ACRA consults on amendments to the Limited Partnerships Act 2008

October 2021

ACRA is proposing amendments to the Limited Partnerships Act to render the limited partnership vehicle more attractive to fund managers using the limited partnership as a fund vehicle. Other updating amendments are also being proposed.

A summary of key amendments proposed to Act are as follows:

Amendments applicable only to fund limited partnerships

(a)    Introduction of a specific definition for a “fund limited partnership” and to apply certain provisions of the Act only to fund limited partnerships. Existing limited partnerships that meet the definition may apply for redesignation as a fund limited partnership. LPs. The amendments that are being introduced that apply only to fund limited partnerships are:

(i)    Fund limited partnerships will be given greater certainty and flexibility to transfer a limited partner’s interest, so that such a transfer (provided it has the consent of the general partner), will result only in a replacement of the limited partner and will not amount to a dissolution of the partnership

(ii)    Restrictions in sections 28 and 30 of the Partnership Act in relation to competing businesses will not apply to limited partners of fund limited partnerships

(iii)   Limited partners of fund limited partnerships will not owe fiduciary duties to other partners or the limited partnership

(b)    The aforesaid amendments are subject to the provisions of the limited partnership agreement that may set out alternative arrangements

Amendments applicable to all limited partnerships

(a)    Expansion of the legal forms that a general or limited partner may take, including registered limited partnerships or foreign limited partnerships, with or without a legal personality

(b)    Clarifying that a general or limited partner may act in the capacity of a trustee or in a representative capacity

(c)    Clarifying when an assignment of partnership interest can validly be made

(d)    Permitting limited partners to appoint third parties to wind up the limited partnership if the general partner is unable to do so, provided all partners agree

Amendments to the First Schedule to the Limited Partnerships Act

The First Schedule sets out the activities which if undertaken by a limited partner, would not, of itself, result in the limited partner being regarded as taking part in the management of the limited partnership. A limited partner who takes part in the management of the limited partnership is liable for all debts and obligations of the limited partnership incurred while he so takes part in the management, as though he were a general partner.

ACRA is proposing to amend the First Schedule:

(a)    To broaden the list of activities which limited partners of fund limited partnerships can engage in without losing their limited liability status

(b)    To clarify the existing list of activities which limited partners of all limited partnerships can engage in without losing their limited liability status

Re-domiciliation

ACRA is seeking views on whether there is a need to introduce a re-domiciliation framework for fund limited partnerships, akin to the re-domiciliation regime for companies and variable capital companies

ACRA’s consultation will end on 1 November 2021