Legal tax and regulatory risks legal tax and

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: urisdictions where Units are offered for sale or where the Partnership carries on business. The General Partner intends to maintain the registration of the Partnership as an extrajurisdictional limited partnership in any such jurisdiction and to maintain the accuracy of such filings. The Partnership will seek, in the reasonable judgment of the General Partner, to obtain contractual protection in favor of the Limited Partners and take any other reasonably available measures for the purpose of preserving their limited liability. However, should limited liability protection be lost for any reason, the Limited Partners may be considered to be general partners in the applicable jurisdictions by creditors and others having claims against the Partnership. Fund Size If the Partnership is undercapitalized and is not successful in attracting further investments in Subsequent Closings or if the Manager is unsuccessful in launching successor funds, the Partnership may be forced to reduce the size of its operations, which could have an adverse impact on the ability of the General Partner and/or the Manager to manage investments. Legal, Tax and Regulatory Risks Legal, tax and regulatory changes may occur during the term of the Partnership which could have an adverse effect on the Partnership, its portfolio companies or the Limited Partners. Without limiting the generality of the foregoing, the future of the law as it relates to the Environmental Sectors is not predictable and is therefore uncertain. Further, there is no certainty that governments will enforce the environmental or other legislation - 28 - that is currently in effect, or that future governments will not provide incentives to other sectors that compete with the Environmental Sectors. See “Legal and Regulatory Considerations” and “Certain Canadian Federal Income Tax Considerations”. Defaulting Limited Partners Limited Partners who fail to comply with a capital call may suffer significant financial consequences, including forfeiture of their Units. CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS The following is a summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”) generally applicable to Limited Partners who acquire Units pursuant to this Offering Memorandum and who, for purposes of the Tax Act, are resident in Canada, hold their Units as capital property, have invested for their own benefit and not as a trustee of a trust, and deal at arm’s length for the purposes of the Tax Act and are not affiliated with the Partnership or the General Partner. The determination of whether the Units are capital property to a Limited Partner will depend in part upon the Limited Partner’s particular circumstances. Generally, Units will be considered capital property to a Limited Partner if they are acquired by the Limited Partner for investment purposes and are not acquired to be held in the course of carrying on a business of trading or dealing in securities or as part of an adventure in the nature of trade. A person or partnership, an interest in which is a “tax shelter investment”, or a person whose Unit, if acquired, would be a “tax shelter investment”, as such term is defined in the Tax Act, is not eligible to become a Limited Partner in the Partnership and this summary is not applicable to such a person. This summary further assumes that at all times all Limited Partners are resident in Canada. In addition, this summary assumes that not more than 50% of the fair market value of all Units will be held by one or more “financial institutions”, as that term is defined in the Tax Act. This summary is based on the current provisions of the Tax Act and the regulations thereunder, specific proposals to amend such provisions publicly announced by the Minister of Finance prior to the date hereof (the “Tax Proposals”) and counsel’s understanding of the current administrative practices of the Canada Revenue Agency. The summary does not otherwise take into account any changes in law, whether made by judicial, governmental or legislative decision or action. Except as described below, this summary does not take into account tax laws of any province or territory of Canada or any jurisdiction outside Canada, which may differ from those discussed below. Recently enacted provisions of the Tax Act (the “SIFT Rules”) impose a tax in respect of certain income earned by certain publicly-traded trusts and limited partnerships (called “SIFT trusts” and “SIFT partnerships”). Provided that Units or other investments in the Partnership are not listed or traded on a stock exchange or other public market, the Partnership will not be subject to tax as a SIFT partnership. This summary assumes that the Partnership will not at any time qualify as a SIFT partnership for the purposes of the SIFT rules. This summary is of a general nature and is not intended to be legal or tax advice to any particular Limited Partner. Prospective Limited Partn...
View Full Document

Ask a homework question - tutors are online