UK Private Fund Limited Partnership (PFLP)

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  • Source the deal.
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TBA goal

Our goal is engineering the investment vehicles of the future. We make alternative investing faster and easier and… more accessible. By bringing to you its new essence – the UK PFLP as the new Investment SPV option.

UIS is making it more attractive, by lowering the absurd costs and complexity of creating and maintaining an Investment SPV. We believe this UK PFLP will deeply change the alternative investment landscape.

UK Private Fund Limited Partnership

Your full-fledged GP/LP fund for Venture Capital, Private Equity, Infrastructure and Real-Estate fund managers. An English limited partnership is commonly used as an investment vehicle for a variety of funds including private equity, real estate and infrastructure funds.

The PFLP is a voluntary alternative to a traditional limited partnership, available only to partnerships that qualify as “Collective Investment Schemes”. This is important because limited partners generally contribute capital to the fund partnership but expect to receive it back when investments are realised.

On 28 March 2017, UK Government confirmed that a new class of English limited partnership – the private fund limited partnership (PFLP), will come into existence on 6 April 2017. The PFLP is likely to become the default choice for private fund managers using an English limited partnership structure.

The introduction of the PFLP is a welcome step in the modernisation of the English limited partnership regime. In particular, the introduction of a list of permitted actions that limited partners will be able to take without compromising their limited liability status is helpful in providing both investors and sponsors with comfort that the limited partnership advisory committee and consent arrangements customarily included in private fund terms will not result in investors risking their limited liability.

This new structure to be available to private investment funds (predominantly being those funds not authorised to be promoted to retail consumers) which are structured as limited partnerships.

Why has the PFLP been introduced?

Recognising that other jurisdictions have in recent years created or reformed their limited partnership regimes to accommodate the needs of the modern funds industry, the UK Government has introduced the PFLP to level the playing field and offer private fund managers a structuring solution with better clarity and more flexibility over the traditional English limited partnership.

Advantages of a PFLP

The key advantages of a PFLP over an existing English limited partnership are:

A PFLP benefits from a “whitelist” of permitted actions which limited partners in the PFLP can take without being regarded as participating in the management of the limited partnership and so losing their limited liability. This includes, among other matters, voting on amendments to the limited partnership agreement, appointing representatives on a limited partner advisory committee, and approving action proposed by the general partner to be taken on investments. The whitelist is not intended to change the general principle that limited partners cannot actively participate in the management of the limited partnership; however, it provides welcome clarity that certain matters customarily reserved for limited partners in private funds will not cause those limited partners to risk their limited liability.

Limited partners in a PFLP are not required to contribute any capital to the partnership. Although this will simplify the administration of the capital structure of the partnership, it is unlikely to have any significant effect in practice since limited partners’ commitments to English limited partnerships are typically structured with only a nominal capital contribution, with the remaining commitment being an advance or loan.

A PFLP is exempt from the administratively cumbersome requirement that exists for an existing English limited partnership requiring any assignments of limited partnership interests to be advertised in the London Gazette.

A PFLP benefits from a right given to limited partners to appoint a person to wind up the partnership if the general partner is unable to do so.

A PFLP is also exempt from certain statutory duties imposed on limited partners not to compete with the limited partnership and to render accounts and information of things affecting the partnership to any limited partner. Such obligations usually need to be specifically excluded in the limited partnership agreement for English limited partnerships.

A PFLP will not be required to file at Companies House:

  • changes which relate to the nature of the partnership’s business;
  • changes to the term of the partnership; or
  • details of capital contributed by any limited partner to the partnership.
This development is welcome as it will help to keep investment decisions private and confidential. The requirement to advertise certain matters in the Gazette and for such changes to only take effect when the advertisement has been published in the Gazette has been abolished for PFLPs. The requirement was designed to protect creditors, but in practice the Gazette is not widely monitored for this purpose. This change should reduce unnecessary costs and risks.

FAQ – Frequently Asked Questions

How to qualify as a PFLP?
In order to qualify as a PFLP, the limited partnership must have a written limited partnership agreement and must also be a Collective Investment Scheme (*). In practice, the vast majority of private funds vehicles should meet these requirements.

An existing English limited partnership may also elect to re-designate itself as a PFLP provided that these requirements are met. However, it will not be possible to change back from a PFLP to an ordinary limited partnership. As the criteria required to qualify as a PFLP are straightforward, the PFLP is likely to be the default choice for private fund managers using an English limited partnership structure going forwards.

