Bill 830 — An Act To Amend the Partnership Act (46th General Assembly, 1st Session)
Bill 830
Newfoundland and Labrador — Bills
First
Session, 46th General Assembly
Elizabeth II, 2008
BILL 30
AN ACT TO AMEND THE
PARTNERSHIP ACT
Received and Read the First Time ...................................................................................................
Second Reading .................................................................................................................................
Committee ............................................................................................................................................
Third Reading .....................................................................................................................................
Royal Assent ......................................................................................................................................
HONOURABLE
JEROME P. KENNEDY, Q.C.
Minister of Justice and Attorney General
Ordered
to be printed by the Honourable House of Assembly
EXPLANATORY NOTES
Clause 1 of the Bill would amend the Partnership
Act by adding a
Part I heading
to the Act.
Clause 2 of the Bill would add
a new
Part II to the Act dealing with the formation and registration of limited
liability partnerships and extra-provincial limited liability partnerships.
Clause 3 of the Bill is a
commencement clause providing that this Act would come into force on a day to
be proclaimed by the Lieutenant-Governor in Council.
A BILL
AN ACT TO AMEND THE PARTNERSHIP ACT
Analysis
Heading Added
PART
RESPECTING
PARTNERSHIPS GENERALLY
Part II Added
PART
LIMITED LIABILITY PARTNERSHIPS
Definitions
47. Application of Act
48. Limited liability
49. Partners subject to
same obligations as
corporate directors
50. Previous partnership
obligations
51. Restrictions on
distribution of
partnership property on
winding up
52. Partnership status in
winding up
53. Liability of partner for
prohibited distribution
54. Successor partnership
55. Application for
registration as limited
liability partnership
56. Professional
partnership
57. Certificate of
registration
58. Change of partners
59. Registration does not
dissolve partnership
60. Legal elements in
name
61. Notice to clients
62. Registered office
63. List of partners
64. Annual return
65. Notice of change
66. Non-registered status
67. Application to register
as extra-provincial
limited liability
partnership
68. Professional
partnership
69. Certificate of
registration
70. Change in partners
71. Legal elements in
name
72. Notice to clients
73. Registered office
74. List of partners
75. Annual return
76. Notice of change
77. Law of governing
jurisdiction
78. Restrictions on name
79. Notice of dissolution
80. Application of law of
governing jurisdiction
81. Cancellation of
registration
82. Service
Commencement
Be it enacted by the Lieutenant-Governor and
House of Assembly in Legislative Session convened, as follows:
RSNL1990 cP-3
as amended
1. The Partnership
Act is amended by adding immediately after
section 2 the following:
PART I
RESPECTING PARTNERSHIPS GENERALLY
2. The Act is amended by adding immediately after
section
45 the following:
PART II
LIMITED LIABILITY PARTNERSHIPS
Definitions
46. In this Part
(a) "distribution"
means, in relation to partnership property, a transfer of money or other
partnership property by a partnership to a partner or an assignee of a partner's
share in the partnership, whether as a share of profits, return of contributions
to capital, repayment of advances or otherwise;
(b) "extra-provincial
limited liability partnership" means a partnership registered under
section 69 as an extra-provincial limited liability
partnership;
(c) "governing
jurisdiction" means, in relation to a partnership, the jurisdiction whose
law governs the
interpretation of the partnership agreement by operation of law
or through a provision in the partnership agreement or another document created
by the partnership;
(d) "limited
liability partnership" means a partnership registered under
section 57 as a limited liability partnership;
(e) "partnership
obligation" means a debt, obligation or liability of a partnership, other
than debts, obligations or liabilities of partners as between themselves or as
between themselves and the partnership;
(f) "profession" means a profession or occupation that is governed
or regulated by a body created by or under
an Act; and
(g) "professional
partnership" means a partnership through which one or more persons carry
on the practice of a profession.
Application of Act
Part I applies to a limited liability
partnership and to an extra-provincial limited liability partnership except in
so far as that
Part is inconsistent with this Part.
Limited liability
(1) Except as expressly provided in this
Part, in another Act or in an agreement, a partner in a limited liability
partnership
(
a) is
not personally liable for a partnership obligation solely by reason of being a
partner;
(
b) is
not personally liable for an obligation under an agreement between the
partnership and another person; and
(
c) is
not personally liable to the partnership or another partner by way of
contribution, indemnity or otherwise, in respect of an obligation to which
paragraph (
a) or (
b) applies.
