17/7/03
Planned changes to laws governing limited partnerships will encourage more investment and jobs for Western Australia, Consumer and Employment Protection Minister John Kobelke said today.
Cabinet has approved the drafting of new legislation to make limited partnerships more accessible and grant certain concessions, bringing WA into line with other States.
"Changes to Commonwealth laws granting favourable tax treatment to venture capital limited partnerships could leave WA seriously disadvantaged by investors going to other States, where limited partnerships are easier to set up," Mr Kobelke said.
"We want WA businesses to grow and expand to create a stronger economy and more jobs and opportunities.
"New legislation will ensure investors, looking to take up limited partnerships, will have the same options here in WA that they now have access to in the Eastern States."
A limited partnership allows some members to invest in a partnership venture with limited liability for the debts of the partnership, provided they are not involved in the management of the partnership business.
The liability of a limited partner for the debts of the partnership is limited to the partner's capital contribution.
A liability limit is attractive to investors seeking to invest in high-risk business ventures.
The proposed changes to WA legislation would remove existing uncertainty surrounding the involvement of limited partners in the management of the limited partnership business, by making it clear the limited partner was not regarded as being involved in the management of a partnership business in certain circumstances.
Mr Kobelke said the new legislation would also:
- remove the stamp duty imposed on capital contributions made to a limited partnership by a limited partner;
- allow an unlimited number of limited partners to be involved in the partnership;
- allow a limited partner to 'cash in' their investment before the partnership is terminated; and
- provide for mutual recognition of other States' laws governing limited liability of limited partners.
"These changes will help WA take full advantage of investment opportunities and increase investment in new projects requiring high risk start-up capital," Mr Kobelke said.
Law Society of WA president Elizabeth Heenan has supported the Government's initiative.
"Limited partnerships have a role to play in mobilising capital in a number of widely differing circumstances, ranging from sophisticated venture capital investment in technology and other long lead-time investments to the traditional start-up capital used in speculative ventures," Mrs Heenan said.
"They have been widely used for many years in the United States of America and in Europe and more recently in other Australian States.
"The old Act is seriously deficient and the society has been active in seeking its modernisation."
Australian Venture Capital Association spokesman Jake Burgess has also welcomed the planned changes.
"These amendments are a critical step in developing greater access to capital for high growth, innovative small and medium enterprises (SMEs)," Mr Burgess said.
"The changes will fund jobs growth, innovation and economic growth. Access to capital for SMEs is a cornerstone for maintaining on-going economic prosperity."
Mr Kobelke said the Gallop Government was working to create 125,000 new jobs for Western Australians over the next five years and encouraging more capital investment to create more employment is part of our plan.
"WA is leading the nation economically with boosted business and consumer confidence, job advertisements in the State rising 4.9 per cent in June to a three-year high, and the number of Western Australians seeking finance for a new home growing by 11.3 per cent in the 12 months to May," he said.
The Minister said more investment would help maintain the State's strong economic growth, which has brought down WA's unemployment to 5.5 per cent - now the lowest of any State in the nation.
The changes are planned for introduction to Parliament before the end of the year.
Minister's office: 9222 9211
