British Virgin Islands: Taking Security Over A BVI Limited Partnership Interest – Issues For Lenders

Last Updated: 13 August 2018
Article by Ashley Davies

We note that interest is growing in the new form of British Virgin Islands limited partnership that can be registered under the Limited Partnership Act 2017 (the "Act"). In the context of banking and finance transactions, there is increasing awareness among lenders of the ability to take security over limited partnership interests. Taking security over limited partnership interests can be useful in a variety of finance transactions, whether the security is being granted by the borrower or a third party. The Act contains a clear and simple framework that facilitates this. While not an exhaustive commentary, this article seeks to highlight some of the key issues for lenders and their counsel to be aware of.

Nature of a BVI limited partnership.

A limited partnership registered under the Act may be formed for the purpose of carrying out any lawful business activity. The default position is that, unlike many other jurisdictions, it will be registered with legal personality unless the general partners elect on registration that it will not have legal personality (once the choice is made it is irrevocable – and there is no ability to make an election later after the initial registration process). A limited partnership must have at least one general partner and at least one limited partner. Each general partner is jointly and severally liable for the debts and liabilities of the limited partnership incurred while that person is a general partner, responsible for management matters, and the agent of the limited partnership for the purposes of the business of the limited partnership (e.g. including signing agreements). On the other hand, a limited partner is generally not liable for the debts and liabilities of the limited partnership. But this limited liability is subject, broadly, to two exceptions. First, a limited partner may in certain circumstances lose its limited liability if it takes part in the management of the limited partnership, which under the Act it is not permitted to do. Second, if it receives a return of its contribution or is released from an outstanding obligation to contribute capital while the limited partnership is insolvent, and the limited partner knew of such insolvency, it may in certain circumstances be liable in respect of such amounts.

Nature of a limited partnership interest.

Under the Act, a limited partnership interest of a BVI limited partnership comprises the limited partner's share of the assets of the limited partnership, including the right to receive distributions (if any), right to vote (if any) and right to any other benefit conferred by the limited partnership agreement. Importantly, a limited partnership interest also includes any liability of the partner in relation to the limited partnership. Accordingly, the terms of the limited partnership agreement will need to be carefully reviewed and the security agreement that is used to take security over such rights will need to be tailored appropriately to ensure the lender has a security interest over all the desired assets. The Act states that a limited partnership interest is personal property situate in the British Virgin Islands.

Checking the limited partnership records.

At the inception of a lending transaction involving security over a limited partnership interest of a BVI limited partnership, lenders will want to carry out basic due diligence on the BVI limited partnership. In this regard they should effect appropriate searches with the BVI Registrar of Limited Partnerships and the BVI courts. They should also obtain copies from the limited partnership of, among other things, the certificate of registration of the limited partnership, any certificates of change of registered name, the limited partnership agreement, the register of general partners, and the register of limited partners. The register of limited partners is particularly important as this register must set out the details of the limited partners and their partnership interests.

Checking the general partner records.

Similar searches and documents in respect of the general partner will also need to be considered – in particular given that the active participation of the general partner will be required to consent to the grant of security (see below). We have mentioned above that the register of general partners should be checked to make sure that the correct entity has been identified. The other documents required in respect of the general partner will depend on the nature of the general partner. The Act provides that, subject to certain restrictions relating to age (in the case of an individual) and relating to insolvency matters, a general partner can be "any person", including a body corporate or a partnership. If, for example, the general partner is a BVI business company, then it would be usual to require copies of, among other things, the certificate of incorporation, certificates of change of name, memorandum and articles of association, and certain statutory registers of the company. It would also be usual to carry out a court search, order a certificate of good standing, and perhaps a certificate of incumbency issued by the registered agent of the company.

Consent of the general partners.

The starting point is that under the Act a limited partner is not permitted to assign, transfer, grant a security interest over or otherwise dispose of all or any part of its partnership interest except with the prior or simultaneous written consent of the general partners. However, the Act provides that this requirement can be modified or excluded under the limited partnership agreement. Accordingly, it is important to review the limited partnership agreement to see what consent, if any, is required from the general partners, and whether it must be given prior to the grant of the security interest. Assuming consent is required, it is important that the general partner gives consent not only to the initial grant of the security interest, but also to any enforcement action that the lender may decide to take (which may include an outright transfer of the limited partnership interest requiring the admission of a third party as a new limited partner).

Consent of other limited partners.

The Act does not require consent of the other limited partners to the grant of a security interest by a limited partner over its limited partnership interest. However, the limited partnership agreement may contain such a requirement. For example, the terms of the limited partnership agreement may include rights of first refusal/pre-emption in favour of existing limited partners which are triggered on a "transfer" of a partnership interest. Depending on how the relevant terms of the partnership agreement are defined, a limited partner may potentially need the consent of other limited partners prior to a transfer of its interest by way of security in favour of a lender. As a practical matter, if there are a large number of limited partners, the time it takes to obtain all relevant consents will clearly have an impact on how quickly the parties can proceed to funding.

Written notice to be given to the limited partnership.

The Act provides that, subject to the limited partnership agreement, written notice of the grant of a security interest over the whole or any part of a limited partnership interest must be given to the limited partnership. The notice may be given by the grantor (limited partner) or grantee (lender) of the security interest. The notice must contain certain prescribed information: the date of the security agreement, the parties to the security agreement, the identity of the grantor and grantee, and the partnership interest (or part thereof) that is subject to the security interest. It is important to contain these details, as failure to do so will render the notice invalid. In addition, it would also be usual to set out in the notice a description of the security interest being granted and what happens on the occurrence of a default under the loan documentation.

Acknowledgement of written notice.

Although not a requirement under the Act, it is advisable to require the limited partnership to acknowledge receipt of the notice referred to above. The form of acknowledgment of the limited partnership will often require various confirmations from the limited partnership concerning the limited partnership interest in respect of which the lender is taking security. These might include, for example, that the limited partnership has not received notice of any previous security interests over the same limited partnership interest, that the grantor is indeed the holder of the relevant limited partnership interest, and that the limited partnership will act on the instructions of the lender following notice of a default under the loan documentation.


With the entry into force of the British Virgin Islands Limited Partnership Act 2017, BVI limited partnerships are likely to feature more on the international legal landscape. Prudent lenders taking security over limited partnership interests should take note of the issues outlined above to ensure that they take valid and effective security over the correct assets with all relevant consents properly obtained and notifications made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions