DTI brings forward partnership law change

The DTI has announced that the 20 partner limit on private equity funds will be lifted on March 22.

The Department of Trade and Industry has brought forward plans to change UK partnership law to allow qualifying private equity partnerships to comprise more than 20 partners without having to put into place complicated contractual provisions.

At present under UK law, general and limited partnerships are subject to a legal maximum of 20 partners, with a number of exceptions. Melanie Johnson MP, Minister for Markets said: “After consulting with investment managers it became clear to us that the law as it stands is putting UK business at a disadvantage internationally and preventing firms from expanding.”

The government announced last year that it would remove the limit for all partnerships and limited partnerships, but this has yet to go through the parliamentary process. Law firm SJ Berwin has been discussing a narrower exemption with the Department of Trade and Industry, which would apply to investment funds which are classed as “collective investment schemes” for regulatory purposes and are managed by an authorised entity.  It is that exemption which will be brought into effect on 22 March.

Commenting on the announcement, a spokesman at SJ Berwin said: “Whilst this change is not sufficient to cover all investment funds, there are a large number which will be able to take immediate advantage of it.”