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CLAUSE NOTES
PARTNERSHIP AMENDMENT BILL 2009
Clause 1: Short Title
Clause 2: Commencement.
Clause 3: Principal Act
Clause 4: Inserts a heading (PART 1 PRELIMINARY) before section 1 of
the Act.
Clause 5: Repeals section 4 (Interpretation) of the Principal Act and replaces
it with updated Limited Partnerships Act 1908, and definitions
relating to limited and incorporated limited partnerships.
Clause 6: Inserts a heading (`PART 2 - PARTNERSHIPS GENERALLY) after
section 5 of the Act
Clause 7: Inserts a Division heading into the new Part 2 (Division 1 Nature
of Partnership).
Clause 8: Inserts a new subsection in section 6 to include an `incorporated
limited partnership' in the definition of `partnership'.
Clause 9: Inserts a new subsection in section 7 excluding incorporated
limited partnerships from the section containing rules determining
the existence of a partnership.
Clause 10: Inserts a Division heading into the new Part 2 (Division 2
relationships of partners to persons dealing with them).
Clause 11: Repeals sections 10 to 23 of the Principal Act and replaces them
with new sections covering similar issues but setting out provisions
which in most cases have application to general, limited and
incorporated limited partnerships. The new sections continue
unchanged the current provisions of the repealed sections of the
same number but incorporate appropriate related sections from the
Limited Partnerships Act and insert new provisions relating to
incorporated limited partnerships:
· New section 10 provides that every partner in a general
partnership, and every general partner in a limited partnership
or incorporated limited partnership, has the power to bind the
partnership, except in certain circumstances.
· New section 11 provides that an act or instrument relating to a
partnership done or executed in the name of the partnership or
in any other manner showing an intention to bind the
partnership is binding on the partnership and all the general
partners.
· New section 12 provides that partnerships are not bound by a
partner using the credit of the partnership for a purpose not
connected with the business of the partnership, unless specially
authorised by the partnership.
· New section 13 provides that where partners have agreed that
a partnership is not to be bound by the acts of a particular
partner or partners, the firm will not be bound by any agreement
with persons having notice of that agreement.
· New section 14 provides that general partners making up a
general partnership or who are part of an incorporated limited
partnership will be jointly liable for debts and obligations of the
partnership whilst they are a partner and after their death their
estate will be severally liable for such debts and obligations
subject to prior payment of any separate debts.
· New section 15 provides that the partnership firm is liable for
the wrongs of general partners where the wrongs were caused
in the ordinary course of business or with the authority of the co-
partners, except in certain circumstances where the general
partners is acting as a director of a body corporate under the
Corporations Act 2001 of the Commonwealth. It also applies a
similar approach to incorporated limited partnerships (ss 3 & 40
· New section 16 provides that where a general partner or a
general or incorporated limited partnership misapplies money or
property received for the partnership, the partnership is to make
good the loss.
· New section 17 provides that every general partner is jointly
and severally liable with every other general partner for
everything for which the partnership becomes liable under
sections 15 and 16.
· New section 18 provides that where there is improper use of
trust property for partnership purposes by a general partner who
is a trustee, neither the partnership nor any other partner is
liable for the trust property to persons beneficially interested in
that property. This does not include liability incurred by a
general partner by reason of them having notice of a breach or
trust, and also does not prevent recovery of trust money held by
the partnership.
· New section 19 provides that of persons who represent or allow
themselves to be represented as a partner in a partnership will
be liable as a partner in the case of a general partnership, and
as a general partner in the case of a limited or incorporated
limited partnership where a person reliant on that representation
gives credit to the partnership. This applies whether the
representation has been made to the person giving credit by or
with the knowledge of the person represented as a partner. The
exception is where a partner has died and the partnership
continues to use the same name or the deceased partner's
name; in those cases the estate will not be liable for partnership
debts contracted after the death.
· New section 20 provides that admissions or representations of
partners (other than limited partners) concerning the
partnership's affairs and in the ordinary course of its business
will be evidence against a partnership.
· New section 21 provides that notice to a partner (other than a
limited partner) is to be considered notice to the partnership,
except where there is a fraud on the partnership committed by
or with the consent of the partner.
· New section 22 provides that a person admitted as partner or
general partner into an existing partnership does not become
liable for anything done before the person becomes a partner,
and a partner retiring from a partnership does not cease to be
liable for the liabilities incurred before the retirement. A retiring
partner may be discharged from liabilities by an agreement
between the retiring partner, the new partnership and the
creditors.
