Historical revision — this record as it stood on 24 August 2026, not the current version. View the current record →

Limited partner eligibility representations

Each limited partner in Professional Centres Canada LP represents several ongoing facts about its own tax and regulatory status, not a one-time subscription checkbox. Every representation must stay true for as long as the partner holds units, and a partner whose status changes can be required to sell. This article covers the Canadian limited partnership only; the parallel vehicles in the United States, Spain, and Mexico use different governing instruments, not described here.

What these representations replace

A public company verifies shareholder eligibility once, at the point of purchase, through the exchange or intermediary that clears the trade. A limited partnership admits each investor directly, by name, onto its own register — there is no exchange standing between the partnership and the risk that an investor's tax or regulatory status changes after admission. The limited partnership agreement closes that gap with representations each partner makes at subscription and must keep true afterward, backed by a mechanism that can force a sale if a partner's status changes in a way the partnership cannot absorb.

The representations each limited partner makes

Each limited partner also represents and warrants four substantive facts about its own status, beyond confirming legal capacity to sign. These are set out in Section 14.2 of the limited partnership agreement:

It is not, and will not become, a "non-resident" of Canada, or a partnership other than a "Canadian partnership," for purposes of the Income Tax Act.
It is not a "non-Canadian" as defined in the Investment Canada Act.
No holder of an equity interest in the limited partner is a "tax shelter investment" under the Income Tax Act, and no part of the subscription price for its units was financed with borrowings whose unpaid principal is a "limited recourse amount" under that Act.
No investment in the limited partner is, or will be, listed or traded on a stock exchange or other public market in a way that could be regarded as a right to the partnership's capital, income, or revenue, or as replicating a return on the units.

A separate representation addresses financial institution status — covered in Limited Partnership Structure and Investment Units, and not repeated here.

How foreign and multi-generational capital participates

The non-resident representation reflects a deliberate design choice, not only a tax technicality: direct ownership of Investment Units is intended to be restricted to residents of Canada. Foreign and multi-generational capital is intended to obtain exposure to the partnership through Club Deals or special purpose vehicles established in Canada, rather than by holding Investment Units directly. This routes indirect capital through a Canadian-resident vehicle that itself can make the representations in this article, rather than exempting foreign capital from them.

The representations must stay true, not just be true at subscription

The limited partnership agreement does not treat these representations as a one-time gate. Each limited partner must maintain the status it represented for as long as it remains a partner, and it may not transfer its units, in whole or in part, to anyone who could not make the same representations. A representation that was accurate at subscription and later becomes false is a breach of an ongoing covenant, not a historical fact that stops mattering once the units settle.

The forced-sale procedure

If a limited partner becomes a non-resident of Canada, or an interest in a limited partner becomes a "tax shelter investment," the limited partnership agreement requires that partner to transfer its units to a person who does not carry the same disqualifying status. The partner has 10 days from notice to complete the transfer itself. If it does not, the general partner is irrevocably appointed as that partner's attorney to sell the units on its behalf — including, if it chooses, purchasing them itself or for cancellation by the partnership. The sale price is the fair market value set by an independent appraiser the general partner appoints, and that appraisal is final and binding on the partnership, the general partner, and the affected partner. The cost of the appraisal, and other reasonable expenses of the sale, are deducted from the proceeds paid to the divesting partner, not borne by the partnership or by other limited partners.

A separate covenant protecting who controls the general partner

A related but distinct protection sits with the general partner rather than with limited partners. The general partner covenants that it will not issue or transfer its own shares in a way that would let a "Prohibited Person" — someone not of good repute, or without experience and expertise in real estate — take direct or indirect control of the general partner. The same covenant reaches a group that includes such a person. The general partner satisfies this covenant by making the investigation a prudent businessperson would make in the circumstances; it is not an absolute guarantee, but a standard of diligence.

What this protects the investor from

Together, these representations and the forced-sale procedure keep the partnership's tax and regulatory position stable even as individual holdings change hands over time. A single limited partner whose status changes cannot expose the entire partnership to adverse tax consequences or regulatory risk it did not agree to bear. The agreement instead gives the general partner a defined, appraisal-priced mechanism to resolve the problem at that one partner's expense, not at the expense of every other unit holder.

What this is not

This article covers only the representations, warranties, and covenants set out in Article 14 of the Canadian limited partnership agreement. It does not describe the financial-institution-concentration mechanism covered in Limited Partnership Structure and Investment Units, the accredited investor eligibility framework covered in Accredited Investor Eligibility, or the equivalent representations in the United States, Spain, or Mexico vehicles, which are governed by separate instruments. It is not legal or tax advice; a limited partner should consult the limited partnership agreement and qualified counsel for the representations applicable to its own units.

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