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The Partnership Act
This is an unofficial version.
If you need an official copy, use the bilingual (PDF) version.

This version is current as of August 26, 2016.
It has been in effect since February 25, 2003.

Note: Earlier consolidated versions are not available online.


 

C.C.S.M. c. P30

The Partnership Act

HER MAJESTY, by and with the advice and consent of the Legislative Assembly of Manitoba, enacts as follows:

Definitions

1(1)        In this Act,

"business" includes every trade, occupation or profession; (« entreprise »)

"Director" means the Director appointed under The Business Names Registration Act; (« directeur »)

"person" includes a sole proprietorship, partnership, unincorporated association, syndicate or organization, a trust, and a natural person in his capacity as trustee, executor, administrator or other legal representative. (« person »)

Interpretation

1(2)        In this Act, a reference to a partnership includes

(a) a reference to a limited partnership, unless the reference would be inconsistent with Part II; and

(b) a reference to a limited liability partnership, unless the reference would be inconsistent with Part III.

S.M. 2002, c. 30, s. 2.

PART I

PARTNERSHIP GENERALLY

Application of Part I

2(1)        The provisions of this Part, so far as they are not inconsistent with the provisions of Part II or III, apply to every partnership, including a limited partnership, a Manitoba limited liability partnership and an extra-provincial limited liability partnership.

Saving for rules of equity and common law

2(2)        The rules of equity and of common law applicable to partnership continue in force, except so far as they are inconsistent with the express provisions of this Act.

S.M. 2002, c. 30, s. 3.

Meaning of partnership

3           Partnership is the relation which subsists between persons carrying on a business in common, with a view of profit; but the relationship between members of an incorporated company or association is not a partnership within the meaning of this Act.

S.M. 2002, c. 30, s. 4.

Rules for determining existence of partnership

4           In determining whether a partnership does or does not exist, regard shall be had to the following rules:

(a) joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof;

(b) the sharing of gross returns does not of itself create a partnership, whether the persons sharing the returns have or have not a joint or common right or interest in any property from which, or from the use of which, the returns are derived;

(c) the receipt by a person of a share of the profits of a business is prima facie proof that he is a partner in the business; but the receipt of such a share, or of a payment contingent on, or varying with, the profits of the business, does not of itself make him a partner in the business, and, in particular

(i) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such,

(ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such,

(iii) a person being the surviving spouse or a child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of that receipt a partner in the business or liable as such,

(iv) the advance of money by way of loan to a person engaged, or about to engage, in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, if the contract is in writing, and signed by or on behalf of all the parties thereto,

(v) a person receiving by way of annuity, or otherwise, a portion of the profits of a business in consideration of the sale by him of the goodwill of the business is not by reason only of such receipt a partner in the business or liable as such.

Postponement of rights of lender or seller in case of insolvency

5           Where a person to whom money has been advanced by way of loan upon such a contract as is mentioned in section 4, or a buyer of goodwill in consideration of a share of the profits of the business, is adjudged a bankrupt or insolvent, enters into an arrangement to pay his creditors less than one hundred cents on the dollar, or dies in insolvent circumstances, the lender of the loan is not entitled to recover anything in respect of his loan, and the seller of the goodwill is not entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money of money's worth have been satisfied.

Meaning of firm

6           Persons who have entered into partnership with one another are for the purposes of this Act called collectively a firm, and the name under which their business is carried on is called the firm name.

Firm may be partner

7           A firm may be, and shall be conclusively deemed always to have had the capacity to be, a party to a partnership agreement and thereby to become a partner in a separate partnership relationship.

Power of partner to bind the firm

8           Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on, in the usual way, business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has, in fact, no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority or does not know or believe him to be a partner.

Partners bound by acts on behalf of firm

9           An act or instrument relating to the business of the firm and done or executed in the firm name, or in any other manner showing an intention to bind the firm, by any person thereto authorized, whether a partner or not, is binding on the firm and all the partners; but this section does not affect any general rule of law relating to the execution of deeds or negotiable instruments.

Partner using credit of firm for private purposes

10          Where one partner pledges the credit of the firm for a purpose apparently not connected with the firm's ordinary course of business, the firm is not bound, unless he is in fact specially authorized by the other partners; but this section does not affect any personal liability incurred by an individual partner.

Effect of notice that firm will not be bound by acts of partner

11          Where it is agreed between the partners to restrict the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement.

Liability of partners

12          Every partner of a firm is liable jointly and severally with the other partners, for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in a due course of administration for the debts and obligations, so far as they remain unsatisfied, but subject to the prior payment of his separate debts.

S.M. 1990-91, c. 4, s. 4.

Liability of the firm for wrongs

13          Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the firm, or with the authority of his co-partners, loss or injury is caused to any person not being a partner in the firm, or any penalty is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.

Misapplication of money

14          Where

(a) one partner acting within the scope of his apparent authority receives money or property of a third person and misapplies it; or

(b) a firm in the course of its business receives money or property of a third person and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm;

the firm is liable to make good the loss.

Liability for wrongs, joint and several

15          Every partner is liable jointly and severally with is co-partners, for everything for which the firm, while he is a partner thereof, becomes liable under section 13 or 14.

