The Government has published its response to its recent consultation on the reform of limited partnership law in the UK.
During the consultation, BEIS sought views on ways to prevent use of limited partnerships and Scottish limited partnerships (referred to collectively as "LPs" here) as vehicles for criminal activities, while at the same time maintaining the LP as an attractive vehicle for legitimate business uses, in particular, in investment fund structures.
The Government has made the following four key proposals:
1. Registration with an AML supervisory body
- Only parties registered with an AML supervisory body can apply to register a new LP.
- Overseas applications will continue to be accepted, but these will be subject to equivalent AML standards. The Government is considering how to achieve this, for example, by only allowing countries within the EEA to apply.
- This proposal would bring an end to direct registrations of LPs.
2. Ongoing UK connection
- UK-registered LPs must have a connection to the UK, which must be demonstrable at the time of registration of the LP and on an ongoing basis thereafter.
- LPs will be able to demonstrate its ongoing UK connection in one of the following ways:
- by retaining a UK principal place of business;
- by carrying on a legitimate business interest in the UK; or
- by continuing to use an agent registered with a UK AML supervisory body whose address is the service address for the LP.
3. Filing of annual confirmation statement
- All LPs will have to file an annual confirmation statement at Companies House to ensure their information is correct (note: this is already a requirement for Scottish LPs).
- Details currently required to be given by LPs on applying for registration must be confirmed by the confirmation statement and the following additional information will also be required: contact details for all partners; dates of birth and nationalities for all partners; a SIC code.
4. Power to strike off
- The Registrar of Companies to have power to strike off dissolved or inoperative LPs.
- There will be a stringent notification procedure similar to the one currently in place for companies to ensure limited and general partners are notified of a potential strike off.
- Discussions on this are ongoing and discussions on an appropriate restoration procedure are also underway.
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Stephen Chan is a partner in the Harper Macleod Corporate team, specialising in partnership and limited partnership law, and is the author of "A Practical Guide to Partnership Law in Scotland", published by Thomson Reuters.
Stephen had met with BEIS three times and made a submission to the consultation as well as the earlier call for evidence.
Harper Macleod are particularly pleased to see that the proposals from the Government are largely consistent with the suggestions put forward by Harper Macleod during the consultation (with Harper Macleod's contribution recognised on page 16 of the Government Response).