THE ISLE OF MAN has taken pole position in a race among offshore havens to enact limited liability partnership laws to entice City law firms to register with them.
The island has introduced an amendment to a Bill currently going through its parliament in an effort to be the first island to introduce such a law.
Jersey's draft legislation on the issue is expected to be enacted by the end of the year. It aims to protect the pockets of individual partners from clients who sue for negligence by allowing them to form limited liability partnerships (LLPs) under which the partnership becomes liable.
The Isle of Man government intended to introduce a similar Bill later this year. But spurred on by its offshore competitor Jersey, it has now amended a separate Bill being considered by the Tynwald, its parliament.
The island hopes to have a law allowing the formation of LLPs on its statute books by August or September this year.
Steven Beevers, of the Isle of Man government treasury, said: “Once that happens, our marketing people will make contact with UK law firms to persuade them of the advantages of registering as LLPs here. We are very aggressive about marketing our offshore facilities.”
Jersey's draft law proposes firms seeking LLP registration set aside £5 million as a bond to cover claims. But the Isle of Man legislation does not specify a bond and it is likely that a requirement of LLP registration will be that the firm has a general partner, so that firms would be required to have a director and a qualified secretary resident on the Isle of Man.
On Guernsey, accountancy and legal firms are helping the government to draft proposals for a limited liability law, but no date has yet been scheduled for the introduction of a Bill.
Ronnie Fox, partnership specialist for Fox Williams said: “I feel sure that the Department of Trade and Industry will put forward something similar here. I don't think they will want to see large businesses registering as limited liability partnerships outside England.”
The DTI is currently consulting over whether to change the UK joint and several liability rules. At the end of last year, a Law Commission investigation concluded there were convincing arguments of principal against replacing existing law.
Giles Henderson, senior partner at Slaughter and May, said his firm was keeping a close eye on the Jersey legislation. But he added: “We have no specific plans to go down that route.”
Henderson said it would be preferable if the UK government altered UK liability law and his firm would be making representations to the DTI on the matter.
