Ontario Limited Partnership Formation

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting, reviewing, interpreting or resolving disputes concerning partnership and limited partnership agreements, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your partnership and limited partnership agreements. I should know – I’m one of them and you can contact me directly.

The New Delaware LLC (or Alternative for Investing)?
I honestly believe that Ontario Limited Partnerships will become the next type of Delaware Limited Liability Company.  Why?  Because those companies are being subject to more stringent tax reporting requirements.  Ontario Limited Partnerships are similar to Delaware LLCs in many respects.  First, the limited partners are liable for the partnership’s debts only up to their contribution or amount promised (akin to a corporation).  Second, the limited partnership is a flow through entity, so no taxes are paid at the limited partnership level  (akin to a partnership).  Ontario Limited Partnerships have the best of both words – corporation and partnership.  So long as you’re mindful of partnership laws, tax laws, securities laws and the like, you’ll be flying straight with your Limited Partnership.

Forming the Limited Partnership using  an extra-provincial corporation
OK, so you are not located in Ontario or even Canada, but you want to have an Ontario Limited Partnership to do business through. That’s perfectly OK for the purposes of Ontario law.  Now, remember: an Ontario LP is comprised of at least one general partner (typically a corporation, because the general partner is exposed to unlimited liability) and at least one limited partner (e.g. an individual, corporation, partnership, etc.).

So you have an extra-provincial corporation.  What next?  Well, if you want it to be the Ontario general partner, you need to obtain an extra-provincial license for the corporate partner.  There is a fee ($330) that has to be paid, paperwork that has to be filed, and an agent for service appointed in order to receive service on behalf of the extra provincial corporation.  I’ve previously blogged about this process here.  You can contact me directly if you need help doing this. Once you’ve got your extra-provincial license, you can now proceed to register the limited partnership using the extra-provincial corporation as a general partner.  THIS IS PERFECTLY OK.  This would not, however, be considered an extra-provincial limited partnership.  An extra-provincial limited partnership is a partnership that is already registered and organized in some other jurisdiction.

What about an extra-provincial LLC as the general partner?
I have spoken with government staff on a number of occasions and they have confirmed that an extra-provincial Limited Liability Company (i.e. not formed in Ontario or even Canada) CAN be the GENERAL PARTNER of an Ontario limited partnership.  So what’s an LLC?  A typical LLC is a hybrid entity: part partnership, part corporation.  It takes the best and worse of both worlds.  As a partnership, it can be disregarded for tax purposes.  This means it’s a flow through entity (just like an Ontario limited partnership).  So the members (not shareholders) who own the units of the LLC receive the profits and losses and are taxed accordingly.  This differs from a corporation, where the corporation is a separate legal entity (it gets taxed) and then the shareholders receive dividends (they get taxed again!).  So, as a partnership-like structure, it has tax advantages. But it also conveys limited liability status on its members and managers.  SWEET!

So how does an LLC become the general partner of an Ontario limited partnership?  Well, we look at the definition of a general partner under the Limited Partnerships Act. Section 2(2) of the Act says that “a limited partnership shall consist of one or more persons who are general partners…”.  OK, so a “person” can be a general partner.  So who’s a person, then? Turning to section 1(1) of the Act, we see that “person” includes an individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his or her capacity as trustee, executor, administrator or other legal representative.  Hmmm…so does an LLC count as a “person”?  It has traits for both a partnership and a corporation.  It is also not incorporated.  I think it would fit within the definition of an “unincorporated organization” under section 1(1).  So I would argue that an extra-provincial LLC is capable of being the general partner for an Ontario Limited Partnership.

Before you can register your Ontario Limited Partnership, you’ll need to register the extra-provincial LLC: you fill out Form 6 and pay $80 to register the business name under the Business Names Act.  The registration lasts for 5 years, so be sure to renew it!  Also, if your name is inappropriate (e.g. includes certain words that identify it as being government) or confusing similar to a competitor’s name in the industry (particularly one that has a trademark), then you may run into problems trying to register or keep the name.  You might want to do a NUANS name search before submitting the registration to avoid wasting extra time and money if the name is inappropriate or confusingly similar to an already existing name.

In July of 2010, the U.S. Bankruptcy Court for Arizona ordered the sale of a debtor’s limited partnership interest in an Arizona limited partnership in disregard of Arizona Revised Statues Section 29-655.  This Arizona statute that says that the sole remedy of a creditor who gets a judgment against a partner of an Arizona limited partnership is a charging order.  A charging order is a court order served on the limited partnership that orders the limited partnership to make any payments of money or distributions of property intended for the judgment debtor to the creditor.  When served with a charging order, the limited partnership usually ceases making payments and distributions to the partner who is the judgment debtor, which means the creditor gets nothing from the limited partnership.

