On 10 July 2015, France introduced a new form of Limited Partnership, the Société de Libre Partenariat (SLP). With the SLP, France offers a competitive solution as alternative investment fund jurisdiction to Private Equity. An SLP is a version of a Société en Commandite Simple (SCS) whose operational rules are governed by the section of the Monetary and Financial Code relating to AIFs (alternative investment funds) and particularly French FPCI, formerly FCPR. The General Partners are responsible for the company’s management and the Limited Partners providing capital. The SLP structure will allow for greater involvement of investors in the life of the vehicle. This structure is similar to that of FPCIs managed by investment companies except that FPCIs do not have a legal personality. SLPs will be open to professional investors, as defined in MiFID; to the investment managers (in order to structure the carried interest) and to investors making an investment of at least €100,000.
The main difference from an FPCI lies in the fact that an SLP will have a separate legal personality. Thus it overcomes one of the principal drawbacks of the FPCI form. FPCI managers have frequently been required to create foreign-registered Special Purpose Vehicles in order to invest in countries other than France. As FPCIs do not have a legal personality, foreign companies or funds (in the case of funds of funds) have been unable to register FPCIs as investors.
In addition, as tax conventions sometimes only apply to entities with a legal personality, SLPs, even if, finally, not considered as fiscally transparent, will be able to benefit from existing tax conventions and avoid double taxation in many countries.
These vehicles will be compliant with the provisions of the AIFM Directive and will thus qualify as AIFs. As a result they will need to appoint depositaries. With the legislation now complete, implementing measures are expected to enter into force by the end of 2015. These are likely to confirm the attractiveness and simplicity of SLPs for Private Equity fund managers and ensure that their tax status is in line with international standards.
CACEIS’s PERES teams offer bespoke solutions to investment companies launching SLPs in order they can benefit from all the advantages of this new structure and thus give fresh impetus to their fundraising.
Edouard Eloy, Head of Product Offering - PERES, CACEIS