Cayman Islands: Exempted Limited Partnerships In The Cayman Islands

Last Updated: 15 May 2017
Article by Harneys  



The Exempted Limited Partnership Law (the ELP Law) governs the formation of exempted limited partnerships (ELPs) in the Cayman Islands. The Partnership Law also contains provisions relevant to the affairs of an ELP, being the main legislation governing partnerships generally.

Nature of an ELP

The Partnership Law defines a partnership as "the relation which subsists between persons carrying on a business with a view to profit". An ELP is a partnership consisting of at least one general partner (who has responsibility for the business affairs of the partnership) and any number of limited partners, which is registered as such under the ELP Law.

Not a separate legal entity

An ELP is not a separate legal entity, but is a set of contractual obligations among the partners, with a general partner which manages the business, holds the assets of the ELP on trust for its parties and has unlimited liability for the ELP's debts and obligations, and limited partners who do not manage the business and have limited liability. Additionally, unlike a general partnership, an ELP is not dissolved or disrupted by a change in the identity of the partners, the assignment of a limited partnership interest or the death or bankruptcy or incapacity of a limited partner.

Transparent vehicle

ELPs are often treated differently than companies for onshore tax purposes, typically being treated as fiscally transparent. Onshore tax advice should always be taken prior to entering into any offshore arrangement or investment.


ELPs are exempted from any Cayman Islands income or gains taxes and can obtain a tax undertaking certificate from the Cayman Islands government guaranteeing no change in their tax status for a period of up to 50 years.

Establishment and operation of an ELP

General partner

Every ELP must have a general partner. The general partner is typically a Cayman Islands exempted company, but can be a Cayman Islands resident individual, a foreign company, a limited liability company established under the Cayman Islands Limited Liability Companies Law, another ELP or a foreign limited partnership. In the case of an exempted company, the management of the ELP ultimately rests with that entity's board of directors. A key aspect of an ELP is that the general partner has unlimited liability in the event that the assets of the partnership are inadequate to satisfy the claims of creditors.

All documents entered into by an ELP must be executed by or on behalf of the general partner and legal proceedings for or against an ELP may be taken by or against one or more of the general partners.

A general partner has a statutory obligation to act at all times in good faith and, subject to any express provisions in the partnership agreement to the contrary, in the interests of the ELP.

Limited partners

Under the ELP Law, limited partners are partners who do not manage the business of the partnership or hold assets in the name of the partnership and whose liability for partnership obligations is typically limited to the level of their agreed commitment to the partnership. The partnership agreement may set out that contributions are payable in one single amount or in instalments, and may be payable in cash or by transfer to the partnership of non-cash assets, such as property or investments.

Limited liability status

A limited partner does not lose its limited liability unless it takes part in the conduct of the business of the ELP in its dealings with persons who are not partners as though it were, for that period, a general partner. In such a case liability is only to a person who transacts business with the ELP with actual knowledge of the limited partner's management participation and who then reasonably believed the limited partner to be a general partner.

What can a limited partner do in relation to the partnership without losing their limited liability?

As noted above, provided that limited partners do not take part in the conduct of the business of the partnership in its dealings with third parties, they will not lose their limited liability status. By way of example, the ELP Law sets out a non-exhaustive list of common actions which can be taken by a limited partner without them being deemed to take part in the conduct of the business of the ELP, including:

  • holding an office or interest in, or having a contractual relationship with, a general partner, or being a contractor for or agent or employee of a general partner, or acting as a director, officer or shareholder of a corporate general partner;
  • consulting with and advising a general partner or consenting or withholding consent to any action proposed, in the manner contemplated by the partnership agreement, with respect to the business of the ELP;
  • investigating, reviewing, approving or being advised as to the accounts or business affairs of the ELP or exercising any right conferred under the ELP Law;
  • acting as surety or guarantor for the ELP generally or in respect of specific obligations;
  • approving or disapproving an amendment to the partnership agreement;
  • calling, requesting, attending or participating in any meeting of the partners;
  • taking any action that results in the winding up or dissolution of the ELP;
  • taking any action required or permitted by the partnership agreement or law to bring, pursue, settle or terminate any action or proceedings brought under certain specific circumstances under section 33(2) of the ELP Law;
  • appointing (or removing) a person to serve on any board or committee of the ELP, a general partner or a limited partner;
  • serving on any board or committee of the ELP, a general partner, the limited partners or the partners, or by appointing, electing or otherwise participating in the choice of a representative or any other person to serve on any board or committee, or by acting as a member of any board or committee either directly or by or through any representative or other person, including giving advice or consenting, or refusing to consent, to any action proposed by the general partner on behalf of the ELP and exercising any powers or authorities or performing any obligations as a member of that board or committee in the manner contemplated by the partnership agreement;
  • serving on the board of directors or a committee of, consulting with or advising or being an officer, director, shareholder, partner, member, manager, trustee, agent or employee of, or by being a fiduciary or contractor for, any person in which the ELP has an interest or any person providing management, consultation, custody or other services or other products for, to or on behalf of, or otherwise having a business or other relationship with, the ELP or a general partner; or
  • voting as a limited partner on the winding up and dissolution of the ELP; the purchase, sale, exchange, lease, mortgage, pledge or other acquisition or transfer of any asset by or of the ELP; the incurrence or renewal of indebtedness by the ELP; a change in nature of the business of the ELP; admission, removal or withdrawal of a general or limited partner and the subsequent continuation of business of the ELP; or transactions in which one or more of the general partners have an actual or potential conflict of interest with one or more of the limited partners.

