Cayman Islands Exempted Limited Partnership

• It is generally accepted that for a partnership to be established, there must be two or more persons or entities carrying on business with a view to profit.  In the case of an exempted limited partnership (ELP), the general partner must conduct the business (subject to certain defined exceptions) whilst the limited partners merely contribute capital and/or expertise.  Subject to the foregoing, the limited partners generally receive the benefit of liability which is limited to the amount of their interest in the ELP.  Profits are allocated amongst the partners in accordance with the provisions of the partnership agreement.

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• A significant characteristic of a Cayman Island exempted limited partnership (ELP) is that a limited partner’s interest can be redeemed at any time without requiring dissolution of the ELP, subject only to a clawback of such redemption proceeds (plus simple interest at 10% per annum, or at such rate as may be stated in the partnership agreement) should the ELP become insolvent within 6 months.  The amount to be clawed back would be such sum as is necessary to settle any debt or obligation of the ELP incurred during the period that the limited partner’s contribution formed part of the assets of the ELP.

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• The Exempted Limited Partnerships Law, as amended, also allows partnership interests to be used as security by limited partners, and allows limited partners to lend to an ELP, thereby enabling flexible funding structures.

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Establishing an Exempted Limited Partnership

 

An ELP is formed by means of a partnership agreement.  The ELP is registered in the Cayman Islands by way of a filing with the Registrar together with certain other documentation.  There are also various continuing obligations that must be complied with, which we can assist with once the partnership is established.

 

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