Chapter 3: Limited Liability Partnerships Flashcards
What is a Limited Liability Partnership?
Essentially a hybrid between a limited company + a general partnership.
Gives members the benefit of limited liability whilst still being able to constitute their business as a partnership with its associated flexibility (when compared with a limited company).
What are LLPs governed by?
The Limited Liability Partnerships Act 2000 (LLPA), and associated legislation
What are LLPs formed?
Registration is required with the Registrar of Companies - cannot trade until it has received a certificate of incorporation.
LLP will have a unique name + company number to identify it on the register of companies at Companies House
What information needs to be submitted in the incorporation documents?
- The name of the LLP (must end in LLP or Limited Liability Partnership)
- Details of the LLP’s registered office location + address
- Names and address of the members of the LLP (and must have at least 2 designated members), and
- Details of people with significant control, if any
How may an LLP change its name?
May change its name at any time by delivering a notice of the change to the Registrar of Companies.
The change is effective when the Registrar issues a certificate of the name change
What happens if there is no statutory compliance re formation of an LLP?
An LLP will not have been created.
The partnership will be a general partnership under the Partnership Act 1890 by default.
- Subject to full liability.
What does an LLP having separate legal personality mean?
It owns property in its own right.
Contracts are entered into in the name of the LLP.
The LLP can sue and be sued in its own name.
Means that unlike a general partnership, an LLP has perpetual succession.
- The LLP as a separate legal person exists independently of any changes to the member and, therefore, doesn’t cease to exist if a member dies or is made bankrupt etc
How many members must an LLP have?
at least 2
What happens if an LLP carries on business without having at least 2 members for more than 6 months?
The person who carried on the business will be jointly and severally liable with the LLP for the debts of the LLP incurred after the initial 6 months + while the LLP has only 1 member
How can a new member be admitted?
The initial members will be those that signed the incorporation documents submitted to Companies House.
Thereafter, unless an LLP agreement provides otherwise, new members may be added only if agreed by all current members.
What is the general role of a designated member?
To perform the administrative and filing duties of the LLP, including to:
- Appoint (and remove) auditors,
- Submit annual confirmation statements,
- Sign and file accounts, and
- Comply with statutory filing requirements, e.g., filing registration documents and notifying Companies House of changes to the members of the LLP
What happens if an LLP doesn’t designate any members?
The law will treat all the members as designated members
What must be done if there are changes in membership or in the identity of the designated members?
The LLP must notify the Registrar of Companies of changes in membership or in the identity of the designated members within 14 days of the change.
Failure to comply with these requirements = criminal offence
When is an LLP not bound by something done by a member?
LLP is not bound by anything done by a member if the member has no authority to act and the person they are dealing with knows that the member has no authority, or does not know or believe that they are a member of the LLP
How may a person cease to be a member of an LLP?
By giving reasonable notice to the other members and giving notice to the Registrar at Companies House within 14 days.
What happens when a person has ceased to be a member of an LLP?
The former member is regarded (in relation to any person dealing with the LLP) as still being a member unless that person has been notified or notice has been sent to the Registrar of Companies.