Improper employment of trust property

16          Where, a partner, being a trustee, improperly employs trust property in the business or on the account of the partnership, no other partner is liable for the trust property to the persons beneficially interested therein; but

(a) this section does not affect any liability incurred by any partner by reason of his having notice of a breach of trust; and

(b) nothing in this section prevents trust money from being followed and recovered from the firm if still in its possession or under its control.

Persons liable by "holding out"

17(1)       Every one who by words spoken or written, or by conduct, represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made.

Continuing business after death of partner

17(2)       Where, after a partner's death, the partnership business is continued in the old firm name, the continued use of that name or of the deceased partner's name as part thereof does not of itself make his executor or administrator or his estate or effects liable for any partnership debts contracted after his death.

Admissions and representations of partners

18          An admission or representation made by a partner concerning the partnership affairs, and in the ordinary course of its business, is evidence against the firm.

Notice to acting partners to be notice to the firm

19          Notice to a partner who habitually acts in the partnership business of any matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.

Liabilities of incoming and outgoing partners

20(1)       A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner.

Pre-retirement debts

20(2)       A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.

Discharge by agreement

20(3)       A retiring partner may be discharged from any existing liabilities, by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors; and the agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.

Revocation of continuing guaranty by change in firm

21          A continuing guaranty given either to a firm or to a third person in respect of the transactions of a firm is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guaranty was given.

Variation by consent of terms of partnership

22          The mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and the consent may be either express or inferred from a course of dealing.

Partnership property

23(1)       All 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 and in the course of the partnership business, are called in this Act "partnership property", and must be held and applied by the partners exclusively for the purposes of the partnership, and in accordance with the partnership agreement.

Land belonging to partnership

23(2)       The legal estate or interest in any land, that belongs to the partnership, shall devolve according to the nature and tenure thereof and the general rules of law thereto applicable, but in trust so far as necessary, for the persons beneficially interested in the land under this section.

Land not belonging to partnership

23(3)       Where co-owners of an estate or interest in land that is not partnership property, are partners as to profits made by the use of that land, and the co-owners from profits made by the use of that land purchase other land for the purpose of sharing the profits from the use thereof, the land so purchased belongs to them in the absence of an agreement to the contrary, not as partners, but as co-owners for the same respective estates and interests as are held by them in the land first mentioned at the date of the purchase.

Property bought with partnership money

24          Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.

Conversion into personal estate of land held as partnership property

25          Where land or any interest therein becomes partnership property, it shall, unless the contrary intention appears, be treated as between the partners, including the representative of a deceased partner, and also between the persons beneficially entitled to his estate, as personal or movable and not as real estate.

Procedure against partnership property for separate judgment

26(1)       The Court of Queen's Bench may, on the application of any judgment creditor of a partner, make an order charging that partner's interest in the partnership property and profits with payment of the amount of the judgment debt and interest thereon, and may by the same or subsequent order appoint a receiver of that partner's share of profits, whether already declared or accruing, and of any other money that may become due to him in respect of the partnership, and direct all accounts and inquiries, and give all other orders and directions, that might have been directed or given if the charge had been made in favour of the judgment creditor by the partner, or which the circumstances of the case may require.

Redemption of interest

26(2)       The other partner or partners are at liberty at any time to redeem the interest charged or, in case of a sale being directed, to purchase it.

Rules as to interests and duties of partners

27          The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement, express or implied, between the partners, by the following rules:

(a) All the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise, sustained by the firm.

(b) The firm must indemnify every partner in respect of payments made and personal liabilities incurred by him,

(i) in the ordinary and proper conduct of the business of the firm; or

(ii) in or about anything necessarily done for the preservation of the business or property of the firm.

(c) A partner making, for the purpose of the partnership, any actual payment or advance beyond the amount of capital which he has agreed to subscribe, is entitled to interest at a rate of 5 % per annum from the date of the payment or advance.

(d) A partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him.

(e) Every partner may take part in the management of the partnership business.

(f) No partner shall be entitled to remuneration for acting in the partnership business.

(g) No person may be introduced as a partner without the consent of all existing partners.

(h) 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.

(i) The partnership books are to be kept at the place of business of the partnership, or the principal place, if there is more than one; and every partner may, when he thinks fit, have access to and inspect and copy any of them.

Expulsion of partner

28          No majority of the partners can expel any partner, unless a power to do so has been conferred by express agreement between the partners.

Retiring from partnership at will

29(1)       Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of his intention so to do to all the other partners.

Notice of retirement

29(2)       For the purpose of subsection (1) where the partnership was originally constituted by deed, a notice in writing, signed by the partner giving it, is sufficient.

Presumption where partnership for term is continued over

30(1)       Where a partnership entered into for a fixed term is continued after the term has expired, and without any express new agreement, the rights and duties of the partners remain the same as they were at the expiration of the term, so far as is consistent with the incidents of the partnership at will.

Presumption as to continuance

30(2)       A continuance of the business by the partners or such of them as habitually acted therein during the term, without any settlements or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.

Duties of partners to render accounts, etc.

31          Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.

Accountability of partners for private profits

32(1)       Every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership, or from any use by him of the partnership property, name, or business connection.

Further application of section

32(2)       This section applies also to transactions undertaken after a partnership has been dissolved by the death of a partner, and before the affairs thereof have been completely wound up, either by any surviving partner or by the representatives of the deceased partner.

