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Establish an LLP in the UK, Setting-Up a Limited Liability Partnership in England, Wales, Scotland and North of Ireland from £32.00!

Coddan can help with setting up of an LLP: there are many reasons for the popularity of an LLP. They are usually easy to set-up and manage, and experience numerous taxation benefits. Members of a limited liability partnership receive protection against personal liability, and are only liable for the amount the individual has actually invested into the LLP. If you require any handbook, or a help understanding any of the membership duties of your LLP and would like information about LLP members responsibilities, feel free to give us a call or send your queries to us via e-mail.
An LLP is normally regarded as tax transparent, and the members of an LLP is, for tax reasons, deemed as self employed as they are taxed on their individual earnings. Another advantage of LLP's start-up , is that they are exempt from corporation tax. An LLP is usually advantageous to several people who may be conducting business as a group and require numerous signatures. The partners of an LLP have limited liability within the limited liability partnership, which adds security to the individual members should something go wrong in their business. If you wish to set-up an LLP or interesting with a company formation, please contact us by phone or via an e-mail.

Guide About Limited Liability Partnership Start-Up Requirements
Set Up & Establish a Limited Liability Partnership Online Information & Guidance

Information & guidance: if you are in the UK, or locating abroad, and thinking of setting up an LLP in UK, you need to speak to Coddan Ltd LLP start-up agent. An LLP has become an increasingly common alternative to the traditional limited companies and it offers a number of advantages. It can be used to reduce National Insurance Contributions for UK citizens and also offers a great deal of flexibility compared to a limited company in UK. Originally conceived for global partnerships, like legal practices, it has been adopted by a myriad of industries, including investment funds, property investors, not-for-profits wanting to exploit commercial ties and silent partners looking to limit their exposure.

LLPs can be attractive because they combine, arguably, the best parts of company and partnership law. They protect the personal assets of those involved, as with a limited company, but profits can be withdrawn in a tax efficient manner, almost like a sole trader. The LLP structure also allows for members to come and go, apart from the initial designated members. With Coddan Ltd's nominee member service, though, your LLP can maintain absolute fluidity and change according to the next project or even one-off job. An LLP can buy property, obtain a credit rating, obtain finance and all manner of things a traditional entity can do. However, if it is wound up then the member's liability is limited to their initial capital investment. So if you think that the setting-up of a limited liability partnership could be for you, get in touch with Coddan Ltd today.

Benefits to Establish an LLP in the United Kingdom

Registering an LLP in the UK

Starting up an LLP in the UK can be a complex and sometimes convoluted LLP set-up procedure. Coddan Ltd are well reputed and experienced LLP establishment agents, offering advice and an incorporation service for those looking to start-up a limited liability partnership in the United Kingdom. Coddan are market leaders and provide comprehensive guidance in relation to the setting up of a limited liability partnerships. Their expertly trained team of consultants and helpful website provide in-depth information on all the associated LLP setting up procedures in relation to fully registering an LLP in the country, taking the unnecessary bureaucracy away from their customers. Talk to our expert consultants today: + 44 (0) 207.935.5171 or +44 (0) 330.808.0089.

Limited Liability Partnership Incorporation & LLP Formation Information & Guidance

Limited Liability Partnership Start-Up

Here at Coddan, we are dedicated in providing our clients information & guidance with the most advanced, innovative and lucrative business structures available to date. The Limited Liability Partnerships Act 2000 has introduced into English law a new corporate entity, the limited liability partnership (LLP).

Before trading, one should look at all possibilities and make an educated decision. The type of business you incorporate, could has an effect on profits, taxes, and the way you will trade or provide your services. Each type of business has its own legal ramifications and can be either beneficial or disadvantageous to your business.

It is daunting for people who wish to start up their own business but have no real experience or knowledge of all the technical difficulties and responsibilities that come with running a company under UK law. You may have big ideas and a reasonable approach to achieving success, but maybe you are lacking the support you need to drive your business forward.

If you need professional advice and expert services to assist you with your ambitions and company development, Coddan Ltd can help you reach your goals and reap the benefits of a lucrative business. Coddan Ltd is the company formation agent comprised of highly trained business consultants. We offer guidance and the facilities to incorporate companies throughout the UK and all around the world.

Information & Guidance: What a Limited Liability Partnership Is?

Establish an LLP in UK

In order to understand the basic dynamics and mechanisms behind an LLP, it is foremost important to understand those of the more long-established entities, namely the conventional limited liability company (LTD) and the traditional partnership and sole trader. These can be understood under the first three concepts which have recurring implications which run from setting up a business in each of the above ways.

First, we need to look at the legal personality of an individual. Under English law all human beings are endowed with a legal personality which is determined by the individual's current status, either as an employer, employee, debtor or creditor, etc. The second concept is the LLP incorporation. Under this concept we are able to notice that the law also permits the creation of an artificial or legal person (corporations).

These corporations may have a legal personality separate and different from that of its members, who are only the means of operating the business. This takes us to the third concept - the limited liability. Company incorporation provides a corporation with its very own legal liabilities and a member's financial liability is consequently only limited to the sum which they have agreed to invest.

Limited liability entails that a corporation's legal liabilities are its won and not its members', exempting the company member's from liability from any incurred company debts. Their immunity is limited to the share capital which they agree to invest. Therefore, the members are liable for a company's outstanding debts, only up to the amount they originally invested in the business. For instance, the sole trader has total independent control of the business and the individual therefore has total control of the profits made.

However, with advantage of total personal control, the individual is also all the capital, as well as personally liable for business debts. Subject to total responsibility for the legal liabilities and financial risks of the business, in other words, the sole trader is responsible for providing all the capital, as well as personally liable for business debts.

A limited liability partnership on the other hand, follows this same type of principle as it is a type of unincorporated association joined together intending to carry out a business with the with the intention of making and sharing profits. The fact that it is an unincorporated an association simply means that it is an organisation without any legal personality distinct from its members.

Not being incorporated and consequently having no legal existence from its members, all the partners are personally liable for its debts and other legal obligations. If the firm does not have sufficient funds, the partners are responsible for any deficit it out of their own pockets.

What are limited liability partnerships for? The limited liability partnership (LLP) format of registered company was originally created to enable the professions to take advantage of limited liability, but its popularity is growing among a much wider range of business.

Information & supervision: who is an LLP for? The LLP should not however be associated with professional firms, as this form of business association and its adoption is available to the owner-managers of any business.

Starting Up a Business Guide: Register as the Sole Trader or as Self-Employed

Setting-Up an LLP in UK

A sole trader has total independent control of the business and the individual therefore has total control of the profits made. However, with advantage of total personal control, the individual is also subject to total responsibility for the legal liabilities and financial risks of the business. In other words, the sole trader is responsible for providing all the capital, as well as personally liable for business debts.

An individual may set up a business and trade under their own name or business name without the need for incorporation. Without incorporation, the sole trader does not acquire a new legal personality singular to their own. This means that he or she has total responsibility for the legal liabilities and financial risks of their businesses.

Such a sole trader encounters the advantage of having full control of their business and also the reassurance that all profits and gains are theirs.

