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Bill to update law on limited partnerships

The Government has approved the drafting of legislation that would modernise the law on limited partnerships and business names.

The proposed bill would also give the Companies Registration Office, which keeps the register of businesses, additional powers.

The Miscellaneous Provisions (Registration of Limited Partnerships and Business Names) Bill would repeal and replace the Limited Partnerships Act 1907 and the Registration of Business Names Act 1963.

‘Modern practices’

The Department of Enterprise, Trade and Employment says that both acts need to be updated to reflect modern business practices for those using a business name or the limited-partnership model.

Under the bill, there will be additional information and reporting requirements and additional powers for the registrar, consistent with those that apply to companies.

This is aimed at ensuring that the integrity of the registers is upheld. There will be enhanced enforcement and compliance provisions within the structure of the limited-partnership framework.

Limited partnerships

Limited partnerships are used by a range of domestic and foreign investors for investments ranging from family farms and businesses to private equity, venture capital and unregulated investment funds.

A limited partnership is a contractual agreement in which at least one general partner has unlimited liability for the debts of the firm, and at least one limited partner has liability limited to the extent of their investment, and is restricted from participating in the management of the partnership.

The 1963 act requires all individuals, partnerships, and companies to register a business name, where they are carrying on business under a name that is not their own.

The department says that there are over 3,600 limited partnerships and 620,000 business names on the registers. Many are thought to have ceased business, but remain on the registers, due to insufficient powers for the registrar to remove them.

The general scheme of the new bill introduces transparency provisions that include:

• Verification of the identity of partners, whether natural or legal persons,
• A register of beneficial ownership of partners of a limited partnership incorporated or administered outside the EEA (European Economic Area).
• A requirement to have at least one EEA-resident general partner for the duration of a limited partnership, and
• A requirement for an ongoing connection with the State for the duration of a limited partnership, via a registered office or place of business in the State.

Limited partnerships and business names registered under the 1907 and 1963 acts will have to comply with the new requirements within 12 months of a notice from the registrar, to be issued within 30 months of commencement of the new act.

Transparency concerns

Peter Burke (Minister for Enterprise, Trade and Employment) described the new bill as “a very worthwhile and keenly anticipated legislative measure”.

He added that the aim was to ensure that the limited-partnership model remained an attractive investment vehicle for legitimate business activity.

“The proposed legislation also fulfils the commitment made by this Government to address concerns raised regarding the transparency of limited partnerships as a result of the ‘Pandora Papers’ released in 2021,” the minister stated.

The 2021 documents contained leaked financial information about individuals and offshore entities.