Limited Partnership Investing in a Venture as a Limited Partner Example of safe

Limited partnership investing in a venture as a

This preview shows page 31 - 48 out of 79 pages.

Limited Partnership
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Investing in a Venture as a Limited Partner Example of safe harbour activities – permitted activities Not considered as taking part in management of LP First Schedule, Limited Partnership Act 2008
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Safe Harbour Activities Advising on business affairs of LP Reviewing, advising or approving affairs or accounts of LP Enforcing limited partners rights under the Partnership agreement Calling or attending partners’ meeting Voting on proposed transaction of LP
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5. Joint Ventures
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Legal Forms of Joint Ventures
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Joint Venture Business relationship in which 2 or more persons combine their labour or property for a single undertaking and share profits and losses as agreed Like a partnership but exists for a single transaction/venture
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Types of Joint Ventures Research & Development (R&D) Natural resource exploration & exploitation Engineering & construction Production/manufacturing Buying & selling Services
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Rights & Liabilities Each Venturer bears own liability Not an agent of the other Venturer. Contract usually limits authority to act on behalf of JV JV contract may allow transfer of interest to 3 rd party Whether JV or general partnership – depends on whether “one-off” or carrying on business on a continual basis
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6. Companies/Corporations
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6.1 Companies Separate legal person from those managing it Different profit distribution, taxation and legal responsibilities than a sole trader or partnership Competitive corporate tax rate Responsibilities of directors Public disclosure
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Companies Allow pooling of capital from investors Limited liability Incorporate under the Companies Act Cap 50
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Companies ADVANTAGES Perpetual succession Limited liability Company & not individual shareholders sue and be sued Borrowing DISADVANTAGES Costs of incorporation & dissolution Loss of privacy due to disclosure requirements Stringent requirements imposed on directors
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6.2 General Partnership & Company GENERAL PARTNERSHIP 2-20 partners No separate legal entity Unlimited liability Partnership Agreement + register under Business Names Registration Act Partners contribute to capital COMPANY 2 to no maximum (50 for private limited co) Separate legal entity Liability ltd to amount fully paid up on shares Register under Companies Act Shareholders contribute to capital
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PARTNERSHIP Entitled to manage, unless otherwise agree Sued and be sued personally or in firm’s name COMPANY Directors manage, not shareholders Sue and be sued in company’s name
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PARTNERSHIP Dissolved by death or bankruptcy etc No transfer of interest except by consent COMPANY Perpetual succession. Not affected by death, bankruptcy of shareholders or change of membership Transfer of membership according to articles of association
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6.3 Private and Public
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