Duty of partner not to compete with firm

33          Where a partner, without the consent of the other partners, carries on any business of the same nature as, and competing with, that of the firm, he must account for and pay over to the firm all profits made by him in that business.

Rights of assignee of share in partnership

34(1)       An assignment by any partner of his share in the partnership, either absolute or by way of mortgage or redeemable charge, does not, as against the other partners, entitle the assignee, during the continuance of the partnership to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the partnership books, but entitles the assignee only to receive the share of profits to which the assigning partner would otherwise be entitled, and the assignee must accept the account of profits agreed to by the partners.

In case of dissolution

34(2)       In case of a dissolution of the partnership, whether as respects all the partners or as respects the assigning partner, the assignee is entitled to receive the share of the partnership assets to which the assigning partner is entitled as between himself and the other partners and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.

Dissolution by expiration or notice

35(1)       Subject to any agreement between the partners, a partnership is dissolved,

(a) if entered into for a fixed term, by the expiration of that term; or

(b) if entered into for a single adventure or undertaking by the termination of that adventure or undertaking; or

(c) if entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership.

Date of dissolution

35(2)       In the last mentioned case, the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is mentioned, as from the date of the communication of the notice.

Dissolution by bankruptcy, death or charge

36(1)       Subject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy or insolvency of any partner.

Dissolution for debt of partner

36(2)       A partnership may, at the option of the other partners, be dissolved if any partner suffers his share of the partnership property to be charged under this Act for his separate debt.

Dissolution by illegality of partnership

37          A partnership is dissolved by the happening of any event that makes it unlawful for the business of the firm to be carried on, or for the members of the firm to carry it on in partnership.

Dissolution by the court

38          On application by any partner to the Court of Queen's Bench, the court may adjudge a dissolution of the partnership,

(a) where a partner is shown to the satisfaction of the court to be of permanently unsound mind, in which case the application may be made on behalf of that partner by his committee or next friend or person having title to intervene; or

(b) where a partner, other than the partner suing, becomes in any other way permanently incapable of performing his part of the partnership contract; or

(c) where a partner, other than the partner suing, has been guilty of such conduct as, in the opinion of the court, regard being had to the nature of the business, is calculated prejudicially to affect the carrying on of the business; or

(d) where a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him; or

(e) where the business of the partnership can only be carried on at a loss; or

(f) where in any case circumstances have arisen that, in the opinion of the court, render it just and equitable that the partnership be dissolved.

Rights of persons dealing with firm changing membership

39(1)       Where a person dealt with a firm which subsequently undergoes a change in membership, and continues to deal with the firm after the change in membership, he is entitled to treat all the apparent members of the old firm as still being partners of the firm until he has notice of the change.

Form of notice

39(2)       The registration under The Business Names Registration Act of a declaration of a dissolution or a change in the membership of a partnership is notice to persons who had no dealings with the partnership before the date of the registration but is not notice to persons who had dealings with the partnership before the date of registration until notice of the registration is published as required by section 4 of that Act.

Liability of estate of deceased partner

39(3)       The estate of a partner who dies, or who becomes bankrupt, or a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm, is not liable for partnership debts contracted after the date of the death, bankruptcy, or retirement respectively.

S.M. 2000, c. 41, s. 18.

Rights of partners to notify dissolution

40          Where a partnership has been dissolved or a partner has retired, and where, if applicable, a declaration of the dissolution has been registered under The Business Names Registration Act, any partner may publicly give notice of the dissolution or retirement, and may require the other partner or partners to concur for that purpose in all necessary or proper acts, if any, that cannot be done without his or their concurrence.

Continuing authority of partners for purposes of winding-up

41(1)       Subject to subsection (2), after the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise.

Bankrupt partner without authority

41(2)        The firm is not bound by the acts of a partner who has become bankrupt; but this subsection does not affect the liability of any person who has after the bankruptcy represented himself or knowingly suffered himself to be represented as a partner of the bankrupt.

Rights of partners as to application of partnership property

42          On the dissolution of a partnership, every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm, and to have the surplus assets after that payment applied in payment of what may be due to the partners respectively, after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may, on the termination of the partnership, apply to the court to wind up the business and affairs of the firm.

Apportionment of premium where partnership prematurely dissolved

43          Where one partner has paid a premium to another on entering into a partnership for a fixed term, and the partnership is dissolved before the expiration of that term otherwise than by the death of a partner, upon application to a court, the court may order the repayment of the premium, or of such part thereof as it thinks just, having regard to the terms of the partnership contract and to the length of time during which the partnership has continued; unless,

(a) the dissolution is, in the judgment of the court, wholly or chiefly due to the misconduct of the partner who paid the premium; or

(b) the partnership has been dissolved by an agreement containing no provision for a return of any part of the premium.

Rights where partnership dissolved for fraud or misrepresentation

44          Where a contract creating a partnership is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled,

(a) to a lien on, or right of retention of, the surplus of partnership assets, after satisfying the partnership liabilities, for any sum of money paid by him for the purchase of a share in the partnership and for any capital contributed by him;

(b) to stand in the place of the creditors of the firm for any payments made by him in respect of the partnership liabilities; and

(c) to be indemnified, by the person guilty of the fraud or making the representation, against all the debts and liabilities of the firm.

