Exempted Limited Partnerships in TCI are usually provided with a Guarantee of Exemption from Taxation in TCI for 50 years which makes them particularly attractive for individuals seeking security for the longer term (in the case of exempted companies ("IBC's") the exemption lasts for 20 years. 

What does it Cost - What is involved?

Features of Limited Partnerships

A Limited Partnership ("LP") is similar to an LLC's in that it provides limited liability to the limited partners and in many instances will avoid liability to corporation tax.  One of the principal differences between the two is that an LP is required to have a general partner (typically a TCI registered company) to carry the liability and perform the management functions of the partnership.   This structure can be preferable to an LLC in certain circumstances, for example, where it is in the interests of the investor members to remain separate from the entity carrying on business (i.e. the general partner) for tax or other reasons.

LP's became a feature of TCI off-shore financial services in 1992 with the passing into law of the Limited Partnerships Ordinance.  In the context of international investment and business LP's can provide a means of achieving the following objectives:

• Allowing investors (limited partners) to benefit from limited liability;

• Providing a means for non-US resident individuals to invest in business ventures which have ties to the US while simultaneously ensuring that they will not be seen to be doing business in the US (or other jurisdiction as may be applicable);
  
   

• Avoiding corporation tax on dividend distributions made to limited partners/investors;

• Raising venture capital.  For example, owners of intellectual property can sell the rights to a TCI exempted company which acts as general partner of a TCI LP.  The LP can then solicit investment capital from US/Canadian investors.  The general partner can attribute as much of the subsequent licensing fees and royalties to the offshore operation as possible and investors may write off start-up costs against personal income;
  
   

• Holding real property or assets and thereby ensuring that distributions made to limited partners will only be made once;
  
   

• Dissuading and deferring frivolous law-suits that might otherwise be brought against the limited partners (i.e. where their interests are non-transferable and the general partner resident in TCI has a discretion as to when distributions are made); 

As mentioned above, TCI exempted companies are typically used as general partners of LP's set up for international business purposes and under the terms of the partnership agreement they usually have extremely limited rights to participate in the profits of the partnership undertaking. 

These types of partnerships are referred to as Exempted Limited Partnerships and are only required to file a limited amount of information with the Registry, namely: (a) the name of the general partner; (b) the Registered address of the LP and its general partner; and (c) a statement by or on behalf of the general partner to the effect that the partnership agreement exists and the duration (if limited).  The identities of the limited partners remain private as do the terms of the partnership agreement itself, and accordingly clients acquire a high level of protection without compromising their privacy.

In circumstances where the general partner will be used principally to hold assets (i.e. where the activities of the LP will effectively be passive) a TCI Guarantee Company can be used to ensure that the promoters and/or investors retain a higher level of control over the management of the general partner while avoiding reporting requirements that might otherwise apply (see information on TCI Guarantee Companies).

Finbar F. Dempsey & Company will provide advices and assistance throughout the structuring process to ensure that matters proceed smoothly.   The service includes working closely with clients and/or their advisors as the case may be, to ascertain the client's objectives and then to tailor the limited partnership agreement to meet those objectives.

We will be happy to discuss the further uses of  TCI LP's and will email more detailed information, dealing in particular with the standard costs, considerations and requirements, upon request.