In re Michael L. Gauvin, the United States Bankruptcy Court ordered the sale of the debtor’s fifty percent interest as a limited partner of an Arizona limited partnership called “Draco Enterprises II, an Arizona limited partnership.”  See the Notice of Sale.

Here is the text of Arizona’s charging order statute applicable to Arizona limited partnerships:

29-655. Rights of judgment creditors of a member

A. On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member’s interest in the limited liability company with payment of the unsatisfied amount of the judgment plus interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member’s interest.

B. This chapter does not deprive any member of the benefit of any exemption laws applicable to his interest in the limited liability company.

C. This section provides the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the judgment debtor’s interest in the limited liability company.

Arizona Revised Statutes Section 29-655 is the equivalent law for Arizona limited liability companies.  This statute states:

29-655. Rights of judgment creditors of a member

A. On application to a court of competent jurisdiction by any judgment creditor of a member, the court may charge the member’s interest in the limited liability company with payment of the unsatisfied amount of the judgment plus interest. To the extent so charged, the judgment creditor has only the rights of an assignee of the member’s interest.

B. This chapter does not deprive any member of the benefit of any exemption laws applicable to his interest in the limited liability company.

C. This section provides the exclusive remedy by which a judgment creditor of a member may satisfy a judgment out of the judgment debtor’s interest in the limited liability company.

Bottom line:  Despite these two Arizona statutes that state that the charging order is the exclusive remedy of a creditor that gets a judgment against a partner of an Arizona limited partnership or a member of an Arizona limited liability company, if the partner or member is a debtor in bankruptcy, the bankruptcy court can and probably will sell the interest and give the proceeds to creditors unless the interest is worthless.

Related posts:

1. Using If in an LLC Operating Agreement
2. A Jurisdictional & Governing Law Quagmire: LLC Charging Orders
3. Ohio Appeals Court Affirms Basic LLC Protections
4. Personal Guaranty’s & LLC’s
5. Bankruptcy Trustee Seeks to Set Aside Millionaire’s Transfers of Assets
6. How to Change the Name of a Limited Liability Company
7. The Single Member Limited Liability Company as Disregarded Entity: Now You See it, Now You Don’t
8. Asset Protection: Doing Nothing Protects Nothing – Why People Form LLCs
9. Reverse Piercing is a Flawed Theory
10. Arizona Attorneys Finding Vexing Issues in Bankruptcy Cases

Respected polling now indicates that cancer survivor Dilma Rousseff of the Worker's Party will likely be voted Brazil's first woman president next month. But election season debate over American-style affirmative action quotas is stretching the nation's social fabric and could spell trouble down the road for Dilma, who until resigning to run for high office, served as president Lula's chief of staff.

With the BBC tagging Brazil as the world's second largest black population after Nigeria, educators and jurists from the mostly non-black political class are questioning programs for people who claim to be descendants of African slaves but fail to create enough equal opportunity private sector jobs to employ them.

It's another reminder of how efforts to globalize the U.S. model of social organization by race can cause the fragmentation of national identity in a regional power like Brazil, where futebol is the national sport, samba is the national music and "order and progress" and "one nation for everybody" are the national mottos. The american concept of "black" is not used in Brazilian Portuguese in connection with race, as in black America, black power, black enterprise; the operative word is negro.

Considering economy minister Guido Mantega's prediction that a new government stimulus plan, which Dilma helped craft, will churn out an annual five percent rate of growth through 2014 one would think that Afro-Brazilians would have little difficulty landing high wage jobs. But many global companies in Brazil work around affirmative action by doing the bare minimum to avoid government penalties and then engage workers willing to opt in as units of human capital much like the contract labor from Europe and Japan that replaced slavery in the late 19th century.

Use of human capital, like cloud computing, enables firms to avoid investing in costly manpower and infrastructure by drawing on service providers only as needed. This is hardly the affirmative action opportunity Brazil's university educated Yanomami Indians living in the Amazon high tech zone or Afro-Brazilians seeking careers in intellectual property, business incubation, venture capital and project management at the government's new Bahia Techno Center can raise their families on.

While Latin governments and organizations sponsored by the Roman Catholic church are still sorting out human rights issues associated with repressive military regimes, they are quick to forget that the concept of human capital, which treats people as a means of production rather than human beings with equal rights, was a component of the free market "Chicago school" of economics during the US-backed military juntas in Brazil, Argentina, Chile and Uruguay.