(*) An Unregulated Collective Investment Scheme (UCIS) is a pooled investment fund whereby a number of investors transfer their money into one pot. A fund manager will then take the money and invest it into various assets. The FCA states that UCIS investments are in fact only suitable for a small group of investors. For further FCA related information, click HERE.

Main features of a PFLP?
The main features of the UK’s new Private Fund Limited Partnership (PFLP) organisational form have been established under the Legislative Reform (Private Fund Limited Partnerships) Order 2017 (PFLP Law).

The PFLP law also modifies the 1907 Limited Partnerships Act so that the limited partners in a PFLP are not required to make a capital contribution. Crucially, however, it also provides that – if they do contribute capital – that capital can be returned at any time during the partnership’s life. This is important because limited partners generally contribute capital to the fund partnership but expect to receive it back when investments are realised.

General UK limited partnership law stipulates that capital can only be returned at the end of the life of the partnership, which necessitates somewhat artificial provisions in the limited partnership agreement so that the bulk of an investor’s contribution is made by way of loan to the partnership. This device will no longer be needed and will bring the UK vehicle more into line with other international structures.

There are various other changes designed to simplify the administration of the PFLP and to make the default position on fiduciary duties more like the position generally negotiated between the parties.

Effective since April 2017, the private equity and venture capital industry has welcomed these changes, which undoubtedly improve the competitiveness of the UK limited partnership structure. While this new option for private fund managers is not radically different from the existing structure, it does enable the UK to continue to offer an onshore structure that combines tax transparency with legal certainty, flexibility and relatively light administrative burdens, and the government’s clear hope is that this will encourage more private funds to remain onshore.

However, whether the UK’s new vehicle will actually encourage more fund managers to use a British structure for their funds is not clear.

What are the PFLP conditions?
A limited partnership may only be a PFLP if it is:

  • constituted by an agreement in writing (this is satisfied by a usual form of limited partnership agreement (“LPA”)); and
  • a collective investment scheme (“CIS”) (as defined by S235 FSMA 2000). This condition will be met, and the partnership can be a PFLP even if it takes advantage of one of the exemptions available to a CIS as S235 (5) FSMA is dis-applied.

The general partner will need to confirm that these conditions are satisfied but, practically speaking, a private investment fund structured as a limited partnership should easily satisfy the requirements and have the option to be designated as a PFLP.

How can a limited partnership register as a PFLP?
To register a new PFLP there is no requirement to provide information relating to:

  • the nature of the partnership’s business;
  • the term of the partnership; or
  • the sum of capital contributed by any limited partner.

And, as mentioned above, the general partner will be required to confirm that the limited partnership meets the conditions of a PFLP (as set out above).


The introduction of the PFLP is a welcome – and long overdue – development in the UK private funds industry. It brings the UK in line with other preeminent jurisdictions offering limited partnership structures and offers both managers and investors tangible improvements on what was already a well-known and robust regime.

For new managers looking at establishing a limited partnership in England and Wales, or Scotland, a decision to designate as a PFLP should be simple. For existing managers, there are clear benefits in doing so with little downside – provided that those managers have the authority to elect to do so and that amendments to the relevant LPA are either unnecessary or can be set easily.

PFLP agreement

For private equity funds formed as limited partnerships, the key legal document is the limited partnership agreement (LPA) which sets out in detail the legally binding relations between the investors (as limited partners in the partnership) and the general partner (representing the fund manager).

The partners are free to agree whatever commercial terms they choose to be in the LPA, save that a limited partner may not take part in the management of the limited partnership; if it does, it will lose its limited liability status.

The LPA sets out the rights and obligations of the partners and seeks to cover every aspect of the formation, operation and termination of the partnership, from the key commercial issues (e.g. investment policy, profit sharing, fees and expenses, etc.) to the detailed constitutional and administrative issues (e.g. when the manager can launch a new fund, reports and accounts, provision of information, etc).

TBA services

TBA & Associates will take care of all necessary and legally required procedures to get your UK Private Fund full registered and operative. Our Lawyers will take care to provide all necessary initial arrangements for your Private Fund Limited Partnership Agreement – as included in our own services.

For any question or matter you may need to set up your UK PFLP, do not hesitate to contact us; all assistance will be promptly provided.

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Disclaimer: While TBA & Associates strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact TBA Customer Services for advice on your specific cases.

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