A Limited Partnership is defined under the Partnership Act (the “Act”) as a Partnership formed by two or more persons with one or more general partners and one or more limited partners. Anyone person may be both a general and limited partner in the same partnership at the same time, but the partnership must always consist of at least two distinct persons.
The Act provides for two types of limited partnerships, the local limited partnerships and the ILP. The distinction between the two rests in the scope of business that they are permitted to conduct. An ILP is not permitted to carry on business with persons resident in the BVI or own an interest in real property situated in the BVI except where the property is leased as an office from which to communicate with partners or for storing the books and records of the partnership. For the purposes of the Act, an ILP shall not be treated as carrying on business with persons resident in the BVI merely because:
- it transacts banking business in the BVI with or through a bank licensed under the
Banks and Trust Companies Act;
- it makes or maintains professional contact with solicitors, barristers, accountants, bookkeepers, trust companies, investment advisers or other similar persons carrying on business within the BVI;
- it prepares or maintains books and records within the BVI;
- it holds, within the BVI, meetings of its partners;
- it holds a lease of property for use as an office from which to communicate with partners or where books and records of the partnership are prepared or maintained;
- it holds shares, debt obligations or other securities in a company incorporated under the Companies Act or the International Business Companies Act;
- any person resident in the BVI or any company registered under the Companies Act or incorporated under the International Business Companies Act is one of its partners.
An International Limited Partnership:
- may serve as a general partner of any other ILP;
- may hold within the BVI meetings of its partners, managers or advisers; and
- shall not be required to hold a licence under the provisions of the Company Management Act.
Who can form an International Limited Partnership
The Act provides that "two or more persons" can form a partnership. 'Person' is defined in the Act as including "a natural person, a partnership general or limited, domestic or foreign, a company, trust, estate, association, custodian, nominee or any other individual or entity in its own or any representative capacity." Based on the foregoing, a non-resident corporation or individual would not be allowed to establish an ILP. Indeed, partners themselves do not have to be individuals (applying the definition of "person") and the Act also provides that a body corporate (with or without limited liability) may be either a general or limited partner.
How is an International Limited Partnership formed?
Usually an ILP is established pursuant to a partnership agreement or articles which are submitted to the registered agent for the ILP. A Memorandum of the ILP is then prepared and submitted to the Registrar and must include:
- the firm name -the name of the ILP must end with the words "Limited Partnership" or the abbreviated "LP". The name of a limited partner must not appear in the firm name unless it is also the name of the general partner in the ILP or the business of the ILP was carried on under that name prior to the time that the limited partner was admitted. Unless written permission is granted by the Registrar, the following words or phrases, or words or abbreviations conveying a similar meaning, are prohibited from use in the name of a ILP:
- the objects and purposes for which the partnership is established -the Act provides that a limited partnership may have a wide objects clause. It may also be established for any object or purpose not prohibited under the Act or under any law for the time being in force in the BVI. The objects and purposes of the partnership may be limited by conditions or limitations in the Memorandum or Articles. An ILP may not carry on:
- banking business;
- trust business;
- the business of insurance, reinsurance, insurance agent, insurance adjuster or insurance broker or any other kind of insurance business; or
- the business of company management unless it is licensed or is exempt from being licensed under the Company Management Act.
- The address of the registered office of the partnership
- The name and address of the registered agent of the partnership .the full name and address of each general partner
- The term, if any, for which the partnership is to exist a statement that the partnership is limited
- A statement that every partner not named as a general partner in the memorandum is a limited partner
- Other information - In the case of an ILP it must contain a statement that the partnership will not carry on the any of the prohibited activities. The Memorandum should also include any other information that the registered agent is instructed to include therein by the provisions of the partnership's Articles/agreement.
Books and Records
The general partners of an ILP are required to maintain a register of limited interests. The Register must contain:
- the names and addresses of the limited partners;
- the amounts and dated of their contributions; and
- the amount and date of any payment representing a return of any part of a limited partner's contribution.
The register must be held at the registered office of the ILP and will not, therefore, be available for inspection by the public. It must be updated within twenty-one days of any changes. The register constitutes prima facie evidence of the matters it contains. Willful failure by a general partner to comply with the requirement to maintain a register of limited partnership interest is an offence and may result in the imposition of a daily fine throughout the period for which the breach continues.
Other than the register of the limited partnership interest, a limited partnership is only required to keep such accounts and records as the partners consider necessary or desirable to reflect the financial position of the partnership.
A ILP is exempt from the provisions of the BVI Income Tax Act. All payments made by an ILP to persons not resident in the BVI, and all capital gains realised with respect to any interest in an ILP held by persons who are not resident in the BVI, are exempt from income tax.
There is no stamp duty payable on instruments relating to transfers of property to or by an ILP, on instruments relating to transactions in respect of the interests of an ILP or on instruments relating to the business of an ILP.
What are the costs involved
The cost to establish and maintain a British Virgin Islands International Partnership will vary depending on the partnership structure desired. For an estimate of costs please contact us.
Should you require any additional information please do not hesitate to give us at email@example.com