Guidelines for The Formation Of Limited Partnerships

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Commercial Partnerships have been in existence under Maltese Law since Ordinance XIII of 1857. Nowadays, commercial partnerships – which include the partnership en commandite (hereinafter referred to as “Limited Partnership” or “LP”), the General Partnership and the Limited Liability Company – are regulated by the Companies Act (the “Act”) and the Commercial Code. Over the years the basic provisions regulating the LP have remained the same. However, specific provisions regulating the establishment of Collective Investment Schemes (“CIS”) as Limited Partnerships were added to the Act in 2003.

In order to optimize the use of the LP as a fund vehicle, further amendments were introduced to cater for the increase in the LP’s popularity among fund managers.

The Maltese LP boasts of an important feature which enhances the transparency of the structure, and in turn increases its flexibility. This is the option to have the investment scheme’s capital dividend divided or not divided into shares.

Some of the key changes include the substitution of the requirement to register the Partnership Deed with the requirement to submit a simple registration form, and clarification for instances in which the limited partnership is required to submit accounts, which means that the compliance framework for LPs has been further simplified.

The Limited Partnership Structure

The LP can be used as a CIS where the great majority of members are passive investors with limited liability. In fact, the framework which regulates LPs operating as CISs – which is incorporated in Schedule X of the Act – applies to LPs which have their object limited to the collective investment of funds in securities and in other movable and immovable property, or in any of them, with the aim of giving the partners the benefit of the results of the management of these funds. A number of CISs, particularly alternative investment funds, have been established in Malta as LPs. Such LPs require a license or other form of recognition from the Malta Financial Services Authority (“MFSA”) in terms of the Investment Services Act.

A Limited Partnership has its own separate legal personality, distinct from that of its partners. It is the subject of rights and obligations, is capable of owning and holding property under any title at law, and is capable of suing and being sued in its own name.

The legal personality runs until such time as the LP is wound up and struck off the register. When dealing with third parties, the LP is only bound in favour of such third parties in instances where a partner acts under the partnership name by virtue of lawful representation which must be stated in the Partnership Deed, Partnership Registration Document, or in any manner recognized by law including by virtue of a power of attorney.

A Limited Partnership may be designated by any name as long as it is followed by “Limited Partnership”, “LP” or “L.P.” Partnership names may be reserved by giving a written notice to the Registrar not more than 3 months before the date on which the partnership is to be registered.


A Limited Partnership may consist of one or more General Partners, and one or more Limited Partners.

General Partner/s

Limited Partner/s

Any person or body corporate may be a general partner.

Any person or body corporate may be a limited partner.

Admitted to the Limited Partnership as general partner/s in accordance with the Partnership Deed.

Admitted to the Limited Partnership as limited   partner/s in accordance with the Partnership Deed.


Upon joining the Limited Partnership as a Limited Partner, shall contribute to the LP’s capital a specified sum.

Responsible for the management of the Limited Partnership.

Not involved in the management of the Limited Partnership.

Jointly and severally liable for all of the LP’s debts without limitation.

Not liable for any debts of the LP beyond the amount contributed or agreed to be contributed and not yet paid.

Shall satisfy the eligibility and other criteria and requirements applicable to them in terms of the Investment Services Act and Investment Services Rules issued by the MFSA as well as those stipulated by the Partnership Deed.

Shall satisfy the eligibility and other criteria and requirements applicable to them, if any, in terms of the Investment Services Act and Investment Services Rules issued by the MFSA as well as those stipulated by the Partnership Deed.

General Partners

The administration, management and representation of a Limited Partnership are vested in the General Partners. Decisions are taken by a simple majority or as otherwise stated in the Partnership Deed.

A person ceases to be a general partner upon:

  1. Resignation, retirement, removal, or expulsion in accordance with the requirements, if any, of the partnership deed;
  2. Bankruptcy, death, or legal incapacitation or interdiction – in the case of a natural person;
  3. Dissolution – in the case of a general partner which is a body corporate.


In the case of any of the above, both the LP and the general partner who has ceased to occupy his post must notify the Registrar of Companies within 14 days.

Limited Partners

The general partners and the limited partnership are accountable to the limited partners in a number of situations. Limited partners may inspect the books of the LP, examine and inquire about the state and prospects of the business of the LP, request information of all things affecting the LP, and request a formal account of the affairs of the LP under reasonable circumstances.

