Enhancements to Legislation with an Eye on Private Equity
About Brian Holdipp
Brian Holdipp is Counsel in the firm’s corporate practice group. His practice encompasses many areas of general corporate and commercial law, with specialist expertise in securities, joint ventures, corporate restructurings and cross-border financings. Mr. Holdipp also advises on partnerships.
Brian Holdipp’s full profile on mjm.bm.
The vast majority of partnerships on the Bermuda registry are said to be private or closed-end funds. Hailed as an important part of the government’s efforts to achieve growth in the asset management area, amendments have been made to partnership and company legislation to enhance the flexibility and efficiency of Bermuda exempted and limited partnerships and to boost the desirability to use Bermuda as a jurisdiction to establish private equity funds and asset-holding structures.
The main improvements brought about by the recently enacted Partnership Amendment Act 2015, Exempted Partnerships Amendment Act 2015, Limited Partnership Amendment Act 2015 and Companies Amendment Act 2015 are seen in provisions that:
- permit a foreign partnership registered in a statutorily-defined appointed jurisdiction overseas (an “appointed jurisdiction”) to transfer by way of continuation in Bermuda;
- enable a Bermuda exempted and limited partnership to de-register and transfer by way of continuation to an appointed jurisdiction;
- provide a framework for a Bermuda exempted and limited partnership to convert into a Bermuda exempted company limited by shares;
- provide a framework for a Bermuda exempted company limited by shares to convert into a Bermuda exempted and limited partnership;
- facilitate the establishment of a register of charges to be kept by the Registrar of Companies in Bermuda regarding charges on the assets of partnerships that have separate legal personality;
- simplify the regulatory process of changing the general partner of a Bermuda exempted and limited partnership where the general partner interest is being transferred to an affiliate;
- allow for a Bermuda exempted and limited partnership to have a secondary (foreign) name; and
- provide for new ‘safe harbour’ provisions which specify acts that do not constitute taking part in the conduct of the business of a Bermuda exempted and limited partnership with a view to ensuring that such acts will not affect a limited partner’s liability.
The amended legislation introduces a number of other changes related to the management of a Bermuda exempted and limited partnership such as confirming the requirement for a general partner to act in good faith, permitting a partnership agreement to call for the establishment of boards and committees and clarifying that subject to any express provision in a partnership agreement to the contrary, a limited partner and any board or committee appointees are not fiduciaries to the limited partnership or any other partner; changes that will be welcomed by those in the private equity space.
These amendments will come into operation on a date appointed by the Minister of Economic Development and demonstrate Bermuda’s commitment to delivering solutions in keeping with industry trends and needs.