The Cayman Islands has recently passed the Limited Liability Partnership Law, 2017 (the "LLP Law") allowing for the registration of a new type of partnership vehicle, namely a limited liability partnership (an "LLP").
The LLP Law came into force on 5 June 2017 and allows for the registration of LLPs with immediate effect. The purpose of this Alert is to briefly outline the legal structure of an LLP to enable clients and others to assess whether the characteristics of such a vehicle may be of interest to their business.
What is an LLP?
In broad terms, an LLP is similar to a general or exempted limited partnership in that the partners retain the flexibility of a partnership agreement that governs their relationship. The key difference is that an LLP is established as an entity with a legal personality which is separate and distinct from its partners.
It is the LLP, rather than its individual partners, that is liable for any debts and losses of the LLP. This means that whilst partners in an LLP can actively manage the operations of the LLPs business, they will not be personally liable for the debts or losses of the LLP either jointly and/or severally (provided that such debts or losses are not caused by a negligent act or a breach of duty of care where such an express duty has been assumed).
Who would be interested in LLPs?
The LLP vehicle may be used for any lawful purpose but will likely be of most interest to professional businesses such as accounting or law firms. An LLP requires a minimum of two partners, however, there is no requirement for a managing partner or for any of the partners to be a Cayman resident.
The LLP Law permits LLPs to be registered as new entities, existing general partnerships to be converted into LLPs or for the continuation of foreign LLPs into Cayman.
Conyers Dill & Pearman offers a full range of legal and secretarial services to assist clients with the registration of LLPs and would be pleased to answer any questions arising in relation to the LLP Law. For further information, please contact the authors or your usual Conyers contact.
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.