Acts and Regulations

P-4 - Partnership Act

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Document at 16 March 2015
CHAPTER P-4
Partnership Act
Definitions and interpretation
1(1)In this Act
“bankrupt” and “bankruptcy” mean and refer to bankruptcy under the Bankruptcy Act, chapter B-3 of the Revised Statutes of Canada, 1970;(failli) et (faillite)
“business” includes every trade, occupation or profession;(affaire ou entreprise)
“court” includes every court and judge having jurisdiction in the case.(cour)
1(2)The rules of equity and of common law applicable to partnership continue in force except so far as they are inconsistent with the express provisions of this Act.
R.S., c.167, s.1
Administration
1.1Service New Brunswick is responsible for the administration of this Act.
2002, c.29, s.11
I
NATURE OF PARTNERSHIP
Definitions of partnership
2(1)Partnership is the relation that subsists between persons carrying on a business in common, with a view of profit.
2(2)The relation between members of any company or association that is
(a) incorporated under the provisions of any Act of the Legislature for the time being in force and relating to the incorporation of joint stock companies, or licensed or registered under the provisions of any such Act relating to the licensing or registration of extra-provincial companies, or
(b) formed or incorporated by or in pursuance of any other statute or letters patent or royal charter,
is not a partnership within the meaning of this Act.
R.S., c.167, s.2
Determination of partnership
3In determining whether a partnership does or does not exist, regard shall be had to the following rules:
(a) joint tenancy, tenancy in common, joint property, common property, or part ownership does not of itself create a partnership as to anything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof;
(b) the sharing of gross returns does not of itself create a partnership, whether the persons sharing the returns have or have not a joint or common right or interest in any property from which or from the use of which the returns are derived;
(c) the receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receipt of such a share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in the business, and in particular,
(i) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business does not of itself make him a partner in the business or liable as such;
(ii) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business does not of itself make the servant or agent a partner in the business or liable as such;
(iii) a person being the widow, widower or child of a deceased partner, and receiving by way of annuity a portion of the profits made in the business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such;
(iv) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that the lender shall receive a rate of interest varying with the profits, or shall receive a share of the profits arising from carrying on the business, does not of itself make the lender a partner with the person or persons carrying on the business or liable as such if the contract is in writing, and signed by or on behalf of all the parties thereto;
(v) a person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by him of the good will of the business is not by reason only of such receipt a partner in the business or liable as such.
R.S., c.167, s.3; 2008, c.45, s.22
Effect of bankruptcy or insolvency
4Where a person to whom money has been advanced by way of loan upon a contract such as is mentioned in section 3, or a buyer of good will in consideration of a share of the profits of the business
(a) is adjudged a bankrupt, and enters into an arrangement to pay his creditors less than one hundred cents in the dollar, or
(b) dies in insolvent circumstances,
the lender of the money is not entitled to recover anything in respect of his loan, and the settler of the good will is not entitled to recover anything in respect of the share of profits contracted for, until the claims of the other creditors of the borrower or buyer for valuable consideration in money or money’s worth have been satisfied.
R.S., c.167, s.4
Meaning of firm
5Persons who have entered into partnership with one another are for the purposes of this Act called collectively a firm, and the name under which their business is carried on is called the firm name.
R.S., c.167, s.5; 2003, c.13, s.1
II
RELATIONS OF PARTNERS TO PERSONS
DEALING WITH THEM
Power of partner to bind firm
6Every partner is an agent of the firm and his other partners for the purpose of the business of the partnership; and the acts of every partner who does any act for carrying on in the usual way business of the kind carried on by the firm of which he is a member bind the firm and his partners, unless the partner so acting has in fact no authority to act for the firm in the particular matter, and the person with whom he is dealing either knows that he has no authority, or does not know or believe him to be a partner.
R.S., c.167, s.6
Power of agent to bind firm
7An act or instrument relating to the business of the firm and done or executed in the firm name, or in any other manner showing an intention to bind the firm, by any person thereto authorized, whether a partner or not, is binding on the firm and all the partners; but this section does not affect any general rule of law relating to the execution of deeds or negotiable instruments.
R.S., c.167, s.7
Pledging of credit for personal business
8Where one partner pledges the credit of the firm for a purpose apparently not connected with the firm’s ordinary course of business, the firm is not bound unless he is in fact specially authorized by the other partners; but this section does not affect any personal liability incurred by an individual partner.
