymaker and the limited partner respectively.