LAWFUEL – The Legal Newswire – A new bill introduced to Parliament on 7 August will begin the process of introducing Limited Partnerships to New Zealand.
The Limited Partnership vehicle is the international vehicle preferred by most investors, and by private equity and venture capital funds in particular. It allows investors to limit their exposure to liability to the amount of their investment, and provides a flow-through tax treatment for investors in relation to gains and losses. The regime is intended to encourage innovation and growth by increasing funding for new and existing businesses.
The new bill has been drafted taking into consideration the experience of other countries and avoiding mistakes made in Australia. As a result, if it is passed it will provide a world leading and competitive regime for New Zealand.
Chapman Tripp partner, Nick Wells, says that while some improvements could be made to the bill, and these will be presented to the select committee in due course, the overall thrust is a reminder that New Zealand is one of the best countries in which to do business.
“We were ranked 19th out of 55 countries evaluated in the 2007 World Competitiveness Yearbook, recently released by the IMD – one of the world’s leading business schools. But there’s room to improve our ranking and legislation such as this is certainly a good way of doing that. This is great news for New Zealand,” he says.
Chapman Tripp has been working with government departments and the New Zealand Private Equity and Venture Capital Association throughout the development of the legislation.
Nick Wells, who also has experience of the equivalent Australian regime, says in undertaking its work, Chapman Tripp sought to learn from international standards and other countries including the US and the UK.
“New Zealand should continue in the trend of making our legal framework, institutions and approach commercial, balanced and world-leading,” he says.
Chapman Tripp is collaborating with LexisNexis New Zealand, publishers of flagship commercial law information services to produce a publication on Limited Partnerships.