The British Virgin Islands (BVI) has been the leading jurisdiction for company formations with around 400.000 active companies registered. The BVI is also a very well-established jurisdiction for investment managers and advisors seeking to establish and operate an offshore fund, be it a hedge fund, a private equity fund, a real estate fund or a hybrid fund, a regulated or unregulated fund.
Earlier this year the BVI legislator introduced the very much anticipated BVI Limited Partnership Act, 2017, replacing Part VI of the former Partnership Act, 1996 for new limited partnerships and for those existing limited partnerships that elect to re-register under the Act.
By way of background, the BVI Limited Partnership Act, 2017 modernises the former BVI partnership law by introducing several key new features for limited partnerships, including the following:
- easy, quick and cost-effective formation
- flexibility regarding the terms of the partnership agreement
- ability to have a limited partnership with or without legal personality
- flexibility for the general partner for dealing with limited partners who default on capital commitments
- provisions facilitating capital call financing
- protections for managers (general partners) who manage a wide range of investment funds
- ability to publicly register security against a limited partnership with legal personality and to obtain priority under BVI law to the assets of the limited partnership as a result of the filing and to give constructive notice to third parties.
- extensive safe harbour provisions for limited partners
- application of certain corporate law concept to limited partnerships, such as continuations into and out of the BVI, mergers, consolidations, redemptions of minority interests and plans and schemes of arrangements between partners and or creditors of the limited partnership.
Hatstone believes that the new BVI Limited Partnership Act, 2017 will continue attracting a lot of interest from the private equity sector.