The Limited Liability Partnership Act 2016 (the "LLP Act") came into force in Mauritius on 3 January 2017 and introduces a new corporate structure in Mauritius; the Limited Liability Partnership (commonly known as LLP). A Limited Liability Partnership is not to be confused with a Limited Partnership, where general partners are jointly and severally liable. One of the key features of a Limited Liability Partnership is its limitation of liability for partners . A partner in an LLP cannot be held liable to pay debts beyond the amount of his contribution to the LLP. A contribution to an LLP can be done in several ways, namely by the provision of money, loan, any other property or service or even through non-cash consideration. An LLP is typically well suited for professionals or consultants who wish to work together and restrict their liability. As such, persons who can set up LLPs in Mauritius are those:
- offering professional or consultancy services;
- holding a Global Legal Advisory Services Licence; or
- engaging in such activities as may be prescribed.
Distinguishing Features:
Like LLPs in other jurisdictions, an LLP in Mauritius has a
separate legal personality from its partners and it can sue and be
sued in its own name and purchase and hold properties in its own
name. The LLP retains the flexibility offered by the partnership
model and as such, the partners in an LLP are free to manage their
rights and obligations on their own terms, with the help of a
partnership agreement. A partnership agreement for an LLP can also
define the roles of partners in the management of the LLP, as
opposed to a limited partnership structure, where the roles of
partners are predetermined in legislation. It is compulsory for an
LLP in Mauritius to have a partnership agreement, which can be
amended as per the provisions of the LLP Act. It is of note that
the LLP Act is silent as to whether it is compulsory for an LLP to
file its partnership agreement with the Registrar of Companies. The
LLP Act also does not provide any restrictions as to the
distributions of profits of an LLP.
Set up of an LLP:
Limited Liability Partnerships are generally easily recognisable in
Mauritius. The name of every LLP in Mauritius, other than a foreign
limited liability partnership, shall end with the words
"Limited Liability Partnership", the abbreviation
"L.L.P" or the designation "LLP". The partners,
who are considered as agents of the LLP in Mauritius, can be any
individual, body corporate or unincorporated body formed or
registered with or without liabilities in Mauritius or elsewhere.
An LLP in Mauritius is required to have at least two partners and
one manager who must be qualified as Secretary of a company under
the Mauritian Companies Act. Should the LLP hold a Category 1
Global Business Licence (also known as GBC 1 Licence), the manager
shall then be a management company. An application for registration
of an LLP shall be made to the Registrar of Companies and the
procedures are fairly straight-forward. The Registrar shall also
keep and maintain a register containing a record of all LLPs
registered in Mauritius and the information contained in that
register shall include details of the partners of each LLP (i.e.
names and addresses). The register is available to the public for
inspection on payment of a prescribed fee. However, for an LLP
holding a GBC 1 Licence or having at least one partner holding a
GBC 1 Licence, the information available to the public is
restricted to:
- the name and address of the registered office of the LLP; and
- the name and address of any management company appointed by the LLP.
Any other information held by the Registrar for that LLP will only be available for inspection purposes by a partner, an office of the LLP or the Financial Service Commission. Such a measure is considered by many as a method to further the protection of confidential information within the global business sector in Mauritius. It is noteworthy that most international businesses prefer to structure their activities in Mauritius through an entity holding a Global Business Licence.
Partners' Liability:
Partners in an LLP should be careful in the manner in which they
discharge their duties. They are duty-bound to exercise the degree
of care, diligence and skill that a reasonably prudent person would
exercise in the discharge of their duties, and to discharge their
duties honestly, in good faith and in the best interests of the
LLP. A partner would still be liable for any liability arising out
of his own wrongful act or omission, though his liability is
limited to his capital contribution. Importantly, in the event of
an insolvency of an LLP whereby there is a breach of the LLP Act;
(i) causing the LLP to be unable to pay its debts; (ii) materially
misleading a partner or creditor, or (iii) impeding the winding up
of the LLP, the Court may declare any partner or former partner or
manager or former manager of the LLP to be personally liable for
the debts of the LLP, to the extent specified by the Court.
LLPs and our Financial Services Sector:
The introduction of the LLP as a corporate entity in Mauritius is
likely to boost economic development, especially in the financial
services sector. The LLP is designed to reach out to new markets,
create more jobs; hence, generate more wealth. Foreign LLPs can
register and continue as LLPs in Mauritius as authorised by the LLP
Act. Such a registration will neither affect the identity
constituted by the foreign LLPs nor the properties, rights and
obligations held by them. Similarly, Mauritian LLPs are able to
move to other jurisdictions. It is also noteworthy that the LLP Act
provides for the conversion of existing entities (bodies corporate
or unincorporated bodies) to an LLP. Furthermore, LLPs holding a
GBC 1 Licence can benefit from the wide range of Double Taxation
Agreements (DTAs) and Investment Promotion and Protection
Agreements (IPPAs) that Mauritius has with several other countries.
This is incremental to position Mauritius as a leading
international financial centre and encourage investment in the
country.
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