R.S., c.167, s.8
When firm not bound by acts of partner
9If it has been agreed between the partners that any restriction shall be placed on the power of any one or more of them to bind the firm, no act done in contravention of the agreement is binding on the firm with respect to persons having notice of the agreement.
R.S., c.167, s.9
Liability of estate of partner
10Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner, and after his death his estate is also severally liable in a due course of administration for such debts and obligations, so far as they remain unsatisfied, but subject to the prior payment of his separate debts.
R.S., c.167, s.10
Liability of firm for errors and omissions
11Where, by any wrongful act or omission of a partner, acting in the ordinary course of the business of the firm or with the authority of his co-partners, loss or injury is caused to any person, not a partner in the firm, or any fine is incurred, the firm is liable therefor to the same extent as the partner so acting or omitting to act.
R.S., c.167, s.11
Liability of firm for misapplication of money or property
12The firm is liable to make good the loss,
(a) where one partner acting within the scope of his apparent authority receives the money or property of a third person and misapplies it, or
(b) where a firm in the course of its business receives money or property of a third person, and the money or property so received is misapplied by one or more of the partners while it is in the custody of the firm.
R.S., c.167, s.12
Joint liability of partners
13Every partner is liable jointly with his co-partners and also severally for everything for which the firm, while he is a partner therein, becomes liable under either section 11 or section 12.
R.S., c.167, s.13
Misapplication of trust property
14If a partner, being a trustee, improperly employs trust property in the business or on the account of the partnership, no other partner is liable for the trust property to the person beneficially interested therein, but
(a) this section does not affect any liability incurred by a partner by reason of his having notice of a breach of trust, and
(b) this section does not prevent trust money from being followed and recovered from the firm if still in its possession or under its control.
R.S., c.167, s.14
Misrepresentation as to partner
15(1)Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm is liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation or suffering it to be made.
15(2)Where after a partner’s death the partnership business is continued in the old firm name, the continued use of that name or of the deceased partner’s name as part thereof does not of itself make his executors or administrators’ estate or effects liable for any partnership debts contracted after his death.
R.S., c.167, s.15
Admission by partner as evidence
16An admission or representation made by a partner concerning the partnership affairs, and in the ordinary course of its business, is evidence against the firm.
R.S., c.167, s.16
Notice to partner deemed notice to firm
17Notice to any partner who habitually acts in the partnership business of a matter relating to partnership affairs operates as notice to the firm, except in the case of a fraud on the firm committed by or with the consent of that partner.
R.S., c.167, s.17
Liability of incoming and outgoing partner
18(1)A person who is admitted as a partner into an existing firm does not thereby become liable to the creditors of the firm for anything done before he became a partner.
18(2)A partner who retires from a firm does not thereby cease to be liable for partnership debts or obligations incurred before his retirement.
18(3)A retiring partner may be discharged from any existing liabilities, by an agreement to that effect between himself and the members of the firm as newly constituted and the creditors, and this agreement may be either express or inferred as a fact from the course of dealing between the creditors and the firm as newly constituted.
R.S., c.167, s.18
Revocation of guarantee of firm
19A continuing guaranty or cautionary obligation given either to a firm or to a third person in respect of the transactions of a firm is, in the absence of agreement to the contrary, revoked as to future transactions by any change in the constitution of the firm to which, or of the firm in respect of the transactions of which, the guaranty or obligation was given.
R.S., c.167, s.19; 1960, c.57, s.1
RELATIONS OF PARTNERS TO ONE ANOTHER
Variation of powers and duties of partners
20The mutual rights and duties of partners, whether ascertained by agreement or defined by this Act, may be varied by the consent of all the partners, and the consent may be either express or inferred from a course of dealing.
R.S., c.167, s.20
Partnership property, devolution of land
21(1)All property and rights and interests in property originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purpose and in the course of the partnership business, are called in this Act partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement.
21(2)The legal estate or interest in any land that belongs to the partnership devolves according to the nature and tenure thereof and the general rules of law thereto applicable, but in trust, so far as necessary, for the persons beneficially interested in the land under this section.
21(3)Where co-owners of an estate or interest in any land, not being itself partnership property, are partners as to profits made by the use of that land or estate, and purchase other land or estate out of the profits to be used in like manner, the land or estate so purchased belongs to them, in the absence of an agreement to the contrary, not as partners but as co-owners for the same respective estates and interests as are held by them in the land or estate first mentioned at the date of the purchase.
R.S., c.167, s.21
Property purchased by firm
22Unless the contrary intention appears, property bought with money belonging to the firm is deemed to have been bought on account of the firm.