Rights of outgoing partner in certain cases

45(1)       Where any member of a firm dies or otherwise ceases to be a partner, and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate, then, in the absence of any agreement to the contrary the outgoing partner or his estate is entitled, at the option of himself or his representatives, to such share of the profits made since the dissolution as the court may find to be attributable to the use of his share of the partnership assets, or to interest at the rate of 5 % per annum on the amount of his share of the partnership assets.

Option to purchase interest

45(2)       Where, by a contract creating a partnership an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner or his estate, as the case may be, is not entitled to any further or other share of profits; but if any partner, assuming to act in exercise of the option, does not in all material respects comply with the terms thereof, he is liable to account under the foregoing provisions of this section.

Retiring or deceased partner's share to be debt

46          Subject to any agreement between the partners, the amount due from surviving or continuing partners to an outgoing partner or the representatives of a deceased partner, in respect of the outgoing or deceased partner's share, is a debt accruing at the date of the dissolution or death.

Rule for distribution of assets on final settlement of accounts

47          In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed:

(a) Losses, including losses and deficiencies of capital, shall be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits.

(b) The assets of the firm including the sums, if any, contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order:

(i) In paying the debts and liabilities of the firm to persons who are not partners therein.

(ii) In paying to each partner rateably what is due from the firm to him for advances as distinguished from capital.

(iii) In paying to each partner rateably what is due from the firm to him in respect of capital.

(iv) The ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.

Allegations not controvertible against any party signing

48          The allegations made in a declaration under The Business Names Registration Act are not controvertible, as against any party, by any person who has signed it, or as against any party, not being a member of the partnership, by any person who has signed the declaration or who was in fact a member of the partnership therein mentioned at the time the declaration was made.

If declaration not filed, action may be brought

49(1)       Subject to subsection (2), where any persons are, or have been, associated as partners for the purpose of carrying on business and so have carried on business in the province, and no declaration has been filed as aforesaid with regard to partnership, any action that might be brought against all the members of the partnership may also be brought against any one or more of them as carrying on, or as having carried on, business jointly with others in the province, without naming the others in the writ or pleading, under the name and style of their partnership, or firm; and, if judgment is recovered against him or them, any other partner or partners may be sued jointly or severally on the original cause of action on which the judgment has been recovered.

Action on instrument naming partners

49(2)       Where any such action is founded on an obligation or instrument in writing in which all or any of the partners bound by it is named, all the partners named therein shall be made parties to the action.

Enforcement of judgments

50          Any judgment recovered under section 49 against any member of a partnership, for a partnership debt or liability, may be executed by process of execution against all partnership stock, property, assets and effects, in the same manner, and to the same extent, as if judgment had been recovered against all the members of the partnership in the usual way.

PART II LIMITED PARTNERSHIPS

Application of Part II

51(1)       This Part applies only to limited partnerships.

Limited partnership may be formed

51(2)       A limited partnership for the transaction of business may be formed by two or more persons, upon the terms, with the rights and powers, and subject to the conditions and liabilities, hereinafter mentioned; but no such partnership shall be formed for the purpose of banking or effecting insurance.

Same person as general and limited partner

51(3)       A person may be a general partner and a limited partner at the same time in the same partnership.

Rights and liabilities

51(4)       A person who is at the same time a general partner and a limited partner in the same partnership has the rights and powers and is subject to the restrictions and liabilities of a general partner, but in respect of his contribution as a limited partner he has the same rights against the other partners as a limited partner.

Constitution of limited partnership

52          A limited partnership may consist of one or more persons, who shall be called "general partners", and of one or more persons who contribute a specific or determinable amount, whether in cash, kind, specie, or money's worth or by any other means whatsoever, as capital of the partnership, who shall be called "limited partners".

General and limited partners, liability of

53          Subject to section 63, general partners are jointly and severally responsible as general partners are by law; but limited partners are not liable for the debts of a limited partnership beyond the amounts by them respectively contributed to the capital of the limited partnership; except that where a limited partner has already paid into the capital of the limited partnership the amount of his contribution, he shall not be further liable for any of the debts of the partnership.

General partners only to transact business, etc.

54(1)       The general partners only are authorized to bind the partnership; but where a limited partner, to the knowledge of the general partners, takes part in the management of the partnership business, he has power to bind the partnership.

Onus of proof

54(2)       The onus of proof as to knowledge under subsection (1) is on the general partners.

Partnership not formed until registered

55          A limited partner is not entitled to the limited liability afforded by this Act until a declaration has been made and registered as required under The Business Names Registration Act; and where a false statement is made in the declaration which has been relied on by a person who suffers injury or loss by reason of the false statement, all of the partners are liable to that person as general partners, for the loss or injury suffered by that person.

Declaration of continuance

56(1)       Where the declaration mentioned in section 55 shows that the partnership is for a fixed duration, any continuance beyond that duration shall be registered and published as required for the original formation of the partnership; and every partnership otherwise continued shall be deemed a general partnership.

Failure to renew

56(2)       Where the registration of a limited partnership has expired and the partnership continues to carry on business without renewing its registration as required under The Business Names Registration Act, it shall, for so long as it fails to renew the registration, be deemed a general partnership.

Effect of change without registration

57          A change or alteration in a limited partnership such as is mentioned in clause 4(1)(b) or (d) and in subsection 4(2) of The Business Names Registration Act has no effect until the registration requirements of that section are complied with.

