Guernsey innovates again: the protected cell limited partnership

In 1997, Guernsey became the first jurisdiction in the world to introduce the protected cell company (PCC). As the 30th anniversary of that landmark approaches, Guernsey is set to do it again, this time by expanding the protected cell concept to limited partnerships – one of the most widely used investment fund vehicles.

In this update, our Investment Funds specialists in Guernsey summarise the proposed Limited Partnerships (Protected Cells) (Guernsey) (Amendment) Law 2026 (the PCLP Law) and what it might mean for investors.

Once approved by the States of Guernsey, the PCLP Law will allow a protected cell limited partnership (PCLP) to be registered from the outset, and will allow existing non-cellular limited partnerships to convert into PCLPs.

What is a protected cell limited partnership?

A PCLP is a single limited partnership that can establish legally ringfenced cells of assets and liabilities, creating separate pools of capital within the limited partnership, each insulated from the liabilities of the others.

The PCLP combines the robustness of the well-established PCC with the tax transparency of a limited partnership, and we expect it to attract strong interest from asset managers, insurers and, potentially, structured finance arrangers seeking a tax-transparent alternative to a PCC.

Key opportunities

While every proposed use should be reviewed from a tax and regulatory perspective, key opportunities are likely to include:

Investment funds and ancillary vehicles

• Run multiple strategies with different risk profiles through a single limited partnership, with one general partner and one regulatory footprint, cutting the cost of a multi-strategy offering while benefiting from statutory segregation of assets and liabilities.

• Use as a multi-asset co-investment vehicle, where separate co-investments are housed within separate cells, allowing different investor groupings to access multiple co-investments on a tax-transparent basis without forming a separate limited partnership for each, accelerating time to market.

• Use as a managed account platform, where separate accounts for single investors are housed in separate cells, allowing separate cells to be managed independently to meet the objectives of the relevant cell investors on a cost effective, tax-transparent basis without forming a separate limited partnership for each, accelerating time to market.

Asset holding vehicles

The PCLP is well suited to holding assets such as aircraft, vehicle fleets and real estate, limiting third party liability within a tax transparent structure.

Insurance vehicles

• Insurers can choose to manage collateralized underwriting risk in a similar way to a PCC through a tax transparent structure.

• The PCLP also offers insurers and arrangers an attractive alternative platform for significant risk transfer arrangements where tax transparency of the structure is desirable.

Structured finance products

As with the PCC, a PCLP provides legally protected ringfencing of assets and liabilities for debt and other issuers, helping to segregate tranche payment obligations in structured finance transactions.

When is the PCLP Law likely to come into force?

The PCLP Law is expected to come into force in the next few months, marking the 30th anniversary of Guernsey's world-first PCC.

Contact the authors of this update or your usual Ogier contact to find out more about the PCLP.

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

Regulatory information can be found under Legal Notice