What this is: UK Limited Partnerships (UKLPs) are one of the key areas where legislative reforms have been introduced under the Economic Crime and Corporate Transparency Act (ECCTA), 2023. The Limited Partnerships Act 1907 is being revamped to prevent its misuse.
What this means: ECCTA finds it necessary to bring in changes to the Limited Partnerships Act 1907 to increase accountability and transparency of these business structures.
Overview of Limited Partnerships in the United Kingdom
In the UK, Limited Partnerships (UKLPs) are governed by the Limited Partnerships Act 1907, which is comprised of general partners and limited partners. The general partners have the responsibility of managing the business of said UKLP and their liability is unlimited. The limited partners contribute funds to the partnership and their liability is limited to the amount contributed, however, generally speaking, they do not have any control over the business. Limited and general partners could be individuals or legal entities.
There is an important distinction between Scottish LPs and the ones formed in rest of the UK (England, Wales and Northern Ireland). Scottish LPs have a legal personality that is separate to its partners. This means that Scottish LPs can hold assets or enter into contracts in their own right.
ECCTA Reforms for UK Limited Partnerships
UKLPs are one of the key areas where legislative reforms have been introduced under ECCTA. The Limited Partnerships Act 1907, which is over 100 years old, is being revamped to prevent its misuse. While UKLPs have been used as a legitimate investment structure or for pension schemes, the government has identified several instances of misuse of these vehicles. Historically, UKLPs have had to furnish very limited information about their activities to Companies House. ECCTA finds it necessary to bring in changes to the Limited Partnerships Act 1907 to increase accountability and transparency of these business structures.
These reforms, when implemented, will apply to all UKLPs, including Scottish LPs and private fund limited partnerships. It is expected that Companies House will provide a transitionary period for UKLPs to comply with the new requirements when laid out through proposed amendments to the Limited Partnerships Act 1907.
It is important for UKLPs not only to familiarize themselves with these upcoming changes but also to be prepared to make significant operational changes, as outlined below, post-transition period.
Registered Office Address
UKLPs will need to demonstrate a connection to the part of the UK in which they were established. In order to fulfill this requirement, the address of the UKLP must be an appropriate address, such as:
- Principal place of business in the UK where documents can be delivered to someone acting on behalf of the UKLP; or
- The residential address of a general partner (in case they are an individual); or
- The registered office address of the general partner (in case they are a legal entity); or
- The address of an Authorized Corporate Services Provider (ACSP) who has been engaged by the UKLP.
In addition to an appropriate address, the general partner will also be required to furnish a registered email address where they can be contacted by Companies House for all matters relating to said UKLP.
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Role of ACSPs
In relation to UKLPs, certain documents can be delivered to Companies House only by ACSPs. This includes registration applications, changes to the UKLP and confirmation statements. This is to make sure the data is trustworthy and fit for purpose. ACSPs (like Cogency Global) must be registered with the HM Revenue and Customs (HMRC) and governed by the UK Anti-Money Laundering Regulations to be able to offer this service to UKLPs.
More Information About the Partners
In an effort to increase transparency of UKLP administration, the secondary legislation will require all existing and new UKLPs to provide an enhanced level of information regarding their partners, whether they are individuals or legal entities. For individuals, this would include the partner’s name, date of birth, residential address, service address, etc. For legal entities, this would include the partner’s corporate name, governing law, registered office address, service address, legal form, etc. Any new partner will be able take part in the management of the UKLP only when their appointment has been notified to Companies House.
Nomination and Verification of Registered Officers
All general partners of the UKLPs that are legal entities will be required to appoint an individual as the registered officer and they will need to provide the contact details of said registered officer to Companies House. Their identity will need to be verified through an ACSP or directly with the Registrar.
In addition, persons that are disqualified under the current director disqualification rules will not be able to continue as a general partner.
Annual Confirmation Statements
The requirements to furnish annual Confirmation Statements will be extended to UKLPs. This confirmation statement will need to be furnished within 14 days of each review period confirming that all the information in the register is correct as of the date of the statement. If there are updates, the statement will need to include those as well. This will apply to all existing UKLPs at the end of the transition period and each subsequent review period. This is in addition to the obligation to report all changes to the UKLPs within a 14-day period. As mentioned before, this will need be filed through an ACSP.
Other Noteworthy Changes
In addition to the above significant changes for UKLPs, we can expect some regulations around dissolution/de-registration of UKLPs, HMRC’s power to obtain UKLP accounts, alignment of UKLPs’ business with the UK Standard Industrial Classification code, etc. We will be closely monitoring the secondary legislation that is expected to be announced in this regard.
What can we expect from Companies House in 2024?
Starting in 2024, we can expect more queries from Companies House on documents/information submitted to them. Companies House will have the power to scrutinize and reject information that seems incorrect or inconsistent with information already on the register. In some cases, they will be able to remove information already registered. There will be stronger checks on company names and registered office addresses for all companies (to ensure that it is not simply a PO Box address). There will also be a requirement to supply email addresses for all registered entities. If you’d like to read more on this topic, head on over to Part 1 of our article series on ECCTA.
How will the Registrar’s powers change with this reform?
As part of this reform, we can expect the Registrar to:
- Send queries and, if required, to challenge the information submitted to them by the companies.
- Undertake greater checks on the company names to avoid misleading the public about the nature of their activities and to tackle misuse of company names.
- Take steps to clean up the existing information and perhaps even remove false or incorrect information provided by the companies.
Will there be any changes to annual accounts filing?
Companies House will transition toward a “software-only” method for annual accounts filing to eliminate data inconsistencies and inaccuracies. Paper-based filing of annual accounts will be phased out and the companies will have to obtain an approved software to submit their financials. There is expected to be secondary legislation on small and micro-entity company accounts and what is required to be included in their accounts. To learn more, read Part 2 of our article series on ECCTA.
This article is provided for informational purposes only and should not be considered, or relied upon, as legal advice.