The rising popularity of limited partnerships

February 24 2017

The rising popularity of limited partnerships

Limited partnerships are becoming an increasingly popular business structure for venture capital and private equity firms looking to enter the New Zealand market. As well as being a flexible and convenient option, limited partnerships enable home-grown businesses to be more competitive in seeking venture capital funds and other private equity schemes. Here’s a quick overview.

The Limited Partnerships Act 2008 enables you to form a partnership with:

  • General partners liable for all the debts and liabilities of the partnership, and who manage the day to day running of the business
  • Limited partners liable to the extent of their capital contribution to the partnership, and who can enjoy more of a silent investor-type role

Some of the key advantages that a limited partnership provides include:

  • Partners can be individuals, companies or partnerships that exist under the Partnerships Act 1908
  • Status as a separate legal personality
  • An indefinite lifespan, if desired
  • Various safe harbour activities for limited partners where their actions do not amount to the management of the business or otherwise breach the Act
  • Tax benefits for partners of the limited partnership

Limited partnerships will have to comply with similar reporting responsibilities as other company structures, such as preparing financial statements and filing annual returns with the Companies Office. Potential partners must also meet eligibility requirements, such as being a New Zealand resident.

Overall this internationally-recognised regime has removed previous barriers to foreign investment in New Zealand. Our legal champions can provide you with extensive advice about this aspect of corporate law if you would like to know more.

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