Private equity and the PSC register

Written on 20 Nov 2014

The British Venture Capital Association (BVCA) has been successful in getting Parliament to water down the application of the new people with significant control (PSC) register as it applies to UK limited partnerships, a popular vehicle in UK private equity fund structures.

The new PSC register is one plank of the Small Business, Enterprise and Employment Bill (the SBEEB), currently going through Parliament. When it becomes law, the PSC register will contain information on individuals who ultimately own or control more than 25% of a company’s shares or voting rights, or who otherwise exercise control over the company and its management. We have a section dedicated to the introduction of the PSC register on osborneclarke.com here.

The private equity industry trade body had been concerned that under the draft legislation, limited partners of limited partnerships without separate legal personality (such as English limited partnerships) may have to be disclosed as PSCs of the portfolio companies in which the private equity fund has invested, even though limited partners are passive investors and even in circumstances where the economic interest of the limited partner was below the 25% threshold.

In the Committee stage, MPs accepted an amendment which states that limited partners will not be registrable on the PSC register only because they are limited partners of a limited partnership registered under the Limited Partnership Act 1907.

Whilst somewhat helpful, private equity funds will still need to analyse whether a general partner of a UK limited partnership is a PSC. Further, the amendment does not apply to limited partnerships not registered under the 1907 Act (for example, Guernsey or Jersey limited partnerships) so the limited partners of limited partnerships in other jurisdictions may still be registrable.

The SBEEB continues its journey through Parliament.