This Guide to Partnerships in Bermuda is concerned exclusively with exempted partnerships and overseas partnerships and does not concern local partnerships i.e. partnerships established by Bermudians for the purpose of carrying on business and trading within Bermuda. The intention is to provide an outline of Bermuda's legal and regulatory environment in relation to exempted partnerships (both limited and general) and overseas partnerships, and the formation and/or registration procedures for such entities.
1.1 Definition and Classification
Under Bermuda law, a partnership is the relationship between persons carrying on a business in common with a view to profit. Two types of partnerships may be created: general partnerships and limited partnerships. A partnership carries on business subject to the provisions of its partnership agreement and to the applicable partnership statutes of Bermuda.
Exempted partnerships are registered to carry on business outside of Bermuda from a place of business in Bermuda and must have at least one non-Bermudian partner. Overseas partnerships are partnerships formed or registered in another jurisdiction and are registered to trade or carry on business in Bermuda. While an overseas partnership is not a Bermuda partnership in the same sense as an exempted partnership, it must maintain a registered office in Bermuda and will enjoy similar treatment under Bermuda law. An overseas partnership can be a general partnership or a limited partnership.
1.2 Legal Identity
Bermuda partnership law largely follows English partnership law. Both general and limited partnerships may operate as unincorporated entities constituted by the contractual relationship between the partners or they may elect to have 'legal personality' upon formation. A partnership that makes such an election is a legal person separate from its partners. Once made, the election of legal personality is irrevocable. Whether a partnership has elected to have separate legal personality or not, a partnership may carry on business in its own name and may sue and be sued in the partnership name.
1.3 Liability of Partners
In the case of a general partnership, the liability of the partners for a partnership's debts and obligations is not limited. Each of its partners is jointly and severally liable for all partnership debts and obligations.
A limited partnership consists of one or more general partners (which may be bodies corporate or general or limited partnerships, whether formed under the laws of Bermuda or another jurisdiction) and one or more limited partners.
In broad terms, the liability of a limited partner is limited to the value of the money and/or the value of any property that the limited partner undertakes to contribute to the partnership. However, the liability of a general partner of a limited partnership is unlimited.
There is no limit on the number of limited or general partners of a limited or general partnership.
1.4 Name of Partnership
The business of a partnership may be conducted under a name chosen by the partners. The proposed partnership name may be reserved in advance by application to the Registrar of Companies (Registrar). The Registrar has discretion to refuse a name if it is undesirable, already in use by another partnership or is too similar to an existing entity's name.
The name of a limited partnership must end in the words Limited Partnership or the abbreviation L.P. (either designation may be used interchangeably).
In the case of an overseas partnership, the name under which the entity has been formed must be advertised in an appointed newspaper (along with other particulars of the partnership) at least three months prior to the application for a permit. The overseas partnership may, on the grant of such a permit, be registered in Bermuda under its original name, unless the Registrar objects to that name on the grounds stated above. It is also possible for an overseas partnership to reserve a name with the Registrar.
1.5 Permitted Scope of Activities
Exempted partnerships and overseas partnerships are permitted to engage in a wide range of activities, excluding carrying on business in Bermuda in certain circumstances (See Doing Business in Bermuda below).
1.6 No Minimum Capital
Bermuda partnerships are not subject to a minimum capitalisation requirement. The permit granted for an overseas partnership may, however, specify any conditions or restrictions that the Minister of Finance (Minister) deems appropriate, including a mechanism for imposing a minimum capital requirement.
The registration procedures for an exempted partnership and an overseas partnership are governed by statute. There are additional requirements on any exempted partnership which is also a limited partnership.
The partnership agreement of any exempted partnership must be governed by Bermuda law. The governing law of the partnership agreement of an overseas partnership remains the law indicated in the partnership agreement and does not, therefore, need to be governed by Bermuda law.
An overseas partnership that is a fund, does not require a permit if it engages a fund administrator or registrar in Bermuda to carry out any of the following services or activities for the fund in Bermuda: corporate secretarial, accounting, administrative or registrar and transfer agent services.
Additionally, an overseas fund partnership does not require a permit to engage in marketing or dealing with the holders of its partnership interests or any of the following activities: offering of partnership interests, acceptance of subscriptions, redemptions, distribution of partnership information, making known that it may be contacted in Bermuda, or otherwise dealing with the holders of its partnership interests.
2.2 General Partnerships
Persons seeking to register a general exempted partnership must apply to the Bermuda Monetary Authority (BMA) for consent to register the partnership and the general partner(s) by making application to the BMA to include information about the general partner(s) and a certificate of particulars containing:
- the proposed name;
- the names of all partners (in the case of a limited partnership, only the names of the general partner(s);
- the registered office address in Bermuda;
- the name of the resident representative in Bermuda and its address; and
- a declaration specifying that the partnership has elected to have legal personality (if applicable).
In addition, the BMA will require information regarding the proposed general partner(s). (See Compliance below.)
All information supplied to the BMA in the course of the application is confidential (subject to certain statutory exemptions related to Bermuda's anti-money laundering/anti-terrorist financing regime). Applications are usually processed in one to two working days, and are made to the BMA online through the BMA's electronic filing system.
Within six months of receiving the BMA's consent, the partners must deliver the certificate of exempted partnership and the BMA's consent to the Registrar. The Registrar will register the partnership and issue a certificate of registration, specifying the date of registration and attaching a copy of the certificate of exempted partnership to it. The certificate of registration is part of the public file maintained by the Registrar, which is open for public inspection. The partnership agreement does not form part of the public file and is not required to be registered with any regulators in Bermuda.
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