Partnership Act (Revised 2020)

Summary

This is the BVI Partnership Act, the core statute governing general partnerships in the Virgin Islands. It sets out how a partnership is formed and recognised, the rights and duties partners owe one another and third parties, and the rules for dissolving a partnership and distributing its assets. Limited partnership concepts (limited partner, general partner, register, Registrar, etc.) were removed from this Act by the 2017 amendment and are now dealt with elsewhere, so this Act now focuses on general partnerships and partnership law principles generally.

• Formation and existence: Defines partnership as persons carrying on business in common with a view to profit, and sets out rules (sharing of gross returns, joint ownership, profit-sharing arrangements) for determining whether a partnership exists.
• Dealings with third parties: Each partner is an agent of the firm and can bind it for ordinary partnership business; firms are liable for a partner's wrongful acts, misapplied money or property, and admissions made in the ordinary course of business.
• Liability of partners: Partners are jointly liable for the firm's debts and obligations incurred while they are partners, and jointly and severally liable for wrongs and misapplied property; a deceased partner's estate remains severally liable for pre-death debts.
• Incoming and outgoing partners: New partners are not liable for debts incurred before they joined; retiring partners remain liable for debts incurred before retirement unless released by agreement with creditors and continuing partners.
• Duties between partners: Partners must render true accounts and full information, account for private profits made from partnership property, name or connections, and must not compete with the firm without consent.
• Dissolution and winding up: Sets out grounds for dissolution (expiration, notice, bankruptcy, death, illegality, court order), continuing authority of partners to wind up affairs, and the order for distributing partnership assets on final settlement.
• Offences and enforcement: Contravention of the Act or regulations made under it is an offence carrying a fine of $5,000 unless another penalty is specified; prosecutions must be brought within 5 years of the offence.

The Act applies by default to general partnerships and their partners, and to persons dealing with such firms (creditors, third parties relying on representations of partnership status). It operates as background commercial law rather than imposing regulatory filings, though its rules can be varied by agreement between the partners in most respects.

Key obligations

• Partners are jointly liable with co-partners for all debts and obligations of the firm incurred while they are partners
• A deceased partner's estate remains severally liable, in due course of administration, for the firm's unsatisfied debts and obligations
• Partners must render true accounts and full information of all things affecting the partnership to any partner or their legal representatives
• Partners must account to the firm for any benefit or private profit obtained without consent from any transaction concerning the partnership, its property, name or business connection
• A partner must not carry on a competing business of the same nature without consent, or must account for and pay over profits made from doing so
• A retiring partner remains liable for partnership debts or obligations incurred before retirement unless discharged by agreement with the continuing partners and creditors
• Prosecutions for offences under the Act must be commenced within 5 years of the date the offence was committed
• A person who contravenes the Act or regulations made under it is liable on summary conviction to a fine of $5,000 unless another penalty is specified

Applies to

general partnerships, partners, firms, persons dealing with a firm, creditors of a firm

Deadlines

• 5 years from the date of the commission of the offence: Time limit within which a prosecution for an offence under the Act or regulations made under it must be commenced

Related documents

• Partnership (Amendment) Act, 2023 amends this document