RSNL1990 CHAPTER L-17 - LIMITED PARTNERSHIP ACT

RSNL1990 CHAPTER L-17 LIMITED PARTNERSHIP ACT Amended: 1996 cR-10.1 s41 CHAPTER L-17 AN ACT TO REVISE THE LAW RESPECTING LIMITED PARTNERSHIPS Analysis 1. Short title 2. Definitions 3. Limited partnerships 4. Formation 5. General and limited 6. Name of partnership 7. Limited partner's contribution 8. Rights of general partner 9. Liability of limited partner 10. Rights of limited partner 11. Share of profits 12. Partners dealings with firm 13. Rights as between themselves 14. Return of contribution 15. Liability to partnership 16. Liability to creditors 17. Additional limited partners 18. Assignments 19. Dissolution of limited partnership 20. Death of limited partner 21. Cancellation of certificate 22. Amendment of certificate 23. Order directing cancellation or amendment 24. Cancellation or amendment 25. Settling accounts on dissolution 26. Effect of false statement 27. Erroneous belief 28. Judgment 29. Parties to proceedings 30. Authority to sign 31. Rules of equity and common law 32. Offences 33. Fees Short title 1. This Act may be cited as the Limited Partnership Act. 1983 c47 s1 Back to Top Definitions 2. In this Act (a) "business" includes every trade, occupation and profession; (b) "certificate" means a certificate made under section 4 and includes a certificate that has been amended; (c) "court" means the Trial Division; (d) "partnership" means the relationship that exists between persons carrying on a business in common with a view to profit; (e) "partnership property" means property and rights and interests in property originally brought into the partnership stock, or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes of and in the course of the partnership business; and (f) "registry" means the Registry of Limited Partnerships maintained by the Registrar of Companies appointed under the Corporations Act. 1983 c47 s2; 1986 c12 Sch Back to Top Limited partnerships 3. (1) A limited partnership may be formed to carry on a business that a partnership without limited partners may carry on. (2) A limited partnership shall consist of (a) 1 or more persons who are general partners; and (b) 1 or more persons who are limited partners. 1983 c47 s3 Back to Top Formation 4. (1) A limited partnership is formed when a certificate substantially complying with subsection (3) is filed and recorded in the registry. (2) A partnership which (a) was formed in a jurisdiction, other than in this province, that is designated by the Lieutenant-Governor in Council for the purposes of this subsection; and (b) is registered or otherwise formally recognized as a limited partnership under the laws of that jurisdiction, may be registered as a limited partnership under this Act on the filing and recording in the registry of a certificate which complies, or in the opinion of the Registrar of Companies substantially complies, with subsection (3). (3) The certificate shall be signed by all the persons wishing to form a limited partnership and shall state (a) the firm name under which the limited partnership is to be conducted; (b) the character of the business; (c) the name and place of residence of each partner, general and limited partners being respectively designated; (d) the term for which the limited partnership is to exist; (e) the amount of cash and the nature and fair value of other property contributed by each limited partner; (f) the amount of additional contributions agreed to be made by each limited partner and the times at which or events on the happening of which an additional contribution is to be made; (g) the time, if agreed upon, when the contribution of each limited partner is to be returned; (h) the share of the profits or other compensation by way of income that each limited partner is entitled to because of his or her contribution; (i) the right, if given, of a limited partner to substitute an assignee as contributor in his or her place, and the terms and conditions of the substitution; (j) the right, if given, of the partners to admit additional limited partners; (k) the right, if given, of 1 or more of the limited partners to priority over other limited partners, to a return of contributions or to compensation by way of income, and the nature of the priority; (l) the right, if given, of the remaining general partner to continue the business on the death, retirement or mental incompetence of a general partner; and (m) the right, if given, of a limited partner to demand and receive property other than cash in return for his or her contribution. 1983 c47 s4 Back to Top General and limited 5. (1) A person may be a general partner and a limited partner at the same time in the same limited partnership. (2) A person who is at the same time a general partner and a limited partner has the same rights and powers and is subject to the same restrictions as a general partner except that in respect to his or her contribution as a limited partner the person has the rights against the other partners that he or she would have if the person were not also a general partner. 1983 c47 s5 Back to Top Name of partnership 6. (1) The surname of a limited partner is not to appear in the firm name of the limited partnership unless it is also the surname of 1 of the general partners. (2) A limited partner whose surname appears in the firm name contrary to subsection (1) is liable as a general partner to a creditor of the limited partnership who has extended the credit without actual knowledge that the limited partner is not a general partner. 1983 c47 s6 Back to Top Limited partner's contribution 7. (1) A limited partner may contribute cash and other property to the limited partnership, but not services. (2) A limited partner's interest in the limited partnership is personal property. (3) Only the general partners may be shown in the Registry of Deeds as owners of an interest of the limited partnership in real property. 