04 Jul 2017
As of June 26th, Scottish limited partnerships (“SLPs”) will be subject to the same beneficial ownership rules as other limited partnerships in the UK. This means that they are now required to reveal beneficial ownership information, to be listed on the public register managed by Companies House. Companies that fail to comply within 28 days will be subject to daily fines of up to £500. (Under certain circumstances, it will still be possible for SLPs to avoid disclosing information to the public register.)
SLPs are, literally, limited partnerships registered in Scotland, although they are regulated by Westminster rather than the devolved Government in Holyrood. The change in the law was driven by two things. First, it was necessary in order for the UK to comply with the European Union’s Fourth Anti Money Laundering Directive. To meet the deadline for implementing the EU rules, the SLP regulation change was passed without the usual 21 days of parliamentary consideration.
Second, SLPs have an increasingly well-documented association with financial crime. Described by Transparency International as the UK’s “own home-grown secrecy vehicle”, they have been conduits for money linked to grand corruption, child pornography and arms dealing. An investigation by Herald Scotland described them as “Scotland’s hidden tax havens” and noted that nearly 3000 were registered at a small flat in Leith, and hundreds more at a former draper’s shop in an old mining village south of Glasgow (high density, obscure official company HQ addresses being a hallmark of dubious shell corporations the world over).
SLPs have a legal personality, which means that they can borrow from banks, enter contracts and hold assets. Partners can be other legal entities, so SLPs could formerly be owned by corporations in known secrecy jurisdictions without having to declare the fact, maintaining the apparent respectability of a UK entity.
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