Fleeing Vesuvius. Gillian Fallon

Fleeing Vesuvius - Gillian Fallon


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and time committed.

      Similarly, any contractors responsible for design and construction can be given the option of being paid in equity shares instead of money. Even if they chose money, they would be expected to take their profit in units so that their stake in the outcome was aligned with the interests of the other stakeholders. As a result, it is in the interests of all stakeholders that the buildings are constructed to high standards of quality and energy efficiency, since to do so minimizes the total cost of ownership over time. The result is a genuinely sustainable development.

      Implementation

      There are three key areas to which attention must be given in order to set up an equity partnership: the availability of the necessary legal form; the taxation regime; and the regulatory regime.

      The Legal Form

      The enabling legislation is the recognition of an “open corporate” enterprise. This is a new type of legal entity, which is a corporate body with no stipulations about what its governing agreement should be, and only simple default provisions based upon partnership principles about its governance. In the UK this was achieved in two pages of legislation and one page of default provisions. The other (relatively few) provisions in the UK legislation dealt with technical matters relating to taxation and limitation of liability. Anyone wishing to set up an EP in the Republic of Ireland could do so in Northern Ireland under the British legislation until equivalent legislation is passed by the Dail.

      If open corporates are permitted, then limitation of liability could be available subject to payment of a bond (as in Jersey); an insurance premium; or a provision into a default fund. However, since an EP is a framework agreement linking all stakeholders and the EP doesn’t actually do anything, there is no need for limitation of liability because no one outside the EP can be adversely affected by it.

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