In July 2015 the government consulted on proposed changes to the Limited Partnership Act 1907. The purpose of these is to ensure that a UK limited partnership remains the market standard structure for European private equity and venture capital funds.
The proposals, which include a draft Legislative Reform Order to amend the Act, involve a new form of limited partnership, a private fund limited partnership (PFLP). PFLP designation will only be available for limited partnerships which qualify as collective investment schemes and are constituted by written agreement.
A key proposal is to set out for the first time a non-exhaustive list of activities which a fund investor who is a limited partner in a PFLP can undertake without being considered to take part in the business's management, and therefore without losing limited liability protection. Unlike other jurisdictions there are no "safe harbours" for this currently in UK legislation.
Other proposed changes include: removing the requirement for limited partners in PFLPs to make a capital contribution, simplifying PFLP registration and reporting, and allowing the partners in a PFLP to agree among themselves who should wind up the limited partnership without having to get a court order.
The next step is for the government to consider the responses to the consultation.