Draft Legislative Reform (Limited Partnerships)
3. This draft Legislative Reform Order (LRO)
on limited partnerships has been laid under the Legislative and
Regulatory Reform Act 2006 ("the 2006 Act"), together
with an Explanatory Document (ED)
by the then Department for
Business, Enterprise and Regulatory Reform (BERR).
4. Limited partnerships were introduced by the
Limited Partnerships Act 1907 ("the 1907 Act"). In this
type of partnership, the liability of one or more of the partners
is limited, provided the partnership also contains at least one
general partner with unlimited liability.
Overview of the proposal
5. The draft Order makes two main changes, by
amending the 1907 Act. These are:
- making a certificate of registration
conclusive evidence that a limited partnership has been formed
at the date shown on the certificate. The intention of this change
is to end the current uncertainty about the formation of limited
partnerships. At present a limited partnership comes into existence
when the certificate is issued, but this may not be the case if
the partnership does not start doing business straight away. The
partnership could therefore be construed as being general and
not limited, the effect being that none of the partners would
have limited liability. Although people have found ways around
the uncertainty, the problem is pertinent at the moment as limited
partnerships are frequently used for investment funds where significant
amounts of money are involved; and
- requiring all new limited partnerships to include
"Limited Partnership" or "LP" or equivalent
at the end of their names. The intention of this change is to
reduce the burden on third parties who at present may need to
take steps to find out if a partnership is general or limited.
6. As required, the Department has consulted
on the proposals contained in the LRO (ED, pp 4 - 6). In fact,
a much larger number of proposals were originally consulted on.
Following this original consultation it was decided to bring forward
only these two, broadly non-contentious, proposals in the present
LRO, and give further consideration to all the other elements.
7. The Committee is satisfied that this LRO
meets the tests set out in the 2006 Act and is not otherwise inappropriate
for the LRO procedure. The Committee is also content with the
Minister's proposal that the affirmative procedure should apply.
1 http://www.opsi.gov.uk/si/si2009/draft/ukdsi_9780111480014_en_1 Back