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Legislative Assembly for the ACT: 2004 Week 09 Hansard (Thursday, 19 August 2004) . . Page.. 3914 ..

in its operations. If this government wants to really promote itself as small business friendly then it might advocate with the Commonwealth and the states for an analysis of the impact of some of the compliance and tax rules on micro businesses in their start-up period and possible modifications to those rules.

Venture capital is much easier to attract—through partnership schemes or not—once the first stage of development is a success. The ACT government might like to now focus its “whole-of-government attention” on how that first stage can be supported—here and right around the country.

MR STANHOPE (Chief Minister, Attorney-General, Minister for Environment and Minister for Community Affairs) (11.43), in reply: Mr Speaker, I am very happy with the support that the bill has received. The bill, which amends the Partnership Act 1963, provides a framework for the formation of a new legal entity as a vehicle for venture capital investments. I understand that the Australian venture capital industry, which lobbied the state and territory governments to provide a corporate limited partnership structure for venture capital investment, is very happy with this bill.

Incorporated limited partnerships provided in the bill will be legal entities separate from the partners in them. The Commissioner for Fair Trading will administer the scheme proposed in the bill. Venture capital is essential for companies that engage in innovative industries or otherwise require long-term capital.

It is noted in the economic white paper that the ACT has a high standard of technological infrastructure and many of its industries are technologically sophisticated and highly committed to innovation. Venture capital investment will greatly assist the ACT to build on these resources and to broaden its economic base. I am confident that the structure the bill provides will attract overseas and interstate investors, in addition to ACT residents who want to invest in venture capital initiatives. No doubt we will have to compete with larger jurisdictions to attract those investors.

Venture capital investment involves a high risk of loss of investment where the invested companies fail. Investors need certainty as to the extent of their liability. Incorporation of a limited partnership ensures that liability of investors is limited to the capital or property they contributed to the partnership. The proposed legislation will be recognised in other jurisdictions as the law of the place of incorporation and applied to determine the status of the limited partners. Investors in the entity under the bill will also be eligible to have the benefits that flow through taxation, including exemptions from capital gains tax under the federal taxation laws.

There is no limit to the number of limited partners an incorporated limited partnership could have. The partnership must also have at least one general partner but not more than 20. It is general partners who manage the business of an incorporated limited partnership. As in the case of partners in a normal partnership, their liability for the debts, obligations and other liabilities of the incorporated limited partnership is unlimited.

The bill ensures that the entity still remains a partnership even though it is incorporated. This also ensures that the interest of the creditors of a partnership is not prejudiced by the corporate status of that partnership. In this regard, the bill complements the Commonwealth Venture Capital Act 2002.

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