R.S., c.167, s.22
Land owned by firm deemed personalty
23Where land or any heritable interest therein has become partnership property, it shall, unless the contrary intention appears, be treated as between the partners including the representatives of a deceased partner, and also as between the heirs of a deceased partner and his executors or administrators, as personal or moveable and not real or heritable estate.
R.S., c.167, s.23
Writ of execution
24(1)A writ of execution shall not issue against any partnership property except on a judgment against the firm.
Liability of partner respecting judgment creditor
24(2)The Court of Queen’s Bench of New Brunswick or a judge thereof may, on the application by summons of a judgment creditor of a partner, make an order charging that partner’s interest in the partnership property and profits with payment of the amount of the judgment debt and interest thereon, and may by the same or a subsequent order appoint a receiver of that partner’s share of profits, whether already declared or accruing, and of any other money that may be coming to him in respect of the partnership, and direct all accounts and inquiries, and give all other orders and directions that might have been directed or given if the charge had been made in favour of the judgment creditor by the partner, or that the circumstances of the case may require.
Redemption of interest by remaining partners
24(3)The other partner or partners are at liberty at any time to redeem the interest charged, or in case of a sale being directed, to purchase the same.
R.S., c.167, s.24; 1979, c.41, s.92
Rules respecting interest of partners
25The interests of partners in the partnership property and their rights and duties in relation to the partnership shall be determined, subject to any agreement express or implied between the partners, by the following rules:
(a) all the partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses whether of capital or otherwise sustained by the firm;
(b) the firm must indemnify every partner in respect of payments made and personal liabilities incurred by him
(i) in the ordinary and proper conduct of the business of the firm, or
(ii) in or about anything necessarily done for the preservation of the business or property of the firm;
(c) a partner making, for the purpose of the partnership, an actual payment or advance beyond the amount of capital that he has agreed to subscribe, is entitled to legal interest from the date of the payment or advance;
(d) a partner is not entitled, before the ascertainment of profits, to interest on the capital subscribed by him;
(e) every partner may take part in the management of the partnership business;
(f) no partner is entitled to remuneration for acting in the partnership business;
(g) no person may be introduced as a partner without the consent of all existing partners;
(h) any difference arising as to ordinary matters connected with the partnership business may be decided by a majority of the partners, but no change may be made in the nature of the partnership business without the consent of all existing partners;
(i) the partnership books are to be kept at the place of business of the partnership, or the principal place, if there is more than one, and every partner may, when he thinks fit, have access to and inspect and copy any of them.
R.S., c.167, s.25
Expulsion of partner
26No majority of the partners can expel any partner unless a power to do so has been conferred by express agreement between the parties.
R.S., c.167, s.26
Retirement of partner
27(1)Where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice of his intention so to do to all the other partners.
27(2)Where the partnership was originally constituted by deed, a notice in writing, signed by the partner giving it, is sufficient for the purpose of subsection (1).
R.S., c.167, s.27
Firm constituted for fixed term
28(1)Where a partnership entered into for a fixed term is continued after the term has expired, and without any express new agreement, the rights and duties of the partners remain the same as they were at the expiration of the term, so far as is consistent with the incidents of a partnership at will.
28(2)A continuance of the business by the partners or such of them as habitually acted therein during the term, without any settlement or liquidation of the partnership affairs, is presumed to be a continuance of the partnership.
R.S., c.167, s.28
Disclosure by partner
29Partners are bound to render true accounts and full information of all things affecting the partnership to any partner or his legal representatives.
R.S., c.167, s.29
Private profit
30(1)Every partner must account to the firm for any benefit derived by him without the consent of the other partners from any transaction concerning the partnership, or from any use by him of the partnership property, name or business connection.
30(2)This section applies also to transactions undertaken after a partnership has been dissolved by the death of a partner, and before the affairs thereof have been completely wound up, either by any surviving partner or by the representatives of the deceased partner.
R.S., c.167, s.30
Competition
31If a partner, without the consent of the other partners, carries on any business of the same nature as and competing with that of the firm, he must account for and pay over to the firm all profits made by him in that business.
R.S., c.167, s.31
Rights of assignee of partner
32(1)An assignment by any partner of his share in the partnership, either absolute or by way of mortgage or redeemable charge, does not, as against the other partners, entitle the assignee during the continuance of the partnership to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the partnership books, but entitles the assignee only to receive the share of profits to which the assigning partner would otherwise be entitled, and the assignee must accept the account of profits agreed to by the partners.
