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
5 Jan 2022 |

Trustee Knowledge Series: Advanced Paper Six: Overview of protectors 'ad serviendum ac protegendum”

Appleby Private Client & Trust Partner David Dorgan has authored and distributed a series of Tru...

25 Nov 2021 |

Regulatory Approach to ESG across the Crown Dependencies

New requirements may require investment products to display a label reflecting their sustainability ...

24 Nov 2021 |

'Jersey's Relationship with India: Political, Commercial and Cultural Connections'

Jersey First for Finance has recently published a guide entitled ‘Jersey’s relationship with Ind...

18 Nov 2021 |

Trustee Knowledge Series: Advanced Paper Five - Trusts with Reserved Powers

Appleby Private Client & Trust Partner David Dorgan has authored and distributed a series of Tru...

11 Oct 2021 |

Trustee Knowledge Series: Advanced Paper Four: The proper law and place of administration of trusts and courts with exclusive jurisdiction

Over the next twelve months, Appleby Private Client & Trust Partner David Dorgan will author and...

7 Oct 2021 |

Jersey: an evolving global platform: Jersey First for Finance 2021

This article, taken from Jersey ~ First for Finance ‒ Celebrating 60 Years of Finance 1961-2021 wa...

4 Oct 2021 |

Navigating the Jersey M&A landscape (2 of 3)

This is the second of a series of three articles, each dealing with topics to be considered when buy...

Contributors: Andrew Weaver
22 Sep 2021 |

Minute Writing Training

Trustees are under a statutory duty to keep accurate records of their trusteeship, but what does tha...

15 Sep 2021 |

Navigating the Jersey M&A landscape

This is the first of a series of three articles, each dealing with topics to be considered when buyi...

Contributors: Andrew Weaver
2 Sep 2021 |

Duties of Trustees

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