· New section 23 provides that a continuing guarantee given to a
third person or firm by a partnership (other than an incorporated
limited partnership) is automatically revoked (unless there is an
agreement to the contrary) by any change to the constitution of
the partnership.
Clause 12: Inserts a new Division heading into the new Part 2 (Division 3
Relationship between Partners). While amending a number of
sections of the existing Act most changes in the new Division 3 are
to dis-apply the current provisions to incorporated limited
partnerships.
Clause 13: Inserts a new subsection (4) in section 25 to the effect that the
section (containing the rules about partnership property) does not
apply to incorporated limited partnerships (covered by new s 25A).
Clause 14: Inserts new section 25A, dealing with partnership property of
incorporated limited partnerships.
Clause 15: Repeals section 27, and substitutes a new section (subsection 1 is
the same as the existing section) adding a new subsection which
excludes its application to incorporated limited partnerships.
Clause 16: Inserts a new subsection (4) in section 28 (which deals with,
proceedings against partnership property for a partner's separate
judgement debt) to exclude the section from applying to
incorporated limited partnerships.
Clause 17: Amends section 29 (which deals with rules as to interests and
duties of partners subject to special agreements), and adds a new
subsection which excludes its application to incorporated limited
partnerships.
Clause 18: Inserts a subsection in section 31 (which deals with the rules about
retiring from a partnership at will) to exclude its application to
incorporated limited partnerships.
Clause 19: Inserts a new subsection (3) in section 32 (which deals with a
partnership made for a term which is continued past the date) to
exclude its application to incorporated limited partnerships.
Clause 20: Repeals section 33 (regarding the duty of partners in all sorts of
partnerships to render accounts), and substitutes a new section to
include a provision to cover incorporated limited partnerships.
Clause 21: Inserts a new subsection in section 34 (regarding the
accountability of partners for private profits) to exclude the
application of the section to incorporated limited partnerships.
Clause 22: Repeals section 35 (regarding the duty of a partner not to compete
with the partnership), and substitutes a new section which includes
a provision to exclude the application of the section to incorporated
limited partnerships.
Clause 23: Inserts a subsection in section 36 (regarding the rights of the
assignee of a share in a partnership) to exclude the application of
the section to incorporated limited partnerships.
Clause 24: Inserts a Division heading into the new Part 2 (Division 4
Dissolution of Partnership).
Clause 25: Inserts a new section 36A that provides that Division 4 does not
apply to incorporated limited partnerships.
Clause 26: Amends section 41(2) of the Act to correct an error affecting the
meaning of the section.
Clause 27: Inserts a new Part 3 and Schedule 1 covering limited partnerships
and incorporated limited partnerships, including the following
matters:
· New section 50 provides that Parts 1 and 2 of the Act apply to this Part
unless otherwise stated in the Act.
· New section 51 provides that limited partnerships and incorporated limited
partnerships are formed on registration (includes the provisions previously
found in section 5 of the Limited Partnerships Act 1908).
· New section 52 provides the minimum requirements for the composition
of a limited partnership or incorporated limited partnership and allows
partnerships and corporations to be partners.
· New section 53 provides the limits on the number of members of a limited
partnership or incorporated limited partnership.
· New section 54 provides that an incorporated limited partnership is
considered a body corporate and a separate legal entity from the partners
that make it up.
· New section 55 provides for the powers able to be exercised by an
incorporated limited partnership.
· New section 56 provides that there must always be a written partnership
agreement between the partners in an incorporated limited partnership,
and what binding effect this agreement has on the parties.
· New section 57 provides for the relationship of partners in incorporated
limited partnerships to others and between themselves.
· New section 58 prescribes who may apply for registration as a limited
partnership or an incorporated limited partnership and brings in the
requirements in relation to Venture Capital Limited Partnerships etc.
· New section 59 provides the form and other requirements for an
application for registration (includes the provisions previously found in
section 8 of the Limited Partnerships Act 1908).
· New section 60 describes the responsibility of the Director of Consumer
Affairs and Fair Trading (the Director) to register limited partnerships and
incorporated limited partnerships.
· New section 61 provides that acts done in preparation for registration do
not of themselves constitute a partnership.
· New section 62 provides the procedure to be followed where there has
been a change in the registered particulars of a partnership (includes the
provisions previously found in section 9 of the Limited Partnerships Act
1908).
· New section 63 provides for the keeping of a Register of Limited
Partnership and Incorporated Limited Partnerships by the Director and
making it publicly available (includes the provisions previously found in
section 14 of the Limited Partnerships Act 1908).
