Can a limited partner in an Ontario limited partnership lose their limited liability protection?

Yes. Under Ontario's Limited Partnerships Act, a limited partner's liability is capped at their investment only as long as they stay out of controlling the business. If a limited partner takes part in the control of the limited partnership's business — beyond the passive investor role the structure is built around — they risk losing that protection and becoming exposed to liability in the same way a general partner is, at least with respect to the period and extent of their involvement.

This is one of the most important and most misunderstood rules in limited partnership structures, because "control" isn't always obvious in practice. A limited partner who starts directing day-to-day operations, making management decisions, or acting as though they're running the business — rather than simply exercising the kinds of oversight rights a passive investor typically has, such as voting on major structural changes — can cross that line. Because the exact boundary is fact-specific rather than a fixed checklist, limited partners who want to stay actively informed without risking their protection should get legal advice on where that line sits for their specific involvement.