If the general partners do not want the limited partnership to have legal personality, they must make an irrevocable declaration stating this. The registered representative must also give consent to the action at the time of registration. The registered representative of the limited partnership must also submit a declaration signed by or on behalf of each limited partner stating that existing limited partnerships will continue to exist under the Partnerships Act, 1996 until they voluntarily re-register under the new Limited Partnerships Act. However, after a period of ten years, all limited partnerships remaining under the Partnerships Act 1996 will be automatically re-registered under the new Act. A newly registered limited partnership then has an additional two years to enter into a limited partnership agreement in accordance with the new law. The Limited Partnerships Act 2017 provides a framework for the formation, operation and termination of British Virgin Islands limited partnerships. [3] Name of the limited partnership, registered office of the limited partnership, name of its registered representative, name and address of its general partner(s) and its duration. Any person, including a corporation and partnership, may be admitted to an LP as a general partner or limited partner. A person can be both a general partner and a sponsor of an SQ, although if this is the case, the SQ must have at least one other partner. Subject to the terms of the relevant limited partnership agreement, a limited partner of an LP does not owe the SQ or any other partner any fiduciary duty in the exercise of its rights or powers or otherwise in the performance of any of its obligations under the limited partnership agreement.

Although the provisions of the Limited Partnerships Act 1996 continue to apply to existing limited partnerships that do not choose to re-register under the new Limited Partnerships Act, these provisions will be repealed for all other purposes and it will no longer be possible to register a new limited partnership under the Limited Partnerships Act 1996. After ten years, all remaining limited partnerships under the Partnerships Act are automatically re-registered in accordance with the Limited Partnerships Act. The British Virgin Islands Partnerships Act 1996 (the “Act”) reflects many recent developments in partnership law and codifies the Partnerships, Local Limited Partnerships and International Limited Partnerships Act into a single Act. Under the new legislation, a limited partnership will be required to keep a record of relevant fees. The fees of a limited partnership may also be entered in the public register, and the law provides that a registered commission takes precedence over a commission subsequently registered or over an unregistered commission if the limited partnership has legal personality. However, the British Virgin Islands is a jurisdiction that is committed to ensuring that its trade legislation is both modern and focused, reflecting the real business landscape in which companies operate. The new Limited Partnerships Act is intended to be resolutely modern and focused. On the one hand, the new legislation will update the existing approach to limited partnerships by adapting existing basic legal positions to better reflect actual market practices and standards; on the other hand, the law will introduce new and innovative features (such as the possibility of choosing legal personality and registering security rights) to make BVI limited partnerships a first choice for modern investment structures. The general partners are responsible for the management of the SQ in accordance with the terms of the limited partnership agreement.

A general partner is the representative of the SQ for the purposes of the business and activities of the SQ, with the authority to bind the SQ, any debt or liability incurred by a general partner in the conduct of the business and activities of a SQ is a debt or liability of the SQ. From a constitutional point of view, the law abolished the memorandum and articles of association of the company, so that the limited partnership agreement and amendments no longer have to be submitted to the general partners. The Limited Partnerships Act offers those who form a limited partnership the choice between forming a limited partnership with legal personality or a partnership without persons. The changes are expected to expand the use of limited partnerships beyond mutual funds to areas such as venture capital investments, management buyouts, project finance transactions and real estate development. If former limited partnerships are re-registered in accordance with the LP Act, they are automatically re-registered with legal personality, unless the general partner expressly declares otherwise. Under the new law, a limited partnership has legal personality, unless its general partner chooses to register without legal personality. However, a limited partnership with “legal personality” is not synonymous with “partnership” and, in fact, the law expressly confirms that a “limited partnership with legal personality is not a company”. The introduction of a royalty register and statutory priority regime is an important development and so far unique for the British Virgin Islands, as other jurisdictions do not give priority to actions against a limited partnership. It is also possible for the Chancellor to cancel a limited partnership (e.g., due to non-payment of fees). If a limited partnership has been entered into for an uninterrupted period of seven years, it shall be cancelled with effect from the last day of that seven-year period). However, the court may reinstate an unregistered limited partnership within seven years.

The aspects of the law that increase the commercial attractiveness of limited partnerships are important. There are now mechanisms for: Although limited partnerships in the British Virgin Islands have been around for some time, the provisions of the Limited Partnerships Act 1996 have not been substantially updated or amended since it came into force. During the same period, however, the activity of investment funds (and in particular the activity of private equity and venture capital) has increased significantly and with it the appetite for limited partnership structures. Although the Partnerships Act 1996 created a strong legislative platform for British Virgin Islands limited partnerships in fund structures, like limited partnership legislation in many other jurisdictions, it was not designed with these structures in mind – with the results already described. From a management perspective, the law provides welcome security. It clearly sets out the rules regarding the activities, changes, liabilities and liabilities of the partners, as well as the termination and subsequent distribution of the company`s assets. As of January 11, 2018, it will no longer be possible to register a new limited partnership under the Partnerships Act 1996. There will be a ten-year transition period (until January 2028) during which existing limited partnerships will be able to voluntarily re-register under the new Lp Act. Newly registered limited partnerships voluntarily are re-registered as limited partnerships without legal personality, unless the general partner expressly chooses otherwise when submitting the application for re-registration.

For a more detailed summary of the SQ Act or applications for voluntary registration or re-registration of a limited partnership, please contact your regular Trident representative or read our more detailed technical note on the legislation. A limited partnership established under the new Act must have a limited partnership agreement. However, the law also provides that a legal form of standard contract (the model agreement) must be introduced by separate provisions that are deemed to have been accepted at the time of incorporation, unless they are subsequently excluded, amended or replaced by a signed limited partnership agreement negotiated between the parties concerned. The form of the model agreement is defined in the rules on limited partnerships annexed to the law. If the Registrar is satisfied that the application complies with the law and that the registration fee has been paid, the Registrar issues a registration certificate indicating whether or not the limited partnership has legal personality. The limited partnership is incorporated on the date specified in the deed. The LP Act is modelled on the BVI Business Companies Act and there are many procedural and administrative similarities between the two regimes. Like a commercial company in the British Virgin Islands, a limited partnership registered under the LP Act and having legal personality may, inter alia: The Act contains detailed provisions for the termination, cancellation and liquidation of a solvent limited partnership and, in this regard, a clear distinction is made between each of these concepts. In detail: Under the SPA Act, a general partner is required to act: at all times in good faith; and unless otherwise expressly provided in the limited partnership agreement in the interest of the SQ. LPs, unless the general partners choose otherwise before registration, have separate legal personality and are formed on the basis of a limited partnership agreement and not on the basis of a memorandum and articles of association of the company. The British Virgin Islands has modernised its partnership regime with the passage of a new Limited Partnerships Act 2017 (the “LP Act”) and the Limited Partnerships Regulations 2018, both of which came into force on 11 January 2018.