1983 c47 s7 Back to Top Rights of general partner 8. (1) A general partner in a limited partnership has all the rights and powers and is subject to all the restrictions and liabilities of a partner in a partnership without limited partners. (2) Notwithstanding subsection (1), a general partner may not, without the written consent to or ratification of the specific act by all the limited partners, (a) do an act in contravention of the certificate; (b) do an act that makes it impossible to carry on the ordinary business of the limited partnership; (c) consent to a judgment against the limited partnership; (d) possess limited partnership property, or assign rights in specific partnership property, for other than a partnership purpose; (e) admit a person as a general partner; (f) admit a person as a limited partner, unless the right to do so is given in the certificate; or (g) continue the business of the limited partnership on the death, retirement or mental incompetence of a general partner, unless the right to do so is given in the certificate. 1983 c47 s8 Back to Top Liability of limited partner 9. A limited partner is not liable for the obligations of the limited partnership except in respect of the amount of property he or she contributes or agrees to contribute to the capital of the limited partnership. 1983 c47 s9 Back to Top Rights of limited partner 10. A limited partner has the same right as a general partner has (a) to inspect and make copies of or take extracts from the limited partnership books; (b) to be given, on demand, true and full information of all things affecting the limited partnership, and to be given a formal account of partnership affairs where circumstances make it just and reasonable; and (c) to obtain dissolution and winding up of the limited partnership by court order. 1983 c47 s10 Back to Top Share of profits 11. (1) A limited partner has the right (a) to a share of the profits or other compensation by way of income; and (b) to have his or her contribution to the limited partnership returned. (2) A limited partner may receive from the limited partnership the share of the profits or the compensation by way of income stipulated for in the certificate if, after payment is made, whether from the property of the limited partnership or that of a general partner, the limited partnership assets exceed all the limited partnership liabilities, excepting liabilities to limited partners on account of their contributions and to general partners. 1983 c47 s11 Back to Top Partners dealings with firm 12. A limited partner may loan money to and transact other business with the limited partnership and, unless he or she is also a general partner, may receive on account of resulting claims against the limited partnership, with general creditors, a proportional share of the assets, but a limited partner shall not in respect of the claim (a) receive or hold as collateral security the limited partnership property; or (b) receive from a general partner or the limited partnership a payment, conveyance or release from liability where at the time the assets of the partnership are not sufficient to discharge partnership liabilities to persons not claiming as general or limited partners. 1983 c47 s12 Back to Top Rights as between themselves 13. (1) Limited partners, in relation to one another, share in the limited partnership assets in respect of their claims (a) for capital; and (b) for profits or compensation by way of income on their contributions, in proportion to the respective amounts of their claims. (2) Where there are several limited partners, the partners may agree that 1 or more of the limited partners is to have a priority over other limited partners (a) as to the return of contributions; (b) as to the compensation by way of income; or (c) as to other matters, but the existence of and nature of the agreement shall be stated in the certificate, and in the absence of a statement all limited partners, subject to subsection (1), stand upon equal footing. 1983 c47 s13 Back to Top Return of contribution 14. (1) A limited partner is not entitled to receive from a general partner or out of the limited partnership property a part of his or her contribution until (a) all liabilities of the limited partnership, excepting liabilities to general partners and to limited partners on account of their contributions, have been paid or there remains sufficient limited partnership property to pay them; (b) the consent of all partners is obtained, unless the return of the contribution may be rightfully demanded under subsection (2); and (c) the certificate is cancelled or so amended as to set out the withdrawal or reduction. (2) A limited partner may demand the return of his or her contribution (a) upon the dissolution of the limited partnership; (b) when the time specified in the certificate for its return has arrived; or (c) after he or she has given 6 month's written notice to all other partners, where no time is specified in the certificate either for the return of the contribution or for the dissolution of the limited partnership. (3) A limited partner has, irrespective of the nature of his or her contribution, only the right to demand and receive cash in return for it, unless (a) there is a statement to the contrary in the certificate; or (b) all the partners consent to some other manner of returning the contribution. (4) A limited partner is entitled to have the limited partnership dissolved and its affairs wound up where (a) he or she rightfully but unsuccessfully demands the return of his or her contribution; or (b) the other liabilities of the limited partnership have not been paid, or the limited partnership property is insufficient for their payment as required by paragraph (1)(a), and the limited partner seeking dissolution would otherwise be entitled to the return of his or her contribution. 