Cayman Islands: Security Over A Limited Partnership Interest

This client briefing seeks to address the issues involved when security is granted over limited partners' interests in exempted limited partnerships.

This client briefing is intended to provide a general summary of the position in law as at the date shown above, and is not to be taken as specific legal advice applicable to particular issues or circumstances. If such advice is required, please contact your usual Ogier contact or one of our partners listed here.

Limited partnership interests

Limited partnership interests are recorded in a register of limited partners which is maintained by the general partner of the partnership. The register of limited partners may be inspected by any person, with the consent of the general partner, during all usual business hours. Each limited partnership interest comprises both rights and obligations under the partnership agreement and the Exempted Limited Partnership Law, 2014 (the ELP Law).


Just as there are two ways of taking security over the shares of an exempted limited company, either by a "legal charge" or an "equitable charge", a similar regime applies to charges of limited partnership interests in exempted limited partnerships. 

Equitable Charge

The most common way of securing a limited partner's partnership interest is by way of an equitable charge. It is considered an equitable charge because there is a right on the part of the secured party to call for the transfer of the limited partnership interest into the secured party's name, that is, there is a contractual right to a transfer of ownership, which equity will enforce. An equitable charge (whether in law or in equity) does not involve the transfer of ownership of the secured assets. 

Section 32(6) of the ELP Law, requires that, subject to the terms of the limited partnership agreement, the general partner must provide written consent to the grant by a limited partner of any security interest in, or the transfer of, the whole or any part of its limited partnership interest. 

Any security interest over a limited partnership interest is perfected by notice to the partnership's registered office and has priority in accordance with the time that written notice is validly served under section 31(4) of the ELP Law. Section 32(9) of the ELP Law further specifies that such written notice may be given by the grantor or the secured party.

Under section 32(10) of the ELP Law, such notice is not valid unless it specifies:

  1. the agreement pursuant to which the security interest is granted;
  2. the date of the agreement;
  3. the parties to the agreement;
  4. the grantor and grantee of the security interest; and
  5. the partnership interest or part thereof that is subject to that security interest.

Section 31(1) of the ELP Law requires the general partner to maintain a register of security interests in respect of all security interests registered and this register may be inspected by any person during all usual business hours.

It is advisable that the consent of the general partner to the grant of security over a limited partnership interest and to the transfer of that limited partnership interest on enforcement of the security is included as a condition precedent to any financing where such security is required.  It should also be noted that such consent, subject to any express provision of the partnership agreement to the contrary, may be withheld in the general partner's sole discretion.

A common closing deliverable to any financing secured by a charge over a limited partnership interest would be a signed but undated transfer of limited partner interest (much in the same way as a signed but undated share transfer form in the case of share security) – this transfer would only be dated upon enforcement. It is always important to check the terms of the limited partnership agreement as it may also require consent from other limited partners before any security interests can be granted over other limited partner interests.

Legal Charge

In the case of a legal charge the secured party takes an absolute transfer of a limited partnership interest and becomes registered as a limited partner in the register of limited partners, against an undertaking to reassign the limited partnership interest upon satisfaction of the secured obligations.  Once the secured party accedes to the partnership agreement in accordance with section 32(1) of the ELP Law, it then becomes a limited partner and has the rights and is subject to the obligations contained in the partnership agreement and the ELP Law.

As with the granting of security by way of an equitable charge over the limited partnership interest, subject to the terms of the limited partnership agreement, no transfer of such an interest as a result of a legal charge may be effected unless the general partner has provided its consent (section 32(6)(a) of the ELP Law).

The primary benefit of a legal charge is that if it becomes necessary to enforce the security, the secured party is already in control as the registered owner of the limited partnership interest. However, the significant disadvantage with legal charges is that the secured party is registered as a limited partner and subject to any rights or obligations of a limited partner under the relevant limited partnership agreement and the ELP Law.  Secured parties, and financial institutions in particular are generally not comfortable with this position and taking an equitable charge remains the more common way of obtaining security over a limited partnership interest.

Security over a limited partner's rights under the limited partnership agreement

The security regime described above relates to security over all or part of a limited partnership interest (i.e. both rights and obligations).  It is also possible for a limited partner to grant security over a particular right or rights under the partnership agreement (e.g. the rights to receive distributions of profit or returns of contributed capital). Such security is given in the same way as security over any other intangible right, by means of an assignment in writing of the rights(s), of which notice in writing is given to the partnership. It is likely that a limited partner's ability to make such an assignment will be limited by the terms of the partnership agreement.

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