Name: Limited Partnership Agreement
Brand: Made It Legal
SKU: 4318
Price: 30.45 CAD
Availability: InStock

Limited Partnership Agreement

$29.00

Step 1 of 14

Great, let's make your Limited Limited Partnership Agreement. Tell us about the partners.
You'll need a General Partner. Tell us the name of your General Partner.*
IMPORTANT! Your General Partner should be a corporation. It's almost always a bad idea to have an individual as the General Partner. Click the "?" icon for more information.

Have you already set up a corporation to be your General Partner (or have an existing corporation to use)?*
- Yes
- No

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We'll keep going with some basics and build up from there.
What's the name of your limited partnership?*
The name should not include any part of a Limited Partner's name. If it does, that Limited Partner becomes liable for the partnership just like a General Partner. It's okay to include a part of the General Partner's name though.
What's the start date for your partnership?*
MM slash DD slash YYYY
Where do you do business from?*
Province
Partnerships exist for a specific business purpose, so we include a short description of the kind of business you're running through your partnership. Please describe what your business does.*
Do you want to include a fixed end date for the partnership?*
- Yes
- No
You can put a fixed end date for your partnership. When you reach that date, the partnership is dissolved and the assets and profit in the partnership get divided up among the partners.

You can always vote to extend the date.

Without a fixed end date, the partnership continues until the partners decide to end it.
How many years from now will the partnership end?*

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We'll go over some points about your General Partner now.
There may come a time when the Limited Partners need to remove and replace the General Partner. This is done by a vote. What approval of the Limited Partners should be needed?*
- 50%
- 67%
- 100%
Approval is determined by ownership percentage (e.g. approval of partners owning 50% or more of the partnership).

Since the General Partner is the one in control of the management and operation of the business, and it's the partner that is responsible for the liability of the business, you have to be careful when removing or replacing the General Partner. Without a General Partner, the Limited Partners could start to be responsible for business liability.

Usually the idea is the General Partner is in it for the long run, keeping its role until the partnership is done. But that's not always the case and you may want to remove the General Partner if it becomes bankrupt or is in serious breach of its responsibilities. You may even want to replace the General Partner for poor performance. While uncommon, the General Partner may also ask to resign and for the Limited Partners to find a replacement.

Maximum flexibility, lowest control over the decision

Medium flexibility, medium control over the decision

Very low flexibility, highest control over the decision
Tell us how you would like to calculate the General Partner's annual fee.
Tell us how you would like to calculate the General Partner's fee.*
- Fixed fee
- Percentage of the partnership profit
- Other
The general partner is responsible for operating the business and takes on the risk of the partnership's debts and other obligations. So, it often gets a fee for its services and risk.

You can set a fixed fee. For example, $50,000 each year.

The general partner is responsible for operating the business and takes on the risk of the partnership's debts and other obligations. So, it often gets a fee for its services and risk.

You can set the fee to be a percentage of the partnership's profits. For example, 5%. So if the partnership made $100,000 of profit (after all of the business expenses) the General Partner would get $5,000.

The general partner is responsible for operating the business and takes on the risk of the partnership's debts and other obligations. So, it often gets a fee for its services and risk.

You can write in your own fee by choosing "other".
No GP fee
- No fee
What fixed fee will the General Partner get?*
What percentage of profits will the General Partner get as its fee?*
Tell us what fee you would like the General Partner to get.

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Let's go over some points about your Limited Partners now.
How do you want to handle bringing in new Limited Partners?*
- The General Partner will approve new Limited Partners
- The existing Limited Partners must approve any new Limited Partners
The idea behind a Limited Partnership is the General Partner is running the business and the Limited Partners are passive investors. The Limited Partners do not take an active role in the business. So, they often are not too concerned about who comes in as a new Limited Partner. If that's the case, we leave it to the General Partner to approve new Limited Partner investors.

The Limited Partners may ask for some control over deciding who can come in as a new Limited Partner investor. Maybe they're concerned about competition and confidentiality, for example. You can give your Limited Partners the authority to approve new Limited Partners if you wish.
What approval of the Limited Partners should be needed to approve a new Limited Partner?*
- 50%
- 67%
- 100%
Approval is determined by ownership percentage (e.g. approval of partners owning 50% or more of the partnership).

Maximum flexibility, lowest control over the decision

Medium flexibility, medium control over the decision

Very low flexibility, highest control over the decision
If a Limited Partner breaks its promises in the Limited Partnership Agreement in a serious way, or if its ownership in the partnership is threatened (e.g. the Limited Partner goes bankrupt), should the General Partner be able to remove the Limited Partner?*
- Yes
- No
If a Limited Partner seriously breaks its promises in the Limited Partnership Agreement, you may want to have the power to remove that partner. This motivates the partner to live up to its obligations.

Also, if the Limited Partner goes through a serious life or business event that threatens its ownership in the partnership, you may want the option to remove the partner. For example:
- - the partner goes bankrupt and its ownership in the partnership passes to its creditors;
  - the partner divorces and the ownership of the partnership passes to the other spouse;
  - the partner goes out of business and it's unclear who will get its ownership position in the partnership; or
  - there is a law suit and a judge orders that the partner's ownership in the partnership go to someone else.
In these cases, you may want the General Partner to have the power to remove the person as a Limited Partner so the business isn't impacted.

