[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 363
LIMITED PARTNERSHIP (LP) Limited partnerships (LP) were only recently introduced into New Zealand. They are governed by the Limited Partnership Act 2008 (‘Limited Partnerships Act’) and are regulated by the Companies Office. Whilst only recently introduced into New Zealand, LPs have existed in other jurisdictions for some time. The LP model in New Zealand is much the same as that in other jurisdictions. In essence, they are a ‘hybrid’ of a company and partnership, integrating the limited liability and separate legal identity benefits of a company, and some of the flexibility and the look-through tax benefits of a partnership. In place of a director, is a ‘general partner’. They are responsible for the management and day-to-day operations of the LP, effectively taking on the role of the agent for the LP. Generally, a corporate entity is appointed as a general partner. In place of shareholders, are ‘limited partners’ whose identity is not publicly available. They contribute capital to the LP and their liability is limited only to the extent of such contributions. Under the Limited Partners Act, limited partners are generally prohibited from being involved in the management and day to day operations of the LP outside specified ‘safe harbours’. Limited partners that take part in management risk losing their limited liability protection. The Limited Partnerships Act requires that a LP have a limited partnership agreement and sets
out the minimal provisions that must be provided for therein. The LP has the freedom and flexibility to include other provisions as appropriate to cater to the specifics of the LP. LPs are incorporated entities. The process to register a LP is completed by submitting a written application to the Companies Office. The requirements for registration are: 1. Limited partnership agreement; 2. At least 1 general partner and at least 1 limited partner, and at least 1 general partner must: a. If a natural person, either be a New Zealand resident, or a director of an Australian company who is living in Australia; or b. If an entity, either be a New Zealand company or partnership, or an overseas company with a director who is either a New Zealand resident or a director of an Australian company who is living in Australia. 3. A registered office and address for service in New Zealand; 4. Registration with the Companies Office. Notable advantages and disadvantages of LPs are as follows:
Advantages
Disadvantages
Separate legal identity
Ongoing statutory administrative obligations, including:
LP itself can hold assets and incur obligations and liabilities.
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Filing annual returns – failing which, the LP will be removed from the Companies Office register;
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Limited liability
Limited partners liable only to the value
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ILN Corporate Group – Establishing a Business Entity Series
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