An introduction to Guernsey limited liability partnerships
In April 2009, the States of Deliberation approved the introduction of a new form of business structure: the limited liability partnership (LLP). In March 2012, the Commerce and Employment Department engaged in research on the laws of other jurisdictions where LLPs are offered and in March 2012 consulted with industry on various points highlighted from its research. The states passed the Limited Liability Partnerships (Guernsey) Law 2013 in their December 2013 meeting and the legislation is currently before the Privy Council and expected to come into force during the course of 2014.
LLPs combine features from a traditional partnership with features from a company, such as limited liability in respect of the actions of other partners (or ‘members’). An LLP will usually have continuing legal existence independent of its members, more akin to a company than a traditional partnership. In contrast to a limited partnership where at least one partner (the general partner) has unlimited liability or a general partnership where all partners are jointly and severally liable, members in LLPs are liable solely for their own actions, not for another member’s misconduct or negligence. Also, distinct from limited partnerships where limited partners can lose their unlimited liability if they take part in the management of the limited partnership, individual members in LLPs may take an active and full role in management. Guernsey LLPs are not necessarily targeted at a particular use or profession. LLPs are commonly used as investment management vehicles and as structures for knowledge-based professions such as accountants, lawyers, doctors, patent attorneys, brokers and translators, as well as for joint ventures — again, where joint management is contemplated. In some jurisdictions, where certain professionals are prohibited by law from incorporating as companies, the LLP has proved to be an attractive option. The UK introduced LLPs in 2000 with the Limited Liability Partnerships Act 2000. Jersey has had LLPs since 1997…
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