Proposed changes to the UK limited partnership framework

Proposed changes to the UK limited partnership framework

What is the current status and proposed impact of the Legislative Reform (Private Fund Limited Partnerships) Order 2017 (LRO)? Sharon Ayres, partner, and Alastair Dolman, associate, both at Gowling WLG, explain that the changes the LRO could initiate when it comes into force in April 2017 are, overall, to be welcomed. However, they point out that the changes may ultimately be short-lived, considering the call for a review of the UK limited partnership framework from the Department for Business, Energy & Industrial Strategy.

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Legislative Reform (Private Fund Limited Partnerships) Order 2017

SI 2017/Draft: Limited partnerships which are collective investment schemes may now be designated as a private fund limited partnership (PFLP). Provision of legislation regarding limited partnerships is also amended. These changes come into force on 6 April 2017.

What is the background to the LRO

Proposals for reform of the law governing limited partnerships have been touted for many years. This is not surprising because the applicable legislation is over a century old (being the Partnership Act 1890 (PA 1890) and the Limited Partnerships Act 1907) and simply cannot deal effectively with the demands of businesses today.

In November 2003, the Law Commission and the Scottish Law Commission published a report on partnership law and the government announced in 2006 that it intended to implement a number of its key recommendations. In August 2008, a consultation was launched, largely based upon the Law Commission’s recommendations, and the response to the consultation was published about a year later in March 2009. However, in a peculiar U-turn, none of the useful recommendations were taken forward.

There followed a few years in which very little happened, save for the continued growth in the use of limited partnerships as private fund vehicles. Other countries, such as Jersey and Luxembourg, continued to react to the demands of the market and introduced limited partnership vehicles that addressed many of the concerns that the Law Commission and Scottish Law

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