Limited Liability Partnership

Limited liability partnership
A Limited Liability Partnership is a comparatively new type of business structure created by the Limited Liability Partnerships Act 2000.
Contents:

• Net Lawman summary of provisions;


• When to use a limited liability partnership;


• LLP or company?

• Whether the registered office is to be situated in England and Wales , (in Wales or in Scotland , the address of the registered office);


• The name and address of the persons who are to be members on incorporation;


• Whether some or all of the members are to be designated members.

• The Act states that the amount subscribed by a member of a limited liability partnership is the amount of his contribution to the limited liability partnership capital, less money:


• He has previously drawn out or taken back;


• He draws out or receives back during a period of five years from the relevant date;


• He is entitled to draw but does not draw;


• He is entitled to seek from another partner.

• Of the appointment or retirement of a member or designated member within fourteen days;


• Of a change in the name or address of a member, within twenty eight days.

• Limited liability generally the essence of a limited liability partnership for practical purposes is as a vehicle to contain a partnership of any size where partners may be at risk from the careless or accidental negligence of a colleague. For example, partners in International accountancy firms would be protected from personal liability if a claim was successfully pursued by a major client. Partners in a construction business would be protected if a new building collapsed, causing high level claims against them;


• Protection for a non-active lender a limited liability partnership may also be appropriate for a partnership where some partners are not actively involved. They might have once been called “sleeping” partners. This will suit both a company and an individual lender;


• Easy in, easy out the LLP structure is more suitable for a group of people engaging together in a property or finance venture where it may be necessary to account for partners coming ang and going more frequently than you would expect in a normal partnership business.

• Less public scrutiny because the partnership agreement remains confidential;


• Easier manipulation of shares between partners;


• Easier changes of membership;


• No administration relating to the issue and allotment of shares;


• Easier expression of administration, roles and management in a partnership agreement.

• Lack of certainty as to how the Registrar and the courts will treat limited liability partnerships;


• Lack of a body of law to protect minorities;


• Possibly more “fuss” to administer until staff and advisers are fully conversant with new procedures.

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