LLPs Flashcards
What are the characteristics of an LLP?
An LLP consists of two or more persons carrying on a business with a view to profit, with incorporation documents filed at Companies House. It is a separate legal entity and liable for its own debts. Members cannot be pursued for the LLP’s debts.
What documents are required for LLP incorporation?
The incorporation documents must include the LLP’s name, country and address of the registered office, names and addresses of each member, identities of designated members, and details of people with significant control.
How many designated members must an LLP have?
At least 2 must be designated members.
What happens if an LLP has only one member for more than 6 months?
The sole member will become personally liable for the debts of the LLP.
What are the rights of LLP members?
Members have the right to share profits equally (unless agreed otherwise), indemnification, inspect books and records at any time, and manage the LLP.
What are the duties of LLP members?
Members must refrain from competing with the LLP, profiting from the use of the LLP’s name or property, and must account to the LLP for any profits.
What is the liability of members for LLP debts and wrongful acts?
Members are not liable for LLP debts or wrongful acts of the LLP or omissions of fellow members beyond their capital contribution but are subject to rules for wrongful and fraudulent trading.
How is an LLP terminated?
An LLP continues despite a member’s death, must be removed from the Companies House register, and will be struck off following insolvency. Members can apply for strike off with a majority vote. Notice must be given to other members and creditors. The LLP is dissolved by the registrar 3 months after notice.
How are LLPs taxed?
LLPs are not taxable entities; individual partners are charged income tax on their share of the profits.
