Section Menu

Partnership Law

The basic structure of partnership law was set out in the Partnership Act 1890, and limited partnerships were introduced by the Limited Partnerships Act 1907. More recently, the Limited Liability Partnerships Act 2000 created a new form: limited liability partnerships (LLP).

Limited partnerships are a form of partnership in which there is at least one general partner, with unlimited liability, and at least one limited partner whose liability is limited to their contribution and who does not become involved in the management of the partnership. Limited partnerships are the dominant investment vehicle used in the UK, Europe and the United States for venture capital and private equity investment funds and are widely used for other types of fund, including real estate and film finance. They are also used for holding leases on farmland in Scotland.

Following recommendations made in a joint report by the Law Commission and Scottish Law Commission, the Government announced in 2006 that it would reform the 1907 Act so as to clarify and modernise the law relating to limited partnerships.

Certain changes based on these recommendations were brought forward in a Legislative Reform Order (LRO) laid before Parliament in June 2009. This LRO:
• clarified that a limited partnership is formed on the date of registration, and that the certificate issued by the registrar is conclusive evidence of its formation; and
• required all new limited partnerships to include at the end of their names an indication of their status (ie “limited partnership”, “lp” or a Welsh equivalent).

Further information about this LRO can be found in this explanatory document. These changes came into force on 1 October 2009 and will affect only limited partnerships formed on or after that date.

The Legislative Reform (Limited Partnerships) Order 2009: explanatory document (202KB)

We plan to consult later this year on the best way of structuring work on limited partnerships so that we can implement all of the reforms for which there is broad support. We will update our website with further information in due course.