PARTNERSHIP AMENDMENT (VENTURE CAPITAL FUNDS) BILL 2006

Serial 42
Partnership Amendment (Venture Capital Funds) Bill 2006
Dr Toyne

The Legislative Assembly of the Northern Territory enacts as follows:

Short title

This Act may be cited as the Partnership Amendment (Venture Capital Funds) Act 2006.

Commencement

This Act comes into operation on the date fixed by the Administrator by notice in the Gazette.

Principal Act amended

Repeal and substitution of sections 3 and 4

"AFOF" has the same meaning as in the Venture Capital Act 2002 (Cth);

"external partnership" means a partnership or legal entity (however described) in the nature of a partnership, formed under a law of a State, another Territory or another jurisdiction (including a foreign country), whether or not –

(a) the liability of any of its partners for its liabilities is limited; and

(b) it is incorporated or is otherwise a separate legal entity from its partners;

"general partner", for an incorporated limited partnership, means an entity that, in accordance with the partnership agreement –

(b) is not designated as a limited partner in the partnership;

"incorporated limited partnership" means an incorporated limited partnership formed under Part 3;

"limited partner", for an incorporated limited partnership, means an entity that, in accordance with the partnership agreement –

"partner", for an incorporated limited partnership, means a general partner or limited partner in the partnership;

"partnership agreement", for an incorporated limited partnership, has the meaning in section 54;

"register" means the register of incorporated limited partnerships established by section 58;

"registered name", for an incorporated limited partnership, means the name of the partnership recorded in the register;

"registered office", of an incorporated limited partnership, means the address of the principal office of the partnership recorded in the register;

"registration" means the registration of an incorporated limited partnership under Part 3;

"special resolution", for an incorporated limited partnership, means a resolution passed by at least 75% of the limited partners in the partnership;

"VCLP" has the same meaning as in the Venture Capital Act 2002 (Cth);

"VCMP" means a venture capital management partnership within the meaning of the Income Tax Assessment Act 1936 (Cth).

(1) The rules of equity and common law for partnerships continue in force except to the extent to which they are inconsistent with this Act.

(2) However, except as provided by this or another Act, those rules do not apply to an incorporated limited partnership, its partners and the relationship between the partnership and its partners.

Repeal and substitution of section 5

(1) A partnership is the relation between people carrying on a business in common with a view of profit, and includes an external partnership and incorporated limited partnership.

(2) However, the relation between members of an association or incorporated body (other than an incorporated limited partnership) is not a partnership.

(3) For this section, a reference to an association includes a reference to an association formed under a law in force in the Territory.

Amendment of section 6 (Determining existence of partnership other than incorporated limited partnership)

a partnership (other than an incorporated limited partnership)

Repeal and substitution of section 8

(1) The partners in a partnership other than an incorporated limited partnership are collectively called a firm and its firm name is –

(a) for an external partnership – the name under which its business is carried on under the law of the place where it is formed; or

(b) otherwise – the name under which its business is carried on in the Territory.

(2) An incorporated limited partnership is a firm and its firm name is its registered name.

Repeal and substitution of sections 9 to 21

(1) A partner in a firm other than an incorporated limited partnership is, for the firm's business, an agent of the firm and of the firm's other partners.

(2) An act of the partner in carrying on in the usual way business of the kind carried on by the firm binds the firm and all its partners, unless –

(ii) did not know or believe the partner was a partner in the firm.

(3) A general partner in an incorporated limited partnership is, for the firm's business, an agent of the firm and of the firm's other general partners.

(4) An act of the general partner in carrying on in the usual way business of the kind carried on by the partnership binds the partnership and all its other general partners, unless –

(a) the general partner had no authority to act in the matter; and

(ii) did not know or believe the general partner was a general partner in the partnership.

(1) An act of a person relating to the business of a firm other than an incorporated limited partnership binds the firm and all its partners if the person is authorised by the firm to carry out the act –

(2) Subject to section 13(4), an act of a person relating to the business of an incorporated limited partnership binds the partnership and all its general partners if the person is authorised by the partnership to carry out the act –

(b) in any other way showing an intention to bind the partnership.

(a) a reference to a person authorised by a firm to carry out an act includes a reference to a partner in the firm so authorised; and

(b) this section does not affect any rule of law about the execution of deeds or negotiable instruments.

(1) The use of the credit of a firm other than an incorporated limited partnership by one of its partners for a purpose not apparently related to its ordinary business does not bind it unless the partner is specially authorised by the other partners to do so.

(2) The use of an incorporated limited partnership's credit by one of its general partners for a purpose not apparently related to its ordinary business does not bind it unless the general partner is specially authorised by it to do so.

(3) To avoid doubt, this section does not affect any personal liability of a partner in a partnership.

If an act contravenes an agreement restricting the power of a partner to bind a firm, the act does not bind the firm in relation to a person who has notice of the agreement.

(1) Each partner in a firm other than an incorporated limited partnership is liable jointly with the other partners for liabilities incurred by the firm while the partner is that partner.

(2) Each general partner in an incorporated limited partnership is liable jointly with the partnership for liabilities incurred by the partnership while the general partner is that general partner.

