Proposals to reform Irish limited partnerships oblige greater transparency and accountability

Under the Bill (92 pages / 578 KB), the Limited Partnership Act 1907 will be replaced with new legislation that is designed to align Irish limited partnerships with international standards.

The proposals include a requirement for 1907 limited partnerships (partnerships) to maintain a continuous connection with Ireland. Currently, a partnership can after its initial registration move its principal place of business (PPOB) outside Ireland. However, the proposal mandates that a partnership must have an Irish registered office or a PPOB in Ireland. Additionally, to register a Partnership applicants must demonstrate that the partnership will have at least one general partner (GP) that is a resident of a European economic area (EEA) throughout the partnership’s existence.

Conor Durkin, investment funds and asset management expert at Pinsent Masons, said: “By requiring Partnerships to have a PPOB in Ireland and engage in an economic activity in the country, the reforms are designed to secure the legitimate use of partnership vehicles.”

The Bill clarifies that a body corporate can act as a GP to a partnership, reflecting current practice. Furthermore, the names of a Partnership must end with ‘limited partnership’, ‘lp’ or l.p.’ (or their Irish equivalents).

For the registration of a Partnership, firms will need to complete a prescribed form supplying information such as the name, address, registered office of the Partnership, the GP and the limited partners. The registration of a partnership will take effect from the date on the certificate of registration, and partnerships must notify the Irish Companies Registration Office (CRO) of any changes to the registered information within 14 days.

The proposed legislation requires partnerships to submit an annual confirmation statement by 1 July each year to verify their registered information. Failure to comply could result in the Partnership being removed from the register, thereby losing limited liability protection for its limited partners.

Under the Bill a GP is required to maintain a register of non-EEA partners and their beneficial owners, and to deliver details of the non-EEA partners and their beneficial owners to the CRO who shall maintain a centralised register of non-EEA partners and their beneficial owners. A GP is required to deliver the information to the CRO within 6 months from the registration of a new partnership or otherwise within 12 months of a partnership receiving a re-registration notice from the CRO.

“The requirement to maintain a beneficial ownership register of non-EEA partners that may be inspected by public authorities aims to tackle corporate secrecy and ensure that partnerships are subject to the same transparency requirements as Irish companies,” said Durkin.

Despite the various proposed amendments “the Bill does not remove the limit on the number of partners, which is currently limited to 20 or 50 if the partnership is formed to provide investment or loan financing to commercial enterprises. Furthermore, the Bill does not set out a list of safe harbour activities that limited partners may undertake without losing their limited liability status, such amendments if adopted would enhance Ireland’s attractiveness as a domicile for the structuring of private equity,” said Durkin.

In a bid to ensure a smooth implementation of the new requirements, the Bill includes a transition period and upon commencement of the new law, existing partnership registrations will be protected. The CRO will have 30 months to identify and remove partnerships registered under the 1907 Act that have ceased operations. Existing partnerships will be notified by the CRO of the of the steps required to re-register a partnership and failure to re-register a partnership within 12 months may at the discretion of the CRO result its removal from the register.