Separate Limited Partnerships (Jersey) Law 2011

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A decision made 21 March 2011:

Decision Reference: MD-E-2011-0041

Decision Summary Title :

Appointed Day Act for Separate Limited Partnerships (Jersey) Law 2011

Date of Decision Summary:

March 2011

Decision Summary Author:

Director,

Finance Industry Development

Decision Summary:

Public or Exempt?

Public

Type of Report:

Oral or Written?

Written

Person Giving

Oral Report:

n/a

Written Report

Title :

Appointed Day Act for Separate Limited Partnerships (Jersey) Law 2011

Date of Written Report:

March 2011

Written Report Author:

Director,

Finance Industry Development

Written Report :

Public or Exempt?

Public

Subject:

Approval of the Appointed Day Act for the Separate Limited Partnerships (Jersey) Law 2011 (“the SLP Law”).

Decision(s):

The Minister approved the lodging of the Appointed Day Act to permit the States to vote on bringing the SLP Law into force .

Reason(s) for Decision:

The Appointed Day Act is required to bring into force the SLP Law which was adopted by the States on 25 May 2010 and sanctioned by the Privy Council on 16 March 2011.

Resource Implications:

There are no financial or manpower costs for the States.

Action required:

The Appointed Day Act to be lodged au Greffe for debate by the States at the earliest opportunity.

Signature:

Position:

Minister for Economic Development

Date Signed:

Date of Decision (If different from Date Signed):

Separate Limited Partnerships (Jersey) Law 2011 - Lodging of Appointed Day Act

Appointed Day Act for Separate Limited Partnerships (Jersey) Law 2010

1. ISSUE AND RECOMMENDATION

1.1. The Appointed Day Act is required to bring into force the Separate Limited Partnerships (Jersey) Law 2011 (“the SLP Law”), which was adopted by the States on 25 May 2010 and sanctioned by the Privy Council on 16 March 2011.

1.2. The Appointed Day Act will bring the SLP Law into force two weeks after approval by the States.

1.3. It is recommended that the Minister approves the Appointed Day Act and that it is lodged au Greffe for debate by the States at the earliest opportunity.

1.4. There are no financial or manpower considerations for the States.

2. BACKGROUND

2.1. Since the passing of the Limited Partnerships (Jersey) Law 1994 (“the 1994 Law”), Jersey limited partnerships have proved increasingly popular, particularly as collective investment vehicles, and particularly among private equity investors. The 1994 Law is widely considered to be both modern and clearly drafted. We seek to build on that success with the introduction of two further limited partnership laws, introducing different possible legal statuses for limited partnerships. One of these is the SLP Law, the other, the Appointed day Act Incorporated Limited (Partnerships (Jersey) Law 2010 will follow shortly.

2.2. A limited partnership is a form of partnership having both general and limited partners. The key feature is that the limited partners’ liability is limited to their partnership contribution, while the general partners’ liability is unlimited. In order to benefit from this limited liability, the limited partners must not involve themselves in the management of the limited partnership.

2.3. At present a Jersey limited partnership does not have a legal personality of its own. In some circumstances this can pose a problem for investors, e.g. if investing in another jurisdiction which does not recognise the concept of limited partnerships. In Scotland limited partnerships do have legal personality, while in Guernsey limited partnerships have a choice as to whether to adopt legal personality or not. It is believed that a wider range of uses of Jersey limited partnerships would be made by consumers if they had the option of creating a limited partnership with legal personality.

SEPARATE LIMITED PARTNERSHIPS (JERSEY) LAW 201-

2.6. The SLP law creates an entity (the SLP) which follows the Scottish model of limited partnership in having a legal personality separate from that of the partners but without being a body corporate. It will be called a ‘Separate Limited Partnership’ as a contraction of ‘Separate Legal Personality Limited Partnership’, which was considered too lengthy to be suitable as a name.

2.7. The SLP will be capable of owning property in its own name (as opposed to limited partnerships under the 1994 Law, which hold property in the name of one or more general partners as an asset of the limited partnership in accordance with the terms of the partnership agreement). The SLP will also be capable of entering into contracts in its own name. However, unlike a body corporate, it will not have perpetual succession. The existence of the separate legal personality will not affect the rights of the partners as between themselves.

2.8. In many ways, SLPs will be similar to existing Scottish limited partnerships. However, while a Scottish Limited Partnership must be “between persons carrying on business with a view to profit”, Article 3(3) of the SLP Law retains the more flexible Jersey provision that an SLP may be set up for any lawful purpose.

2.9. A further potential advantage of the SLP Law over the Scottish model is that the UK Partnership Act 1890 provides that, “In Scotland a firm is a legal person distinct from the partners of which it is composed...”, which leaves open the possibility that a Scottish limited partnership should not be treated as having such personality outside Scotland. Article 3(4) of the draft Law by contrast is completely unqualified in stating that an SLP is a legal person.

2.10. This ADA is lodged prior to the Law being registered in the Royal Court in order to bring the Law into force sooner. This is an exceptional event which is advocated due to the fact that Jersey Finance Limited has stated that there is a pressing commercial need to bring this law into force as quickly as possible. The Bailiff’s consent has been given in order to do this.

3. RECOMMENDATION

3.1. It is recommended that the Minister approves the Appointed Day Act and that it is lodged au Greffe for debate by the States at the earliest opportunity.

DIRECTOR, FINANCE INDUSTRY DEVELOPMENT

18 March 2011

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