The Limited Liability Partnerships (Jersey) Law 2017 (the “2017 Law”) replaces the Limited Liability Partnerships (Jersey) Law 1997 (the “1997 Law”). The Law was adopted by the States on 1st November 2016 and the 2017 Law shall come into force in its entirety on 1 August 2018.
The 2017 Law will facilitate the use of limited liability partnership (“LLPs”) as investment entities in addition to their common use as professional services entities. The 2017 Law is aimed at making LLPs more competitive for use as a vehicle of choice for business.
The key characteristics of an LLP, save for that it must have at least two partners, are as follows:
- an LLP can own its own property and sue and be sued in its own name;
- an LLP offers limited liability to all partners but does not affect liability in respect of personal debts or for losses caused by a partner;
- all partners must contribute their capital or effort and skill to the partnership business; and
- it must be registered and maintain its registration in Jersey
LLPs are currently required pursuant to the 1997 Law to have one designated partner who is responsible for administrative obligations of the LLP. This requirement shall be replaced under the 2017 by the requirement to appoint a Jersey-based secretary who shall either be required to be a partner in the LLP or registered as a secretary under Part 2 of the Financial Services (Jersey) Law 1998, as amended.
The 2017 Law requires this secretary to hold certain records and ensure annual returns are filed. The 2017 Law also imposes an obligation on all partners of the LLP to take reasonable steps to ensure that the records are prepared and kept properly and accurately.
The 2017 Law grants the Jersey registrar more power to take steps to wind up LLPs if the LLP has:
- failed to appoint a secretary;
- failed to provide the secretary with accounting records or file an annual return; or
- failed to provide a registered office in Jersey.
The requirement for solvency statements to be made annually, as previously adopted pursuant to the 1997 Law, has been removed under the 2017 Law. The 2017 Law now provides an LLP must not allow a partner or former partner to withdraw any LLP property unless a statement is made by the LLP as to its anticipated solvency for the subsequent 12-month period.
The partners of the LLP will be liable to return the property or pay the value of the property together with interest back to the LLP if a withdrawal has been made where a solvency statement was not made 12 months prior.
Limited Liability Companies (Jersey) Law 201-
The proposed introduction of the draft Limited Liability Companies (Jersey) Law 201- (the “LLC Law”) is aimed at the growing US market by providing a familiar vehicle for US funds into Jersey. The idea of introduction limited liability companies (“LLC”) into Jersey legislation for this purpose is due to their treatment of transparency for tax.
The proposed LLC Law will combine elements of both Jersey limited companies, limited liability partnerships and traditional partnerships. An LLC would have a separate legal personality and would be able to enter into contracts in its own name but would not be a body corporate.
An LLC would need one or more members and if appointed, one or more managers, who may or may not be members.
The managers will be under a duty to act in good faith in the performance of their management duties, much like directors for limited companies. Members would not owe any fiduciary duties to the LLC or any other members.