(2) Subsection
(1) does not relieve a person who is a partner in a limited liability
partnership from personal liability for a negligent or otherwise wrongful act
or omission, malpractice or misconduct of the person for which that person
would be personally liable if the person were not a partner.
(3) Subsection
(1) does not protect a partner's interest in the partnership property from
claims against the partnership in respect of a partnership obligation.
Partners subject to same obligations as corporate directors
(1) Partners in a limited liability
partnership are personally liable for a partnership obligation for which they
would be liable if the partnership were a corporation of which they were directors.
(2) Where
a corporation is a partner in a limited liability partnership, the directors of
the corporation are jointly and individually liable for a liability imposed on
the corporation under subsection (1).
Previous partnership obligations
50. Nothing in this
Part limits the liability of
partners in a limited liability partnership for a partnership obligation that
(
a) arose
before the partnership became a limited liability partnership; or
(
b) arises
out of a contract entered into before the partnership became a limited
liability partnership.
Restrictions on distribution of partnership property on winding up
(1) A limited liability partnership shall
not make a distribution of partnership property in connection with the winding
up of its affairs unless all partnership obligations have been paid or
satisfactory provision for their payment has been made.
(2) In
circumstances other than in connection with the winding up of its affairs, a limited
liability partnership shall not make a distribution of partnership property if
there are reasonable grounds to believe that after the distribution
(
a) the
partnership would be unable to pay its partnership obligations as they come
due; or
(
b) the
value of the partnership property would be less than the partnership
obligations.
(3) Subsections
(1) and (2) do not prohibit a payment made as reasonable compensation for
current services provided by a partner to the limited liability partnership, to
the extent that the payment would be reasonable if paid to an employee who was
not a partner as compensation for similar services.
(4) A
limited liability partnership may base its determination of whether a
distribution is prohibited by subsection (2)
(
a) on
financial statements prepared on the basis of accounting practices and
principles that are reasonable in the circumstances;
(
b) on
a fair valuation; or
(
c) on
another method that is reasonable in the circumstances.
Partnership status in winding up
(1) Where a limited liability partnership
dissolves and its affairs are to be wound
up, the partnership maintains its status as a limited liability partnership
while its affairs are being wound up.
(2) A
limited liability partnership is considered, for the purpose of this
section
and subsection 51 (1), to have dissolved and to be winding up its
affairs where
(
a) the
partnership ceases to carry on business; or
(
b) there
is a change in the membership of the partnership and there is not a successor
partnership within the meaning of
section 54 .
(3) Where
a limited liability partnership has dissolved and its affairs are being wound
up, the Trial Division may on the application of an interested person make an
order with respect to the partnership that could be made with respect to a
corporation under subsection 211(8) of the
Canada Business Corporations Act .
Liability of partner for prohibited distribution
(1) A partner in a limited liability
partnership who receives a distribution contrary to
section 51 is liable to the partnership for the lesser of
(
a) the
value of the property received by the partner; and
(
b) the
amount necessary to discharge partnership obligations that existed at the time
of the distribution.
(2) A
partner in a limited liability partnership who authorizes a distribution
contrary to
section 51 is jointly and individually liable to the partnership
for an amount for which a recipient is liable under subsection (1), to the
extent that the amount is not recovered from the recipient.
(3) Proceedings
to enforce a liability under this
section may be brought by the limited
liability partnership, a partner in the partnership or a person to whom the
partnership was obligated at the time of the distribution to which the
liability relates.
(4) Proceedings
to enforce a liability under this
section may not be commenced later than 2
years after the date of the distribution to which the liability relates.
Successor partnership
(1) For the purpose of this Part, a new
partnership is the successor partnership of an original partnership where
(
a) at
a particular time, the original partnership is registered as a limited
liability partnership;
(
b) immediately
after that time, a new partnership with different partners is carrying on the
business of the original partnership;
(
c) one
or more of the partners in the original partnership are members of the new
partnership; and
(
d) there
is an express or implied agreement between the partners in the original
partnership and new partnership that the new partnership will assume all
partnership obligations of the original partnership.
(2) A
successor partnership is considered to be the same partnership as the original
partnership for the purpose of this Part and is subject to all the partnership
obligations of the original partnership.
Application for registration as limited liability partnership
(1) A partnership consisting of partners
who practice in an eligible profession may apply to register the partnership as
a limited liability partnership by submitting to the registrar, on behalf of
the partnership, an application in the form the registrar may require.
