The Government has published proposals to reform limited partnership (LP) law in order to protect against LPs being used for criminal purposes (including money laundering). The proposals follow the Government’s original consultation in April 2018 and its call for evidence in January 2017.
The key points to note are as follows:
- Anyone wishing to register an LP in the future will need to provide evidence that they are registered with an anti-money laundering (AML) supervisory body. The Government is considering how to achieve this for applicants based overseas, but it may end up limiting overseas applications to jurisdictions within the European Economic Area (EEA).
- An LP will need to maintain a demonstrable link to the UK. It could do this in one of three ways: keep its principal place of business in the UK; engage a UK agent registered with an AML supervisory body; or show it is conducting some legitimate business activity at a UK address. As our partner Stephen Robinson explains in his blog, this flexibility will come as a relief for many funds operating in the private equity and venture capital sectors.
- All LPs will be required to file an annual confirmation statement. (Scottish LPs already do this.) However, the Government has decided not to require all LPs to file accounts. (Some LPs are required to file accounts, but most funds are structured in a way that does not require this.)
- Companies House will have the power to strike dormant LPs off the public register. This would happen only if the LP has been dissolved or is not carrying on business. This process would be subject to a “robust notification procedure”, which the Government will continue to design, to ensure limited partners in particular are aware of a proposed strike-off.
The Government now intends to develop legislation to implement these reforms.