32(2)In case of a dissolution of the partnership, whether as respects all the partners or as respects the assigning partners, the assignee is entitled to receive the share of the partnership assets to which the assigning partner is entitled as between himself and the other partners, and, for the purpose of ascertaining that share, to an account as from the date of the dissolution.
R.S., c.167, s.32
DISSOLUTION OF PARTNERSHIP AND ITS
CONSEQUENCES
1987, c.6, s.78
Dissolution
33(1)Subject to any agreement between the partners, a partnership is dissolved:
(a) if entered into for a fixed term, by the expiration of that term,
(b) if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking, or
(c) if entered into for an undefined time, by any partner giving notice to the other or others of his intention to dissolve the partnership.
33(2)In the case of paragraph (1)(c), the partnership is dissolved as from the date mentioned in the notice as the date of dissolution or, if no date is so mentioned, as from the date of the communication of the notice.
R.S., c.167, s.33
Dissolution by death or bankruptcy, dissolution on charging of partner’s interest
34(1)Subject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner.
34(2)A partnership may, at the option of the other partners, be dissolved if any partner suffers his share of the partnership property to be charged under this Act for his separate debt.
R.S., c.167, s.34
Dissolution on business becoming unlawful
35A partnership is in every case dissolved by the happening of any event that makes it unlawful for the business of the firm to be carried on, or for the members of the firm to carry it on in partnership.
R.S., c.167, s.35
Dissolution by court
36On application by a partner the Court may decree dissolution of the partnership in any of the following cases:
(a) when a partner is shown to the satisfaction of the Court to be mentally incompetent, in which case the application may be made on behalf of that partner by his committee or litigation guardian or person having title to intervene as well as by any other partner;
(b) when a partner, other than the partner suing, becomes in any other way permanently incapable of performing his part of the partnership contract;
(c) when a partner, other than the partner suing, has been guilty of such conduct as, in the opinion of the Court, regard being had to the nature of the business, is calculated to prejudicially affect the carrying on of the business;
(d) when a partner, other than the partner suing, wilfully or persistently commits a breach of the partnership agreement, or otherwise so conducts himself in matters relating to the partnership business that it is not reasonably practicable for the other partner or partners to carry on the business in partnership with him;
(e) when the business of the partnership can only be carried on at a loss;
(f) whenever in any case circumstances have arisen that, in the opinion of the Court, render it just and equitable that the partnership be dissolved.
R.S., c.167, s.36; 1986, c.4, s.40
Notice respecting change of constitution, liability after the date of death, bankruptcy or retirement
37(1)Where a person deals with a firm after a change in its constitution, he is entitled to treat all apparent members of the old firm as still being members of the firm until he has notice of the change.
37(2)An advertisement in The Royal Gazette or the registration of a certificate under the Partnerships and Business Names Registration Act is notice to persons who had no dealings with the firm before the date of the dissolution or change so advertised or certified.
37(3)The estate of a partner who dies or who becomes bankrupt or of a partner who, not having been known to the person dealing with the firm to be a partner, retires from the firm is not liable for partnership debts contracted after the date of the death, bankruptcy, or retirement respectively.
R.S., c.167, s.37; 1956, c.50, s.1; 1980, c.39, s.22; 1986, c.62, s.25
Notice of dissolution
38On the dissolution of a partnership or retirement of a partner, any partner may publicly notify the same and may require the other partner or partners to concur for that purpose in all necessary or proper acts, if any, that cannot be done without his or their concurrence.
R.S., c.167, s.38
Authority of partners on winding up
39After the dissolution of a partnership the authority of each partner to bind the firm and the other rights and obligations of the partners continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise; and the firm is in no case bound by the acts of a partner who has become bankrupt, but this proviso does not affect the liability of any person who has, after the bankruptcy, represented himself or knowingly suffered himself to be represented as a partner of the bankrupt.
R.S., c.167, s.39
Winding up of partnership
40On the dissolution of a partnership every partner is entitled, as against the other partners in the firm, and all persons claiming through them in respect of their interests as partners, to have the property of the partnership applied in payment of the debts and liabilities of the firm and to have the surplus assets after such payment applied in payment of what may be due to the partners respectively after deducting what may be due from them as partners to the firm; and for that purpose any partner or his representatives may, on the termination of the partnership, apply to the Court to wind up the business and affairs of the firm.
