As highlighted in our recent insight article, the Economic Crime and Corporate Transparency Act 2023 (the "ECCTA") received Royal Assent on 26 October 2023. Part 2 of the Act introduces a wide suite of limited partnership reforms which will amend the Limited Partnership Act 1907 (the "1907 Act"), the primary legislation governing limited partnerships established in the UK.
The substantive limited partnership reforms introduced by the ECCTA (together with confirmation of when the six-month transitional period begins) are to be brought into force by Statutory Instrument. The timeline for this has not yet been published .
In this article, we summarise the most significant reforms to UK limited partnerships ("UK LPs").
UK Registered Office Address
A key objective of the reforms is to ensure that UK LPs maintain a sufficiently close connection with the UK. To that end, the ECCTA requires general partners of a UK LP to ensure that the registered office of the UK LP is at all times an 'appropriate' address.
A registered office address will be 'appropriate' if it is in the jurisdiction of registration of the UK LP and capable of receiving correspondence and bringing this to the attention of the UK LP. It must also be at least one of the following:
- the address of the principal place of business of the UK LP;
- the usual residential address of a general partner who is an individual;
- the address of the registered or principal office of a general partner that is a legal entity; or
- an address of an authorised corporate service (an "ACSP") provider that is acting for the limited partnership.
It will be an offence for a general partner to be in default of this requirement.
Points to note for UK LPs with their principal place of business outside of the UK
For UK LPs whose principal place of business and general partner are based outside of the UK, the UK LP will need to use the address of an ACSP. Law firms, company services providers and other professional advisers may elect to register as an ACSP.
There was some concern caused by early drafts of the ECCTA that some UK LPs with their principal place of business outside the UK could become UK AIFs as a result of the requirement to have a registered office in the UK (and therefore require to comply with the rules applying to AIFs). Helpfully, the ECCTA amends the definition of 'UK AIF' so that an AIF will be a UK AIF if its principal place of business (not its registered office) is in the UK.
Registered Email Address
General partner(s) of a UK LP will be required to ensure that the UK LP maintains at all times an 'appropriate' registered email address. As with the registered office address, an email address is considered appropriate if it is capable of receiving emails on behalf of the UK LP and these emails will come to the attention of someone who can act on behalf of the UK LP. It will be an offence for a general partner to be in default of this requirement.
New power of HMRC to demand audited accounts of UK LPs
The ECCTA gives HMRC the power to require general partners of UK LPs (including those designated as private fund limited partnerships) to prepare audited accounts for inspection by HMRC. These accounts do not need to be filed with the Companies House so, unless voluntarily filed, will not appear in the public domain.
While it remains to be seen how and to what extent HMRC will choose to exercise this power, it is anticipated that a demand for audited accounts would not prove onerous to general partners in most cases given that many UK LPs already prepare audited accounts.
Information to be provided about partners
The ECCTA requires general partners to disclose specific information relating to partners of UK LPs, such as their name, address and (for general partners only) any register which they appear on. For example, where the general partner is registered in a jurisdiction outside of the UK, they must state which register they appear on, along with a note of its registration number (if applicable).
General partners will be required to notify Companies House of changes relating to existing partners' information as well as the addition of any new partners. A failure to make such notification within 14 days of the change occurring is an offence.
These filings must be made by an ACSP. It remains to be seen how a general partner will discharge its duties where existing partners do not provide the prescribed information to the general partner or the ACSP within the time limits.
Restrictions on, and information about, general partners
Registered Officers and Named Contacts of General Partners
For general partners that are legal entities, the ECCTA introduces a fresh obligation on general partners to appoint and maintain at least one of its managing officers as a contactable 'registered officer'.
If the general partner has one or more corporate managing officers, it will be required to provide a named contact for each corporate managing officer. The named contact must be a managing officer of the corporate managing officer.
Companies House must be notified within 14 days of any changes affecting the registered officer, named contact or corporate managing officer. Failure to do so will be an offence.
Restrictions on General Partners
The ECCTA prohibits a disqualified director of a UK company from acting as the general partner of a UK LP. This applies even where the general partner was disqualified prior to this provision coming into force.
Annual Confirmation Statement
The ECCTA requires UK LPs to file an annual confirmation statement, in addition to its usual LP6 filings (being the form currently used to notify Companies House of any changes to a UK LP).
The confirmation statement must be filed within 14 days after each review period. A review period occurs every 12 months starting from the date the UK LP was registered or last submitted a confirmation statement. Similar to the regime for UK companies, the UK LP can choose to shorten its own review period if it so wishes.
Dissolution and Winding Up
A general partner is obliged to notify Companies House of dissolution of a UK LP within 14 days of becoming aware of such dissolution. If the UK LP does not have any general partners, a limited partner must make such notification within the same time period.
Companies House will also now have the power to de-register UK LPs where it has been notified of a UKLP's dissolution, or where there is a reasonable cause to believe that the UK LP has been dissolved. We expect this will help resolve the confusion caused where dissolved UK LPs have continued to show as 'active' on Companies House notwithstanding that requisite steps were taken to notify Companies House of the UK LP's dissolution.
The ECCTA sets a transitional period of six months. The transitional period is not yet in place and the commencement of such will be determined by secondary legislation. During this time the relevant individuals/entities concerned will need to take the required action to ensure compliance with the ECCTA following the expiry of the transitional period.
For further advice relating to any of the issues raised in this article, including the steps you may wish to take to prepare for the forthcoming transitional period, please do get in touch with your usual Brodies contact or one of the contacts listed below who will be happy to assist.