Private Fund Limited Partnerships

Private Fund Limited Partnerships

Of Relevance to:
Managers of private equity and venture capital funds; managers of unauthorised collective investment schemes

A reminder that ‘The Legislative Reform (Private Fund Limited Partnerships) Order 2017’ (2015/514) came into force on 6 April 2017.

As advised in Regulatory Roundup 66, the Order will only apply to those UK LPs that are collective investment schemes that are not authorised (i.e. not an authorised contractual scheme) by the FCA. The intention of the Order is to ensure that the UK limited partnership remains the market standard structure for private funds.

Points of note include (references in brackets refer to the relevant part of the Order):

  • Limited partners will not be under any obligation to contribute any capital or property to the PFLP unless otherwise agreed between the partners. (Article 2, paragraph (3))
  • Under certain circumstances a limited partner can wind up a dissolved PFLP. (Article 2, paragraph (4))
  • Limited partners will be permitted to undertake certain activities without being regarded as taking part “in the management of the partnership business” – which would ordinarily make that partner liable for all the debts and obligations of the LP incurred whilst taking part in the management of the business. (Article 2, paragraph (5))
  • The ability for an existing limited partnership to be designated as a PFLP. (Article 2, paragraph (9))