Introduction

When choosing the appropriate entity and structure to operate any business venture, there are a number of alternatives available.  The choice will be influenced in each case by the specific requirements of the proposed venture and the features offered by the available legal structures. 

Initial considerations include:

• who will be involved in the venture, including their appetite for risk, their tax profile and whether they want to be involved in management;
• whether the legal structure needs to be familiar to offshore investors;
• how the business will operate, what activities it intends to conduct, whether centralised/specialist management is required and whether there are any restrictions imposed on the preferred legal structure that will impede those activities;
• the potential start up costs for the venture and its forecast financial performance going forward (for example, is it expected to be loss making early on or make capital gains);
• the ability for investors to get in and out of the venture in the future;
• what level of transparency/confidentiality is required; and
• whether debt finance is necessary.

Common legal structures each have their own advantages and disadvantages.  These are also important to think about when choosing the most appropriate vehicle for a new business venture. 

This paper will consider the features of five of the more common legal structures:

• a company;
• a limited partnership;
• a partnership;
• an unincorporated joint venture; and
• a trading trust with corporate trustee.