· New section 64 provides for the certificate of registration to be issued by
the Director where a limited or incorporated limited partnership is
registered, changed or corrected, and the evidentiary weight of such a
certificate (includes the provisions previously found in section 13 of the
Limited Partnerships Act 1908).
· New section 65 provides that a limited or incorporated limited partnership
is not required to register a business name under the Business Names Act
1962 if their registered name is to be the firm name (includes the
provisions previously found in section 10 of the Limited Partnerships Act
1908)..
· New section 66 provides that the liability of a limited partner is limited to
the amount shown in the Register.
· New section 67 provides for the effect of a change of liability being
recorded in the Register a reduction in the nominated liability does not
affect existing liabilities of the partner.
· New section 68 provides for the effect of a change in the status of
partners becoming a limited partner does not affect pre-existing
obligations.
· New section 69 provides that limitations liability also apply in respect of
business conducted by a Tasmanian registered partnership outside the
State (includes the provisions previously found in section 12 of the Limited
Partnerships Act 1908).
· New section 70 provides for recognition of limitations on the liability of
members of limited partnerships formed under corresponding laws
(includes the provisions previously found in section 12A of the Limited
Partnerships Act 1908).
· New section 71 provides that the previous provisions in relation to
business conducted outside the State do not extend the liability of a
limited partner further than it would be extended if the same business was
conducted within the State.
· New section 72 provides that contributions towards the discharge of debts
or obligations of a limited partnership must be in money only, and if all or
any part of that contribution is given back to the limited partner liability is
restored accordingly.
· New section 73 provides that statutory provisions relating to limitation of
liability of a limited partner cannot be varied by a partnership agreement.
· New section 74 provides that a limited partner has no liability for the
liabilities to either an incorporated limited partnership or a general partner
other than to the extent of the nominated contribution in the agreement.
· New section 75 provides for the effect of a change in the status of
partners from general partner to limited partner and vice versa - becoming
a limited partner does not affect preexisting obligations.
· New section 76 deals with the liability of a limited partner in an
incorporated limited partnership in respect of conduct, acts or omissions
outside the State.
· New section 77 provides for recognition of limitations of liability for
incorporated limited partnerships formed under corresponding laws in
other jurisdictions.
· New section 78 provides that the previous provisions in relation to
business conducted outside the State by a limited partner do not extend
liability further than it would be extended if the same business was
conducted within the State.
· New section 79 provides that a limited partner is not to take part in the
management of a limited partnership taking part removes the limits on
liability and the person is treated as a general partner (includes some of
the provisions previously found in section 6 of the Limited Partnerships Act
1908).
· New section 80 similarly provides that a limited partner is not to take part
in the management of an incorporated limited partnership but because of
the different structures the limited partner has some different rights than a
limited partner in an ordinary limited partnership.
· New section 81 provides that a difference arising as to ordinary matters in
a limited partnership may be decided by a majority of the general partners
and extends the provisions to incorporated limited partnership (includes
some of the provisions previously found in section 6 of the Limited
Partnerships Act 1908).
· New section 82 provides rules relating to transfers and assignations of
partner's interests in limited and incorporated limited partnerships.
· New section 83 provides that dissolution of the partnership is not
available in certain cases.
· New section 84 provides for the cessation of limited partnerships where
there is no longer a limited partner.
· New section 85 provides for the registration of dissolution or cessation of
limited partnerships.
· New section 86 provides that the winding up of a limited partnership is to
be carried out by the general partners of the partnership unless a Court
orders otherwise.
· New section 87 provides that the winding up of an incorporated limited
partnership is to be carried out in accordance with Schedule 1 (below).
· New section 88 describes ways for an incorporated limited partnership to
execute a document, including a deed.
· New section 89 provides that a person is entitled to make assumptions
about matters under section 90 (eg, assumptions about compliance with
the partnership agreement, about the authority of general partners).
· New section 90 provides that a person may make assumptions about an
incorporated limited partnership - that a partnership agreement has been
complied with, and a series of assumptions about persons who appear to
be, or are held out to be, general partners of the partnership, and relating
to the due execution of documents.
· New section 91 provides that certain documents relating to the status of
an incorporated limited partnership as a Venture Capital Limited
Partnership etc must be lodged with the Director within one month of
registration, and makes failure to lodge documents an offence.
· New section 92 provides that the regulations may prescribe a model
limited partnership agreement which can be adopted by reference by a
partnership.
· New section 93 provides that on documents issued by a partnership the
initials `L.P.' must be used to designate a limited partnership, and `I.L.P' to
designate an incorporated limited partnership.
