The government recently consulted on proposed changes to the Limited Partnerships Act 1907 (the “LPA 1907”) and the Legislative Reform (Private Fund Limited Partnerships) Order 2017 (“LRO”) implementing those changes came into force on 6 April 2017. With this comes the introduction of a new subcategory of limited partnership, the ‘private fund limited partnership’ (“PFLP”), which seeks to modernise the regime that has existed for more than a century under the LPA 1907.
Given that most, if not all, English limited partnerships (“English LP”) used for private funds, joint ventures and other forms of co-investment will satisfy the requirements to qualify as a PFLP, the new PFLP regime will be highly relevant for any private equity, venture capital or similar co-investment structure.
We expect these changes to further cement the English LP, already one of the most common investment vehicles in European real estate private equity, as one of the most attractive and flexible choices of fund vehicle, improving its competitiveness against other jurisdictions.
Qualifying as a PFLP
(i) is an English LP constituted by agreement; and
(ii) satisfies all the elements of a “collective investment scheme” under the Financial Services and Markets Act 2000 (ignoring any exemptions).
New and existing English LPs can be registered as PFLPs, provided they fulfil the criteria (set out above) and their general partner completes and submits the relevant application (Form LP7 for new English LPs and Form LP8 for existing English LPs). It is likely that partnership agreements of existing English LPs will require updating to correspond with registration as a PFLP.
It should also be noted that an English LP that becomes a PFLP will not be able to return to its limited partnership status.