1.7 Business - Limited Liability Partnerships Flashcards
What is required for creating an LLP?
1) 2 or more persons
- Individuals
- Cos/Firms
- At least 2 designated members (members can agree on becoming/terminating as designated)
- NOT disqualified as D/LLP member OR undischarged bankrupt (UNLESS court consents)
2) Carrying on lawful business
3) View to profit
4) Form LLIN01 > CH
LLP’s name
- If sensitive > Gov approval needed
- Same as another LLP > within same group + group consents
- ‘Limited liability partnership’/‘LLP’ > Outside offices, place of reg, reg no, office address > business stationery (letter invoices, receipts, cheques), website (name, email, office, reg no, VAT, place of reg)
Registered office address
Specified/All members > Designated?
Each proposed members’ details > Designated?
Statement of Compliance
What happens after Form LLIN01 is filed at CH?
1) CH exam checks
- App is correctly completed
- Fee is paid
2) Register LLP
3) Issue Certificate of Incorporation
- LLP’s name + Reg no
- Date of incorp
- Reg office (E&W, Scotland, NI)
Is members’ agreement required?
NO
BUT strongly advised to have one
- Certainty
- Stability
- Protect members’ interests during dispute
What are members’ liability?
LLP’s debts
- If multiple partners => Limited liability (separate personality)
- If sole partner + knew LLP carrying on business + after 6 months => Joint and several liability
Insolvent LLP
- Liable for investment in LLP (since no shares, CA not applicable) > Amount agreed with other members (no need to make contributions)
What records must LLP keep?
Register of members and residential addresses
- Changes + appointed/removed members => Update register + submit form to CH within 14 days + Notice of person becoming designated member
Register of debenture holders (if issued) + charges with instrument (if charges entered)
Register of people with significant control
Accounting records
- All money received and expended by LLP
- Record of assets and liabilities
LLP deals goods
- Statement of stock (end of financial years)
- Statement of stocks taking taken/prepared statements
- Statement of goods sold and produced (other than ordinary retail trade) > List of goods, sellers, buyers
What are designated members’ duties?
Defined statutory tasks (NOT mgmt)
- Sign + deliver accounts > Registrar
- Appoint/Remove auditors
- Notice (membership/reg office change) > Registrar
- Sign + deliver confirmation statement
- Apply to strike off LLP from register
Otherwise sanctions (fine)
When may members bind LLP?
Member’s deal w TP > LLP NOT liable
1) Member NOT authorised as agent
2) TP knows no auth/not know or believe member of LLP
Member’s ceasing as member > Still member UNLESS
- TP has notice of ceasing
- Notice of ceasing > Registrar
Member’s wrongful act/omission in LLP course of business/with LLP authority > LLP + Member liable to same extent
What are members’ fiduciary duties?
Source
- Express terms
- Implied terms
- LLPR 2001
- Tort duties (duty of care)
- CA06 duties (accounts, auditors, record preservation)
Duties
- NO CoI w/o consent
- NO profit from position w/o consent
- Act in Ben’s interests
- Act in good faith
Do members owe duties to each other?
Member > Member
- LLP agreement
- NOT by law
Members’ rep (sits on LLP board) > LLP
- Overrides duty to Member
Do members owe duties to LLP?
Member acted as agent > Breach of duty
Pship agreement > Nature and extent of members’ actions vs LLP
What happens in liquidation of LLP?
Designated members must perform same duties as Ds
- Attend and preside over creditors’ meeting
DMs’ powers (like Ds) terminate after liquidator appt
DMs’ powers (like Ds) NOT terminate after liquidator appt
- Members voluntary liq (MVL) > Sanctioned by LLP at GM/Liquidator
- Creditors voluntary liq (CVL) > Sanctioned by liquidation committee/Creditors
What are designated members’ duties during liquidation?
Before liquidation
- Appropriate caution
- Take advice from liquidator
During liquidation
- Give info re LLP’s affairs > Liquidator
- Attend interviews with Liquidator when reasonably required
CVL > Present Statement of Affairs at creditors’ meeting
- LLP’s assets, debts, liabilities
- Creditors’ names and addresses
- Held securities + date when given
- Other prescribed info
