Pawlina Law can assist you with drafting and reviewing a partnership agreement. By assisting you with making informed business decisions and by having things done properly from the outset, we can save you time and money in the long run. We can advise you in a wide rage of services, including completing a partnership agreements. There are three types of partnerships in Ontario, a general partnership, a limited partnership, and a limited liability partnership. More information on resolving a partnership dispute can be found here.
In a general partnership, all partners share the management of the business and each is personally liable for all the debts and obligations of the business. This means that each partner is responsible for the actions of his or her partners and must assume the consequences of the actions of the other partner(s). Without a partnership agreement, the following provisions are some of the Partnerships Act (Ontario) that should be considered in a partnership dispute:
- Partners equally share in the capital and profits of the business and contribute equally towards the losses (Section 24(1))
- Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or the partner’s legal representative (Section 28)
- Every partner must account to the firm for any benefit derived by the partner without the consent of the other partners from any transaction concerning the partnership or from any use by the partner of the partnership property, name or business connection. (Section 29)
- Every partner may take part in the management of the partnership business (see s. 24(5) of the Act).
- Any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners. (Section 24(8))
- Consent of all the partners is required for the variation mutual rights and duties of partners, and the introduction of new partners (Section 20 and Section 24(7))
- Partners have a duty not to compete with the firm (Section 30)
- No majority of the partners can expel any partner (Section 25)
- A partnership is dissolved if entered into for an undefined time if a partner gives notice to the other partners of the intention to dissolve the partnership (Section 32)
- Death or insolvency of a partner results in the dissolution of the partnership (section 33(1))
- At the option of the other partners, a partnership may, a partnership be dissolved if any partner suffers that partner’s share of the partnership property to be charged (Section 33(2))
- A partnership is dissolved if the partnership’s business becomes illegal (Section 34)
- On application to the court by a partner, the court can dissolve a partnership (Section 35)
A partnership agreement can change some of the rules imposed by the Partnerships Act (Ontario) Pawlina Law can ensure you understand the risks and obligation of entering a business partnership.
Limited Liability Partnership
Limited Liability Partnerships (LLP) are a type of general partnership. In a LPP, each partner’s liabilities is limited to the amount they put into the business. LLPs are only permitted in Ontario for the sole purpose of carrying on a profession and that LLP must be governed by an Act that allows an LLP to practise as a profession. Thus, LLP are governed by the Partnerships Act (Ontario) and any act that allows a profession to use them. For example, the Law Society Act, R.S.O. 1990, c. L.8 allows lawyers to operate using LLPs.
In a limited partnership, there are general partners who control and manage the business and limited partners who only contribute capital. Limited partners take no part in control or management and are liable for debts to a specified extent only. These partnerships are governed by the Limited Partnerships Act, R.S.O. 1990, c. L.16. There are special rules applicable to limited partnerships. We can also assist you with preparing and reviewing a limited partnership agreement.