United States: Limited Partnership Reform – Streamlining The Existing UK Limited Partnership Regime For Private Funds

Executive Summary

On 6 April 2017, changes to the law governing UK limited partnerships will come into effect through the Legislative Reform (Private Fund Limited Partnerships) Order 2017 (the "LRO"). The changes introduce the new concept of a "private fund limited partnership" ("PFLP") into UK law. New and existing limited partnerships will be able to elect to be designated as PFLPs which will bring advantages compared to the existing limited partnership regime, including:

  1. a 'white list' which sets out a non-exhaustive list of actions limited partners can carry out without risking their limited liability; and
  2. limited partners will no longer have to advance capital to the partnership on admission in order to become a partner.

We would anticipate that a large majority of funds established on or after 6th April 2017 will elect to register as PFLPs; the decision of existing limited partnership funds to re-designate themselves as PFLPs will vary depending on their specific circumstances.    

What is the LRO amending and why are the changes being made?

The LRO will amend the existing legislation and introduce a "private fund limited partnership" ("PFLP") concept. The principal aim of the LRO is to reduce the administrative burden and introduce operational flexibility thereby allowing the UK to continue to be an attractive domicile for funds compared to other jurisdictions.

When are these changes due to take effect?

The LRO will come into effect on 6th April 2017.

Can all UK limited partnerships apply to be designated as a PFLP?

The LRO enables a UK limited partnership to be designated as a PFLP if it fulfills the following conditions:

  1. it is constituted by an agreement in writing; and
  2. is a collective investment scheme (within the meaning of section 235, Financial Services and Market Act 2000 ("FSMA") (ignoring any exemptions under section 235(5), FSMA)). Most limited partnerships used for investment purposes, e.g. funds, co-investment vehicles, alternative investment vehicles and aggregator vehicles will meet this condition. It is possible that certain club deals and joint ventures may not qualify due to a significant level of involvement by the limited partners. This would need to be assessed on a case-by-case basis.

We would anticipate that the vast majority of limited partnership funds will be able to meet these two conditions.

New PFLPs can be so designated at the time of their initial registration; equally, existing UK limited partnerships may also re-designate themselves as a PFLP if they meet the conditions above and go through the re-designation process (as described in further detail below).

What are the key advantages of applying to become designated as a PFLP?

'White list' activities for limited partners

The LRO will introduce a non-exhaustive 'white list' of activities that limited partners are permitted to undertake without being regarded as taking part in the management of the partnership and exposing themselves to unlimited liability.

The 'white list' is not an exhaustive list, although the impact of other activities would need to be assessed in each case. The introduction of the 'white list' does not automatically permit limited partners to carry out all of these activities, rather this will depend on the terms agreed in the relevant partnership agreement.

A summary of some of the key 'white list' activities is set out at the end of this briefing note.

No requirement to make capital contributions

Limited partners will not be required to make capital contributions to PFLPs. Under the current legislation this is a requirement and can create timing issues at closing, as currently capital cannot be returned during a fund's life and requires the loan/capital split of an investor's commitment. The proposed change would simplify both the form of documentation and process.

For limited partnerships established before the LRO comes into effect which elect to become PFLPs, capital contributions which have been made will continue to be treated under the current regime and therefore must still be registered with Companies House which could create some confusion.

No requirement to file gazette notices

The LRO will remove the requirement to file a Gazette notice upon a transfer of interest by a limited partner to give the transfer legal effect. Further, the current law provides that until a person has notice of changes (i.e. through the Gazette notice) to the constitution of the partnership they are entitled to treat former partners, as continuing to be partners will be disapplied for PFLPs.

Winding-up process made simpler

The current legislation requires that a limited partnership must be wound-up by its general partner. Where the general partner has been removed, the remaining limited partners must apply for the partnership to be wound up under the supervision of the court. The LRO removes this requirement for PFLPs and grants the limited partners of a PFLP the power to authorise a third party to wind up the partnership on their behalf.

Removal of certain administrative burdens

The LRO removes the burden of filing certain information at Companies House. Specifically, PFLPs will not be required to file notices of the following at Companies House:

  • changes which relate to the nature of the partnership's business
  • changes to the term of the partnership; or
  • details of capital contributed by any limited partner to the partnership.

However, certain safeguards on the accountability of limited partnerships will continue to remain for PFLPs, namely the names of the partners and the address of the principal place of business will still need to be filed at Companies House.

Are there any disadvantages to consider if applying to be designated as a PFLP when setting up a new fund?

Apart from private fund sponsors facing additional queries from prospective limited partners about the effects of a limited partnership being designated as a PFLP, we cannot see any significant disadvantages with private funds registering as PFLP and would therefore envisage that most new limited partnerships established will apply to be designated as a PFLP.

Are there any disadvantages to consider if applying to be designated as a PFLP as an existing fund?

Existing funds (as with new funds) will incur some administrative costs in re-designating a limited partnership as an PFLP (this process is described below). Apart from this, the disadvantages of a re-designation would be minimal.

Whether there would be a legal obligation to notify or seek the consent of limited partners before making a re-designation of a limited partnership will depend on the terms of the relevant partnership agreement and should be considered. In any case, it would be good practice to notify limited partners and this process would incur some administrative costs.

Ultimately, an assessment of the associated time and cost implications of a re-designation, compared with the advantages, should be undertaken prior to making the re-designation. The advantages of the 'white list' and the streamlined administrative processes that come with PFLP designation may lead funds to be re-designated even if capital already contributed will continue to be treated under the pre-LRO regime. The LRO does not have for a deadline by when existing limited partnerships must file for re-designation as PFLPs, and so fund sponsors can make the decision at a point in time of most convenience to them.

What practical steps are required in order to be designated as a PFLP?

In order for a limited partnership to be designated as a PFLP, the general partner may make an application either at the time of the initial registration of the partnership (using a new Form LP7) or at any time thereafter (using a new Form LP8). Both forms will require the general partner to confirm that the limited partnership fulfils the conditions to be a PFLP (which, as noted earlier, should not be an issue).

Upon acceptance of the designation as a PFLP, the registrar of companies will issue a certificate of designation as a PFLP for the limited partnership which will be conclusive evidence that the limited partnership was so designated. If the limited partnership is designated as a PFLP at the same time that it is registered, the registrar of companies may issue a combined registration as a limited partnership and designation as a PFLP.


Summary of Key White List Activities

The 'white list' includes the following activities:

  • Taking part in a decision about (a) the variation of, or waiver of a term of, the partnership agreement or associated documents; (b) whether the general nature of the partnership business should change; (c) whether a person should become or cease to be a partner; or (d) whether the partnership should end or the term of the partnership should be extended.
  • Appointing a person to wind up the partnership.
  • Enforcing an entitlement under the partnership agreement, provided that the entitlement does not involve a limited partner taking part in the management of the partnership business.
  • Enforcing into, or acting under, a contract with the other partners in the partnership, provided that the contract does not involve a limited partner taking part in the management of the partnership business.
  • Providing surety or acting as guarantor for the partnership.
  • Approving the accounts of the partnership.
  • Reviewing or approving a valuation of the partnership's assets.
  • Taking part in a decision regarding changes in the persons responsible for the day-to-day management of the partnership.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.