Limited partnership name

58(1)       The business of a limited partnership shall not be conducted under a name or firm in which the names of a limited partner, or some or one of them is used; and, if the name of any limited partner is used in such a name or firm with his privity, he shall be conclusively deemed to be a general partner.

Use of "Limited" in partnership name

58(2)       Notwithstanding anything to the contrary in any other Act of the Legislature, a limited partnership heretofore or hereafter registered under The Business Names Registration Act may carry on business under a firm name containing the words "Limited Partnership", and shall be deemed always to have had the right to include those words in its name.

Liability of general partners as such

59          Actions or suits in relation to the limited partnership may be brought and conducted by and against the general partners in the same manner as if there were no limited partner.

Interest upon contribution of limited partner

60(1)       A limited partner may annually receive lawful interest on the sum contributed by him to the capital of the partnership, if the payment of that interest does not reduce the original amount of the capital; and if after the payment of that interest, any profits remain to be divided, he may also receive his portion of those profits.

Return of contribution

60(2)       A limited partner has the right to demand and receive the return of any part of his contribution,

(a) upon the dissolution of the limited partnership; or

(b) at the time, if any, specified in the partnership agreement for the return of the contribution; or

(c) after he has given six months notice in writing to all other partners, if no time is specified in the partnership agreement for the return of the contribution or for the dissolution of the limited partnership; or

(d) when all partners consent to the return of the contribution.

Restrictions on return of contribution

60(3)       Notwithstanding subsection (2), a limited partner is not entitled to receive any part of his contribution out of the limited partnership assets or from a general partner until

(a) all liabilities of the limited partnership, except liabilities to general partners and to limited partners on account of their contributions, have been paid or there remain sufficient limited partnership assets to pay them;

(b) the partnership agreement is terminated or so amended, if necessary, to set forth the withdrawal or reduction of the contribution; and

(c) a declaration has been made and registered as required under The Business Names Registration Act.

Form of returned contribution

60(4)       A limited partner has, irrespective of the nature of his contribution, only the right to demand and receive money in return therefor, unless

(a) the partnership agreement provides otherwise; or

(b) all the partners consent to another form in which to return the contribution.

Dissolution of limited partnership

60(5)       A limited partner is entitled to have the limited partnership dissolved and its affairs wound up where

(a) the limited partner is entitled under this Act to the return of all or part of his contribution but, upon demand, the contribution is not returned to him; or

(b) the other liabilities of the limited partnership have not been paid or the limited partnership assets are insufficient for their payment as required under clause (3)(a), and the limited partner seeking dissolution would otherwise be entitled under this Act to the return of all or part of his contribution.

Continuing liability

60(6)       Where a limited partner has received the return of all or part of his contribution, he is nevertheless liable to the limited partnership or, where the limited partnership is dissolved, to its creditors, for any amount, not in excess of the amount returned with interest, necessary to discharge the liabilities of the limited partnership to all creditors who extended credit or whose claims otherwise arose before the return of the contribution.

When liable to refund

61          Where by the payment of interests or profits to any limited partner, the original capital has been reduced, the partner receiving it shall restore it, or so much thereof as is necessary to make good his share of the deficit capital, with interest.

Privileges of limited partners

62          A limited partner may, by himself or his agent inspect the books of the firm and examine into the state and progress of the partnership business, and may advise as to its management.

Loss of limited liability by a limited partner

63(1)       Where a limited partner takes an active part in the business of the partnership, he is liable as if he were a general partner, to any person with whom he deals on behalf of the partnership and who does not know that he is a limited partner for all debts of the partnership.

Limitation

63(2)       The liability of a limited partner to a person under subsection (1) extends only to liabilities incurred by the partnership to that person between the time that the limited partner first so dealt with the person and the time when the person first acquires actual knowledge that he was dealing with a limited partner.

When limited partnership not dissolved

63(3)       A limited partnership is not dissolved by the death or bankruptcy of a limited partner, and the mental incompetence of a limited partner is not a ground for dissolution of the partnership by a court unless the mentally incompetent partner's share cannot be otherwise ascertained and realized.

Winding-up

63(4)       In the event of the dissolution of a limited partnership, its affairs shall be wound up by the general partners unless a court otherwise orders.

Further characteristics of a limited partnership

63(5)       Subject to any agreement express or implied between the partners,

(a) any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the general partners;

(b) a limited partner may, with the consent of the general partners, assign his share in the partnership, and upon such an assignment, the assignee becomes a limited partner with all the rights of the assignor;

(c) the other partners are not entitled to dissolve the partnership by reason of any limited partner suffering his share to be charged for his separate debt;

(d) a person may be introduced as a partner without the consent of the existing limited partners;

(e) a limited partner is not entitled to dissolve the partnership by notice.

S.M. 1993, c. 29, s. 196.

General partners liable to account

64          The general partners of a limited partnership are liable to account, both at law and in equity, to each other and to the limited partners for their management of the concern, in like manner as other partners are liable.

Creditors preferred to limited partners

65          In case of the insolvency or bankruptcy of a limited partnership, no partner shall, under any circumstances, be allowed to claim as a creditor until the claims of all the other creditors of the limited partnership have been satisfied.

