Administration

Requirements

A limited partnership is not a separate entity.  It comprises the partners collectively, in the same manner as an ordinary partnership.

A limited partnership must comply with the general conditions that apply to ordinary partnerships. There must be two or more persons in business in common with a view to profit.

A limited partnership must have at least one general partner.  The general partner may be a limited company.  There is a maximum number of 20 partners, with at least one general partner. The limitation on partnership numbers does not apply to persons carrying out certain professional practices subject to certain conditions.

A limited partnership must be registered with the Companies Registration Office.  It must register with a place of business in Ireland.


Management

For the most part, the general partnership rules apply to limited partners, as they apply to ordinary partners.

The ordinary management of the business is undertaken by the general partners without taking account of the views of the limited partner(s).  There may be agreements to the contrary.  However, they may not allow the limited partner to participate.

Subject to an agreement expressly or impliedly providing otherwise, differences as to ordinary matters in connection with the partners business is decided by a majority of the general partners.

The limited partner is intended to be an investor only. If he takes part in the management of the business, he becomes liable for all the debts and liabilities of the firm, while he takes part, as if he were a general partner.

A limited partner may not take part in the management of the business.  He has no power to bind the firm.  He may inspect books and records.


Partners

A limited partnership is in all respect the same as a partnership, with the exception that there may be one or more partners, whose liability is limited.  The limited partner must not participate in the management of the business.  He will not usually have authority to bind the partnership.

A limited partnership must have one or more general partners.  They are liable for all of the partnership debts, in the same way as a partner under the Partnership Act.

There may be one or more limited partners.  They must contribute cash or assets as capital.  They are not obliged to contribute beyond this. What is provided may be cash or other assets.  Actual transfer or payment is required.  A guarantee is not sufficient.


Capital Contribution

The limited partner must make a capital contribution.  This must be detailed in the CRO return.  The contribution may be a relatively small sum. As with companies, the contribution may comprise assets.  The value of the assets subscribed must be valued and ascertained. Formerly, companies capital duties applied on the value of assets contributed.

The limited partner’s liability for the debts of the firm is limited to the amount of his contribution, strictly subject to compliance with certain ongoing conditions.  The general partner’s obligations are unlimited.

The relevant capital contribution must be made on entry to the partnership.   Failure to make the contribution or register will lead to denial of limited liability to the limited partner. A limited liability company may be a limited or general partner.

The partnership agreement may provide that the limited partner is liable to his fellow partners beyond the extent of his capital contribution.  This may be binding as between the partners notwithstanding that as regards third parties, his liability is limited.


Withdrawing Capital

The limited partner must not receive back any part of his contribution, either directly or indirectly, during the continuation of the partnership.  If he does so, he is liable for the debts and obligations of the firm up to the amount received.

A limited partner may not, during the continuance of the partnership, withdraw his capital contribution.  If he does draw or receive it back, he is liable for the debts and obligations of the firm up to the amounts that are drawn out. This is limited to withdrawals during the continuation of the partnership.

It appears that partner may withdraw his capital on ceasing to be a partner.  Similarly, on termination of the partnership itself, the capital may be withdrawn.


Rights and Duties

The acts of the general partners in the ordinary course of the business of the firm will be binding on the limited partner.  However, fundamental changes in the structure of the firm (such as a change in the nature of the business) require the consent of the limited partner.

The limited partner has no right to take part in the management of the firm. If a limited partner takes part in the management, he is liable for all debts and obligations of the firm.

The limited partner may inspect the books of the firm. He may consult with the general partners in relation to the finances and accounts of the firm. He may examine the state and prospects of the business.  He should not take any steps to advise on the merits of decisions, as this will risk participation in management.

The initial formation and organisational decisions in relation to the firm are not management decisions. However, any input relating to the management of the business may cross the line.


Agency

Because of the limited partners’, limited ability to take part in the firm, some of the ordinary provisions applicable to partners will not apply. The limited partner does not have authority to bind the firm.

