Limited Partnerships: Upcoming Changes Fit For An Anti-Fraud Age
UK limited partnerships (LP) will soon be subject to significantly more stringent requirements when the Economic Crime and Corporate Transparency Bill – now in its final stages - becomes law. The Bill is a key part of the government’s drive to continue clamping down on corporate fraud and strengthening the existing framework.
Unsurprisingly, Companies House will be handed greater powers.
An LP is a business association of one or more general partners and one or more limited partners, which could be a corporate body. In latter years, they have been increasingly set up (entirely legitimately) as vehicles for investment purposes in highly complex and multi-layered investment structures and pension schemes. The funds industry will therefore particularly be impacted by the changes.
The changes are deemed a necessity in view of abuses of the LP model, such as the Azerbaijani laundromat money laundering scandal. Given that the existing legislation, the Limited Partnerships Act 1907, is more than a century old, it hardly needs pointing out that it is no longer fit for the modern age.
The changes will tighten LP registration requirements and require LPs to maintain a connection to the UK (with an ‘appropriate’ registered office in the UK). The Companies Registrar will also be able to deregister dissolved LPs and those no longer in business; or where the court rules it is in the public interest to deregister an LP.
Transparency requirements will also be increased, particularly:
· General partners will be required to nominate a registered officer, subject to identity verification. The application to Companies House will need to be accompanied by appropriate statements
· Applications for registrations must include the LP’s intended email address. This must be an ‘appropriate email address’
· Identity verification will be required of those delivering documents to the Registrar, along with confirmation of this by a verification statement by an authorised corporate service provider (ACSP). In fact, an LP will have to use an ACPS for nearly all an LP’s filings to Companies House
Existing LPs within scope
The changes will apply both to existing and new LPs, but a transitional period of six months will be given to allow existing LPs to comply with the new requirements (or face deregistration). For instance, certain information about each partner will need to be provided – and the Registrar must be updated where required information about any partner changes.
Note also that English LPs will also be made subject to the requirements to provide annual confirmation statements to Companies House. Limited companies have had to do so since 2016; and Scottish LPs already have to file them.
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