Special resolutions and general partner removal

Limited partners in Professional Centres Canada LP can remove the general partner outright, but only through one mechanism: a 75% Special Resolution vote. This article covers the Canadian limited partnership only. The parallel vehicles in the United States, Spain, and Mexico use different governing instruments, with voting mechanics not described here.

What replaces day-to-day board oversight

A public corporation's shareholders elect a board that supervises management continuously. A limited partnership has no board. The general partner manages the business directly, and a limited partner who participates in management risks losing its limited liability. The Special Resolution is the structural substitute: a defined, high-threshold vote reaching a fixed set of matters, without requiring limited partners to sit on a governing body or manage the partnership themselves.

The Special Resolution threshold

A Special Resolution passes with 75% or more of the votes cast at a duly constituted meeting where a quorum is present, in person or by proxy. Limited partners may instead adopt a Special Resolution in writing, without a meeting, if partners holding 75% or more of all outstanding units sign it. Both routes carry equal legal effect. The 75% threshold sits well above a simple majority, so a Special Resolution requires broad consensus, not a bare majority of those who vote.

The eight matters requiring a Special Resolution

Limited partners may act on only eight matters by Special Resolution, and no other mechanism authorizes these actions:

• Removing Woodfine Professional Centres Inc. as general partner and appointing a replacement.
• Removing any successor general partner and appointing a new replacement.
• Waiving a default by the general partner and releasing it from related claims.
• Authorizing the sale, lease, transfer, or other disposition of all or substantially all of the partnership's assets, outside the ordinary course of the partnership's business or a final sale of the business.
• Amending the limited partnership agreement itself.
• Approving a change to the partnership's stated business.
• Amending or cancelling a Special Resolution the limited partners previously passed.
• Approving any transaction proposed outside the partnership's normal course of business.

A limited partner may vote its units on a Special Resolution even where it has a personal interest in the matter, with one exception. The sitting general partner, and its affiliates, cannot vote on a resolution to remove that general partner, waive its default, or release it from claims. A general partner that has already been removed faces no such restriction if it later holds units and a subsequent Special Resolution concerns a different, later-appointed general partner.

Removing the general partner

Limited partners may remove the general partner at any time, but only if three conditions are all met. First, the general partner must have committed fraud, or wilful misconduct in, or wilful disregard or breach of, a material obligation it owes under the agreement. Second, limited partners must approve the removal itself by Special Resolution. Third, limited partners must admit a qualified successor and appoint it as the new general partner, also by Special Resolution.

Where the alleged breach is curable, removal requires an added step. A limited partner must give the general partner written notice of the breach. The general partner then has 20 business days from receipt to remedy the breach before removal can proceed. An investment or divestiture decision, on its own, is never cause for removal, absent fraud or wilful misconduct — limited partners cannot remove the general partner simply because they disagree with an asset-level decision it made in good faith.

Amendment protections

Amending the limited partnership agreement is itself one of the eight matters above. The agreement adds further protection beyond the 75% threshold, though: a defined list of changes no Special Resolution can make, and a delay before any amendment adverse to the general partner takes effect.

The base rule and a higher bar for Article 16 itself. The agreement may be amended in writing by the general partner with the limited partners' consent by Special Resolution — except that any amendment to the amendment article itself requires unanimous consent of every partner, not a 75% vote.

Matters no Special Resolution can amend. No amendment, however passed, may: let a limited partner take part in managing the partnership's business; reduce, eliminate, or modify the partnership's obligation to issue the escrowed promoter equity described in Professional Centres Canada LP — Direct-Hold Solution Structure; change the general partner's cost-and-expense provisions, unless the general partner itself consents; reduce any limited partner's interest in the partnership; change how income, loss, or tax attributes are allocated between limited partners and the general partner; change any partner's liability; change a partner's voting rights; convert the partnership from a limited partnership to a general partnership, unless every limited partner consents; or deny or reduce a tax deduction or credit a limited partner would otherwise have. These matters sit outside what a 75% vote can reach at all — they require the affected party's own consent, or unanimity, not a supermajority of the whole.

A delay before amendments adverse to the general partner. An amendment that would adversely affect the general partner's own rights or obligations does not take effect until 60 days after the meeting that adopted it, unless the general partner consents to an earlier date. The delay runs in the general partner's favour specifically — it has no equivalent counterpart delaying an amendment adverse to limited partners.

The general partner's own housekeeping power. Separately, the general partner may amend the agreement on its own, without limited partner notice or consent, but only to add a provision it considers protective or beneficial to limited partners, to cure a manifest error or ambiguity, to resolve an inconsistency between provisions, or to comply with a legal requirement — and only where, in the general partner's own opinion, the change will not materially and adversely affect any limited partner's rights. Limited partners are notified of the full details of any amendment, of either kind, within 30 days of its effective date.

What this is not

This article covers only the Special Resolution, general-partner-removal, and amendment mechanics set out in the Canadian limited partnership agreement. It is not a description of the Take Over Bid or buyout/takeout mechanics covered in the partnership's structure article, which operate independently of the Special Resolution vote described here. It is not a description of voting or removal mechanics in the United States, Spain, or Mexico vehicles, which are governed by separate instruments. It is not legal advice; a limited partner should consult the limited partnership agreement and qualified counsel for the rights applicable to its own units.

See also

• Professional Centres Canada LP — Direct-Hold Solution Structure — the partnership's entities, agreements, and change-of-control mechanics
• Meetings of Limited Partners — how a Special Resolution vote is called, noticed, and conducted
• Statutory Rights — investor rights under securities law, distinct from the contractual voting rights described here
• Limited partnership structure — the generic general-partner/limited-partner legal form
• Four-Jurisdiction Framework — the parallel vehicles governed by different instruments