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Wednesday, 14 July 2010

Claremont Forbes Ltd: Collective Investment Scheme and Limited Liability Partnerships

There is an interesting article by Tony Hetherington on whether having a Limited Liability Partnership means that a land banking property company will not be classified as a collective investment scheme. A number of the UK land banking companies have been shut down on the grounds that they are a collective investment scheme and therefore come under the aegis of the Financial Services Authority, which means that those managing a CIS must have FSA approval and also offers investors some protections. 

Incidentally wine investment funds are collective investment schemes and the 1990s ostriches/ostrich eggs investment schemes were also judged to be CISs.   

Tony's article appears on Midas Extra, which is a subscription site run by Associated Newspapers. Click here for details.

Although I cannot reproduce Tony's article I can mention some of its salient points.
Claremont Forbes intends to offer investors parcels of land that already has planning permission. Each land site would be organised and managed as a Limited Liability Partnership.

Terence Farr, director of Claremont Forbes, believes that this would mean that it wasn't a collective investment and so those offering and managing it would not need to be approved and registered with the FSA (or with the Bank of England when it takes over the FSA functions). He does, however, expect that the FSA will attempt to close him down on the grounds that this is a CIS.

It is quite possible that the FSA will take a close look at this use of LLPs for land banking schemes. They are likely to want evidence that the investors are actively running the partnership and the building plot scheme. Not a question of being just a sleeping partner!  

You have to wonder how many investors will have both the inclination and the skills to be actively involved running an LLP.


••

Following a message I received from Terence Farr, director of Claremont Forbes Ltd, I have reviewed the comments made by his company on two earlier posts. I have made some amendments and deletions.

I have asked Terence Farr the following questions and am looking forward to his response.  I will be particularly interested in learning exactly what experience he and his 'highly experienced team' have in the property and land development market. We do know that some of the sales force including a 19-year-old do have experience selling wine while working for a company (Finbow) now under investigation by the Metropolitan Police. 

'We are a leading London based company dedicated to offering exclusive UK land development opportunities to private clients on a worldwide basis.’
From Claremont Forbes website
Since Claremont Forbes was incorporated on 29th January 2010, is the description ‘leading’ justified here?

‘At Claremont Forbes you will find a highly experienced team who take pride in offering a best-in-class service.’

What property experience do you and your team have?

From Tony Hetherington’s article on Midas Extra:
‘So, what is Claremont Forbes offering?  So far, not a lot.  The company is run by 28-year-old Terence Farr, who has never headed a limited company before.  He told me that it is offering land in Kent, but he added that it was ‘in the process of acquiring one new site as well as finalising a recent property investment club’ – so it appears there is as yet no LLP up and running that the FSA could put under the microscope.’

What land with planning permission in Kent are you offering? Also is Claremont Forbes (Margate Kent) LLP up and running.
 
Would agree that Tony Hetherington’s conclusion (see below) is fair comment?
‘But unless those investors know what they are doing, and perhaps have some knowledge of planning and development, and land values, it is hard to see the attraction.  And with Claremont Forbes itself anticipating a battle with the FSA, it is easier to see the downside and decide to steer clear.’

7 comments:

  1. Edited comment from anon

    Are they involved in other land banking activities which they do not list? Most strange as stated they have not even formed their llp creation yet,

    time will tell.

    Companies House shows that Claremont Forbes do have an llp (Margate) formed, which may not be operational yet.

    I did ask Terence Farr, Claremont's director, but have had no response as yet to my question about the status of this llp.

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  2. The thing is this industry is so large and varied prices, i am looking to buy some 2009 En Primeur i followed your advice and looked on wine searcher.

    Nickolls and Perks MOUTON ROTHSCHILD 1ER CRU PAUILLAC BORDEAUX RED IB, 2009 £8500.00
    Case of 12 Btls

    OK fine but i noticed En Primeur company were selling this for £7200 a massive difference of £1300 on one case.

    I see from previous postings that you are very judgemental on other companies over charging so to speak what are your comments on this jim Budd?....

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  3. Anon. Thanks for your comment.

    It depends upon whether these two companies are offering the wines retail or are pushing them as an investment.

    My advice has always been to use wine-searcher to find the good deals. With en primeur there is also the assessment of the financial health of the company from whom you are buying – will they still be around in two years time when the en primeur Bordeaux are due to be delivered.

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  4. Really useful blog.Good work keeping this updated! UK investment Thanks a lot!

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  5. I will be particularly interested in learning exactly what experience he and his 'highly experienced team' have in the property and land development market.

    ReplyDelete
  6. Anon. You may be correct but I need some evidence before publishing your comment.

    ReplyDelete
  7. has anyone had dealings with tower properties?

    ReplyDelete