British Virgin Islands: International Limited Partnerships

INTRODUCTION

The object of this memorandum is to provide clients of Walkers with information on the formation and operation of an international limited partnership in the British Virgin Islands.

FEATURES OF BVI LIMITED PARTNERSHIPS

The British Virgin Islands Partnership Act 1996 (the "Act") has been enacted to reflect many recent developments in partnership law. The main features of the Act as they relate to international limited partnerships are:

1. The Act codifies the law for general partnerships, local limited partnerships and international limited partnerships into one piece of legislation.
   
   
2. The general partner can be a corporation and need not be registered or resident in the BVI.
   
   
3. Limited partners liability is limited to the amount stated in the articles to be contributed by the limited partner.
   
   
4. International limited partnerships are given tax exempt status in the same way as international business companies.
   
   
5. An international limited partnership name can be reserved for up to 90 days. The name must have at its end the words "Limited Partnership" or the abbreviation "L.P.".
   
   
6. There is no limitation on the number of partners.
   
   
7. International limited partnerships are required to have a registered agent in the British Virgin Islands.
   
   
8. International limited partnerships can have fixed term and non standard dissolution events.
   
   
9. The management of the international limited partnerships is conducted in accordance with the Memorandum and Articles of Limited Partnership.
   
   
10. There is a clear definition of the powers of limited partners.
    
    
11. International limited partnerships are required to be registered.
    
    
12. The identities of the limited partners are not available on the public record.
    
    

PROCEDURE

1. Articles must be executed by two or more persons desiring to form a limited partnership.
   
   
2. The signed articles are then submitted to the BVI registered agent named in the articles.
   
   
3. The registered agent signs a memorandum before a witness and files it with the Registrar. The memorandum must include:
   
   

LIABILITY OF LIMITED PARTNERS

The Act provides that a limited partner is not liable for the obligations of a limited partnership unless he is also a general partner or, in addition to the exercise of his rights and powers as a limited partner, he participates in the control of the partnership business and, if the limited partner participates in the control of partnership business, he is liable only to persons who transact business with the limited partnership reasonably believing, based upon the limited partner's conduct, that the limited partner is a general partner.

One notable exception is where a limited partner's name appears in the name of the limited partnership. In such a case, the limited partner is liable as a general partner to partnership creditors who extend credit to the partnership without actual knowledge that he is not a general partner.

The Act further provides that a limited partner is liable to the partnership:

1. for the difference between his contribution as actually made and as stated in the partnership agreement as having been made; and
   
   
2. or any unpaid contribution which he agreed in the partnership agreement to make in the future at the time and on the conditions stated in the agreement.
   
   

REGISTER OF PARTNERSHIP INTERESTS

A general partner must maintain a register at the partnership's registered office of all limited partnership interests including:

1. the name and address of each limited partner;
   
   
2. the amount and date of each contribution and any returns; and
   
   
3. all details of changes must be entered on the register within 21 business days.
   
   

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.