1. LLP, LP and Partnership Flashcards
Pros of LLP
LL, separate entity, tax transparent, financing easier, no AoA
What two kinds of business media make their own contracts
Companies and LLPs
Minimum number of partners for an LLP
2 or more formally appointed, and 2 must be designated Ms at all times
Example of event which causes automatic dissolution of TP
Bankruptcy of one P
Cons of ST
Unlimited personal liability + difficult financing
Main legislation for LP
Limited Partnerships Act 2007
Main legislation for partnership
Partnership Act 1890
Cons of TP
Outdated legislation, financing difficult, at least 2 to set up, unlimited liability, N/A salary under PA, and leaving = dissolution w/o PA
Minimum number of persons for ST
1
Example of archaic fall-back provisions of Partnership Act 1890
Equal profit sharing + no entitlement to remuneration
What rules are there under 2001 Regs for decision-making under LLP
Ordinary decisions by majority, and changes to nature by unanimity
What type of business media is split into LPs and GPs
LP
What business media can issue shares to the public
PubC
How do TPs hold property
Shared between the partners
What kind of security can LLPs grant
fixed + floating charges
What form is used for LLP to register at CH
Form LL IN01
What Act applies in modified form to LLPs (from companies)
Insolvency Act
Which kind of partnership has continuing reg requirements
LLP - to file changes at CH, accounts and keep in-house records
What three business media demand at least 2 members
Partnership, LP and LLP
What two kinds of business media have to print company stationery
Companies and LLPs
Why is a Partnership Agreement used for TP
To avoid archaic fall-back provisions of PA
What partners cannot participate in management of LP
LPs
What happens if P enters into C w/o authority of TP, but TP wants the benefit?
Can ratify and adopt
How does a company enter into contracts
On its own behalf
What three business media need not file annual accounts/confirmation statements
LP, partnership and ST
Three ways to finance a company
Issue shares, borrow and shareholder investment.
Minimum number of partners in a LP
2 - 1 must be GP, and 1 LP
ST needs to register with CH?
No
What specific kind of company has continuing obligations
Listed
What happens if a limited partner in LP participates in management
loses limited liability status
Liability of partners in a partnership
Individually liable; jointly liable in contract; J&S liable in tort
What happens if LP does not register at CH
Loses limited status
What is it preferable to draw up in a partnership, which then raises the 0 expenses for start up
Partnership Deed
What two kinds of business media have a separate legal personality
LLPs and companies
Cons of company
Not private, expensive, corporation/double tax, likely to ask for personal guarantee
What is prima facie evidence of existence of partnership
Profit sharing
Is intention relevant for TP
No
What happens if PA for LP does not provide for dissolution
Ordinary law of TP applies
Definition of TP
Minimum 2 people carrying on common business w/ view to profit
What two business media need not be registered at CH
ST and partnership
Definition for LLP
Minimum 2 people carrying on commercial activity w/ view to making profit
Cons of LLP
Not private, continuing reg, minimum 2 and likely to ask for personal guarantee
What must LPs do regarding information held at CH
Update info
Example of provision in Partnership Act that is archaic
Equal distribution of profits, regardless of investment
Which partner in LP manages LP day-to-day
General partner
When might TP still be bound if TP does not ratify and adopt P’s unauthorised action
If P = A under Partnership Act, or if CL rules on agency apply
What happens if LPs in an LP participatee in management
They lose their limited liability status
What business media has no formalities required to start up (2)
ST and partnership
Minimum number of partners in a partnership
2
Start up expenses/steps for a LP
Register at CH + PD
Minimum number of shareholders for a company
1 per 7(1) CA
Main legislation for LLP
Limited Liability Partnerships Act, supplemented by various other Regs + Acts
Two kinds of Ps in a limited partnership
Limited partner and general partner
What section of CA limits shareholder liability to amount unpaid on shares
S.3(2) CA ‘06
what kind of business media is frequently accidentally set up (as no formalities required)
partnership
What business media has a continuing registration regime
LLP
4 steps to set up LLP
Incorporation docs, register at CH, Members Agreement + print stationery
Three steps before a company can be set up (generally)
Incorporation documents (MoA; AoA), register at CH, and print company stationery
Is there any specific legislation applicable to sole traders
No
For what three business media is financing difficult, and why
Partnership, LP and ST, as not separate legal entities
What is the main legislation for companies
CA ‘06
What two business media have to deliver confirmation statements and file changes at CH
LLP and company
What is the effect of one P leaving under TP w/o PA
Dissolution of TP
Liability of company
Shareholders limited to amount unpaid on their shares
Pros of ST
Privacy, control, low set-up + ongoing costs, and quck
What rules are there under 2001 Regs for M rights under LLP
Equal profit + capital share, LLP indemnifies M, and all participate in management
Pros of company
Can issue shares, likely to have security, limited liability, cheap if MA + shelf, flexibility in structure
Pros of TP
Few formalities, privacy, tax transparent, no ongoing disclosure
Liability of partners in an LLP
Limited to their contribution, and not jointly and severally liable (although they are individually liable for their own negligence)
What does the continuing reg regime of LLP mean
Must file changes + confirmation statement at CH, and keep in-house records.
What duties do partners owe in a partnership
Fiduciary duties, similar to those owed by Ts to Bs
What do companies have to continue to do once set up
Deliver confirmation statements, annual accounts, and file changes at CH
Three ways TP can be dissolved
By court, automatically on certain events or at will by notice from any P
Liability of ST
Personally liable + unlimited
How are TPs dissolved as a last resort
By the court
Liability of partners in a LP
LPs limited to contribution, but GPs unlimited
When is P an A under s.5 PA 1890?
If act is kind carried on by firm and carried on in the usual way and 3rd not aware P unauthorised.
What two kinds of business media shelter their shareholders/partners/members from liability
LLPs and companies
What business media are tax transparent
Partnerships and LLPs
What is a major draw back of the Partnership Act
It is very old, so a lot of the provisions make no sense
What business media can borrow in their own capacity
LLP and company
Why would a Members Agreement be entered into in an LLP
To avoid the default provisions in Regs 7 and 8 2001 Regs
Example of a law firm that is a partnership
Slaughter & May
What is an ST
Individual carries on business by themselves
Two business media that must declare PSCs to CH
LLP and company
Which partner in an LP cannot bind LP
A limited partner
What does LLP NOT have to file at CH - confirmation statement or AA?
AA
What business media can issue shares in general
Company
