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Partnerships

BC

This publication guides practitioners in British Columbia through the creation, management, and dissolution of partnerships.

2 Matter Plans

Overview

The commentary covers key aspects of partnerships, including partnership structures, formation, privacy, and liability. It also offers further guidance on flexibility, income and taxation, participant arrangements, raising capital, and decision-making.

The Reference materials folder includes guidance on electronic signing and remote witnessing, and the Getting the matter underway folder contains essential compliance and client engagement documents. The comprehensive Retainer Instructions ensure that all necessary information is gathered from the client at the outset of the matter.

The Business structures and the comparative table guide provides a comparison of the pros and cons of different business structures.

Precedents in this publication include:

  • Library of clauses for partnership agreements;
  • Agreements and deeds for:
    • Partnerships;
    • Limited partnerships;
    • Buy and sell options;
    • Assignment;
    • Dissolution;
  • Buy and sell funding arrangement explanations.
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2 Matter Plans Included

  • Item icon ALERTS - Nil
  • Item icon Full Commentary - Partnerships (BC)
  • Folder icon Reference materials
    • Item icon AI Prompts
    • Item icon Electronic Signing and Remote Witnessing
    • Item icon Business Structures and the Comparative Table (BC)
    • Item icon Further information
  • Item icon Overview
    A partnership is a common form of business organization that:

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  • Folder icon A. Getting the matter underway
    • Item icon File cover sheet - Partnerships
    • Item icon To do list - Partnerships
    • Item icon Taking instructions in partnership matters
      Although a partnership agreement does not need to be in writing, it is both common and sensible to have a written partnership agreement. A written agreement will almost always be the most valuable and powerful evidence of the parties’ intentions. Use the Retainer Instructions and the precedent ...

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    • Item icon First steps
    • Item icon Client details, verification, and source of funds
    • Item icon Retainer instructions - Partnerships
    • Item icon Conflict of interest check
    • Item icon Initial letter to client enclosing retainer agreement
    • Item icon Retainer agreement - British Columbia
    • Item icon Scope of work - Partnerships
    • Item icon Time and costs estimates
    • Folder icon If required - Costs disclosure update and a non-engagement letter
      • Item icon Letter to client updating costs disclosure
      • Item icon Non-engagement letter
    • Folder icon General deeds, agreements, execution clauses, and statutory declarations
      • Item icon Deeds and Agreements
      • Folder icon Deeds
        • Item icon Confidentiality deed
        • Item icon Deed for general use
        • Item icon Deed of assignment of agreement
        • Item icon Deed of gift
        • Item icon Deed of guarantee
        • Item icon Deed of release
        • Item icon General deed of indemnity
        • Folder icon Library of standard clauses for deeds
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Agreements
        • Item icon Agreement for general use
        • Item icon Heads of agreement
        • Item icon Non-disclosure agreement - Formal
        • Item icon Non-disclosure agreement - Informal
        • Folder icon Library of standard clauses for agreements
          • Item icon Amendment clause
          • Item icon Confidentiality clause for defined information - All parties
          • Item icon Confidentiality clause for defined information - One party
          • Item icon Confidentiality clause for terms of agreement - All parties
          • Item icon Confidentiality clause for terms of agreement - One party
          • Item icon Costs clause
          • Item icon Counterparts clause
          • Item icon Dispute resolution clause
          • Item icon Events beyond control clause
          • Item icon Governing law and jurisdiction clause
          • Item icon Interpretation clause
          • Item icon No assignment clause
          • Item icon Notices clause
          • Item icon Severance clause
          • Item icon Waiver clause
          • Item icon Whole agreement clause
      • Folder icon Execution clauses
        • Item icon Execution clauses - Agreements and contracts
        • Item icon Execution clauses - Deeds
      • Folder icon Statutory declaration
        • Item icon Statutory declaration
      • Item icon Standard annexure note for documents
  • Folder icon B. Establishing a partnership
    • Item icon Partnership structures
      There are three types of partnerships:

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    • Item icon Powers, rights, and responsibilities of partners
      All partners are regarded as agents of one another and owe one another a duty of utmost good faith. Therefore, partners are expected to conduct themselves in business relations for the mutual advantage of the other partners and avoid conflicts between their interests and their obligations and ...

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    • Item icon The partnership agreement
      It is not essential to have a formal written agreement for a partnership to exist, and the agreement between partners can be oral or implied. However, a limited liability partnership can only be established by the express agreement of the partners. A well-drafted partnership agreement is considered ...

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    • Item icon Partnership agreement
    • Item icon Limited partnership agreement
    • Item icon Letter to client with draft partnership agreement
    • Folder icon Library of clauses for partnership agreements
      • Item icon Representative clause for a corporate partner
      • Item icon One partner to have sole management
      • Item icon Termination of partnership
      • Item icon Notice of determination of partnership
      • Item icon Expulsion clause
    • Item icon Buy and sell agreements
      Buy and sell clauses or agreements and other variations such as a put and call option, pre-emptive rights clause, shotgun clause, or right of first refusal clause are commonly included in a partnership agreement. They can also be a separate document incorporated into a partnership agreement. In a ...

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    • Item icon Buy and sell option agreement
    • Item icon Enclosure - Buy and sell agreements funding arrangements explanation
    • Item icon Buy and sell option - Funding agreement
    • Item icon Policy register
    • Item icon Establishing a partnership
      Partnership structures There are three types of partnerships:

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    • Item icon BC Registries and Online Services
    • Item icon Name Request
    • Item icon Declaration for British Columbia Limited Partnership
    • Item icon Declaration for Extraprovincial Limited Partnership
    • Item icon Registration Statement
    • Item icon Registration Statement (Extraprovincial)
    • Item icon Changes to Registration Statement
    • Item icon Changes to Registration Statement (Extraprovincial)
    • Item icon Business Registration Online
  • Folder icon C. Running a partnership
    • Item icon Partnership property
      A partnership does not have a separate legal personality from its partners and is incapable of holding property in its name. Partnership property is held in the name of the general partners for the benefit of the partnership. All property and rights and interests in property initially brought into ...

