With Six Nations Ventures (SNV) being a Limited Partnership and not a corporation the Limited Partnership (SNV) potentially achieves the following:
• As long as the First Nations can justify that they are exempt from income tax under terms of the Income Tax Act (by qualifying as public bodies performing a function of government in Canada), then their respective share of income from the Limited Partnership should likely be exempt from income tax. If the First Nations instead carried on the business through a corporation, then any income earned by the corporation would be taxable.
• If the Limited Partnership follows all of the appropriate rules, there may be savings enjoyed in respect to PST, GST and Fuel Tax.
• The Limited Partnership, providing all of the limited partner's behave in the appropriate fashion, may provide some limited liability protection.
• The business entity becomes a Limited Partnership. The Limited Partnership has a General Partner's (Inc.) which acts as the general partner's. The general partner's is responsible for the day-to-day management of the Limited Partnership. The general partner's holds one (1) unit.
• The limited partner's are passive in their involvement. They have the ability to appoint directors to the general partner's. Beyond that, they cannot have any involvement in the day-to-day management of the Limited Partnership.
• The limited partner's are the First Nation Band, but not individual members of any First Nation.
• Likewise, the shareholders of the general partner's are the First Nations and not their members.
Individual members have no rights with respect to the Limited Partnership. They may make enquiries of the chief and council who may in turn make enquiries of the directors of the general partner's. The Band should make this clear to its members.
• The management of the Limited Partnership reports to the board of directors and not the First Nations. It is up to the board of directors to report back to the First Nations.
• Employees of the Limited Partnership will report to the management.
• Directors will not be getting involved in the day-to-day business. This should be delegated to management personnel.
• Directors should meet no more than once monthly unless there is an emergency.
• The Chief and Council must not get involved in the management of the Limited Partnership. If they do so, then the limited liability aspect of the Limited Partnership may be lost to the particular First Nation forever.
• It takes the Liability away from the Band
• The Liability stays with the company and Directors
• The company buys 'Directors and Officer Liability insurance' to protect the Directors (does not apply to Fraudulent acts, which the Director or Manager would be liable for the penalty). Note: May be hard to get D & O liability insurance for the first two years.
• There are tax breaks for the company and employees under this structure. Note though, that since Laws are changing continuously, and thus adjustments to the tax breaks can occur at any time. Therefore there could be some adjustments to the foregoing, at the time of legally setting up the company.
• As indicated, to take Liability away from the Band
• Maintain consistency in Director and Management decision, as Chief and Council can change every few years
• Appointment to Director or Management positions should be based on the person being business minded, which is not always guaranteed in a political appointment.
• Recommended that company decisions should be based on sound business principles with little or no political interference.
• Client companies like consistency in operations and structure, for obvious reasons.
Does Chief and Council have any say in the Business? Yes.
• They can appoint the Directors for the company
• They can attend Board of Directors meetings as observers
• They can make suggestions at any time
• They can request updates from the Directors
• They can ask the managers and Directors to have a meeting with the community at any time.
• SNV has an accounting firm, with professional accountability to look after all SNV accounting.
• Two signatures on every check and no SNV signing checks.
• All major purchases to require Director approval.
• The managers would have to show the Directors, rational for the timing of major purchases.
• Annual 3rd party audits by accounting firms (KPMG) not connected with SNV.
L to R Diane Bigfoot-PRFN, Joyce Achla-HRFN, President Darrell Garbitt-SFN, Secretary Carl Pouce Coupe-DRFN, Jim Webb-WMFN, Vacant is the BRFN director.
