1. INTRODUCTION

The limited partnership ("LP") is a variation of the more commonplace general partnership and combines some of the most useful attributes of a partnership (such as the ease of raising capital) with those of a corporation (such as limited liability for limited partners).

2. ANGUILLIAN LIMITED PARTNERSHIPS

LPs in Anguilla are governed by the Limited Partnership Ordinance, 1994 (the "Ordinance"). A LP may be formed in Anguilla for any lawful purpose to be carried out and undertaken either in or from within Anguilla or elsewhere upon the terms, with the rights and powers and subject to the conditions, limitations, restrictions and liabilities stated in the Ordinance and as provided in the partnership agreement. The Ordinance provides an attractive investment vehicle, particularly for the raising of venture capital as it permits the limited partners to be insulated from liability. Every LP must have a registered office situate in Anguilla for the service of process and to which all notices and communications may be addressed.

3. CONSTITUTION OF A LIMITED PARTNERSHIP

A LP must consist of (i) one or more general partners who, in the event that the assets of the firm are inadequate, are liable for all the debts and obligations of the partnership and (ii) one or more limited partners who, upon entering into the LP contribute a specified sum or sums as capital or property valued at a stated amount and who are not be liable for the debts and liabilities of the LP save as provided in the partnership agreement and specified under the Ordinance. A person may be both a general and a limited partner. Partners may be individuals, corporations (with or without limited liability) or other partnerships, but at least one general partner must be an Anguillian company, partnership or resident.

4. CHARACTERISTICS OF A LIMITED PARTNER

A limited partner takes no part in the management of the business of the LP. All letters, contracts, deeds, instruments or documents must be entered into by one or more general partners on behalf of the LP. If a limited partner takes part in the management of the business of a LP in its dealing with persons who are not partners, that limited partner will be liable in the event of the insolvency of the LP for all the debts and obligations incurred during the period that he participated in the management of the business, as though he were for such period a general partner, provided that the limited partner will be so liable only to a person who transacted business with the LP under a genuine and reasonable belief that such limited partner was a general partner. A limited partner will not be deemed to take part in the management of the business of a LP merely by doing one or more of the following acts:

  • being a contractor for or agent or employee of the partnership or of a general partner, or acting as a director, officer or shareholder of a corporate general partner;
  • consulting with and advising a general partner with respect to the business of the partnership;
  • investigating, reviewing, approving or being advised as to the accounts or business affairs of the LP or exercising any right conferred upon him by the Ordinance;
  • acting as surety or guarantor for the partnership either generally or in respect of specific obligations;
  • approving or disapproving an amendment to the partnership agreement; or
  • voting as a limited partner in accordance with the partnership agreement on one or more of the following matters:

(a) the dissolution and winding up of the partnership;
(b) the purchase, sale, exchange, lease, mortgage, pledge, or other acquisition or transfer of any asset by or of the partnership;
(c) the incurrence, renewal of indebtedness by the partnership;
(d) a change in the nature of the partnership’s business;
(e) the admission, removal or withdrawal of a general or limited partner and the continuation of the business of the partnership thereafter; or
(f) a transaction in which one or more of the general partners have an actual or potential conflict of interest with the partnership or with one or more of the limited partners.

A limited partner may not, without the prior written consent of at least one general partner (which consent may be withheld at the sole discretion of said general partner notwithstanding an implied or express term to the contrary in the partnership agreement), assign absolutely or by way of mortgage the whole or any part of his partnership interest. A person may become a limited partner by assignment with the consent of the general partners and without the consent of the existing limited partners. Subject to such consent, an assignee shall to the extent of the assignment become a limited partner with such rights and obligations of the assignor in accordance with the partnership agreement and the Ordinance.

If a limited partner has mortgaged the whole or any part of his partnership interest, the mortgagee must serve written notice at the address of the registered office of the LP of such mortgage, together with an executed copy of the mortgage document and pay such fee as is prescribed. The general partners are required to maintain a register of mortgages and charges at the registered office of the LP, which register will be open to inspection by any person during usual business hours. Entry of a mortgage in the register of mortgages and charges has the effect of conferring priority on the charge according to the date that the written notice was served at the registered office.

