Establishing A Limited Partnership
New Zealand’s limited partnership regime is based on the limited partnership regimes operating in the United States (Delaware Model) and the United Kingdom. It is governed by the Limited Partnerships Act 2008 (Limited Partnerships Act).
Key features of a limited partnership (LP) include:
(a) it enjoys separate legal personality;
(b) it must have at least one general partner and one limited partner (who cannot be the same person at the same time);
(c) it must have at least one general partner who lives in New Zealand (and, if the general partner is a New Zealand company, then the company must have at least one director who lives in New Zealand, or lives in Australia and is a director of a company registered in Australia);
(d) the general partner is responsible for the day to day management of the LP, and is liable for all of the LP’s debts and liabilities, to the extent the LP cannot pay those debts and liabilities;
(e) subject to paragraph ‘f’ below, the limited liability partner (generally a “silent” investor) is liable only to the extent of its capital contribution to the LP;
(f) limited partners (who wish to preserve their limited liability status) must not be involved in the management of the LP, although there are certain specified activities in the Limited Partnerships Act, in which the limited partners may participate but still retain their limited liability protection;
(g) it can have an indefinite lifespan (if desired); and
(h) it is subject to “flow-through” tax treatment, where the profits and losses of the LP flow through to the partners in proportion to their capital contribution to the LP.
A LP is effective upon registration with the Companies Office. It must have, and will be governed by, a partnership agreement (which does not need to be filed publicly) and by the Limited Partnerships Act.