On 16 January 2017 HM Treasury published a draft Legislative Reform Order (LRO) to amend the Limited Partnerships Act 1907 and introduce a Private Fund Limited Partnership (PFLP) structure. This follows on from HM Treasury’s March 2016 response to its July 2015 reform proposals (summarised in our briefing HM Treasury drives private fund limited partnership reform). The LRO is due to come into force on 6 April 2017, at which point UK limited partnerships (UKLPs) that meet the PFLP conditions and are so registered can take advantage of a more flexible limited partnership regime.
On a parallel basis the Department for Business, Energy and Industrial Strategy (BEIS) also published a call for evidence to consider whether the current UKLP framework needs to be reviewed with a view to increasing transparency and reporting requirements, or possibly by amending some of the legal characteristics of partnerships. The focus is on Scottish limited partnerships, allegedly being used for criminal activities, but potentially has wider implications on all UKLPs and fund structures. Responses to the call for evidence are invited on or before 17 March.
It is likely that the new PFLP regime will come into effect before any of the issues in the BEIS paper become formal proposals which amend the law on UKLPs. Therefore the reduction in the compliance and administrative burden under the new PFLP regime may be short-lived and may well be replaced by other initiatives to increase accountability for UKLPs more generally.
We will be in touch again shortly with more details on both these developments, including the impact of the introduction of the new PFLP regime on existing vehicles and structures.