Regulation watch: The UK's simplified partnership rules

The Financial Choice Act, which could eliminate the Volcker Rule, was due to be presented to the US House of Representatives as Private Equity International was going to press. The act could ease a number of regulatory standards enacted through the 2010 Dodd-Frank Act, including the rule restricting the amount of tier 1 capital banks can hold in private investments. It was expected to be presented mid-February, but the date was pushed back for “modest changes”. The bill's author, Congressman Jeb Hensarling, released the redraft to lawmakers on 11 April, with the provision to scrap the Volcker Rule intact. It is likely to reach the floor for a vote by June or July. 

A new regime that will reduce the costs and administrative burden of operating a UK limited partnership came into force on 6 April. The Private Fund Limited Partnership, the result of changes to the 1907 Limited Partnership Act, is designed to bring the UK limited partnership in line with other major fund jurisdictions. It includes a 'white list' detailing actions an LP can take without jeopardising their limited liability.

The change also removed the requirement for gazette notices on a transfer of limited partner interest and simplified the wind-up process. New funds launched can opt for their funds to be PFLPs or stick with the original regime, while funds already on the road can be re-designated. 
The UK's tax authority published draft rules that could increase the administrative burden on some UK fund partnerships from April 2018. Depending on how the final rules are written, it could mean investors that are not currently named on a partnership tax return must be in the future. It would have the biggest impact on partnerships with non-resident partners, who most commonly use the nominee agreement. This allows non-UK resident partners to name a UK nominee to receive their profits, with aggregate returns to all NRPs invested in the fund included as one entry on the partnership tax return. 

The new rules would also require any profit-generating partnership with a partner that is itself a separate partnership – such as a fund of funds LP – to report details of each partner and calculate each partner's taxable profits on all four UK tax bases. 
The European Commission launched its review of the impact of the Alternative Investment Fund Managers Directive on fund managers. It will survey AIFMs across 12 European Union countries on: experience in applying the AIFMD; impact on investors; impact on AIFs and AIFMs in the EU and third countries; and achievement of the objectives of the directive. The survey will also assess the necessity of the AIFMD's EU oversight and ask whether the desired effect of the regulation could have been achieved at national level. The survey is a mandatory review, carried out in accordance with Article 69 of the directive. The consultation closes on 1 June, 2017.
Jay Clayton, the private equity lawyer nominated to be chairman of the US Securities and Exchange Commission, was approved by the Senate Banking Committee in April. A full Senate vote, a date for which is yet to be set, will decide whether he will lead the regulator.