LLP Flashcards
1
Q
Legal requirements for LLP
A
- LLP must have at least 2 members on incorporation.
- 2 designated members to file documents at Companies House: similar powers as directors.
- Form: LL IN01; CH will issue a certificate of registration
- Name end with LLP or Welsh equivalent; similar restriction on name.
- Must have registered office
2
Q
Effect of limited liability
A
- LLP liquidation = company: Members may be liable for misfeasance, fraudulent, or wrongfull trading
- Director Disqualification Act applies to members of LLP
3
Q
Duties of members
A
- Mutual rights and duties governed by members’ agreement, if none, by LLP Regulations 2001
- Members own fiduciary to LLP as agent
- LLP may still be liable when a member acts without authority because of apparent authority.
4
Q
Owning property and granting charges
A
- LLP can own property and the LLP itself is the legal owner
- LLP can grant debentures, fixed and floating charges.
- LLP must keep a register of charges and a copy of every charge at its registered office available for inspection by creditors or members.
- LLP must register charges with Registrar of Companies
5
Q
Change in membership
A
- New member: LLP must deliver a notice within 14 days of appointment to Registrar of Companies (LL AP01 or LL AP02)
- A member leaving: form LL TM01 or LLTM02 to CH within 14 days
6
Q
Default rules under LLP Regulations 2001 (in case of no LLP agreement)
A
1, Member shares capital and profits equally (no default provision regarding loss as it is borne by the LLP)
2. Every member may take part in management of LLP and are not entitled to remuneration
3. Ordinary matters will be decided by majority. Changing nature of business and terms of LLP contracts must be unanimous.
4. Members can leave LLP by giving reasonable notice to other members. No right expulsion provided in laws.
7
Q
Pros and cons
A
- flexibility and limited liability
- administrative and accounting requirements