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We'll go over some financial matters now.

How much has each partner contributed to the partnership?*

Be sure to include all the partners here, even the General Partner. Click the "+" icon to add more rows.

Name of Partner	Amount ($)

Do you want to allow partners to withdraw their capital contributions? You have two choices if you do. Click on the "?" icons if you need more information to help you choose.*
- Waterfall (returned gradually after a certain date)
- Cliff (returned all at once after a certain date)
- Partners cannot withdraw their capital contributions
An investor puts money or property into the partnership to become a Limited Partner. That amount is called a "Capital Contribution". In return for its Capital Contribution, the investor gets a part of the profit from the partnership. That's how the investor makes money.

Also, when the partnership is all done and wrapped up, if there is money left over (and that is the goal, of course) the investor gets their initial Capital Contribution back plus its share of the additional money leftover. Usually a Limited Partner does not get its Capital Contribution back until the partnership is wound up.

But, you can allow Limited Partners to take back their Capital Contributions after a certain amount of time has passed. It's a way to encourage investment by promising to give back the investment once enough time has passed. There are two options for returning Capital Contributions early:
1. A waterfall approach;
2. A cliff approach.
With a waterfall, the investor can start to take back a part of their Capital Contribution after a certain date. For example, after January 1, 2025 a Limited Partner can take back 20% of their Capital Contribution each year. The slower time period makes it easier to return the investor's amount.

With a cliff approach, the investor can take back 100% of their Capital Contribution after a certain date has passed.
After what date will Limited Partners be allowed to gradually take back their capital contribution?*
MM slash DD slash YYYY
How much of its capital contribution can the Limited Partner take back each year after this date? Fill in a number that represents the percent the partner can take back (e.g. 20%).*
For example, you could say starting on January 1, 2025 a Limited Partner can withdraw 20% of its capital contribution each year.
After what date will Limited Partners be allowed to take back their capital contribution?*
MM slash DD slash YYYY

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Partners can also loan money to the partnership, which gets repaid over time as the partnership makes a profit. Will any of the partners be loaning money when you sign your Limited Partnership Agreement?

Name of Partner	Amount ($)

Tell us about the loans. Be sure to include all partners, even the General Partner, that will be making loans to the partnership.

Partnership loan not applicable
- Skip this part. No partnership loans.

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If your partnership is short on money, do you want the partners to have to put more funds into the partnership?*
- Yes
- No
One feature you can include in your Limited Partnership Agreement is a capital call, which is an obligation by the Limited Partners to put more money into the partnership when finances are tight.

A capital call works like this:
- - The General Partner lets the Limited Partners know that there isn't enough money in the business.
  - The Limited Partners then vote on whether they should all have to invest more into the partnership to keep the business going. You can set the approval at 100%, two-thirds (67%), or a simple majority (50%).
  - If the vote is passed, all the Limited Partners must put in their share of the needed money.
What approval of the Limited Partners should be needed for the mandatory additional funds?*
- 50%
- 67%
- 100%
Approval is determined by ownership percentage (e.g. approval of partners owning 50% or more of the partnership).

Maximum flexibility, lowest control over the decision

Medium flexibility, medium control over the decision

Very low flexibility, highest control over the decision
If a Limited Partner doesn't give its additional mandatory funds when requested, you can charge that partner interest as a way to encourage them to live up to their promise. Would you like to do that?*
- Yes
- No
What interest rate do you want to charge?*

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How often should the partnership's profits have to be distributed to the partners?*
- Annually (most common)
- Quarterly
The General Partner runs the business and the profits are then distributed to the partners throughout the year.

This is the most common way to distribute profits because at the end of the year is when it's easiest to know if there is a profit.

Quarterly distributions work well for a business that has regular and predictable income, like an apartment building business for example. Since rental revenue is fairly predictable, you could choose to distribute profits quarterly to your investors.
Should the financial statements be audited?*
- Yes
- No
Audited financial statements are ones that have been reviewed by your auditor, which is an outside accounting firm you hire to thoroughly review your financial statements and records to give your investors a lot of confidence in their accuracy. Auditors charge a fee for their review.

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Let's go over some confidentiality and non-competition points now.
What protections do you want to have for the partnership? Check all that apply.
What protections do you want to have for the partnership? Check all that apply.*
- Confidentiality
- Non-competition
You can include an agreement by all the partners to keep sensitive company information confidential. This takes the place of individual confidentiality agreements with your partners. Each partner will acknowledge the confidential nature of the partnership’s information and agree to only use it for the benefit of the partnership and to grow its business.

You can include promises by the partners that they will not compete with the business of the partnership. Non-competition promises can be hard to enforce. If you choose this option, we'll guide you through some decisions so you have an idea of how enforceable the promise may be.
Protections opt out
- None of the above
After a person is no longer a partner, for how long should they have to keep the partnership's information confidential?*
So your partners are not at risk of liability forever, you can place a time limit on how long their confidentiality promise lasts. For example, you could say a partner has to keep information confidential while they are an investor and for 3 years after they are no longer a partner.

