UK Private Equity and Venture Capital Funds, Take Note: New PFLP
From 6 April 2017 a new private fund limited partnership (PFLP) vehicle will be available.
Limited partnerships are a commonly used structure for private equity and venture capital funds. The Legislative Reform (Private Fund Limited Partnerships) Order 2017 will introduce a new limited partnership for use specifically by private investment funds.
The PFLP will enjoy less administrative burdens which the government hopes will make UK limited partnerships the market standard for private investment funds across the globe and, in particular, in Europe.
The new PFLP status will:
- not require limited partners to make any capital contribution;
- be available to limited partnerships which are constituted by written agreement and which qualify as a collective investment scheme;
- benefit from a non-exhaustive list of actions which limited partners may take without being deemed to be taking part in the management of the limited partnership (e.g., taking part in decisions on how the PFLP should exercise any right as an investor in another collective investment scheme, subject to certain provisos);
- give limited partners the ability to appoint a person to wind up the PFLP, if there is no general partner available to do so; and
- remove certain duties from limited partners which are inconsistent with the role of an investor in an investment fund.
The private equity and venture capital industry is important to the UK economy, with around 35 percent of all assets managed in Europe, managed out of the UK. The new PFLP status is a bid by the government to retain this global market share. Private investment funds should take full advantage.
One administrative burden that does not currently affect limited partnerships is the requirements of the persons with significant control (PSC) regime introduced in the UK in 2016.
However, this may soon change.
The Department for Business, Energy and Industrial Strategy issued a discussion paper in November 2016, which considers whether limited partnerships should be subject to the PSC regime. The outcome of the consultation will be published in spring 2017 and could lead to the requirements of the PSC regime being extended to limited partnerships.
For more information on the PSC regime, please follow the below links to our previous articles on the topic.