Limited Partnerships Act

Section 24


Canadian Home Publishers Inc. v. Parker, 2019 ONCA 314

a limited partner on dissolution can only receive a return of its capital contributions, where s. 24 not overridden

S. 24 of the Limited Partnerships Act (Ontario) provides that “unless the partnership agreement or a subsequent agreement provides otherwise,” on a partnership dissolution the residual assets are to go to the general partner excepting for the payment to the limited partner of its contributions and unpaid profits distributions. Accordingly, Nordheimer JA found that, on a dissolution of a limited partnership that occurred as a result of the death of the limited partner (who had had a 50% profits participation), the estate of the limited partner was entitled to receive only a return of the relatively modest contributions of capital that the limited partner had made decades earlier, rather than 50% of the residual assets. He stated (at para. 25):

A limited partner enjoys protection from the liabilities of the limited partnership, unlike a partner in an ordinary partnership. In return for that protection, the limited partner is restricted to the receipt of two things under the LPA: one is their share of the profits and the other is the return of their contribution (see LPA, s. 11). A limited partner has no broader right to participate in the upside of the limited partnership, just as the limited partner has no broader obligation to suffer or contribute in the downside.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 98 - Subsection 98(1) - Paragraph 98(1)(b) liquidation entitlement of limited partner was only to a return of his capital contributions 320