English Limited Partnership Registration

Three types of partnership are available under UK law: the general partnership; the limited partnership (English and Scottish varieties) ("LP"); and the limited liability partnership.

A LP is essentially the same as a general partnership registered under the Partnership Act 1890, except that it has two categories of partner. Each LP will have one or more general partners who have responsibility for managing the LP's business and have unlimited liability for the firm's debts and obligations. It must also have one or more limited partners who will invest capital in the LP, will not take an active role in the LP's operation, and will have limited liability up to the amount of capital that they have contributed.

The main advantage of a LP therefore is that it allows the limited partner to participate in the profits of the partnership without him incurring unlimited liability. Partners can be bodies corporate meaning a general partner, who has unlimited liability, can be a company. Thus, if set up properly, an individual creating the structure can insulate himself from unlimited liability. As well as the advantage of limited liability, another important reason to use a LP is the tax transparency that it offers.

A LP must be registered with Companies House in accordance with the Limited Partnership Act 1907, and must carry on a business in common with a view of profit. English and Scottish LPs differ in that a Scottish LP has a separate legal personality whereas an English one does not.

Despite the age of the governing legislation, LPs have important modern uses. They have a light statutory and regulatory regime compared with companies; they can vary in size from two partners to much larger LPs for complicated structures; and can be particularly useful in wealth management structures.

This case study looks at how a LP was recently used for wealth management purposes.

Case study

Recently, Jordans was asked to advise on the possibility of registering a UK entity for a non-UK resident family, through which to conduct an investment business.

The family wished to place the business within a reliable and respectable legal environment, and were of the view a UK company or partnership entity would provide such an environment.

The family provided three specifications for the chosen entity:

Registration at Companies House in the UK No UK tax liability at entity level No publication of the accounts of the entity or the family In this case Jordans...