In England and Wales, limited partnerships are commonly used in fund and property investment structures. Because one of the partners (typically a limited company formed for the purpose) must have unlimited liability, they are subject to very limited filing requirements and the government has become concerned that they are being misused particularly for money laundering. There is also some concern that the structures, which are governed by the Limited Partnerships Act 1907, are rather out of date even though there has been some recent reform through the introduction of fund limited partnerships.
The Government has consulted on some proposed changes to the law applying to limited partnerships, and has recently released the results of its consultation. Its proposed reforms following the consultation include:
- Making it mandatory for a person presenting a limited partnership for registration to demonstrate that they are registered with an anti-money laundering supervisory body, and provide evidence of this on the application form. It is considering how to ensure registrations from overseas are subject to UK-equivalent standards and may create a whitelist of approved jurisdictions.
- Introducing a requirement that limited partnerships have a demonstratable link to the UK. This will include providing a proposed principle place of business (PPoB) in the UK on the application form, and thereafter requiring that (i) the limited partnerships retains its PPoB in the UK; (ii) demonstrates some legitimate business activity from an address in the UK; or (iii) demonstrates that it has engaged an agent that is registered with a UK anti-money laundering supervisory body and which has agreed to act as service address for the limited partnership. A limited partnership will also be required to notify Companies House where it does not maintain its PPoB in the UK, and if the basis on which it demonstrates its connection to the UK changes.
- Bringing the filing requirements for limited partnerships substantially into line with those applicable to companies. For example, there will be a requirement for annual confirmation statements, a register of persons with significant control will need to be maintained and appropriate filings made, and contact details and other information for all the partners will need to be supplied.
- Introducing a striking off procedure for limited partnerships which are dissolved or where the Registrar of Companies concludes it is no-longer carrying on business or in operation. Under current law, it is not possible for limited partnerships to be removed from the register of companies. This means that limited partnerships which may have been dissolved decades ago remain “live” at Companies House. The Government considers it is important that the register is up to date. However, a further consultation will be carried out on the procedure for doing this in order to ensure that limited partners don’t lose that status, for example, because of a failure to make filings by the general partner.
However, it has been decided that there should be no requirement for limited partnerships to prepare and file annual accounts.
Overall, while these new rules will add to the administrative burden of running a limited partnership, the additional friction does not appear too severe and the proposed changes are a welcome modernisation of the rules relating to limited partnerships.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.