No premature dissolution without notice

66          No dissolution of a limited partnership by the acts of the partners shall take place until a notice of the dissolution is registered and published as required under The Business Names Registration Act.

PART III

LIMITED LIABILITY PARTNERSHIPS

Definitions

67          In this Part,

"distribution", in relation to partnership property, means 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; (« distribution »)

"extra-provincial limited liability partnership" means a limited liability partnership formed under the laws of another jurisdiction and registered as an extra-provincial limited liability partnership under The Business Names Registration Act; (« société à responsabilité limitée extraprovinciale »)

"governing jurisdiction", in relation to a partnership, means 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; (« autorité législative compétente »)

"liability insurance" means either or both of

(a) a policy of insurance that covers the payment of professional liability claims against a partner in a limited liability partnership, or

(b) another method, required by a professional governing body referred to in clause 69(1)(c), of ensuring the availability of funds to pay professional liability claims against members of the profession; (« assurance responsabilité »)

"Manitoba limited liability partnership" means a partnership that is registered under The Business Names Registration Act as a Manitoba limited liability partnership; (« société à responsabilité limitée du Manitoba »)

"partnership obligation" means any 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; (« obligation »)

"professional liability claim" means a claim against a partner

(a) with respect to his or her negligence, wrongful act or omission, malpractice or misconduct occurring in the ordinary course of practising a profession in a Manitoba limited liability partnership or extra-provincial limited liability partnership, or

(b) with respect to another person's negligence, wrongful act or omission, malpractice or misconduct for which subsection 75(1) does not protect the partner from liability. (« demande d'indemnité pour faute professionnelle »)

S.M. 2002, c. 30, s. 5.

Application of Part III

68          This Part applies only to Manitoba limited liability partnerships and extra-provincial limited liability partnerships.

S.M. 2002, c. 30, s. 5.

Manitoba limited liability partnerships

69(1)       A partnership or two or more persons who have agreed to carry on business in a limited liability partnership may register as a Manitoba limited liability partnership under The Business Names Registration Act if

(a) they carry on business in Manitoba only for the purpose of practising a profession governed by an Act of the legislature;

(b) the governing Act or a regulation under this Act permits the profession to be practised in a limited liability partnership; and

(c) the governing body of the profession or a regulation under this Act requires members who are partners in limited liability partnerships to maintain a minimum amount of liability insurance.

Authority to require liability insurance

69(2)       The governing body of a profession that is permitted by regulation to practise in limited liability partnerships is authorized to require members who are partners in such partnerships to maintain a minimum amount of liability insurance, despite anything to the contrary or any lack of authority in the profession's governing Act.

Limited partnerships not eligible

69(3)       No limited partnership may be registered as a Manitoba limited liability partnership.

Effective date and period of status

69(4)       The status of a partnership or group of persons as a Manitoba limited liability partnership takes effect on the day on which the Director registers the partnership under The Business Names Registration Act and continues so long as the registration is in force or deemed to be in force under that Act.

S.M. 2002, c. 30, s. 5.

Effect of registration

70          Subject to any agreement between the partners, the registration of a partnership as a Manitoba limited liability partnership does not cause the dissolution of the partnership, and the Manitoba limited liability partnership continues as the same partnership that existed before the registration.

S.M. 2002, c. 30, s. 5.

Notice to clients

71          Without delay after being registered as a Manitoba limited liability partnership, a partnership must send to all of its existing clients a notice advising of the registration and explaining in general terms the potential changes in liability of the partners that result from the registration.

S.M. 2002, c. 30, s. 5.

Registered office must be in Manitoba

72(1)       A Manitoba limited liability partnership must at all times have a registered office in Manitoba.

Location of registered office

72(2)       The registered office must be the business

premises of the Manitoba limited liability partnership or of a person or firm that has agreed to act as the partnership's registered office.

Access to registered office

72(3)       A Manitoba limited liability partnership must ensure that its registered office is accessible to the public during normal business hours.

Address for service by mail

72(4)       A Manitoba limited liability partnership may designate a separate post office box within Manitoba as its address for service by mail.

S.M. 2002, c. 30, s. 5.

Partnership list

73          A Manitoba limited liability partnership must keep at its registered office a list of the partners and must without delay provide the following information without charge to any person who requests it:

(a) a list of the partners;

(b) a list of the persons who were partners in the Manitoba limited liability partnership on a date specified in the request.

S.M. 2002, c. 30, s. 5.

Name

74(1)       The name of a Manitoba limited liability partnership must end with the phrase "Limited Liability Partnership" or its abbreviation "LLP", or with the phrase "société à responsabilité limitée" or its abbreviation "s.r.l.".

Use of registered name only

74(2)        A Manitoba limited liability partnership must not carry on business under a name other than its registered firm name.

S.M. 2002, c. 30, s. 5.

Limited liability of partners in a Manitoba limited liability partnership

75(1)       Subject to subsections (2), (4) and (5), a partner in a Manitoba limited liability partnership is not individually liable, directly or indirectly by means of indemnification, contribution, assessment or otherwise, for debts, obligations or liabilities of the partnership or another partner that arise from the negligence, wrongful act or omission, malpractice or misconduct of

(a) another partner; or

(b) an employee, agent or representative of the partnership;

occurring in the ordinary course of carrying on practice in a profession referred to in subsection 69(1) while the partnership is a Manitoba limited liability partnership.

