Limited Partnership Act — Société en Commandite (Quebec)

Under the Code civil du Québec (arts. 2236–2249), a société en commandite (limited partnership) is a unique business structure that combines two categories of partners with distinct roles and liability profiles. The commandité (general partner) manages the business and bears unlimited personal liability for the debts and obligations of the society, just like a partner in a general partnership (société en nom collectif). The commanditaire (limited partner) contributes capital but does not participate in management and, crucially, their liability is limited to the amount of their contribution to the partnership. This structure is fundamentally different from the société en nom collectif (CCQ arts. 2186–2235), where all partners bear unlimited personal liability and all have management rights. The société en commandite is attractive for investment vehicles, real estate projects, and business ventures where some investors wish to limit their risk exposure while others take operational control. The commanditaire loses their limited liability protection if they participate in management acts, which is one of the most important restrictions under arts. 2244–2245 C.c.Q.

Under the Loi sur la publicité légale des entreprises (RLRQ, ch. P-44.1) and CCQ art. 2249, a société en commandite that carries on an enterprise must file an initial declaration (déclaration initiale) with the Registraire des entreprises du Québec (REQ) before commencing operations. The declaration must include: (1) the name of the society; (2) the nature of the enterprise carried on; (3) the address of the principal establishment; (4) the names, addresses, and dates of birth of the general partners (commandités); (5) for limited partners (commanditaires), the declaration must include each commanditaire's name and address and the amount of their contribution, though their personal information is less extensively published than that of general partners. The declaration must be updated within 30 days of any material change. Annual updating declarations are also required. Failure to register can affect the ability to enforce rights against third parties and may expose the partners to personal liability that would otherwise be limited.

Under articles 2244 and 2245 of the Code civil du Québec, a commanditaire (limited partner) loses their limited liability protection if they participate in the management of the société en commandite. However, the C.c.Q. carves out a number of activities that a commanditaire may perform without triggering this loss of protection. These permitted activities include: (1) consulting the books and records of the society; (2) inspecting the business operations; (3) attending and voting at meetings of the partners on fundamental matters (such as dissolution, amendments to the partnership act, or admission of new partners); (4) providing advice and counsel to the general partner on business matters, provided this does not constitute actual management control; (5) granting a loan to the society or guaranteeing its obligations; (6) being an employee of the society. The line between permissible advice and prohibited management is not always clear, and commanditaires should document their role carefully to preserve their limited liability. Any commanditaire who regularly participates in management decisions — even informally — risks being held personally liable as a general partner.

Under the Code civil du Québec (art. 2246), profits and losses in a société en commandite are distributed in the manner agreed upon in the partnership act (acte de société). The C.c.Q. grants the partners broad freedom to establish their own profit and loss sharing formula, which may be based on the proportion of capital contributions, fixed percentages, or other agreed criteria. If the partnership act is silent on profit distribution, the C.c.Q. default rules applicable to all partnerships apply: profits and losses are shared equally among partners unless otherwise agreed. However, for losses, the commanditaire's share of losses cannot exceed their capital contribution — this is the core protection afforded by limited liability under art. 2241 C.c.Q. The general partner (commandité), by contrast, bears losses without limit. The partnership act must clearly specify how profits are calculated, when distributions are made, whether preferred returns or priority distributions apply, and how undistributed profits are treated. Tax treatment of income from a société en commandite in Quebec depends on whether the partnership itself files a trust income return and how income is allocated to partners.

A Limited Partnership Act — Société en Commandite (Quebec) does not legally require a lawyer in Quebec, and individuals and businesses may draft and execute the document independently. However, seeking independent legal advice from a qualified Quebec lawyer is recommended for transactions involving substantial financial value, complex regulatory requirements, or cross-border elements where multiple legal jurisdictions may apply. A lawyer can verify that the document complies with all applicable statutory requirements, identify potential risks specific to the transaction, and confirm that the terms adequately protect the interests of all parties involved. The Superior Court of Québec has jurisdiction over disputes arising from this type of document, and Registraire des entreprises du Québec may impose additional compliance obligations depending on the nature of the underlying transaction. Professional legal review is particularly advisable where the document will be submitted to government agencies or used as evidence in legal proceedings.