Limited Liability Partnership
The Limited Liability Partnership Act 2016 (the “LLP Act”) came into force in Mauritius on 3 January 2017 and introduces a new corporate structure in Mauritius; the Limited Liability Partnership (commonly known as LLP)
A Limited Liability Partnership is not to be confused with a Limited Partnership, where general partners are jointly and severally liable. One of the key features of a Limited Liability Partnership is its limitation of liability for partners. A partner in an LLP cannot be held liable to pay debts beyond the amount of his contribution to the LLP. A contribution to an LLP can be done in several ways, namely by the provision of money, loan, any other property or service or even through non-cash consideration. An LLP is typically well suited for professionals or consultants who wish to work together and restrict their liability.
As such, persons who can set up LLPs in Mauritius are those:
- offering professional or consultancy services
- holding a Global Legal Advisory Services Licence
- engaging in such activities as may be prescribed
Features of an LLP:
Like LLPs in other jurisdictions, an LLP in Mauritius has a separate legal personality from its partners and it can sue and be sued in its own name and purchase and hold properties in its own name. The LLP retains the flexibility offered by the partnership model and as such, the partners in an LLP are free to manage their rights and obligations on their own terms, with the help of a partnership agreement. A partnership agreement for an LLP can also define the roles of partners in the management of the LLP, as opposed to a limited partnership structure, where the roles of partners are predetermined in legislation. It is compulsory for an LLP in Mauritius to have a partnership agreement, which can be amended as per the provisions of the LLP Act. The LLP Act also does not provide any restrictions as to the distributions of profits of an LLP.
Partners in an LLP should be careful in the way they discharge their duties. They are duty-bound to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the discharge of their duties, and to discharge their duties honestly, in good faith and in the best interests of the LLP. A partner would still be liable for any liability arising out of his own wrongful act or omission, though his liability is limited to his capital contribution. Importantly, in the event of an insolvency of an LLP whereby there is a breach of the LLP Act; (i) causing the LLP to be unable to pay its debts; (ii) materially misleading a partner or creditor, or (iii) impeding the winding up of the LLP, the Court may declare any partner or former partner or manager or former manager of the LLP to be personally liable for the debts of the LLP, to the extent specified by the Court.
Creation of an LLP:
Limited Liability Partnerships are easily recognisable in Mauritius. The name of every LLP in Mauritius, other than a foreign limited liability partnership, shall end with the words “Limited Liability Partnership”, the abbreviation “L.L.P” or the designation “LLP”. The partners, who are considered as agents of the LLP in Mauritius, can be any individual, body corporate or unincorporated body formed or registered with or without liabilities in Mauritius or elsewhere. An LLP in Mauritius is required to have at least two partners and one manager who must be qualified as Secretary of a company under the Mauritian Companies Act. Should the LLP hold a Category 1 Global Business Licence (also known as GBC 1 Licence), the manager shall then be a management company.