1983 c47 s14 Back to Top Liability to partnership 15. (1) A limited partner is liable to the limited partnership (a) for the difference between the amount of his or her contribution as actually made and the amount stated in the certificate as having been made; and (b) for an unpaid contribution that he or she agreed in the certificate to make in the future at the time and on the conditions stated in the certificate. (2) A limited partner holds as trustee for the limited partnership (a) a specific property stated in the certificate as contributed by him or her, but that has not in fact been contributed or that has been wrongfully returned; and (b) money or other property wrongfully paid or conveyed to him or her on account of his or her contribution. (3) The liabilities of a limited partner as set out in this section may be waived or compromised, but only with the consent of all partners. (4) A waiver or compromise agreed to under subsection (3) does not affect the right of a creditor of the limited partnership to enforce a liability arising from the credit that was extended to or a claim that otherwise arose (a) after the filing of the certificate by which the limited partnership was formed; but (b) before the cancellation or amendment of it by which the waiver or compromise was effected. (5) Where a limited partner has rightfully received the return, in whole or in part, of the capital of his or her contribution, the partner is nevertheless liable to the limited partnership for a sum, not in excess of that return with interest, necessary to discharge its liabilities to all creditors who extended credit or whose claims otherwise arose before the return. 1983 c47 s15 Back to Top Liability to creditors 16. A limited partner does not become liable as a general partner unless, in addition to exercising his or her rights and powers as a limited partner, he or she takes part in the control of the business. 1983 c47 s16 Back to Top Additional limited partners 17. After the formation of a limited partnership, additional limited partners may be admitted by amendment of the certificate in accordance with this Act. 1983 c47 s17 Back to Top Assignments 18. (1) A limited partner's interest is assignable. (2) A substituted limited partner is a person admitted to all the rights of a limited partner who has died or has assigned his or her interest in the limited partnership. (3) An assignee who does not become a substituted limited partner has no right (a) to require information or account of the partnership transactions; or (b) to inspect the partnership books, but is entitled only to receive the share of the profits or other compensation by way of income, or the return of his or her contribution, to which his or her assignor would otherwise be entitled. (4) An assignee may become a substituted limited partner (a) where all the members, except the assignor, consent; or (b) where the assignor, being so authorized by the terms in the certificate, gives the assignee that right. (5) An assignee becomes a substituted limited partner when the certificate is appropriately amended in accordance with this Act. (6) A substituted limited partner has all the rights and powers and is subject to all the restrictions and liabilities of his or her assignor, except those liabilities of which he or she was ignorant at the time he or she became a limited partner and that could not be ascertained from the certificate. (7) The substitution of an assignee as a limited partner does not release the assignor from liability under sections 15 and 26. 1983 c47 s18 Back to Top Dissolution of limited partnership 19. The retirement, death or mental incompetence of a general partner dissolves a limited partnership unless the business is continued by the remaining general partners (a) under a right to do so stated in the certificate; or (b) with the consent of all remaining partners. 1983 c47 s19 Back to Top Death of limited partner 20. (1) The executor or administrator of the estate of a deceased limited partner has (a) all the rights and powers of a limited partner for the purpose of settling the estate of the deceased limited partner; and (b) whatever power the deceased had to constitute his or her assignee a substituted limited partner. (2) The estate of a deceased limited partner is liable for all his or her liabilities as a limited partner. 1983 c47 s20 Back to Top Cancellation of certificate 21. (1) Where (a) a limited partnership is dissolved; or (b) all limited partners of a limited partnership stop being limited partners, the certificate relating to the limited partnership shall be cancelled by filing with the registry a notice of cancellation. (2) The notice to cancel a certificate shall be signed by all the partners. 1983 c47 s21 Back to Top Amendment of certificate 22. (1) Where in respect of a limited partnership, (a) there is a change in the name of the limited partnership or in the amount or character of the contribution of a limited partner not provided for in the certificate; (b) a person is substituted as a limited partner; (c) a person is added as a limited partner; (d) a person is added as a general partner; (e) a general partner retires, dies or becomes mentally incompetent, and the business is continued under section 19; (f) there is a change in the character of the business of the limited partnership; (g) a false or erroneous statement is discovered in the certificate; (h) there is a change in the time as stated in the certificate for the dissolution of the limited partnership or for the return of a contribution; (i) a time is fixed for the dissolution of the limited partnership or for the return of a contribution, no time having been specified in the certificate; or (j) the partners wish to make a change in another statement in the certificate in order to make the certificate accurately represent the agreement between them, the certificate relating to that limited partnership shall be amended by filing with the registry a notice to amend the certificate. (2) The notice to amend a certificate shall (a) set out clearly the change in or addition to the certificate that is desired; and (b) be signed by all the partners. (3) A notice to amend a certificate by substituting a limited partner or adding a limited or general partner shall also be signed by the person to be substituted or added and, where a limited partner is substituted, the amendment shall also be signed by the assigning limited partner. 