The Jersey LLP continues to be a popular vehicle among international and local businesses. In this article we turn our attention to some of its key features and noteworthy changes made in The Limited Liability Partnerships (Jersey) Law, 2017.
A Jersey LLP is a separate legal person which holds assets in its own name but, unlike a UK LLP, is not a body corporate. Having a separate legal personality means that any assets or liabilities are not impacted by the retirement or admission of partners as the LLP is legally distinct from its partners.
The main advantages of incorporating a LLP in Jersey relate to flexibility, filing requirements and taxation. Governance and regulation of the partnership is for the most part dictated by the terms of the partnership agreement.
Under Jersey law, the accounting records are simply required to be, “sufficient to show and explain the limited liability partnership’s transactions”. (By comparison, UK LLPs must prepare accounts in accordance with the Companies Act 2006.) There is no requirement to file a copy of the partnership agreement or to file accounts (unless undertaking certain types of financial services business.)
A partner is permitted to make or receive loans to or from the LLP and it is now possible for a partner to also be an employee of the LLP. In addition a partner can make their contribution to the LLP in the form of capital alone, in place of effort and skill, meaning that Jersey LLPs can now also be utilised as investment vehicles.
Formation of a Jersey LLP is simple. A declaration must be filed with the Registrar stating the name of the LLP (which must end with “Limited Liability Partnership” or “LLP”), its registered office address and details of each partner (there must be at least two initial partners). There will now also be the need to appoint a secretary of the LLP who will handle the administrative affairs of the partnership, replacing the previous requirement of appointing two designated partners, however it is possible for a partner to fulfil this role if they are resident in Jersey. It is worth noting that the partnership will automatically be dissolved if it ceases to have at least two partners at any time.
Finally, the 2017 law requires that a specified solvency statement should be made by the LLP at least twelve months prior to any withdrawal of partnership property. The solvency statement provides an opinion that the LLP will be able to carry on its business and discharge all debts as they fall due for the twelve months from the date the statement is made. This new requirement which seeks to protect creditors effectively means that statements will be made annually, unless drawings are made less frequently than once every year. The LLP is guilty of an offence if drawings are made in absence of a solvency statement, or if statements are made without “reasonable grounds” for the opinion provided within.
The information in this article is believed to be factually correct at the time of writing and publication, but is not intended to constitute advice. No liability is accepted for any loss howsoever arising as a result of the contents of this article. Specific advice should be sought before entering into, or refraining from entering into any transaction.