5. REGISTRATION

Registration of a LP is effected on making payment to the Registrar of Companies of a registration fee in the prescribed amount and by filing with the Registrar a statement signed by or on behalf of the general partners containing the following particulars:

  • the name of the LP (which must end in the words "Limited Partnership", the letters "LP" or any derivation thereof);
  • the general nature of the LP’s business;
  • the address in Anguilla of the LP’s registered office;
  • the term (if any) for which the LP is entered into or, if for unlimited duration, a statement to that effect and the date of its commencement; and
  • the full name and address of each general partner specifying each of them as a general partner.

In the event that any of the general partners is a corporation, a copy of the certificate of incorporation or certificate of registration of that partner must accompany the statement. The Registrar of Companies maintains a record of each partnership registered under the Ordinance and all of the statements filed in relation to a LP and such records and statements maintained by the Registrar are open to inspection by the public during usual office hours. The Registrar of Companies issues a Certificate of Registration under his hand and seal as soon as the registration of the statement has been effected in accordance with the Ordinance. Until registration is complete, no limited partner has the benefit of limited liability.

6. ANNUAL RETURN

Before the end of the year in which it registers and thereafter on or before every anniversary of its registration, a LP must file with the Registrar of Companies a return signed by or on behalf of the general partners certifying that during the previous year the LP has complied with the Ordinance and that there have been no breaches of the declaration made in accordance with the Ordinance. The LP must at this time pay to the Registrar such annual fee as is prescribed by rules made under the Ordinance.

7. DISSOLUTION

A LP may not be dissolved by an act of the partners until a notice of dissolution signed by or on behalf of the general partners has been filed with the Registrar of Companies. A limited partner may not dissolve a LP by notice. In the event of the dissolution of a LP, its affairs shall be wound up by a general partner unless the Court orders otherwise on the application of any partner or creditor of the partnership or unless the business of the partnership is continued within 90 days of such date of dissolution upon the unanimous election by the limited partners of one or more new general partners and if at the date of such election the firm is solvent. On the application by a partner or a creditor of the LP, the Court may order the dissolution of an LP and give directions for the winding up of its affairs as may be just and equitable. Upon receiving notice of the dissolution of a LP, the Registrar of Companies must strike the name of the LP off the Register.

Subject to any implied or express term of the partnership agreement and the foregoing, a LP is not dissolved nor its existence terminated by:

  • a change in any one or more of the partners;
  • the assignment of the whole or part of the partnership interest of the LP;
  • the death, bankruptcy, dissolution or winding-up of a limited partner;
  • the incapacity of a limited partner;
  • the granting by any one or more of the limited partners of a mortgage, charge or other form of security interest over the whole or part of his partnership interest; or
  • the sale, exchange, lease, mortgage, pledge or other transfer of any of the assets of the LP.

8. TAX EXEMPTION

Any LP which does not undertake business within Anguilla other than so far as may be necessary for the carrying on of the business of that LP exterior to Anguilla, is not subject to any income tax, withholding tax, or other taxes based upon or measured by assets or income originating outside of Anguilla or in connection with other activities outside of Anguilla or in connection with matters of administration which may occur in Anguilla.

No LP will be considered to be doing business in Anguilla solely because it engages in one or more of the following activities:

  • maintaining bank accounts in Anguilla;
  • holding meetings in Anguilla;
  • maintaining partnership or financial records in Anguilla;
  • maintaining an administrative or managerial office in Anguilla with respect to assets or activities outside of Anguilla;
  • maintaining a registered office in Anguilla; and
  • investing in stocks or entities of Anguilla corporations or being a partner in an Anguillian partnership or a beneficiary of an Anguillian trust.

The foregoing exemption is valid for a period of fifty years from the date of the formation of the LP.

9. DIVIDENDS AND DISTRIBUTIONS EXEMPTION

Any dividend or distribution by a LP which does no business in Anguilla to a corporation, or to individuals or entities which are not citizens or residents of Anguilla, will be exempt from any tax or withholding provisions of Anguillian law which might otherwise be applicable to such LP or the recipient of the dividend or distribution. The foregoing exemption is valid for a period of fifty years from the date of the formation of the LP.

Harney Westwood & Riegels also provide information and advice on the British Virgin Islands. To view this information Click Here

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.

For further information please contact us.