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Partnership (Venture Capital Funds) Bill
Victorian Legislation and Parliamentary Documents
Circulation Print
EXPLANATORY MEMORANDUM
General
This Bill amends the Partnership Act 1958 to provide for the formation and
registration of incorporated limited partnerships that are separate legal
entities distinct from their partners; for the relationship of the partners of
incorporated limited partnerships to each other and to the incorporated
limited partnership; and for the limitation of liability of the general partners
and limited partners for the liabilities of the incorporated limited partnership.
Clause Notes
Clause 1 sets out the main purpose of the Bill.
Clause 2 provides for the commencement of the Bill on the day after Royal
Assent.
Clause 3 defines the Principal Act as the Partnership Act 1958.
Clause 4 Inserts Part 5 in the Principal Act. The provisions of Part 5 are
set out below.
Proposed section 81 sets out definitions applicable to Part 5.
Proposed section 82 provides for the application of other
provisions of the Act to Part 5. Proposed section 82(1) provides
that Parts 1 and 2 (except sections 22, 26, 27(2) and (3), 30, 31
and 34 and Division 4 of Part 2) apply to limited partnerships
incorporated under Part 5, unless Part 5 provides otherwise.
Proposed section 82(2) provides that a provision of Part 5 will
prevail in the event of inconsistency with a provision of any other
Part of the Act that applies to incorporated limited partnerships.
Proposed section 83 provides that an incorporated limited
partnership is formed on registration under Part 5.
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551116 BILL LA CIRCULATION 31/10/2003
Proposed section 84 provides that an incorporated limited
partnership is a body corporate with legal personality and
perpetual succession; that it may have a common seal; and that it
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may sue or be sued in its firm-name. It also provides for the
custody and use of the common seal (if any).
Proposed section 85 provides that an incorporated limited
partnership must have at least one limited partner (which may be
a body corporate), and at least one but no more than 20 general
partners (any of whom may be bodies corporate). It also
provides that in calculating the number of general partners, if a
general partner is itself a partnership, the general partners of that
partnership are also counted as general partners of the
incorporated limited partnership, while limited partners of that
partnership are not to be so counted.
Proposed section 86 provides that there must at all times be a
written partnership agreement; that such a partnership agreement
also operates as a contract between the incorporated limited
partnership and each partner; but that an incorporated limited
partnership may, in fact, execute such a partnership agreement.
Proposed section 87 provides that an existing partnership or the
proposed partners of a proposed incorporated limited partnership
may apply for registration as an incorporated limited partnership
if the partnership is registered or is intended to be registered
under Part 2 of the Venture Capital Act 2002 of the
Commonwealth as a Venture Capital Limited Partnership or
Australian Fund of Funds within the meaning of that Act, or if
the partnership is or is intended to be a venture capital
management partnership within the meaning of the Income Tax
Assessment Act 1936 of the Commonwealth.
Proposed section 88 provides that an application is made by each
partner or proposed partner signing a statement containing the
particulars prescribed under section 88, or prescribed by the
regulations, or required by the form approved by the Director of
Consumer Affairs Victoria ("Director").
Proposed section 89 provides that the Director may register an
incorporated limited partnership if proposed section 88 is
complied with, by recording the particulars in the section 88
statement in the Register. The firm-name of the incorporated
limited partnership is that recorded in the Register, which must
include the words "an Incorporated Limited Partnership" or the
abbreviation "L.P." or "LP", and which must not be ineligible for
registration under the Business Names Act 1962.
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Proposed section 90 provides that the Director must keep a
Register of Incorporated Limited Partnerships that is accessible
to the public during the ordinary office hours of the Director, and
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that the Director may correct errors or omissions in the Register.
Proposed section 91 provides that where there are changes in the
registered particulars of the incorporated limited partnership, a
statement signed by the general partners, or by one general
partner with authority to sign from the other general partners,
setting out the changed particulars, must be lodged with the
Director within 7 days of the change occurring. Failure to do so
is an offence, making each general partner liable to a penalty of
up to 10 penalty units. The Director must update the Register as
soon as possible after the statement is lodged.
Proposed section 92 provides that the Director must issue a
certificate to the general partners as to the formation and
registered particulars of the incorporated limited partnership, in
certain circumstances. The Director may also issue such a
certificate to an applicant. The certificate is conclusive evidence
of the date of formation of the incorporated limited partnership,
and unless the contrary is established, of the existence of the
incorporated limited partnership, its general and limited partners
and other particulars of the incorporated limited partnership in
the Register, as at a specified time.
