UK government opens consultation on LP legislation

The UK government launched a consultation on proposed reforms to its limited partnership legislation.  Proposals include a list of permitted LP activities, eliminating nominal capital contributions and amendments to the way LPs are registered, as well as disclosure obligations.

The consultation was first announced by the Treasury in its Summer Budget released in early July.

Among its proposed changes to the Limited Partnership Act 1907, the consultation asks for responses to a “White List” of activities an LP may undertake without losing limited liability. The consultation document states these activities are unclear in the 1907 legislation.

Under the proposals, LPs would be allowed to participate in decisions covering a range of situations including investments, changes to the partnership agreement or the nature of the business, disposal of the business and acquisitions, winding up the partnership and approving the valuation of its asset and accounts.

The consultation also address LP capital contributions and suggests removing the requirement for an LP to make a nominal contribution, and eliminates the liability placed on LPs should they withdraw their capital. Private funds registering a limited partnership will no longer have to supply information on capital contributions.

The proposed legislative changes will apply to collective investment schemes and written partnership agreements to “more effectively accommodate the use of limited partnerships for private equity and venture capital investments”, the Treasury said on its website.

For the purposes of implementing the changes, the draft legislation requires that limited partnerships register as a private fund vehicle. However, the requirement for a GP to advertise in the Gazette when it becomes an LP or when an LP reassigns its interest would no longer apply. LPs in a fund where the general partner has been removed would also be able to dissolve the partnership without obtaining a court order.

The consultation, which is seeking views from fund managers and other interested parties, opened in July and closes October 5.   

The changes are intended to “eliminate many of the uncertainties and inconveniences associated with existing UK limited partnership law” to ensure the UK remains the market standard for European private equity partnerships, according to the consultation document.