They are unlikely to have authority to initiate or defend the litigation.  Notice to them of dealings in the ordinary course are unlikely to be notice to the partnership.

As with ordinary partners, retiring and departing partners may remain liable until third parties have been notified of the departure.  The departure must be registered, but this of itself would not be sufficient to give third parties notice.

Where the partnership becomes a limited partnership, similar principles apply.  The mere registration as a limited partnership is not sufficient of itself to give notice to their creditors and customers of the change.


Initial Registration

The limited liability partnership must be registered. Registration confers the status of a limited partner and the consequent limitation of liability of the limited partner.  Material changes in the details must be registered.  The word “limited” must be used in the firm’s name.

The initial registration statement, which must be filed, requires

  • the firm’s name;
  • the general nature of business;
  • the place of business;
  • the name of each partner;
  • the term of the partnership if any;
  • a statement that the partnership is limited;
  • description of the limited partner as such;
  • sums contributed by limited partner and whether in cash.

The Registrar of Companies issues a certificate of registration.


Ongoing Registration

Any change in the registered particulars must be notified to the Registrar.  This includes changes in the term or character of the partnership; sums contributed or the liability of a partner because of his becoming a limited partner.

Notice of any transaction by which a person would cease to be a general partner or become a limited partner must be advertised in the Official Gazette.

The Registrar must maintain records and registers of limited partners.  It must be available for inspection by the public.


References and Sources

Limited Partnership Act 1907

Twomey. Partnership Law. Butterworths, 2000.


Case Law

Quigley -v- Harris

[2008] IEHC 403

Laffoy J.

“Limited partnership legislation

It is convenient at this juncture to set out the statutory provisions in relation to limited partnerships which counsel for the parties drew on in making their submissions and to make some comments on them.

Limited Partnership Act 1907

The Partnership Act 1890 (the Act of 1890) did not provide for limited partnerships, so the starting point is the Limited Partnerships Act 1907 (the Act of 1907), which is referred to in the definition of “limited partner” in s. 1013. The following provisions of the Act of 1907 were referred to by counsel in their submissions:

•           Section 3, the interpretation section, which, in addition to ascribing to certain expressions the same meanings as they have in the Act of 1890, contains, for the purposes of the construction of the Act of 1907, a definition of “general partner” which provides that that expression “shall mean any partner who is not a limited partner as defined by this Act”.

•           Section 4, which is headed “Definition and constitution of limited partnership”. Subsection (1) of s. 4 provides that, from and after the commencement of the Act, limited partnerships may be formed in the manner and subject to the conditions by the Act provided. Subsection (2) provides as follows:

“A limited partnership shall not consist, in the case of a partnership carrying on the business of banking, of more than ten persons, and, in the case of any other partnership, of more than twenty persons, and must consist of one or more persons called general partners, who shall be liable for all debts and obligations of the firm, and one or more persons to be called limited partners, who shall at the time of entering into such partnership contribute thereto a sum or sums as capital or property valued at a stated amount, and who shall not be liable for the debts or obligations of the firm beyond the amount so contributed.”

Counsel for the taxpayer drew attention to the fact that in that provision both “general partners” and “limited partners” are defined by reference to liability for the debts and obligations of the firm.

•           Section 5, which stipulates that registration of a limited partnership under the Act is required, is the section which is the linch-pin of the appellant’s case. It provides:

“Every limited partnership must be registered as such in accordance with the provisions of this Act, or in default thereof it shall be deemed to be a general partnership, and every limited partner shall be deemed to be a general partner.”

•           Section 6, which is headed “Modification of general law in case of limited partnerships”, which provides in subs. (1) as follows:

“A limited partner shall not take part in the management of the partnership business, and shall not have power to bind the firm:

provided that …

If a limited partner takes part in the management of the partnership business he shall be liable for all debts and obligations of the firm incurred while he so takes part in the management as though he were a general partner.”

