Introducing the new Scottish private fund limited partnership
Introducing the new Scottish private fund limited partnership
UK partnership law has been relatively unchanged for over 100 years. So it was big news on 6 April 2017, when a new partnership vehicle was introduced in the UK. The private fund limited partnership (“PF LP”) has been designed specifically for the private funds industry, and reduces administrative requirements while maintaining the UK’s competitive position with other jurisdictions. A PF LP is a UK limited partnership, established under the UK Limited Partnerships Act 1907, which has been designated as a private fund limited partnership.
Why use a PF LP?
The PF LP is intended to be a more flexible and streamlined vehicle as compared to a UK limited partnership which has not been designated as a private fund limited partnership. The new PF LP regime applies equally in England and Scotland. Unlike English PF LPs, Scottish PF LPs have separate legal personality and this makes them suitable for use in layered partnership structures. There are particular advantages in using Scottish PF LPs as feeder vehicles.
A UK limited partnership which has been designated as a PF LP has several added features, such as:
- a new flexibility around the capital structure;
- more clarity on the actions limited partners can undertake without jeopardising their limited liability;
- streamlined registration requirements;
- a less burdensome process for the transfer of partnership interests; and
- particular characteristics which will make Scottish PF LPs ideal feeder vehicles.
Who can be a PF LP?
Any limited partnership which is:
- constituted by a limited partnership agreement in writing; and
- a fund vehicle defined with reference to the UK definition of “collective investment scheme” (ignoring any exemptions),
may be designated as a PF LP.
We expect that most limited partnerships used for investment purposes would meet these conditions.
Existing limited partnerships which meet these conditions may be re-designated as PF LPs.
Finally…
The new PF LP vehicle exists because of lobbying by the UK funds industry. The result is a vehicle that is aimed at the needs of the private funds market. No one knows as yet how popular the new regime is going to be but we think that PF LPs are likely to be widely utilised because of the advantages they offer, in particular in relation to feeder structures.
Please read our client note for further information.
