Bermuda Limited Partnership: Liability and Compliance

Understanding the Limited Partnership in BermudaCopy link to section

For a foreign sponsor or investor, the limited partnership in Bermuda is, in practice, an exempted limited partnership: a form registered under both the Limited Partnership Act 1883 and the Exempted Partnerships Act 1992 because one or more partners hold no Bermudian status. This combined vehicle suits non-resident owners who want flow-through tax treatment and contractual freedom rather than a corporate structure. The article explains how the partnership is constituted, who carries liability, how it is taxed, and what a foreign owner must maintain to stay compliant. It is most relevant to private equity sponsors, fund managers, and cross-border joint-venture participants structuring an investment vehicle from outside the island; the government partnerships page sets out the official framework.

A partnership composed only of Bermudian partners is a local partnership. Once a partner lacks Bermudian status, the firm becomes exempted, and the exempted limited partnership is the form a foreign owner will use.

Legal Basis and Governing Law of Bermuda Limited PartnershipsCopy link to section

Three statutes govern the vehicle: the Partnership Act 1902, the Limited Partnership Act 1883, and the Exempted Partnerships Act 1992, each as amended. The Partnership Act 1902 closely follows the UK Partnership Act 1890, so much of the underlying law will feel familiar to advisers trained in English principles.

Partnership legislation here does not attempt to regulate the internal affairs of a limited partnership in any detail. Operation is left largely to agreement between the partners, with existing rules of equity and common law continuing in force except where the statutes provide otherwise.

That contractual emphasis carries a practical benefit for foreign owners: the partnership agreement itself remains private. Only the information contained in the registered Certificates becomes a matter of public record.

Recent amendments to the Exempted Partnerships Act 1992 reflect the island's adoption of corporate income tax. Changes effective 28 December 2024 inserted definitions tied to the new tax regime, and further amendments under BR 100/2025 took effect 3 November 2025.

Registration sits with the Registrar of Companies. Every partnership, local or exempted, must register with that office.

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Defining Features: Legal Personality, General and Limited Partners, and LiabilityCopy link to section

A Bermuda limited partnership may elect to have separate legal personality by filing a declaration with the Registrar of Companies. Without that election the firm is not a legal entity at all, but a relationship between the partners, though the rules of court still allow it to sue and be sued in the partnership name.

The timing of this election matters more than almost any other formation decision. For a new partnership the election must be made at formation; miss it, and the option is lost permanently.

Where the election is taken, it appears in the Certificate. It is particularly useful for partnerships that trade in jurisdictions which may not otherwise recognise the limited liability of limited partners.

The liability split between partner classes defines the structure. General partners run the business, bind the firm, and carry joint and several liability to an unlimited extent for its debts; limited partners, acting solely as providers of capital, are liable only up to the amount each has agreed to contribute.

That protection for limited partners is conditional. A limited partner who takes part in management, or whose surname appears in the partnership name, is treated as a general partner and forfeits limited liability.

There is no share capital. Partners hold partnership interests rather than shares, and no minimum capital contribution applies. For partnerships that have elected legal personality, charges over assets, whether located inside or outside the island, can be registered at the Registrar of Companies under a procedure modelled on company charge registration.

Capital Contributions and the Partnership StructureCopy link to section

No minimum capital is required, and contributions may take the form of cash, property, or services exactly as the partnership agreement provides. The agreement governs the form and amount, leaving the commercial terms to the partners.

Capital is not freely returnable. Subject to limited statutory exceptions, capital may not be withdrawn, and no profit or compensation may be paid to a limited partner, where doing so would reduce partnership capital below a required minimum.

A register of limited partners must be kept at the registered office, recording the current names and addresses of all limited partners. This register is open to public inspection during normal business hours, a point worth weighing where investor confidentiality is a concern.

For the purpose of establishing that a partnership exists, investment holding alone counts as sufficient business activity under the law here.

