New legislation modernises the framework for the establishment and operation of limited partnerships in Gibraltar, as demand continues to grow.
Leading international law firm, ISOLAS LLP, is encouraging the global funds industry to seize the fresh advantages presented by Gibraltar's new Limited Partnerships Act 2021 and the Protected Cell Limited Partnerships Act 2021, which have now come into effect.
The new legislation was a joint effort between Her Majesty's Government of Gibraltar (HMGoG), the Gibraltar Financial Services Commission (GFSC) and the Gibraltar Funds and Investments Association (GFIA). The Government instructed a team of leading experts to support the development of the legislation. ISOLAS LLP's own Jonathan Garcia (acting in his capacity as Head of the Technical Committee at GFIA) worked alongside Gibraltar Finance's Tim Haynes and Diala Minott, of Paul Hastings LLP in London.
The new limited partnerships legislation repeals the previous Limited Partnerships Act 1927, adapting and modernising the existing legislation. Businesses can expect a number of welcome changes, as the new Limited Partnerships Act refreshes a range of legislative areas. It has been meticulously designed to provide a framework for, amongst other things:
- The partnership interests of limited partnerships being represented by shares, bonds, notes, loans or other debt securities or instruments.
- Limited partners being able to undertake a more active role in the affairs of the limited partnership without forfeiting their limited liability.
- The general partners of a limited partnership being able to elect whether or not the limited partnership is to have legal personality.
The Act also ensures voting rights of each partner will be in proportion to their partnership interest, unless otherwise varied by agreement between or the consent of the partners. This has enshrined a fairer system of management.
In further legislative modernisation, the Protected Cell Limited Partnerships Act also enacts valuable change. The Act allows fund limited partnerships to create one or more cells to protect and segregate cellular assets from non-cellular assets, and keep each cell separate and separately identifiable from other cells. The legislation was based on the innovative protected cell company legislation that was first introduced in Gibraltar in 2001. Gibraltar was the first EU jurisdiction to offer this.
Jonathan Garcia, Partner at ISOLAS LLP, who led the process in his capacity as Head of Technical at GFIA, said: "It was a pleasure to have headed the working group that led to this legislation's development, which represents a significant moment for the funds industry in Gibraltar. The Limited Partnerships Act and the Protected Cell Limited Partnerships Act have ushered in a powerful regulatory evolution, showcasing the unparalleled benefits of doing business on the Rock.
"After a rigorous review and consultation stage, this carefully considered legislative framework facilitates businesses in staying up to date with the modern uses of Limited Partnerships. This is significant, as the funds industry continues to grow in importance to Gibraltar. More and more businesses are attracted to our 'right touch, not light touch' regulatory model that Gibraltar offers.
"It was an honour to work with HMGoG throughout this process, and I welcome the tangible changes as the new statutory framework comes into effect. Investors and asset allocators are constantly seeking new ways to boost performance, and ISOLAS LLP are proud to be leading innovation as well as delivering top-quality service. In the wake of this pioneering legislative change, we look forward to welcoming even more exciting, dynamic institutions to the Rock!"
View HM Government of Gibraltar's press release by clicking here.
Originally published 26/11/2021
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