Page 15 - English-DBINZ brochure-2019

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The most recognisable feature of a limited partnership is its hybrid nature. It is a separate legal entity
which provides the protection of limited liability for its limited partners but it is taxed in the same way as
a traditional partnership (often referred to as “flow through” or “tax transparency”).

A limited partnership must be registered, have a partnership agreement, at least one general partner and
one separate limited partner. There is a substantial amount of flexibility afforded to what a partnership
agreement may incorporate and like a company’s shareholders’ agreement (but unlike a company’s
constitution) privacy is maintained as a partnership agreement will not be a publicly available document.
Also, while all partners’ details must be registered, only details of the general partner will be made
public thereby keeping the details of the underlying investor base confidential.
The limited partnership regime has become a popular business vehicle with local and overseas investors
alike, particularly for investment funds and certain types of joint ventures. Investors are attracted
by not only the potential tax benefits but also the less arduous disclosure requirements and reduced
compliance costs traditionally struck in company structures.

JOINT VENTURES

A joint venture is an arrangement between two or more parties who contribute resources to a particular
business. A joint venture may be carried out via:

ə A limited liability company of which each joint venture party is a shareholder
ə A partnership
ə A limited partnership
ə An unincorporated contractual joint venture.
The structure and operation of a joint venture should be dealt with:

ə In the case of a company, in its constitution and/or shareholders’ agreement
ə In the case of a partnership or limited partnership, in the partnership agreement
ə In the case of an unincorporated (contractual) joint venture, in a joint venture agreement.

ALTERNATIVE FORMS OF ENTITY

Alternative business structures may be appropriate if you wish to establish a non-profit entity (eg a
charitable trust or incorporated society) or your members wish to work together cooperatively and/or
trade with the entity (eg a cooperative company or industrial and provident society).

If you wish to establish a financial services business, a building society, managed investment scheme or
some other structure may be appropriate.

FOREIGN INVESTMENT CONTROLS
The Overseas Investment Act 2005 sets out a consent procedure for overseas persons and their
associates investing in significant business assets in New Zealand. For more information about
New Zealand’s foreign investment control regime, please refer to page 34.

“The limited partnership regime has become a popular business
vehicle with local and overseas investors alike, particularly for
investment funds and certain types of joint ventures.”