This publication has been prepared for the assistance of those who are considering the formation of limited liability partnerships in the Cayman Islands pursuant to the terms of The Limited Liability Partnership Act (2021 Revision) (as amended). It deals in broad terms with the requirements of Cayman Islands law for the establishment and operation of such entities. It is not intended to be exhaustive but merely to provide brief details and information which we hope will be of use to our clients. We recommend that our clients and prospective clients seek legal advice in the Cayman Islands on their specific proposals before taking steps to implement them.
Before proceeding with the registration of a limited liability partnership in the Cayman Islands, persons are advised to consult their tax, legal and other professional advisers in their respective jurisdictions.
Persons considering establishing limited liability partnerships to carry on a regulated activity such as insurance or mutual fund business should request separate publications prepared by Conyers on these topics.
The principal statute governing the formation and operation of limited liability partnerships (each an "LLP") in the Cayman Islands is The Limited Liability Partnership Act (2021 Revision) (as amended) (the "Act").
An LLP is an entity with legal personality other than a body corporate which is separate and distinct from its partners and, unless otherwise provided in its partnership agreement, is capable of exercising all the functions of a natural person of full capacity irrespective of any question of benefit. An LLP has perpetual succession, the capacity to sue and be sued it its own name and the power to acquire, hold and dispose of property. An LLP may be registered where two or more persons carrying on business in common for any lawful purpose have agreed, with or without other terms, that the business shall be carried on, following registration, in the form of an LLP.
2. PRE-REGISTRATION MATTERS
2.1 Partnership Name
The proposed name of the LLP can be reserved with the Registrar of Limited Liability Partnerships (the "Registrar") for up to one hundred and twenty days. No LLP may be registered with a name that is identical to the name of an LLP already registered or which so nearly resembles such name (or translated name) as to be calculated to deceive unless the LLP in existence is in the course of being dissolved and provides its consent. Similarly, an LLP may not register with a name that, in the opinion of the Registrar, suggests that the LLP is licensed to carry on any type of business when the LLP is not in fact so licensed or, because of any other reason, is likely to mislead.
The name of an LLP may, but need not, include the words "Limited Liability Partnership" or the letters "LLP" or "L.L.P". In the case of an LLP carrying on special economic zone business, the name shall include the words "Special Economic Zone" or the letters "SEZ". The Act also prescribes certain words that may not be used in an LLP's registered name except with the Registrar's consent.
An LLP may be registered with a dual name in a foreign script. There is no requirement that the dual name be a translation of the company's English name.
3. FORMATION AND REGISTRATION
Registration of an LLP is effected by filing with the Registrar a registration statement signed by or on behalf of any person forming the LLP and the payment of a prescribed fee. The registration statement is required to state the name of the LLP, the type of LLP, the address in the Cayman Islands of the registered office, the LLP's nature of business, the name and address (which may be a business address) of each person who is to be a partner, the start date of each partner and the end date (where applicable), the date of the end of the LLP's financial year, which of the partners will be a managing partner, the term of the LLP, if the LLP is not formed for an unlimited duration, and the expiration date (where applicable). The LLP will be issued with a certificate of registration, which is evidence that the LLP has met the requirements under the Act. The Registrar shall make the registration documents and certificate of registration available for inspection by any person on payment of a fee and any member of the public is entitled to be informed by the Registrar, upon their request, of the location of the LLP's registered office.
Along with the registration statement, a certificate of incorporation and a certificate of good standing dated no earlier than one month prior to the date of its delivery to the Registrar are required for corporate managing partners. In certain circumstances, approvals from CIMA and other authorities may be required. A partnership agreement is only required to be submitted if the relevant option "Subject to Terms and Conditions of LLP Agreement" is chosen in the smart form registration statement.
4. CONVERSION OF A FIRM
A firm, meaning "persons who have entered into partnership with one another", may apply to convert to an LLP if the partners of the prospective LLP comprise all of the partners of the firm at the time of such conversion and the firm publishes a notice of its application in the Cayman Gazette at least twenty-eight (28) days prior to the proposed conversion date.
In order to make the application, the firm must file with the Registrar an application for conversion, a consent signed by all the partners of the firm together with the associated documents specified by the Registrar, and the requisite fee. The consent must adopt a registration statement and an LLP agreement in conformity with the Act which will each take effect upon registration of the conversion. The name of the firm prior to conversion must be provided, along with its registration number if it was previously registered as a limited partnership.
The conversion will constitute a transfer of the property, interests, rights, including choses in action, debts and obligations of the firm to the LLP. Once the Registrar is satisfied that the firm may be converted to an LLP, the Registrar will issue a certificate of registration and enter the details in the register. The firm will convert to an LLP by virtue of the issuance of the certificate and the LLP agreement will take effect accordingly. The firm will be dissolved from the date that the conversion takes effect.
Every partner of a firm that converts to an LLP continues to be personally liable, jointly and severally with the LLP, for any debts and obligations of the firm that were incurred before conversion or which arise from any contract entered into before conversion, unless written consent is obtained from any persons thereby affected.
If a partner discharges any debt or obligation, that partner is entitled to be fully indemnified by the LLP in respect of the debt or obligation subject to any express provision in the LLP agreement.
Any person (including a body corporate, with or without limited liability, and a partnership of any type) may be a partner of an LLP. An LLP may have any number of partners; such partners may be admitted into the LLP in accordance with the partnership agreement or by unanimous agreement of the partners. The LLP is liable for all its debts and losses and, subject to the Act (see 5.1 below), no partner is liable, either jointly or jointly and severally, for the debts and losses of the LLP. All partners in an LLP are considered to be managing partners unless the partnership agreement specifies one or more managing partners with the requisite responsibilities under the Act. If there is more than one managing partner, anything that the managing partner is required to do by the Act may be done by any one of the managing partners. Each partner of the LLP is an agent of the LLP and the acts of any one partner in its capacity as such bind the LLP except in circumstances where (i) the partner is not acting is such capacity or is acting without authority; and (ii) the person with whom the partner is dealing knows or should have known that to be the case.
A change brought about by the admission, retirement or death of a partner, or by a partner liquidating or otherwise ceasing to exist, does not affect the existence, rights or liabilities of the LLP.
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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.