Limited partnerships - a comparison between England and Jersey/Guernsey
by Ogier & le masurier
England: The transfer of partnership interests in an English limited partnership attracts stamp duty at the rate of 4%.
Jersey/Guernsey: There is no stamp duty or stamp duty reserve tax payable on the transfer of limited partnership interests.
Participation in management
England: If a limited partner participates in the management of the limited partnership, it will lose the protection of limited liability.
Jersey/Guernsey: The Jersey and Guernsey limited partnerships Laws specifically allow limited partners to take some role in the management of the limited partnership without losing the protection of limited liability, including approving the purchase or sale of assets of the limited partnership and the creation of any obligation of the limited partnership, acting as an agent of the limited partnership and acting as a director of the general partner. Hence, limited partners can approve investment recommendations as part of an investment committee.
Disclosure of limited partners/partnership agreement
England: The identity of limited partners and the limited partnership agreement the must be disclosed on a public register.
Jersey/Guernsey: There is no requirement to disclose the identity of limited partners or the limited partnership agreement on any public register.
Requirement of limited partners/partnership agreement capital distributions
England: To constitute an English limited partnership, the general partner must make some capital contribution and receive some share of the profits.
Jersey/Guernsey: There is no requirement for the general partner to make any capital contribution or to receive any share of profits to constitute a Jersey or Guernsey limited partnership.
England: On an insolvency of an English limited partnership, limited partners remain liable for the return of any distributions made to them in respect of capital contributions to the partnership.
Jersey/Guernsey: There is no liability on limited partners to repay capital distributions unless the partnership is insolvent at the time of the distribution and even if it is insolvent at that time, the liability to repay capital distributions remains only for a period of six months.
Limited partners as creditors
England: Limited partners which make loans to the partnership in connection with the partnership business will rank behind third-party creditors on any insolvency of the partnership.
Jersey/Guernsey: A limited partner which makes a loan to the partnership or otherwise has a claim against the partnership will rank equally with third-party creditors as a creditor of the partnership in respect of such claim.
Requirement for FSMA registered operator
England: An English limited partnership which constitutes a collective investment scheme must, in certain circumstances, appoint an FSMA-registered operator to carry out certain functions on its behalf.
Jersey/Guernsey: There is no requirement for a Jersey or Guernsey limited partnership which constitutes an investment fund to appoint an FSMA-registered operator.
England: An English limited partnership does not have separate legal personality.
Jersey/Guernsey: A Jersey or Guernsey limited partnership does not have separate legal personality. However, a Guernsey limited partnership can elect to have a separate legal personality (so that for instance it would count as only one investor in a fund).
England: Fees charged by an English general partner to the limited partnership may be subject to irrecoverable VAT.
Jersey/Guernsey: Fees charged by a Jersey or Guernsey managed and controlled general partner to the partnership will not be subject to VAT.
England: Fees charged by an English general partner to the limited partnership may be subject to UK income tax.
Jersey/Guernsey: Fees charged by a Jersey or Guernsey managed and controlled general partner to the partnership will not be subject to income tax in Jersey, Guernsey or the UK (on payment of an exempt company fee by the general partner of £600).
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