Changing regulatory landscape for Scottish partnerships
Companies House recently announced an imminent extension to UK anti-money laundering measures affecting Scottish limited partnerships (SLPs) and certain Scottish partnerships (SPs) (together, Scottish Partnerships). This will bring Scottish Partnerships into the persons with significant control (PSC) regime, which came into force for companies and limited liability partnerships (LLPs) last year.
Current PSC Regime
Since April 2016, most UK limited companies and limited liability partnerships have been required to maintain a register detailing any relevant PSCs. The purpose of the regime is to increase corporate transparency and enable investors to make informed decisions about a proposed investment. The PSC regime does not currently apply to Scottish Partnerships and, significantly, information submitted to Companies House is generally available for the public to view.
Proposed Changes to the PSC Regime
From 24 July 2017, the scope of the existing PSC regime will be broadened to include SLPs, as well as to SPs where all partners are corporate bodies.
Regulations to implement this extension have not been published, so it is not currently clear how this will work in practice. Based on the implementation of the current PSC regime and the information currently available, we would expect that existing SLPs will be required to register PSC information with Companies House, and to notify any PSC change within 14 days. It is also expected that new SLPs will be required to give PSC information at their point of registration. The position for SPs is less clear since they are not currently required to be registered at Companies House.
Who would be a PSC for a Scottish Partnership?
The criteria for determining who qualifies as a PSC for Scottish Partnerships have not yet been published but are expected shortly. However, in respect of SLPs, we would anticipate a definition will be used based on how PSCs for LLPs are identified and is likely to be an individual who is, or directly or indirectly controls, the general partner of an SLP. Once again, the changes in respect of SPs are more difficult to predict and it may be that, depending on the number of partners in the SP, all partners are required to be registered as PSCs.
Possible exemption?
With the change in law will also come a change to the existing protection regime – restricting certain information supplied to Companies House from appearing on the public register. Scottish Partnerships will be able to apply for restriction of their PSC information, limiting its disclosure to certain public authorities, and credit and financial institutions.
Next steps
This is not the only new change to partnership law in 2017 and it will be interesting to see how the extension of the PSC regime interacts with the recently introduced rules on private fund limited partnerships which largely focused on reducing administrative burden for certain types of partnership. Further, as the alleged use of some SLPs for fraudulent activity has attracted a degree of press scrutiny recently, the inclusion of SLPs within the remit of the PSC regime may go some way to assuage concerns around possible criminality through increased transparency. We await the further guidance to be published for clarity on these issues.