The Legislative Reform (Private Fund Limited Partnerships) Order 2017

Citation, commencement and interpretation

1.—(1) This Order may be cited as the Legislative Reform (Private Fund Limited Partnerships) Order 2017.

(2) This Order comes into force on 6th April 2017.

(3) In this Order “the Act” means the Limited Partnerships Act 1907(1).

Amendment of the Limited Partnerships Act 1907

2.—(1) The Act is amended as follows.

(2) In section 3 (interpretation of terms) at the end insert—

““Private fund limited partnership” means a limited partnership that is designated under section 8(2) as a private fund limited partnership.”.

(3) In section 4 (definition and constitution of limited partnership)(2)—

(a) in subsection (2) omit the words from “, who shall at the time” onwards;

(b) after subsection (2) insert—

“(2A) Each limited partner in a limited partnership that is not a private fund limited partnership shall, at the time of entering into the partnership, contribute to the partnership a sum or sums as capital or property valued at a stated amount, and shall not be liable for the debts or obligations of the firm beyond the amount so contributed.

(2B) A limited partner in a private fund limited partnership—

(a) is under no obligation to contribute any capital or property to the partnership unless otherwise agreed between the partners, and

(b) is not liable for the debts or obligations of the firm beyond the amount of the partnership property which is available to the general partners to meet such debts or obligations.”;

(c) in subsection (3) for “A limited partner” substitute “Subject to subsection (3A), a limited partner”;

(d) after subsection (3) insert—

“(3A) In the case of a limited partner in a private fund limited partnership—

(a) where the limited partnership was registered on or after 6th April 2017, subsection (3) does not apply;

(b) where the limited partnership was registered before 6th April 2017, subsection (3) applies only in relation to the amount of any contribution made by the limited partner when the limited partnership was not a private fund limited partnership.”.

(4) In section 6 (modifications of general law in case of limited partnerships)(3)—

(a) after subsection (1) insert—

“(1A) Section 6A (private fund limited partnerships: actions by limited partners) makes provision, in respect of limited partners in private fund limited partnerships, supplementing subsection (1).”;

(b) in subsection (3), after “limited partnership” insert “, other than a private fund limited partnership,”;

(c) after subsection (3) insert—

“(3A) If a private fund limited partnership is dissolved at a time when the partnership has at least one general partner, the affairs of the partnership must be wound up by those who are general partners at that time, subject to any express or implied agreement between the partners as to the winding up of the affairs of the partnership.

(3B) If a private fund limited partnership is dissolved at a time when the partnership does not have a general partner, the affairs of the partnership must be wound up by a person who is not a limited partner, appointed by those who are limited partners at that time, subject to any express or implied agreement between them as to the winding up of the affairs of the limited partnership.

(3C) Except in the phrase “a person who is not a limited partner” in subsection (3B), references in subsections (3A) and (3B) to partners do not include a partner who is insolvent.

(3D) Subsections (3A) and (3B) have effect subject to any order of the court as to the winding up of the affairs of the partnership.”;

(d) in subsection (5), after paragraph (e) insert—

“(f) A limited partner in a private fund limited partnership is not subject to the duties in—

(i) section 28 of the Partnership Act 1890(4) (duty of partners to render accounts, etc), or

(ii) section 30 of that Act (duty of partner not to compete with firm).”;

(e) after subsection (5) insert—

“(6) Section 36(1) of the Partnership Act 1890 (rights of persons dealing with firm against apparent members of firm) does not apply where a partner in a private fund limited partnership ceases to be a member of the firm.”.

(5) After section 6 insert—

“Private fund limited partnerships: actions by limited partners

6A.— (1) A limited partner in a private fund limited partnership is not to be regarded as taking part in the management of the partnership business for the purposes of section 6(1) merely because the limited partner takes any action listed in subsection (2).