1983 c47 s22 Back to Top Order directing cancellation or amendment 23. (1) Where anyone designated under section 21 or 22 as being a person who shall sign a notice to cancel or amend a certificate refuses to do so, a person wishing the cancellation or amendment may apply to the court for an order directing the cancellation or amendment. (2) Upon hearing an application brought under subsection (1), the court, where it finds that the applicant is entitled to have the notice in question signed, shall by order direct that the cancellation or amendment of the certificate set out in the order be recorded in the registry. 1983 c47 s23 Back to Top Cancellation or amendment 24. A certificate is cancelled or amended, as the case indicates, where there is filed with and recorded in the registry (a) a notice signed as required by this Act; or (b) a certified copy of a court order made under section 23. 1983 c47 s24 Back to Top Settling accounts on dissolution 25. After the dissolution of a limited partnership, the accounts shall be settled in the following order: (a) the liabilities of the partnership to creditors, excepting (i) to limited partners on account of their contributions, and (ii) to general partners, shall be paid 1st; and (b) subject to a statement in the certificate or to subsequent agreement, the other accounts shall be paid, in the following order, (i) to limited partners in respect of their share of the profits and other compensation by way of income on their contributions, (ii) to limited partners in respect of the capital of their contributions, (iii) to general partners other than for capital and profits, (iv) to general partners in respect of profits, and (v) to general partners in respect of capital. 1983 c47 s25 Back to Top Effect of false statement 26. Where a certificate contains a false statement, a person suffering loss as a result of relying upon that statement may hold liable as a general partner a party to the certificate who (a) knew, when he or she signed the certificate, that the statement relied upon was false; or (b) became aware, after he or she signed the certificate but within a sufficient time before the false statement was relied upon to enable him or her to cancel or amend the certificate or to start proceedings in accordance with this Act for the cancellation or amendment of the certificate, that the statement relied upon was false. 1983 c47 s26 Back to Top Erroneous belief 27. A person who contributes to the capital of a business conducted by a person or partnership believing erroneously that he or she has become a limited partner in a limited partnership (a) is not, by reason only of his or her exercising the rights of a limited partner, a general partner with the person or in the partnership carrying on the business; and (b) is not bound by the obligations of the person or partnership carrying on the business, where, upon ascertaining the fact that he or she is not a limited partner, the person promptly renounces his or her interest in the profits or other compensation by way of income from the business. 1983 c47 s27 Back to Top Judgment 28. (1) The court may, upon application by a judgment creditor of a limited partner, charge the interest of the indebted limited partner with payment of the unsatisfied amount of the judgment debt, and may appoint a receiver and make all other orders, directions and inquiries that the circumstances of the case require. (2) A charged interest referred to in subsection (1) may be redeemed with the separate property of a general partner, but may not be redeemed with limited partnership property. (3) The remedies conferred by subsection (1) are not exclusive of others that may exist. 1983 c47 s28 Back to Top Parties to proceedings 29. A limited partner, unless he or she is also a general partner, is not a proper party to proceedings against a limited partnership, except where the object of the proceedings is to enforce a limited partner's right against or liability to the limited partnership. 1983 c47 s29 Back to Top Authority to sign 30. (1) An actual or proposed general or limited partner may give special authority to another person to execute on his or her behalf a document under this Act. (2) A special authority referred to in subsection (1) shall be filed in the registry and recorded with the document or 1 of the documents executed in the exercise of the special authority. 1983 c47 s30 Back to Top Rules of equity and common law 31. The rules of equity and of common law applicable to partnerships continue in force except where they are inconsistent with the express provisions of this Act. 1983 c47 s31 Back to Top Offences 32. (1) A person who (a) contravenes this Act or the regulations; or (b) makes a statement in a document, material, evidence or information submitted or required by or for the purposes of this Act that, at the time and in the light of the circumstances under which it is made, is false or misleading with respect to a material fact or that omits to state a material fact, the omission of which makes the statement false or misleading, is guilty of an offence and on conviction is liable to a fine of not more than $2,000 or, where the person is a corporation, to a fine of not more than $20,000. (2) A person is not guilty of an offence referred to in paragraph (1)(b) if he or she did not know that the statement was false or misleading and in the exercise of reasonable diligence could not have known that the statement was false or misleading. (3) Where a corporation is guilty of an offence under subsection (1), a director or officer of the corporation, and where the corporation is an extra-provincial corporation, a person acting as its representative in the province, who authorized, permitted or acquiesced in the offence is also guilty of an offence and on conviction is liable to a fine of not more than $2,000. 1983 c47 s32 Back to Top Fees 33. The minister may set fees for the purpose of this Act. 1996 cR-10.1 s41 ©Earl G. Tucker, Queen's Printer