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Partnership Law

Relevant or Related Legislation

The Partnership Act 1890 sets out the basic structure of partnership law. The Limited Partnerships Act 1907 introduced a second form of partnership, in which the liability of one or more of the partners could be limited, whilst also retaining general partners with unlimited liability.

Reform of Limited Partnership Law

On 1 June 2009, the Government laid in draft the Legislative Reform (Limited Partnerships) Order 2009. Once made, this would clarify 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. It would also require 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).

The Explanatory Document for this LRO is available here:

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

This Legislative Reform Order (LRO) is seen as a first step in a planned comprehensive overhaul of limited partnership law. In 2008, BERR consulted on an ambitious LRO delivering such an overhaul, based on recommendations by the Law Commissions. But the responses made it clear that there was a lot of work to do to before the reforms could be framed in a way that would attract consensus across the board. After an informal re consultation, the Government decided to bring forward a first LRO with the targeted aims described above.

We plan to consult further on ways of completing the programme of reform, probably through a further two or more LROs.

Earlier history of Partnership proposals

In November 1997 the DTI requested the Law Commission and the Scottish Law Commission to undertake jointly a review of partnership law.

In September 2000 the two Commissions issued a Joint Consultation Paper on partnership law. The Paper set out proposals for the reform of the Partnership Act 1890. In October 2001 the two Commissions issued a further Joint Consultation Paper on proposals to reform the Limited Partnerships Act 1907. The two Commissions published their joint report on partnership law in November 2003. The report included a draft bill. The consultation papers and the report are available from the Law Commission’s website (link on the right of the screen).

On 30th April 2004 the Department invited interested parties to provide information on the possible economic benefits and costs of the Law Commissions' proposals.

On 20 July 2006 the Government announced its decision to implement the limited partnership law reforms recommended by the Law Commissions in their joint report. At the same time it announced that it did not intend to take forward the recommendations in respect of general partnership law reform at that time.

In August 2008, the Government published a consultation on a Legislative Reform Order to reform limited partnership law, and in March 2009 they published the Government response and the responses received from consultees. The Government response explained that in the light of the stakeholder responses they would not be able to proceed with the comprehensive Legislative Reform Order.

On 20 July 2006 the Government announced its decision to implement the limited partnership law reforms recommended by the Law Commissions in their joint report. At the same time it announced that it did not intend to take forward the recommendations in respect of general partnership law reform at that time.