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.
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 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.
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.