The Enactment Of Limited Liability Companies (LLC) Legislation In Guernsey
7. Potential Guernsey LLC Structure It is envisaged that a Guernsey LLC would have the following characteristics. Body Corporate/Legal Personality In Guernsey, most existing business structures are bodies corporate with legal personality, for example companies, LLPs and Limited Partnerships which have elected to have legal personality. Foundations have legal personality but are not bodies corporate. An LLC may, most naturally, fall to be described as a body corporate with legal personality, notwithstanding that the intention is that it would not, by default, be taxed as a company. This would be consistent with the status of Guernsey LLPs, which are the most analogous structures currently available. It is noted that some jurisdictions have provided for an LLC to have legal personality, without being a body corporate3. It is thought that this may be to assist in determining domestic tax treatment and/or to strengthen the argument that other jurisdictions should not treat LLCs (or at least those which have not elected to be taxed as companies) as companies for tax purposes in those jurisdictions. Based on current legislation, classification as a body corporate in Guernsey means that an LLC would be taxed as a company, unless amendments are made to the Income Tax (Guernsey) Law, 1975.4 This area will be considered as part of this process. LLC Agreement The most common term used for the constitutional document, which sets out the LLC powers and structure, is an LLC Agreement. This is the format used in Bermuda, Cayman and Jersey. By way of contrast, some jurisdictions, such as the Isle of Man, instead of an LLC Agreement, have Articles of Organisation and an Operating Agreement. In other jurisdictions, it is not common for there to be a prescribed format for the LLC Agreement, however there is commonality in respect of content. The LLC Agreement is pivotal to the structure setting out the rights and duties of the Members, the administrative procedures, contributions, allocation of profits and losses,
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Delaware’s LLC Act provides that a Delaware LLC is a legal entity with status governed by its Laws. A Bermuda LLC has separate legal personality and the liability of its members is limited. Bermuda Limited Liability Company Act 2016 provides for an Exempted LLC, so called because they are exempt from the provision of the Act. A Jersey LLC will have legal personality but will not be a body corporate. See section 2(2) of the Limited Liabilities Company (Jersey) Law, 2019. Section 9(3) of the Cayman Islands Limited Liability Companies Law, 2016 provides that, “From the date of registration, a limited liability company shall be a body corporate (with legal personality separate from that of its members from time to time)…”. 4
See the definition of company in section 209(1) of the Income Tax (Guernsey) Law, 1975: “company” means any body of persons corporate or unincorporate, not being a partnership.
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