R.S., c.167, s.40
Repayment of premium after dissolution
41Where one partner has paid a premium to another on entering into a partnership for a fixed term, and the partnership is dissolved before the expiration of that term otherwise than by the death of a partner, the Court may order the repayment of the premium, or of such part thereof as it thinks just, having regard to the terms of the partnership contract and to the length of time during which the partnership has continued, unless,
(a) the dissolution is, in the judgment of the Court, wholly or chiefly due to the misconduct of the partner who paid the premium, or
(b) the partnership has been dissolved by an agreement containing no provision for a return of any part of the premium.
R.S., c.167, s.41
Fraud or misrepresentation
42Where a partnership contract is rescinded on the ground of the fraud or misrepresentation of one of the parties thereto, the party entitled to rescind is, without prejudice to any other right, entitled:
(a) to a lien on, or right of retention of, the surplus of the partnership assets, after satisfying the partnership liabilities, for any sum of money paid by him for the purchase of a share in the partnership and for any capital contributed by him,
(b) to stand in the place of the creditors of the firm for any payments made by him in respect of the partnership liabilities, and
(c) to be indemnified by the person guilty of the fraud or making the representation against all the debts and liabilities of the firm.
R.S., c.167, s.42
Effect of outgoing or deceased partner
43(1)Where a member of a firm has died, or otherwise ceased to be a partner, and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate then, in the absence of any agreement to the contrary, the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since the dissolution as the Court may find to be attributable to the use of his share of the partnership assets, or to legal interest on the amount of his share of the partnership assets.
43(2)Where by the partnership contract an option is given to surviving or continuing partners to purchase the interest of a deceased or outgoing partner, and that option is duly exercised, the estate of the deceased partner, or the outgoing partner, or his estate, as the case may be, is not entitled to any further or other share of the profits, but if any partner assuming to act in exercise of the option does not in all material respects comply with the terms thereof, he is liable to account under subsection (1).
R.S., c.167, s.43; 1955, c.65, s.1
Share of outgoing partner to be firm debt
44Subject to any agreement between the partners, the amount due from surviving or continuing partners to an outgoing partner or the representatives of a deceased partner in respect of the outgoing or deceased partner’s share is a debt accruing at the date of the dissolution or death.
R.S., c.167, s.44
Settling of accounts on dissolution
45In settling accounts between the partners after a dissolution of partnership, the following rules shall, subject to any agreement, be observed:
(a) losses, including losses and deficiencies of capital, shall be paid first out of the profits, next out of the capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits;
(b) the assets of the firm, including the sums if any contributed by the partners to make up losses or deficiencies of capital, shall be applied in the following manner and order:
(i) in paying the debts and liabilities of the firm to persons who are not partners therein,
(ii) in paying to each partner rateably what is due from the firm to him for advances as distinguished from capital,
(iii) in paying to each partner rateably what is due from the firm to him in respect of capital, and
(iv) the ultimate residue, if any, shall be divided among the partners in the proportion in which profits are divisible.
R.S., c.167, s.45
III
2003, c.13, s.2
LIMITED LIABILITY PARTNERSHIPS
2003, c.13, s.2
Definitions
46In this Part
“distribution” , in relation to partnership property, means a transfer of money or other partnership property by a partnership to a partner or an assignee of a partner’s share in the partnership, whether as a share of profits, return of contributions to capital, repayment of advances or otherwise;(distribution)
“extra-provincial limited liability partnership” means a partnership that is designated as an extra-provincial limited liability partnership under the Partnerships and Business Names Registration Act;(société à responsabilité limitée extraprovinciale)
“governing jurisdiction” , in relation to a partnership, means the jurisdiction whose law governs the interpretation of the partnership agreement by operation of law or through a provision in the partnership agreement or another document created by the partnership;(autorité législative compétente)
“New Brunswick limited liability partnership” means a partnership that is designated as a New Brunswick limited liability partner ship under the Partnerships and Business Names Registration Act;(société à responsabilité limitée du Nouveau-Brunswick)
“partnership obligation” means any debt, obligation or liability of a partnership, other than debts, obligations or liabilities of partners as between themselves or as between themselves and the partnership.(obligations de la société)
2003, c.13, s.2
Application of Parts I and II
47Parts I and II apply to New Brunswick limited liability partnerships and extra-provincial limited liability partnerships insofar as those Parts are not inconsistent with this Part.
2003, c.13, s.2
Limited liability of partners
48(1)Except as expressly provided in this Part, in another Act or in an agreement, a partner in a New Brunswick limited liability partnership
(a) is not personally liable for a partnership obligation solely by reason of being a partner,
(b) is not personally liable for an obligation under an agreement between the partnership and another person, and
(c) is not personally liable to the partnership or another partner by way of contribution, indemnity or otherwise, in respect of an obligation to which paragraph (a) or (b) applies.
48(2)Subsection (1) does not relieve a person who is a partner in a New Brunswick limited liability partnership from personal liability for the person’s negligence, wrongful act or omission, malpractice or misconduct for which the person would be personally liable if the person were not a partner.
48(3)Subsection (1) does not protect the interest in the partnership property of a partner in a New Brunswick limited liability partnership from claims against the partnership respecting a partnership obligation.
2003, c.13, s.2
Partners subject to same liabilities as corporate directors
49(1)Partners in a New Brunswick limited liability partnership are personally liable for any partnership obligation for which they would be liable if the partnership were a corporation of which they were the directors.
49(2)Where a corporation is a partner in a New Brunswick limited liability partnership, the directors of the corporation are jointly and severally liable for any liability imposed on the corporation under subsection (1).
2003, c.13, s.2
Previous partnership obligations
50Nothing in this Part limits the liability of partners in a New Brunswick limited liability partnership for any partnership obligation that
(a) arose before the partnership became a New Brunswick limited liability partnership, or
(b) arises out of a contract entered into before the partnership became a New Brunswick limited liability partnership.
2003, c.13, s.2
Restrictions on distribution
51(1)A New Brunswick limited liability partnership shall not make a distribution of partnership property in connection with the winding up of its affairs unless all partnership obligations have been paid or satisfactory provision for their payment has been made.
51(2)In circumstances other than in connection with the winding up of its affairs, a New Brunswick limited liability partnership shall not make a distribution of partnership property if there are reasonable grounds to believe that after the distribution
(a) the partnership would be unable to pay its partnership obligations as they come due, or
(b) the value of the partnership property would be less than the partnership obligations.
51(3)Subsection (1) does not prohibit a payment on account of any partnership obligation where a partner in a New Brunswick limited liability partnership receives a prorated payment with all other creditors of the partnership of the same class.
51(4)Subsections (1) and (2) do not prohibit a payment made as reasonable compensation for current services provided by a partner to the New Brunswick limited liability partnership, to the extent that the payment would be reasonable if paid to an employee who was not a partner as compensation for similar services.
51(5)A New Brunswick limited liability partnership may base its determination of whether a distribution is prohibited by subsection (2):
(a) on financial statements prepared on the basis of accounting practices and principles that are reasonable in the circumstances;
(b) on a fair valuation; or
(c) on another method that is reasonable in the circumstances.
2003, c.13, s.2
Recovery of prohibited distributions
52(1)A partner in a New Brunswick limited liability partnership who receives a distribution contrary to section 51 is liable to the partnership for the lesser of
(a) the value of the property received by the partner, and
(b) the amount necessary to discharge the partnership obligations that existed at the time of the distribution.
52(2)A partner in a New Brunswick limited liability partnership who authorizes a distribution contrary to section 51 is jointly and severally liable to the partnership for any amount for which a recipient is liable under subsection (1), to the extent that the amount is not recovered from the recipient.
52(3)Proceedings to enforce a liability under this section may be brought by the New Brunswick limited liability partnership, any partner in the partnership or any person to whom the partnership was obligated at the time of the distribution to which the liability relates.
52(4)No proceedings to enforce a liability under this section shall be commenced later than two years after the date of the distribution to which the liability relates.
2003, c.13, s.2
Status after dissolution
53After the dissolution of a New Brunswick limited liability partnership, the partnership maintains its status as a New Brunswick limited liability partnership while its affairs are being wound up.
2003, c.13, s.2
Law of governing jurisdiction applies
54(1)In this section
“eligible profession” means eligible profession as defined in the Partnerships and Business Names Registration Act.
54(2)Except as expressly provided in another Act, the law of the governing jurisdiction of an extra-provincial limited liability partnership applies
(a) to the organization and internal affairs of the extra-provincial limited liability partnership, and
(b) to the liability of the partners in the extra-provincial limited liability partnership for debts, obligations and liabilities of or chargeable to the partnership.
54(3)Notwithstanding subsection (2), a partner in an extra-provincial limited liability partnership does not have any greater protection against personal liability with respect to his or her practice of an eligible profession in New Brunswick than a partner in a New Brunswick limited liability partnership would have under this Part.
2003, c.13, s.2
N.B. This Act is consolidated to December 19, 2008.