Jersey limited liability partnerships (LLP) can now be used by fund advisors, according to the Jersey Financial Services Commission, which will now begin issuing GPs licenses to invest from the structure.
Jersey believes the LLP structure will become a more popular entity for fund advisors now that the UK and other EU sovereigns will need to begin enforcing the Alternative Investment Fund Managers Directive this July. The directive introduces new rules on pay, reporting and other criteria, which Jersey believes will lead some fund advisors to structure both their fund vehicles and management firms offshore. GPs based in Jersey can continue accessing EU investors through national private placement regimes until 2018.
Jersey’s LLP has traditionally been used by lawyers, accountants and other financial service businesses but left largely untouched by private fund managers, who have opted for the UK’s LLP structure instead when advising Jersey-based funds.
The appeal in a Jersey LLP is that unlike other Jersey partnerships the structure doesn’t need to include at least one GP with unlimited liability. Moreover Jersey LLPs, unlike the English LLP, do not have to file accounts with any authority (unless it takes on certain types of financial service business). And unlike an English LLP, which must have at least 2 designated partners, it is permissible for a Jersey LLP to have just one designated partner.
“Jersey now offers licensed LLPs as managers or general partners of private equity funds. These are proving popular in the context of English limited partnerships and can be bolted on as an additional GP or in substitution for an existing GP,” said Emily Haithwaite, funds partner at offshore law firm Bedell Cristin.