Proposed section 93 provides that an incorporated limited
partnership does not also have to register its name under the
Business Names Act 1962.
Proposed section 94 provides that any act done in connection
with making an application for registration of an incorporated
limited partnership does not of itself create a partnership between
the proposed partners of the proposed incorporated limited
partnership.
Proposed section 95 provides that an incorporated limited
partnership has the legal capacity and powers of an individual
and also all the powers of a body corporate, except as otherwise
provided by the partnership agreement.
Proposed section 96 provides that--
· except as otherwise provided by the partnership
agreement and subject to proposed section 98, neither a
general partner, the incorporated limited partnership,
nor an officer, employee or agent of the incorporated
limited partnership is the agent of a limited partner, nor
do their acts bind the limited partner; and a limited
partner is not an agent of a general partner or of another
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limited partner or of the incorporated limited
partnership, nor do the acts of the limited partner bind
them; but that, nevertheless, it can be agreed by the
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relevant parties that a partner can act as an agent of
another partner or of the incorporated limited
partnership, or that the incorporated limited partnership
can act as the agent of a partner;
· where any consent or authority required or permitted
under the Act is to be given by a partner or partners of
an incorporated limited partnership, the partnership
agreement may provide that it be given under that
agreement by that partner or those partners in relation to
all such consents or authorities, or to a particular
consent or authority, or to a class of consent or
authority;
· Division 2 of Part 2 of the Act applies to incorporated
limited partnerships but with modifications to ensure
that certain references to "partners" are references to
general partners; that the persons authorised to do an act
or execute an instrument for an incorporated limited
partnership do not, subject to proposed section 98,
include a limited partner; that the general partners are
jointly liable with the incorporated limited partnership
for its liabilities but that such liability is limited to that
which the incorporated limited partnership cannot
satisfy; that references to debts or obligations of the
firm are references to the liabilities of the incorporated
limited partnership; that the exceptions in section 14(2)
to acting in the ordinary course of the business of the
firm do not apply to acts or omissions of a general
partner in the circumstances set out in those exceptions;
that section 21(3) recognises the perpetual succession of
an incorporated limited partnership; and that section
24(1) recognises the separate legal entity of the
incorporated limited partnership; and
· subject to proposed section 98, a limited partner is not a
proper party to a suit by or against the incorporated
limited partnership except for a suit by the incorporated
limited partnership against the limited partner or by the
limited partner against the incorporated limited
partnership.
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Proposed section 97 provides that, subject to proposed section 98,
a limited partner has no liability for the liabilities of the
incorporated limited partnership or of a general partner, but not
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so as to prevent the satisfaction of such liabilities by the
contributions of capital or property by limited partners, or by the
enforcement of the obligation to so contribute.
Proposed section 98 provides that--
· limited partners must not take part in the management
of the business of the incorporated limited partnership,
and that if they do, their acts will bind the incorporated
limited partnership (if such acts would have bound a
general partner and the third party reasonably believed
the limited partner was a general partner) but that their
liability for the liability of the incorporated limited
partnership arising from such acts is limited to that
incurred as a direct result of such acts and which cannot
be satisfied by the incorporated limited partnership;
· a limited partner is not to be regarded as taking part in
the management of the business of the incorporated
limited partnership merely because it engages in the
specified acts ("safe harbour provisions") which are acts
currently permitted of limited partners under Part 3 but
also include expanded and additional acts, principally
engaging with companies in which the incorporated
limited partnership invests and participating in
committees dealing with requests from general partners
for consent to do things not complying with the
partnership agreement;
· limited partners may inspect the books and records, and
examine the state of the incorporated limited
partnership, subject to the partnership agreement; and
· except for the provisions regarding inspection of books
etc, its provisions cannot be varied by the partnership
agreement or by consent of the partners.
Proposed section 99 provides for definitions, for the purposes of
the safe harbour provisions of section 98, of "an associate" of a
general partner or a limited partner or the incorporated limited
partnership; of a "general partner"; a "security holder"; and a
"related body corporate".
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Proposed section 100 provides that, subject to variation by the
consent of all the partners, differences about the business of an
incorporated limited partnership may be decided by a majority of
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the general partners.
Proposed section 101 provides that limited partners may transfer
the whole or part of their interest in the incorporated limited
partnership with the consent of all the general partners and that a
person may be admitted as a partner without having to obtain the
consent of the limited partners.