Counsel for the taxpayer made the point that the consequence of a limited partner taking part in the management of the partnership business is not to constitute him a general partner, but to impose liability for the debts and obligations of the firm on him for a limited time.

•           Section 8, which stipulates the manner in which registration is to be effected, and the succeeding two sections are only of minor significance in the context of the issue with which the Court is concerned. The particulars which have to be given to procure registration include the principal place of business (para. (c)), which it is envisaged is within the jurisdiction, and a statement that the partnership is limited and the description of every limited partner as such (para. (f)).

•           Section 9, which requires registration of changes in partnerships, for example, a change in the liability of any partner by reason of his becoming a limited instead of a general partner and vice versa (para. (g)).

•           Section 10(1), which requires notice by advertisement in Iris Oifigiúil of an arrangement or transaction under which any person will cease to be a general partner and become a limited partner in a firm or under which the share of a limited partner is assigned to any person.

Investment Limited Partnerships Act 1994

A new model of limited partnership was introduced in this jurisdiction in the Investment Limited Partnerships Act 1994 (the Act of 1994), which was designed primarily to create an investment vehicle which would be attractive to foreign investors, particularly, investors from the United States of America, as is explained in an article by Declan Murphy B.L., “Investment Limited Partnerships” (1994) 1(11) C.L.P. 287.

Section 4(2) of the Act of 1994 expressly disapplies the provisions of the Act of 1907 to investment limited partnerships.

The expression “investment limited partnership” is defined in the interpretation section, s. 3, as meaning a partnership which holds a certificate of authorisation issued by the Central Bank in accordance with the Act of 1994. Section 3 also contains definitions of “general partner” and “limited partner” which are statute-specific in that they are definitions expressed to be for the purpose of the Act of 1994 and they relate to a person who has been admitted to an investment limited partnership as a general partner or a limited partner “in accordance with the partnership agreement”. However, the definitions manifest the same essential defining characteristics as are manifested in s. 4(2) of the Act of 1907, in that a general partner is a person who shall be personally liable for the debts and obligations of the investment limited partnership and a limited partner (subject to exceptions provided for later, for example, in s. 6(2) and (3) under which liability is modified if a limited partner takes part in the conduct of the business) is a person who is not liable for the debts or obligations of the investment limited partnership beyond the amount contributed or undertaken to be contributed by him. The expression “partnership agreement” is defined in s. 3 as meaning –

“… any valid written agreement of the partners governed by the law of the State and subject to the exclusive jurisdiction of the courts of the State, as to the affairs of the investment limited partnership and the conduct of its business as may be amended, supplemented or restated from time to time.”

One of the main planks in the taxpayer’s case is reliance on s. 43 of the Act of 1994 which provides:

“In any proceedings involving a limited partnership established under, or by its terms governed by, the law of another state, the liability of the partners, its organisation and internal affairs shall be determined according to the law of that state.”

It is common case that s. 43 is of general application and is not confined to investment limited partnerships.

The rationale for the inclusion of s. 43 in the Act of 1994 is explained in para. 2.3 of Mr. Murphy’s article as an aspect of the legislative policy designed to encourage recognition abroad of the limitation on liability conferred by Irish investment limited partnerships. It was hoped that the comity shown by Irish law for foreign law in s. 43 in recognising the limitation of liability of foreign limited partnerships would ensure reciprocal treatment.

…….As to the correct approach in determining the taxpayer’s status under Irish law, it was submitted on behalf of the appellant that one should isolate the incidents of the foreign entity under foreign law first and one should then assess those characteristics under domestic law, the approach which was applied by the Court of Appeal of England and Wales in Memec plc v. Commissioners of Inland Revenue (1998) T.C. 71. Adopting that approach, the appellant contended, the taxpayer comes within the ambit of para. (d). The taxpayer’s answer was that on the proper application of the Memec decision the result is the opposite; the taxpayer would not be caught by s. 1013.