(3) The estate of the partner referred to in subsection (1), or of the general partner referred to in subsection (2), is liable severally for the liabilities referred to in that subsection –

(a) to the extent to which the liabilities remain unsatisfied; and

(b) only after the separate liabilities of that partner or general partner have been satisfied.

(4) However, the general partner or the general partner's estate is only liable for the liabilities –

(a) to the extent to which the partnership cannot satisfy the liabilities; or

(b) to a greater extent provided by the partnership agreement.

(1) A firm other than an incorporated limited partnership is liable to the same extent as a partner in the firm for any loss, injury or penalty caused by an act (including omission) of the partner if –

(a) the act occurred while the partner was acting in the ordinary course of the firm's business or with the authority of the other partners; and

(b) for a loss or injury – the loss or injury is not suffered by a partner in the firm.

(2) An incorporated limited partnership is liable to the same extent as a general partner in the partnership for any loss, injury or penalty caused by an act (including omission) of the general partner if –

(a) the act occurred while the partner was acting in the ordinary course of the partnership's business or with the partnership's authority; and

(b) for a loss or injury – the loss or injury is not suffered by a partner in the partnership.

(3) For subsections (1) and (2), an act of a partner as a director must not be taken to have occurred in the ordinary course of the firm's business or with the firm's authority only because of one or more of the following:

(a) the partner obtained the firm's agreement or authority to be appointed or to act as the director;

(b) the remuneration the partner receives as the director forms part of the firm's income;

(a) a director of a corporation within the meaning of the Corporations Act 2001; or

(b) a member of a body established by a law of the Territory.

(1) A firm other than an incorporated limited partnership is liable for any loss arising from the misapplication of a third party's property if –

(a) the property was received and misapplied by a partner in the firm acting within the scope of the partner's apparent authority; or

(i) was received by the firm in the course of the firm's business; and

(ii) was misapplied by one or more partners in the firm while it was in the firm's custody.

(2) An incorporated limited partnership is liable for any loss arising from the misapplication of a third party's property if –

(a) the property was received and misapplied by a general partner in the partnership acting within the scope of that partner's apparent authority; or

(i) was received by the partnership in the course of the partnership's business; and

(ii) was misapplied by one or more general partners in the partnership while it was in the partnership's custody.

"third party's property", in relation to a firm, means money or other property belonging to someone other than the firm or a partner in the firm.

(1) Each partner in a firm other than an incorporated limited partnership is jointly and severally liable for a liability referred to in section 14(1) or 15(1) incurred by the firm while the partner is that partner.

(2) Each general partner in an incorporated limited partnership is jointly and severally liable for a liability referred to in section 14(2) or 15(2) incurred by the partnership while the general partner is that general partner.

(a) to the extent to which the partnership cannot satisfy the liability; or

(b) to a greater extent provided by the partnership agreement.

(1) A partner in a firm other than an incorporated limited partnership is not liable for the misuse of any trust property for the firm by a trustee of the trust who is another partner in the firm.

(2) An incorporated limited partnership or general partner in the partnership is not liable for the misuse of any trust property for the partnership by a trustee of the trust who is another general partner in the partnership.

(a) affect any liability of a partner in the firm incurred because the partner knew about a breach of the trust; and

(b) prevent the tracing and recovery of the trust property from the firm.

(1) A person is liable as a partner in a firm other than an incorporated limited partnership to a creditor of the firm who provided the credit because of a representation that the person is that partner.

(2) A person is liable as a general partner in an incorporated limited partnership to a creditor of the partnership who provided the credit because of a representation that the person is that general partner.

(a) whether or not the representation was made by the person or with the person's permission or knowledge; and

(b) whether the representation was made orally, in writing or by conduct.

(4) The estate of a partner in a firm is not liable for any debt incurred by the firm after the partner's death only because, after the death –

(b) the partner's name continues to be used in the firm name.

(1) A representation about a firm's affairs is evidence against the firm if the representation is made in the ordinary course of the firm's business by –

(a) if the firm is not an incorporated limited partnership – a partner in the firm; or

(2) For this section, a representation includes an admission, and may be made orally, in writing or by conduct.

(1) Notice to a partner in a firm other than an incorporated limited partnership about the firm's affairs is taken to be notice to the firm if –

(b) the notice does not relate to a fraud on the firm committed by or with the consent of the partner.

(2) Notice to a general partner in an incorporated limited partnership about the partnership's affairs is taken to be notice to the partnership if –

(a) the general partner ordinarily acts in the partnership's business; and

(b) the notice does not relate to a fraud on the partnership committed by or with the consent of the general partner.

(1) An entity does not, only because of the entity's admission as a partner in a firm other than an incorporated limited partnership, become liable for a liability incurred by the firm before the admission.

(2) An entity does not, only because of the entity's retirement as a partner in the firm, cease to be liable for a liability incurred by the firm before the retirement.

(3) An entity does not, only because of the entity's admission as a general partner in an incorporated limited partnership, become liable for a liability incurred by the partnership before the admission.

(4) An entity does not, only because of the entity's retirement as a general partner in the partnership, cease to be liable for a liability incurred by the partnership before the retirement.

(5) A retiring partner in a firm may be discharged from any existing liabilities of the firm by an agreement between –

(d) if the firm is an incorporated limited partnership – the partnership.

