Cayman Islands: Security Over A Limited Partnership Interest

This client briefing seeks to address the issues involved when security is granted over limited partners' interests in exempted limited partnerships.

This client briefing is intended to provide a general summary of the position in law as at the date shown above, and is not to be taken as specific legal advice applicable to particular issues or circumstances. If such advice is required, please contact your usual Ogier contact or one of our partners listed here.

Limited partnership interests

Limited partnership interests are recorded in a register of limited partners which is maintained by the general partner of the partnership. The register of limited partners may be inspected by any person, with the consent of the general partner, during all usual business hours. Each limited partnership interest comprises both rights and obligations under the partnership agreement and the Exempted Limited Partnership Law, 2014 (the ELP Law).


Just as there are two ways of taking security over the shares of an exempted limited company, either by a "legal charge" or an "equitable charge", a similar regime applies to charges of limited partnership interests in exempted limited partnerships. 

Equitable Charge

The most common way of securing a limited partner's partnership interest is by way of an equitable charge. It is considered an equitable charge because there is a right on the part of the secured party to call for the transfer of the limited partnership interest into the secured party's name, that is, there is a contractual right to a transfer of ownership, which equity will enforce. An equitable charge (whether in law or in equity) does not involve the transfer of ownership of the secured assets. 

Section 32(6) of the ELP Law, requires that, subject to the terms of the limited partnership agreement, the general partner must provide written consent to the grant by a limited partner of any security interest in, or the transfer of, the whole or any part of its limited partnership interest. 

Any security interest over a limited partnership interest is perfected by notice to the partnership's registered office and has priority in accordance with the time that written notice is validly served under section 31(4) of the ELP Law. Section 32(9) of the ELP Law further specifies that such written notice may be given by the grantor or the secured party.

Under section 32(10) of the ELP Law, such notice is not valid unless it specifies:

  1. the agreement pursuant to which the security interest is granted;
  2. the date of the agreement;
  3. the parties to the agreement;
  4. the grantor and grantee of the security interest; and
  5. the partnership interest or part thereof that is subject to that security interest.

Section 31(1) of the ELP Law requires the general partner to maintain a register of security interests in respect of all security interests registered and this register may be inspected by any person during all usual business hours.

It is advisable that the consent of the general partner to the grant of security over a limited partnership interest and to the transfer of that limited partnership interest on enforcement of the security is included as a condition precedent to any financing where such security is required.  It should also be noted that such consent, subject to any express provision of the partnership agreement to the contrary, may be withheld in the general partner's sole discretion.

A common closing deliverable to any financing secured by a charge over a limited partnership interest would be a signed but undated transfer of limited partner interest (much in the same way as a signed but undated share transfer form in the case of share security) – this transfer would only be dated upon enforcement. It is always important to check the terms of the limited partnership agreement as it may also require consent from other limited partners before any security interests can be granted over other limited partner interests.

Legal Charge

In the case of a legal charge the secured party takes an absolute transfer of a limited partnership interest and becomes registered as a limited partner in the register of limited partners, against an undertaking to reassign the limited partnership interest upon satisfaction of the secured obligations.  Once the secured party accedes to the partnership agreement in accordance with section 32(1) of the ELP Law, it then becomes a limited partner and has the rights and is subject to the obligations contained in the partnership agreement and the ELP Law.

As with the granting of security by way of an equitable charge over the limited partnership interest, subject to the terms of the limited partnership agreement, no transfer of such an interest as a result of a legal charge may be effected unless the general partner has provided its consent (section 32(6)(a) of the ELP Law).

The primary benefit of a legal charge is that if it becomes necessary to enforce the security, the secured party is already in control as the registered owner of the limited partnership interest. However, the significant disadvantage with legal charges is that the secured party is registered as a limited partner and subject to any rights or obligations of a limited partner under the relevant limited partnership agreement and the ELP Law.  Secured parties, and financial institutions in particular are generally not comfortable with this position and taking an equitable charge remains the more common way of obtaining security over a limited partnership interest.

Security over a limited partner's rights under the limited partnership agreement

The security regime described above relates to security over all or part of a limited partnership interest (i.e. both rights and obligations).  It is also possible for a limited partner to grant security over a particular right or rights under the partnership agreement (e.g. the rights to receive distributions of profit or returns of contributed capital). Such security is given in the same way as security over any other intangible right, by means of an assignment in writing of the rights(s), of which notice in writing is given to the partnership. It is likely that a limited partner's ability to make such an assignment will be limited by the terms of the partnership agreement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.