(2) A
limited partnership may not be registered as a limited liability partnership.
(3) An
application under subsection (1) shall include
(
a) the name of the partnership;
(
b) a description of the
eligible profession in which the partners practise;
(
c) the name and residential address in the
province of the partner who is designated as the representative of the
partnership with respect to matters relating to the partnership;
(
d) the address of the registered office of the
partnership in the province;
(
e) a statement from a person who is authorized by
the governing body of the applicable eligible profession to provide the
statement certifying that the partnership and the partners meet all applicable
eligibility requirements for practice as a limited liability partnership that
are imposed under the Act that regulates the eligible profession; and
(
f) the fee the minister may set.
Professional partnership
56. A professional partnership is not eligible to register
as a limited liability partnership unless
(
a) members
of that profession are expressly authorized by or under the Act by which that
profession is governed to carry on the practice of the profession through a
limited liability partnership; and
(
b) prerequisites
to that authorization that have been established under that Act have been met
by the partnership.
Certificate of registration
(1) Where an application submitted to the registrar
under
section 55 is in accordance with
the requirements of this Part, the registrar shall file the application and publish
a notice of registration in the Gazette .
(2) On
the filing of the application under subsection (1), the partnership is
registered as a limited liability partnership.
Change of partners
58. The registration of a limited liability
partnership is not adversely affected by a change in the partners in the partnership.
Registration does not dissolve partnership
59. Subject to an agreement among the partners, the
registration of a partnership as a limited liability partnership does not cause
the dissolution of the partnership, and the limited liability partnership continues
as the same partnership that existed before the conversion.
Legal elements in name
60. A limited liability partnership shall have the
words "Limited Liability Partnership" or the abbreviation "LLP"
as part of and at the end of its name.
Notice to clients
61. On registration as a limited liability
partnership, the partnership shall immediately send to all of its existing
clients a notice that advises of the registration and explains in general terms
the potential changes in liability of the partners that result from the
registration and the operation of this Part.
Registered office
(1) A limited liability partnership shall
at all times have a registered office in the province.
(2) A
limited liability partnership may designate a separate post office box within
the province as its address for service by mail.
(3) A limited liability partnership's registered
office shall be the business premises of the partnership or of a person or firm
that has agreed to act as the limited liability partnership's registered
office, and the partnership shall ensure that its registered office is
(
a) accessible to the public during normal
business hours; and
(
b) readily identifiable from the information
provided in the application for registration or in a notice amending the application.
List of partners
63. A limited liability partnership shall keep at
its registered office a list of its partners and shall, without delay, provide
the following information without charge to a person who requests it:
(
a) a
list of the partners; and
(
b) a
list of the persons who were partners in the limited liability partnership on a
date specified in the request.
Annual return
(1) A limited liability partnership shall
annually, within 2 months after each anniversary of the date on which the partnership
was registered as a limited liability partnership, file with the registrar an annual
return in the form the registrar may require.
(2) A
limited liability partnership that has not filed with the registrar one or more
annual returns under this Act shall remedy that default before filing with the registrar
another annual return under this Act.
Notice of change
(1) Where information included in an
application under paragraph 55 (3)(a), (
c) or (
d) or this
section changes, the limited
liability partnership shall promptly file a notice of change to the application,
in the form the registrar may require, indicating the change.
(2) The
registrar shall issue an amended certificate of registration on filing of a
notice of change to the name of the limited liability partnership under
subsection (1) and shall publish notice of the change in the Gazette .
Non-registered status
66. A partnership that has the status of a limited
liability partnership under the laws
of a jurisdiction outside the province shall be treated as an ordinary
partnership with respect to rights and obligations that it acquires or incurs
under this province's laws while carrying on business in the province without
being registered as an extra-provincial limited liability partnership.
Application to register as extra-provincial limited liability
partnership
(1) A partnership consisting of partners
who practice in an eligible profession that has the status of, or a status equivalent to, a limited liability partnership
under the laws of a jurisdiction outside the province may apply to register as
an extraprovincial limited liability partnership.
