LLP structures are common in the United Kingdom, having become the preferred model for professional services businesses. The Jersey LLP has its own legal personality, giving limited liability to its members, whilst being tax transparent for Jersey tax purposes. The Limited Liability Partnerships (Jersey) Law 2017 will repeal and replace the 1997 when it comes into force, expected a little later this year. The 2017 law will take the LLP forward allowing greater flexibility and development in a structure that will allow passive investment as well as active involvement by members.

Recognising the considerable increase in interest from United States based promoters in Jersey, further innovation is in train. In November 2017, the government released a consultation paper in relation to the introduction of a law enabling the creation of limited liability companies (LLCs) and in April 2018 released its summary of responses to that consultation. It is anticipated that LLCs will enter the statute book in the third quarter of 2018. By design, LLCs are targeted at a North American market and it is considered likely that LLPs will continue to be a preferred structuring solution for UK originated promoters. The LLC will have legal personality separate from its members and managers, conferring limited liability on the same. It will be permitted, for Jersey tax purposes, to elect to be taxed either as a company or partnership. The uses to which LLCs may be put are wide ranging and varied, including both as active businesses, holding entities or investment structures. The proposed law permits the creation of designated series’ of members, managers, LLC interests or assets which, like an incorporated cell of an incorporated cell company, will ring fence the assets and liabilities attributable to such series and confer on the series legal personality separate from its members, the LLC or any other series.

There are many differences in the detail and operation of LLPs and LLCs and also some fundamental differences. The LLP describes the key characteristics of an LLP as comprising an association of persons who wish to carry on a business with a view to profit; each shall contribute capital or skill and effort; profits of the business shall be divided between them and each shall have an interest in the LLP property (as provided in the law). In contrast an LLC may be formed for any lawful business, purpose or activity, whether or not for profit; with unlimited capacity and consist of one or more members and may appoint one or more managers. In both cases, the LLP or LLC has its own legal capacity distinct from its members but is not a body corporate. The treatment for tax purposes is variable as mentioned above. In both cases the rules of Jersey customary law applicable to partnerships applies, save where inconsistent with the relevant statute.

Once these laws are in force, when taken together with the flexible provisions of Jersey companies law (which also allows protected cell companies and incorporated cell companies), and the widespread adoption of limited partnerships, separate limited partnerships and incorporated limited partnerships, the variety of tools available for business structuring in Jersey will be unparalleled. Variations of regulatory policy will be needed but Jersey’s innovation and adaptability in funds and investment services is firmly established.

Twitter LinkedIn Email Save as PDF
More Publications
2 Sep 2021 |

Duties of Trustees

The relationship of trustees to beneficiaries is viewed as fiduciary, meaning there are certain equi...

18 Aug 2021 |

Beneficial Owners and Controllers (BOC)

The aim of BOC is to drill-down to the identification of persons who are the beneficial owners and c...

30 Jul 2021 |

Fighting international fraud

First published in New Law Journal, July 2021. Appleby partners Anthony William and Jared Dann an...

Contributors: Jared Dann, Claire Corkish
27 Jul 2021 |

Fund Finance Update – Will Jersey’s new sustainable investment disclosure requirements aid ESG financing?

This article provides an overview of ESG, the hot topic of 2020 that is carrying on full steam throu...

Contributors: Daniel Healy
22 Jul 2021 |

Listing Variable Funding Notes (VFNs) on The International Stock Exchange

This article provides a summary of Appleby listing agent services in the Channel Islands, and also o...

1 Jul 2021 |

Saunders v Vautier where the beneficial class is not closed - the debate goes on...

The rule in Saunders v Vautier is familiar territory for trust lawyers.  In the modern world it is ...

17 Jun 2021 |

Solvency Statements under Companies (Jersey) Law 1991 - Is it time to go paperless?

In April of this year, the Royal Court of Jersey considered the practicalities around the making of ...

Contributors: Kevin McQuillan
11 Jun 2021 |

“Offshore intelligence – Funds in demand” Appleby Podcast

We have recently produced a podcast focused on the Funds industry entitled “Offshore Intelligence ...

2 Jun 2021 |

Why use Jersey entities in restructurings?

As the extension of various forbearance measures and fiscal support packages continues in response t...

Contributors: Gemma Whale, Andrew Weaver
28 May 2021 |

Further updates to the JFSC’s AML Handbook

On 31 May 2021, the handbook for the prevention and detection of money laundering and the financing ...

Contributors: Gemma Whale