Jersey Finance has welcomed a further series of amendments to Jersey’s limited partnership law, approved on 27 April, which aim to give fund managers greater flexibility in their international fund structuring.
The amendments, subject to Privy Council approval, are expected to come into force in the third quarter of this year. They aim to modernise the jurisdiction’s regulatory framework, recognising trends and developments in the international funds environment.
In particular, they introduce 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:
• Greater flexibility – such as 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
Popularity of LPs
The limited partnership vehicle is used extensively in cross-border fund structuring, particularly in the private equity and venture capital asset classes. It is popular for a range of reasons, including tax-neutrality and limited liability.
The last set of amendments to Jersey’s limited partnership law was in 2020, when a statutory basis for limited partnerships to be migrated from other jurisdictions was introduced.
This provided greater legal certainty for managers and investors and resulted in a significant uptick in limited partnership fund structures moving to Jersey.
Elliot Refson (pictured), Head of Funds at 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.
“These latest amendments will be welcomed by the industry as a further demonstration of our innovative approach and capability to support high-quality private equity and wider alternative fund structuring.”