In fact, courts prefer it (generally) when confidentiality obligations don't go on forever and your agreement is more likely to be enforceable if you put a time limit on it. Two to five years is fairly common, but it could be higher for companies in sensitive and highly competitive industries, like some tech start-ups. 10 years is typically seen as the upper limit.
How strict do you want to make the non-competition promise?*
- Limited Partners can have competing business interests if they ask for permission from the other partners first
- Limited Partners cannot have any competing business interests
Narrowing the non-competition promise to only the geographic areas where the partnership operates helps to make it enforceable.
- Make the non-competition promise apply only to where the partnership operates (more enforceable)
- Keep it broad without any geographic limits (less enforceable)
After a person is no longer a partner, for how long should they be not allowed to compete with the partnership?*
A non-competition promise is likely to be unenforceable if it goes on for too long. So, we need to put a limit on it. For example, you could say a partner is not allowed to compete with the partnership for 3 years after they are no longer a partner.

Non-competition time periods vary quite a bit depending on the business. Choose a time that is reasonable to protect your business, but not overly strict. If you're unsure, something in the range of 1 to 3 years is typical.

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What would a business be without meetings?
How often should partner meetings be held?*
- At least annually
- At least quarterly
Partnerships hold regular meetings for the Limited Partners. At these meetings, the General Partner gives an update on the business and the Limited Partners may vote on anything in the Limited Partnership Agreement they are allowed to vote on.
Limited Partners can also call emergency meetings if enough of the Limited Partners ask for it. This is done by a vote. What percentage approval of the Limited Partners should be needed to call an emergency meeting?*
- 50%
- 67%
- 100%
Approval is determined by ownership percentage (e.g. approval of partners owning 50% or more of the partnership).

Maximum flexibility, lowest control over the decision

Medium flexibility, medium control over the decision

Very low flexibility, highest control over the decision
What percentage of the partnership's ownership should be represented at a meeting for it to go ahead?*
- 50%
- 67%
- 100%
Meetings can only go ahead if you have enough partners in attendance to make it worthwhile. For example, enough partners to represent at least 50% of the partnership's ownership. If less than that show up, the meeting has to be postponed until more partners can make it.

Lower representation for important decisions, usually easy to get a meeting to go ahead

Medium representation for important decisions, a little harder to get a meeting to go ahead

High representation for important decisions, least flexibility to get a meeting to go ahead

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Let's go over how we change your Limited Partnership Agreement.
If you want to amend your Limited Partnership Agreement, you will need the approval of the Limited Partners. What approval by the partners do you want to have?*
- 50%
- 67%
- 100%
Approval is determined by ownership percentage (e.g. approval of partners owning 50% or more of the partnership).

Maximum flexibility, lowest control over the decision

Medium flexibility, medium control over the decision

Very low flexibility, highest control over the decision

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Let's talk about transferring your ownership in the partnership to others.
When a Limited Partner gets an offer from someone to buy their ownership in the partnership, should they have to give the other Limited Partners a chance to match the offer first? (Known as a "right of first refusal")*
- Yes
- No
A right of first refusal means that if a Limited Partner receives an offer to buy their ownership in the partnership from an outside party, the Limited Partner has to first offer to sell their ownership to the other Limited Partners for the exact same price and on the same terms as what the third party offered. If the other Limited Partners want to accept the offer, then they get to buy out the other partner. If not, the sale goes ahead to the outside party.

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Limited Partnership Agreement

Step 1 of 14

We're glad you're interested in creating a Limited Partnership. Starting a business is exciting, but figuring out what kind of legal set up you need can feel overwhelming. That's why we made the Start-a-Business Assistant.

Great, let's make your Limited Limited Partnership Agreement. Tell us about the partners.

We'll keep going with some basics and build up from there.

We'll go over some points about your General Partner now.

Let's go over some points about your Limited Partners now.

We'll go over some financial matters now.

Let's go over some confidentiality and non-competition points now.

What would a business be without meetings?

Let's go over how we change your Limited Partnership Agreement.

Let's talk about transferring your ownership in the partnership to others.

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Limited Partnership Agreement

Step 1 of 14

We're glad you're interested in creating a Limited Partnership. Starting a business is exciting, but figuring out what kind of legal set up you need can feel overwhelming. That's why we made the Start-a-Business Assistant.

Great, let's make your Limited Limited Partnership Agreement. Tell us about the partners.

We'll keep going with some basics and build up from there.

We'll go over some points about your General Partner now.

Let's go over some points about your Limited Partners now.

We'll go over some financial matters now.

Let's go over some confidentiality and non-competition points now.

What would a business be without meetings?

Let's go over how we change your Limited Partnership Agreement.

Let's talk about transferring your ownership in the partnership to others.

Here's what else we recommend for you.

Send a little love to Made It Legal.

Legal help you can get through in less than the time it takes to finish your coffee.

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