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
27 Sep 2022

Similar but Different

While the basic features of the trust remain, there are some notable differences in how trusts can b...

1 Aug 2022

Register of Overseas Entities: A Jersey perspective

The Register of Overseas Entities at Companies House (ROE), as contemplated by the Economic Crime (T...

30 Jun 2022

Digital Identification in Jersey

There have been considerable changes made to the way we do business in recent times. These changes w...

Contributors: Gemma Whale, Paul Worsnop
17 Jun 2022

Proposals to amend the Powers of Attorney (Jersey) Law 1995

Following the recent update from our Guernsey colleagues on the introduction of lasting or enduring ...

Contributors: Gemma Whale
9 Jun 2022

Trustee Knowledge Series: Masters Paper Two: Family Governance

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

17 May 2022

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

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

Contributors: Andrew Weaver
5 May 2022

The Economic Crime (Transparency and Enforcement) Act 2022: a Jersey perspective

The new Economic Crime (Transparency and Enforcement) Act received Royal Assent on 15 March 2022 (th...

Contributors: Andrew Weaver, Gemma Whale
21 Apr 2022

Listing Private Equity Acquisition Debt on The International Stock Exchange

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

12 Apr 2022

Trustee Knowledge Series: Masters Paper One: PTC Structures

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

16 Mar 2022

Trustee Knowledge Series: Advanced Paper Eight: Amending Mistakes

It is almost inevitable that during the life of most trusts (which can now last indefinitely in many...