Limited partnership investing in a venture as a

Limited Partnership

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

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

5. Joint Ventures

Legal Forms of Joint Ventures

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

Types of Joint Ventures
•
Research & Development (R&D)
•
Natural resource exploration & exploitation
•
Engineering & construction
•
Production/manufacturing
•
Buying & selling
•
Services

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

6. Companies/Corporations

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

Companies
•
Allow pooling of capital from investors
•
Limited liability
•
Incorporate under the Companies Act Cap 50
•

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

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

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

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

6.3 Private and Public