In recognition of the potential for misuse of a UK registered Limited Partnership ("L.P."), the UK Government is currently engaged in consultation regarding proposed updates to the legal framework currently governing L.P.'s. The consultation has been looking at areas where there is the potential to strengthen the legal framework as well as the implementation of the proposed changes. Melissa Bourgeois looks at the key proposed changes in the areas of registration, physical presence and compliance, which if implemented, would have an effect on the governance of an L.P.
AML pre-requisite for registration of an L.P. with the Registrar of Companies
It is proposed that the registering of a new L.P. with the Registrar of Companies be restricted to presenters that are able to demonstrate that they are registered with an anti-money laundering supervisory body (AML body) (whether in the UK or overseas equivalent) and be able to provide evidence of such registration on the application form. The rationale for this action is to ensure that money laundering checks will have to have been conducted before an L.P. is registered.
Although the UK Government recognises that this may lead to a potential increase in fees and administrative burden, it has argued this is a proportionate action to take in order to increase the transparency and accountability of presenters and may deter those looking to register an L.P. with the intent of engaging in illicit activity.
UK Principal Place of Business requirement
It has been proposed that L.P.'s would be required to have their principal place of business within the UK. Responses to the consultation, particularly from the fund management industry, have expressed concern that this could make L.P's less attractive to investors ( as this could have an effect on UK L.P's being able to carry out significant activity outside of the UK as well as potentially increasing their UK tax liability by bringing the fund manager within the scope of the Alternative Investment Fund Managers Directive.. However, although the UK Government has acknowleged this concern, they believe that it is vital for a UK L.P. to demonstrate some tangible link to the UK.
Therefore they have proposed that in order to continue to demonstrate a link to the UK, an L.P. would have an on-going commitment to demonstrate at least one of the following:
retention of a principal place of business within the UK; ability to demonstrate the conduct of...