Faculty backing for 'logical' limited partnership proposals
PLANS to tighten the legal framework around Scottish limited partnerships have been supported in the main by the Faculty.
The UK Government’s Department for Business, Energy and Industrial Strategy has proposed reform in the wake of evidence that limited partnerships, particularly in Scotland, were being used for illicit purposes, including international money laundering schemes.
A consultation paper says limited partnerships remain popular business entities for a range of legitimate and important commercial activity. The aim of the changes was to limit the risk of misuse and to bring the law governing limited partnerships, largely unamended since 1907, more in line with that governing limited companies.
In a response, the Faculty agreed as “logical” proposals 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.
In relation to limited partnerships having to prepare accounts and reports, like private companies, the Faculty stated that a case for the requirement could no doubt be made on policy grounds.
“However, if that proposal was to gain favour then it would remove one of the main reasons for businesses electing to form a limited partnership in the first place. In practice, this may well result 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,” said the Faculty.
Another suggested reform is that presenters – those seeking to register a limited partnership – would need to be registered with an anti-money laundering supervisory body.
The Faculty said it recognised the important policy objective which the proposal sought to achieve.
“Nevertheless, the 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.”