(2) An
application referred to in subsection (1) shall include
(
a) information
to identify the governing jurisdiction of the partnership, and confirm that the
partnership has the status of a limited liability partnership in its governing
jurisdiction;
(
b) the name of the partnership;
(
c) a description of the
eligible profession in which the partners practise;
(
d) the name and residential address in the
province of the partner who is designated as the representative of the
partnership with respect to matters relating to the partnership;
(
e) the address of the registered office of the
partnership in the province;
(
f) a statement from a person who is authorized by
the governing body of the applicable eligible profession to provide the
statement certifying that the partnership and the partners meet all applicable
eligibility requirements for practice as a limited liability partnership that
are imposed under the Act that regulates the eligible profession; and
(
g) the fee the minister may set.
Professional partnership
68. A professional partnership that has the status
of a limited liability partnership
under the laws of a jurisdiction outside the province shall not register as an
extra-provincial limited liability partnership unless
(
a) members
of that profession are expressly authorized by or under the Act by which that
profession is governed in this province to carry on the practice of the
profession through a limited liability partnership; and
(
b) prerequisites
to that authorization that have been established under that Act have been met
by the partnership.
Certificate of registration
(1) Where an application submitted to the registrar
under
section 67 is in accordance with
the requirements of this Part, the registrar shall file the certificate, issue
to the partnership a certificate of registration and publish notice of
registration in the Gazette .
(2) On
issuance of the certificate of registration under subsection (1), the
partnership is registered as an extra-provincial limited liability partnership.
Change in partners
70. The registration of an extra-provincial limited
liability partnership is not adversely
affected by a change in the partners in the partnership.
Legal elements in name
(1) The name of an extra-provincial
limited liability partnership
shall
(
a) contain
the words and abbreviations required under the law of its governing
jurisdiction; and
(
b) comply
with
section 60 .
(2) In
the event of a conflict between the requirement under paragraph (1)(
a) and the
requirement under paragraph (1)(b), the requirement under paragraph (1)(
b) prevails.
Notice to clients
72. On registration as an extra-provincial limited
liability partnership, the partnership
shall immediately send to all of its existing clients in this province a notice
that advises of the registration and explains in general terms the potential
changes in liability of the partners that result from the registration and the
operation of this Part.
Registered office
(1) An extra-provincial limited liability
partnership shall at all times have a
registered office in the province.
(2) An
extra-provincial limited liability partnership may designate a separate post
office box within the province as its address for service by mail.
(3) A limited liability partnership's registered
office shall be the business premises of the partnership or of a person or firm
that has agreed to act as the limited liability partnership's registered
office, and the partnership shall ensure that its registered office is
(
a) accessible to the public during normal
business hours; and
(
b) readily identifiable from the information
provided in the application for registration or in a notice amending the application.
List of partners
74. An extra-provincial limited liability
partnership shall keep at its registered
office a list of the partners resident in this province and shall, without delay,
provide the following information without charge to a person who requests it:
(
a) a
list of the partners resident in
this province ; and
(
b) a
list of the persons who were partners resident in
this province in the partnership
on a date specified in the request, which shall be after it was registered
under this Part.
Annual return
(1) An extra-provincial limited liability
partnership shall annually, within 2 months
after each anniversary of the date on which the partnership was registered as
an extra-provincial limited liability partnership, file with the registrar an
annual return in the form the registrar may require.
(2) An
extra-provincial limited liability partnership that has not filed with the registrar
one or more annual returns under this Act shall remedy that default before
filing with the registrar other annual returns under this Act.
Notice of change
(1) Where information included in an
application under paragraph 67 (2)(b), (
d) or (
e) or this
section changes, the extra-provincial limited
liability partnership shall promptly file a notice of change to the application,
in the form the registrar may require, indicating the change.
(2) The
registrar shall issue an amended certificate of registration on filing of a
notice of change to the name of the extra-provincial limited liability
partnership under subsection (1) and shall publish notice of the change in the Gazette .
Law of governing jurisdiction
(1) Except as provided in another Act, the
law of the governing jurisdiction of an extra-provincial limited liability partnership
applies
(
a) to
the organization and internal affairs of the extra-provincial limited liability
partnership; and
(
b) to
the liability of the extra-provincial limited partnership and its partners for
debts, obligations and liabilities of or chargeable to the extra-provincial
limited liability partnership or its partners.
(2) Notwithstanding
subsection (1), a provincial partner of an extraprovincial limited liability
partnership does not have greater protection against individual liability for
partnership obligations with respect to his or her activities in the province than
a partner in a limited liability partnership has under this Part.
