Faculty backs "logical" limited partnership reform plans

Proposals to reform the law regulating Scottish limited partnerships have been supported in the main by the Faculty of Advocates, in a response to a consultation by the UK Department for Business, Energy & Industrial Strategy.

The plans reflect evidence that limited partnerships, particularly in Scotland, were being used for illicit purposes, including international money laundering schemes, and while recognising their use for a range of legitimate and important commercial activities, aim to limit the risk of misuse and bring the law more into line with limited companies.

Faculty agrees it is "logical" that all limited partnerships should be required to file an annual confirmation statement, and that the registrar should be given power to strike off partnerships from the register of companies.

However, regarding a possible requirement to prepare accounts and reports, like private companies, it states that "it would remove one of the main reasons for businesses electing to form a limited partnership in the first place" – likely resulting "in very few limited partnerships being formed in the future, given the obvious advantage as regards liability of members which comes with a limited company".

And while there was an important policy objective behind a proposal that "presenters" seeking to register a limited partnership would need to be registered with an anti-money laundering supervisory body, "Faculty considers that it would be desirable to have an exception which allowed direct submission by presenters who intend to be general partners of the limited partnership and where the partnership proposes to conduct its business in the UK jurisdiction in which it is applying to incorporate.

"It appears unlikely that such an exception would be used for illicit purposes, since it would require the general partner to provide their details as part of the registration process, thus ensuring transparency."

Click here to view the full response.