Hong Kong, April 27, 2018 - “The BVI’s new Limited Partnership Act is innovative, modern and efficient,” said Robert Briant, Partner and Head of BVI Corporate at the offshore law firm Conyers Dill & Pearman.
Mr. Briant was speaking on Thursday at an Investment Funds Lunch Seminar held at the firm’s Hong Kong office. The new Limited Partnership Act, which came into force in January this year, is modeled on the popularly-used BVI Business Company.
The act allows for the formation of Limited Partnerships (LPs) and requires a general partner, one limited partner and a limited partnership agreement. Limited Partnerships can be registered online on the BVI’s corporate registry, and the incorporation process takes just a few hours. Limited partnerships will still have to go through the normal know-your-customer (KYC) process and liaise with the registered agent as appropriate.
The registered agent is permitted to be the limited partner if a speedy incorporation is desired, and the LPs can be used for private equity funds and for complicated structures that need bespoke provisions for investors.
Limited Partnerships are deemed to have a legal personality unless otherwise selected. Mr. Briant said the new act takes corporate law concepts that work well for business and applies them to limited partnerships.
“The most significant innovation in the new Limited Partnership legislation is the ability to grant charge over its assets and for the bank to register that charge,” said Mr. Briant. “This provision gives creditors comfort that they will have priority under the BVI law.”
Explaining further, he said, “The bank can lend to the Limited Partnership as an entity with legal personality and file a description of charge in the BVI to obtain priority over those assets in the event of an insolvent liquidation. No one else has this provision.”
Mr. Briant discussed other innovative features of the LP, which include enforceability of penalty provisions; safe harbor provisions making the limited partner liable if they engage in management; ability for continuations to other jurisdictions; mergers, consolidations and arrangements; redemption of minority; liability of general partners; capital commitments; an asset clawback of payments; indemnification; and just and equitable winding up.
Ms. Elise Donovan, Director of BVI House Asia, said that when compared to other products in the market, the BVI offers some real advantages in investment funds, which the Asian clients will find exciting and beneficial.
Mr. Briant, who has been working as a BVI practitioner for the last 20 years, said the Limited Partnership Act was put together by a committee of BVI lawyers from various firms keen to keep the BVI’s financial services industry on the cutting-edge. “We reviewed all the other existing legislation on limited partnerships and are confident that the new BVI Limited Partnership Act provides clear advantages,” he said.