The British Virgin Islands has created a new partnership regime targeted at investment funds.
The BVI's Limited Partnership Act will provide all the typical benefits of limiting liability, as well as a number of unique features, marking an evolution in limited partnership law. It is particularly targeted at investment funds - limited partnerships have become a preferred structure for investment funds and are frequently used as a vehicle for private equity funds and joint ventures. The structure is aimed at investors not wishing to play an active role in managing the fund to limit their liability as the fund is controlled by a general partner who takes on unlimited liability.
The legislation contains several key innovations which represent a step change in this area of law. The Act contains a number of state-of-the-art provisions including legal personality allowing new partnership to have the capacity to hold assets and enter into contracts, and have the right to start legal proceedings in the name of the partnership. This provides partners with greater legal certainty and flexibility.
The new statute will allow limited partnerships to register charges, providing greater certainty for creditors, which will enable limited partnerships to borrow to fund operations. It also allows for forfeiture – the specific common law position on penalties will not be applied, so forfeiture provisions typical in most limited partnerships will be enforceable. It also creates model agreement inclusion – enabling the rapid set up of a limited partnership if needed. M&A provisions from the BVI Business Companies Act are applied in the new law, meaning limited partnerships can merge or consolidate with other limited partnerships.
Robert Briant, partner and head of the corporate deparment of British Virgin Islands law firm Conyers, Dill & Pearman, said: 'Taken together, the provisions of the Act combine to create a state of the art innovative limited partnership product. It has been drafted in the same style as our flagship BVI Business Companies Act and will bring the benefits of being flexible, easy to set up and cost effective.'
Lorna Smith, interim executive director of BVI Finance added: 'The BVI is committed to ensuring that our business legislation is modern and fits market needs, reflecting the actual commercial landscape in which companies operate. That is why we have created new provisions for limited partnerships in the BVI that will be highly attractive to funds, particularly private equity funds. This Act is the product of excellent collaboration between lawyers from eight firms based in the BVI, who have worked tirelessly to create this innovative statute. We are particularly proud of progressing this important piece of legislation despite being devastated by two Hurricanes last September. It shows that the BVI is very much open for business and continuing to innovate to help secure its place as a leading offshore financial centre.'