Bermuda's House of Assembly has concluded its third reading of the Limited Liability Company Bill 2016 which has now been introduced to the Senate.
A limited liability company (LLC) is a hybrid legal structure allowing the contractual and operational flexibility of a partnership to be housed within a corporate entity. Subject to approval by the Senate, the introduction of LLC will be the first new corporate structure introduced in Bermuda in 100 years. Although new in Bermuda, LLCs are of course well known to those located in or who do business with, the United States of America. In particular, Bermuda's legislation has been modelled on the Delaware LLC and consequently will provide a welcome degree of familiarity to clients and their advisers.
Although the LLC vehicle may be utilised by clients in a broad range of sectors, the LLC has undoubtedly been of great interest to clients in the investment management/funds sector.
Appleby is pleased to have been able to work closely with the legislature to ensure that Bermuda's existing funds law is simultaneously amended so that LLCs are available immediately for use in investment fund structures.
We believe that the commonality with Delaware legislation will prove to be one of the many benefits of using a Bermuda LLC when structuring investments, allowing for consistency across the constitutional documents in a master/feeder structure, parity amongst investors and reduce implementation costs, especially where the documentation for any onshore vehicle is substantially in place.
Clients who work within family offices may also be interested in working with LLCs as they offer flexibility in structuring arrangements where there may be a number of family members but where a partnership or trust structure is unattractive for other reasons.
Upon the passing of Bermuda's LLC legislation, Appleby will release a detailed memorandum, setting out the key features of the legislation, the entity itself and further detail on how our clients might consider using Bermuda's newest vehicle.
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.