(6) The agreement may be expressed or inferred from the conduct of anyone referred to in subsection (5).

Amendment of section 22 (Revocation of continuing guarantee)

(2) This section does not apply to an incorporated limited partnership.

Repeal and substitution of section 24

(1) The partnership property of a firm consists of property and any rights and interests in property that were originally brought into, or are subsequently acquired for, the firm.

(2) The partners of a firm other than an incorporated limited partnership must, in accordance with the partnership agreement, hold and apply the partnership property exclusively for the firm.

(3) However, any partnership property of the firm that is an interest in land must devolve –

(a) according to its nature and tenure and the general rule of law; and

(b) in trust so far as necessary for persons beneficially interested in the land.

(a) the co-owners of an interest in land (the "first interest") are partners in the firm in relation to profits made by the use of the first interest; and

(b) the first interest is not partnership property for the firm; and

(c) the co-owners use the profits to purchase another interest in land (the "second interest") to be used in a similar manner,

then, subject to any agreement to the contrary, the co-owners must, from the date of the purchase, hold the second interest in the same manner as the first property is held.

(5) An incorporated limited partnership must hold and apply the partnership property of the partnership exclusively for the partnership.

(6) A partner in the partnership does not have any legal or beneficial interest in the property only because the partner is the partner.

(7) For this section, an interest in land includes an estate in land.

Amendment of section 26 (Personal estate held as partnership property)

(2) This section does not apply to an incorporated limited partnership.

Amendment of section 27 (Procedure against partnership property for partner's separate judgment debt)

(4) Subsections (2) and (3) do not apply to an incorporated limited partnership.

Amendment of section 28 (Rules about interests and duties of partners)

(2) This section does not apply to an incorporated limited partnership.

Amendment of section 30 (Retirement from partnership)

(3) This section does not apply to an incorporated limited partnership.

Amendment of section 31 (Continuance of partnership on old terms)

(3) This section does not apply to an incorporated limited partnership.

Repeal and substitution of section 32

(1) A partner in a firm other than an incorporated limited partnership must give accurate and complete information about the firm to each of the other partners in the firm.

(2) Subject to the partnership agreement, an incorporated limited partnership must give accurate and complete information about the partnership to each partner in the partnership.

Amendment of section 33 (Accountability of partners for private profits)

(3) This section does not apply to an incorporated limited partnership.

Amendment of section 34 (Duty of partner not to compete with firm)

(2) This section does not apply to an incorporated limited partnership.

Amendment of section 35 (Rights of assignee of share in partnership)

(4) This section does not apply to an incorporated limited partnership.

New section 35A

This Division does not apply to an incorporated limited partnership.

New Part 3

The object of this Part is to facilitate the making of venture capital investments in the Northern Territory.

If this Part is inconsistent with a provision of Part 1 or 2 in its application to an incorporated limited partnership –

(b) the provision does not, to the extent of the inconsistency, apply to the partnership.

Division 2 – Formation of incorporated limited partnerships

An incorporated limited partnership is formed on its registration.

(a) is a corporation with perpetual succession and legal personality separate from its partners; and

(2) The common seal must be kept as the partnership directs and may only be used as authorised by the partnership.

(a) at least one general partner but not more than 20 general partners; and

(2) Any of the following may be a general partner or limited partner:

(3) For subsection (1)(a), if a general partner is a partnership, the number of partners in that partnership that do not have limited liability as partners under the law of the place where it is formed must be counted as general partners.

(a) the number of partners in a partnership referred to in subsection (3) may be worked out in accordance with one or more applications of that subsection; and

(b) an entity must be counted only once for subsection (3) if it is a partner in more than one partnership; and

(1) There must be a written agreement between the partners in an incorporated limited partnership (the "partnership agreement") that sets out the interests, rights and obligations of the partners.

(2) On the partnership's registration, the partnership agreement has effect as a contract between the partnership and the partners.

(1) Either of the following may apply for the registration of an incorporated limited partnership:

(b) the proposed partners in the proposed incorporated limited partnership.

(2) The application may only be made in any of the following circumstances:

(a) the partnership referred to in subsection (1)(a) is a VCLP, AFOF or VCMP;

(b) a general partner in the partnership referred to in subsection (1)(a) intends to apply for the registration of the partnership under the Venture Capital Act 2002 (Cth) as a VCLP or AFOF;

(c) a proposed general partner in the proposed partnership referred to in subsection (1)(b) intends to apply for the registration of the partnership under the Venture Capital Act 2002 (Cth) as a VCLP or AFOF;

(d) the partners in the partnership referred to in subsection (1)(a) intend to meet the requirements in section 94D(3) of the Income Tax Assessment Act 1936 (Cth) for the partnership's recognition as a VCMP;

(e) the proposed partners in the proposed partnership referred to in subsection (1)(b) intend to meet the requirements in section 94D(3) of the Income Tax Assessment Act 1936 (Cth) for the partnership's recognition as a VCMP;

(1) An application for the registration must be made to the Commissioner in the approved form.

(2) The applicant must give the Commissioner any additional information required by the Commissioner.

