Legislative Reform (Limited Partnerships) Order 2009

We are debating today the Legislative Reform (Limited Partnerships) Order 2009. Limited partnerships were created by the Limited Partnerships Act 1907. The Act has remained substantially the same over the past 100 years. There are currently around 16,000 limited partnerships. They have been used for a wide variety of purposes, but most new limited partnerships are for investment funds, particularly private equity funds. In 2003, a Law Commission report made a set of recommendations for reforming limited partnership law, which the Government decided to accept. The recommended changes would not alter the nature of limited partnerships, but would comprehensively modernise and clarify the law. They are therefore appropriate for a legislative reform order. We consulted last year on a comprehensive LRO. It would have repealed the 1907 Act entirely and replaced it by writing new sections into the Partnership Act 1890. The response showed that there was wide support for modernising and clarifying the law along the lines recommended by the Law Commission. It also showed that there was insufficient support for the draft order on which we had consulted. We therefore reconsulted informally on a proposal to proceed stepwise by introducing the reforms in a short series of LROs, beginning with the instrument under debate today. Some consultees were naturally disappointed that the full reform would be delayed, but in general they accepted that this would be a more certain way of proceeding. We plan to consult later in the summer on the forward programme of LROs. The current order delivers two changes recommended by the Law Commission. The first provides clarity that a limited partnership comes into existence on the date shown on its certificate of registration and that the certificate is conclusive evidence of its formation. Practitioners have told us that the current vagueness about when a partnership comes into existence is a serious problem, as is the risk that if there is some fault in the application process, it might turn out later that none of the partners have limited liability. The first change in the order will resolve both of these problems. Some consultees argued that this clarification would be of most value if Companies House offered a same-day registration for limited partnerships, as it does for companies. I am happy to tell the Committee that Companies House is planning to offer a same-day registration service for limited partnerships from 1 October this year. The second change delivered by the order is to require all new limited partnerships to choose a name that includes an indication of its status at the end. Each of these proposals was welcomed by all consultees who addressed them, and no consultee objected to either. I hope that your Lordships will also agree that they make a useful first step in our programme of reform. I beg to move.