[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 362
Flexibility and freedom in drafting partnership agreement. No registration requirements. No statutory ongoing administrative obligations. The partnership agreement and other information relating to partnership structure and operations can remain confidential. The partners’ capital contributions can be in any form – including cash, loans, skills or assets. Subject to the partnership agreement, there is flexibility as to distribution of profits/income; specifically, there is no
The partnership does not have a separate legal identity from the partners. No limited liability protection – partners can be personally sued and held liable (however subject to the partnership agreement, partners can be indemnified by the partnership). Subject to the partnership agreement:
partner;
Not suited to passive investors – subject to partnership agreement, all partners participate in management and day to day operations; The partnership is technically dissolved each time a partner retires, replaced and/or a new partner is introduced.
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Any partner can bind all other partners – partners have unlimited joint and several liability; Partners are beneficial and equal co-owners of all of the
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Tax : Partnerships are fiscally transparent for tax purposes – the partnership is not a separate legal entity, so each partner’s income share is taxed according to its own tax status. Tax losses can be passed through, utilised or carried forward. No RWT/NRWT payable. Loss limitation rule does not apply. The partnership can register for GST.
Tax: As a partnership not a separate legal entity, partners are jointly and severally liable for GST obligations.
partnerships’ property and
solvency test requirements.
assets, regardless of contributions; Partners are entitled to equal share in profits,
From each individual partners perspective, all partners owe fiduciary obligations to each other.
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regardless of contributions;
There are often difficulties in raising additional capital as unanimous consent is required to introduce a new
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ILN Corporate Group – Establishing a Business Entity Series
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