(2) The actions are—

(a) taking part in a decision about—

(i) the variation of, or waiver of a term of, the partnership agreement or associated documents;

(ii) whether the general nature of the partnership business should change;

(iii) whether a person should become or cease to be a partner;

(iv) whether the partnership should end or the term of the partnership should be extended;

(b) appointing a person to wind up the partnership pursuant to section 6(3B);

(c) enforcing an entitlement under the partnership agreement, provided that the entitlement does not involve a limited partner taking part in the management of the partnership business;

(d) entering into, or acting under, a contract with the other partners in the partnership, provided that the contract does not require, or the action under the contract does not involve, a limited partner taking part in the management of the partnership business;

(e) providing surety or acting as guarantor for the partnership;

(f) approving the accounts of the partnership;

(g) reviewing or approving a valuation of the partnership’s assets;

(h) discussing the prospects of the partnership business;

(i) consulting or advising with a general partner or any person appointed to manage or advise the partnership about the affairs of the partnership or about its accounts;

(j) taking part in a decision regarding changes in the persons responsible for the day-to-day management of the partnership;

(k) acting, or authorising a representative to act, as a director, member, employee, officer or agent of, or a shareholder or partner in—

(i) a general partner in the partnership; or

(ii) another person appointed to manage or advise the partnership in relation to the affairs of the partnership,

provided that this does not involve a limited partner taking part in the management of the partnership business or authorising a representative to take any action that would involve taking part in the management of the partnership business if taken by a limited partner;

(l) appointing or nominating a person to represent the limited partner on a committee, authorising such a person to take any action in that capacity that would not involve taking part in the management of the partnership business if taken by the limited partner, or revoking such an appointment or nomination;

(m) taking part in a decision about how the partnership should exercise any right as an investor in another collective investment scheme as defined in section 8D(4) (“master fund”), provided that the partnership’s exercise of the right would not cause the partnership to be liable for the debts or obligations of the master fund beyond the amount contributed, or agreed to be contributed, by the partnership to the master fund;

(n) taking part in a decision approving or authorising an action proposed to be taken by a general partner or another person appointed to manage the partnership, including in particular a proposal in relation to—

(i) the disposal of all or part of the partnership business or the acquisition of another business by the partnership;

(ii) the acquisition or disposal of a type of investment or a particular investment by the partnership;

(iii) the exercise of the partnership’s rights in respect of an investment;

(iv) the participation by a limited partner in a particular investment by the partnership;

(v) the incurring, extension, variation or discharge of debt by the partnership;

(vi) the creation, extension, variation or discharge of any other obligation owed by the partnership.

(3) The fact that a decision that affects or relates to a private fund limited partnership involves an actual or potential conflict of interest is not of itself a reason to regard a limited partner in the partnership who takes part in the decision as taking part in the management of the partnership business for the purposes of section 6(1).

(4) Nothing in this section—

(a) limits the circumstances in which a limited partner in a private fund limited partnership is not to be regarded as taking part in the management of the partnership business; or

(b) affects the circumstances in which a limited partner in a limited partnership that is not a private fund limited partnership may, or may not, be regarded as taking part in the management of the partnership business.”.

(6) In section 8 (duty to register)(5)—

(a) in the heading after “register” insert “and designate”;

(b) the existing provision becomes subsection (1);

(c) after that subsection insert—

“(2) The registrar must designate a limited partnership on the register as a private fund limited partnership if an application for such designation is made to the registrar in accordance with section 8D.”.

(7) In section 8A (application for registration)(6)—

(a) in subsection (1)(b), after “(2)” insert “or (3)”;

(b) in subsection (2), for “The required” substitute “Except in the case of an application that is accompanied by an application for designation as a private fund limited partnership, the required”;

(c) after subsection (2) insert—

“(3) In the case of an application that is accompanied by an application for designation as a private fund limited partnership, the required details are—

(a) the name of each general partner,

(b) the name of each limited partner, and

(c) the address of the proposed principal place of business of the limited partnership.”.

(8) In section 8C (certificate of registration)(7)—

(a) in the heading, after “registration” insert “and certificate of designation as a private fund limited partnership”; and

(b) after subsection (4) insert—

“(5) If a limited partnership is designated on the register as a private fund limited partnership, the registrar must issue a certificate of designation as a private fund limited partnership.

(6) The certificate must be signed by the registrar or authenticated with the registrar’s seal.

(7) The certificate must state—

(a) the firm name and registration number of the limited partnership,

(b) the date of designation as a private fund limited partnership, and

(c) that the limited partnership is designated as a private fund limited partnership under this Act.