A person ceases to be a limited partner:

  1. Upon a valid assignment of the whole of his interest in the LP; or
  2. At such time and, or upon the occurrence of such event specified in the Partnership Deed.


Ceasing to be a limited partner does not relieve that limited partner of any liability that may arise under the provisions of the Schedule. Subject to the provisions of the Partnership Deed and/or the Schedule, in the event of death or dissolution or other cessation of a limited partner, the LP shall continue to run with the heirs or other relevant partner.

Any number of partners may become limited partners the LP, subject to:

  1. The provisions of the partnership deed and any prior approval by the LP required for such admission in terms of the Partnership Deed and the Schedule;
  2. An agreement in writing with LP and/or with other such partners as required by the Partnership Deed.


If a limited partner, or any other person, holds himself out as being a general partner, that person shall have unlimited, joint and several liability with the general partners for all the obligations contracted by the LP.

The contribution of a limited partner may be satisfied in cash or other property capable of economic assessment. It may not, however, consist of undertakings to perform work or supply services. Where property other than cash is provided, it should be valued at its fair market value at the time of its transfer to the LP.

The Process Of Incorporation

In order to be validly constituted a Limited Partnership requires the following documentation:

  1. A Partnership Deed which is entered into and signed by the initial partners (at least one general partner and one limited partner);
  2. A Partnership Registration Document which must be delivered to the Registrar; and
  3. A Certificate of Registration issued by the Registrar.


The Partnership Deed must be drawn up in writing and contain certain specific details. It is not required to be delivered to the registrar and may remain confidential. The Partnership Registration Document – which must be delivered to the registrar – must contain the following details:

  1. Name and Residence of the General Partner/s;
  2. Name of the Partnership;
  3. Registered office in Malta;
  4. Business Objects;
  5. Whether its capital is, or is not, divided into shares, as well as a number of sub-requirements depending on the type of limited partnership;
  6. Where applicable in the case of a Multi-Fund Limited Partnership, the election to have the assets and liabilities of each sub-fund treated for all intents and purposes of the law as a patrimony separate from the assets and liabilities of each other sub-fun;
  7. The period, if any, fixed for the duration of the Limited Partnership, and where no such period is fixed, a statement to that effect; and
  8. A declaration that the Partnership Deed has been entered into and signed.


The Partnership Deed must state which of the partners are general partners, and limited partners. It may also specify whether its administration and representation are to be exercised by the general partners jointly or severally. It may also expressly provide for the extension of the period, if any, fixed for its duration.

The Registrar will issue a certificate confirming the registration of the LP once the Partnership Registration Document is registered, and the prescribed fee is paid. The Limited Partnership shall commence business from the date of the certificate. The certificate of registration constitutes conclusive evidence that the requirements of the Schedule in respect of registration have been complied with, and that the LP has come into existence and is duly registered under the Act.

Types of Limited Partnership Structures

Limited Partnerships With Variable Share Capital

A limited partnership that is registered with variable share capital is required to add the words “with variable share capital”, or “VC” or “V.C.” after its standard “Limited Partnership” or “LP”/”L.P.” appearing after its name. A Variable Capital Limited Partnership cannot issue partly paid up shares, and may purchase or redeem its own shares, directly or indirectly out of its assets, on such terms and in such manner as may be provided by the Partnership Deed.

Multi-Class Limited Partnership

A Share Capital LP may be constituted as a Multi-Class Partnership where, in accordance with the Partnership Deed, its capital is, or is capable of being, divided into different classes of shares, not constituting any distinct sub-fund. In this case, it may not segregate any of its assets and liabilities. A Multi-Class LP may create and offer, or issue a new class/classes of shares, in accordance with the partnership deed, and subject to the Authority’s approval or any other requirements that may be stipulated in the Act. Said class or classes of shares must not constitute a distinct sub-fund/s of the LP. The shares may be denominated in a different currency, however, each class of shares can only be denominated in one currency. If the LP has its capital denominated in different currencies, it may draw up its annual accounts, or other reports, in any one of these currencies.

