Smith DamienDAMIEN SMITH (ACT): The nation is gripped after this bill I think Mr Penk. Did I sense dissent in the Labour ranks there—was this being supported or not supported? I'm not sure. But you know I'm going to help the nation tonight understand what this is about and it'll be as short as possible. OK the bill makes a small technical change—Chris Penk: Yes. DAMIEN SMITH: —a small technical change—to ensure consistency around the ability to name companies and limited partnerships and—to put you out of your misery Chris—we will be supporting this bill because it is going to increase confidence in the New Zealand financial system. The financial markets company structures regulations and the corporate forms you have to fill in online—it is going to clear up a legal anomaly and it is going to clear up any deception and any misleading conduct and it is a gap in the law. Now for our colleagues across the way let's first of all define what business entities in New Zealand actually are. You might want to put this in the bill Mr Penk because there are different ways to structure your business each with different legal and financial obligations. Most businesses in New Zealand are either sole traders limited companies cooperative companies unlimited companies—which are very rare—or limited partnerships. So what is a limited partnership? It is a form of partnership involving general partners like a law firm—it is pretty simple—who are all liable for the debts and liabilities of the partnership in limited partners. So if the partners of PwC Tower don't bring any buildings in because of their expensive rent down at the waterfront they then have to foot the bill. They are also liable to the extent of the capital contribution to the partnership. In its name the New Zealand Companies Office defines that a limited partnership must include the words 'Limited Partnership' or … 'LP' or 'L.P.' at the end of the name." Features of limited partnerships include separate legal personality; an indefinite lifespan if desired; safe harbour activities defined by the limited partnership while they are not participating in the management of the limited partnership. There is also a tax treatment for the limited partnership and this is administered by the New Zealand Companies Office so it's a real thing. What is a limited company? A limited company has full responsibility for all its legal and financial obligations. It's the liability of the shareholders that is limited. Shareholders are only liable for the money owing on their shares and personal guarantees they have given to lenders and creditors such as banks or suppliers and again it is registered under the Companies Act. "So what's the problem?" the nation asks tonight. Dr Duncan Webb: That's a good question. DAMIEN SMITH: Yeah. The Companies Act does not prevent the registration of a new company with a name that is identical or nearly identical of that of an existing limited partnership—and that is correct. By contrast the Limited Partnerships Act does prohibit the registration of the new limited partnership with a name that is identical or nearly identical to that of an existing company. So the member's bill does rectify this anomaly between the Companies Act 1993 and the Limited Partnerships Act 2008 in relation to identical or nearly identical names across different entity types. So it is a simple straightforward change correcting a minor anomaly in the legislation but its impact will clean up an issue and will guarantee that there is no need to take a trip to the court. So it is a very simple thing there's nothing sinister in it and ACT supports the bill at its first reading."