Proposed section 102 provides that if a general partner becomes a
limited partner, they enjoy limited liability only from that point,
and not in relation to their earlier activities as a general partner;
and that if a limited partner becomes a general partner, their
limitation of liability prior to their change of status is unaffected.
Proposed section 103 provides that the limitation on liability of a
limited partner is the same for liabilities incurred outside the
State as for those incurred inside the State.
Proposed section 104 provides for the recognition of the
limitation of liability of partners in incorporated limited
partnerships formed under a law of another jurisdiction for
liabilities incurred in the State, provided that that law
corresponds to Part 5 or the Governor in Council has declared
that that law corresponds to Part 5, which can only be done in
relation to another Australian law if the circumstances giving rise
to the limitation of liability in that other jurisdiction would also
give rise to the same limitation under Part 5 if the circumstances
arose in the State, and in relation to a foreign law, only if that law
provides for the limitation of liability of certain partners in
certain partnerships.
Proposed section 105 provides that sections 103 and 104 cannot
be taken as implying that a limited partner in an incorporated
limited partnership under Part 5 can have liability for conduct or
acts done outside the State that would not attract liability if done
within in the State.
Proposed section 106 defines "assets" for the purpose of
Division 6 of Part 5.
Proposed section 107 provides for an incorporated limited
partnership to be wound up voluntarily under the partnership
agreement, or by a special resolution of the limited partners; for
the distribution of assets on the winding up; and for aggrieved
persons to apply to the Supreme Court.
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Proposed section 108 provides for the Director, having formed
the opinion that the incorporated limited partnership has breached
one of the matters set out, to issue a notice requiring an
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incorporated limited partnership to show good cause why it
should not be wound up; for the partnership to show good cause
within 28 days; for the Gazettal of a winding up certificate if the
Director is satisfied that good cause has not been shown; and for
notice of the certificate to be given to the partnership.
Proposed section 109 provides for an aggrieved person to apply
to the Supreme Court within 28 days of the publication of the
certificate under proposed section 108 for a review of the
decision to publish.
Proposed section 110 provides for the winding up of an
incorporated limited partnership, which must commence no later
than 28 days after publication of the notice under proposed
section 108 or on the determination of any application to the
Supreme Court under proposed section 109, and must be
completed by the date specified in a notice given by the Director
to the partnership, which must not be earlier than 60 days after
the date of that notice; for the Director to appoint any person to
be the liquidator; and for the terms of that appointment.
Proposed section 111 provides for the distribution of assets of the
incorporated limited partnership on winding up, which is
primarily governed by the partnership agreement or in
proportionate shares if not so governed; and for an aggrieved
person to apply to the Supreme Court.
Proposed section 112 provides that the winding up of an
incorporated limited partnership otherwise than under proposed
sections 107 or 108, is declared to be an applied Corporations
legislation matter for the purposes of Part 3 of the Corporations
(Ancillary Provisions) Act 2001 in relation to Part 5.7 of the
Corporations Act; for modifications of the application of Part 5.7,
particularly to allow for winding up of an incorporated limited
partnership on public interest grounds; and for the Australian
Securities and Investments Commission to perform functions
conferred on it by the application of Part 5.7, or otherwise for
those conferred functions to be performed by the Director.
Proposed section 113 provides for an offence (10 penalty units)
for the general partners of an incorporated limited partnership to
fail to notify the Director of the commencement and completion
of the winding up within 7 days of the commencement or
completion; and for the Director to record receipt of the notices
in the Register.
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Proposed section 114 provides for the Director to publish in the
Government Gazette the cancellation of the registration of an
incorporated limited partnership on its winding up and to record
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the cancellation in the Register; and for the existence of the
incorporated limited partnership to cease on cancellation.
Proposed section 115 provides for the execution of documents by
an incorporated limited partnership, with or without using a
common seal.
Proposed section 116 entitles a person who deals with an
incorporated limited partnership or with a person who has
acquired property from the partnership to make the assumptions
set out in proposed section 117, unless the person knew or
suspected that the relevant assumption was incorrect; and for the
inability of the partnership to assert that any of the assumptions
are incorrect.