(8) A certificate of designation as a private fund limited partnership is conclusive evidence that the limited partnership was designated as a private fund limited partnership on the date of designation.

(9) If a limited partnership is designated as a private fund limited partnership at the same time as it is registered, the registrar may issue a combined certificate instead of issuing separate certificates under subsections (1) and (5), and that combined certificate—

(a) must be signed by the registrar or authenticated with the registrar’s seal,

(b) must state the particulars mentioned in subsections (3) and (7), and

(c) is conclusive evidence that—

(i) a limited partnership came into existence on the date of registration, and

(ii) the limited partnership was designated as a private fund limited partnership on the date of registration.”.

(9) After section 8C insert—

“Application for designation as a private fund limited partnership

8D.— (1) An application for designation as a private fund limited partnership may be made with an application for registration under section 8A or at any time after a limited partnership has been registered.

(2) An application for designation as a private fund limited partnership must—

(a) specify the firm name of the partnership;

(b) specify the address of the partnership’s principal place of business or proposed principal place of business;

(b) in the case of an application made after the firm is registered as a limited partnership, specify the limited partnership’s registration number and the date of registration;

(c) include confirmation by a general partner that the partnership meets the private fund conditions;

(d) be signed or otherwise authenticated by or on behalf of each general partner; and

(e) be made to the registrar.

(3) The private fund conditions are that the partnership—

(a) is constituted by an agreement in writing, and

(b) is a collective investment scheme.

(4) In subsection (3) “collective investment scheme” has the same meaning as in Part 17 of the Financial Services and Markets Act 2000(8) (see section 235 of that Act), ignoring any order made under section 235(5) of that Act(9).”.

(10) In section 9 (registration of changes in partnerships)(10), for subsection (1) substitute—

“(1) If during the continuance of a limited partnership any change is made or occurs as mentioned in subsection (1A), a statement, signed by the firm, specifying the nature of the change must within seven days be sent by post or delivered to the registrar.

(1A) The changes are—

(a) in the case of any limited partnership, changes to—

(i) the firm name,

(ii) the principal place of business,

(iii) the partners or the name of any partner,

(iv) the liability of any partner by reason of the partner becoming a limited instead of a general partner or a general instead of a limited partner;

(b) in the case of a limited partnership that is not a private fund limited partnership, changes to—

(i) the general nature of the business,

(ii) the term or character of the partnership,

(iii) the sum contributed by any limited partner;

(c) in the case of a private fund limited partnership that was registered as a limited partnership before 6th April 2017, any withdrawal by a limited partner of the partner’s contribution which has the effect that the amount of the partner’s contribution is less than it was on the date on which the limited partnership was designated as a private fund limited partnership.”.

(11) In section 10 (advertisement in Gazette of statement of general partner becoming a limited partner and of assignment of share of limited partner)(11)—

(a) in subsection (1) after “firm” in the first and third places in which it appears insert “that is not a private fund limited partnership”;

(b) after subsection (1) insert—

“(1A) Notice of any arrangement or transaction under which any person will cease to be a general partner in a private fund limited partnership shall be forthwith advertised in the Gazette.

(1B) Where a person deals with a private fund limited partnership after an arrangement or transaction of the type referred to in subsection (1A), that person is entitled to treat the person who is ceasing to be a general partner as still being a general partner of the firm until the person has notice of the arrangement or transaction.

(1C) Advertisement of a notice in accordance with subsection (1A) is notice to a person dealing with the firm for the purpose of subsection (1B).”.

(12) In section 15 (the registrar)(12) after subsection (2)(b) insert—

“(ba) references to the registrar in relation to an application for designation of a limited partnership as a private fund limited partnership made with an application for registration are to the registrar to whom the application for registration is to be made (see section 8A(1)(d));”.

(13) In section 16 (inspection of statements registered)(13)—

(a) in subsection (1) for “of the registration of any limited partnership” substitute “mentioned in section 8C”; and

(b) in subsection (2) for “of registration” substitute “mentioned in section 8C”.