This is the simplest way to go into business, but its simplicity carries the heavy burden of unlimited liability; the sole trader is liable for all debts they incur, and are often subject to both class 2 and class 4 National Insurance contributions, which can be expensive.

In order to start operating as a sole trader you are firstly required to register as self-employed. At this point, you automatically become a self-assessed taxpayer. You can trade under your own name or under a business name, though if you plan to do the latter you will need to do a name check to ensure that the name is available.

Advantages of being self-employed: -

  • It is the easiest and least expensive business vehicle to incorporate.
  • It allows great flexibility for the self-employed individual as they can operate on their own terms.
  • The tax you pay is dependent on how much you earn.

Disadvantages of being self-employed: -

  • The sole-trader is a business entity that has unlimited liability and is responsible for all debts the business may incur.
  • There are fewer state benefits and tax reliefs available to the individual as a sole-trader.
  • Some businesses will discriminate against using a sole-trader for business.
  • The deductions of Tax and National Insurance come directly from the profits of the year.

Requirements to Register a Traditional Partnership: Advantages and Disadvantages

Establishing an LLP in UK

Advantages to register a limited company: this entity is subject to the capital, management and decision-making requirements of the Companies Act 2006.

A partnership is a type of unincorporated association joined together intending to carry out a business with the intention of making and sharing profits. The fact that it is an unincorporated an association simply means that it is an organisation without any legal personality distinct from its members.

The partnership is particularly favoured by professionals like doctors, solicitors and accountants as an advantageous method of business organisation, as they will be able to share facilities and expertise which a sole practitioner would be unable to meet the expense for.

However, this method of carrying out business is not limited to professional bodies, on the other hand, its advantages are also apparent amongst starting and small businesses, as this base enables start-up capital and expertise to be drawn from a number of people. However, partners, in the same manner as a sole trader, are responsible for rising up capital and are also personally liable for the business debts.

The existence of a partnership relationship may be implied from the moment two or more partners start the running or operating stage, with the intention of making and sharing a profit. Planning stage is not included.

However, for clarity and evidential purposes it is best to formalise its existence by written LLP partnership agreement which describes the partnerships deeds. The agreement should include the nature and purpose of the business, its name and legal LLP address, the amount of capital invested by each partner and how profits are to be shared and paid. It is also important to specify the role of the partners, their involvement in providing a service and clarifying who the managing partners are and who the sleeping partners are (partners whose only involvement is providing and taking a share of the capital).

The partnership may trade under the names of the partners or under a business name.

Must be at least two partners at all times and according to the Partnership No 17 Regulation 2001, there are no restrictions on the number of members that a partnership may have. The partnership relationship is a fiduciary one.

When transcending business on behalf of the partnership, all the partners become agents, acting within their legal authority and must carry out their agreed duties. The authority of each individual member includes, but is not restricted to, carrying out transactions relating to the business. However, the implications of the above entail that any binding contract resulting from the acts of one partner, is binding on all other partners, whether or not they actually authorised it.

Therefore, failure to perform the contract could result in an actions breach against any or all of the partners. Examples of binding liability of all members for the actions of one partner include joint liability for the cost of expenses, even if it was previously agreed that there was no need to buy a particular item or service. A negligently performed job could also give rise to this type of liability.

The partners are jointly and severely liable for all partnership obligations. Not being incorporated and consequently having no legal existence from its members, all the partners are personally liable for its debts and other legal obligations. If the firm does not have sufficient funds, the partners are responsible for any deficit out of their own pockets.

Legal action can be taken against a partner in its own name, but the partners remain jointly liable for what is owned. Therefore, if a judgement debt is not paid, it can be enforced against all or any of the partners. This may result in one partner having to pay the whole debt, although he may seek contribution from other partners. Like a sole trader, a partner may be personally bankrupted if the assets of the business are not sufficient to cover the debts.

Limited Partnerships Act 1907 enabled some of the partners to experience the advantages of limited liability, however, at least one of the members must retain unlimited liability for the partnership debts at all times. The liability of the remaining members, provided that they do not manage the business, is limited to the amount of capital that they have invested in the business. Therefore in most cases, anyone seeking to have limited liability usually follows to form a limited company.

As a result the Limited Liability Partnerships Act 2000 was passed, which in contrast to a traditional partnership, it enables the creation of a partnership with the advantages of having limited liability for all of the partners.

Starting or Running a Business: Importance of the Limited Liability

Start-Up an LLP

Limited liability entails that the legal liabilities of a corporation are its own and not of its members, exempting the company members from liability from any debts incurred by the company. Their immunity is limited to the share of capital which they agree to invest. Therefore, the members are liable for a company's outstanding debts only up to the amount they originally invested in the business.

Before incorporating a company, it is therefore important to gain an understanding of the areas of law which govern each of the business forms. Most importantly, it is important to understand how the device of limited liability operates and can be used.

The device of the limited company start-up, which has its own legal personality, permits and simplifies matters from property ownership to what happens when a member leaves the business, as it limits the financial exposure of those involved in the business in the event of financial failure. However, along limited liability, there are also the disadvantages involved with being subject to a set of regulations.

The LLP combines elements of a sole trader and the benefits of the both an LTD private company and a traditional partnership: on the contrary to a sole trader and a traditional partnership, and in a similar manner to a private LTD company and the LLP as corporate body is an entity with a legal personality separate from that of its members and with its own rights and liabilities. Having its own legal personality is the vital distinction of an LLP. It will now, generally speaking, be a separate legal entity, separate from the individual members, which will carry the duties and liabilities of the business owned to third parties and receive the income of the business.

It will probably also, at least in most cases, own the property and assets of the business. In particular, it will be the LLP and not the members which will have rights of recovery from third parties on contractual claims or for the wrongs done to it. It will now also be the LLP which will be the employer of the staff of the business and it will be the LLP with which staff and members enter into restraint of trade covenants. The LLP will also have its own rights under the Human Rights Act 1998.

There will also be a distinct set of rights and duties between the LLP as an entity and the members of it. The LLP will transcend the existence of its members and will not cease to exist if at any time there are not two or more members of it, just like a private LTD company.

LLP incorporation advantages: this entity is connected with capital and management flexibility, as well as with unlimited liability, together with the convenience of a tailor-made LLP agreement. An LLP is beneficial for two or more people who wish to form a partnership as it reduces the risk of personal liability.

Another reason why this is a particularly popular business option is due to the tax transparency. Business conducted by a limited liability partnership is technically and for tax reasons, treated as though conducted by the individual members within the LLP. This tax transparency terminates if the LLP is in liquidation and is having its assets wound up in Court or if the limited liability partnership fails to conduct business for profit. It is important to remember that the tax transparency will not apply in some countries around the world, and they will therefore have different taxation rules.

LLP registration disadvantages: however, along with the advantages of LLP incorporation, it is important to recognise that there are also regulatory rules and disciplines in place to protect creditors. These are the duties and responsibilities of members. Professionals will need to face up to the possibility of full (and authorised) disclosure of their accounts and profit figures.

Unlimited capacity means that LLP has the same capacity and freedom as a natural individual to enter in any contract or other transaction as a private individual. Therefore, its capacity to enter transactions is not limited in any way to that of its members. In addition, the LLP will be able to own all and any of the assets of the business which it is carrying on.

