Jersey’s Limited Partnership Law

The amendments to the Law provide wider protections for the limited liability of the limited partners. This is achieved in the amended Law by expanding the ‘safe harbours’ in terms of participation in the management of the limited partnership (LP), in line with the safe harbours that are available in competitor jurisdictions.

• Specific provisions in relation to the delivery and registration of electronic forms and communication from limited partners (LPs) in the partnership.
• Confirmation that a general partner can be an unincorporated body.
• The addition of express provision that the disclosure of the records of LPs are subject to the terms of the applicable partnership agreement.
• Confirmation that contributions made by a limited partner to a Jersey limited partnership may be paid up or left owing.

The provisions of the amended Law increase its flexibility going forward. These provisions include:

• Allowing third parties to have enforceable rights under the partnership agreement, while not being a partner of the partnership.
• Making statutory provision for the general partner to be liable for the debts and obligations of the LP, in the event the LP has insufficient assets to meet its liabilities.
• Increasing the flexibility of LPs by allowing the limited partnership agreements to, except in certain circumstances, override the Law, with the Law operating more as a statutory ‘back stop’ where the partnership agreement is silent. The amendments proposed to achieve this include:
  • The removal of overriding statutory restrictions on the general partners’ rights and powers in respect of the LP. The powers and the rights of general partners are now made subject to the partnership agreement only.
  • A partner’s entitlement to receive a return of his or her contributions is to be expressly made subject to the terms of the partnership agreement.
  • A limited partner’s liability to the LP is to be expressly made subject to the terms of the partnership agreement. A limited partner’s liability for the debts or obligations of the LP are expressly made subject to the partnership agreement in addition to the Law.
  • New provisions allowing for the winding up of the LP to be undertaken by a person other than the general partner if authorised by the partners or by the partnership agreement or by the court.

The previous provisions of the Law regarding the termination of LPs raised practical issues in Jersey.

The proposals have amended the Law to create a clearer order of events for the termination process, with the dissolution being the final act of the LP (similar for example, to the winding-up of a company under Jersey law). The changes also provide a mechanism for the removal of a LP from the register for non-compliance with its statutory reporting and annual fee payments. This allows historic LPs that failed to follow a correct de-registration process to be removed from the register.

The new termination process is:

• For a voluntary termination: the winding-up of the LP will be triggered in accordance with the terms of the partnership agreement, upon which the LP is obliged to be wound-up. Upon the winding-up being completed, a request for cancellation of its registration must be delivered to the Registrar. Dissolution will occur once the LP is de-registered, reversing the current statutory position, which is based upon customary law.
• For an involuntary termination: the variety of methods to bring the LP to an end whilst recognising rights and protections of limited partners and creditors has been expanded.

In addition to the above new process, the amendments to the Law also introduce the power to reinstate a LP, to address the possible adverse consequences of a LP having its registration cancelled by the Registrar for the continued default of the general partner, or for being mistakenly de-registered whilst it still has assets. Any application to reinstate the LP can be brought by a partner, creditors or any other interested party at any time before the tenth anniversary of it being de-registered (a provision similar to equivalent legislation for reinstating companies under Jersey law).

As previously noted, the amendments to the Law provided new reporting obligations and powers to the Registry, to ensure that the register is kept up-to-date and correct. These include:

• A new annual confirmation, bringing the reporting obligations in line with obligations of other legal entities in Jersey. This will provide the Registrar with regular updates as to the status of the LP and of any changes to the information previously provided to the Registrar.
• As already mentioned, the new process regarding the termination of LPs will allow the Registrar to remove defaulting limited partnerships from the Register for any continued default.
• The amendments also include a new power for the Registrar to apply to the Court for a LP to be wound up where its activities are bringing the reputation of the Island into disrepute.

Finally, the amendments allowed for further additional amendments to be made to the Law by way of regulations, rather than the requirement to amend the primary legislation.