According to experts with Carey Olsen’s Guernsey offices, the LLP structure is being introduced in response to demand by companies looking to set up in the Channel Island jurisdiction.
In particular, professional services firms that have historically structured themselves as partnerships will, Carey Olsen says, "be attracted by the limited liability and flexible management arrangements afforded to members of an LLP, and it is for such firms that LLPs have proved particularly popular in the UK".
LLPs are also seen to be well suited to special purpose “mancos” (management companies) and general partner vehicles, particularly for certain technical reasons that have to do with recently-introduced changes to the UK’s Partnership Accounts Regulations, a Carey Olsen spokesperson said.
Jersey's LLP rules amended
Guernsey's introduction of LLP regulations comes a little more than a year after its Channel Island neighbour and rival, Jersey, amended its existing LLP rules, which, in spite of having been brought in in the late 1990s, had failed to result in a single LLP ever having been registered there.
The reason for this was said to be a requirement that such LLPs maintain a bond or similar financial provision equal to £5m, in order to provide creditor protection on the winding up of the LLP. That requirement was replaced by a rule that restricted the withdrawal by any of the LLP's partners of property, except under certain circumstances that proved the business would be able to continue to function and meet its obligations for 12 months.
According to the Carey Olsen spokesman, "a few" Jersey LLPs are now up and running.
Before they become law, the new Guernsey LLP regulations must be approved by the UK's Privy Council.
