Limited Liability Partnerships Flashcards
What four things must be included in the incorporation documents for an LLP that are submitted to Registrar of Companies?
- Name of the LLP
- Registered office address
- Names/addresses of partners
- Details of people with significant control
If an LLP is not properly set up, what is the result?
A general partnership forms and the partners have unlimited liability
What is the minimum number of members?
Two
For how long can an LLP operate with one member, and what happens after that period?
Six months, after which the single member is liable for debts accrued after the six month period
Unless the agreement provides otherwise, what is required to add a new member?
Consent of all members
What is the role of the designated member?
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
What is the position if the LLP does not designate a member?
All members are treated as designated members
Within what time period of a change to the designated members must the Registrar be notified?
14 days
What is the position regarding agency and authority in an LLP?
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
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?
14 days
Until when is a former member deemed to still be a member for the purposes of dealings with third parties?
Until notice is given to the person or sent to the Registrar
What four possible ways could someone’s stake in an LLP make them a person with significant control?
- Directly or indirectly holding more than 25% of the surplus assets upon winding up
- Directly or indirectly holding more than 25% of the voting rights
- Directly or indirectly holding the right to appoint or remove the majority of management
- Otherwise having the right to exercise or actually exercising significant control or influence
How are profits shared in the absence of agreement?
Equally
How is management and voting dealt with?
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
What is the duty to account in an LLP?
Same as general partnership; must account for benefits derived from partnership without consent, and competing profits
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?
No, but the LLP is liable with the offending member
In order to benefit from limited liability, what five things is an LLP obligated to make available to the public?
- Annual accounts
- Annual confirmation statement
Details of:
3. Appointment/removal of members
4. Changes to members’ details
5. Changes to LLP name or address
What is the extent of the liability for a member of an LLP?
Limited to their capital contribution
What proportion of the members may apply to the Registrar for an LLP to be struck off and dissolved?
Majority
In what three circumstances is it not permitted to strike off an LLP?
- LLP has traded or carried on business in the last three months
- LLP changed name in last three months
- LLP is the subject of any insolvency proceeding
What four parties must the members making the application to strike off notify?
- Other members
- Creditors of the LLP
- Employees
- Trustee of any pension fund
What time period after the notice to strike off will the Registrar strike off the LLP, dissolving it?
Three months
How is an LLP taxed?
Members are taxed individually for their share of profits/gains
What are the two requirements for property transferred to an LLP within one year of incorporation to be exempt from stamp duty land tax?
- 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
- Proportional share of the property in the LLP remains the same as the proportional ownership in the property in that partnership
