LIMITED liability legislation has been lodged with Jersey's legislative assembly amid predictions that a law change would entice several City firms to the island.
Under the proposed law, a Jersey registered partnership will continue to remain totally liable for all its debts.
But, in stark contrast to the current position in Jersey and the UK, individual partners who have not been responsible for a particular “negligent act” will have their personal assets protected from debts arising from such negligence.
The draft Limited Liability Partnerships Jersey Law is due to be debated by the States of Jersey, the island's legislative assembly, on 18 June. If approved, the law will then go to the Privy Council for sanction.
The Jersey initiative is being watched with interest by UK law and accountancy firms, although it is not the only offshore haven planning new legislation. The Isle of Man and Guernsey are expected to produce their own versions of the law.
Commenting on Jersey's plans, Denton Hall consultant John Wylde, a professional indemnity specialist, said: “I am quite sure that several City firms will be looking at the possibility of registering there very seriously, particularly in the context of the growing dissatisfaction with the way the profession is regulated here.”
Garth Pollard, executive partner at Clifford Chance, said: “We will continue watching developments in Jersey and consider that a similar move would be appropriate in this country.”
The DTI is currently consulting over whether to change the current UK joint and several liability rules.
The move follows a Law Commission investigation into the feasibility of a change.
News of developments in Jersey coincides with a stinging attack on the commission by Denton Hall which has demanded a full investigation into the issue.
According to the firm the commission “failed to address the legitimate concerns of the commercial world and to fully appreciate the glaring inadequacies of the present law”.