Limited Liability Partnerships

What are LLPs

Corporate bodies with a separate identity from their members.

What does the Limited Liability Partnership Regulations 2001 provide?

A default contract for an LLP in the absence of the members (partners) agreeing terms.

How many designated members are required for LLP?

- Must have two designated members who are responsible for filing documents at Companies House.

If designated member reduces to one for over six months what happens?

that person is jointly and severally liable for any of the LLP's debts incurred during the period from the six month point onwards.

What are designated members required to do?

- Signing and filing the annual accounts with the Registrar,

- Appointing, removing, and remunerating the auditors,

- Filing the annual confirmation statement

- Sending notices to the Registrar of Companies (if someone leaves or joins LLP) - Winding up the LLP

What duties to designated members owe?

must carry out all their functions consistently with the core fiduciary obligation every member owes to the LLP.

owe a duty of reasonable care and skill to the LLP.

When does limited liability pass? When can partners be liable?

- Members may be liable for debts if there has been misfeasance, fraudulent trading or wrongful trading.

- May be required to contribute to the assets of the insolvent LLP.

Duties and responsibilities of members

- Mutual rights and duties of the LLPs members are governed by agreement between members or between the LLP and its members.

What duties do members owe?

Members owe fiduciary duties to the LLP, as its agents.
This includes:
- Duty of good faith
- Duty to account for any money received on behalf of the LLP
- Duty to the other members to render true accounts and full information on matters concerning the LLP.

If a new member joins LLP, who must be notified and within how many days?

If a new member joins, the LLP must deliver notice to the Registrar of Companies notifying them of the new member within 14 days of appointment.

Form used for new member joining

FORM LL AP01 (individual member) or

LL AP02 (for corporate member).

Form used when member leaves

File form LL TM01 (for an individual member)

LL TM02 (for company member) at companies house

within 14 days.

Default position of 2001 Act: Capital and Profits

Members of the LLP share equally in the capital and profits of the LLP.

Default position of 2001 Act: Management and decision making

Every member may take part in the management of the LLP.

Members are not entitled to take any remuneration for taking part in management.

Changing the nature of business and changing terms of contract can only be decided by unanimous consent.

Default position of 2001 Act: Leaving the LLP

members of the LLP can leave by giving reasonable notice to other members. Members cannot be expelled (unless in agreement)

Who should be notified when a member leaves?

the LLP must notify Companies House on form LL TM01 within 14 days of member leaving.

Formation of LLP, what form is required?

FORM LLIN01 and filed at Registrar of Companies with prescribed fee

Who's name must be subscribed to partnership on incorporation?

Two or more members associated for carrying on lawful business with a view to profit

When is LLP formally created?

When Registrar issues the Certificate of Incorporation

What does Form LLIN01 cover?

- Proposed name
- Country / Address of Registered Office
- Designated members
- Member details
- Corporate member details
- Statement of Initial Significant Control
- Statement of Compliance
- Election to keep information on a central register

Who must sign LLIN01?

Must be signed on behalf of the LLP by a solicitor engaged in the LLPs formation or a proposed member of the LLP

Name of LLP - Restrictions

Must be registered at Companies House.

Name cannot be the 'same as' or 'too like' the name of an existing company.

Must end with 'limited liability partnership', 'llp' or 'LLP' (or Welsh equivalents).

It cannot suggest a connection with HM Government.

Permission is required if it includes 'sensitive' words or expressions.

It should not be offensive or include offensive words.

Not infringe trademarks

Designated members

At least two members must be designated who perform the admin functions.
All members can be designated.

Statement of initial significant control

Statement that there is / is not someone with significant control

Statement of compliance

Statement that two or more persons named in the form are associated for carrying on lawful business with a view to making profit.

Must be signed on behalf of the LLP by a solicitor engaged in the LLPs formation or a proposed member of the LLP

If LLP has only one member - effect

Number of members reduces to one

This carries on for more than six months

That person is jointly and severally liable for any of the LLP’s debts incurred during the period from the six month point onwards.

What consent is required to change the terms of contract or change the nature of business?

Only be decided by unanimous consent.