Exceptions to protection under subsection (1)

75(2)       Subsection (1) does not operate to protect a partner from liability

(a) if the partner knew of the negligence, wrongful act or omission, malpractice or misconduct at the time it was committed and failed to take reasonable steps to prevent its commission; or

(b) if the negligence, wrongful act or omission, malpractice or misconduct was committed by an employee, agent or representative of the partnership for whom the partner was directly responsible in a supervisory role.

Limitation of action

75(3)       A partner in a Manitoba limited liability partnership is not a proper party to a proceeding by or against the partnership that claims relief in respect of negligence, wrongful acts or omissions, malpractice or misconduct described in subsection (1).

Interest in partnership property not protected

75(4)       The protection from liability given to a partner by subsection (1) shall not be construed as offering any protection from claims against his or her interest in the partnership property.

Previous obligations

75(5)       The protection from liability given to a partner by subsection (1) shall not be construed as offering any protection from liability for partnership obligations that arose before the partnership became a Manitoba limited liability partnership.

S.M. 2002, c. 30, s. 5.

Service

76(1)       A notice or document required or permitted to be sent to or served on a Manitoba limited liability partnership may be

(a) delivered to its registered office, as shown in the Director's records;

(b) personally served on the partner who is designated as its representative, as shown in the Director's records;

(c) sent by registered mail to

(i) its registered office, as shown in the Director's records,

(ii) the partner who is designated as its representative, as shown in the Director's records, or

(iii) the separate post office box designated as its address for service by mail, as shown in the Director's records; or

(d) delivered or sent by any other manner that may be provided for in the regulations.

Deemed time of receipt

76(2)       A notice or document sent by registered mail to a Manitoba limited liability partnership in accordance with clause (1)(c) is deemed to be received on the fifth business day after mailing, unless there are reasonable grounds for believing that the partnership did not receive the notice or document at that time or at all.

S.M. 2002, c. 30, s. 5.

Extra-provincial limited liability partnerships

77(1)       A partnership formed under the laws of a jurisdiction outside Manitoba may register as an extra-provincial limited liability partnership under The Business Names Registration Act if it

(a) has the status of a limited liability partnership under the laws of a jurisdiction outside Manitoba; and

(b) consists of partners who practise a profession that partners in a Manitoba limited liability partnership may practise.

Effective date and period of status

77(2)       The status of a partnership as an extra-provincial limited liability partnership takes effect on the day on which the Director registers the partnership under The Business Names Registration Act and continues so long as the registration is in force or deemed to be in force under that Act.

S.M. 2002, c. 30, s. 5.

Non-registered status

78          A partnership that has the status of a limited liability partnership under the laws of a jurisdiction outside Manitoba shall be treated as an ordinary partnership with respect to rights and obligations that it acquires or incurs under Manitoba laws while carrying on business in Manitoba without being registered as an extra-provincial limited liability partnership under The Business Names Registration Act.

S.M. 2002, c. 30, s. 5.

Notice to clients

79(1)       Without delay after being registered as an extra-provincial limited liability partnership, the partnership must send all the existing clients of its Manitoba practice a notice advising of the registration and explaining in general terms the potential changes in liability of the partners that result from the registration.

Subsequent notice to clients

79(2)       If an extra-provincial limited liability partnership has sent a notice similar to the notice described in subsection (1) to all of its existing clients as a result of being registered as a limited liability partnership or an extra-jurisdictional limited liability partnership in another jurisdiction, the notice required by subsection (1) is required to be sent only to the partnership's existing clients in Manitoba.

S.M. 2002, c. 30, s. 5.

Registered office in Manitoba

80(1)       An extra-provincial limited liability partnership must at all times have a registered office in Manitoba.

Location of registered office

80(2)       The registered office must be the business

premises of the extra-provincial limited liability partnership or of a person or firm that has agreed to act as the partnership's registered office.

Access to registered office

80(3)       An extra-provincial limited liability partnership must ensure that its registered office is accessible to the public during normal business hours.

Address for service by mail

80(4)       An extra-provincial limited liability partnership may designate a separate post office box within Manitoba as its address for service by mail.

S.M. 2002, c. 30, s. 5.

Partnership list

81          An extra-provincial limited liability partnership must keep at its registered office a list of the Manitoba-resident partners and must without delay provide the following information without charge to any person who requests it:

(a) a list of the Manitoba-resident partners;

(b) a list of the persons who were Manitoba-resident partners in the partnership on a date specified in the request, which must be after it was registered under The Business Names Registration Act.

S.M. 2002, c. 30, s. 5.

Name

82(1)       The name of an extra-provincial limited liability partnership must contain the words and abbreviations required under the laws of its governing jurisdiction.

Use of registered name only

82(2)       An extra-provincial limited liability partnership must not carry on business under a name other than its registered firm name.

S.M. 2002, c. 30, s. 5.

Service

83(1)        A notice or document required or permitted to be sent to or served on an extra-provincial limited liability partnership may be

(a) delivered to its registered office, as shown in the Director's records;

(b) personally served on the partner who is designated as its representative, as shown in the Director's records;

(c) sent by registered mail to

(i) its registered office, as shown in the Director's records,

(ii) the partner who is designated as its representative, as shown in the Director's records, or

(iii) the separate post office box designated as its address for service by mail, as shown in the Director's records; or

(d) delivered or sent by any other manner that may be provided for in the regulations.

