Guernsey’s government has recently approved draft legislation for the island’s first limited liability partnership (LLP) regime. It is expected that the LLP law will come into force before July.
The offshore Channel Island hopes the LLP structure, familiar with GPs nearby in the UK, will entice more private equity executives to set up their management firms in Guernsey, according to Tom Carey, partner at Guernsey-based law firm Carey Olsen.
Already Guernsey is a prime destination spot for limited partnership funds, but often these funds are managed by a fund advisor based onshore (typically the UK). Guernsey feels incoming EU regulations, namely the Alternative Investment Fund Managers Directive (AIFMD), which comes into effect this July, represent an opportunity to lure some private equity business offshore, said Carey. GPs based in Guernsey can continue accessing EU investors through countries' private placement regimes until 2018.
A Guernsey LLP will differ from the current Guernsey limited partnership because it will offer all partners limited liability. Under current Guernsey partnership law, general partners of limited partnerships remain jointly and severally liable for the fund's liabilities.
The LLP regime can also benefit private equity service providers, including law and accountancy firms, who are typically structured as LLPs in the UK.
To set up a Guernsey LLP there must be at least two members, although one member can be a corporate member and not necessarily a natural person who is a resident of Guernsey. An LLP must also keep the following documents at its registered office: the register of members; the name and address of its registered agent; the members’ agreement; accounting records; minutes of all meetings of the members; and all documents filed with the registrar.