Bermuda LLCs on the Way
About Brian Holdipp
Brian Holdipp is a senior associate 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.
Legislation was recently put before Parliament to introduce Bermuda’s newest form of commercial vehicle: the limited liability company (“LLC”). The new law establishing the Bermuda LLC is heavily (and intentionally) influenced by the Delaware Limited Liability Company Act to accommodate the main efficiencies of a Delaware LLC.
Recognizing the commercial utility of the limited liability company, Economic Development Minister Dr. Grant Gibbons, when tabling the legislation, succinctly explained the features that make LLC’s so attractive to legal advisors in the United States:
“LLCs are typically viewed as hybrid entities because they offer characteristics and advantages of both partnerships and corporations. The fundamental similarity to partnerships is that LLCs are managed and operated pursuant to a contractual agreement among the members, who are owners of the LLC. This provides significant flexibility for LLC members to determine the most appropriate terms and conditions for administration and governance of the LLC. LLCs are also similar to corporations, in that LLC members generally enjoy limited liability, so any personal liability is limited to the value of each member’s capital contribution to the LLC. This limitation on liability typically remains in place even if LLC members actively participate in the management of an LLC. In fact, the ability of the members to both manage the day to day operations of an LLC while retaining their limited liability are two cornerstones of this structure and are particularly attractive to investors.”
It is expected that the flexible contractual arrangements possible through use of the Bermuda LLC will be applied in a variety of private equity fund, joint venture, asset holding and other structures.
Bermuda’s development as an offshore jurisdiction responsive to the needs of its market continues apace.