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Management, Control, and the Role of the General PartnerCopy link to section

Management belongs exclusively to the general partners. If a limited partner participates in running the business, that partner may become liable as a general partner, so the activities of the two classes must stay strictly segregated except where the legislation specifically allows otherwise.

The general partner need not be an individual. A corporate general partner is common, typically a Bermuda exempted company or LLC formed for the purpose.

Every exempted partnership must maintain a registered office on the island, which cannot be a post office box, and must appoint a resident representative there. That resident representative may file documents and make applications on the partnership's behalf.

Certain structural changes require sign-off from the Minister of Finance. A change of name, a change of general partners, or a change in the general nature of the business needs Ministerial consent.

Once such a change is made, it must be recorded in a supplementary certificate signed by the general partners and registered with the Registrar of Companies within thirty days. The change takes effect on the date that supplementary certificate is registered.

Record-keeping obligations attach to the general partners. An exempted partnership must keep records of account covering assets, liabilities, capital, cash flows, and income and expenses, and must maintain audited financial statements in accordance with GAAP, although the audit requirement can be waived if the partnership agreement so provides.

Common Uses and Who Chooses a Bermuda Limited PartnershipCopy link to section

The exempted limited partnership is a standard vehicle for private equity and alternative investment fund structures. Its appeal rests on fiscal transparency: tax is imposed at the partner level, not at the partnership level, and the tax position of one partner does not affect any other.

Closed-ended funds, such as private equity funds, fall outside the Investment Funds Act, which lowers the regulatory burden for sponsors structuring this type of vehicle. The legal personality election adds further utility for funds that need bank financing, since security over assets is simpler to grant.

There is a currency advantage as well. Exempted partnerships are designated non-resident for exchange control purposes, allowing them to make distributions and to acquire, hold, and sell foreign currency and securities without reference to exchange control authorities.

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Taxation and Key Compliance ObligationsCopy link to section

At the entity level the partnership is fiscally transparent, so tax falls on the partners according to where they are resident. A partnership establishes tax residency by being established on the island, and no tax is imposed on tax non-residents.

One regime overrides transparency for the largest groups. From 1 January 2025, a 15% corporate income tax applies to the statutory income of businesses, including partnerships, that are tax resident or have a permanent establishment here and form part of a multinational enterprise group with annual revenue of EUR 750 million or more.

Below that threshold there is no income, profits, capital gains, or withholding tax at the entity level, as confirmed in the PwC tax summary. Exempted partnerships may also apply for a statutory tax assurance under the Exempted Undertakings Tax Protection Act 1966, though the corporate income tax was enacted notwithstanding that assurance for in-scope groups.

Economic substance is the next compliance layer. Partnerships carrying on a relevant activity, such as financing, leasing, fund management, headquarters, or holding, must satisfy substance requirements and file an annual declaration with the Registrar, regardless of whether they have elected legal personality.

Two carve-outs help typical fund structures. Investment funds and collective investment vehicles are generally not treated as pure equity holding entities and, provided they carry on no other relevant activity, sit outside substance requirements; a non-resident entity, meaning one tax resident in a jurisdiction outside the island that is not on the EU blacklist, is likewise excluded.

Each exempted partnership must send the Registrar a signed written declaration of the general nature of its business by 31 January every year, accompanied by the annual government fee. A January 2021 gazette set that fee at BD$2,350, but a new regulatory fee regime took effect 1 January 2024, so confirm the current amount with the Registrar of Companies or your service provider before relying on a figure.

Missing the declaration exposes every partner to a penalty, and failing to pay the annual fee is an offence carrying a daily fine. All limited and exempted partnerships must also maintain a beneficial ownership register at their registered office, or another convenient place on the island for inspection by the Registrar.