Ironically presidential candidate Jose Serra of the neoconservative Social Democrats learned Chicago economics in dictator Pinochet's Chile, where he thought exile was a more favorable alternative to the military regime in power back home across the Andes in Brazil. On the campaign trail Serra has said little on matters relating to affirmative action preferring to go negative on Dilma, recycling old allegations linking her to drug dealers and the FARC. Even though Serra is Latin America's top technocrat, the lack of charisma that caused him to lose to Lula in the 2002 presidential race is again a factor this go-round and he has already gone public blaming his party and advisers for crafting a bad campaign strategy.

Marina Silva, the Green Party presidential candidate who identifies herself as an Afro-Brazilian has distanced herself from the affirmative action conversation as well. Marina, who defected from the Worker's Party after resigning as president Lula's environment minister, was tagged by pundits early on in the campaign as a spoiler candidate who could take away enough female votes from Dilma to send presidential voting into a second round. But Marina's platform has more to do with cutting back social programs and restricting a woman's right to abortion than providing clean drinking water and stopping the flooding and forest fires that are relocating hundreds of thousands of economically disadvantaged Brazilians and has drawn support away from herself and Serra.

Dilma is banking on the political capital generated by the 20 visits Lula made to African nations she took part in as a basis for growing of the government's south-south economic cooperation plan.

It took nearly two centuries of American democracy to produce LBJ's "Great Society." But affirmative action spawned half a century ago doesn't play in Peoria anymore because economic changes brought on by globalism have rendered it obsolete.

And it doesn't play in Brazil- where the Brazilian Institute for Geography and Economics lists over 40 categories of people based on skin color -- either. In his book Brazil Second Way, Roberto Mangabeira Unger, who served president Lula as minister for planning and development, characterized this type of national project for strengthening Brazil's young democracy as being "too expensive, too restrictive and too unfair." One reason perhaps that he has returned to academic life; his former student at Harvard, Barack Obama, meanwhile, currently serves as president of the United States.

Unger has called for Brazil to think outside the box and find new ways to empower favela and rain forest kids so that they don't lose human dignity and default to becoming just human capital. If that doesn't happen, high wage jobs that can help break the pathology of underdevelopment will remain the realm of the white and pardo (mixed) elites and the idea of one nation for everybody will just be another public service ad on the Rio Metro.

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AZ Right to Life PAC endorses Schweikert over all other candidates

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Authors of SB1070, Pearce and Kavanagh, endorse David Schweikert

Schweikert suggests issues for Harry Mitchell's campaign webpage which simply reads "Issues Coming..."

Ward campaign clarifies TV ad featuring Ward’s former Treasurer supporting McCain

New McCain ad features woman who chooses Dem. Harry Mitchell over JD Hayworth

Schweikert fundraiser last night an amazing event; raises over $10,000

Cutest campaign picture yet

Legislative leaders including SB1070’s Pearce line up behind Schweikert: McComish says Schweikert has best chance

Arizona Guardian: Bitter Smith recycling Arpaio endorsement without his OK

Where is Harry Mitchell? Picnicking with DC Lobbyists!

Schweikert tops 2000 yard signs across district

Schweikert: Do you like children?

Schweikert one of few candidates abiding by sign laws

Schweikert to Harry Mitchell: "You're Fired!"

Cleaning up Harry Mitchell's Dirty Laundry

Friday the 13th Trillion

Yorkies for Schweikert!

Shih Tzu's for Schweikert!

Review by Azlan Adnan for Developing Business Strategies, 6th Edition
Rating:
Unless you know where your company is going, chances are it won’t get very far in today’s global marketplace. That’s why every business needs the strong vision and keen sense of direction that come from the development, evaluation, and implementation of business strategies-and why every business owner or manager should have Developing Business Strategies, David A. Aaker’s classic and comprehensive guide to strategic planning, now in its fifth edition.Using vivid case studies, Developing Business Strategies helps you to move beyond reactive problem solving toward the development and realization of sound strategic objectives for your company. Providing both the framework and the tools necessary to make strategy development and strategy review efforts effective, this book shows you how to: * Conduct a structured external and internal analysis of a business with confidence * Develop sustainable competitive advantages by creating assets, competencies, and strategies * Make strategic investment decisions to generate growth * Organize to support strategies * Compete strategically in hostile, growth, and global contexts.As compact and easy to use as ever, this new Fifth Edition offers new or revised sections on current topics such as strategic uncertainty, buyer hot buttons, shifting customer priorities, strategy as options, paradigm shifts, organizational stubbornness, and brand equity. You’ll also find up-to-date research and fresh examples on economic value analysis, competitor image, total quality management, reengineering, the virtual corporation, and more-plus a set of useful sample planning forms to help guide you through the strategy development process.Whether you’re a business owner, manager, or planning executive, the key to your company’s success is in Developing Business Strategies.David A. Aaker is the E. T. Grether Professor of Marketing Strategy at the Haas School of Business Administration at the University of California at Berkeley. He is the author of numerous articles and ten books on strategy, including Marketing Research, Fifth Edition (Wiley) and Managing Brand Equity. His books have been translated into eight languages. Professor Aaker is an active consultant and speaker in the United States, Europe and South America. Reviewed by Azlan Adnan. Formerly Business Development Manager with KPMG, Azlan is currently Managing Partner of Azlan & Koh Knowledge and Professional Management Group, an education and management consulting practice based in Kota Kinabalu, Malaysian Borneo. He holds a Master’s degree in International Business and Management from the Westminster Business School in London.