(3) Without limiting subsection (1), the approved form must require the following to be included in the application:

(a) for an application by a partnership referred to in section 55(1)(a) –

(i) the signature of each partner in the partnership or a person authorised to make the application on behalf of the partnership and its partners; and

(iii) the full address of the proposed principal office in the Territory of the partnership;

(b) for an application by the proposed partners in a proposed partnership referred to in section 55(1)(b) –

(iii) the full address of the proposed principal office in the Territory of the proposed partnership;

(ii) if the partner or proposed partner is a partnership – its firm name or the full name of each of its partners;

(d) the following particulars about the address of each partner or proposed partner (as the case may be):

(ii) for a corporation – the corporation's registered office or principal place of business;

(iii) for a partnership – the partnership's registered office or principal place of business;

(e) a statement as to whether each partner or proposed partner (as the case may be) is, or is proposed to be, a general partner or limited partner;

(f) a statement as to whether each partner or proposed partner (as the case may be) is a partnership;

(g) for an application in the circumstance covered by section 55(2)(a) – a copy of a document evidencing the status of the partnership as a VCLP, AFOF or VCMP;

(h) for an application in the circumstance covered by section 55(2)(b), (c), (d) or (e) – a statement of the intention referred to in that section;

(i) for an application in the circumstance covered by section 55(2)(f) – a statement setting out the circumstance.

(1) The Commissioner must register a partnership or proposed partnership as an incorporated limited partnership if an application for the registration is made under section 56.

(2) The registration is made when the Commissioner records the information in the application (the "registered information") in the register.

(3) However, the Commissioner may record a firm name only if the Registrar of Business Names considers the firm name would be eligible for registration as a business name under the Business Names Act.

(1) The Commissioner must establish and maintain a register of incorporated limited partnerships.

(2) The Commissioner may correct errors and omissions in the register.

(3) The register must be available for public inspection at reasonable times.

(1) Within 7 days after a change has occurred to a matter in the registered information of an incorporated limited partnership, a statement setting out the change and signed by all the general partners in the partnership, or a general partner authorised by those partners, must be given to the Commissioner.

(3) The Commissioner must, on the basis of the statement, change the registered information if the statement is given under this section.

(4) Each general partner in the partnership commits an offence if subsection (1) is contravened.

Penalty: If the offender is a natural person – 20 penalty units.

(5) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(1) The Commissioner may, on the application of a person, give the applicant a certificate of registration of an incorporated limited partnership.

(2) The Commissioner must give the general partners in an incorporated limited partnership a certificate of registration each time when –

(b) a correction in the register is made in relation to the partnership; or

(3) A certificate of registration of an incorporated limited partnership –

(a) is a certificate about the partnership's registration and its registered information as at the time when the certificate is given; and

(4) A matter stated in a certificate of registration is evidence about that matter.

An incorporated limited partnership need not register its firm name under the Business Names Act.

Anything done for an application by the proposed partners referred to in section 55(1)(b) does not of itself create a partnership between them.

(2) Without limiting subsection (1), the partnership has the powers to –

(a) create, confer, vary or cancel interests in the partnership; and

(e) appoint agents and attorneys, and act as an agent for other people; and

(f) form, and participate in the formation of, corporations; and

(g) participate in partnerships, trusts, joint ventures, other associations and other arrangements for the sharing of profits; and

(h) do anything else it is authorised to do under this Part or the partnership agreement.

(3) The partnership agreement may limit the partnership's powers.

(1) Subject to sections 66 and 67, this section has effect in relation to an incorporated limited partnership.

(2) None of the following is an agent of a limited partner in the partnership:

(b) an officer, employee, agent or representative of the partnership or a general partner in the partnership.

(3) An act of a person referred to in subsection (2)(a) or (b) does not bind a limited partner in the partnership.

(4) A limited partner in the partnership is not an agent of, or a fiduciary for, the partnership or another partner in the partnership.

(5) An act of a limited partner in the partnership does not bind the partnership or another partner in the partnership.

(6) To avoid doubt, subsections (2) to (5) do not prevent or limit an agreement between a partner (the "first entity") and another partner or the partnership (the "second entity") under which –

(a) the first entity binds the second entity by acting as its agent; or

(b) the partnership binds the first entity by acting as a partner's agent.

(7) Any consent or authority that may be given by one or more partners in a partnership under this Act may be given by a general partner in the partnership.

(8) The operation of subsection (7) may be varied by an agreement in the partnership.

(9) A limited partner, as that limited partner, may not be a party to any proceeding commenced in a court or tribunal by or against the partnership except for any proceeding –

(a) commenced by the partnership against the limited partner; or

(b) commenced by the limited partner against the partnership.

(10) For this section, a reference to a general partner that is a partnership includes a reference to each partner in that partnership.

(1) Subject to sections 66 and 67, a limited partner in an incorporated limited partnership is not liable for the partnership's liabilities or the liabilities of a general partner in the partnership.

(2) However, this section does not prevent the satisfaction of a liability of the partnership or general partner by –

(b) the enforcement of an obligation of the limited partner to make such a contribution.

(1) A limited partner in an incorporated limited partnership must not take part in managing the partnership's business.

(2) However, to the extent to which the partner is authorised by the partnership agreement to do so, the partner may –

(a) access, inspect or copy the partnership's books or records; and

(b) examine the state or prospects of the partnership's business; and

(c) advise, or consult with, any partners in the partnership in relation to the state or prospects of the partnership's business.