Restrictions on name
(1) The name of a limited liability
partnership or an extraprovincial limited
liability partnership shall not be
(
a) identical
to the name of another limited liability partnership or another
extra-provincial limited liability partnership; or
(
b) so
similar to the name of another limited liability partnership or another
extra-provincial limited liability partnership that the only difference is with
respect to the phrase or abbreviation required to be included under
section 60 .
(2) Paragraph
(1)(
b) does not apply if the written consent of the other limited liability
partnership is filed with the registrar.
(3) Where
a limited liability partnership or an extra-provincial limited liability
partnership is registered with a name that does not comply with this Part, the registrar
may, by notice in writing to the partnership, direct the partnership to change
its name to one that complies with this Part within 60 days after the date of
the notice.
Notice of dissolution
(1) On the dissolution of a limited
liability partnership or an extra-provincial
limited liability partnership, the partnership shall submit to the registrar
for filing a notice, in the form the registrar may require, advising the registrar
of the dissolution of the partnership.
(2) For
the purpose of subsection (1), a person who was a partner of the partnership at
the time of its dissolution may file the required notice.
(3) Where
a limited liability partnership or an extra-provincial limited liability
partnership files a notice of dissolution under subsection (1), the registrar
shall cancel the registration of the partnership and shall publish notice of
cancellation in the Gazette .
Application of law of governing jurisdiction
80. Notwithstanding the dissolution of an extra-provincial limited
liability partnership,
section 77 as it relates to the liability of the partnership and the partners
continues to apply to the partnership and its partners until the business and
affairs of the partnership are wound up.
Cancellation of registration
(1) The registrar may cancel the registration of
(
a) a
limited liability partnership where
(
i) the limited liability partnership fails to file an annual return
required under
section 64 , or
(ii) there is filed with the registrar a request, in the form the registrar
may require, that the registration be cancelled; or
(
b) an
extra-provincial limited liability partnership where
(
i) the extra-provincial limited liability partnership fails to file an
annual return required under
section 75 , or
(ii) there is filed with the registrar a request, in the form the registrar
may require, that the registration be cancelled.
(2) Before
the registrar cancels the registration under subsection (1), the registrar shall
provide to the partnership, a notice informing it of the intended cancellation.
(3) At
any time later than one month after the date of the notice, the registrar may
cancel the registration of the partnership, unless the default is remedied or
the registrar is satisfied that reasonable steps are being taken to remedy the
default and the registrar shall publish notice of cancellation in the Gazette .
(4) Cancellation
of the registration of a limited liability partnership or an extra-provincial
limited liability partnership does not dissolve the partnership, but instead
only removes its status as a limited liability partnership.
(5) On
the cancellation of the registration of a partnership as a limited liability partnership
or an extra-provincial limited liability partnership,
(
a) where
the partnership has the province as its governing jurisdiction, this Act
applies to the partnership as if it were an ordinary partnership and
section 48 ceases to apply to the partnership and its partners, and
(
b) where
the partnership does not have the province as its governing jurisdiction, this
Act applies to the partnership as if it were a partnership that does not have this
province as its governing jurisdiction and that is not an extra-provincial
limited liability partnership and paragraph 77 (1)(
b) ceases
to apply to the partnership and its partners.
(6) Cancellation
of the registration of a partnership as a limited liability partnership or an
extra-provincial limited liability partnership does not affect the liability of
a partner in the partnership in respect of a partnership obligation that
(
a) arose
before the cancellation of the registration of the partnership as a limited
liability partnership, or
(
b) arose
out of a contract entered into before the cancellation of the registration of a
partnership as a limited liability partnership.
Service
(1) A
notice or document required or permitted to be sent to or served on a limited liability
partnership may be
(
a) delivered to the limited liability
partnership's registered office as shown in the registrar's records;
(
b) personally served on the partner who is
designated as the representative of the limited liability partnership as shown
in the registrar's records; or
(
c) sent by registered mail to
(
i) the limited liability partnership's registered
office as shown in the registrar's records,
(ii) the partner who is designated as the
representative of the partnership as shown in the registrar's records, or
(iii) the separate post office box designated as its
address for service by mail as shown in the registrar's records.
(2) A notice or document sent by registered mail
to a limited liability partnership in accordance with paragraph (1)(
c) is
considered to be received or served on the day the intended recipient actually
receives it.
Commencement
3. This
Act comes into force on a day to be proclaimed by the Lieutenant-Governor in
Council.
Earl G. Tucker, Queen's Printer