A partnership is defined by the Partnership Act, 1902 as a relationship subsisting between persons carrying on a business in common with a view of profit.
Legislation which governs all Bermuda partnerships does not attempt to regulate the affairs of a partnership to any great extent. If the partnership agreement does not provide for a particular situation, the Partnership Act 1902 would apply.
Partnerships are either local or exempted and may be general or limited.
A local partnership is composed of Bermudian partners only and is permitted to conduct business locally and abroad.
If one or more of the partners in a partnership does not possess Bermudian status, then the partnership is an exempted partnership and defined as a partnership in respect of which articles of partnership have been registered in accordance with the Partnership Act 1902, the Exempted Partnerships Act 1992 and may only conduct business outside Bermuda from a principal place of business within Bermuda.
The partnership agreement must state the nature of the business to be carried out by the partnership and only that business may be undertaken by the partnership.
The articles, particulars and general partners of the partnership agreement may not be altered without the prior approval of the Minister of Finance.
The amount of capital to be contributed to a partnership by the partners must be stated in the partnership agreement, and must be not less than the foreign currency equivalent of BD$12,000.
In addition to the Partnership Act 1902, the Exempted Partnerships Act 1992 applies to exempted partnerships.
An exempted partnership:
In a general partnership there is no limit to the liability of the partners, with each partner being liable jointly and severally with the others for the debts of the partnership incurred whilst that partner is a member of the partnership.
The Limited Partnership Act 1883 the Partnership Act 1902 and, if applicable, the Exempted Partnerships Act 1992 apply to limited partnerships.
Under the provisions of the Limited Partnership Act, 1883 a limited partnership consists of one or more general partners and one or more limited partners. Only the general partners are authorised to transact business and sign for and bind the partnership, and only they are liable jointly and severally to an unlimited extent for the debts of the partnership. Provided that the limited partners act solely as providers of funds to the partnership, and do not take part in the management of the partnership, they are only liable to the partnership for the amount each has agreed to contribute.
The general partners’ surnames may appear in the name of the partnership. If the surname of a limited partner appears in the name of the partnership, or if a limited partner engages in the management of the partnership, that partner will be deemed to be a general partner and lose the benefit of limited liability.
A limited partnership must maintain a registered office in Bermuda and must establish and maintain in the registered office a register of limited partners. This register must be open to the public for inspection during normal business hours.
All the partners of a limited partnership must sign a Certificate of Limited Partnership which must be registered with the Registrar of Companies. This certificate must state the name and address of the partnership, the names and addresses of the general partners, the general nature of the business of the partnership, the date the partnership will commence business and the date of termination.
The minimum capital prescribed by the Exempted Partnerships (Prohibition of Registration) Order 1993 is the foreign currency equivalent of BD$12,000.
Any proposed amendment to the information contained in the certificate must be advertised in an appointed Bermuda newspaper up to three months before the change is made. Any change in the name of the limited partnership or a change of general partners or a change in the general nature of the business of the limited partnership requires the consent of the Minister. Not later than thirty days after a change is made, it must be recorded in a supplementary certificate, signed by the general partners and registered with the Registrar of Companies. The change will be effective on the date the supplementary certificate is registered.
Subject to certain exceptions outlined in the Limited Partnership Act 1883, the capital of the partnership may not be withdrawn nor any payment of profits or other compensation made to a limited partner if that withdrawal or payment would result in the amount of capital in the limited partnership below any minimum ordered by the Minister of Finance.
If in accordance with the provisions of the Limited Partnership Act 1883 a limited partner has received part or all of the capital contributed, that limited partner will remain liable to the limited partnership or its creditors for any amount, up to the amount of capital contributed, necessary to discharge the liabilities of the limited partnership incurred before the date of the return of the capital contribution.
A limited partner may, with the consent of the general partners, execute an instrument assigning part or all of the limited partner’s interest in a limited partnership.
Processing by the Authority usually takes no more than 24 hours but where a case is urgent faster processing is possible. Fees are payable in connection with the application and the issue of a certificate of partnership.
A partnership formed outside Bermuda may, through the Authority, apply to the Minister of Finance for a permit to operate in Bermuda or outside Bermuda from a place of business in Bermuda.
In deciding whether or not to recommend the grant of a permit, the Authority will be guided by the economic situation in Bermuda, the nature and previous conduct of the partnership and those having an interest in it, as well as any advantage or disadvantage which may result from the partnership carrying on business in or from within Bermuda. The granting of a permit will not normally be recommended if it is considered that a Bermuda exempted partnership could be formed to carry on the business proposed.
Before commencing business in Bermuda and before 31st January of each year, so long as the permit subsists, a permit partnership must pay the appropriate Government fees.
Permits may be granted subject to such terms and conditions as the Authority may recommend and the Minister of Finance may think fit and which will be specified in the permit.
An overseas partnership must appoint a resident representative in Bermuda and must supply particulars of the resident representative, in writing, to the Authority and to the Registrar of Companies and any changes in these particulars must be notified to both parties.
The Registrar of Companies keeps a register of overseas partnerships which is open to inspection by members of the public on payment of a fee.
Having received a permit, a partnership must deliver to the Registrar of Companies a copy of its permit and a list of persons in Bermuda legally able to deal with the affairs of the partnership and must pay an annual fee. When a permit is issued after 31st August in any year, the fee payable in respect of that year shall be half the annual fee. Any changes to these details must be approved by the Minister of Finance, through the Authority, and notified to the Registrar of Companies within thirty days of the Minister’s approval having been granted.
Every overseas partnership must maintain, at its place of business in Bermuda, a record of its business activities in Bermuda.
An overseas partnership may apply to the Minister of Finance, through the Authority, for a variation of any of the terms of its permit.
An overseas partnership, like all exempted undertakings, may apply to the Minister of Finance for an assurance exempting it from any taxation until 2016.
Unless authorised by any other Act, an overseas partnership may not do the following:
Some of the circumstances in which permits have been granted are:
