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Response to the Consultation on the Review of UK Limited Partnership Law

11 March 2019

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In recognition of the potential for misuse of a UK registered Limited Partnership (“L.P.”), the UK Government is currently engaged in consultation regarding proposed updates to the legal framework currently governing L.P.’s.  The consultation has been looking at areas where there is the potential to strengthen the legal framework as well as the implementation of the proposed changes.  Melissa Bourgeois looks at the key proposed changes in the areas of registration, physical presence and compliance, which if implemented, would have an effect on the governance of an L.P.

AML pre-requisite for registration of an L.P. with the Registrar of Companies

It is proposed that the registering of a new L.P. with the Registrar of Companies be restricted to presenters that are able to demonstrate that they are registered with an anti-money laundering supervisory body (“AML body”) (whether in the UK or overseas equivalent) and be able to provide evidence of such registration on the application form. The rationale for this action is to ensure that money laundering checks will have to have been conducted before an L.P. is registered.
Although the UK Government recognises that this may lead to a potential increase in fees and administrative burden, it has argued this is a proportionate action to take in order to increase the transparency and accountability of presenters and may deter those looking to register an L.P. with the intent of engaging in illicit activity.

UK Principal Place of Business requirement

It has been proposed that L.P.’s would be required to have their principal place of business within the UK.  Responses to the consultation, particularly from the fund management industry, have expressed concern that this could make L.P’s less attractive to investors ( as this could have an effect on UK L.P’s being able to carry out significant activity outside of the UK as well as potentially increasing their UK tax liability by bringing the fund manager within the scope of the Alternative Investment Fund Managers Directive..  However, although the UK Government has acknowledged this concern, they believe that it is vital for a UK L.P. to demonstrate some tangible link to the UK.
Therefore they have proposed that in order to continue to demonstrate a link to the UK, an L.P. would have an on-going commitment to demonstrate at least one of the following:

  • retention of a principal place of business within the UK;
  • ability to demonstrate the conduct of legitimate business activities at an address within the UK; or
  • ability to demonstrate continued engagement of the services of an agent registered with an AML supervisory body that also provides a service address for the L.P.

Additional information and filings requirement

Similar to limited companies and limited liability partnerships, it is proposed that L.P.’s would be required to file an annual confirmation statement to confirm the validity of the information held by the Registrar of Companies and that the statement would be expanded to include the contact information, nationality and date of birth of all limited and general partners as well as a SIC code to identify the principal business activity of the L.P.  The additional information sought is designed to help increase the transparency of the L.P. and ensure the accuracy of the information held by the Registrar of Companies is actively checked and confirmed.
Additionally, there is ongoing discussion as to whether to introduce a requirement to provide the beneficial ownership information of corporate partners who do not have a PSC register.
However, at this time the government is not considering implementing the need for L.P’s to prepare and file accounts.

Strike Off

It is proposed that the Registrar of Companies be given the power to strike off L.P.’s which are dissolved or that are concluded to no longer be carrying on business.  In response to concerns raised during consultation, the power to strike off will be subjected to a robust notification procedure equivalent to the strength of the procedure already in place for limited companies.
Consideration is also being given as to any such circumstances whereby it may be appropriate to restore an L.P. to the register and the procedure for doing so.

What Next?

Although no timetable for passing any required legislation has been set, indications are that this may take place during 2019 followed by an implementation period.  As such it is important for UK L.P.’s to be aware so adequate procedures can be put in place to process the changes if implemented.
If you have any questions or would like to discuss further what impact the proposed changes may have on your business please contact one of UK team who will be happy to discuss this with you.