The PSC regime is not new, having created obligations on UK limited companies and UK LLPs (LLP) to maintain a register of persons with significant control (PSC) since June 2016. What is new, and is of significance to private equity and venture funds, is the extension of the regime to Scottish Limited Partnerships (SLPs) brought into effect under The Scottish Partnerships (Register of People with Significant Control) Regulations 2017 (Regulations) which came into force on the 26 June 2017.

Prior to the Regulations coming into force, the PSC regime applied only to UK limited companies and LLPs. English limited partnerships and SLPs were both outside its scope. With the introduction of the regime having been driven by the idea of corporate transparency however, it is perhaps unsurprising that it has been extended to SLPs which, unlike English legal partnerships, have separate legal identity.

SLPs are often found in private equity structures, whether as carried interest entities for executive management or as the primary investment vehicle. In many cases, the PSC regime will represent the first time that the ultimate controllers have been made public.

For the purposes of an SLP, a PSC is defined in similar terms to a PSC of a UK limited company or an LLP, that is, a person holding the right:

(a) directly or indirectly, to more than 25% of any surplus assets on a winding up;

(b) directly or indirectly, to more than 25% of the voting rights;

(c) directly or indirectly, to appoint or remove the majority of the persons who are entitled to take part in the management of the SLP;

(d) to exercise, or actually exercising, significant influence or control over the SLP; or

(e) to exercise, or actually exercising, significant influence or control over a trust or firm that satisfies one of the conditions in (a)-(d) above. 

Unlike the PSC regime for UK limited companies and LLPs, the regime as it applies to SLPs does not include a 'carve out' for limited partners. It is likely therefore, for fund structures incorporating SLPs, that both general partners and those limited partners holding more than 25% of the fund interests will be caught by the analysis.

Any SLPs in existence on 24 July 2017 are required to deliver to the Registrar of Companies the appropriate registration information in accordance with the Regulations, by 7 August 2017. Any SLP formed after 24 July 2017 or subject to a change of its partners (or the partners in its partners) will have 14 days in which to file information about those changes. SLPs will also be under the on-going obligation to file an annual confirmation statement.

Firms with SLPs in their structures should conduct an analysis of their partnership agreements and identify PSCs and relevant legal entities (RLE) before the 7 August deadline. Allocation of assets, voting rights, the participation in management, as well as the ability to remove a general partner, will all be indicators in identifying likely PSCs and RLEs. Similarly, UK limited companies and LLPs already maintaining their own PSC registers under the Companies Act may now need to amend their registers to recognise SLPs in place of PSCs currently recorded.