A limited partner is an investor who commits capital to a fund in exchange for a share of its profits, and who keeps limited liability — capped at the amount committed — for as long as it stays out of controlling the fund's business.
Provincial Limited Partnerships Acts are the reason the label matters this much: Ontario's Act requires only that the partnership file a declaration to register — it does not itself require the underlying agreement to be in writing — but a limited partner's liability shield depends on staying out of the business's control, so the written limited partnership agreement is what actually defines, for each LP, which oversight and consent rights it can exercise without crossing that line. Absent a written agreement, the partners fall back to the Act's own default rules, which, as the same source puts it, "may not reflect what they actually intended."
Subscribing for an LP interest is itself a securities-law event. Canadian funds raise almost entirely under the accredited investor exemption in National Instrument 45-106: an individual who, alone or with a spouse, holds net financial assets exceeding $1,000,000, or whose net income before taxes exceeded $200,000 (or $300,000 combined with a spouse) in each of the two most recent years with a reasonable expectation of exceeding it again, or who holds net assets of at least $5,000,000; a non-individual investor qualifies with net assets of at least $5,000,000. In Ontario, several of the Instrument's other accredited-investor categories run through a separate Securities Act test instead of applying as written — worth checking before assuming a category travels unchanged across provinces.
A limited partner that does not want to document its net worth or income against those tests has a second route: the Instrument's minimum-amount investment exemption, available to a purchaser that is not an individual, buys as principal, and pays at least $150,000 cash for the securities of a single issuer. Most institutional LPs — pension funds, insurers, funds-of-funds — clear this route on the size of the cheque alone, without needing to establish accredited investor status at all.
An institutional LP commits $2,000,000 to Maple Ridge Capital Fund II, LP, qualifying as an accredited investor on the strength of its own net assets rather than any individual income test — though at that commitment size it would equally have cleared the $150,000 minimum-amount route. It takes no seat on the GP's investment committee and no vote on individual deals, which is what preserves the limited-liability position its commitment relies on.
See also: General partner · Limited partnership agreement · Co-investment right.
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