This includes, but is not limited to intellectual property rights, to hold shares in a company, to be a member of another LLP and sustain no limitation on its legal capacity to borrow. Furthermore, the absence of any statement of its business in its incorporation document allows the members to act on behalf of the LLP.

UK LLP Incorporation Process Requirements

LLP Start-Up Requirements

LLP Act 2000 provides: "There shall be a new form of legal entity to be known as LLP". This entity is brought to existence by two or more persons incorporating themselves as an LLP. The key characteristics of an LLP are that it is a body corporate and it has unlimited capacity. The liability of its members to contribute on winding up will be limited to whatever contractual terms they agree.

Therefore, the LLP defers from a traditional partnership in that it is a corporate entity with its own legal personality separate from those of its members, and not simply a group of persons bound to an agreement to each other.

The essential characteristic of an LLP, generally speaking, is that it is a separate legal entity which carries on a business and it will by for this entity that each member will be acting as an agent, as opposed to a traditional partnership in which each partner is jointly liable for the obligations and actions of each other.

In the result, it is a separate entity which is subject to the duties and liabilities of the business. In other words, it is brought into existence by two or more members being added or removed in accordance with the agreed contractual terms. Its separate legal personality mean that the body has an unlimited capacity, however the liability of its members contributes to the LLP winding up, which is limited to whatever has been agreed.

The existence of an LLP serves therefore, as a main purpose to protect individual members from personal liability for the acts of the other members, as well as from personal liability for their own acts carried out in a course of business. This is permitted by the LLP's corporate personality separate from its members, which makes the entity, and not its members, liable for such duties.

The LLP agreement is the equivalent to the articles of association of a company and is a private agreement which is not required to be disclosed to the outside world and there is no need for a written agreement, in the same manner as a traditional partnership. The LLP partnership agreement can be tailored made for the members, in accordance with the required decision making structure and the management.

However, there are notable differences between the agreement of a traditional partnership and an LLP. In a partnership agreement it concerns of the legal relationship between the member, where as the LLP covers the working relationship between the members, as well as the relationship between the members and the LLP. It is important to cover the areas of business and how each partner works in relation to the business (roles and responsibilities), when drafting an LLP agreement.

Considering that the agreement is a contract, it is subject to contract law, even if an oral agreement is the case. If no LLP agreement is made, complications may arise if a dispute goes to work, as the partnership law does not fully cover this aspect. If would therefore be wise for there to be an LLP agreement.

The points which need to be covered by the LLP agreement is a follows: -

  • Sharing in LLP capital and profits
  • Indemnity to LLP members
  • The right to take part in LLP management
  • No entitle to remuneration
  • Introduction to a new member and volunteer assigning of a new member's interests
  • Ordinary matter associated with the votes
  • Books and records to be made available for inspect by all members at the registered address, or at a SAIL address
  • Each member to render full account to each member
  • The need state as a group the true account of all profits they make, from competing business without consent
  • The obligation to account to the LLP any profits made from a competing business without consent
  • The abdication to account to the LLP any private benefit derived without consent with use of LLP property
  • No majority vote to disqualify a member, unless stated on the agreement

The registrar of companies takes on the same role in relation to LLPs as in relation to limited companies, having the obligation to file annual accounts and other information. Furthermore, the LLPs are added to bodies whose names are kept on the registrar's index of company and corporate names. The registrars of documents in legible form and by electronic communication are applied to LLPs.

One of the key LLP characteristics which makes it advantageous over other entities which have a similar limited liability, is its ability to have a decision making and profit sharing structure written uniquely for its business and its members. This gives it an ability to have specific clauses and agreements, which will suit an a specific business strategy, consequently increasing the chances of success.

Furthermore, the LLP will not be subject to any of the companies legislation relating to share capital, the company's management or meetings and resolutions, unlike a limited company. Moreover, there is no distinction built in a structure of an LLP between the roles of the owners of the business and those in charge of managing the business; the equivalent of shareholders and directors on an LTD companies.

It is also important to note that there are no publicly available articles of an association of an LLP and the decision making structure, of which the terms of association of the participants make part of. These are purely a matter of the agreement between members. This agreement is purely private and is not available to public records. The confidentiality which surrounds the internal agreement between the LLP members is another reason why it is attractive to those looking to start a business.

The LLP agreement, which is not disclosed to the outside world, governs the rights and duties of members as between themselves and will cover also the right and duties existing as between the members and the LLP as a separate entity. However, it is important to take into account that there are certain default rules which will have effect to govern the rights and duties of an LLP agreement. This means that the LLP agreement is subject to overriding statutory provisions and duties.

The bearings of the liabilities of the LLP and its business corresponds to the limitation of liability on part of its members as the key commercial element in LLPs. However, along with of the advantages listed above which act as a shield for the members of the LLP it also carries with it obligations which serve to meet regulatory requirements and to provide information about itself for public scrutiny.

For instance, like other entities in the UK, it is subject to file annual accounts and annual report, in addition to file notices of any changes i the membership of the LLP. It could by said, however, that this is only a small price which the members pay for the benefits of it to those in the protective shield of the LLP. The outside world is entitled to know the financial state and composition of all limited liability businesses and The LLP Act 2000, therefore, requires at least two designated members, whose role is to carry responsibility for the principle regulatory and disclosure requirements being met. LLPs will also be subject to The Department of Trade and Institution Investigation and power of the Secretary of State.

The members will also be subject to the CDDA 1986 in the same way as company directors. Therefore, in the event of liquidation its members will be subject to the wrongful trading and similar provisions of the Insolvency Act 1996.

The registrar of companies takes on the same role in relation to LLPs as in relation to companies, having the obligation to file annual accounts and other information. Furthermore, the LLPs are added to bodies whose names are kept on the registrars index of company and corporate names. The registrar of documents in legible form and by electronic communication are applied to LLPs.

UK LLP Start-Up: LLP Name Requirements

UK LLP Establishment Online

The name of the "Limited Liability Partnership" must have the name ending or LLP if incorporated in the Great Britain, if however, the company is incorporated in Wales, it is allowed to have the Welsh equivalents. However, this is only when the registered office address on the document of incorporation of the LLP is stated to be situated in Wales. Only then can the names end with "partneriaeth atebolrwydd cyfyngedig" or PAC in place of limited liability partnership.

However, it is important to take into account that the name swill not be permitted to have the word LLP in any other place other than at the end. It is also not allowed to have the name of any other companies appearing in the index of the company and corporate names kept by the Registrar under CA 2006, nor with the name which is to be considered offensive by the Secretary of State.

For the effect of the above and for practical purposes the name of the LLP cannot be the same as the name of another company or use a name which in the opinion of the secretary of state would be likely to give the impression that the LLP is connected in any way the Government or with nay local authority.

At Coddan, we can do a search for the LLP name, as well as detect any sensitive words or expressions which may require additional evidence from the companies House or the Secretary of State. Coddan knows we are aware and will instantly inform our clients if any of the specified words and expressions specified in their LLP name includes words and expressions which is misused, might give a false impressions of professional association or recognized status which would be severely penalized by the Government.

