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Umbrella investment limited partnerships
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41. The Act of 1994 is amended by the insertion of the following Schedule after section 67:
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“SCHEDULE
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Umbrella Investment Limited Partnerships
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Definitions
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1. In this Schedule—
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‘sub-fund’ means a separate portfolio of assets maintained by a general partner of an investment limited partnership for and on behalf of one or more limited partners in accordance with the partnership agreement;
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‘umbrella fund’ means an investment limited partnership which is divided into a number of sub-funds.
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General
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2. Where an investment limited partnership is established as an umbrella fund, the assets shall belong exclusively to the partners holding interests in a relevant sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other sub-fund and shall not be available for any such purpose. The general partner may in its absolute discretion operate, establish or designate classes of interest with differing rights and obligations for accounting purposes or otherwise within the investment limited partnership.
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Segregated liability of investment limited partnership sub-funds
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3. (1) Notwithstanding any statutory provision or rule of law to the contrary—
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(a) any liability incurred on behalf of or attributable to any sub-fund of an umbrella fund shall be discharged solely out of the assets of that sub-fund, and
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(b) no umbrella fund nor any general partner, limited partner, receiver, liquidator, provisional liquidator or other person shall apply, nor be obliged to apply, the assets of any such sub-fund in satisfaction of any liability incurred on behalf of or attributable to any other sub-fund of the same umbrella fund.
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(2) The general partner of an umbrella fund to which this Schedule applies shall—
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(a) ensure that the words ‘An umbrella fund with segregated liability between sub-funds’ are included in all its letterheads and in any agreement entered into on its behalf in writing with a third party, and
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(b) disclose to a third party that it is a segregated liability umbrella fund before the general partner enters into an oral contract with the third party.
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(3) If the general partner of an umbrella fund fails to comply with subparagraph (2)(a) or (b), the general partner and any officer of it who is in default shall be guilty of an offence.
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(4) There shall be implied in every contract, agreement, arrangement or transaction entered into on behalf of an umbrella fund to which this Schedule applies the following terms, that:
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(a) the party or parties contracting with respect to the umbrella fund shall not seek, whether in any proceedings or by any other means whatsoever or wheresoever, to have recourse to any assets of any sub-fund of the umbrella fund in the discharge of all or any part of a liability which was not incurred on behalf of that sub-fund;
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(b) if any party contracting with respect to the umbrella fund shall succeed by any means whatsoever or wheresoever in having recourse to any assets of any sub-fund of the umbrella fund in the discharge of all or any part of a liability which was not incurred on behalf of that sub-fund, that party shall be liable to the umbrella fund to pay a sum equal to the value of the benefit thereby obtained by it; and
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(c) if any party contracting with respect to the umbrella fund shall succeed in seizing or attaching by any means, or otherwise levying execution against, any assets of a sub-fund of an umbrella fund in respect of a liability which was not incurred on behalf of that sub-fund, that party shall hold those assets or the direct or indirect proceeds of the sale of such assets on trust for the umbrella fund and shall keep those assets or proceeds separate and identifiable as such trust property.
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(5) All sums recovered by an umbrella fund as a result of any such trust as is described in subparagraph (4)(c) shall be credited against any concurrent liability pursuant to the implied term set out in subparagraph (4)(b).
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(6) Any asset or sum recovered by an umbrella fund pursuant to the implied term set out in clause (b) or (c) of subparagraph (4) or by any other means whatsoever or wheresoever in the events referred to in those clauses shall, after the deduction or payment of any costs of recovery, be applied so as to compensate the sub-fund affected.
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(7) In the event that assets attributable to a sub-fund to which this Schedule applies are taken in execution of a liability not attributable to that sub-fund, and in so far as such assets or compensation in respect thereof cannot otherwise be restored to that sub-fund affected, the general partner of the umbrella fund, with the consent of the depositary, shall certify or cause to be certified, the value of the assets lost to the sub-fund affected and transfer or pay from the assets of the sub-fund or sub-funds to which the liability was attributable, in priority to all other claims against such sub-fund or sub-funds, assets or sums sufficient to restore to the sub-fund affected, the value of the assets or sums lost to it.
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Further matters respecting an umbrella fund
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4. (1) Without prejudice to the other provisions of this Schedule, a sub-fund of an umbrella fund is not a legal person separate from that umbrella fund, but the general partner of an umbrella fund may sue and be sued in respect of a particular sub-fund and may exercise the same rights of set-off, if any, as between its sub-funds as apply at law in respect of companies and the property of a sub-fund is subject to orders of the court as it would have been if the sub-fund were a separate legal person.
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(2) Nothing in this paragraph or any other provision of this Schedule shall prevent the application of any enactment or rule of law which would require the application of the assets of any sub-fund in discharge of some or all of the liabilities of any other sub-fund on the grounds of fraud or misrepresentation.”.
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