(3) In addition, the limited partner is liable as a general partner in the partnership for any loss or injury caused by the partner to a person other than a partner in the partnership if –

(a) the loss or injury is a direct result of a wrongful act (including omission) of the limited partner in taking part in managing the partnership's business; and

(b) at the time of the act the person has reasonable grounds to believe that the limited partner was a general partner in the partnership.

(4) The operation of this section must not be varied by the partnership agreement or any other agreement between the partners.

(5) For this section, a reference to the limited partner includes a reference to a person acting for the limited partner.

67. Circumstances in which limited partner not regarded as taking part in management

(1) For section 66, the limited partner must not be regarded as taking part in managing the partnership's business only because one or more of subsections (2) to (12) apply.

(2) This subsection applies if the partner is employed or engaged by –

(iii) an associate of a general partner in the partnership; and

(b) the advice is given in the proper performance of functions arising –

(i) from the engagement of the partner in a professional capacity; or

(ii) from business dealings between the partner and an entity referred to in paragraph (a).

(4) This subsection applies if the partner gives a guarantee or indemnity in relation to a liability of –

(5) This subsection applies if the partner takes any action, or participates in any action taken by other limited partners, for the purposes of –

(a) enforcing the limited partner's rights as the limited partner; or

(b) safeguarding the limited partner's interests as the limited partner.

(6) This subsection applies if the partner exercises a power under the partnership agreement for –

(b) a resolution of some or all of the partners in the partnership.

(7) This subsection applies if the partner exercises a power referred to in section 66(2)(a), (b) or (c) under that section.

(a) advises or consults with an associate of the partnership; or

(b) is, or acts as, an officer, director, security holder, partner, agent or representative of an associate of the partnership; or

(d) is, or acts as, a lender to, or fiduciary for, an associate of the partnership.

(9) This subsection applies if the partner, as authorised by the partnership agreement –

(a) participates in, or has or exercises a right in relation to, the appointment, removal or nomination of a person as a member of a committee; and

(b) the committee has functions that relate to one or more of the following proposals from a general partner in the partnership:

(i) a proposal involving a material change in the nature of the partnership's business (including a change in any investment guidelines, policies or conditions relating to the business);

(ii) a proposal for the adoption of a method for valuing some or all of the partnership's assets (including any changes to the existing method);

(iii) a proposal for an extension or reduction in the period in which, under the partnership agreement, an investment can be made by the partnership;

(iv) a proposal for an approval or disapproval of an investment that the partnership does not otherwise have a right to make;

(v) a proposal for an actual or potential transaction or anything else involving an actual or potential conflict of interest;

(vi) a proposal relating to an actual or potential transaction, contract, arrangement or understanding between one or more partners in the partnership (or any of their associates) and the partnership or a general partner in the partnership (or any of their associates);

(vii) a proposal for the delegation, waiver, release or variation of an authority, right, duty or obligation of the general partner;

(viii) a proposal for the appointment, or approval under the partnership agreement, of anyone as a senior executive of the general partner or an associate of the general partner.

(a) nominates, selects, investigates, evaluates or negotiates with anyone in relation to the removal or replacement of a general partner in the partnership; or

(b) participates in the work of a committee that relates to the nomination, selection, appointment, change in control or ownership, suspension, replacement or removal of –

(11) This subsection applies if the partner takes, or participates in, an action for the registration, or maintaining the registration, of the partnership or a general partner in the partnership as a VCLP or AFOF.

(b) the partner takes any action for the partnership in the capacity of a partner, or an associate of a partner, in the VCMP.

(13) This section does not imply that the limited partner must be regarded as taking part in managing the partnership's business if –

(a) the partner does anything in relation to the conduct of that business; and

(b) with the consent of the partners in the partnership (whether or not given under the partnership agreement).

(15) For this section, a reference to the limited partner includes a reference to a person acting for the limited partner.

(1) An associate of a general partner includes any of the following:

(b) anyone to whom the general partner has delegated a power or function in relation to a partnership in which the general partner is a general partner;

(c) if the general partner or a person covered by paragraph (a) or (b) is a corporation – a related body corporate of the corporation;

(d) a director, officer, employee, agent, representative or security holder of the general partner or of a person covered by
paragraph (a), (b) or (c).

(2) An associate of a limited partner includes any of the following:

(b) if the limited partner or a person covered by paragraph (a) is a corporation – a related body corporate of that corporation;

(c) a director, officer, employee, agent, representative or security holder of the limited partner or a person covered by paragraph (a), or (b).

(3) An associate of an incorporated limited partnership includes –

"interest", in a partner or partnership, includes an interest as a security holder, trustee, responsible entity, manager, custodian, subcustodian, nominee, administrator, executor or legal personal representative;

"partner", includes, if that partner is another partnership, a partner in that other partnership;

"related body corporate" has the same meaning as in section 9 of the Corporations Act 2001;

"securities" has the same meaning as in section 92(3) of the Corporations Act 2001;

"security holder", in relation to a body, includes a holder of securities in or of the body.

(1) A difference arising from an ordinary matter that is connected with an incorporated limited partnership's business must be decided by a majority of the general partners in the partnership.

