BVI Passes New Limited Partnership Act, 2017 - September 2018
The BVI has modernised its partnerships regime with the enactment of a new Limited Partnership Act, 2017 (the “LP Act”) and Limited Partnership Regulations, 2018, both of which entered into force on 11 January 2018.
A key feature of the new regime is that it allows limited partnerships the option of having legal personality, meaning a partnership can enter into contractual arrangements, commence or defend legal proceedings in its own name, and create a charge over its assets and register such charges so that they have priority over later registered or unregistered charges under BVI law.
The new LP Act is of significant interest to companies and individuals embarking on joint venture initiatives or setting up investment funds, as it provides the legal capacity and the flexibility to transfer interests or admit new investors.
Similarities to the Business Companies Act, 2004
The LP Act is modelled on the BVI Business Companies Act and there are many procedural and administrative similarities between the two regimes. Like a BVI Business Company, a limited partnership that is registered under the LP Act and which has legal personality may, among other things:
- merge or consolidate with other limited partnerships;
- continue into or out of the BVI;
- compulsorily redeem minority interests; and
- enter into schemes and plans of arrangement.
Key Features of New Limited Partnerships
In addition to the ability to have legal personality, other key aspects of the LP Act are that it provides for the:
- de-registration of a limited partnership on application to the Registrar of Limited Partnerships;
- transfer of partnership interests;
- admission of additional limited partners without the need for consent of the limited partners; and
- voluntary re-registration of limited partnerships registered under the old Partnerships Act, 1996 at any time within the next ten years.
Where old limited partnerships are re-registered under the LP Act, they are automatically re-registered with legal personality unless the general partner specifically declares the contrary.
Registering a New Limited Partnership
The process of registering a new limited partnership has changed significantly, in that new limited partnerships must have a written partnership agreement in place prior to registration. The written agreement provides for the rights and obligations of the partners between themselves and may provide for the affairs of the limited partnership and the conduct of its business activities.
The registered agent for the limited partnership also has to file a statement signed by or on behalf of each general partner specifying:
- the name of the limited partnership and its foreign character name, if any;
- the address of the registered office on registration;
- the name and address of the person who will be the registered agent of the limited partnership on registration;
- the name and address of each general partner; and
- the term for which the limited partnership is entered into or, if for an unlimited duration, a statement to that effect.
If the general partners do not want the limited partnership to have legal personality, they will have to file an irrevocable declaration stating so. The registered agent must also file its consent to act at the time of registration.
As from 11 January 2018, it is no longer possible to register a new limited partnership under the 1996 Partnership Act. There will be a ten year transition period (up to January 2028) during which existing limited partnerships may voluntarily re-register under the new LP Act. Voluntarily re-registered limited partnerships will be re-registered as limited partnerships without legal personality unless the general partner specifically elects the contrary when filing the application to re-register.
For a more detailed summary of the LP Act or enquiries regarding the registration or voluntary re-registration of a limited partnership, please contact your usual Trident representative or read our more detailed technical memo on the legislation.