Jersey, Channel Islands, updates its limited liability partnership (LLP) legislation
Limited liability partnerships (LLPs) – introduced into Jersey law in 1997- are partnerships that are governed by the terms of their partnership agreements, and have some of the benefits of companies such as a separate legal personality and limited liability for their members. To make the LLP a more attractive vehicle for international businesses, the Jersey LLP law has been updated. The amended law is expected to come into force soon.
The most relevant changes are the following:
- Limited partner contributions can now consist of “capital, effort and skill,” which would facilitate the use of LLPs as investment vehicles rather than just as professional service entities.
- Introduction of the LLP Secretary, who is required to be either a partner in the LLP or a properly licensed Jersey trust company business. The Secretary is tasked with record-keeping requirements under the new law, as well as with filing annual returns.
- Solvency requirements are no longer required to be made annually under the new law, but partners cannot withdraw property from the LLP if a solvency statement has not been made in the 12 months leading up to such withdrawal. Failure to comply with this requirement constitutes an offence for the both the LLP and the withdrawing partner(s), with the latter being liable either to return the withdrawn property to the LLP or to pay it the equivalent of the value of this property with interest.
- Forced dissolution. Under the new law, the Jersey Registrar can issue a Certificate of Dissolution to LLPs in cases where it has failed to appoint a Secretary; failed to provide its Secretary accounting records or an annual return; failed to have a registered office in Jersey or pay the required government fees.
The new law is intended to repeal and replace the current 1997 law, but there will be a transition period of 12 months. In this time, existing LLPs can make changes to comply with the requirements of the new law, in particular with the requirement to appoint a Secretary.