HM Treasury has published a revised draft Legislative Reform Order (Order) on amendments to the Limited Partnership Act 1907 (Act), which was laid before parliament on January 16. The Order relates to the new private fund limited partnership (PFLP) structure. The PFLP is designed to reduce the administrative and financial burdens that impact funds under the current limited partnership (LP) structure, thereby making the United Kingdom a more attractive jurisdiction for funds. Further information on the proposal stage of the Order can be found in the Corporate & Financial Weekly Digest edition of August 7, 2015.
New and existing LPs that qualify as a collective investment scheme, as defined in the Financial Services and Markets Act 2000, will be able to elect to become PFLPs. PFLPs will be able to benefit from a number of modifications to the LP regime, including the following:
- there will be no need to make or register “capital” contributions and the prohibition on withdrawal of capital contributions will be removed;
- the requirements to register changes in the LP, such as term, capital and general nature, will be removed;
- more relaxed rules on a winding up will apply, with the requirement for a court order removed; and
- there will be a non-exhaustive “white-list” of activities a limited partner can carry out without being deemed to be involved in the management of the LP and therefore liable for the debts and obligations of the LP. The white list includes actions such as taking part in decisions about varying the partnership agreement and appointing a person to wind up the partnership.
The Order will need to be approved by a resolution of both Houses of Parliament before becoming law. The Order will likely go into effect on April 6.
The Order is available here.