Deemed time of receipt

83(2)       A notice or document sent by registered mail to an extra-provincial limited liability partnership in accordance with clause (1)(c) is deemed to be received on the fifth business day after mailing, unless there are reasonable grounds for believing that the partnership did not receive the notice or document at that time or at all.

S.M. 2002, c. 30, s. 5.

Law of governing jurisdiction applies

84(1)       Except as provided in another Act or in subsections (2) to (4), the law of the governing jurisdiction of an extra-provincial limited liability partnership applies

(a) to the organization and internal affairs of the partnership; and

(b) to the liability of the partners for debts, obligations and liabilities of or chargeable to the partnership.

Manitoba partner's own acts and omissions

84(2)       A Manitoba partner of an extra-provincial limited liability partnership has the same individual liability as a partner of a Manitoba limited liability partnership does for debts, obligations or liabilities arising from his or her own negligence, wrongful act or omission, malpractice or misconduct.

Extent of Manitoba partner's liability

84(3)       A Manitoba partner of an extra-provincial limited liability partnership has no greater protection against individual liability for debts, obligations or liabilities of the partnership or another partner described in subsection (4) than a partner of a Manitoba limited liability partnership would have against individual liability for similar debts, obligations or liabilities of the Manitoba partnership or another partner.

Debts to which subsection (3) applies

84(4)       The debts, obligations or liabilities referred to in subsection (3) are those arising

(a) from the negligence, wrongful act or omission, malpractice or misconduct of another partner or an employee, agent or representative of the partnership about which the partner knew at the time of its commission and in respect of which he or she failed to take reasonable steps to prevent its commission; or

(b) from the negligence, wrongful act or omission, malpractice or misconduct of an employee, agent or representative of the partnership for whom the partner was directly responsible in a supervisory role.

S.M. 2002, c. 30, s. 5.

Restrictions on distribution of partnership property

85(1)       A Manitoba limited liability partnership must 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.

Distribution other than in winding up

85(2)       In circumstances other than in connection with the winding up of its affairs, a Manitoba limited liability partnership must 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.

Exception re subsection (1)

85(3)       Subsection (1) does not prohibit a payment on account of a partnership obligation if a partner receives a prorated payment with all other creditors of the partnership of the same class.

Exception for current services

85(4)       Subsections (1) and (2) do not prohibit a payment made as reasonable compensation for current services provided by a partner to the 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.

Determination of prohibited distribution

85(5)       A Manitoba 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.

S.M. 2002, c. 30, s. 5.

Recovery of prohibited distributions

86(1)       A partner in a Manitoba limited liability partnership who receives a distribution in contravention of section 85 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 the partnership obligations that existed at the time of the distribution.

Authorizing partner jointly and severally liable

86(2)       A partner in a Manitoba limited liability partnership who authorizes a distribution in contravention of section 85 is jointly and severally liable to the partnership for any amount for which a recipient is liable under subsection (1), to the extent that the amount is not recovered from the recipient.

Parties who may institute recovery proceedings

86(3)       Proceedings to enforce a liability under this section may be brought by the Manitoba limited liability partnership, any partner in the partnership or any person to whom the partnership was obligated at the time of the distribution to which the liability relates.

Limitation period

86(4)       No proceedings to enforce a liability under this section shall be commenced later than two years after the date of the distribution to which the liability relates.

S.M. 2002, c. 30, s. 5.

Dissolution of partnership

87(1)       After the dissolution of a Manitoba limited liability partnership, the partnership maintains its status as a Manitoba limited liability partnership while its affairs are being wound up.

Deemed dissolution and winding up

87(2)       For the purposes of this section and subsection 85(1), a Manitoba limited liability partnership is deemed to have dissolved and to be winding up its affairs if

(a) it ceases to carry on business; or

(b) it is dissolved under any of sections 35 to 38.

Application to court for supervision order

87(3)       When a Manitoba limited liability partnership has dissolved and its affairs are being wound up, the court may, on the application of any interested person, make any order respecting the partnership that could be made respecting a corporation under subsection 204(8) of The Corporations Act.

S.M. 2002, c. 30, s. 5.

Regulations

88(1)       The Lieutenant Governor in Council may make regulations

(a) authorizing a profession that meets the requirements of clauses 69(1)(a) and (c) to be practised in limited liability partnerships;

(b) respecting the minimum amount of liability insurance that limited liability partnerships practising particular professions must maintain.

Notice to governing professional body

88(2)       The Lieutenant Governor in Council shall not make a regulation under clause (1)(b) in relation to a profession unless

(a) the minister appointed by the Lieutenant Governor in Council to administer this Act considers that the minimum amount of liability insurance required by the profession's governing body does not provide sufficient protection for clients of limited liability partnerships;

(b) the minister requests the governing body in writing to increase the minimum amount within a specified time; and

(c) the governing body does not increase the minimum amount.

Regulation re insurance takes precedence

88(3)       A regulation made under clause (1)(b) takes precedence over a rule, by-law or other requirement of a professional governing body respecting the minimum amount of liability insurance required for limited liability partnerships.

S.M. 2002, c. 30, s. 5.