3. Limited Liability Partnerships Flashcards

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1
Q

What four things must be included in the incorporation documents for an LLP that are submitted to Registrar of Companies?

A
  1. Name of the LLP
  2. Registered office address
  3. Names/addresses of partners
  4. Details of people with significant control
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2
Q

If an LLP is not properly set up, what is the result?

A

A general partnership forms and the partners have unlimited liability

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3
Q

What is the minimum number of members?

A

Two

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4
Q

For how long can an LLP operate with one member, and what happens after that period?

A

Six months, after which the single member is jointly and severally liable with the LLP for debts accrued after the six month period

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5
Q

Unless the agreement provides otherwise, what is required to add a new member?

A

Consent of all members

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6
Q

What is the role of the designated member?

A

Perform administrative and filing duties of the LLP, including:

  • Appoint and remove auditors
  • Submit annual statements
  • Sign and file accounts
  • Comply with statutory filing requirements
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7
Q

What is the position if the LLP does not designate a member?

A

All members are treated as designated members

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8
Q

Within what time period of a change to the members or designated members must the Registrar be notified?

A

14 days

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9
Q

What is the position regarding agency and authority in an LLP?

A

The same as a general partnership.

Every member is an agent of the LLP.

LLP not bound by anything done if a member has no authority and the person with whom they are dealing knows they have no authority or doesn’t think they do

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10
Q

Within what time period of a member giving notice of their intent to cease to be member to other members must the Registrar be notified?

A

14 days

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11
Q

Until when is a former member deemed to still be a member for the purposes of dealings with third parties?

A

Until notice is given to the person or sent to the Registrar

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12
Q

What four possible ways could someone’s stake in an LLP make them a person with significant control?

A
  1. Directly or indirectly holding more than 25% of the surplus assets upon winding up
  2. Directly or indirectly holding more than 25% of the voting rights
  3. Directly or indirectly holding the right to appoint or remove the majority of management
  4. Otherwise having the right to exercise or actually exercising significant control or influence
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13
Q

How are profits shared in the absence of agreement?

A

Equally

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14
Q

How is management and voting dealt with?

A

Roughly the same as a general partnership, e.g. equal right to manage, ordinary matters require simple majority; change to nature of business requires unanimity

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15
Q

What is the duty to account in an LLP?

A

Same as general partnership; must account for benefits derived from partnership without consent, and competing profits

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16
Q

Are members in an LLP liable for wrongful acts or omissions of other members in the course of business or with the LLP’s authority?

A

No, but the LLP is liable with the offending member

17
Q

In order to benefit from limited liability, what five things is an LLP obligated to make available to the public?

A
  1. Annual accounts
  2. Annual confirmation statement

Details of:
3. Appointment/removal of members
4. Changes to members’ details
5. Changes to LLP name or address

18
Q

What is the extent of the liability for a member of an LLP?

A

Limited to their capital contribution

19
Q

What proportion of the members may apply to the Registrar for an LLP to be struck off and dissolved?

A

Majority

20
Q

In what three circumstances is it not permitted to strike off an LLP?

A
  1. LLP has traded or carried on business in the last three months
  2. LLP changed name in last three months
  3. LLP is the subject of any insolvency proceeding
21
Q

What four parties must the members making the application to strike off notify?

A
  1. Other members
  2. Creditors of the LLP
  3. Employees
  4. Trustee of any pension fund
22
Q

What time period after the notice to strike off will the Registrar strike off the LLP, dissolving it?

A

Three months

23
Q

How is an LLP taxed?

A

Members are taxed individually for their share of profits/gains

24
Q

What are the two requirements for property transferred to an LLP within one year of incorporation to be exempt from stamp duty land tax?

A
  1. Property must be transferred from a person who is/was a partner in a partnership comprised of members of the LLP, or holds property as a bare trustee for such a partner and
  2. Proportional share of the property in the LLP remains the same as the proportional ownership in the property in that partnership