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    • Item icon Apportionment of liability
      Generally, each partner is jointly and severally liable to the full extent of their personal assets for all the partnership’s debts and obligations. After death, a partner’s estate is also severally liable for debts and obligations to the extent that they remain unpaid. There are exceptions to this ...

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    • Item icon Taxation
      Income Tax Partnerships do not pay tax. Income and losses flow through to the partners, who include the income and losses in their income tax returns. They pay tax based on their aggregate income at their marginal income tax rate if the partner is an individual or the corporate tax rate if the ...

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    • Folder icon If required - Deed of variation
      • Item icon Deed of variation of partnership - Profit share
    • Folder icon Library of precedents for small business
      • Item icon Agreement for supply of goods and services
      • Item icon Credit application
      • Item icon Dispatch and delivery policy
      • Item icon Director guarantee deed
      • Item icon Liability waiver and consent
      • Item icon Privacy policy
      • Item icon Returns and refund policy
      • Item icon Terms of trade
      • Item icon Website terms of use for advertising and booking personal services
      • Item icon Website terms of use for downloadable online products
      • Item icon Website terms of use for physical products
  • Folder icon D. Dispute resolution
    • Item icon Mediation
      Mediation has a cost and time-saving advantages and can be particularly useful for partnerships where a small business with limited financial resources is involved. In mediation, an impartial and independent third party is appointed by agreement, or sometimes by a mechanism in the partnership ...

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    • Item icon Litigation
      Litigation involves the parties to a dispute asking the court to determine the outcome. The decision of the court is binding on the parties and enforceable. Litigation is the most expensive and time-consuming method of dispute resolution. Litigation’s stressful and adversarial nature often means ...

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    • Item icon Letter to other partners giving notice of partnership dispute and referral to mediation
    • Item icon Letter to other partners giving notice of expulsion from partnership
  • Folder icon E. Dissolution of a partnership
    • Item icon Dissolution of the partnership
      Generally, the exit of a partner brings a partnership to an end unless the partnership agreement provides otherwise. The partnership can be reconstituted with the remaining partners, or a new partnership established between the old and new partners.

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    • Item icon Involuntary dissolution
      General partner Subject to the partnership agreement, a general partner wishing to retire and end the partnership may give notice of their intention to dissolve the partnership to the other partners. The partnership will be dissolved from the date identified in the notice.

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    • Item icon Voluntary dissolution
      The general partners can agree when forming the partnership that the partnership is for a fixed period or a specific undertaking. This will mean that the partnership will be dissolved once the fixed term has elapsed, or the undertaking is completed or abandoned. Additionally, all the partners may ...

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    • Item icon Court-ordered dissolution
      Section 38 of the Partnership Act 1996 provides that all partners may apply for a court order to dissolve a partnership when:

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    • Item icon Letter to other partners giving notice of meeting of partners
    • Item icon Minutes of meeting
    • Folder icon Library of notices
      • Item icon Letter to other partners giving notice of intention to dissolve the partnership
      • Item icon Letter to other partners giving notice of retirement of partner
      • Item icon Letter to other partners giving notice of intention to dissolve partnership with no previous partnership agreement
    • Item icon Deed of dissolution
      A Deed of Dissolution is not mandatory. However, having a deed gives certainty to the terms of dissolution and avoids any conflict. The terms of a deed of dissolution should cover the following:

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    • Item icon Deed of dissolution
    • Item icon Declaration for British Columbia Limited Partnership
    • Folder icon If required - Notice of partnership dissolution or partner retirement
      • Item icon British Columbia Gazette
      • Item icon Example content - Request to publish in the gazette - Dissolution
      • Item icon Letter to third party giving notice of dissolution of the partnership
    • Item icon Settling accounts on dissolution
      Sections 47 and 73 of the Partnership Act 1996 respectively deal with settling the accounts of a general partnership and a limited partnership on dissolution.

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  • Folder icon F. Post dissolution - Continuation of the business and reconstitution
    • Item icon Continuing after a partner’s retirement
      When a partner in a general partnership retires, the remaining partners settle the partnership’s accounts, buy the retiring partner’s share, and reconstitute the partnership to run the business. If the remaining partners continue the business activities without winding up or buying out the retiring ...

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    • Item icon Assignment
      Instead of winding up a partnership on a dissolution triggering event, the remaining partners may reconstitute the partnership with the retiring partner directly assigning their interest to a new partner. This process will depend on the partnership agreement.

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    • Item icon Deed of assignment of interest in partnership
    • Item icon Letter to other partners giving notice of admission of new partner
    • Item icon Agreement for admission of incoming partner
    • Item icon Letter to client with draft agreement
  • Folder icon G. Finalizing the matter
    • Item icon Finalizing the matter
      It can be useful to foster these professional relationships as business clients often require ongoing legal advice and support. By establishing a strong working relationship with them, lawyers can develop a loyal client base. Working with such clients can also expose the firm to a wide range of ...

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    • Item icon Letter to client finalizing the matter
    • Item icon Invoice recital - Partnerships
    • Item icon Closing the file
    • Item icon File closing checklist
  • Item icon Comments and suggestions for By Lawyers

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