Canada Limited partnership. A limited partnership is a form of a general partnership, which is one of three ways of organizing a business in Canada: The other two are sole proprietorship and incorporation. Each of these has its own operational, accounting, tax and legal requirements.
There are four characteristics that distinguish a limited partnership from a general partnership:
- It is operated by a single general partner with unlimited liability, supported by other “limited partners.”
- The single general partner gets a bigger share of the earnings in exchange for increased contributions and risk.
- The limited partners contribute capital but cannot be involved in the company’s management.
- The liability of the limited partners is capped by the amount of capital they contribute.
Tax benefits:
As with a general partnership, the profits and losses in a limited partnership flow through the business to the partners, all of whom are taxed on their personal income tax returns. The difference is that the limited partners in the relationship get to share in the profits and losses, but they do not have to participate in the business itself.
Liability limits:
A limited partner’s liability for the partnership’s debt is limited to the amount of money or property that an individual partner contributed to the partnership. This is not true of the general partnership, where any money or property contributed becomes an asset of all the partners.
The general partners take charge: In a limited partnership, the general partners deal with the daily operations and responsibilities and don’t need to consult the limited partners for most business decisions.
No turnover issues:
Limited partners can be replaced or leave without dissolving the limited partnership.
Less paperwork:
Creating a limited partnership, like a general partnership, requires less paperwork than forming a corporation. However, it’s important to create and file a partnership agreement in the county where your company does business.
Investment opportunities:
A limited partnership is a great way to offer investors the opportunity to benefit from the profits and losses of your business without getting them actually involved in the business.
Registering a Limited Partnership in Canada
Registration of limited partnerships in Canada is done by filing a Limited Partnership declaration with the corporate registry office of the desired jurisdiction of registration.
The Declaration of limited partnership must set out the following information:
The Firm name.
The general nature of the Firm’s business.
For each general partner (GP) who is not an individual (which generally includes corporate GPs and GPs consisting of other limited partnerships), the GP’s:
name;
address (or address for service), including a municipality, street, and number, if any, and postal code; and
its provincial corporation number, if any.
The address of the Firm’s principal place of business in the province of registration, including:
municipality, street and number, if any, and postal code; and
mailing address.
(Section 1.1, General Regulation, R.R.O. 1990, Reg. 713 (LPA Regulations).)
Individuals rarely, if ever, act as GPs.
The Declaration must be signed by the GP or, if there is more than one GP, by each GP (section 3(2), LP Act).
Name Requirements
The Firm may, but is not required to, have a name that includes “LP”, “L.P.” or “Limited Partnership”. But a Firm cannot include the word “Limited” in its name except as part of the words “Limited Partnership”.
Maintenance of Limited Partnerships
Registration Renewal Requirements
A declaration of limited partnership expires five years after its date of filing unless the existing Declaration is replaced by filing a new Declaration before the expiry date.
Annual Filing Requirements
There are no annual filing requirements under provincial limited partnership act.
Other Requirements to Record Changes
A Limited Partnership is required to file with the registrar if there is any change in the:
Partnership name; or
general nature of the partnership’s business.
An admission or removal (or change of name) of any general partners. If a new general partner is admitted, the Declaration must set out, for each new general partner that is not an individual, the GP’s:
name;
address (or address for service), including a municipality, street, and number, if any, and postal code; and
Ontario corporation number, if any.
Any change in the recorded address (or address for service) of a general partner.
Any change in the corporation number of an existing general partner (which occurs on an amalgamation or continuance).
A change in the partnerships:
principal place of business in the province of registration, including a municipality, street, and number, if any, and postal code; and
mailing address.
If there is a change of address of the Firm or a general partnership, the Declaration of change must be filed within 15 days after the change takes place, the LP Act). In any other case, the change is only effective when the Declaration of change is filed with the Registrar.
If these changes are not notified to the Registrar, the following additional consequences may result:
The limited partnership may be unable to maintain a proceeding in a court in Canada in respect of the business carried on by the Firm except with leave of the court
The Firm or its general partners may not actually receive a critical notice that has been sent to its former recorded address.
A general partner (or a director officer of a corporate general partner) may be:
guilty of an offense under the LP Act; or
personally liable for failing to correct a statement in the Declaration within a reasonable time by filing a declaration of change.
We Register Canada Limited partnerships in 24 Hours
Company Formations offers Canada Limited Partnership Registration to Canadian residents and non-Canadian residents. Our Canada Limited Partnership registration service for Only $2200 (all inclusive) Includes:
- Name Search confirming uniqueness of the name
- Government registration fee
- Registered office address for one year
- Declaration Form 3 confirming the registration of the Limited Partnership
- Organizational Resolutions of the General Partners
- Resolution Admitting of Limited Partner
- Partnership Agreement
- Register of General Partners
- Register of Limited Partners