Proposed section 117 provides that a person may assume
compliance with the partnership agreement of an incorporated
limited partnership; that a person who appears to be a general
partner or is held out as a general partner or agent of the
partnership is such, has customary powers and duties and
properly perform those duties; that a document that appears to
have been signed in accordance with proposed section 115(2) or
sealed in accordance with proposed section 115(1) has been duly
executed or fixed; and that a general partner or agent who has
authority to issue a document or certified copy has authority to
warrant that it is genuine or a true copy.
Proposed section 118 provides for offences (20 penalty units) for
the general partners of an incorporated limited partnership that
issues a specified document in connection with the conduct of its
business without certain words or abbreviations at the end of the
name of the incorporated limited partnership that bring its status
to the attention of the reader, or to fail to display its certificate of
registration at its registered office.
Proposed section 119 provides for an offence for the general
partners (10 penalty units) of an incorporated limited partnership
that fails to keep a registered office in Victoria to which all
communications with the incorporated limited partnership may
be addressed.
Proposed section 120 provides for an offence (10 penalty units)
for the general partners of an incorporated limited partnership
that fails to lodge certain documents with the Director that verify
the status on which it was registered under Part 5 or the loss of
that status or that it has ceased to carry on business.
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Proposed section 121 provides for documents to be served on the
incorporated limited partnership by leaving them at, or posting
them to, to the registered office.
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Proposed section 122 provides that an entry in the Register is
sufficient notice of the fact or effect that the entry records to
persons dealing with the relevant incorporated limited
partnership.
Proposed section 123 provides for offences (60 penalty units) for
persons making false and misleading statements in documents
lodged with the Director.
Proposed section 124 provides for the Director to issue a notice
to an incorporated limited partnership to furnish information
within a specified period; and for an offence (60 penalty units)
for the partnership not to comply with the notice or to provide
false or misleading information.
Proposed section 125 provides for an offence (60 penalty units)
for the Director or other person to give away information
acquired under Part 5 unless in relation to legal proceedings or
law enforcement or with the consent of the person to whom the
information relates.
Proposed section 126 provides that if an offence is committed
under Part 5 by a partnership or a limited partnership, it is
committed by each partner or general partner; and for a defence
for any partner in a prosecution under specified sections of Part 5
that the partner took all reasonable precautions and exercised all
due diligence to avoid the commission of the relevant offence.
Proposed section 127 provides for the Director to delegate his/her
functions under Part 5 to a person employed under Part 3 of the
Public Sector Management and Employment Act 1998.
Proposed section 128 provides for the Governor in Council to
make regulations for or with respect to any matter or thing
required or permitted by Part 5 to be prescribed, or necessary to
be prescribed to give effect to Part 5, with penalties of up to
20 penalty units for their contravention.
Clause 5 amends the definition of "partnership" in section 5(1) of the
Act so that it includes an incorporated limited partnership;
and provides that a reference to a "partnership" includes a
reference to a partnership formed under a law of another State,
a Territory or another country or jurisdiction in a number of
sections of the Act to ensure that those sections apply to
partnerships formed outside of Victoria, for example, to ensure
that an incorporated limited partnership formed in Victoria can
participate in partnerships formed outside Victoria (proposed
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section 95(b)(vi)); amends the definition of "association" in
section 5(2) of the Act to exclude incorporated limited
partnerships except in the specified sections of the Act; and
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amends section 5(2) of the Act to include incorporated limited
partnerships in references in the Act to a "firm".
Clause 6 modifies the following provisions of the Act--
The definition of "debt" in section 49(1) is repealed and replaced
by the broader definition of "liability" and that expression is also
substituted in other sections that refer to "debt/s or obligation/s".
The number of general partners of a limited partnership to be
counted for the purposes of section 51(2) includes the partners in
a partnership that do not have limited liability and excludes the
partners that do have limited liability.
The application for registration as a limited partnership under
section 54(2) provides for the situation where a partner is a
partnership.
The requirement for a statement to be signed by a limited partner
under section 56(2)(b) provides for the situation where a limited
partner is a limited partnership.
The liability of limited partners under section 60(2) provides for
the situation where a limited partner in the limited partnership is
a partnership.
The mutual recognition provisions of section 64 of the Act do not
derogate from any other laws regarding recognition of the limited
liability of limited partners.
Clause 7 provides that sections 63 and 64 of the Act cannot be taken as
implying that a limited partner in an incorporated limited
partnership under Part 5 can have liability for conduct or acts
done outside the State that would not attract liability if done
within the State.
Clause 8 corrects an error by providing that the regulation making power
under section 80 of the Act applies to the Act rather than just to
Part 4.
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