The Limited Partnerships Bill 2011 was approved in Parliament on 19 October 2011 and is expected to receive the assent of the President of the Republic shortly. This new legislation was long awaited by professionals in the funds industry and it will attract significant interest for setting up new fund structures with a limited partnership ("LP") structure. This new vehicle will be useful in ensuring tax efficient and transparent fund structures.
A LP offers flexibility for the general partners in terms of capital and profit distributions and as regards the general administration of the LP structure. LPs are principally established for investment purposes and are a favoured structure for use in private equity and venture capital schemes, collective investment schemes, structuring joint ventures, holding property interests, estate planning, asset protection and tax and financial planning. General Partners have the ability to manage operations from locations other than Mauritius.
A Mauritian LP vehicle may hold a category 1 global business licence issued by the Financial Services Commission ("FSC") and can be structured to benefit from the network of double taxation avoidance agreements which Mauritius has with 36 countries. The LP may seek authorisation from the FSC to operate as a Collective Investment Scheme under the Securities Act 2005 and the Securities (Collective Investment Schemes and Closed-End Funds) Regulations 2008. Other regulatory consents may be required depending on the type of activities the LP will be undertaking.
Every general partner and limited partner of a LP structure holding a category 1 global business licence under the Financial Services Act 2007 will be liable to income tax in respect of its share of income in that LP. However, a Mauritian LP may hold a global business licence and may elect to be taxed in Mauritius and thus take advantage of the Mauritius tax treaty benefits.
A LP vehicle can be registered with or without legal personality with the Registrar of Limited Partnerships who is also the Registrar of Companies in Mauritius.
The name of a LP must end with the words "Limited Partnership", the abbreviation "L.P." or with the designation "LP". The LP must have a registered office in Mauritius which may, but need not, be its principal place of business and it is not mandatory to have a Mauritian general partner. However, a LP without a Mauritian general partner must at all times have a registered agent in Mauritius.
A limited partner may not participate in the business of the LP and the legislation sets out a non-exhaustive list of activities where the limited partner will not be considered as participating in the management of the LP.
Access to the records of the LP on the Register of Limited Partnerships may only be given to an officer as defined in the legislation, the management company appointed by the LP or its registered agent where that LP holds a global business licence. However, any person may request the Registrar of Companies to provide the name of the LP and its registered office and the name and address of any management company or registered agent appointed by the LP as the case may be.
A general partner may also be a limited partner at the same time in the same LP.
The legislation allows flexibility as to the form of limited partners’ contributions which may be made in or by money, loan, property and services.
The situations where a LP may be dissolved are listed in the legislation and the court has an overriding power to order the dissolution of the limited partnership on the application of any partner, creditor or the Registrar. Upon dissolution, the affairs of the LP are wound up by the general partners unless a liquidator has been appointed. The law sets out a priority order under which the assets of the LP are distributed upon its dissolution.
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