Trust and Corporate Services
Partnerships and their Uses
The Partnership Law (2002 Revision) is based upon the
provisions contained in English Partnership Statutes. It generally regulates the
establishment of partnerships and permits the formation of limited partnerships. There are
three types of partnership which may be set up in the Cayman Islands – general
partnerships, limited partnerships and exempted limited partnerships.
Limited Partnerships
Limited Partnerships shall consist of not more than 20
persons and must have one or more persons called general partners who will be liable for
all debts and obligations of the venture. Limited partners are only liable for the amount
they have individually agreed to contribute and are prohibited from taking part in the
management of the partnership. Various public declarations are obligatory relating to the
partners, the partnership name, nature of its business, principal place of business, the
term of the partnership and the capital contributed by each partner. This information is
also filed with the Registrar who must be advised of any changes to the information.
Exempted Limited Partnerships
Exempted Limited Partnerships may be established under the
provisions of the Exempted Limited Partnership Law (2003 Revision). A partnership so
formed shall not undertake business with the public of the Cayman Islands and will be
registered with the Registrar. Public declarations are not required but restricted
information is filed with the Registrar. An Exempted Limited Partnership may apply for a
Tax Undertaking rendering the partnership free of any taxes which may be introduced in the
Cayman Islands for a period of fifty years from the date of application. These exempted
limited partnerships are the ideal solution for clients looking to establish a partnership
for offshore business purposes.
A fee is payable upon registration and annually in January
thereafter for any limited partnerships.
Uses of Partnerships
Partnerships, particularly those in limited form, have
proved attractive to potential investors in venture capital type situations. The
distribution of profits between the limited partners and the general partner(s) may be
achieved more efficiently through the flexibility afforded by a partnership than the
corporate structure. Other factors, such as potential tax benefits and the lack of
liability associated with being a limited partner, may also be compelling reasons for
establishing a partnership.
HSBC Financial Services (Cayman) Limited is well versed in
the operations of partnerships and is able to provide services either to partnerships on a
direct basis or through the General Partner responsible for the administration of the
partnership.
These services may include:
providing the registered and/or principal office of the
partnership
ensuring that the partnership is in compliance with
appropriate legislation
filing or publishing as required any amendments to the
partnership
maintaining accounting records of the partnership
including the production of financial statements of the partnership and individual
partners' statements
distribution of information and reports to the partners
arranging and maintaining records of partnership meetings.
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