· New section 94 provides that limited partnerships and incorporated limited
partnerships must keep a registered office in Tasmania.
· New section 95 provides that service of documents can be achieved by
leaving a document at or sending a document to the registered office of
the partnership.
· New section 96 provides that an entry in the Register of a fact concerning
the partnership will constitute notice to anyone dealing with the
partnership, and also has effect for the purposes of section 41.
· New section 97 makes providing false or misleading document to the
Director an offence.
· New section 98 provides that where the Act provides that a general
partner in a limited partnership or an incorporated limited partnership is
guilty of an offence, general partner is to be taken to mean each partner in
the partnership, unless the partner has limited liability. This section also
applies to partnerships which are partners in another partnership and
includes a defence of reasonable precautions and due diligence for
proceeding brought under this section.
· New section 99 allows the Director to require information from as
incorporated limited partnership. The incorporated limited partnership
must furnish the information in the period allowed, and to furnish
information that is false or misleading is an offence.
· New section 100 contains the regulation making power and provides a list
of matters about which regulations may be made (includes the provisions
previously found in section 16 of the Limited Partnerships Act 1908).
· New section 101 provides that a matter dealt with under the Act may be
wholly or partially excluded from coverage by the Corporations Act 2001 of
the Commonwealth by regulations made under this Act.
· New Schedule 1 holds the procedure for winding up incorporated limited
partnerships. It includes 9 clauses:
Clause 1 provides definitions for `assets' of an incorporated
limited partnership and the meaning of `special resolution' for
the purposes of the Schedule.
Clause 2 sets out the process for voluntarily winding up an
incorporated limited partnership, if the partnership
agreement sets out to terms to do so, or by a special
resolution of the partners. Persons aggrieved by the
operation of the section have recourse to the Supreme
Court.
Clause 3 provides that the Director may require an
incorporated limited partnership to show good cause why it
should not be wound up. If the partnership is unable to
satisfy the Director, the Director may publish a notice in the
Gazette requiring that the incorporated limited partnership be
wound up. A partnership may also be wound up where it has
failed to meet the requirements of a Venture Capital Limited
Partnership, Australian Venture Capital Fund of Funds, Early
Stage Venture Capital Limited Partnership or Venture
Capital Management Partnership.
Clause 4 provides that a person whom is affected by the
decision to publish a notice under clause 3 may apply to the
Supreme Court for a review of the decision. It also provides
the time in which this application is to be made, and the
options open to the Court upon review.
Clause 5 provides the time in which the winding up must
commence after the gazettal of the notice or unsuccessful
review of the decision to gazette the notice. It also provides
that the Director may appoint a liquidator, who need not be a
registered liquidator under the Corporations Act 2001 of the
Commonwealth, and the duties and powers of the liquidator.
The costs of winding up are payable out of the property of
the incorporated limited partnership.
Clause 6 provides that where a partnership agreement sets
out how assets are to be dealt with upon winding up, the
assets are to be dealt with in that manner. In any other case
the assets are to be distributed among the partners in shares
proportionate to their respective contributions of capital or
property to the partnership.
Clause 7 provides that the winding up of an incorporated
limited partnership, other than a voluntary winding up or a
winding up required on a certificate of the Director under
clause 3, 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 the
provisions of Part 5.7 (Winding up bodies other than
companies) of the Corporations Act 2001 of the
Commonwealth and that Part applies as if the incorporated
limited partnership were a Part 5.7 body within the meaning
of that Act, subject to some textual modifications.
Accordingly, the Australian Securities and Investment
Commission (ASIC) may perform a function under this
Commonwealth legislation, pursuant to an arrangement of
the kind referred to in section 11 (8) or (9A) (b) of the
Australian Securities and Investments Commission Act 2001
of the Commonwealth and the Commission is authorised to
perform that function under section 11 of that Act. Any
functions under the Commonwealth legislation that refer to
ASIC, unless specifically mentioned above, are to be read as
referring to the Director under this Act.
Clause 8 provides that an incorporated limited partnership is
to notify the Director of the commencement (or special
resolution) and completion of winding up, and the Director
must record the receipt of these notices on the Register.
Clause 8 also makes a failure to notify the Director in this
way and offence on the part of each general partner of the
incorporated limited partnership.
Clause 9 provides that the Director must cancel the
incorporation of the partnership by notice in the Gazette after
winding up, and record the cancellation of the incorporation
in the Register. Clause 9 confirms that the incorporated
limited partnership ceases to exist on the cancellation of
incorporation.
Clause 28: Provides that the Limited Partnerships Act 1908 (in Schedule 1), is
repealed.