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Wednesday, February 10, 2016
Saskatchewan Justice

The Partnership Act sets out the rules for partnerships carrying on business in Saskatchewan and for the dissolution of partnerships.

Partnerships doing business in Saskatchewan, including extra-provincial partnerships, must register their business names under The Business Names Registration Act. However, the laws of the jurisdiction in which the extra-provincial partnership is formed govern its formation, internal affairs and the liability of limited partners.

A partnership is an unincorporated organization that subsists between persons carrying on business in common with a view of profit. The persons that make up a partnership may include individuals over 18 year's old, Indian bands, corporations or limited partnerships. Unlike business corporations, for example, a partnership has no legal existence distinct from the persons composing it. The partners are jointly and severally liable.

There are three forms of partnership:

  • general;
  • limited; and
  • limited liability.

In a general partnership, two or more general partners manage the business, share in the profits, and are equally responsible or liable for its debts. Any individual acts by a partner are binding on the other partners and all partners are personally liable for the partnerships' total liabilities.

In a limited partnership, there must be at least one general partner and at least one limited partner. The limited partner or partners may invest in the business but are not directly involved in management, have no say in the daily operations of the company, and are liable only to the extent of their investments.

Partnerships are common for service professions such as accounting, dentistry and law. These can be viewed as "unlimited liability partnerships" because these professions cannot practise with a shield against liability for professional malpractice claims against their firms.

The formation of limited liability partnerships is restricted to professions. In these partnerships, partners are not, as such, personally liable for obligations of the firm. Liability continues to apply if a person suffers injury because of the partner's negligent or wrongful acts or omissions, including negligence in appointing, supervising or failing to supervise another member or employee of the firm, or where the partner knew of the wrongful acts or omissions and failed to take reasonable steps to prevent them. Limited liability partnerships and extra-provincial limited liability partnerships must register with the Corporate Registry and file annual returns.

The Act establishes rules including:

  • what constitutes partnership property - (e.g., a joint tenancy, tenancy in common, joint property, or common property do not of itself create a partnership);
  • the relationship between partners (e.g., partners are obliged to provide each other with reasonable notice of all resolutions concerning the affairs of the partnership);
  • the rights and obligations of partners (e.g., a partner may not introduce a new member into the firm without the consent of the existing partners); and
  • dissolution procedures (e.g., a partnership is dissolved by any partner giving notice to the other or others of the intention to dissolve it, 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 a partnership formed for a single venture is dissolved, even in the absence of a formal act of dissolution, once the venture is terminated).

Subject to the agreement between the partners, partnerships automatically dissolve if any partner doesn't live up to the partnership agreement for reasons of incompetence, bankruptcy or authorized assignment under the Bankruptcy Act (Canada), or illness or death.

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