[ESTABLISHING A BUSINESS ENTITY IN NEW ZEALAND] 364
of their investment.
Keeping minutes of meetings;
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In some cases, preparing and/or auditing financial statements; financial reporting obligations.
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Perpetual succession
Continues to exist unless removed from the Companies Office register (in spite of changes in control/ownership/management).
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Certain mandatory provisions in the Limited Partnerships Act cannot be contracted out of, by the limited partnership agreement or otherwise (although less when compared with the mandatory provisions relating to companies). From the general partner’s perspective – whilst the LP has limited liability, general partners can be held personally liable for the obligations of the LP (however this can be mitigated by having a corporate general partner). Certain details must be registered with the Companies Office, and are thus publically available and viewable, including:
Confidentiality
Details of limited partners are not publicly available; Limited partnership agreement not publicly available.
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Flexibility and freedom in drafting the limited partnership agreement (provided it does not contravene the Limited Partnerships Act. Limited partners’ capital contributions can be in any form – including cash, skills or assets (excluding loans). Suited to passive investors, reasons include:
LP’s name;
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Details of the general partner;
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LP’s registered office and address for service.
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Separation between ownership and management/control – the general partner handles management and day to day operations; limited partners simply investors and have no power to bind the LP; The general partner has fiduciary duties to the LP and limited partners – basic duties are prescribed under the Limited Partnerships Act and general agency law, however they can be avoided or added to under the limited partnership agreement.
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Subject to the limited partnership agreement:
There is flexibility to introduce and raise new capital; There is flexibility as to distribution of profits/income; specifically, there is no solvency test requirements.
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ILN Corporate Group – Establishing a Business Entity Series
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