By Doyle A Dally, Senior Manager - Trust Dept Head


So often, we forget or neglect to include in the package of useful products available in the Cayman Islands, the Exempted Limited Partnership probably, because it is not properly understood.

The business opportunities connected with the Cayman Islands Exempted Limited Partnership, are probably best explained by taking note of a few observations.

First of all, we have the traditonal type of partnership commonly referred to, as an Ordinary Partnership, where each partner is liable jointly with the other partners for the debts of the partnership and there is no limit to the liability of the partners. We also have a type of partnership known as a Limited Partnership which consists of one or more General partners and one or more Limited Partners. While the General Partners are liable for the debts of the partnership, the Limited Partners are generally speaking, not so liable. These Limited Partners contribute to the Assets of the partnership by paying in Cash or other liquid Assets as capital. The General Partners on the other hand, are the only ones authorised to transact business on behalf of the partnership.

Unlike a corporation, for example, a Limited Liability Company, a partnership whether of the Ordinary or Limited type, is not itself a completely separate legal person. By definition, a partnership is the relationship which exists between persons carrying on business in common, with a view to profit. If you take this legal treatment and couple it with the present availability under Cayman Islands Law of having a Limited Partner(i.e with limited liability), you will see that the reason for interest in these structures has to do with the fact that the partnership itself is TRANSPARENT. Understanding what transparency means in this context is critical in order to fully appreciate the usefulness of this structure.

In the United States, partners in a partnership can elect to be taxed individually or as a partnership. They can elect to be taxed individually because of the transparency however, there is often the option available to tax the partnership instead. This is why many venture capital projects have been structured as partnerships.

What this actually means, is that individuals now have the opportunity to make investments in their own names( because the partnership is transparent), but with limited liability. The Cayman Islands Exempted Limited Partnership Law, 1991 allows for these structures to be established for a broad range of purposes and gives them considerable flexibility in the way they may operate.


Trust and Legal practitioners in the Cayman Islands are perhaps the most aggressive cadre to be found in any offshore jurisdiction, always on the cutting -edge or pioneering legislation their peers elsewhere would be reluctant to seriously adopt.

Fresh from the recently enacted STAR Trust legislation, they are at it again. This time it is an exercise that challenges an age old dogma governing trust practise in the United Kingdom and its present and former territories namely,ligitimising the creation of Revocable trusts.

Hitherto, regarded as nothing more than Americans tinkering with an almost sacrosanct practise, the Revocable Trust has been shunned by common law purists. That it has risen to its present status, where it is presently a Bill sanctioned by the Cayman Islands Legislative Assembly and now only awaiting the assent of the Governor-in-Council , is certainly a clear indication that the Island's Legal and Financial community are intent on finding ways to effect change that is innovative and sensible.

The above information is based on our interpretation of the legislative intent and does not constitute a conclusive analysis. Any questions should be directed to one of the law firms on the island.

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.