Posted on :Wednesday, December 2, 2015
The Partnerships and Business Names Law, Cap. 116, has been amended by Law 144(I)/2015 and published in the Official Gazette of Cyprus, hereinafter, as amended, “Cap. 116”. The amending statute introduces the partnership limited by shares (“Limited Liability Partnership” or “LLP”), being the Cyprus equivalent of a Luxembourg SCSp. The amending statute has also introduced a change over the maximum number of persons that can be partners in any type of partnership, which is now increased to one hundred.
The LLP, being a form of partnership widely used in other jurisdictions, such as Poland and Luxembourg, has finally been introduced into Cypriot law, and is expected to facilitate an increase in the use of Partnerships for investments and commercial transactions, particularly by Polish Closed End Fund structures.
The partners holding shares in an LLP (“Limited Liability Partners”), can be legal persons or natural persons, and enjoy limited liability in the same manner as shareholders enjoy limited liability in a limited company. However, a Limited Liability Partner cannot take part in the management and the operations of the LLP, nor can a Limited Liability Partner be authorized to bind the LLP.
In light of the above, an LLP shall consist of:
- One or more general partners, who are liable for all debts and obligations of the LLP, and are authorized to manage, operate and bind the LLP as such; and
- One or more Limited Liability Partners, who contribute capital towards shares in the LLP, but who are not authorized to manage, operate and bind the LLP.
The following is a brief summary the new LLP regime:
- The introduction of the LLP in no way affects the paramount principle enshrined within the statutory provisions of Cap. 116, that partnerships acquire no legal personality.
- The LLP itself is tax transparent (as it has no legal personality). Taxation, if any, arises at the level of the partners.
- Alternative Investment Funds can now be formed as an LLP.
Please feel free to liaise with either Charles Savva at firstname.lastname@example.org (Managing Director, Savva & Associates), or Mr. Stephanos Evangelides email@example.com (Legal Director, Evangelides & Partners LLC) for further information regarding the new Limited Liability Partnership.