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Explanation about a limited partnership start-up in Scotland: a limited partnership is an organisational arrangement that was introduced in the United Kingdom in 1907, when the British government formalised a business partnership that has existed in one form or another since the third century BC. The Limited Partnerships Act 1907 has remained unchanged since it was first put into place, although there are differences in the arrangements that exist in England and Scotland.
Scottish limited partnership, or SLP, differ from limited partnerships elsewhere in England and Wales by virtue of the fact that in a SLP, the limited partnership takes on a separate legal personality to its constituent members. This yields a number of advantages. A Scottish registered limited partnership can itself own assets, take out loans, file lawsuits and so forth. This gives the partners of a SLP more indemnity, as well as considerably more options, than partners in a limited partnership in England or Northern of Ireland.
Despite having a separate legal personality, SLPs are taxed as though they did not. This gives partners tax transparency and the ability to be taxed as individuals within the Scottish incorporated limited partnership, despite the organisation's special status.
SLPs are useful arrangements in terms of fund structuring. A limited partnership registered in Scotland, can function as a main funds vehicle, being able to hold assets as a separate legal entity, as well as having the added strength of generally only having a single general partner, who can manage assets, investments and general business. There are other notable functions of a Scottish limited partnership. Notably, a partnership of this sort can be used as a 'carried interest partner', allowing a portion of the main funds to be moved to the fund manager.
Given the long history of this type of limited partnership start-up, Coddan has a great deal of experience in helping clients in Scotland to startup limited partnerships (LPs). In fact, we are able to do so within 24 hours. When setting-up an SLP, Coddan can also provide a nominee limited partner and nominee general partner (whose role is similar to a nominee director and nominee shareholder) service upon Scottish limited partnership startup.
Profit earnings are passed onto the partners in the form of wages, income and profit payments, each partner pays tax that is proportionate to their individual share of profits; a business can obtain much-needed investment capital by giving more passive investors the option of reducing the risks by becoming limited partners; since there is no direct involvement of the limited partners in the management of the business, general partners enjoy full independence and have the right to make important business decisions.