Multi-Fund Limited Partnership

Similar to the the Multi-Class LP, the Multi-Fund LP is a Share Capital LP in which its capital is, or is capable of being, divided into different classes of shares. Unlike the Multi-Class LP, the limited partnership is a Multi-Fund one, where one class, or a group of classes of shares constitute a distinct sub-fund. Subject to the provisions of the Partnership Deed, the provisions of the Act, and any approval required by the Authority, a Multi-Fund LP may create and offer to issue a new class/classes of shares which may constitute a new sub-fund or be comprised in an existing sub-fund/s of the LP. Different classes of shares constituting a sub-fund in a Multi-Fund LP may be denominated in a different currency provided that a class of shares may be denominated only in one currency.

A Multi-Fund LP may stipulate in its partnership deed that each sub-fund’s assets and liabilities are to be treated separately from the assets and liabilities of each other sub-fund. The liabilities incurred in respect of each sub-fund shall be paid out of the assets forming part of its patrimony and the creditors in respect thereof shall have no claim or right of action against the other assets of the LP. In order to document, as evidence, that the assets and liabilities of each sub-fund are distinct from the other sub-funds in the same LP, separate records, accounts, statements and other documents are to be held.

Tax Treatment

Under Maltese tax law, a CIS established in the form of a limited partnership with capital not divided into shares is deemed to be a transparent vehicle. This means that income and capital gains arising from the fund are taxed directly in the hands of investors according to their tax status. Tax neutrality is of fundamental importance when selecting a fund’s jurisdiction of establishment and legal form.

US Investors

It is expected that a limited partnership established in terms of Article 66A of the Maltese Companies Act would also be treated as fiscally transparent by the United States Internal Revenue Services. This is because a general partner in a Limited Partnership has unlimited liability which satisfies US Rules to be classified as a tax transparent partnership. If tax transparency for US purposes is not desired, the limited partnership offers the option to elect corporate, non-transparent, tax treatment under the US Rules.

UK Investors

On the basis of correspondence with Her Majesty’s Revenue and Customs, it is understood by the Authority that a limited partnership established in terms of Article 66A of the Maltese Companies Act, that does not have its capital divided into shares, should be considered to be transparent for tax purposes under UK law.


In accordance with Article 30 of the EU Accounting Directive, undertakings falling within the parameters prescribed in Article 1 of the Directive are to publish their duly approved financial statements within a period not exceeding 12 months. In order to fall outside the scope of the EU Accounting Directive, at least one member of a limited partnership must have unlimited liability. This applies to both direct and indirect members.


Upon dissolution, the winding up of a limited partnership’s affairs is the responsibility of the general partners unless circumstances require a liquidator to be appointed by the court. Dissolution proceedings may be held judicially through the filing of a court application, or through the appointment of a liquidator by the partners in accordance with the Partnership Deed or by mutual agreement. Upon dissolution, the LP shall cease all business activities, unless they are so required for its winding up.

The Court may order the dissolution of a limited partnership on the application of any partner, creditor, or the Registrar, given that there is a genuine reason to do so; for example if the LP is insolvent, or if the LP’s affairs are being conducted in a way to defraud creditors, etc. Should the assets of the LP not be sufficient to settle all of its liabilities, the persons conducting the winding up may request the payment of the unpaid part of the partners’ contribution. They may also demand, from the partners with unlimited liability, the amount required to settle the liabilities if they are not covered by the partners’ contribution.

The dissolution of a limited partnership is deemed to occur upon the earlier of the following:

  1. The date of the occurrence of the event upon which, under the provisions of the Schedule, the LP is dissolved;
  2. The date of the Court’s dissolution order.


A notice of the dissolution is to be filed with the Registrar by the General Partners, and is then to be published in the Government Gazette or on the Company Registry’s website, not later than 14 days from the date of dissolution.

Upon dissolution, the LP’s assets are to be distributed in the following order:

  1. First, toward the expenses incurred during the dissolution, including the liquidator’s remuneration;
  2. Second, to creditors (other than partners) according to their preferential ranking regulated by law;
  3. Third, to limited partners who are creditors and who are not general partners, according to their preferential ranking regulated by law;
  4. Finally, subject to the provisions of the Partnership Deed, to the partners as follows:


  • Limited Partners for the return of their contributions;
  • Limited Partners for their share of the profits on their contribution;
  • General Partners other than for capital and profits;
  • General Partners in respect of capital; and
  • General Partners in respect of profits.