The limited partnership agreement should carefully delineate the respective roles of the general and limited partners to make sure that there is no inadvertent loss of limited liability.

The ELP Law explicitly confirms that a limited partner does not, unless the limited partnership agreement provides otherwise, owe any fiduciary duty to the partnership or any other partner.

Formation and registration

Until it is registered, an ELP is a general partnership under Cayman Islands law and therefore it is crucial that registration happens immediately after the partnership is formed.

Registration of an ELP is done by paying the filing fee and filing a statutory statement (a Section 9 Statement) signed by or on behalf of the general partner with the Registrar of ELPs (the Registrar). The Section 9 Statement contains prescribed particulars of the ELP:

  • its name;
  • a general description of its business;
  • its registered office address;
  • the term (if any) for which the ELP is entered into; and
  • the particulars of its general partner.

The Section 9 Statement also includes a declaration made by the general partner that the ELP will not carry on business with the public in the Cayman Islands other than to the extent necessary to facilitate its overseas business.

The name of an ELP must include the words/letters "Limited Partnership" or "L.P." or "LP". ELPs can be established on an express basis and no governmental or regulatory approvals are required.

On registration, the Registrar will issue a certificate of registration for the partnership, typically within 3-5 working days of the application being made, or within 24 hours if the application is made on an express basis and an express fee paid. Please contact us for details of the current government fees payable.

Residency requirements

Every ELP must have a registered office in the Cayman Islands. There are local residency requirements for at least one general partner:

  • if the general partner is an individual, he or she must be resident in the Cayman Islands;
  • if the general partner is a company, it must be registered under the Companies Law (either by incorporation as a Cayman Islands company or as a foreign company) or as a limited liability company under the Limited Liability Companies Law; or
  • if the general partner is itself a limited partnership, it must be registered under the ELP Law (either by registration as an ELP or as a foreign limited partnership).

Local presence is a logical requirement so that the Cayman courts will have jurisdiction over the partnership and so that the partners are more readily accountable to the provisions of the ELP Law.

The partnership agreement

As an ELP is effectively a contractual vehicle with a statutory overlay, the partnership agreement is the key document which deals with the way in which the business of the ELP is run and the rights and obligations of the partners among themselves. It will also deal with the admission, retirement and withdrawal of existing partners and the transfer of partnership interests, the allocation and distribution of profits of the ELP between the partners and the return of contributions to limited partners. Each limited partner will typically grant the general partner a power of attorney authorising them to take certain actions on behalf of the limited partners.

Depending on the nature of the business, the partnership agreement may be very brief, amounting to little more than a skeleton agreement under which the general partner may exercise considerable discretion, or it may be very detailed and robust, similar to the articles of association of a company. The partnership agreement is not registered with any authority and is not open to public inspection in the Cayman Islands.

Statutory registers

The general partner has the responsibility for maintaining (or causing to be maintained) the following statutory registers:

Register of limited partners

This register must contain the name and address of each limited partner and the date on which a person became or ceased to be a limited partner. The register of limited partners can be kept anywhere in the world. If the register is kept at a place other than the registered office it must still be readily accessible, as it must be made available at the registered office should there be a notice or order for production under the Tax Information Authority Law.

The register can be kept in electronic form and must be updated within 21 days of any changes. The register (and the record of address at which the register is maintained if it is not maintained at the registered office) is open to inspection by all partners (subject to any express or implied term of the partnership agreement) and by any other person with the consent of the general partner.

The record of contributions and payments

The record of contributions and payments must show the amount and date of the contribution or contributions of each limited partner and the amount and date of any payment representing a return of the whole or any part of the contribution of any limited partner. As with the register of limited partners, this record may be kept in or outside of the Cayman Islands but must be updated within 21 days of any change and be accessible to the registered office. These records are only available for inspection by any person (including a limited partner) with the consent of the general partner.

The register of security interests in relation to limited partnership interests

A register of security interests that have been granted over any limited partnership interest must be maintained at the registered office. When a security interest is granted over the whole or any part of a limited partnership interest, the ELP Law requires that notice must be given by the grantor (ie the limited partner) or the grantee (eg the lender) to the ELP at the registered office. The general partner must then enter on the register the identity of the grantor and the grantee, the relevant partnership interest, and the date on which notice of the security interest was validly served. The register must be open for public inspection during regular business hours. Any security interest has priority according to the time that the written notice is validly served at the registered office.

