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The States of Guernsey has responded to increasing demands from local and international businesses for limited liability partnership structures (LLPs) and has approved draft legislation which is expected to receive Royal Assent and come into force before July 2014.
The key features of a Guernsey LLP are that:
• It is a body corporate with separate legal personality and unlimited capacity
• It may be formed for any lawful purpose and carry on business and own its assets in its own name
• It must have at least two members
• Members are not liable for the debts of the LLP, and in the ordinary course of business their liability is limited to the capital that they have agreed to contribute to the LLP
• It will be transparent for Guernsey tax purposes
• It must have a written LLP agreement to govern the relationship between the members and the LLP, which agreement is private to the LLP and is binding on all members and the LLP itself
• Members will have almost total freedom to agree the ownership, operation and management of the LLP
• The names and addresses of members of the LLP must be notified to the registrar of companies, but there is no requirement to file profit-sharing or other details
Their inherent flexibility means that LLPs are likely to prove a popular choice in a number of different commercial scenarios. As well as for professional services firms, where LLPs have proved particularly popular in the UK, they are also suited to special purpose vehicles, management companies and general partner vehicles particularly in light of the recently-introduced changes to the UK’s Partnership Accounts Regulations.
Carey Olsen corporate partners, advocate David Crosland and advocate Tom Carey, hosted a recent seminar outlining the legislation.
Advocate Crosland said: “LLPs should also prove popular for real estate joint ventures and other investment ‘clubs’ where participants will be attracted by the ability to take an active part in the management of the LLP and its investments without giving up their limited liability."
Advocate Carey added: “The ability to tailor the economics of LLPs will also make them attractive as simple asset-holding vehicles even in the absence of any active investment management. It is this flexibility that makes LLPs such an exciting new part of Guernsey’s legal landscape”