Amendment of the Financial Services and Markets Act 2000

3.  In section 235A of the Financial Services and Markets Act 2000 (contractual schemes)(14), in subsection (6) after paragraph (a) insert—

“(aa) that the limited partnership is not designated under section 8(2) of the Limited Partnerships Act 1907 as a private fund limited partnership;”.

Amendment of the Limited Partnerships (Forms) Rules 2009

4.—(1) The Limited Partnerships (Forms) Rules 2009(15) are amended as follows.

(2) In rule 3 (forms to be used for the purpose of the Limited Partnerships Act 1907)—

(a) in paragraph (1) after “Act” insert “which is not accompanied by an application for designation as a private fund limited partnership under that Act”;

(b) after paragraph (2) insert—

“(3) The form in Part 3 of the Schedule must be used for any application for the registration of a limited partnership under the 1907 Act which is accompanied by an application for designation as a private fund limited partnership under that Act.

(4) The form in Part 4 of the Schedule must be used for any application for designation as a private fund limited partnership under the 1907 Act which does not accompany an application for registration of a limited partnership under that Act.”.

(3) For the Schedule substitute the new Schedule set out in the Schedule to this Order.

Amendment of the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013

5.—(1) Regulation 16 of the Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 (modification of the Limited Partnerships Act 1907 for partnership schemes)(16) is amended as follows.

(2) In paragraph (3)—

(a) omit sub-paragraph (a)(ii);

(b) after sub-paragraph (a) insert—

“(aa) in subsection (2A) there were omitted the words “and shall not be liable for the debts or obligations of the firm beyond the amount so contributed”;”; and

(c) in sub-paragraph (b)—

(i) for “subsection (2)” substitute “subsection (2A)”;

(ii) the inserted subsections (2A) to (2C) become inserted subsections (2AA) to (2AC); and

(iii) in the inserted subsection (2AC) for “Subsection (2B)” substitute “Subsection (2AB)”.

(3) In paragraph (6)—

(a) for “subsection (1)” substitute “subsection (1A)”; and

(b) in sub-paragraph (a) for “paragraphs (d) and (f)” substitute “paragraphs (a)(iii) and (b)(iii)”.

Amendment of the European Long-term Investment Funds Regulations 2015

6.—(1) Regulation 9 of the European Long-term Investment Funds Regulations 2015 (modifications to the Limited Partnerships Act 1907)(17) is amended as follows.

(2) In paragraph (2)—

(a) for sub-paragraph (a) substitute—

“(a) in subsection (2A) there were omitted the words “and shall not be liable for the debts or obligations of the firm beyond the amount so contributed”;”;

(b) in sub-paragraph (b)—

(i) for “subsection (2)” substitute “subsection (2A)”;

(ii) the inserted subsections (2A) to (2C) become inserted subsections (2AA) to (2AC);

(iii) in the inserted subsection (2AA) after “limited partners” insert “in a limited partnership that is not a private fund limited partnership”;

(iv) in the inserted subsection (2AB) after “limited partner” insert “in a limited partnership that is not a private fund limited partnership”; and

(v) in the inserted subsection (2AC) for “Subsection (2B)” substitute “Subsection (2AB)”; and

(c) in sub-paragraph (c) for “subsection (3)” substitute “subsections (2B)(b), (3) and (3A)”.

(3) In paragraph (3)—

(a) in sub-paragraph (b) for “subsection (3)” substitute “subsections (3) and (3A)”; and

(b) after sub-paragraph (b) omit “and”, and insert—

“(ba) in subsection (3B) the reference to “general partner” is to be read as a reference to “general partner or depositary of the European long-term investment fund”;”;

(c) in sub-paragraph (c)(ii) for “paragraph (b)” substitute “paragraphs (b) and (f)”; and

(d) after sub-paragraph (c) insert—

• “; and

(d) in subsection (6) after “does not apply where a” insert “limited”.”.

(4) In paragraph (5)—

(a) for “subsection (1)” substitute “subsection (1A)”; and

(b) in sub-paragraph (a) for “paragraphs (d) and (f)” substitute “paragraphs (a)(iii) and (b)(iii)”.

Name

Name

Two of the Lords Commissioners of Her Majesty’s Treasury

Date