Amendments to limited partnership law for private equity investments
HM Treasury has consulted on proposed amendments to the Limited Partnerships Act 1907 to remove unnecessary legal complexity and administrative burdens for UK limited partnerships that are non-FCA authorised collective investment schemes constituted by an agreement in writing.
The proposed amendments are targeting private equity and venture capital funds that take the form of either English or Scottish limited partnerships in a private fund structure. The amendments are intended to remove some of the uncertainties of partnership law that have existed to date.
The proposed amendments include (amongst other things):
- the introduction of a non-exhaustive list of activities that a limited partner may undertake without risking losing its limited liability status (such as taking part in decisions on certain matters, acting as a director, member, employee, shareholder or member of a general partner, consulting or advising a general partner about the affairs of the partnership or its accounts);
- removal of the requirement for limited partners in private funds to make a capital contribution and removal of the liability of limited partners in private funds for capital contributions that have been withdrawn;
- a proposal to allow the partners (and where there is no general partner, the limited partners) in a private fund limited partnership to agree amongst themselves who should wind up the partnership without having to obtain a court order;
- removal of some of the details that must be specified when a private fund limited partnership is registered (including the amount of capital contributed and the term for which the limited partnership is to be entered into); and
- removal of the requirement to publish Gazette notices when a general partner becomes a limited partner or a limited partner transfers its interest in a limited partnership to another person.
HM Treasury has reaffirmed its commitment to exploring the possibility of allowing English LPs to elect for separate legal personality but this was not included in the consultation.
For more information, contact Cathy Goodman.