Investment Limited

Partnership Seminar
 AGENDA

 Background and History

 Overview of the Law
 Partner Requirements
 General and Limited Partners Defined
 Duties of General Partners
 Duties of Limited Partners
 Limited Partner Rights
 Benchmarking
 Advantages of Investment Limited Partnerships
 Limited Partnership Companies under the
Commercial Companies Law
 Questions & Answers

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 Background and History (1)

 The Law on Investment Limited Partnerships

(“ILP”) (Law No. 18 of 2016) was implemented on
4 August 2016.

 The ILP can only undertake permitted activities,

which will be later discussed.

 The ILP is regulated by the CBB.

 The ILP supports investment companies in

establishing financial investment funds, and
enables them to access new funding
mechanisms.
 Background and History (2)

 The Commercial Companies Law has addressed

Limited Partnership Companies, however this law
(ILP) in specific addresses Investment Limited
Partnerships.

 With partnership laws being well established in

common law jurisdictions, such as:
London
New York
Singapore
Cayman Islands
the ILP allows firms in and/or from such jurisdictions
to operate in Bahrain within a legal framework with
which they are familiar.
 Overview of the Investment Limited
Partnership Law
Permitted Activities:

Private Investment Limited Partners General

Undertakings; Partners

Collective Investment
Undertakings;
Securitization;
Insurance Captives; and
Any other financial service that
the CBB may specify in a
regulation issued pursuant to
the provisions of this law. Investment Limited
Partnership

The ILP will have its own legal

personality while allowing
investors to contribute to the
investment fund without taking
an active management role.

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Investment Limited Partnerships consists of ….

• One of more GPs

• At least one of the GPs must be a
corporate body domiciled in Bahrain
General
or in a other country or jurisdiction
Partners
acceptable to the Central Bank.
• Remaining GPs can be either a
natural person or a corporate body.

• One of more LPs

Limited
Partners • All LPs may be either a natural
person or a corporate body.
 ……..

 Each of the remaining GPs and all the LPs are not required
to be of Bahraini national nor are they required to be
domiciled in Bahrain.

 There are also no requirements for corporate bodies to be

incorporated or have its principal place of business in
Bahrain.
General Partners & Limited Partners Defined

General Partner Limited Partner

Definitions • Partners who • Partners who contribute
contribute to the to the Partnership’s
Partnership’s capital in capital in cash or in
cash or in kind kind

• responsible for the • passive investors

management of the without management
fund rights

• unlimited liability • not be liable for the

(jointly and severally Partnership’s
liable) to third parties obligations and debts
for the debts of the beyond own
fund. contribution.
 Duties of a General Partner (1)

Act in good faith and with fair dealing

Must act in interests of partnership

Act only as authorised or liable

Not to use partnership property for personal benefit

Maintain confidential opportunities for partnership

Not to abuse position for personal enrichment

 Duties of General Partner (2)

Duty not to conduct affairs in a way prejudicial to others

Render true accounts and full information about partnership to other partners

Exercise powers to meet fund’s objective

Not to compete unless specified consent is given

Disclosure of personal interests in accordance with partnership agreement

To compensate any breach of duty or law

 But what about Limited Partners?

REMEMBER…LPs are not involved in the

management of the ILP. Therefore, there are no
duties.

LPs have rights though, which include...

 Limited Partner Rights

●Limited liability

●Access to partnership information

●Compliance by general partner with partnership

agreement and law

●Protection from prejudicial actions

●Preference over general partner on dissolution

 Advantages of Investment Limited
Partnerships (1)

 Limited partnerships most popular form for funds

internationally

 Understood by international fund investors

 Catches up with neighbouring GCC jurisdictions (Dubai, Abu

Dhabi and Qatar)

 Investment of funds in a confidential manner in family limited

partnership is a growing area. ILPs are suitable for due to
their flexibility in order to take into account the needs of the
family
 Advantages of Investment Limited
Partnerships (2)

 Places clear fiduciary responsibilities on the general partner

 Provides investor access and transparency

 Provides flexibility for managers to develop terms that suit

their needs and different forms of investment.

 Promotes suitable structures for collective investment on a

venture capital basis, such as fintech, start-up companies
and early stage companies.
 Benchmarking (1)

Positive Points to Raise Note

Should be noted that Bahrain’s ILP Not the case in DIFC, QFC, ADGM.
structure is the only
onshore/mainland limited partnership
structure available in the GCC

Bahrain is not regulation heavy, and In contrast to Luxembourg, Jersey

is not subject to evolving regional and other European jurisdictions
rules that European jurisdictions
arguably are subject to which can
add to on-going regulatory costs.

Bahrain’s ILP has a separate legal Not the case in QFC, Cayman Islands,
personality Jersey and is optional for ADGM’s
ILP

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 Benchmarking (2)

Positive Points to Raise Note

Cost Efficient- CBB Application Fee of Cheaper than Cayman Islands, Jersey,
BD 50 QFC, ADGM, DIFC
1 GP and 1 LP minimum In line with most jurisdictions

Due to the recent 2017 amendments, In contrast to other mainland GCC

documents in English can be notarized. jurisdictions.

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 Limited Partnership Companies
under the Commercial Companies Law

Includes a Limited
Partnership
Company as a
general commercial
company form.

Some General
Partnership Limited
Company Partnership
provisions would Company- only 6
apply to a Limited Articles.
Partnership
Company
 Limited Partnership Companies
under the Commercial Companies Law

The following General Partnership Company provisions under

the Commercial Companies Law would also apply to a Limited
Partnership Company:

 Incorporation
 Management
 Termination
 Liquidation

This would also apply to Limited Partners under the Limited

Partnership Company, provided that the articles relating to
Limited Partnership Companies are complied with.

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 Thank you!

CONTACT

Legal Enquiries:
LegalAdvisor@bahrainedb.com

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