UK Law and Practice Contributed by: Sam Kay, Philippa List, Mark Stapleton and Nicolas Kokkinos, Dechert LLP
such funds are limited partners in the partner - ship. One of the fundamental attractions in the UK of a limited partnership structure for private closed-ended funds is that the limited partner - ship is a flexible vehicle in terms of internal gov - ernance and control. In recognition of the importance of the private closed-ended funds business to the UK finance sector, the government introduced important reforms to the UK limited partnership law appli - cable to private funds, which took effect in 2017. The reforms introduced the concept of a “private fund limited partnership” (PFLP) – an English limited partnership with certain modifications, so as to simplify the regime, making it a more attractive and competitive choice of vehicle. Most private equity and venture capital funds (and related vehicles, such as co-investment vehicles and feeder funds) will fulfil the relevant PFLP conditions and can therefore choose to be designated as a PFLP (although it is not manda - tory to do so). It is also possible for a private closed-ended fund in the UK to be structured as a unit trust scheme. The English law concept of a trust has no equivalent in some other jurisdictions. It is a structure under which title to the fund’s assets is held by a person with legal personality (the trustee) for the benefit of the fund’s investors (the beneficiaries). The document constituting the trust (the trust deed) governs the relationship between the trustee and the beneficiaries, and strict fiduciary duties are owed by the trustee as a matter of law. A trust does not have a sepa - rate legal personality; all legal relationships are entered into by or on behalf of the trustee. These vehicles have historically most commonly been used for certain UK real estate fund structures.
In November 2021, rules came into effect for a new UK fund structure: the Long-Term Assets Fund (LTAF). The LTAF is a UK-authorised fund that is designed to be focused on long-term, illiquid assets and is particularly targeted at increasing defined contribution pension scheme investment into alternative assets. The LTAF is an authorised fund so can be struc - tured as an open-ended investment company (investment company with variable capital – ICVC), unit trust or contractual scheme. At the time of writing, the use of LTAFs remains limited, with just 24 registered, but the number in exist - ence is steadily increasing, including for new asset classes (the first LTAF with a dedicated pri - vate debt strategy was launched in June 2024). It would also be common for a UK-based private fund manager to establish its private closed- ended fund as an offshore vehicle (whether a partnership, a unit trust or a corporate entity). However, for the purposes of the description of closed-ended private funds in this chapter, the focus will be on English limited partnerships. Listed Funds The vehicles used most often are ITCs and REITs, which are typically structured as public limited companies under UK companies legisla - tion and listed on a recognised stock exchange, most commonly the Premium Segment or the Specialist Funds Segment of the Main Market of the London Stock Exchange, although certain other stock exchanges both in and outside of the UK are possible. As public limited companies, ITCs and REITs have a board of directors who are responsible for managing their affairs, and typically delegate the day-to-day operation of the investment trust. For example, investment management functions are
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