New Law on Private Fund Limited Partnerships in the U.K.

On April 6, 2017, the Legislative Reform (Private Fund Limited Partnerships) Order 2017 (the “Order”) went into affect, amending the U.K. Limited Partnerships Act.  The Order creates a new category of limited partnership, the private fund limited partnership (the “PFLP”).  A PFLP application must include confirmation by the general partner that the “private fund conditions” are met: (i) that the partnership is constituted by an agreement in writing and (ii) that the partnership is a collective investment scheme.  The PLFP has a number of modern advantages for establishing a fund.  Among them are that limited partners would not be required to make any capital contributions to a PFLP.  Limited partners would explicitly not be managing a PFLP if they do solely any of the things listed in the Order, including, for example, taking part in a decision to change the partnership agreement, changing the nature of a partnership, adding or removing a partner and the amending the term of a partnership.  In the absence of a general partner, limited partners could cause a PFLP to be wound up without getting a court order.  There are also some other administrative advantages.  The new category is likely to be popular among fund managers.