Similar rights apply to any individual carrying out an LLP name search, as to those carrying out a LLP business name search. Namely, the fact that any person may inspect any records in relation to an LLP kept by the Register for the purposes of the CA 2006 or the LLP Act 2000 and may obtain any of the information recoded on these records, with the option to have any copy certified. Checking the name of an LLP is therefore follows exactly the same process as that of a company limited by shares. Use the Companies House web check system and you will be able to check the availability of that name.

Overseas LLPs can also be incorporated under other jurisdictions, also called LLP. The LLP legislation in the UK recognizes such entities may be carrying business in Great Britain. The LLP legislation, therefore, provides every overseas LLP with the following:

a) In every prospectus inviting subscriptions for its debentures in Great Britain, state the country in which it is incorporated;
b) Conspicuously exhibit on every place where it carries on business in Great Britain its name and the country in which it is incorporated;
c) Cause its name and the country in which it is incorporated to be stated in legible characters in all bill heads, letter paper and other official publications of it.

More Details About a Limited Liability Partnership Incorporation

Establish a UK LLP

There are a number of essential requirements which need to be met before an LLP can be incorporated. Coddan can help you meet any of these requirements, so that enjoying any of the advantages of an LLP is just a phone call away. We can incorporate the LLP within 24 hours, using our own electronic LLP registration system. Upon LLP incorporation, you will receive the certificate of registration with your unique LLP number & the LLP partnership agreement. Alternatively, we can also incorporate the LLP using paper forms for entity names which contain letters that are not in the English alphabet.

The process is simple and you can have your registered LLP within seven working days, or sooner depending on how long it takes Companies House to certify the documents. Two or more persons associated for carrying on a lawful business.

LLPs must be formed for active trading - they cannot be registered as dormant. A statement on the Companies House forms for LLP registration confirms that the registrants are joining in business for the purpose of making a profit. That excludes non-profit enterprises (such as clubs or charities) and it also excludes non-trading companies.

The associated members of an LLP can either comprise or include physical individuals or an incorporated body of persons who form part of a company, another LLP or any other form of corporate entity. Therefore, LLP members do not necessarily have to be physical people; they can be corporate entities registered in the UK or anywhere in the world. The liability of a limited liability partnership falls on the company itself, as opposed to the individual members.

Incorporation of an LLP & LLP members' nationality: it is always useful to know that LLP members can be from anywhere in the world and still conduct business within the UK, though it is legally required that there is at least two partners. There are no legal requirements regarding the nationality of any of the subscribers, or persons becoming members. The members do not need to be British National or reside in the United Kingdom, on the other hand, they can be of any nationality and reside anywhere in the world. Therefore, LLP members can be comprised of individuals or corporations who are all foreigners and resident offshore.

Setting up an LLP: natural individuals and corporate bodies required: the members of an LLP do not need to be natural persons. All members could include or be companies or other LLPs. This is because the LLP as a separate entity is able to own property and assets as well as shares in other companies.

Registration of an LLP: the required number of LLP subscribers: there is no upper limit on the number of members or subscribers an LLP may have and an LLP may therefore be composed of as many members as it desires.

Forming an LLP in UK & limited liability partnership members' requirements; the LLP Act 2000, serves to further echo the commercial venture operating around profit, as it is a requirement that the relation which exists between the members and the LLP is one which subsists in common with a view on making profit. However, it is important to note that profit is not purely defined in terms of excess of receipts over expenditure of the business.

However, the word "common" does not carry the same emphasis as it does on a traditional partnership and the word "associated" becomes the main characteristic on an LLP. In other words, two or more persons have to be "associated" for carrying on a lawful business before the LLP can be incorporated. This makes it extremely unlikely for a non-for-profit body which does not have an charitable status to become an LLP, although it is possible for the former mentioned to become part of an LLP as a member.

Furthermore, at least two of the subscribers must be intended to contribute in at least some way to carrying a the LLP business, however, under normal circumstances, it should be the case that all the members, at the very least, should intend to contribute to the business.

However, it is also of major importance to disassociate contribution with profit, as there is not requirement that every member must have a share of the profits of the business or that the shares are distributed in accordance to the amount of contribution. The distribution of the shares is an issue that needs to be resolved between the members of the LLP in the agreement. The business does not have to be carried out on in the United Kingdom; it can be carried out outside the UK.

It is of great importance to realize that despite the fact that like a traditional partnership, it requires at least two members in order to bring the entity into existence, unlike a traditional partnership, its existence does not cease when the minimum requirement of two members is no longer the case.

Conversely, the fact that an LLP is brought to existence by at least two members, this existence takes on a life of its own in the from of a separate personality which has a legal existence of its own.

Therefore, the corporate entity that composes an LLP has an existence separate to that of its members. When only one partner is left, the LLP does not terminate, on the contrary, it continues to exist despite the fact that there is no longer a relationship between two partners. the LLP can continue to carry on business although it only has one member. If however, the LLP carries on with this internal structure for more than 6 months, that single member becomes liable for the LLP and for payment of the LLP debts after the LLP was formed.

What Business or Professions are Allowed to Incorporate as an LLP?

Benefits of LLP Formation

In the same manner as a traditional partnership, the LLP is a corporate vehicle mostly associated with professional bodies. However, it is important to take into account that any individual can form an LLP to carry out a business, which includes every trade, profession or occupation. The only restriction in regards to the activity of the business, is concerning its legality.

The business must be strictly lawful in not only the means of carrying the business. This involves carrying out criminal act made illegal by statute and will obviously be permitted to be a form of legal business. Any act in breach of the European legislation and consequently that of the United Kingdom, will also be marked as unlawful, as this has a direct effect on that of the United Kingdom.

Equally, any business carrying on a trade involving illegal contacts or the commitment of a tort against a third party or one in which its subscribers intend to carry on in an illegal manner is also unlawful. Other examples include, failing to obtain the necessary licenses to carry on an specific business, a business that is unacceptably offensive to public morals, or one which deceives the public as to the service or expertise on offer.

Further to the need to carry on a business in accordance with the country in which the LLP is incorporated, in this case the UK, it is also important for the LLP to subject itself to rules of the foreign countries in which it is carrying out business.

An intention on the part of the subscribers that the LLP should trade under the name of a professional body, while failing to live up to the expectations of that body or where all of the members are part of that body, would also constitute an unlawful business. Therefore, any profession looking to incorporate as an LLP will clearly need to consider their own particular legislation (and professional rules).

Companies Registrar & the Incorporation Document

The LLP incorporating document - LLP agreement - is equivalent to the memorandum of association for a limited company, with the important difference that it has no objects clause. The incorporating document must meet the following requirements: -

  • Be in a form approved by the Registrar
  • State the name of the LLP
  • State where the registered office address of the LLP is situated (England and Wales, Wales or in Scotland)
  • State the address of the registered business address
  • State the name and address of each of the persons who are to be members of the LLP on incorporation; and
  • Either specify which of those persons are to be designated members, or state that every person who from time to time is a member of the LLP is a designated member

We believe that it is of great importance to consider each of the above defining factors in turn. Our electronic system has a system approved by the Companies House. Our application form for the incorporation of the limited liability partnership sets out a format for the prescribed information to be given. In addition to the names and address of the persons who are to be the members of the LLP on incorporation, our order form provides the dates of birth of such persons to be given.

