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Are you considering starting a business in New Zealand? If so, you may be contemplating what kind of business structure you wish to adopt. One such structure is a limited partnership. This article will outline:

  • what a limited partnership is;
  • what a partnership agreement is; and
  • how you can register a limited partnership.

What Is a Limited Partnership?

A partnership is when two, or more, people form a business together. A limited partnership (LP) is a partnership that you register with the Companies Office.

Before you can register your partnership, it must have at least one limited partner and one general partner. A limited partner is not involved in the management of the LP. However, they may make a capital contribution to, or assist in financing, the partnership.

Moreover, a general partner is responsible for the overall management of the LP. Just as shareholders are legally separate from their limited liability company, the LP is a legally separate entity from the general and limited partners.

Additionally, there is no restriction on the kind of business that a limited partnership can conduct.

Tip: You may wish to set up your business as an LP as you have the benefit of being taxed as an LP by Inland Revenue whilst receiving the protections that accompany being a company.

The Requirements for a General Partner

There are restrictions on who can and cannot be a general partner. An individual is disqualified from being appointed as a general partner of an LP if they are:

  • under the age of 18;
  • an undischarged bankrupt;
  • subject to a court order or statutory provision that prohibits them from being a director of a company;
  • prohibited from becoming a director of an overseas company under the law of their country or territory outside of New Zealand; 
  • prohibited from becoming a general partner of an overseas LP under the law of their country or territory outside of New Zealand; or
  • subject to a property order. 

If an individual does not fall into any of these categories, they are legally qualified for the role of general partner. 

Additionally, that general partner must be at least one of the following:

  • an individual that lives in New Zealand; 
  • an LP that has one or more general partners who live in New Zealand;
  • a partnership governed by New Zealand law and involves an individual who lives in New Zealand; 
  • a New Zealand company; or
  • an overseas company registered under New Zealand law that has a director who lives in New Zealand. 

Alternatively, instead of living in New Zealand, these general partners may live in Australia and be a director of an incorporated company in Australia. 

What Is a Partnership Agreement?

Firstly, you will need to draft a partnership agreement if you wish to register your business as a limited partnership. A partnership agreement is a written document that details the affairs of the LP and the conduct of its business. This agreement also acts as a contract for the partners of the LP. Likewise, all partners agree to observe and perform the obligations and conduct specified in the agreement. 

A partnership agreement must address:

  • whether partners can assign or dispose of their partnership interest;
  • whether there are any restrictions on the business that the LP undertakes;
  • the distributions that partners are entitled to;
  • if a general partner can compete with the LP; 
  • how partners may leave the LP;
  • the procedure for terminating the LP (noting that LPs can exist for an indefinite period and will only terminate on the date specified in the partnership agreement); and
  • whether the LP has a conflict of interest policy. 

A partnership agreement should also address how you can change these matters and the agreement in general. Further, the agreement should cover ways to manage disputes between partners.

How Do You Register a Limited Partnership?

You can register your business as a limited partnership through the Companies Office website. Below are the steps to register your LP.

1. Gather Required Information

Before you complete the application form to register your LP, there is certain information you should gather beforehand. This information includes:

Your LP’s Name

This name must include ‘Limited Partnership’, ‘LP’ or ‘L.P.’ at the end of the name.

The Various Addresses of Your LP

Your LP will need to have:

  • a registered office address; 
  • an address for service (where legal documents are delivered); 
  • a postal address; and 
  • an email address. 

Certification by a General Partner

A general partner must certify that the proposed partners have entered into a legally compliant partnership agreement.

Details of the General and Limited Partners

These details include the full legal name, residential address, email address, date and place of birth, and a signed consent form (for general partners only). 

2. Create an Online Account

To complete the application, you will need:

  • a RealMe login; and
  • an online services account with the Limited Partnerships Register.

3. Complete the Online Application

Once you have logged onto your online services account, you can complete an application form. Applications incur a fee of $240.78 (plus GST). If your application is approved, you will receive a registration certificate, and your business will be registered as a limited partnership.

Key Takeaways

A limited partnership is one business structures you can choose to adopt when setting up your business. To set up an LP, you need to:

  • have at least one limited partner and a general partner; 
  • have a compliant partnership agreement; and
  • register your business as an LP with the Limited Partnership Registers through the Companies Office website.  

If you need help with starting a limited partnership, contact LegalVision’s business lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

Is a limited partnership a company?

A limited partnership is not a company, but it does have some of the same legal protections that a company has.

Does a limited partnership have directors?

A limited partnership does not have directors. It has limited and general partners.

Who are the limited partners in a limited partnership?

A limited partner is not involved in managing the limited partnership but may make a capital contribution to, or assist in financing, the partnership. You must have at least one limited partner to register your business as an LP.

What does a general partner do?

A general partner is responsible for the overall management of the limited partnership. 

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