Seanad debates

Friday, 6 November 2020

Investment Limited Partnerships (Amendment) Bill 2020: Report and Final Stages

 

9:30 am

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail) | Oireachtas source

As discussed on earlier Stages, the 1994 Act permitting a limited partner to participate on the board and committees related to an investment limited partnership. Section 7 of the 1994 Act allows that. This adds board participation to the white list of activities that can be undertaken by a limited partner and that will not be deemed as taking part in the conduct of the business and that will, therefore, not result in any loss of liability. The white list concept is common in many areas. The essence of the Senator's argument is that participating in those activities, including serving on boards or committees of the investment limited partnership, choosing a person to serve on such a board or making a decision to approve a change of partnership agreement is so major that it makes people of influence more akin to a general partner. That is the essence of the argument being made. The clarification in this legislation allows limited partners to serve on a board in a consultative capacity. That is the essence of it. They can be there in a non-decision-making capacity and can offer opinions but they have no role in the management of the partnership. They can be consulted and have their say but they have no role in decision-making. A person is entitled to participate and express his or her views but that does not make him or her a decision-maker.

If such partners are deemed to be partaking in a decision of the investment limited partnership or breach their role as a limited partner, they will lose their limited liability. In effect, they will then become general partners with unlimited liability for the whole partnership. It is possible to have more than one general partner but some people only want to be there as passive investors who are consulted on issues and do not want to be involved in the decision-making process. They can be consulted on issues but cannot be brought into the decision-making process. If they were, they would lose their limited partnership protection and limited liability and would become general partners. As the regulator and registrar, the Central Bank will be always oversee and approve the schemes of all legislation being put in place. I must again revert to the fallback position that I am satisfied that the Central Bank is very thorough. It has a strong international reputation for being a good, strong, straight and effective regulator and it will not be any less so when it comes to this legislation. For those reasons, I am not in a position to accept the amendment.

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