Carey Olsen recently assisted a client to form a Guernsey
limited liability partnership ("Guernsey LLP") to act as
general partner of a UK limited partnership for the purpose of
ensuring that the UK limited partnership was not subject to the UK
Partnership Accounts Regulations 2008 (the
"Regulations"). We believe this is the first Guernsey LLP
to be so used.
Qualifying Partnerships: The Guernsey Solution
The Limited Liability Partnerships (Guernsey) Law, 2013 (the
"Law") came into force on 13 May 2014. A
description of the features and potential uses of Guernsey LLPs can
here. As that briefing anticipated, one of the potential uses
of a Guernsey LLP is as a general partner vehicle, particularly in
light of recent changes to the Regulations.
The Regulations require "Qualifying Partnerships" to
prepare and file with the UK registrar annual accounts which comply
fully with UK GAAP or IFRS. Investment funds which are structured
as UK limited partnerships are likely to be caught by the
Regulations. However, many fund promoters are naturally reluctant
to make the accounts of Qualifying Partnerships publicly available
in this way and, indeed, regard accounts prepared in that format as
neither appropriate nor beneficial to their investors.
The simplest way to avoid being subject to the Regulations is
not to use UK limited partnerships at all and a number of Carey
Olsen's clients have adopted this approach for their latest
funds. However, for Qualifying Partnerships established before the
recent changes to the Regulations were proposed, it is often not
feasible to replace those vehicles with non-UK partnerships.
The definition of a Qualifying Partnership under the Regulations
does not include a UK limited partnership if at least one of its
general partners is a limited liability partnership
("LLP"). Accordingly many promoters are
considering the appointment of an LLP as an additional general
partner to any Qualifying Partnerships within their structures. A
number of jurisdictions have had legislation enabling the formation
of LLPs for some time but the implementation of the Law means that
Guernsey LLPs are now also available to fulfil this role. In
addition, UK counsel have confirmed that a UK limited partnership
which appoints a Guernsey LLP as a general partner is not a
For fund promoters who already use Guernsey structures, the
appointment of a Guernsey LLP to this role may be an obvious choice
simply because of the administration resources already available to
it in the jurisdiction. In addition, the following features of
Guernsey LLPs make them an attractive option even for promoters who
have not previously done business in the island:
Details of members of a Guernsey LLP are not publicly
Guernsey LLPs are tax transparent.
There is no requirement to audit the financial statements of a
There is no requirement to file the accounts of a Guernsey
The Regulations apply to the first financial year of a
Qualifying Partnership commencing on or after 1 October 2013.
Accordingly, it is anticipated that many fund promoters will wish
to restructure their existing structures in this way by 31 December
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.
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