For immediate use
There is some reporting in the media currently of proposals in Guernsey to introduce limited liability partnerships which shows understandable confusion and misunderstanding. Comment has been very much on the lines that "Guernsey may follow its neighbour Jersey" in introducing LLPs and this gives entirely the wrong message. This notice is issued to set the record straight.
It is not correct that the draft Guernsey LLP follows the Jersey precedent either as to timing or as to substance. A Guernsey LLP was under consideration early in 1995 and before anyone in Guernsey had heard of plans for a Jersey version. Furthermore, the proposed Guernsey LLP bears little resemblance to the Jersey version and, most importantly, was designed for use by local professional practices and not to accommodate UK practices.
The Guernsey version is still at an early stage but as envisaged it does not include the concept of property partnership, a minimum £5 million bond, or of a general partner. The approach is rather to remove joint liability of partners (and not, as reported by some, to remove joint and several liability).
This announcement is made to remove misunderstanding and is not to be taken in any way as a criticism of the Jersey LLP.
Notes for editors
1. LLPs are not to be confused with Limited Partnerships (LPs) which were recently introduced into the laws of both jurisdictions, in the case of Guernsey from 1 February this year. LPs consist 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.
Historically, North American investors have used the LP as a pooled investment vehicle, particularly in less conventional assets such as venture capital and management buy-out situations. They are popular because of tax transparency - the incurring of any liability to tax is in the hands of the investors (limited partners) rather than in the hands of the partnership as such. LPs are not designed to address the plight of individual partners arising from successful litigation.
2. To add to the possible confusion, the Guernsey authorities are currently proposing an amendment to the LP Law which came into force on I February to give such partnerships the option of themselves having legal personality (as opposed to the partners themselves being the only legal persons) or of not having it. This is an entirely separate matter.
3. The Commission does not pretend to be knowledgeable on Jersey LLPs and questions on these should be addressed to the Jersey authorities.
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 on Tel: +44 (0) 1481 712 706 or fax: +44 (0) 1481 712 010 or e-mail: info@gfsc.guernseyci.com
Visit the Guernsey Financial Services Commission Web Site at Click Contact Link
