CHAPTER 02 Types of Business Organizations
In Québec, a limited partnership must file a declaration of registration under the Act respecting the legal publicity of enterprises . This declaration must include the name and domicile of each of the general partners and the names and domiciles of the three limited partners that provided the largest contributions and, as discussed above, the date of birth of individual partners and ultimate beneficiaries. Every year, the limited partnership must file an annual declaration to maintain its registration in good standing. UNDECLARED PARTNERSHIPS In Ontario, although a limited partnership can only be formed by the filing of a declaration under the Limited Partnerships Act , a general partnership may exist without any registration or filing on the public record. (If it uses a firm name or business name other than the name of the partners, that name must be registered under the Business Names Act , but the failure to do so would not affect the existence of the partnership.) If the relationship satisfies the legal criteria for a general partnership, its members will be liable as general partners for obligations relating to the partnership business and will be bound by any such obligations incurred by any of the partners, even to third parties that are not aware of the existence or identity of the other partners. This reflects the common law principle that an undisclosed principal will be liable in the same manner as a disclosed principal for obligations incurred by its agent.
In Québec, a general or limited partnership that does not file a declaration under the Act respecting the legal publicity of enterprises is an undeclared partnership. An undeclared partnership may arise from a written or oral agreement or from acts indicating an intent to form an undeclared partnership. In the absence of an agreement, the relations of partners to each other in an undeclared partnership are treated by the provisions of the Civil Code of Québec in the same manner as those of general partners. If a partner of a Québec undeclared partnership contracts in the partner’s own name with a third party that is unaware of the existence of the undeclared partnership, only that partner incurs liability to the third party (unlike a general partner that can bind the other partners). If, however, a third party is aware that a partner of an undeclared partnership is acting in a partnership capacity in dealing with the third party, the other partners of the undeclared partnership will also be liable to the third party. Joint Ventures A joint venture is an agreement entered into by two or more parties to pool capital and skills for the purpose of carrying out a specific undertaking. It may or may not involve co-ownership of the project assets by the venturers. Because it is essentially a contractual relationship not specifically regulated by statute, the venturers are free to agree on whatever terms they choose. Since a joint venture is not a recognized entity for tax purposes, income and losses for tax purposes are computed separately by each joint venturer rather than at the joint venture level.
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