The Limited Partnerships (Guernsey) Law, 1995 comes into force today, 1 February 1996. The Guernsey law, which was prepared following extensive consultation with the finance sector and drew on precedents and experience from other jurisdictions, has been refined to make the legislation as simple and as flexible as possible.
In general a limited partnership consists of one or more persons called "general partners" who are liable for all the debts and obligations of the firm, and one or more persons called "limited partners" who at the time of entering into the partnership contribute or agree to contribute a stated amount of capital and are not liable for the obligations of the partnership beyond that amount.
Features of the Guernsey limited partnership include:
a) a minimum of one general partner and one limited partner;
b) no restrictions on the number of partners;
c) a fixed duration or not, as appropriate;
d) accounts may be maintained in any currency; and
e) tax transparency - the incurring of any liability to tax in the hands of the investors (limited partners) rather than in the hands of the partnership as such.
Historically, North American investors have used the limited partnership as a pooled investment vehicle, particularly in less conventional assets such as venture capital and management buy-out situations. As a form of business undertaking the limited partnership is not necessarily suitable just for investment funds. It is considered that some captive insurers would also fit this form well.
Nigel Taylor, Superintendent of Investment Business, said "Guernsey already has a long and favourable track record in providing management and administrative services to limited partnerships established in other jurisdictions, and I have no doubt that the new law will attract significant additional quality business to the Island".
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.
For further information contact Peter Crook, Director General, Tel:(01481) 712801,Fax:(01481) 712010 (International dialling: 44-1481.
Visit the Guernsey Financial Services Commission Web Site at Click Contact Link