On 9 October 2015, the General Partnerships Law was amended through the promulgation of amending law 144(I)/2015. The amending statute introduced for the first time in Cyprus law the concept of a limited liability partnership with share capital ("Cyprus Limited Liability Partnership" or "Cyprus LLP"). Cyprus law on partnerships is largely codified in the Partnerships and Business Names Law, Cap. 116 (the “General Partnerships Law”).
Traditionally, Cyprus law recognised two types of partnerships: general partnerships, in which all partners were general partners and had unrestricted liability for all obligations of the partnership; and limited partnerships, in which at least one partner was a general partner and had unrestricted liability for all obligations of the partnership whereas other partners may also exist, which could have limited liability up to the amount contributed (or remaining unpaid) by them in the partnership.
The legal framework after 9 October 2015 defines the Cyprus LLP as a partnership, having a share capital, and in which the liability of the limited partners is limited up to the amount which remains unpaid, if any, for the shares that they hold. Equally, a limited partner in a Cyprus LLP means the limited partner who contributes in the shares capital of the Cyprus LLP and to whom shares are allotted, depending on the amount contributed. In addition, the amending statute has clarified that Cyprus LLPs, regardless of whether they have share capital or not, are not considered legal entities with a separate legal personality.
The main features of an LLP can be summised as follows: Nature of partners. The partners holding shares in Cyprus Limited Liability Partnership can be legal persons or natural persons. Number of partners. A Cyprus Limited Liability Partnership can comprise up to 100 persons.
Liability of partners
Cyprus Limited Liability Partnership comprises: one or more general partners, who are liable for all debts and obligations of the partnership, and are authorised to manage, operate and bind the LLP as such; and one or more Limited Liability Partners, who merely contribute capital towards shares in the partnership and can enjoy limited liability in the same manner as shareholders enjoy limited liability in a limited company.
A Cyprus LLP cannot be considered a legal entity with a separate legal personality, regardless of whether the Cyprus LLP has share capital or not.
A Cyprus LLP can have share capital.
A Limited Liability Partner cannot take part in the management and the operations of the Cyprus Limited Liability Partnership. If he does, then he is liable for all debt and obligations of the LLP which arise as long as he takes part in the management, as if he was a general partner.
A Limited Liability Partner cannot be authorized to bind the Cyprus Limited Liability Partnership.
These are decided by general partners, in a manner similar to the one applicable in companies.
The Cyprus Limited Liability Partnership itself is tax transparent (as it has no legal personality). Taxation, if any, arises at the level of the partners.
A Limited Liability Partner cannot dissolve the partnership by notice and, also, his/her death or bankruptcy or incapacity does not constitute a ground for dissolution of a Cyprus LLP (this is subject to exceptions).