………….As I have already outlined, the nub of the appellant’s argument on the construction of paragraph (d) is that, as a matter of Irish law, all partners other than limited partners as defined in the Act of 1907 and in the Act of 1994 are general partners, actual or deemed. Counsel for the taxpayer submitted that that proposition is fundamentally wrong in that –

(a)        it interpolates something into the definition in s. 1013(1) which is not there, but could easily have been included,

(b)        it is inconsistent with the express reference to the Act of 1907 in paragraph (a),

(c)        it ignores the fact that paragraph (c) envisages a foreign element, and

(d)        it ignores the overriding principle of private international law, the comity principle, which applies unless expressly excluded.

Both sides resorted to Lindley and Banks on Partnership, (18th ed., 2002) to define the concepts of limited partner and general partner.

Counsel for the taxpayer cited the following passage (at p. 841) in which the “essence of a limited partnership” is described as:-

“…the combination in a firm of (1) one or more partners whose liability for

the debts and obligations of the firm is unlimited and who alone are entitled to manage the firm’s affairs, and (2) one or more partners whose liability for such debts and obligations is limited in amount and who are excluded from all management functions.”

Apropos of the second characteristic of a limited partner, Lindley and Banks note that “in some countries, a limited partner may take part in the firm’s management”.

Counsel for the appellant focused on the following passage (at p. 842) as setting out the essential features of a general partnership:

“[The Act of 1907] for the first time under English law enabled a partnership to be formed which did not display three of the normal characteristics of a normal or general partnership:

(1)        the unlimited liability of every partner;

(2)        the implied authority of each partner to bind the firm and its co-partners in all matters within the ordinary scope of the partnership business; and

(3)        the right of each partner, subject to any contrary agreement, to take part in the management of that business.”

When one examines the taxpayer’s position as a partner under the C.L. Partnership against the indicia of a general partner as set out in that passage, it was acknowledged by counsel for the appellant that indicia (1) and (2) are not present, because –

(a)        his liability as a partner in the C.L. Partnership is limited, and

(b)        by virtue of s. 61 of the Cook Islands statute entitled International Partnership Act, 1984, as amended, he does not have implied authority to bind the firm, in that, if in carrying on the business of the C. L. Partnership, or in carrying on any contract connected therewith, he “obligates” the partnership without express authority of the general partners, he is personally liable for the obligation.

………….

In construing the definition of “limited partner” in s. 1013, it seems to me that it is necessary to identify the type of agreements or arrangements recognised by Irish law under which a partner with limited liability can exist.

By virtue of the Act of 1994 and, in particular, s. 43 thereof, the existence of foreign limited partnerships is statutorily expressly recognised. In paragraph (c) of the definition of limited partner in s. 1013 (1) the existence of joint trading ventures subject to the jurisdiction of foreign states is statutorily expressly recognised. Therefore, the type of partnership or joint trading arrangement which the Revenue Commissioners may have to take cognisance of in assessing an individual’s liability to tax are various and include:

(i)         what Lindley and Banks call “normal or general” partnerships, domestic or foreign;

(ii)        limited partnerships regulated by the Act of 1907;

(iii)       investment limited partnerships regulated by the Act of 1994, although not subject to the provisions of s. 1013(1) because of their specialised nature as vehicles for collective investments;

(iv)       foreign limited partnerships; and

(v)        other joint trading ventures regulated by foreign law.

The question of construction which arises here is whether the expression “general partner” in paragraph (d) expressly and in clear and unambiguous terms encompasses a person who is a partner under a partnership established in a foreign jurisdiction whose liability is limited and who has no implied authority to bind the firm but who is entitled to participate in the management of the partnership business, as the appellant contends. In my view, it does not.

I do not accept that the expression “general partner” has a legal meaning which exists for all purposes. In particular, the default provision in s. 5 of the Act of 1907 does not have the universal effect contended for by the appellant nor does the deeming provision operate for all purposes. In my view, s. 5 was never intended to apply to a partnership established under, or governed by, the law of a foreign jurisdiction which does not trade in this jurisdiction, because the Act of 1907 envisages a limited partnership registered thereunder having its principal place of business in this jurisdiction and, in general, compliance with ss. 8, 9 and 10 in the case of a foreign partnership would seem to give rise to considerable, perhaps even insurmountable, practical difficulty. Even if I am wrong in that conclusion, at any rate since the enactment of s. 43 of the Act of 1994, s. 5 cannot operate so as to negative the effect of that provision. Most significantly, in considering the text of the definition of “limited partner” in sub-s. (1) of s. 1013 to formulate the appropriate test to be applied to identify a “general partner” within the meaning of paragraph (d), I cannot conclude that the appellant’s contention – that if the partner bears any of the three characteristics of a general partner listed by Lindley and Banks, he is a general partner – is correct.

The principal feature which distinguishes a general partner from a limited partner under Irish law is that, in the case of the latter, his liability for the debts of the partnership is limited in amount, whereas, in the case of the former, it is unlimited. As regards the additional distinguishing feature recognised in s. 6 of the Act of 1907 and in s. 6 of the Act of 1994 – the prohibition on the limited partner taking part in the management of the partnership, or in the conduct of the business of an investment limited partnership, and having power to bind the firm – non-compliance does not, as counsel for the taxpayer submitted, turn the limited partner into a general partner, although it affects his liability for the duration of his participation in the management or conduct of the business. In relation to the application of s. 1013 to a partner in a foreign partnership, I see no basis for finding that “general partner” in paragraph (d) encompasses such a partner whose liability is limited merely on account of the fact that, under the partnership agreement and in accordance with the law of the jurisdiction which governs the partnership, he is entitled to participate in the management of the partnership.

This conclusion is not at variance with the analysis of the concepts of general partner and limited partner as defined in Lindley and Banks quoted earlier and relied on by the parties. The third essential feature of a general partner identified – the right to take part in the management of the business – is subject to the qualification that it is “subject to any contrary agreement”. Similarly, it is recognised that in foreign jurisdictions a limited partner may take part in the firm’s management. In neither concept is participation or non-participation in the management of the firm’s business an absolute requirement.

In enacting paragraph (d) in 2000 the Oireachtas chose an expression, “general partner”, which is not a term of art and the Oireachtas chose not to define it. Aside from a situation in which the default effect and the deeming provision of s. 5 of the Act of 1907 operates and, in my view, clearly it cannot operate in a situation to which s. 43 of the Act of 1994 applies, it is inconceivable that anybody, whether within the class of persons to which the appellant contends paragraph (d) is directed (members of limited partnerships or partnerships generally) or not, would attach a meaning to the expression which would ignore the most basic characteristic of a general partner, that his liability is unlimited. The Oireachtas cannot have intended that it should be so interpreted. When it is recognised, by whatever route, that the taxpayer’s liability as a partner in the C.L. Partnership is not unlimited, in my view, the conclusion that he is a general partner within the meaning of paragraph (d) is not open.

That, it seems to me, answers the question of construction. However, I will proceed to consider the arguments in support of and counter arguments against various routes by which it is asserted that the taxpayer’s limited liability qua partner may be recognised.

………….As I propose to illustrate, the effect of the interpretation and application of s. 43 in the manner which I have suggested the Oireachtas intended, parallels the effect of the application of the Memec principles advocated by counsel for the appellant in the resolution of the issue raised on the case stated.

…………………In applying the rule, Robert Walker J. decided that the arrangement embodied in the silent partnership was not transparent for U. K. tax purposes and that the source of plc’s taxable income was not dividends of the trading subsidiaries but rather plc’s contractual rights under the silent partnership. He explained how he arrived at that conclusion in the following passage (at p. 98):

“Whether or not the arrangement is called a partnership, its essential features (established by the evidence of German law) are that there was a commercial arrangement under which plc, in consideration of a lump-sum investment with a holding company, had the contractual right to an annual payment equal to a large share of the holding company’s dividend income from its subsidiaries, less expenses. In my judgment, the decisive point, on the first main issue, must be the absence of any proprietary right, legal or equitable, enjoyed by plc in the shares of the trading subsidiaries, or in the dividends accruing on those shares. The accruing dividends belonged to GmbH as the subsidiaries’ holding company, and the contractual arrangements under which a sum equal to 87.84 per cent share of the dividends, less expenses, was due to plc must be regarded as a separate source of income. Metaphorical language is not a substitute for analysis, but it may help to explain the conclusion: adopting Lord Asquith’s phrases, I conclude that plc’s rights under the partnership agreement did have independent vitality and were not mere incidental machinery. Without those rights under the partnership agreement, plc would have continued to receive dividends from GmbH, and nothing from the trading subsidiaries.”

In the Court of Appeal, Peter Gibson L.J. reached the same conclusion but with a different emphasis in applying the rule. He dealt with the approach to be adopted in relation to the transparency issue in the following passage (at p. 111):

“What, in my judgment, we have to do in the present case is to consider the characteristics of an English or Scottish partnership which make it transparent and then to see to what extent those characteristics are shared or not by the silent partnership in order to determine whether this silent partnership should be treated for corporation tax purposes in the same way. The judge aptly cited the remark of Rowlett J. in Garland v. Archer-Shee … in relation to an American trust …”

Peter Gibson L.J. then went on to examine the relevant characteristics of English partnerships stating:

“The relevant characteristics of an ordinary English partnership are these:

(1)        the partnership is not a legal entity;

(2)        the partners carry on business of the partnership in common with a view to profit (s.1(1) Partnership Act, 1890);

(3)        each does so both as principal and (s.5 ibid) as agent for each other, binding the firm and his partners in all matters within his authority;

(4)        each partner is liable jointly with the other partners for all debts and obligations of the firm (s. 9 ibid); and

(5)        the partners own the business, having a beneficial interest in the form of an undivided share, in the partnership assets …, including any profits of the business.

A limited partnership differs relevantly only in the following respects:

(a)        (2) and (3) above are modified in that the limited partner takes no part in the management of the partnership business (s. 6(1) Limited Partnership Act, 1907) the ordinary partners acting on his behalf as well as on their own behalf;

(b)        the limited partner on entering the partnership is obliged to make a contribution of a sum or sums as capital or property of a stated amount and (4) above is modified in that the limited partner is only liable up to, but not beyond, the amount so contributed.”

Having also examined the characteristics of a Scottish partnership, Peter Gibson L.J. found that it differed in certain respects from an English partnership. He observed (at p. 113) that it was not difficult to see why an English partnership (including a limited partnership) is treated as transparent, the partners carrying on business (whether by themselves or by the other partners as their agents) in common and owning the business and having a beneficial interest in the partnership assets and profits. He went on to consider how the silent partnership differed from both English and Scottish partnerships. In relation to what Robert Walker J. had considered the decisive point – the absence of any proprietary right, legal or equitable, enjoyed by plc in the shares of the subsidiaries or in the dividends accruing on those shares – he considered that to be a strong point of distinction from an English partnership. He then identified what he considered to be “a clearer distinction” in the following passage (at p. 113):

“… unlike in English or Scottish partnership in the silent partnership no business is carried on by plc and GmbH in common with a view to profit. The business is that of GmbH as sole owner. Plc is not jointly liable with GmbH to creditors of GmbH for the debts and obligations of GmbH. The liabilities of the business are those of GmbH alone, although plc can be called on by GmbH to bear its share of losses computed at the end of the year to the extent of its capital contribution. To a third party, plc’s role in the silent partnership is irrelevant and may not be known.”

Peter Gibson J. went on to quote with approval the last two sentences of the passage from the judgment of Robert Walker J. (at p. 98), which I have quoted earlier, and he concluded on the transparency issue as follows (at p. 114):

“The agreement was, in my judgment, the source of plc’s share of the profits of the GmbH business, not the trading operations of the subsidiaries or the shares owned by GmbH in the subsidiaries producing the dividend paid to GmbH. Accordingly I would reject the first basis advanced on behalf of plc.”

Sir Christopher Staughton, who concurred on the transparency issue, identified the difference between a stille gesellschaft and an English partnership as follows (at p. 118):

“A silent partner in such an organisation (in this case plc) does not carry on the business, and does not incur the rights and liabilities of the business. It is interested only in its share of the net profits. Section 230(2) of the German Commercial Code provides: ‘The owner alone has the rights and obligations with respect to transactions concluded within the operation of the business’. The owner, in that section, is the one who runs the enterprise, in contrast to the silent partner. I, therefore, conclude that the German subsidiaries in the present case cannot be treated, for tax purposes, as having paid dividends to plc.”

…………….

First, paragraph (d) was not part of the original scheme of s. 1013 but was added on to the definition of “limited partner”. By the year 2000, when paragraph (d) in the form at issue in these proceedings was enacted, there had been a significant legislative advance in relation to limited partnerships, in that s. 43 of the Act of 1994 had come into force. In 2000, the Oireachtas can hardly have intended that foreign limited partnerships would be registered under the Act of 1907 or that the default mechanism in s. 5 of that Act would operate to constitute them general partnerships in the event of non-registration.

Secondly, there is a certain symmetry between paragraphs (b) and (c) of the definition of “limited partner” in s. 1013(1) in that –

(1)        the liability of a person who comes within paragraph (c) is limited and the person who comes within paragraph (b) has the benefit of an indemnity against liability beyond a certain limit, and,

(2)        a person who comes within either paragraph is not entitled to take part in the management and, consequently, is precluded from binding the firm.

Therefore, in substance, a person within either category (b) or (c) has none of the characteristics of a general partner identified by Lindley and Banks. Paragraph (d) does not share the symmetry which exists between paragraphs (b) and (c). It refers to a general partner without qualification other than that he does not work on a full-time, or almost full-time, basis in the partnership business.

Thirdly, when paragraph (d) is juxtaposed with paragraph (b), it is impossible to interpret the expression “general partner” in paragraph (d) as meaning a partner subject to the further qualification of lacking one or more of the normal characteristics of a general partner. In paragraph (b) the draftsman spelt out that qualification and he could easily have done so in paragraph (d), if that was the intention of the Oireachtas.

Summary of conclusions

The determination of whether the taxpayer is a limited partner by reference to paragraph (d) of the definition in s. 1013(1) so as to be subject to the restrictions on the availability of relief imposed by s. 1013 is a two stage process. The first stage is to determine the characteristics, rights and obligations of the taxpayer qua partner under the C.L. Partnership by reference to the law of Cook Islands. That approach is mandated by common law and by statute (s. 43 of the Act of 1994). The second stage is to determine whether, applying Irish law, the characteristics, rights and obligations of the taxpayer qua partner match the characteristics, rights and obligations of a general partner within the meaning of paragraph (d) in the context of s. 1013 as a whole to the extent that one can conclude that the expression “general partner” in paragraph (d) clearly and unambiguously captures the taxpayer.

The outcome of the two stage process in this case is that, as a matter of fact (including Cook Islands law), the characteristics, rights and obligations of the taxpayer qua partner under the C.L. Partnership, primarily that his liability is not unlimited, mean that, as a matter of Irish law, he is not a general partner within the meaning of paragraph (d).

It is possible to observe, without violating the principle enunciated by the Supreme Court in Cronin v. Cork and Country Property Company Limited referred to earlier, that the inclusion by the Oireachtas of the epithet “general” before the word “partner” in paragraph (d) prevented paragraph (d) having the application to the taxpayer contended for by the appellant.

Answer to question posed in the case stated

The answer to the question posed in the case stated is that the taxpayer does not fall within paragraph (d) of the definition of limited partner in s. 1013(1) of the Act of 1997, as amended.

.