Currently at the Report Stage in the House of Commons, the Economic Crime and Corporate Transparency Bill (the "Bill") has been noted as seeking to implement "the most significant reforms to the UK’s framework for registering companies in 170 years".
Those significant reforms are set to not only impact companies, but also limited partnerships, with certain amendments proposed to the Limited Partnership Act 1907 ("LPA 1907"). In the UK, limited partnerships are used for a variety of purposes, including use as fund vehicles across a number of asset classes.
This blog considers specifically the requirement under the Bill (in its current form) for limited partnerships to have, in in addition to its principal place of business ("PPB"), a registered office within the UK.
UK Registered Office
As set out in the explanatory notes to the Bill, the rationale behind this additional requirement is to ensure that limited partnerships maintain a connection to the UK, whilst also providing an address to which correspondence can sent by Companies House.
The registered office will require to be one of the following:-
- the address of the principal place of business of the limited partnership;
- 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;
- an address of an authorised corporate service provider that is acting for the limited partnership.
For UK limited partnerships with an overseas PPB and general partner, the address of 'an authorised corporate service provider' will need to be relied upon.
Authorised Corporate Service Provider
The Bill introduces a definition of an 'authorised corporate service provider' to the Companies Act 2006, which will be directly applicable to the LPA 1907. Under this definition, a 'relevant person' may apply to the Registrar of Companies (the "Registrar") to become an 'authorised corporate service provider'.
Given their status as a 'relevant person', it is anticipated that certain intermediaries – including law firms, accountants, company service providers - will be in a position to apply to become an 'authorised corporate service provider', which in turn would facilitate the use of their addresses as the limited partnership's registered office.
Transitional Period
The Bill contemplates a transitional period of 6 months, in which the general partner of each limited partnership will require to provide the Registrar with details of the registered office. Failure to do so will amount to a criminal offence by the general partner (including any managing officers in default), which may result in a fine following conviction.
A general partner or its managing officer is "in default" if they authorise or permit, participate in, or fail to take all reasonable steps to prevent, the contravention of the requirement to notify the Registrar. Given the penal consequences, it will be important to ensure timely compliance with this obligation.
Regulatory Considerations
In addition to the practical considerations, there are certain anticipated regulatory implications to be considered. The City of London Law Society and the Law Society of England & Wales have recently published their response to the Bill (the "Response Paper"), which has raised certain concerns, including those related to the requirement to maintain a registered office in the UK. In their view, this change may result in the classification of a limited partnership, with an overseas principal place of business, as an UK alternative investment fund (a "UK AIF").
Consequences of classification as a UK AIF
Classification as a UK AIF (notwithstanding the fact that the AIF is not marketed in the UK) has certain regulatory consequences, including (but not limited to) the requirements that:
- prescribed information must be made available to investors prior to their investment;
- a single depositary is appointed and the assets of the AIF are entrusted to that depositary for safekeeping;
- an annual report is made available to investors and the FCA for each financial year; and
- certain information is disclosed to the FCA relative to each UK AIF an Alternative Investment Fund Managers ("AIFM") manages.
Given the 6 month transitional period, AIFMs of affected limited partnership will have a fairly short time frame to ensure compliance with those additional requirements applicable to UK AIFs.
Implementation of the Bill
At present, the timeframe and form in which the Bill will be implemented are unclear, but should you have any queries in the meantime on how it might impact you, or require funds expertise more generally, please contact: Paul McLaughlin (paul.mclaughlin@brodies.com), or Andrew Akintewe (andrew.akintewe@brodies.com).
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