What’s in a Name? (printed on Vision Magazine June-July Issue 2010, Karlo G. Magpayo)

As customers, we get bombarded with hundreds and thousands of different brands in the market everyday, which makes quick decisions and purchases a real struggle. A simple walk in the supermarket, for example, will expose you to a myriad of brands of commodities that say a lot of different things for similar products. Most of these brands constitute the biggest players in the industry. Consequently, these are the brands that placed huge investments in advertising and marketing to increase their Brand Equity.

For those well versed in Finance or Accounting, Equity means the value of ownership in assets, rights, stock value, etc. As marketers, we take “Brand Equity” simply as an asset or premium that a company holds over its products & services.  Confused? Well, let me explain…

Back in 2006 while working as Managing Director for HAS Communications Philippines, whose offices extend to Hong Kong, Singapore and Thailand, I was faced with a dilemma of evaluating an investment proposal by another company in exchange for majority of the shares for the Philippine operations. Apart from the usual valuation of books to evaluate its liquidity and profitability, a huge portion of the “buy in” was based on non-formulaic equations but more on an intrinsic value of what the brand stands for. At that time, trapik.com and Manila360 were common names in the airwaves (i.e. radio) as the only resource for traffic and news information and on-air advertising used by big name networks as well as Yahoo!. The company was in good footing, healthy and strong but our Hong Kong office wanted more out of the stock value – reasoning that the Brand Name carries much weight and can easily fetch for more millions than what was expected by the investor.

Thus, this experience made me realize that a strong brand is worth more than the numbers and figures but more of the perceived notion of success based on Market Dominance, Market Size, Share of Pocket and much more.

Brand Equity based from marketing literature is a combination of Brand Awareness, Perceived Quality and many other factors summing up to 7 to 10 or even 12 components. However, I have only enumerated the factors which I feel carry more bearing over the others namely: (1) Brand Awareness, (2) Perceived Quality, (3) Brand Loyalty, (4) Brand Identity, and (5) Brand Associations.

Looking within ourselves, how do we see our brand (i.e. St. Peter) in comparison to other known brands regardless of industry in the country? Have we reached the level of success where our brand is preferred over others? Does the price of our products and services play a secondary role in a customer’s decision to purchase especially now that we have new products in the market?

Given numerous discussions with my marketing peers connected with ad agencies, networks, media and various marketing organizations like the Philippine Association of National Advertisers (PANA) & the Philippine Marketing Association (PMA), the respondents casually sighted the following as the significant core strengths of our brand known to them.

• eBurol
• Miter Logo
• Pink Casket
• Funeral Parlor

The above are quick depictions of what we stand for. Perhaps these are a cause of several marketing and advertising efforts in the past or perhaps these are simply the core services that we are simply associated with.

For this article, I have used the following resources to further dissect and analyze each variable of Brand Equity: Building Strong Brands and Brand Portfolio Strategy by David Aaker and 22 Immutable Laws of Branding by Al Reis and Brand Simple by Allen P. Adamson.

1. Brand Awareness

In the book Building Strong Brands by David Aaker, Brand Equity is defined as a psychological measurement of retention strength in a person’s mind. In marketing, this would be the strength of retention of “brand presence” without aggravation. Hence, recognition plays a significant role in garnering every foothold of awareness.

Plainly speaking, recognition from one’s face of a friend to another or a product from its closest rival is the discerning factor of differences between each. Brand recognition answers why this brand differs from another, which could be positive or negative.

However, varying types of awareness in Marketing also differ from each other depending on the point of view of the customer or audience.

Brand Recall – This refers towards a particular product class. This is often seen in basic fashion or RTW and footwear wherein a particular model stands out. For example, premium basketball shoes equates to the Nike Air Jordan.