Limited Liability Partnerships

Question 1

What are the formalities for creation of an LLP?

Answer 1

Registration with Companies House

Cannot begin to trade until received a certificate of incorporation

Question 2

What must be filed with Companies House to set up an LLP?

Answer 2

An incorporation document including:

The name of the LLP
Registered address of LLP
Names and addresses of LLP members
Details of people with significant control

Its name may be changed at any time by delivering notice of the change to registrar of companies

Question 3

Does an LLP have a separate legal personality and perpetual succession?

Answer 3

Yes

Question 4

How many members must an LLP have?

Answer 4

Two. If an LLP carries on for more than 6 months without 2 members, the person who carried on the business will be jointly and severally liable with the LLP for any debts incurred.

Question 5

Can new members in an LLP be admitted with a majority vote?

Answer 5

No, new members must be added by unanimous vote

Question 6

What does a designated member of an LLP do?

Answer 6

Administrative and filing duties of the firm. If no member is designated, the law will treat all the members as designated members

Question 7

How long does the LLP have to notify the Registrar of changes to designated members?

Answer 7

14 days

Question 8

Can the LLP be bound by its members?

Answer 8

Yes - same as partnerships - members may bind the LLP in contract and make the LLP liable in tort if they have actual or apparent authority

Question 9

How can a person leave an LLP?

Answer 9

Giving notice to the other members and notice to the registrar within 14 days

Question 10

What is a person with significant control in an LLP?

Answer 10

• Has a right to more than 25% of surplus assets on winding up
• More than 25% of voting rights
• Right to appoint or remove the majority of those in management
• Right to exercise significant influence or control

Question 11

How are profits shared?

Answer 11

Capital and profits are shared equally unless stated otherwise (same as GP)

Question 12

Is there an entitlement to remuneration in an LLP?

Answer 12

No, but expenses may be recovered from the LLP (same as GP)

Question 13

How are decisions made?

Answer 13

Majority vote on all matters other than a change in the nature of the business and admission of a new member (same as GP)

Question 14

Do members of an LLP have a duty to account for profits from a competitor business or from secret profits?

Answer 14

YES (same as GP)

Question 15

What are the LLPs filing requirements with Companies House?

Answer 15

1. Annual accounts
2. An annual confirmation statement
3. Details of appointment and removal of members
4. Details of any changes to the details of members (names and addresses)
5. Details of any changes to registered name or address of the LLP

Question 16

What is the liability of individual members?

Answer 16

Liability limited to capital contribution

Question 17

Do Clawback provisions and fraudulent / wrongful trading apply to members of an LLP?

Answer 17

Yes, just as they do to members of a company

Question 18

How can an LLP be terminated?

Answer 18

A majority of members can apply for the LLP to be struck off the register and dissolved

OR

An LLP can be struck off by the Register if the Registrar believes it is not carrying on business

Cannot be struck off if still active (it has changed its name or has been trading in past 3 months, or if subject to insolvency)

Question 19

Does notice have to be given of an application to strike off?

Answer 19

Yes, members of the LLP are required to give notice to creditors/employees of an application to strike off. Registrar will then publish notice of proposed striking off in London Gazette and wait 3 months for any objections