Limited Liability Partnerships Flashcards
Overview of LLPS
What is meant by an LLP being a ‘hybrid vehicle’?
It has both elements of company and a partnership.
What is required to form an LLP?
Must be two or more persons associated for carrying on a lawful business with a view to profit.
Person includes legal and natural people.
What must an LLP registered at Companies House on formation?
Form LL IN01 which states name, registered office and designated members
Once registered will get certificate of incorporation.
What filing obligations are LLPs under?
- change of name
- change of registered office
- change in membership
- creation of charge
- annual confirmation statement
- accounts
- People with significant control (more than 25% interest)
What are the requirements in relation to members?
- Must have at least two formally appointed members at all time
- At least two members of the LLP must be designated members
When will an LLP member cease to be a member?
- on death
- agreement by other members of the LLP
- on giving notice to other members of the LLP
- dissolution of the LLP or if member a body corporate, on its dissolution
What is the default position in relation to sharing capital and profits?
Partners share them equally
What is the default position in relation to management?
Each member may take part in management
What is the default position in relation to salaries?
No member is entitled to a salary
What is the default position in relation to decision making?
Most decisions can be made by a majority of members.
Any proposed change in relation to a change in the LLP’s business requires consent of all members.
What is the default position in relation to expulsion of a member?
There is no implied expulsion power of expulsion by majority unless all members have agreed.
What is the default position in relation to members competing with the LLP?
If done without consent, must account and pay over to LLP all profits made in competition with the LLP
What is the tax position of LLPs?
LLPs are treated as tax transparent. That means the LLP itself is not taxed but members. Members are liable for income tax and CGT.
Can LLPs create a floating charge?
Yes
