A new type of limited partnership vehicle – the PFLP
New limited partnerships (“LPs”) can now (as of 6 April 2017) register as private fund LPs (“PFLPs”) and existing LPs can apply to register as PFLPs (i.e. convert their status from LP to PFLP).
The point of the new law is to reduce the administrative and cost burdens of being an LP because the Limited Partnerships Act 1907 is so old many of the requirements are now unhelpful.
To be a PFLP, an LP must be constituted by a written agreement and be a collective investment scheme (FSMA definition). Most funds will satisfy this easily.
The new rules contain a white list of activities that sets out what limited partners can do or be involved in without jeopardising their limited liability status (most useful are the activities of overseeing GP investments and approving GP investment proposals).
PFLP administrative requirements are less onerous so less needs to be notified to Companies House and there is no need to publicise certain changes to the LP (it is still necessary to advertise when a general partner ceases to be a general partner).
Limited partners are no longer subject to the duties to disclose information and accounts from competing businesses, there is no longer a duty to not compete with the fund’s business and there is no need to obtain a court order to wind up a PFLP where there is no general partner. A third party (not a limited partner) can be appointed to carry out the winding up.
It is expected that all new LPs will register as PFLPs where possible due to the added protection that the white list offers. It is also expected that existing LPs will convert to PFLPs to benefit from the white list protection.
For more information on this contact Nick Lloyd.