Advantages of the Limited PartnershipCopy link to section

• Fiscal transparency recognised in major jurisdictions including the US and UK, with tax falling only at the partner level
• Non-resident status for exchange control, allowing free movement of capital, distributions, and foreign securities
• Optional election for separate legal personality, giving corporate-like capacity where security or cross-border recognition is needed
• Charges over assets inside or outside the island registrable at the Registrar where the personality election is made
• Wide contractual freedom, since the legislation regulates internal affairs only lightly
• Accounts and financial records need not be filed publicly, and the partnership agreement stays private
• Conversion permitted to or from an exempted company or LLC, giving restructuring flexibility
• Closed-ended private equity funds structured as partnerships fall outside the Investment Funds Act
• Formation not requiring Ministerial consent can complete within one business day of application

Limitations and Practical ConsiderationsCopy link to section

General partners carry unlimited joint and several liability for all partnership debts, a position fixed by statute that cannot be contracted away. Foreign sponsors commonly address this by using a corporate general partner rather than an individual.

The legal personality election is a one-time opportunity at formation. Should you skip it for a new partnership, you cannot apply later, so the decision needs to be settled before the Certificates are signed.

Trading locally is off limits. An exempted partnership may not do business with persons on the island, save for narrow exceptions such as contracts performed wholly outside it, acquiring office supplies, registering intellectual property, or dealing with other exempted or permit entities; restricted business additionally requires permission of the Minister of Finance.

Restructuring carries regulatory friction. Any change of name, of general partners, or of the general nature of the business needs Ministerial consent, which adds time to corporate changes.

The largest groups face the 15% corporate income tax from 1 January 2025, and that liability cannot be defeated by an earlier tax assurance certificate. Substance obligations apply to any partnership carrying on a relevant activity, with penalties and reputational risk for non-compliance.

Two practical points round out the picture. Formation cannot be done remotely by the owner; a Bermuda-licensed law firm, accountancy firm, or corporate service provider must manage it, and the names and addresses of limited partners appear in a register open to public inspection, which some investors treat as a confidentiality concern.

Formation Overview at a GlanceCopy link to section

The step-by-step process is covered in a separate guide; what follows is a brief orientation for planning purposes.

In outline, the name is cleared with the Registrar, an application for consent goes to the Bermuda Monetary Authority with the identities of the general partners and personal declarations for any individual holding 10% or more of a general partner, and on consent the partners sign and register the Certificate of Limited Partnership and the Certificate of Exempted Partnership. The legal personality election, if wanted, is filed at this stage.

Timelines depend on whether Ministerial consent is needed. A partnership not requiring such consent can form as quickly as one business day after the application is received; consent of the Bermuda Monetary Authority normally takes around a week, and a complete application typically forms within roughly five to ten days.

On fees, the annual government fee for an exempted partnership was set at BD$2,350 in 2021, but the post-2024 regulatory fee schedule should be confirmed with the Registrar or your provider, and the registration fee is supplied on request rather than published in a current public schedule.

ConclusionCopy link to section

For a non-resident sponsor or investor, the Bermuda exempted limited partnership combines partner-level taxation, exchange control freedom, and broad contractual flexibility within a recognised, lightly regulated form. The decisions that most affect a foreign owner are settled early: structuring the general partner to contain unlimited liability, choosing whether to take separate legal personality at formation, and confirming substance and tax positions against the group's size. Below the EUR 750 million corporate income tax threshold the entity-level tax position stays neutral, while the public register of limited partners and the local trading restriction are the practical trade-offs to plan around. Engaging a licensed local provider is not optional, so early advice will save time and rework.

How Expanship Can Help Your Business in BermudaCopy link to section

Expanship structures and registers Bermuda exempted limited partnerships for foreign owners, from clearing the name and preparing the Certificates to coordinating the legal personality election and the Bermuda Monetary Authority consent. The same team supports the wider needs of a foreign-owned entity on the island across its life.

• Partnership formation and registration of the governing Certificates
• Registered office and resident representative arrangements
• Tax registration and annual filing support, including corporate income tax assessment
• Ongoing compliance management, including economic substance and beneficial ownership obligations
• Accounting, record-keeping, and audit coordination
• Introductions to banking partners

To discuss your structure, contact Expanship Bermuda.

Frequently Asked QuestionsCopy link to section