Law 114(1) of 2015 has been recently introduced which amends the Partnerships and Business Names Law, Cap. 116. The amending statute introduces and recognizes the long-awaited partnerships limited by shares (referred to as “Limited Liability Partnership” or “LLP”), a concept adopted in various other jurisdictions such as Luxembourg, United Kingdom and Poland.
The amended legislation allows business partnerships to enjoy the benefits of Limited Liability, avoiding the problems of joint and several liabilities providing new opportunities for investors across the EU. A limited partnership consists of at least one general partner liable for all the debts and obligations of the partnership and one or more limited partners who contribute capital in the shares they acquire in the partnership however, they are not authorized to manage, operate and bind the LLP. The members of a partnership limited by shares (who can either be legal or natural persons) enjoy limited liability up to the amount invested in a partnership and their liability is limited in the same exact manner a shareholder enjoys limited liability in a limited company.
It should be highlighted that the basic principle pertained in the provisions of Cap.116 that partnerships do not acquire legal personality upon formation, remains unchanged. An LLP, as it has no separate legal personality, is transparent for tax purposes with members being taxed individually on their share of the limited liability partnerships income or gains. The limit on the total number of partners is increased in any type of partnership to 100.