When two or more parties decide to start a business together for a specific project or intention, they have formed a joint venture. It is important to note that Canada does not define joint ventures in the Income Tax Act; this leads to people confusing a joint venture with a partnership. For clarification regarding joint ventures, contact one of Verhaeghe Law Office’s Edmonton corporate lawyers.
Partnership vs Joint Venture
A joint venture occurs when two or more parties come together for a particular, specific business project or intention, which can be short-term or long-term. Individuals participating in a joint venture typically conduct other business outside of the venture. The joint venture is a separate business from an individual’s other businesses. A partnership, on the other hand, involves two or more parties coming together for an ongoing business intention that is not limited to a specific project. A joint venture can be carried out as a partnership as defined in Alberta’s Partnership Act, but it can also be carried out as another form of business structure such as a corporation and more.
Partnership
A partnership occurs when two or more individuals work together to split both the profits and the losses of a business. A partnership must be registered with Alberta’s business registry.
Limited Partnership
A limited partnership is a partnership in which different partners have varying responsibilities and liabilities based on their contribution to the business. Unlike a partner in a partnership, a limited partner is usually only liable for the amount they have contributed to the business. For a partnership to become a limited partnership, the business must be registered with Alberta’s business registry as a limited partnership.
Limited Liability Partnership
Similar to a limited partnership, a limited liability partnership protects an individual from being liable for another partner’s negligence in business operations. For a partnership to become a limited liability partnership the business must be permitted as an eligible profession and registered with Alberta’s business registry.
Corporation
A corporation separates an individual from their business. This means that an individual’s personal assets are considered separate from the company’s assets. To incorporate a business, the owner is required to register the business as a corporation on Alberta’s business registry.
Joint Venture Agreement
A joint venture agreement is a document that describes each partner’s roles and responsibilities in the joint venture. This agreement typically differs from a contract in a partnership.
This article is not an exhaustive list of the different types of business in Canada and does not encompass the entirety of what a joint venture entails.
Contact Verhaeghe Law Corporate and Commercial Lawyers for Advice on Joint Venture Restructuring.
Verhaeghe Law Office’s Edmonton corporate lawyers have been proudly serving Edmonton’s communities for decades on joint venture restructuring and more. Contact our corporate and commercial lawyers for more information on joint venture restructuring.
*Disclaimer: Please note the content prescribed in this article is only intended to act as a general overview on a legal topic. For specific legal guidance regarding joint venture restructuring, we recommend you consult with a corporate and commercial lawyer for legal advice, as each situation is unique.
