Partnership Formation

Below is a summary of the requirements for a Cayman partnership but for a more detailed discussion please contact us.

The Partnership Law (Revised) (Partnership Law) defines a partnership as the relation which subsists between persons carrying on a business in common with a view to profit. This definition is taken from a corresponding English law from the late 19th century, and there is consequently a body of case law and commentary that gives a firm grounding to the partnership concept under English law and, therefore, Cayman law.

Exempted limited partnerships

An exempted limited partnership (ELP) is a Cayman partnership that is registered under the Exempted Limited Partnership Law (Revised) (ELP Law). The ELP Law specifically preserves relevant provisions of the Partnership Law and provides that the principles of common law and equity applicable to partnerships shall apply to ELPs.

The ELP Law takes these partnership concepts and provides a modern framework that makes an ELP the vehicle of choice for particular types of international business, including for all types of private equity, real estate and other closed-ended funds; as tax transparent master funds in onshore/offshore hedge fund structures; and as single-investor vehicles replicating managed accounts.

Key features of an exempted limited partnership

An ELP has the following key features, certain of which are described in greater detail below:

  • no separate legal personality;
  • neither the ELP nor the partners subject to taxation in the Cayman Islands;
  • a minimum of one general partner and a minimum of one limited partner;
  • all management responsibility vested in the general partner(s);
  • limited liability for the limited partners, except in narrow circumstances;
  • unlimited liability for the general partner in the event that the assets of the ELP are inadequate; and
  • inviolable duty of the general partner to act in good faith.

Formation and registration


The proposed name must include the words ‘Limited Partnership’ or the letters ‘L.P.’ or “LP”.  There are certain restricted words that, in some cases, may not be included in the name of the ELP at all and, in other cases, require the prior consent of the Registrar: for example, “bank”, “insurance”, “trust”, “royal”.

Qualifying general partner

At least one general partner must be a “qualifying general partner”: typically a Cayman exempted company; a non-Cayman company (or LLC) registered in Cayman as a foreign company; or a non-Cayman limited partnership registered in Cayman as a foreign limited partnership.

A Cayman ELP may itself serve as a qualifying general partner provided that it in turn has a qualifying general partner.

Registered office

The ELP must have a registered office in the Cayman Islands, provided by a service provider licensed by the Cayman Islands Monetary Authority (CIMA) for such purpose. Bell Rock provides registered office to partnerships so please contact us for further information.

Number of partners

At all times, an ELP requires at least two separate persons or entities as partners (the ‘two-party rule’), including a minimum of one general partner and a minimum of one limited partner.


An ELP is established by:

  • ensuring that at least one of the proposed general partners (generally there is only one general partner) is a “qualifying general partner” under the ELP Law;
  • one or more general partners and one or more limited partners agreeing to form an ELP with the relevant name, typically by signing a short-form limited partnership agreement (LPA); and
  • the general partner registering details of the ELP with the Registrar of Exempted Limited Partnerships by way of a Section 9(1) Statement, and paying the registration fee (US $1,220).
  • Upon submission of the ELP registration documents, it takes approximately five business days for the Certificate of Registration to be issued. Upon payment of an express registration fee (US $488) it is possible to obtain the Certificate of Registration within one business day.

Cayman Islands Tax Treatment

Neither an ELP nor any partner is subject to any form of direct taxation in the Cayman Islands. An ELP is entitled to apply for an undertaking to be granted on behalf of the Cayman Islands Government that, for a period not exceeding 50 years from the date of the undertaking, no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains or appreciations shall apply to the ELP or to any partner in respect of the operations of the ELP, the assets of the ELP or the interest of a partner in the ELP.

Partnership records

The LPA normally establishes procedures for the maintenance of accounting records in relation to the contributions made by partners to the ELP, the allocation of profits amongst the partners and the scope of the limited partners’ powers to inspect such records.  In the absence of a provision to the contrary in the LPA, the ELP Law provides that a limited partner may demand and receive from the general partner true and full information regarding the state of the business and financial condition of the ELP.

The general partner must also maintain:

  • a register of limited partners containing the name and address of each partner, their date of admission and date of withdrawal. Subject to the LPA, this is open to inspection by any partner and any other person with the consent of the general partner;
  • a record of the amount and date of each partner’s contribution and the amount and date of the return of all or any part of a limited partner’s contribution. This record is only open to inspection with the consent of the general partner; and
  • a register of security interests recording details of any security granted by a limited partner over its limited partner interest. The register of security interests may be inspected by any person.

Ongoing obligations

In addition to compliance with the elements of the ELP Law highlighted in this note and adherence to the terms of its LPA, an ELP has the following ongoing obligations:

  • in the event of a change to any of the particulars contained in the Section 9(1) Statement filed upon registration of the ELP, a general partner must file with the Registrar an updated statement within certain specified periods depending on the nature of the proposed amendment;
  • an ELP must pay an annual registration fee to the Registrar in January of each year (currently US $1,463 if registered with CIMA, or US $2,439 if not registered with CIMA); and
  • the general partner must retain all books of account for a minimum period of five years from the date on which they are prepared.

Please contact us to discuss your requirements:

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