(2) The operation of subsection (1) may be varied with the consent of all the partners in the partnership.

(1) A limited partner (the "transferor") in an incorporated limited partnership may transfer all or part of that partner's interest in the partnership to an entity (the "transferee") with –

(a) the consent of the general partners in the partnership; and

(2) If all the interest is transferred, the transferee replaces the transferor as a limited partner in the partnership.

(3) If part of the interest is transferred and that interest is or includes any of the transferor's legal interest in the partnership, the transferee becomes a limited partner in the partnership in relation to so much of that legal interest as is transferred.

(4) An entity may be admitted as a partner in the partnership without the consent of any limited partner in the partnership.

(5) The operation of this section may be varied with the consent of all of the partners in the partnership.

(1) A general partner in an incorporated limited partnership that becomes a limited partner in the partnership is liable for any liability incurred by the partnership before the partner becomes the limited partner –

(a) to the extent to which the partnership cannot satisfy the liability; or

(b) to a greater extent provided by the partnership agreement.

(2) A limited partner in the partnership that becomes a general partner in the partnership is not liable for any liability of the partnership –

(a) that was incurred before the partner becomes the general partner; and

(b) for which the partner was not liable while being a limited partner.

(1) A limited partner in an incorporated limited partnership may only be liable for a liability incurred by the partnership for an act that occurred outside the Territory if the partner would be liable under this Act for such a liability had the act occurred in the Territory.

(2) For subsection (1), a reference to an act includes a reference to –

(ii) a general partner or limited partner in the partnership; or

(iii) an officer, employee or agent of the partnership or a general partner in the partnership.

(1) The Regulations may prescribe a law of a State, another Territory or another jurisdiction (including a foreign country) that provides for the limitation of a partner in a partnership to be a corresponding law.

(2) In addition, any other law of a State, another Territory or another jurisdiction (including a foreign country) that substantially corresponds to the provisions in this Act that relate to incorporated limited partnerships is a corresponding law.

(1) A partner in a partnership formed under a corresponding law may only be liable for a liability incurred by the partnership for an act that occurred in the Territory if the partner would be liable under that law had the act occurred in the place where the partnership was formed.

(2) For subsection (1), a reference to an act includes a reference to –

(iii) an officer, employee or agent of the partnership or a partner in the partnership.

(1) To avoid doubt, sections 72 and 74 do not imply that a limited partner in an incorporated limited partnership –

for an act occurred outside the Territory that the limited partner would not have if the act had occurred in the Territory.

"act" has the same meaning as in section 72 or 74 (as the case requires).

For this Division, a reference to the assets of an incorporated limited partnership that is being wound up is a reference to its remaining assets after the satisfaction of all its liabilities and the costs for the winding up.

(1) An incorporated limited partnership may be wound up voluntarily –

(a) if the partnership agreement sets out the terms on which it may be wound up voluntarily – in accordance with the agreement; or

(b) otherwise – subject to the agreement, by a special resolution of the limited partners in the partnership.

(2) On the voluntary winding up of the partnership, its assets –

(a) must be dealt with in accordance with the partnership agreement if the agreement sets out how they are to be dealt with on a voluntary winding up; or

(b) otherwise – must be distributed among the partners in shares proportionate to their respective contribution of capital or property to the partnership.

(3) A person aggrieved by the operation of subsection (2) may apply to the Supreme Court for an order for the disposal or distribution of the assets.

(4) On the application, the Supreme Court may make any order the Court considers appropriate for the disposal or distribution of the assets.

(1) The Commissioner may, by notice given to an incorporated limited partnership, require it to show cause why it should not be wound up.

(2) The Commissioner may do so if the Commissioner considers –

(b) none of the partners in the partnership is a limited partner; or

(d) the partnership's registration was obtained by a mistake or fraud; or

(i) is registered on the basis that it is, or intended to be, a VCLP, AFOF or VCMP; and

(ii) has stopped being, or has not within 2 years after its registration, become a VCLP, AFOF or VCMP.

(3) The Commissioner may issue a certificate for the winding up
28 days after giving the notice or at a later time.

(4) The Commissioner may issue the certificate only if the Commissioner is satisfied the partnership –

(i) publish a notice of the certificate in the Gazette; and

(ii) give a notice of the certificate to the partnership; and

(b) as soon as possible after giving the notice referred to in
paragraph (a)(ii), record in the register that the notice has been given.

(6) The Commissioner must give a notice under subsection (1)
or (5)(a)(ii) by –

(a) serving it on the partnership at its registered office; or

(b) if serving it at the registered office is not reasonably practicable – publishing it in a newspaper circulating generally in the Territory.

(1) A person whose interests are affected by a decision to issue the certificate may apply to the Supreme Court, within 28 days after the notice referred to in section 78(5)(a)(ii) is given, for a review of the decision.

(2) The operation of the certificate is suspended until the application is withdrawn or the review is decided.

(4) This section does not prevent the Commissioner cancelling the certificate at any time after the application for the review is made.