Limited Liability Partnership and the Registered Office Address

Benefits of LLP Registered Address

It is one of the minimum legal requirements when incorporating that the LLP has a registered office address in the United Kingdom at all times, in order to allow the vital communications and notices from the governmental institutions to be sent. The registered office address must at all times be situated in England and Wales or in Wales, or must at all times be situated in Scotland (depending on where the LLP was incorporated).

This means that the members of the LLP must make a mutual decision on where they desire the LLP to be incorporated and provide an address in either England and Wales, Wales, or registered address in Scotland, as forever thereafter it will be the case.

Consequently, it will also be the place where the LLP is to be registered and whether by the Registrar of LLPs in England and Wales or the Registrar of Companies in Scotland and which will be the legal system having jurisdiction over it. It is important to note that like the registered business addresses provided by Coddan, the address must be in full, identifying building, street, town, county, country and post-code, as a PO Box number alone is not suffice and will not be accepted by the Companies House.

The LLP may at any time after incorporation deliver a notice to the registrar stating that its registered office address is to be situated elsewhere Coddan. Here at Coddan we can assist you with this process by providing such a notice through our own form approved by the Companies House. This notice will need to be signed by one of the designated members of the LLP. We can then alter the incorporation document so that it states that the registered legal address is situated elsewhere, so that it is up-to-date with the Companies House records.

As previously mentioned, the LLP must have a registered office address in the United Kingdom. In other words, an address situated either in England and Wales, Wales or Scotland to which communications and notices may be sent. Although the registered office address can be changed at any point after incorporation, it is important to take into account that this change must be consistent with the choice made at incorporation, as it is one that is revocable regarding the situation of the LLP.

Regardless of where the LLP trades or where its main activity is carried out, all court proceedings must be sent to the registered office address, whether situated in England and Wales, Wales or Scotland, to the attention of the manager or designated member of the LLP.

The following documents must be kept at the registered office address: -

  • The LLP's accounting records
  • Any register of holders of debentures of the LLP
  • A copy of every instrument creating a charge which requires to be registered
  • The register of charges, containing details of all charges specifically affecting the property of the LLP, and of all floating charges on the LLP’s undertaking or any of its property

The registered office address must be included on all business letters and order forms, and is also an item of information to be included in the annual return.

At Coddan, we can incorporate your limited liability partnership (LLP) and file all the necessary documentations. In addition to registering your LLP, we can also fulfill the necessary legal requirements by the provision a registered office address, should you need one, using your own registered office address, while also appointing your own members.

Names and Addresses of the LLP' Members

About LLP Members

As mentioned previously, an LLP requires the minimum of two designated members at all times. The members associated for carrying on a lawful business with a view to profit will need to subscribe the names to the incorporation document. This document needs to hold details of the names, date of birth and address of the member, if a natural person.

On the other hand, if the member is a corporate entity, it is required to provide the details of a legal representative in the form of a name and a surname. In addition, the entity’s name, incorporation date, registration number, registered office address and country of registration need to be provided in full.

The legal service address of an LLP member who is an individual is his usual residential address and of a corporation is its registered office address. As mentioned earlier, a foreign corporation can be a member of an LLP and it is therefore important to notice that in instances where a registered office address cannot be provided for a corporation, the term "principle office" will apply.

Starting or Running a Business: Importance of the Limited Liability

Create an LLP

Limited liability entails that the legal liabilities of a corporation are its own and not of its members, exempting the company members from liability from any debts incurred by the company. Their immunity is limited to the share of capital which they agree to invest. Therefore, the members are liable for a company's outstanding debts only up to the amount they originally invested in the business.

Specifying the Designated Members of an LLP

Designated Members of an LLP

The responsibility of controlling and maintaining the LLP falls directly on the designated members. The designated members are in charge by legislation to ensure that the minimum legislative and lawful requirements are satisfied. The role of a designated member is therefore to ensure, as required by law, the disclosure and notifications to the Companies House are met.

So long as it has two members, an LLP must always have at least two designated members. LLP registration document must, therefore, either: name the first members of the LLP to be designated members or state that every person who from time to time is a member of the LLP is a designated member, for the purpose of LLP start-up.

Please notice that whichever course is adopted, the LLP incorporation document which we provide at Coddan must provide at least two designated members, as required by law. In our order forms you will notice a box that needs to be ticked against one of the two questions: "will all the members from time to time be designated members" and "if no, at least two of the listed members must be selected as designated members".

It is also important to consider that such options can be modified from time to time after LLP incorporation. We can help you with this process by delivering to the Companies House a notice of the change. Such a notice will have the same authority as if it had been executed during the incorporation process. The notice that we provide to the Companies House for switching from one option to the other has been approved by the LLP registrar.

We can also alter LLP registration document through web-filing. The alteration of the LLP incorporation document may include a change in the name of the LLP and even a change in the manner of identifying who the designated members are to be.

Registrar Statement: The Incorporation Document and Certificate of Registration

The LLP must be registered with the approval of the companies and LLPs registrar. An incorporation document is required. The reason why all of its members can experience a limited liability is because once a limited liability partnership registered, the LLP takes on a legal personality of its own, separate to that of its members. The liability of each member is therefore limited to the amount of his or her investment in the firm.

It can be deduced that an LLP enjoys all the advantages of the limited liability protection, while relatively few disadvantages.

LLP Act 2000, s. 3 provides that an incorporation document must be produced when LLP incorporated. We shall register the LLP incorporation document and shall give a certificate that the LLP is registered by the name specified in the incorporation document. It is therefore the issue of the certificate which constitutes the LLP as a corporate body with its own legal personality, separate from that of its members.

Thereafter, the LLP is able to carry on business as a separate legal entity with no restrictions as against the outside world on its capacity to do so. Consequently, the certificate generated after incorporation by the Companies House and produced by Coddan is conclusive evidence of the existence of the new LLP upon setting-up.

The certificate also serves as conclusive evidence that the requirements of Section 2 of the LLP Act 2000 are complied with and the LLP is incorporated by the name specified in the incorporation document. The Certificate can also act as a deterrent to other from challenging the validity of the incorporation and alleging that the LLP does not exist as such, as the Certificate is conclusive evidence.

It can also act as evidence that there are at least two members or subscribers at the time of incorporation and at the time the certificate was issued, both who are associated for carrying on a lawful business with the view to make profit. However, it is important to also consider that the House of Lords raise notice that the certificate does not prove that all the objects and powers in the memorandum are lawful.

In addition to the Certificate of incorporation, we will also provide you with an allocated registered number, which is provided by the Companies House. This unique number, along with other required information must appear in all business letters and order form. This information will appear on public records from the date of incorporation and can be accessed by any individual on request, signed by the Registrar and authenticated with an official seal.

At the point in which the LLP has been incorporated, it has a limit of a year in order to start trading. If this is not the case, it will run the risk of being wound up by a court on such grounds.

Taxation of a Limited Liability Partnership and its Members

Taxation of LLP

A coherent system of taxation has been developed for LLPs, which treats an LLP as partnership and its members as partners for all tax purposes. Consequently, the profits of an LLP will be taxed in accordance with the taxation rules which apply to the members of the LLP. In case of individual members, the profits will be calculated in accordance with the income tax rules. Taking this into consideration, it can be deduced that a member liable for corporation tax will have their share of profits calculated in accordance with corporation tax rules.

