Written By Bryan Haynes, Nancy Helm, Brent Kraus and Sydney Olsen
As of June 1, 2021, Alberta's Partnership Act (the Act) was amended to help reduce red tape attached to several administrative requirements of limited partnerships. These amendments better align the Act with the more streamlined Ontario Limited Partnership Act, particularly in regards to the formation of limited partnerships, reliance on partnership agreements and extra-provincial limited partnerships. The simplification of the Act is made pursuant to Bill 22, Red Tape Reduction Implementation Act, 2020 (RTRI Act). The RTRI Act is an omnibus bill that amends 12 pieces of legislation and repeals 2 others across 6 government departments. The Government of Alberta has categorized the objectives of the amendments into four categories: speeding up government approvals; easing administrative burdens on municipalities; improving government transparency and removing outdated requirements; and promoting economic growth and job creation by eliminating unnecessary burdens. The recent changes to the Partnership Act fall into the category of removing unnecessary burdens imposed on Albertans and businesses by eliminating several overly prescriptive and outdated requirements.
Certificate of Limited Partnerships
In contrast to the previous Alberta Partnership Act, the British Columbia Partnership Act and the Saskatchewan Partnership Act, the newly amended Act moves Alberta's legislative requirements for limited partnerships closer to those of Ontario. While businesses looking to form a limited partnership must still file the requisite certificate with the Registrar, the information required on the certificate has been significantly reduced. Previously, the certificate needed to contain extensive information about the partnership, including the character of the business, the contributions made by each limited partner and certain rights of the partners. Now, a certificate must only contain the signatures of the parties wishing to form the partnership, the firm name, the name and contact information of each general partner and any other information required by regulation. The Partnership Amendment Regulation which has also been proclaimed in force requires that the certificate state that the limited partnership substantially complies with subsection 3.1(2) of the Regulation which now requires that the information previously required to be disclosed in the certificate now be contained in the limited partnership agreement.
The amendments also remove the lengthy list of circumstances that would require the certificate to be amended. Now, the Act simply states that an amendment to the certificate is required if there is a change in the information stated in the certificate (namely, a change in the firm name or the name and contact information of each general partner) or if a general partner is added.An inconsistency, however, has been identified in the legislative amendments whereby an existing subsection requiring the certificate to be amended where a person is added as a limited partner was not repealed. We understand that this omission was inadvertent and that further legislative amendments will be required to eliminate this inconsistency.
Reference to Partnership Agreements
A second change that further aligns the Act with Ontario's Limited Partnership Act is the acknowledgement of, and reliance on, the fact that certain rights and obligations of the partners are defined in the partnership agreement rather than the certificate. With the reduced information in the certificate, the Act now points to the partnership agreement when referring to considerations such as the share of profits, rights of the partners, liability to the partnership and dissolution of the partnership, among others. One particularly helpful amendment was the clarification that general partners are not entitled to contravene the partnership agreement without consent of the limited partners, rather than the previous prohibition against contravening only the certificate.
Extra-Provincial Limited Partnerships
One further clarification provided by the amendments is confirmation that the organization, internal affairs and liability of extra-provincial limited partnerships is governed by the laws of the jurisdiction in which the partnership was formed, rather than the Alberta Partnership Act.
Bennett Jones can advise and assist existing limited partnerships or businesses proposing to establish a limited partnership with the above changes. For further information, please reach out to one of the authors, your contact at Bennett Jones or a member of the Bennett Jones Commercial Transactions team.