Bahamian law permits the formation of exempted limited partnerships, which are a type of limited liability company. The Exempted Limited Partnership Act, 1995 sets forth the law on formation and operation of exempted limited partnerships, or ELPs.
Exempted limited partnerships must have at least one general partner and at least one limited partner. Limited partners do not and must not participate in running the ELP's business. Exempted Limited Partnership Act (ELPA), Section 7(1). In exchange, limited partners are shielded from most liabilities incurred by the ELP or the general partner. If a limited partner does participate in an ELP's business relating to people who are not ELP partners, then the limited partner becomes liable for ELP debts if the ELP becomes insolvent, though only for the period of time that the limited partner was participating in the business. ELPA, Section 7(2). The Act lists a number of activities that are not considered participating in running an ELP's business, such as reviewing the ELP's business affairs, communicating with the general partner, and being an employee of the ELP. ELPA, Section 7(3).
General partners' debts incurred on behalf of an ELP become obligations of the ELP, and general partners have personal responsibility and liability for partnership debts if the ELP cannot pay the debt. ELPA, Sections 4(2) and 6(3). Property held in an ELP's name is actually held by the general partner or jointly by multiple general partners in trust for the ELP, under the terms of the partnership agreement. ELPA, Section 6(2). In The Bahamas, at least one general partner must be a Bahamian resident, incorporated under the Companies Act or International Business Companies Act, or registered under the Companies Act, Part VI. ELPA, Section 4(5).
The law imposes specific restrictions on how exempted limited partnerships engage in business. ELPs cannot do business with the general public in The Bahamas except as needed to carry on business in other countries. ELPA, Section 4(1). The only exception is doing business with other companies or international business companies.
New ELPs must make a filing with the Registrar General of The Bahamas and pay a fee to be recognized. Like other companies, they need to have a registered office located in The Bahamas. ELPA, Section 6(4). ELPs' business names must include the words “Limited Partnership” or “LP”. ELPA, Section 6(1).
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