Treasury has published a draft legislative reform order to amend the Limited Partnerships Act 1907 in respect of private investment funds, such as venture capital and private equity funds. The proposals include the creation of a private fund limited partnership (PFLP) as a new form of limited partnership. The order is due to come into force on 6 April 2017. Key changes to prior draft reforms include:
- A new Article 2(4)(e) which would disapply section 36(1) of the Partnership Act 1890 (rights of persons dealing with firm against apparent members of firm) where a partner in a PFLP ceases to be a member of the firm.
- Amending the list of activities that a limited partner may undertake without being considered to take part in the management of the business.
- Amending the definition of “collective investment scheme” so as to ignore section 235(5) of FSMA 2000, thereby allowing LPs which would meet the definition but for one of the exceptions to fall under the PFLP structure.
- Replacing the previous requirement for a solicitor’s certificate with a requirement for the general partner to confirm that the partnership fulfils the requirements on application to become a PFLP.
- Removing the one year transition period, so that an LP will always be able to apply for PFLP status if it fulfils the criteria.
- Removing the requirements for PFLP’s to register or update details which are not of significance to the public, such as the nature of the partnership business, the amount of any increase in a limited partner’s capital contribution and the term of the limited partnership.
- Making consequential amendments to the forms to be used for applications and notifications to the registrar.