2 Background
4. The Partnership Act 1890 sets out the basic structure
of partnership law. General partnerships governed by that Act
have unlimited liability for the debts and obligations of the
partnership. The Limited Partnerships Act 1907 introduced a second
form of partnership whereby the liability of one or more of the
partners was limited, so long as the partnership also included
at least one general partner with unlimited liability. Both of
these Acts have remained largely unchanged. The draft Order applies
only to limited partnerships.
5. Limited partnerships are used for specialised
purposes (for instance venture capital and private equity investment
funds, although the proposals in the draft Order confer no special
advantage on such enterprises) and are normally governed by formal
agreements. The Explanatory Document (ED) says that limited partnerships
are a useful vehicle for investors who do not wish to play an
active part in managing the business.[4]
There are currently around 15,600 limited partnerships in the
UK.
6. In August 2008, BERR (now BIS) undertook a consultation
exercise in connection with a proposed comprehensive legislative
reform order which would have repealed the Limited Partnerships
Act 1907 and inserted new provisions into the Partnership Act
1890. Responses to the consultation indicated broad support for
modernising and clarifying some aspects of limited partnership
law, but 'diverging views' about other proposals contained in
that draft LRO, for example on re-registration (particularly from
Scottish landowners), although certified registration itself was
'specifically identified by many as an important and welcome improvement'.[5]
4 ED, para 14, p3. Back
5
ED, para 7, p2. Back
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