Jersey Partnerships

Jersey offers a choice of partnership type, mostly similar to partnerships found under English or Scottish law, although in some areas, the Jersey law is more up to date.  The choice will depend on whether a separate legal identity is required; how the partnership will be treated for tax purposes; the amount of information available to the public; and the client’s attitude to risk and liability.  Every partnership must be formed under a contract, have a lawful purpose and be aimed at making a profit, although it is not necessary to carry on business actively – a partnership could be a passive vehicle as long as the aim is to make a profit.  Each partner must make a contribution to the partnership, which can be in the form of a cash contribution or in the form of services provided, for example.

Limited Partnerships are currently a popular choice in Jersey as a useful vehicle for a wide variety of financial planning arrangements. They make it possible for a partnership structure to be employed for investment purposes while protecting passive investors against unlimited liability for the partnership’s debts.  They are fiscally transparent, so that they are treated as a Jersey tax exempt structure and the partners being treated as having a pro-rata share of each underlying investment and of any income derived from that investment.

If the Limited Partnership is a passive holding structure, it may not be subject to regulation, whereas a more active investment vehicle may be subject to the Collective Investment Funds (Jersey) Law 1998 and the provisions of the Regulation of Undertakings and Development (Jersey) Law 1973 and advice should be taken on this, especially if the client’s tax advice is that a business presence should be established to support the concept of the limited partnership.

Limited Liability Partnerships can offer a vehicle to businesses that do not wish to separate ownership and management of the business.  They also offer protection against litigation risk for substantial professional partnerships in preference to the alternative of forming a limited liability company and with less disclosure of confidential information.  Although Limited Liability Partnerships have separate legal personality, they are not a body corporate.

What are the main features?

Limited Partnership

Limited Liability Partnership

Governed by Limited Partnerships (Jersey) Law 1994.

Governed by Limited Liability Partnerships (Jersey) Law 1997.

No separate legal personality.

Separate legal personality but unincorporated status.

Acts through and holds property via its general partners, of which there must be at least one, which need not be a Jersey-registered entity.

Property can be registered in the name of the partnership

If the general partner changes, all partnership assets it holds must be transferred to the new general partner.

A change of partner will not affect the legal personality of the partnership although there must be at least 2 limited partners.

General partner has unlimited liability and the limited partner’s liability is restricted to the amount of his contribution. However, the general partner’s liability can be ring-fenced if it is a limited liability company.

All partners have limited liability.

To maintain his limited liability, the limited partner may not be involved in the management of the business, although the law helpfully lists activities that would not constitute active involvement.

All partners can participate in the management of the business.

The partnership document, the names of the limited partners and their contributions are not on the public record.

The names of the limited partners are on the public record

Unlimited number of limited partners permitted.

Unlimited number of limited partners permitted.

£150 annual fee payable to the JFSC but no requirement to file an annual return.

£500 annual fee payable to the JFSC and an annual declaration filed.
No audit requirement. No audit requirement.


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