Cayman Islands: Cayman To Introduce Limited Liability Partnerships

Last Updated: 31 May 2017
Article by Solomon Harris

The Cayman Islands ('Cayman') is set to introduce a new entity ideally suited to professionals looking for the flexibility of a traditional partnership, but with the protection of a separate corporate identity – the Limited Liability Partnership ('LLP'). As well as benefitting those who do business in Cayman, the legislation is drafted widely enough to allow the use of Cayman LLPs internationally.

When will this happen?

The Limited Liability Partnerships Bill 2017 was Gazetted on 31 January 2017 and it is expected to be passed by the Cayman Legislative Assembly later this month, parliamentary time permitting.

So what is an LLP?

An LLP combines elements of a corporate body and a partnership. Like a corporation, an LLP is an entity created and governed by statute which has a separate legal identity from its owners. Unlike a company, an LLP has partners and a partnership agreement rather than shareholders and a memorandum and articles of association.

How is that different to a normal partnership?

The most important difference is that unlike both a general partnership and a limited partnership, an LLP has separate legal identity from its partners. In a general partnership each partner has unlimited joint and several liability for the debts of the partnership and for any misconduct or negligence of one or more of the other partners. That is not the case with an LLP. The LLP itself is liable for its debts and losses and its property will be available to pay those debts and losses.

So is it the same as a Limited Partnership?

No. In a Cayman limited partnership ('LP') the business of the partnership is conducted through the General Partner ('GP'). The limited partners are generally passive investors and risk personal liability if they take part in the management of the business. In an LLP there is no GP and there is no restriction on any partner being actively involved in the day to day operations of the LLP's business.

So who is this for?

An LLP is an ideal vehicle for a professional firm, such as a law firm or accounting firm, which traditionally would have operated as a general partnership. As an LLP, the partners continue to have the flexibility of a partnership structure whilst enjoying protection from personal liability. Importantly, a partner will not be liable for any debt or loss caused by the act or omission of another partner or former partner of the LLP, unless they have assumed an express duty of care to a person and acted in breach of that duty.

So is this just for doing business in Cayman?

Whilst LLPs will benefit professional firms operating in Cayman, there is nothing to prevent the vehicle being used internationally where its characteristics may be attractive for a particular type of business, transaction or project. Where an LLP is not doing business in Cayman, it can apply to the Financial Secretary for a tax exemption certificate, guaranteeing that the LLP will be exempt from any possible future direct taxation.

So how do you become an LLP?

To form an LLP at least two persons must have agreed to carry on a lawful business as an LLP. A general partnership can become an LLP by applying for registration with the Registrar of Limited Liability Partnerships ('the Registrar') and, assuming that the registration application is in order, the Registrar will issue a certificate of registration evidence the formation of the LLP.

Can an existing general partnership become an LLP?

The Bill proposes that an existing general partnership ('Firm') can be converted into an LLP without the complication of having to assign/novate assets and liabilities. The partners in the LLP have to be the same as those in the Firm, with no additions, and notice of the application to convert has to be given in the Cayman Islands Gazette at least twenty-eight days before the planned conversion. The Partners file with the Registrar:

  • a consent, signed by all the Partners, that the firm will convert (i.e. transfer all the property interests, rights, debts, obligations)
  • an application for conversion, together with any documents the Registrar may specify need to be included.

A fee is paid and if the Registrar is satisfied then a certificate of registration as an LLP is issued. At this point the Firm is dissolved and all the property and interests of the Firm are transferred to the LLP by operation of law.

What happens to existing agreements on conversion?

All proceedings by or against the Firm, all agreements, contracts etc become enforceable by or against the LLP instead of the Firm, and the conversion cannot be treated as either an event of default or as causing any existing agreement to terminate. Unless there is written consent from any person who would be affected, the partners of the Firm remain personally liable for any debt or obligation incurred before or arising from an agreement entered into before conversion. The Bill also proposes that for twelve months after conversion the Firm must include in all correspondence and on all invoices a declaration of the conversion and the name of the Firm.

How do you register as an LLP?

The application to be registered has to include :

  • the name (which must include LLP or L.L.P.)
  • the address of the registered office (which must be in Cayman)
  • the nature of the business to be carried on
  • the names and addresses of each of the partners
  • which of them, if any, will be a managing partner.

The register of partners must be open to inspection at the registered office by any person during normal business hours. Annual returns will need to be provided stating the names of all partners, and changes in any of the information must be delivered to the Registrar within 30 days of any change. Penalties will apply for default.

How does it work?

The LLP's Partnership Agreement ('Agreement') will govern the rights and duties of the partners as between themselves and third parties, subject to certain restrictions. For example, the Agreement cannot make a partner personally liable for the debts or losses of the LLP, although it can provide an indemnity for individual partners. The Agreement will govern who is eligible to join as a partner, when and how they can retire and whether there will be any restrictions on the ability of partners to assign, transfer or mortgage their interest in the LLP.

When it comes to the LLP's relationships with third parties the Bill provides that partners do not act as agents for each other but as agents for the LLP. A partner will be acting with the authority to bind the LLP if they act in the ordinary course of business or when they are given express authority by the Agreement. An individual partner's actions will not be binding on the LLP where they act without authority and the other party either knows or should know that is the case. The Bill also proposes that the existing rules of equity and common law which apply to general partnerships (as modified by the Partnership Law (2013 Revision)), will apply to an LLP except where they are inconsistent with the express provisions of the new LLP law.

How do you terminate an LLP?

The Bill makes provision for the voluntary and compulsory winding up of an LLP, dissolution and strike-off of an LLP, essentially following the rules for a Cayman ELP, adopting, as modified, Part V of Companies Law and Winding Up Rules 2008. An LLP is automatically wound up if at any time there are fewer than two partners.

Can an LLP be re-domesticated?

Yes. The Bill proposes a procedure (similar to that under the Companies Law) by which an LLP can be re-domesticated to another jurisdiction and a foreign LLP can be re-domesticated to the Cayman Islands.

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.

Similar Articles
Relevancy Powered by MondaqAI
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”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions