As those of you who attended this year's Partnership Forum Conference may recall, one of our speakers, Professor Laura Macgregor of the University of Edinburgh, referred to a book chapter which she had recently published, and a number of delegates asked for further details.
The book is:
Paul S Davies and Tan Cheng-Han (eds), Intermediaries in Commercial Law (2022) Hart Publishing. 9781509949090. £95.
The chapter is:
Laura Macgregor, ‘The Partner’s Fiduciary and Good Faith Duties: More than Just an Agent?’ (pp 253-272 of the book)
The chapter explores the partner in the UK partnership as a type of commercial intermediary. It explores the way in which more general agency law and fiduciary law scholarship applies to the specific commercial context of partnerships. Ultimately, it questions whether designation of the partner as an “agent” continues to be a key factor in understanding the totality of the partner’s rights and duties. Rather, many important rights and duties are either sui generis or emanate from fiduciary (rather than agency) law.
The partnership structure poses challenges to the application of standard agency and fiduciary law principles. The partner is an unusual agent, being present at both the level of agent, and at the level of principal (as an actor who forms part of the partnership). In key respects, partnerships differ from classic fiduciary relationships. The partner is, for example, perhaps not as vulnerable as other types of principals. Rules on secret profits apply with difficulty where the partner in fiduciary breach shares in secret profits disgorged to the partnership. These facts should lead us to question whether the designation as “agent” continues to be as important in understanding the totality of partnership law (beyond the partner’s ability purely to bind the firm). This perhaps mirrors developments in agency case law, as we question whether the label “agent” necessarily determines the extent of fiduciary duties (Prince Arthur Ikpechukwu Eze v Conway and anor [2019] EWCA Civ 88).
A key problem is the need to unravel the interaction of good faith and fiduciary duties within partnerships. In this exercise, partner to partner duties, on the one hand, and partner to firm duties, on the other, must be differentiated. Of particular interest is the heightened relevance of partner to partner duties at times of “stress” within partnerships, for example where an individual partner is being excluded from, or is resigning from, the partnership (as illustrated recently by Rennie v Rennie [2020] CSOH 49). It may be possible to draw on scholarship (Nolan and Conalgen) on what it means for fiduciaries to act in good faith.
The chapter takes into account differences between Scots law (where the partnership is a separate juridical person) and English law (where it is not). Analysis will draw upon different types of partnerships: the partner formed under the Partnership Act 1890; limited partnerships and limited liability partnerships.
UK law firm CM Murray (including recent Partnership Conference speaker Corinne Staves) has published a useful summary of the key provisions of the Bill which will affect partnerships and LLPs.
It is available at:
https://www.cm-murray.com/knowledge/most-significant-changes-to-companies-house-in-170-years/
Following on from the excellent papers given by Victoria Griffiths, senior policy advisor at BEIS, and journalist David Leask, at the Partnership Forum Conference last week, you might be interested to note that the Economic Crime and Corporate Transparency Bill 2022 has now been published.
The Bill is at:
https://bills.parliament.uk/bills/3339
Various explainers are at:
https://www.gov.uk/government/publications/economic-crime-and-corporate-transparency-bill-2022-factsheets
Delegates at yesterday's Partnership Conference asked about publications resulting from previous conferences (as well as the possibility of future publications).
Peer reviewed articles based on the papers given at the Inaugural Forum Conference in 2018 were published in a special issue of NibleJ (together with an article on which I subsequently gave a paper at the 2019 Conference). You can access this special issue (and all issues of NIBLeJ) at https://www.ntu.ac.uk/study-and-courses/courses/our-schools/nls/nottingham-insolvency-and-business-law-ejournal
For the special issue, just scroll down to 2018 and click the arrow to expand.
Best wishes, Elspeth
Partnership, LLP and LLC Law Conference
Thursday 15th September 2022
Crowne Plaza Hotel, Nottingham (in-person)
Registration is still open for the 5th Annual Conference of the Partnership, LLP and LLC Law Forum, which aims to bring together all those with an interest in partnerships, LLPs, LLCs and other alternative forms of business organisation in the UK and overseas, including related areas such as tax, employment, property, corporate social responsibility etc. We endeavour to be as inclusive and welcoming as possible.
The programme, with abstracts and speaker details, and the registration link, is at
5th Annual Conference of the Partnership, LLP and LLC Law Forum | Nottingham Trent University - or contact Elspeth Berry at elspeth.berry@ntu.ac.uk if you have any queries.
The programme includes:
- Corinne Staves (Maurice Turnor Garner)
Partnership and LLP structures and their uses for families, financial services businesses and professional practices (including internationally)
- Caroline Field (Fox & Partners)
Restrictive covenants in a partnership/LLPs context, with a specific focus on developments in relation to LLPs
- Professor Laura Macgregor and Jonathan Hardman (University of Edinburgh)
Empirical reflections on LLPs and LPs
- Nic Clarke and Brian Stokes (HMRC)
Partnership/LLP tax developments
- Victoria Griffiths (Senior Policy Advisor, Corporate Transparency and Register Reform, BEIS)
Update on limited partnership and register reform proposals
- David Leask (investigative journalist)
Developments in UK limited partnerships
UK law firm Travers Smith has just published a short piece on the recent decision in Bluecrest, the first decision on the salaried member rules applicable to LLp members. It is available at :
https://www.traverssmith.com/knowledge/knowledge-container/tribunal-publishes-first-detailed-decision-on-salaried-members-rules/
15 September 2022
Nottingham Trent University, UK
The Partnership, LLP and LLC Law Forum is pleased to host its 5th Annual Conference in conjunction with the Centre for Business and Insolvency Law at Nottingham Law School. The Conference aims to bring together all those with an interest in partnerships, LLPs, LLCs and other alternative forms of business organisation in the UK and overseas.
The following speakers have provisionally confirmed:
• Corinne Staves (Maurice Turnor Garner) – partnership and LLP structures
• Caroline Field (Fox & Partners) - restrictive covenants in a partnership context, with a specific focus on developments in relation to LLPs
• Nic Clarke (HMRC) – partnership/LLP tax developments
• Victoria Griffiths (BEIS) - update on limited partnership and register reform proposal
• Professor Laura Macgregor and Jonathan Hardman (University of Edinburgh) - empirical reflections on LLPs and limited partnerships
• David Leask (investigative journalist) - developments in UK limited partnerships
• Stephen Chan (Harper Macleod) - why are Scottish limited partnerships used in a fund?
It is intended that the Conference will be an in-person event.
Registration will open shortly, and details provided on this website. In the meantime, please contact Elspeth Berry at elspeth.berry@ntu.ac.uk with any queries.
We look forward to meeting you at the Conference!
Butler to the World: How Britain became the servant of tycoons, tax dodgers, kleptocrats and criminals, Oliver Bullough (Profile Books 2022), 224pp., hardback, ISBN: 9781788165877. Also available as an e-book and an audiobook.
Forum members who attended the 2021 Conference will already know something of Oliver Bullough’s work; he is a journalist and author who specialises in writing about financial crime, and his previous book, Moneyland, was a Sunday Times bestseller.
In my opinion, ‘Butler to the World’ should be read by anyone with an interest in law, finance, regulation or democracy (which I’d like to think is everyone on this Forum!). It contains a highly readable account of the role of Britain (or at least of the British government and institutions) as an amoral enabler for kleptocrats, profiting from helping them launder not only their money but their reputation. It is a fascinating and eye-opening read, if somewhat depressing, for example his scathing comment that ‘[f]inancial skulduggery isn’t just something that happens in the UK; there has been a concerted and decades long effort to encourage it to do so’. His narrative clearly details the extent of the harms caused by this behaviour, both in the UK (including gambling addiction, loss of tax revenue, and improper levels of political influence) and overseas (in particular, economic deprivation of some of the poorest countries and most marginalised communities).
Bullough takes as his starting point the impact on Britain of the Suez crisis and the end of empire, and its search for a role in that new world. He examines the rise of the City of London and the potentially anti-democratic impact of deregulation and globalisation on the power of national governments. He also looks at Britain’s offshore territories and their role as tax havens and facilitators of opaque businesses and transactions. He carefully critiques the regulatory gaps and deficiencies, and the imbalance between the resources of regulators and prosecutors as compared with wealthy kleptocrats and their advisors, which results in an impression of effective regulatory activity while little of substance is actually done to combat money laundering and other harms. There is also an interesting chapter on private prosecutions, something which has painful resonance in the light of the Post Office’s use of this process to perpetrate miscarriages of justice on a significant number of its sub-post masters and sub-post mistresses. The book concludes with a summary of useful resources (including, should anyone wish to pursue a career as a Jeeves-style actual butler, details of how to embark on that career path!).
In Chapter 6, which is likely to be of particular relevance to Forum members, he examines the financial ‘laundromats’ operated in countries of the former USSR and facilitated by Scottish limited partnerships as well as limited partnerships operating elsewhere in the UK, and UK LLPs. His damning indictment is that ‘Butler Britain exists to help its clients. It has no interest in stopping them from misbehaving when there’s profit in it’. Despite the introduction of the legislation requiring disclosure of people with significant influence (PSCs) over a business (the substantial flaws in which have been pointed out by many commentators, including this reviewer (see ‘Partnership law: Used, Misused or Abused?’ (2021) 32(2) EBLR 208)), little has been done legislatively to remedy the problem. As Bullough pithily puts it, from the point of view of the British government, ‘limited partnerships were an obscure twig on an already pretty unfashionable branch of the law’. He also makes the point, citing Richard Smith (whom Forum members may recall from the 2019 Conference), that SLPs owned by anonymous offshore companies are not isolated examples but, at some points in time, the vast majority of SLPs being registered. And he concludes this chapter by sounding the alarm about the exploitation of the new PFLP vehicle (something on which this reviewer has also written (see ‘Limited partnership law and private equity: an instance of legislative capture?’ (2019) 19(1) JCLS 105).
Bullough does conclude with some limited optimism, making the point that the dislocations caused by Brexit and then Covid have led to Britain questioning its role in the world as it did after Suez and the dismantling of its empire, and that this provides an opportunity for Britain to make ‘a principled decision to take a course of action not because it [is] profitable but because [is] right’.
I’ll certainly raise my half-full glass to that.
Law firm Carey Olsen has published a brief article on forthcoming amendments to Jersey's limited partnership legislation. They include extensions to the 'safe harbour' list of activities in which a limited partner can participate. It is available at:
https://www.careyolsen.com/briefings/upgrades-jerseys-limited-partnership-law