Conversion Of An Exempted Company To An Exempted Limited Partnership

1. INTRODUCTION

This publication outlines the steps necessary under the Companies Act 1981 of Bermuda for an exempted company established under the Companies Act 1981 to convert to a Bermuda exempted limited partnership, established under the Exempted Partnerships Act 1992 and the Limited Partnership Act 1883, which has elected to have legal personality, pursuant to the Partnership Act 1902 (the "partnership").

The conversion of an exempted company into an exempted limited partnership requires careful planning.

2. CONVERSION OF A BERMUDA EXEMPTED COMPANY TO AN EXEMPTED LIMITED PARTNERSHIP

2.1 Procedure

Any conversion must be authorised by the board of directors and by the shareholders of the exempted company subject to the terms of the exempted company's bye-laws. Once the conversion has been approved, an application must be made to the Bermuda Monetary Authority ("BMA") seeking permission for the exempted company to convert. This application should include:

1. the name of the exempted company;
2. the date of the exempted company's certificate of incorporation;
3. the new name following conversion;
4. the future effective date or time of the conversion (if applicable);
5. confirmation that the conversion has been approved by the board of directors and by the shareholders in such manner as authorised by the bye-laws;
6. the registered office address of the partnership; and
7. confirmation that the partners have approved in writing a form of partnership agreement of the partnership which conforms to the requirements of the Exempted Partnerships Act 1992, the Limited Partnership Act 1883, the Partnership Act 1902 and any other applicable law of Bermuda.

At least fourteen days prior to the date of the application to the BMA, notice must be published in a newspaper in Bermuda and in national newspapers in all jurisdictions within which the exempted company carries on a substantial part of its trade or business activities to the effect that the company intends to convert to a partnership.

A director of the exempted company must sign a statutory declaration confirming that the company is solvent, can meet all of its liabilities and obligations and that the conversion will not adversely affect the interests or rights of bona fide creditors and members of the company.

Once the relevant consent has been received from the BMA, application for conversion of the exempted company to a partnership in Bermuda must be made to the Registrar of Companies (the "Registrar"). The submission must include:

1. a copy of the application for conversion filed with the BMA;
2. the consent of the BMA;
3. the statutory declaration of solvency referred to above;
4. the certificate of exempted partnership; and
5. the certificate containing particulars of the limited partnership.

Where the Registrar receives confirmation that the BMA has consented to the conversion, the Registrar will issue a certificate of conversion, which shall specify the date of conversion of the exempted company to a partnership.

2.2 Consequences of Conversion

Upon conversion of an exempted company to a partnership pursuant to the Companies Act 1981:

1. the property of the exempted company will continue to be the property of the partnership;
2. the partnership continues to be liable for the obligations of the exempted company;
3. any existing cause of action, claim or liability to prosecution in respect of the exempted company is unaffected;
4. any civil, criminal or administrative action or proceeding pending by or against the exempted company may be continued by or against the partnership; and
5. any conviction against, or any ruling, order or judgment in favour of or against the exempted company may be enforced by or against the partnership

The conversion of an exempted company to a partnership under the Companies Act 1981 (i) does not create a new legal entity; (ii) shall not constitute a dissolution of such company; and (iii) shall cause the partnership to be the same entity as the converting company. The conversion shall constitute a continuation of the existence of the company in the form of a partnership.

The rights, privileges, powers, and interests in property of the exempted company that was converted shall not be deemed, as a consequence of the conversion, to have been transferred to the partnership.

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.