Annual requirements

The general partner is required to make an annual return to the Registrar in January each year regarding compliance with the ELP Law and to pay an annual return fee. The annual return will generally be signed on behalf of the general partner by the registered office service provider. Particulars of relevant fees are available on request.

Changes to the Section 9 Statement

Any changes to the Section 9 Statement must be promptly notified to the Registrar, by filing an amended statement signed by the general partner. In general, changes must be notified within 60 days; however, a change to the general partner must be filed within 15 days of the change and is not effective until that filing is made.

Dealings with partnership interests

With the consent of the general partner, a limited partner may transfer or grant a security interest in its partnership interest (subject to any provisions in the partnership agreement dispensing with or modifying the requirement for consent).

In the case of a transfer of a partnership interest, the transferee is typically admitted to the partnership in accordance with the formalities prescribed in the partnership agreement. Once the requirements for admission have been met, the ELP Law provides that the incoming partner is deemed to have agreed to and be bound by the terms and conditions of the partnership agreement as if all parties had together duly executed and delivered it.

A general partner may also, subject to the partnership agreement, transfer or grant a security interest in its general partnership interest with the written consent of any other general partner.

Failures to perform

The partnership agreement may include provisions setting out the consequences for a partner who fails to perform any of its obligations under the partnership agreement. For example, the partnership agreement may provide that if a limited partner fails to contribute to the partnership such funds as were committed, that partner shall forfeit its partnership interest. The ELP Law expressly provides that such provisions in the partnership agreement will not be unenforceable solely on the basis that they may be penal in nature.

Return of contributions

If a limited partner receives a payment (or is released from an obligation) in respect of its commitment and at the time that the payment or release was made the partnership is insolvent and the limited partner has actual knowledge of the insolvency, then for a period of six months the limited partner is liable to the partnership for the amount (to the extent required to settle the debts of the partnership).


The general partner is required to keep (or cause to be kept) proper books of account. The records must be sufficient to give a true and fair view of the business and financial condition of the ELP and to explain its transactions. These records must be retained for a minimum period of five years.

Subject to the partnership agreement, each limited partner may demand and receive from the general partner a true and full picture of the state of the business and financial condition of the partnership.

There is no requirement for the accounts of an ELP to be audited each year under the ELP Law, although this may be required if the partnership is otherwise regulated, for example under the Mutual Funds Law.


A general partner may apply to the Registrar to de-register the ELP in the Cayman Islands and continue the partnership in another jurisdiction. For de-registration to be available, the foreign jurisdiction must permit (or not prohibit) the transfer of the ELP. In addition, a fee must be paid and the application must be supported by an affidavit of the general partner assuring the Registrar that certain conditions are met, eg the solvency of the partnership.

Strike off

Where the Registrar has reasonable cause to believe that an ELP is not carrying on business or is not in operation, it may strike the partnership from the register. A general partner may also request, upon payment of a prescribed fee, that an ELP be struck off the register. A partner or creditor aggrieved by a striking off may apply to have the ELP restored to the register. An ELP is deemed to be dissolved once it has been struck off.

Winding up and dissolution

Most ELP agreements contain provisions prescribing the automatic winding up and dissolution of the partnership upon the occurrence of a particular event. That event is typically the passing of a resolution by the general partner to the effect that the partnership's affairs be wound up and the partnership dissolved. In the absence of such a provision, a solvent partnership will continue in existence until wound up and dissolved by a resolution of all general partners and a two-thirds majority of the limited partners.

The death, bankruptcy or incapacity of the last remaining general partner will cause an automatic dissolution of the ELP unless the limited partners take steps to replace them.

A partner or creditor can also apply to the court for an order for dissolution on just and equitable principles. It is possible to include a contractual non-petition covenant in the partnership agreement to guard against this.

In cases not involving automatic dissolution, the provisions of Part V of the Companies Law and the Companies Winding Up Rules are deemed to apply.

Regulation and AML compliance

If an ELP is established as an open-ended investment fund in the Cayman Islands and falls within the definition of a "mutual fund" under the Mutual Funds Law, it may be regulated by the Cayman Islands Monetary Authority (CIMA) and will have to comply with Cayman Islands money laundering legislation.

Closed-ended funds established as ELPs, such as private equity funds, do not fall within the definition of a "mutual fund" and are therefore not regulated by CIMA. Closed-ended ELPs are not expressly covered within the relevant definitions in the Cayman Islands money laundering statutes as such, but their activities may constitute "relevant financial business" and they may, therefore, be covered by those laws. It is, however, best practice for general partners to conduct standard KYC and due diligence procedures on investors in accordance with Cayman Islands anti-money laundering legislation or delegate responsibility for AML compliance to an administrator.

The registered office service provider will always need to obtain KYC and due diligence information on the general partner and some of the limited partners.

Please see our Guide to Investment Funds in the Cayman Islands and our Guide to Private Equity in the Cayman Islands for more information about ELPs which are established as investment funds.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions