Business partnerships in Bermuda may elect to give their partnership a legal personality ? enabling it to sure and be sued in its own right ? after the House of Assembly passed an amendment to the Partnership Act 1902 which was tabled Friday by Finance Minister Paula Cox.

The Partnership Amendment Act 2006 will allow partners the option ? whether they are carrying on businesses offering household services or professional services such as accounting ?? to give their partnership a legal personality.

The amendment is aimed at solving a number of partnership issues deemed ?problematic? currently. While the law views a company as a separate legal entity that can sue and be sued in its own name, it only views partners as working together in a temporary association.

With the amendment, partners will be guarantors of the partnerships? obligations and they will remain jointly and severally liable for the actions of the partnership. However partners would no longer be required to act personally, but instead would act on behalf of the partnership as a legal person in its own right. The partnership would have legal personality and be a legal person which may sue and be sued in its own right. The amendment will not make a partnership a body corporate or a company.

?This has been the position in Scotland for a very long time and most states in the USA have taken this approach. It is seen as a rational and logical advance,? said Minister Cox.

The Bermuda amendment incorporates the Scottish provisions on legal personality.

As well as addressing the key problem of the continuation of a partnership, the amendment also addresses the question of ownership of assets and capacity of a partnership. A partnership with legal personality will own the assets and the partnership will have unlimited capacity to carry on its business.

?This bill will provide options for partnerships particularly larger commercial businesses which need certainty but flexibility in structuring their deals,? said Minister Cox who noted that while partnerships currently serve a number of purposes in the modern business world their limitations do create problems.

It will not be mandatory for partners to give their partnership a legal personality since for example some partners may wish to continue their association for tax or regulatory reasons.

There is currently debate in the UK over whether all partnerships should by law have legal personality since issues such as how partnerships with legal personality may be treated for tax purposes internationally remain unclear.

Partners who do wish to embrace the change will have twelve months from the time the bill comes into force to make an election to register with the Registrar of Companies.

For newly formed partnerships, the members of the partnership may immediately file with the Registrar of Companies a declaration that they intend that the partnership will be legal person.

The 600 exempted partnerships, including limited partnerships, currently registered in Bermuda are generally formed by large institutions for investment holding purposes while the 60 overseas partnerships currently registered here generally form to carry out transactional or investment business.

The bill passed on Friday.