Business Law: Limited Partners and Limited Liability in Kenya

Below is section 56-67 of the Kenya Partnership Act which provides laws  to govern limited partnerships and  limited liability.

Limited partners and limited liability
56. What constitutes a limited partnership
(1) A partnership is a limited partnership for the purposes of this Part only if it
has—
(a) one or more general partners, each of whom has unlimited liability;
and
(b) one or more limited partners, each of whom has limited liability.
(2) A general partner shall he liable for all debts and obligations of the
partnership.
(3) A limited partner shall be liable for the debts or obligations of the
partnership to the extent of the amount contributed the partnership at the time of
joining the partnership.
57. Becoming and ceasing to be a limited partner
(1) A person shall become a limited partner in a limited partnership when the
person is registered as such.
(2) A person shall cease to be a limited partner if—
(a) the person is deregistered as a limited partner;
(b) the person dies; or
(c) the partnership is dissolved.
58. Role of limited partner to be restricted
(1) A limited partner shall not take part in the management of the partnership
business.
(2) A person who contravenes subsection (1) is personally liable for—
(a) any partnership obligation incurred as a result of the contravention;
and
(b) any other partnership obligation incurred during the period of
contravention.
(3) Nothing in subsection (1) shall prevent a limited partner from doing
anything which is a permitted activity under the Sixth Schedule.
59. Limited partner’s liability to be limited
(1) A limited partner shall not be entitled either directly or indirectly to draw
out or receive back the whole or part of the capital contribution that the partner
has made to the partnership.
(2) A limited partner shall not, during the continuance of’ the partnership,
either directly or indirectly draw out or receive back the whole any part of any
capital contribution that the partner has made to the partnership.
(3) A limited partner who contravenes subsection (2) shall be personally
liable for any partnership obligation incurred while he is a limited partner.
(4) A limited partner’s liability under subsection (3) exceed the amount drawn
out or received back by the partner.
(5) In this section, “capital contribution” means a capital contribution
consisting of—
(a) a sum or sums of money; or
(b) property that has an agreed capital value.
60. General application of Act to limited partnerships
Subject to sections 62, 63 and 64, this Act applies in relation to limited
partnerships as it applies in relation to general partnerships.
61. Rights and duties of the partners, etc.
(1) Differences arising relating to ordinary matters connected with the
partnership business or affairs shall to decided by—
(a) the general partner; or
(b) if there is more than one general partner, a majority of them.
(2) Differences arising relating to other matters connected with the
partnership business or affairs shall be decided by—
(a) the general partner; or
(b) if there is more than one general partner, all of them acting together.
(3) The question as to whether a limited partner should be given authority to
act on behalf of the partnership is not an ordinary matter.
(4) The partners in a partnership may not vary the provisions of subsection
(3) or (4).
62. Changes in partners
(1) A person may become a partner in an existing partnership if all the
general partners in the partnership agree to the person’s admission into the
partnership.
(2) Partners in a partnership may not expel a limited partner under section
(3) Nothing in section 34 prevents a person to whom a partner has assigned
the whole of his share absolutely from becoming a partner in place of such
partner if—
(a) all the general partners agrees to the substitution; or
(b) the substitution is made in accordance with the partnership
agreement.
63. Break up and winding up of limited partnership
(1) Unless the Court orders otherwise the winding up of a limited partnership
shall be conducted by a general partner.
(2) Sections 54 and 51 and the Second Schedule shall with necessary
modifications, apply in relation to a limited partnership.
64. Limited partnership Registered Office
A limited partnership shall establish and maintain a registered office to which
communications may be delivered or addressed.
65. Name of a limited partnership
(1) The name of a limited partnership shall have—
(a) the word “limited partnership”; or
(b) the abbreviation “lp” or “LP”,
appearing at the end of its name.
(2) A partnership may not be registered in a name—
(a) which is the same as a name appearing in the index kept under the
Companies Act (Cap. 486);
(b) the use of which would in the opinion of the Registrar constitute an
offence; or
(c) which in the opinion of the Registrar is offensive.
(3) In determining for the purposes of this section, whether one name is the
same as another, the Registrar shall have regard to the existence of otherwise
of—
(a) the definite article as the first word of the name;
(b) any of the following, or abbreviations of them, at the end of the
name—
(i) “limited partnership”;
(ii) “limited liability partnership”;
(iii) “company”;
(iv) “and company”;
(v) “company limited”;
(vi) “limited”;
(vii) “unlimited”;
(viii) “public limited company”;

(ix) “investment company with variable capita!”; or
(c) “open-ended investment company”.
(4) For the purposes of subsection (3), the type and case of letters, accents,
spaces between letters and punctuation marks, and “and” and “&” shall be taken
as the same.
66. Improper use of the expression “limited partnership”, etc.
(1) This section applies to the following entities—
(a) a limited partnership;
(b) a partner in a limited partnership;
(c) a foreign limited partnership; or
(d) a partner in a foreign limited partnership.
(2) An entity to which subsection (1) applies shall not carry on the business of
a limited partnership under a name which is not registered as a limited
partnership or which does not include at the end of its name, the words “limited
partnership”; or any contraction or imitation of either of those.
(3) An entity which contravenes subsection (1) commits an offence and is
liable on conviction to a fine not exceeding one hundred thousand shillings.
67. Information to be provided on partnership documents
(1) The partners of a limited partnership shall state the name and the address
of the registered office of the limited partnership on any partnership document.
(2) A general partner who fails to comply with subsection (1) commits an
offence and is liable on conviction to a fine not exceeding one hundred thousand
shillings.