While most startups in Toronto and beyond choose to incorporate, some innovative companies do create legal partnerships. Partnerships are a legal agreement between two or more parties. The contract will usually define the terms of the partnership and how the profit-sharing will work. A partnership is not a separate legal entity from its owners.
Two types of partnership exist in Ontario:
- General partnerships―each partner shares the management and remains personally and legally liable for the company’s debts
- Limited partnerships―some (“general”) partners manage the company and other (“limited”) partners contribute only financially. In this type of partnership, the extent of liability and profit-sharing varies and will have been defined contractually from the start (see a sample template of a limited partnership agreement)
Downloadable general partnership agreement sample template
As an innovation hub, MaRS has created a sample template of a general partnership agreement to help streamline business processes for investors, entrepreneurs and their respective legal advisors. While MaRS makes this document available for educational purposes and to facilitate the negotiation of terms between investors and startups looking at business growth, the template is yours to use at your own risk. Please see the disclaimer below.
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