On the other hand, a member subject to income tax will have their profits calculated in reference to this rule or any other which they may be personally bound to. Therefore, despite incorporation, the LLP is characterised by integrating with it all the advantages of a UK traditional partnership in relation to taxation. This means that its members are placed in an advantageous financial position that if they were company share-holders.

LLP Formation & Income Tax

Any activity carried out by an LLP shall be treated as though carried on in partnership by its members. The effect of the above means that the members of the LLP are taxed under the self-assessment rules as though they were partners in a partnership, consequently, the disregard of incorporation applies for all tax purposes. This means that the partners in a partnership are unaffected by incorporation for tax purposes. However, it is important to take notice that such tax self-assessment rules make each individual partner personally liable for the tax due on that partner's profit share, and the partnership liability would not be a partnership liability.

Taking into account that the taxation rules that apply to an LLP are identical to those of a partner and a partnership, the LLP is subject to annual taxation and through the submissions of an annual tax return to the Inland Revenue which sets out the tax figures relevant to that fiscal year. The LLP member will be taxed upon the profits arising for the accounting period ending the relevant tax year.

For example: if an LLP has an accounting reference date of 30 April, the annual accounts to the 30 April fall under the tax year 2002/03 (period 6 April 2002 to 4 April 2003), and will therefore form the basis of the LLP's 2002/03 tax return.

Consequently, this could be perceived as an advantage, as in many cases the LLP can experience reduced taxation, because a member can conduct business for an LLP with a reduced tax rate, which is dependent on the individual rather than the company as a whole. However, company tax applies as though the members of the LLP had conducted the business, rather than the LLP itself.

What Must the LLP Tax Return Include?

  • Details of the profit and loss account (to be filed annually);
  • Balance sheet (using Inland Revenue's standard accounts information format provided by Coddan, to be filed annually);
  • Maintain records of all items relating to the firm's taxation position.

Note: the LLP Tax return must be signed by a designated member on behalf of all members. Failure to file such records can lead to fines in the thousands region for each default, and considering that partnership rules apply to an LLP for tax purposes; these penalties can be multiplied by the number members during the relevant tax year. The LLP members may also be liable to penalties if the tax return is submitted after the filing deadline. Further mis-administration of company records may lead to the designated members being liable to further penalties.

An LLP is required to submit annual accounts for tax purposes to the Companies House. In the same manner, partners are required to prepare their accounts, for tax purposes, making the profits chargeable to taxation for an LLP similar to that of a partnership. Details from the member’s income from the LLP will need to be reported to the Inland Revenue via the LLP's annual tax return, along with the individual detail for each member shown on LLPs tax return which shows details of the individual’s other income and outgoing for the relevant tax year.

Please note that being the member subject to the tax regulations, the individual member is subject to the filing requirements and record keeping requirements as an LLP. This member will need to report details of income from the LLP on the basis of his share of the taxable profits arising in the relevant tax year. These rules allow the individual to be taxed on the share of taxable profits arising in the business during the relevant tax year and penalties will apply in circumstances where an annual tax return has been filed late.

LLP Formation & National Insurance

LLP & National Insurance

Further to income tax, like an individual who is self-employed, the members of the LLP are also liable to pay National insurance contributions. Unlike an alternative employee and like a sole trader, the member is liable to Class 4 National insurance contributions. However, this may differ from member to member and in some cases, the member may even be liable to Class 2 and or even 3 National Insurance Contributions.

Therefore, the LLPs pay tax differently from most other traditional companies, as the individual members pay tax on the profit they make, rather than the company itself. Tax applies to the individual members’ income rather than the profit of the company, resulting in the member being separately liable to income tax on their share of the LLP profits.

The key difference that affects the view of many start-up businesses is the tax treatment of the owners (members). In a traditional LTD the Directors (who are also usually the sole shareholders in a start-up company) are treated as employees of their own company. This means that their salary is subject to personal Income Tax and National Insurance and employers' NI contributions. Profits left in the company (not withdrawn as salary) are subject to the (lower) corporation tax rate.

The members of an LLP pay Income Tax as self-employed persons, so there is no employers' NI to pay. On the other hand, all the profits of the company are regarded as the members' income and are subject to income tax. So the balance of tax advantage depends on how much profit the company might make and how much the owners pay themselves.

LLP Incorporation With Corporate Nominee Members and LLP Tax Issues

As previously mentioned, the profits of an LLP are taxed in accordance with the taxation rules which apply to its members. Therefore, as companies are also able to be members of an LLP, the corporate member will be subject to separate corporation tax rules and not the personal self-assessment income tax rules which apply to a natural person.

Accordingly, a corporate member's share of profits need to be calculated in accordance with the with the corporation tax regime. In a similar manner to a Traditional partnership, all fees and profits earned by the LLP filter directly to the members of the limited liability partnership. However, management companies pay tax on the profits they make. It is advantageous to know that a Limited Liability Partnership cannot be included as part of a group with other companies with the intention of covering any loss relief and capital gains tax.

In other words if a corporate entity is the member of an LLP, it will be subject to corporation tax for any income it receives from the LLP. For instance, companies that are LLP members will have to pay corporation tax on their profits from the LLP and should include the relevant details on their self assessment return for corporation tax.

Limited Liability Partnerships & Non UK Residents

UK LLP & Non UK Residents

An LLP will normally be regarded as transparent for tax purposes and each member/partner will be assessed to tax on their share of the LLP's income or gains as if they were members of a traditional partnership. Therefore if an LLP carries on a trade then each registered partner is taxable on the income they derive from the LLP as trading income.For non-UK residents this means that the advantages of an LLP in regards to tax are enormous.

For instance, non-UK residents may with relevance to their individual circumstances not be liable to UK taxes. As the LLP is not liable for incorporation tax, its profits are shared amongst its members and are taxed using self-assessment rules. In the case of the member being a non-UK resident and operating the business outside the UK , the member will in most instances not be subject to UK tax rules if the member is a non-UK resident. Consequently, non-UK resident persons or entities members of an LLP will in most cases need to declare taxes in the country in which they reside and not the UK.

However, one should be careful of any double taxation treaties that can occur when trading in different countries.

Limited Liability Partnerships & Double Taxation Relief

Double taxation relief is available to those individuals that are non-UK residents and run the risk of being taxed in more than one country. One of the principles behind double taxation treaty is that they are enacted to ensure that relief is obtained for the taxation suffered in one country, against the taxation charges arising on the same profits in another country. Although the wording of the agreements make specific references to corporate taxes, it is important to take into account that these also transcend into income tax.

Consequently, income taxes suffered in one country will be cancelled-off by taxation charges in another country. The relief for income taxes is usually offered by the source country. However, it is important to take note that while an LLP may be taxed under income tax or corporate tax rules in the UK, it may be liable for one of the opposites in a foreign country.

However, Inland Revenue has avoided this distinction by stating that they will allow tax credit relief to be obtained in respect of the proportionate share of the foreign tax paid. However, it is of great importance to consider the overseas taxation of an LLP, as the legislation and rules to which an LLP is exposed overseas vary from those of the UK.