(1) The Commissioner must appoint a person (including a general partner in the partnership or a person who is not a registered liquidator for the Corporations Act 2001) to be the liquidator for the winding up.

must, within 10 days after the appointment, publish a notice of the appointment in a newspaper circulating generally in the Territory; and

(b) must give the prescribed security for the winding up; and

(a) 28 days after the notice referred to in section 78(5)(a)(ii) is given; or

(b) if the Supreme Court confirms the decision to issue the certificate under section 79 – 28 days after the confirmation.

(a) stated in a notice given by the Commissioner to the partnership; and

(5) The reasonable costs of the winding up are payable out of the partnership property.

(a) must be dealt with in accordance with the partnership agreement if the agreement sets out how they are to be dealt with on its
winding up on a certificate by the Commissioner; or

(b) otherwise – must be distributed among the partners in shares proportionate to their respective contribution of capital or property to the partnership.

(2) A person aggrieved by the operation of subsection (1) may apply to the Supreme Court for an order for the disposal or distribution of the assets.

(3) On the application, the Supreme Court may make any order the Court considers appropriate for the disposal or distribution of the assets.

(1) The winding up of an incorporated limited partnership is declared to be an excluded matter for section 5F of the Corporations Act 2001 in relation to Part 5.7 of that Act.

(2) Part 5.7 of the Corporations Act 2001 applies to the partnership as if it were a Part 5.7 body within the meaning of section 9 of that Act, except –

(a) the words "or in the public interest" are taken to be inserted in section 583(c)(ii) of that Act after "just and equitable"; and

(a) may perform a function or exercise a power under Part 5.7 of the Corporations Act 2001 as applied by subsection (2) in accordance with an agreement or arrangement referred to in section 11(8)
or (9A)(b) of the Australian Securities and Investments Commission Act 2001 (Cth); and

(b) is authorised to perform that function or exercise that power under section 11 of that Act.

(4) Unless a function or power under Part 5.7 as applied by
subsection (2) is conferred on the Australian Securities and Investments Commission as referred to in subsection (3), that Part applies as if a reference in that Part to that Commission were a reference to the Commissioner.

(1) An incorporated limited partnership must give the Commissioner a notice of the beginning of its winding up within 7 days after –

(a) if a special resolution referred to in section 77(1)(b) is passed – the day on which it is passed; or

(2) The partnership must give the Commissioner a written notice stating the day of the completion of the winding up within 7 days after that day.

(3) The Commissioner must, as soon as practicable after receiving a notice under subsection (1) or (2), record the receipt of the notice in the register.

(4) Each general partner in the partnership commits an offence if subsection (1) or (2) is contravened.

Penalty: If the offender is a natural person – 20 penalty units.

(5) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(1) The Commissioner must, by notice in the Gazette, cancel an incorporated limited partnership's registration after it is wound up.

(3) The Commissioner must record the cancellation in the register.

(a) take judicial notice of the seal of an incorporated limited partnership; and

(2) Despite any other law of the Territory, the partnership may execute a document (including a deed) by the seal or the signature of a general partner acting for the partnership.

(3) Subsection (2) does not limit the ways in which the partnership may execute a document.

(1) A person may make the assumptions in section 87 in relation to –

(a) any dealings with an incorporated limited partnership; and

(b) any dealings with an entity that has, or purports to have, directly or indirectly acquired property from the partnership.

(2) If the person makes the assumption, the partnership or entity may not assert that the assumption is incorrect in a proceeding relating to the dealings.

(3) The assumption may be made even if a partner in the partnership, or a representative of the partner, acts fraudulently in relation to the dealings.

(4) However, the person may not make the assumption if, at the time of the dealings, the person knew or suspected that the assumption was incorrect.

(1) This section has effect for the dealings referred to in section 86(1).

(2) The partnership agreement may be assumed to have been complied with in relation to the dealings.

(3) If a person appears to be a general partner in the partnership on the basis of information provided by the person that is registered information, the person may be assumed –

(b) to have the authority to exercise the powers and perform the functions conferred on a general partner.

(4) If a person is held out by the partnership to be a general partner in, or an agent of, the partnership, the person may be assumed –

(a) to be a general partner in, or an agent of, the partnership (as the case may be); and

(b) to have the authority to exercise the powers and perform the functions usually conferred on the general partner or agent.

(5) The general partners in, or agents of, the partnership may be assumed to be properly exercising their powers and performing their functions.

(6) A document may be assumed to have been properly executed by the partnership if its execution appears to have complied with section 85.

(7) If a general partner in, or an agent of, the partnership has the authority to issue a document or a certified copy of a document for the partnership, the general partner or agent may be assumed to have the authority to warrant that it is genuine or a true copy (as the case may be).

(1) A document issued by or for an incorporated limited partnership for its business must contain in legible letters its registered name, ending with "An Incorporated Limited Partnership", "L.P." or "LP".

(2) A general partner in the partnership commits an offence for a document issued by or for the partnership that contravenes subsection (1) if, when the document is issued, the person knows about the contravention.

Penalty: If the offender is a natural person – 100 penalty units.

(3) A person commits an offence if the person issues or authorises the issue of a document that contravenes subsection (1).

Penalty: If the offender is a natural person – 20 penalty units.

(1) An incorporated limited partnership must keep an office at its registered office for the receipt of communications addressed to it.

(2) Each general partner in the partnership commits an offence if the partnership contravenes subsection (1).

