Partnerships & LLPs
Partnerships are a popular way to structure your business. There are three types of partnership that can be established under Gibraltar law: general partnerships, limited partnerships and limited liability partnerships.
The law governing partnerships is predominantly based on the English statute equivalent.
ISOLAS is experienced in all aspects of partnership law, practice and regulation, particularly in the financial services sector. This has involved the use of limited partnerships and their uses in fund structures. ISOLAS also have experience in “family partnerships”, a way of using partnerships as wealth management and investment planning vehicles.
The team at ISOLAS have also worked with the Government and GFIA on the new Limited Partnerships Act 2020 will repeal the existing Limited Partnerships Act 1927, paving the way for significant modernisation, as well as restating previous rules for the sector.
At ISOLAS, we have experience in:
- Drafting partnership agreements, each of which is bespoke and reflects each client’s unique situation
- The formation and registration of limited partnerships
- Advising clients in the financial services industry on setting up their collective investment schemes as limited partnerships
- Advising on the structuring of limited partnerships, for instance on loan arrangements between the limited partnership and the limited partners
- Advising on corporate governance, insolvency and the use of limited partnerships in securitisation and asset-based lending transactions
‘General’ partnerships, sometimes referred to as ‘traditional’ partnerships, are the sort of partnerships envisaged by the Partnership Act 1895. Each partner can act on behalf of the partnership in the conduct of its business with binding effect on the other partners, and all partners have unlimited liability for the debts of the partnership. A general partnership is not a legal person.
The concept of a ‘limited partnership’ was introduced by the Limited Partnerships Act 1927 and it allows a person to be a ‘limited partner’, whose liability for the partnership’s debts is limited to his or her capital contribution to the partnership. A limited partnership must consist of at least one general partner, whose liability is unlimited, and one limited partner; limited partners must not be involved in the management of the partnership’s business. Unlike general partnerships, limited partnerships have separate legal personality.
The Limited Liability Partnerships Act 2009
The LLP Act provides for the creation of a legal entity known as a limited liability partnership. A limited liability partnership is a ‘body corporate’ with legal personality separate from its members. It enables each member to limit his/its liability for the partnership’s debts to an amount (usually the capital they have invested in the limited liability partnership) agreed with the other members of the limited liability partnership.
Like general partnerships, a limited liability partnership can be formed by two or more (natural or legal) persons, including other limited liability partnerships, carrying on a business with a view to profit.
Limited Partnerships Act 2020
The new Limited Partnerships Act 2020 will repeal the existing Limited Partnerships Act 1927, paving the way for significant modernisation, as well as restating previous rules for the sector. In one of the most significant changes, Limited Partnerships will no longer be required to have legal personality.
The Act will allow general partners, upon registering a limited partnership or re-registering a company as a Limited Partnership, to choose whether or not a Limited Partnership has legal personality.
Protected Cell Limited Partnerships Act 2020
In further legislative modernisation, the Protected Cell Limited Partnerships Act 2020 has also been introduced.
The act enables Limited Partnerships that are authorised as an Experienced Investor Fund 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.
Protected Cell’s will be able to be used to create multi-cell funds or “umbrella funds”. Protected Cell Company legislation was first introduced in 2001, and Gibraltar was the first EU jurisdiction, at the time, to offer this.