In reference to dividends received from an overseas source, the individual will in most cases be able to claim relief for the withholding tax suffered. However, this does not apply to the underlying taxes suffered on the profits out of which the dividend has been paid. Only in exceptional circumstances will the LLP be able to claim relief for the foreign taxes when it has ceased to be treated as transparent.

It is of major importance to make a clear distinction between a UK LLP and a UK branch of an overseas LLP for tax purposes, mainly because the Inland and Revenue have made clear that taxation will vary, as such overseas LLPs will be taxed as though liable for corporation tax, where as others will be regarded as a partnership and consequently experiencing the same tax consequences as a UK LLP.

Limited Liability Partnerships Annual Return & LLP Annual Accounts

An annual return must be filed every year and must be signed by the designated member. If there is a failure to file annual return, every member is liable for the offence, unless the can prove that they took reasonable steps to file the annual return. It is the duty of the members to file profits and loss account every year.

Every LLP must deliver to the Registrar each year an annual return which contains the following information: -

  • The address of the LLP's registered office;
  • The names and usual residential addresses, of its members;
  • Specify the names of the designated members, if not all;
  • Where the register of debenture holders is kept, if different to the registered office address.

All the information must be signed by the designated members to certify that the information given is true to the best of his knowledge and belief. The return must be made up to the date and not later that the ‘return date’ and must be delivered to the Registrar within 28 days after that date, timeframe which is subject to the anniversary of the incorporation of the LLP.

In other cases, if the return date may be subject to the anniversary of the last annual return delivered to the Registrar. Failure to deliver the annual return within 28 days after return date will lead to the LLP being liable on summary conviction to a fine and such fines will continue until the situation is resolved by the delivery of a satisfying annual return.

Furthermore, every designated member is liable to the charges, unless he can prove taking all reasonable steps to avoid the situation. The status of the annual return may be accessed by nay member of the public, being open to inspection on the registrar. A copy of the status may be obtained by nay person.

Annual account with an auditor's report must be filed to the Registrar. The accounts must be signed by the designated member, as it is there duty. Annual audited accounts which are available for public scrutiny.

Limited Liability Partnerships & Insolvency Procedures

LLP Insolvency Procedures

Insolvency procedures governing companies also apply to LLP. The governing rules which apply to self-employed individuals are distinct to those that have a business that is run by more than one individual jointly. For self-employment, no particular rules are needed, distinct from those that apply to that individual.

On the other hand, where there is more than one owner, there will need to be rules governing the relationship between themselves and those with whom they with on behalf of the business. The rules surrounding the aforementioned relationship are covered by partnership law (largely based on contract law), which relates to binding agreements.

Partnership law has developed in such a way that a default set of rules have been developed, which prevents the need for separate negotiation between all the partners and those that they deal with. We provide a standard agreement which cover all the set of rules that have been developed. However, these default set of rules can also be easily amended and new ones added, to suit the individual needs of every partnership. There will need to be rules governing the relationship between the owners of the business themselves.

Limited Liability Partnerships & Formalities and Requirements After Incorporation

In accordance with the Companies Act 2006, there are a number of formalities and requirements which the LLP needs to obey by in order to maintain good order and avoid fines for failing to comply with the rules. The LLP must have a name and keep it affixed outside every office or place in which its business is carried out.

This name needs to be positioned in a conspicuous place and the letters should be legible in order to make it visible to others. Furthermore, details of the company must be on all business letters and on all a LLP’s order forms, in once again legible characters. The details include:

a) Its name (it should end in LLP and reference to the fact that the entity is an LLP);

b) Place of registration and registration number;

c) Registered office address. Its name should also be mentioned in all its official notices, official publications, on all bills of exchange, promissory notes, endorsements, cheques and orders for money or goods purporting to be signed by or on its behalf and bills of parcels, invoices, receipts and letters of credit. It is important to keep in mind that failure to do any of the above will result in severe fines to the members of the LLP and not the LLP itself.

Furthermore, if a member of an LLP or a person fails to comply with these rules on behalf of the LLP, he is liable for a fine. If a member of the LLP or a person on its behalf signs or authorises to be signed on behalf of the LLP any bill of exchange, promissory note, endorsement, cheque or order for money or goods in which the LLP’s name is not mentioned in legible characters, he further liable to the holder of the bill of exchange.

Limited Liability Partnerships & Legal Regulation

Once incorporated, the LLP as corporate body is an entity with a legal personality separate from that of its members and with its own rights and liabilities. Having its own legal personality is the vital distinction between an LLP. It will now generally speaking, be the separate legal entity, as opposed to the individual members, which will carry the duties and liabilities of the business owned to third parties and which will receive the income of the business; and which will probably also, at least in most cases, own the property and assets of the business.

LLP members have the following statutory rights: -

  • Rights to inspect the accounts at times
  • The right receive LLP accounts and the auditor's report after one month of being approved without being charged
  • If an auditor is removed the LLP members have the right to receive a copy of all of their statements
  • Every member has the statutory right to force the filling of documents with the Registrar

Limited Liability Partnerships & Capital and Profits

LLP Capital and Profits

The LLP needs working capital. The capital provided by the members can be provided by way of loan or contribution of capital and funds can also be borrowed from the Bank. The LLP agreement will deal with profit share. Profits and losses are measured by the LLP's performance over a given period which is usually one year. If an LLP makes a trading lost, a provision will need to cover it cash terms and in terms of impropriating that lost in the accounts. For this reason, extra consideration regarding this matter will need to be considered when drafting the LLP agreement.

LLP management: with an LLP there is no distinction between the owners and the managers. Member can adopt which ever management structure they wish. Every member may take part in management of the LLP. If the there is a management committee the authority will need to be clearly illustrated in the LLP agreement.

All the members are liable for any wrong doing committed by nay of the members; but the LLP itself is separate from its members. The LLP serves to shelter the members from personal liability and acts as another member or an employee. If a member of an LLP enters a contract, he will not be liable to that contract or for the other party because he is acting on behalf of the LLP. The only way a member can be personally affected is if they acted unlawfully or willing-fully negligent in a contract.

Limited Liability Partnerships & Contracts, Deeds and Other Documents

In regards to the execution of contracts and other documents, it could be said that more or less the same rules can be applied as for companies. The fact that LLPs with reference to CA 2006 adopt similar principles to a company means that any contract may be made on behalf of the LLP by nay person acting with its expressed or implied authority. A contract can in other circumstances also be made by an LLP in writing under its common seal and despite the fact that a common seal is not required, it is required to have the LLP's name engraved on its common seal, if it does have one.

Not having the name engraved on its common seal can lead to unnecessary fines. Further, to the personal liability note previously on behalf of the members for not keeping the LLP up to date, the member of an LLP can also be liable to fines if a member authorises the use of a seal in which its name is not engraved.

There are two options in regards to the manner in which documents are signed; firstly, the documents can be signed by at least two of the members of the LLP and express to be executed by the LLP or alternatively, it can be signed by the LLP itself, by affixing the LLP's common seal to the document, if this is the case. Such document executed by the LLP usually has effect upon delivery, unless otherwise is proved to be delivered upon its being so executed. Consequently, a document is to be believed to have been duly executed, if it has been signed by at least two of the members of the LLP.

