Jersey Limited Partnership Amendments Aim to Provide Greater Flexibility for Fund Managers

The amendments, which are subject to Privy Council approval and are expected to come into force in the third quarter of this year, are designed to modernise the jurisdiction’s regulatory framework, recognising trends and developments in the international funds environment.

In particular, they include introducing wider protections for the limited liability of limited partners, by expanding “safe harbour” provisions where participation in the management of a limited partnership is concerned.

Further amendments include:

• The introduction of greater flexibility through a number of measures, including allowing third parties to have enforceable rights under the partnership agreement while not being a partner of the Limited Partnership
• New reporting obligations to ensure the Register is kept up-to-date, including a new annual confirmation requirement
• A clearer termination process
• The introduction of wider amendment powers by way of secondary legislation to facilitate quicker and more efficient legislative change in the future

The Limited Partnership vehicle is used extensively in cross-border fund structuring, particularly within the private equity and venture capital asset classes, and is popular for a range of reasons including the tax neutrality and limited liability the structure offers.

The last set of amendments to Jersey’s Limited Partnership law were made in 2020, when a statutory basis for limited partnerships to be migrated from other jurisdictions was introduced. The move provided greater legal certainty for managers and investors and resulted in a significant uptick in Limited Partnership fund structures moving to Jersey.

Elliot Refson, Head of Funds, Jersey Finance, said: “We continue to see strong growth in our funds sector with the latest figures showing that private equity and venture capital business, asset classes where Limited Partnerships are widely used, grew by 27% over 2021.

“We have a strong track record when it comes to evolving and enhancing our ecosystem for alternative funds. These latest amendments will be welcomed by the industry as a further demonstration of our innovative approach and our ambition and capability to support high quality private equity and wider alternative fund structuring.”