Penalty: If the offender is a natural person – 20 penalty units.

(3) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(4) The office must be open to the public during the hours prescribed by the Regulations.

(1) An incorporated limited partnership must display its certificate of registration at all times in a conspicuous place at its registered office.

(2) Each general partner in the partnership commits an offence if the partnership contravenes subsection (1).

Penalty: If the offender is a natural person – 20 penalty units.

(3) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(1) An incorporated limited partnership must give the Commissioner –

(a) a notice in the approved form within one month after becoming a VCLP, AFOF or VCMP; and

(b) a notice in the approved form within 7 days after ceasing to be a VCLP, AFOF or VCMP; and

(2) Each general partner in an incorporated limited partnership commits an offence if the partnership contravenes subsection (1)(a), (b) or (c).

Penalty: If the offender is a natural person – 20 penalty units.

(3) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(1) A document concerning the business of an incorporated limited partnership may be served on the partnership if it is left at, or sent by post to, the partnership's registered office.

(2) However, the document must be served on the partnership in accordance with a law of the Territory if that law specifies how it must be served.

A person dealing with an incorporated limited partnership is taken to have sufficient notice of the partnership's registered information.

(1) The Commissioner may, by notice given to an incorporated limited partnership, require it to give specified information to the Commissioner for monitoring compliance with this Part.

(a) a period specified in the notice that is at least 28 days after the date of the notice; or

(3) Each general partner in the partnership commits an offence if the partnership contravenes subsection (2).

Penalty: If the offender is a natural person – 100 penalty units.

(4) It is a defence to a prosecution for the offence if the general partner proves that –

(a) the general partner did not know about the contravention; and

(b) reasonable precautions and appropriate diligence had been exercised to avoid the contravention.

(5) This section does not affect the Commissioner's powers and functions under the Consumer Affairs and Fair Trading Act.

(a) a provision in this Part provides that a general partner in an incorporated limited partnership commits an offence; and

(b) the general partner is a partnership (the "second partnership").

(2) A reference to the general partner in that provision is taken to be a reference to –

(a) if paragraph (b) does not apply – each partner in the second partnership; or

(b) if a partner in the second partnership has limited liability for the liabilities of that partnership under the law of the place where that partnership is formed – each partner in that partnership that does not have such limited liability.

The Regulations may declare a matter dealt with by this Part to be an excluded matter for section 5F of the Corporations Act 2001 in relation to any of the following:

(a) the whole of the Corporations legislation to which Part 1.1A of the Corporations Act 2001 applies;

(b) a provision of the Corporations legislation that is specified in the Regulations;

(d) the Corporations legislation to the extent specified in the Regulations;

(e) the Corporations legislation otherwise than to the extent specified in the Regulations.

(1) This section applies to a person who is, or has been, the Commissioner or a person employed or engaged in the administration of this Act.

(i) records any information ("protected information") obtained because of the performance of a function or exercise of a power under this Act; or

(ii) directly or indirectly discloses protected information to another person; and

(b) the recording or disclosure is not part of the performance of a function or exercise of a power under a law in force in the Territory.

Penalty: If the offender is a natural person – 100 penalty units.

(3) Subsection (2) does not apply if the recording or disclosure –

(a) is made with the consent of the person from whom the information was obtained; or

(b) is made to a law enforcement agency (including the Police Force).

(4) A person to whom this section applies is not required to disclose protected information or produce any document containing protected information to a court unless it is necessary to do so for a law in force in the Territory.

(5) A reference in subsection (4) to a court includes a reference to anyone who may require the production of documents or the answering of questions.

(1) The Administrator may make regulations, not inconsistent with this Act, prescribing matters –

(b) necessary or convenient to be prescribed for carrying out or giving effect to this Act.

(2) The Regulations may prescribe any of the following matters:

(d) the exemption of a person, matter or thing from a provision in this Act;

(e) a fine for an offence against the Regulations not exceeding –

(i) if the offender is a natural person – 100 penalty units; or

(ii) if the offender is a body corporate – 500 penalty units.

Repeal and substitution of Part 4 heading

Part 5 – Transitional matters for Partnership Act 1997

Northern Territory Bills

PARTNERSHIP AMENDMENT (VENTURE CAPITAL FUNDS) BILL 2006

Short title

Commencement

Principal Act amended

Repeal and substitution of sections 3 and 4

Repeal and substitution of section 5

Amendment of section 6 (Determining existence of partnership other than incorporated limited partnership)

Repeal and substitution of section 8

Repeal and substitution of sections 9 to 21

Amendment of section 22 (Revocation of continuing guarantee)

Repeal and substitution of section 24

Amendment of section 26 (Personal estate held as partnership property)

Amendment of section 27 (Procedure against partnership property for partner's separate judgment debt)

Amendment of section 28 (Rules about interests and duties of partners)

Amendment of section 30 (Retirement from partnership)

Amendment of section 31 (Continuance of partnership on old terms)

Repeal and substitution of section 32

Amendment of section 33 (Accountability of partners for private profits)

Amendment of section 34 (Duty of partner not to compete with firm)

Amendment of section 35 (Rights of assignee of share in partnership)

New section 35A

New Part 3

Repeal and substitution of Part 4 heading

Renumbering of sections 49 and 50