On the other hand, in the same manners a can LLP execute a deed by affixing its common seal; it can also empower any person, either generally or in respect of any specified matters, as its attorney, to execute deeds on its behalf, using the same common seal procedure. This has the same effect as if the deeds were executed by the LLP using the common seal and it follows that the deeds can be executed in any territory outside the UK.

Only after an LLP has a common seal, may also it also apply to have an official seal. The official seal allows the LLP to use it in nay territory, district or place elsewhere than in the United Kingdom, having all the names where it is to be used printed. Therefore, having two seals can provide flexibility to the operations of the LLP, as the common seal can be used to authorise any person appointed for the purpose of the foreign territory, to use the official seal. When it comes to the authentication of documents, these can be authorised by a single members of the LLP.

Limited Liability Partnerships & Authority of a Member to Bind an LLP

The authority of a member to act on behalf of an LLP, according to the LLP ACT 2000 Section 6 (1), is simply that of an agent. The subsection does not limit the authority of a member's actual or apparent authority. However, the sections are not intended to establish unlimited authority for the member. If it was providing positively for an agency without limit of authority, it would be doing so for actual authority as well as for apparent authority. The act does not make distinction between Actual and apparent authority, however there can be limits placed on the actual authority of a member.

It is therefore important to establish the differences between actual and apparent authority in order to establish the authority of a member. Whatever the decision and agreements a member makes will affect the LLP. It is consequently vital to draw an agreement and set limits on the actual authority of the members of the LLP.

However, the authority cannot be totally defined in the LLP as there will always be uncertainty or ambiguity regarding the authority between the members, as the agreement does not set the specifics of the agreement. On the other hand, the apparent authority of a member may allow him to take or enter certain contracts for which for he has not actual authority. It is therefore important for the LLP to accurately portray its activity to the public, to limit the apparent authority of its members to the specific role of the LLP.

When considering the apparent authority of a member, it is important to also establish how this may be directly correlated with the actual authority of a member, e.g. a managing director, as opposed to an individual with less apparent authority. The approach is not easily followed when someone’s considered apparent authority is the same as that of other members due to them having similar roles within the LLP.

It is assumed that the member of the LLP has the authority to work within the spectrum of what the LLP is intended to do. By promoting the apparent authority of a member within the LLP to the outside world, the LLP can control the actual and apparent authority of a member to either limit or exceed that of the LLP's. This is usually carried out by emphasising the role of a certain member on the LLP's official procedure and formalities.

Therefore, as the word partnership may denote that the power of the members is equal; this can be manoeuvred by the LLP agreement. On a point of details, it is worth bearing in mind that the apparent authority of a member to enter into transactions and the apparent authority to communicate on behalf of the LLP in relation to transactions may be different. The Latter authority may be wider than the former, which better suits the commercial realities of the situation.

There are cases, however, where the LLP is not bound to the wrongful doings of one of its members and Section 6(2) of the LLP Act 2000 sets out the scenarios where the outcome may apply. For instance, although the members have the same roles as agents, when dealing directly with a third party, where a member has no authority, is believed to have no authority by the third party or does not believe that the individual is a member of the LLP.

Therefore, for the purpose of making a distinction between knowledge, Section 6(1) (b) sets the importance of understanding the distinction between actual knowledge and belief. In other words, for the above to be satisfied, the third party must have actual knowledge that the member does not have the relevant authority.

Limited Liability Partnerships & What Happens to the Authority, if a Member Ceases to be a Member?

Where a person ceases to be a member (subject to any agreement to this contrary) he will cease to be the agent of the LLP and as a result, cease to have actual authority to bind the LLP. The moment in which a person ceases to be a member will take place in accordance with the terms of the LLP agreement, rather than when the Public registrar is notified of the changes to the LLP.

However, it is important to notice that it is essential that the Companies House is informed of any changes, as this will allow other individuals dealing with the LLP to take notice of the changes.

Coddan: updating the changes on the Public registrar is a process that can be executed through a formal notice and in accordance with Section 9 (1) (a), this notice must be delivered within fourteen days of the person ceasing to be a member.

Limited Liability Partnerships & Employment

The LLP Act state that members of the LLP are not seems as employed by the LLP, unless the other members were partners in partnership. The purpose of the above is to prevent the LLP member becoming an employee of the corporate body. There is no requirement that in order to be a member of an LLP the member is entitled to a share of the profits, therefore, there can be individual's members that receive a salary, but do not receive profit.

Members employed to the LLP have a contractual obligation to the LLP as employers. This is of importance in case of the LLP going into liquidation, because the employer of the LLP can prove nay unpaid salary. An individual ceases to be a member of the LLP if he dies and a corporation ceases to be a member if it is dissolved. A person can leave the LLP by giving reasonable reason to the other members and notice must be give to the registrar, signed by at least one of the designated members.

Designated members: At all times there must be two designated members. All members of the LLP can be foreign person, corporations or a combination of both. The LLP guideline does not clearly outline the responsibilities of a designated member. In the LLP agreement there may be a clause that all members may be designated members at some point.

If due to a death or the liquidation of a member company, all the LLP members will be automatically become designated members, in case there is only one member left and any changes must be updated with the registrar within 14 days. When there is notice of a members becoming a designated member, the Registrar must similarly be notified.

Limited Liability Partnerships & Making Changes After LLP Incorporation

Change of name: the legislation regarding LLP specifies that the name of an LLP can be changed at any time. We can provide this service for you however, it is important to note that mutual agreement on the LLP name must be made, this needs to be covered by a specific or general decision-making provision in the LLP agreement. If such mutual agreement is not specified on the LLP agreement, then, the default decision making procedure will apply. In other word, the decision may require the consent of all the members of the LLP before any changes to the name can be made.

Under other circumstances, it is also important to note that the Secretary of State may within a 12 month period direct the LLP in writing to change its name within a specified period. This will only be the case if the Secretary of State believes that the name is too like a name appearing at the registration index of company and corporate names.

Another reason to be requested to change the name of the LLP by the Secretary of State is if appears to have misleading information, if the name appears to be causing harm to the public or if its name has been granted for a purpose that has not been fulfilled. In such case, the Secretary of State may alert the LLP in writing to change its name within five years of the LLP’s incorporation date. The decision of the Secretary of state is not final and a request for a name change for any of the above reasons can be challenged by appealing to the High Court.

When an LLP decides to change its name, either for personal choice or by Direction of the Secretary of State, it must deliver a notice of change of name to the registrar. The notice must be in a form approved by the Registrar.

Once the name change has been approved by the Registrar, they will proceed in updating the new name in the index under the list of corporate name kept by the Companies House. You will also be provided with a Certificate of the change of name, which is issued by the Companies House. The change of name will have effect from the date on which the certificate is issued.

The change of name does not affect any of the rights or duties of the LLP or render defective any legal proceedings by it or against it; and nay legal proceeding that might have been commenced by its former name or continued against it will be resumed.

Change of registered office address: the LLP may at any time after incorporation deliver a notice to the registrar stating that its registered office address is to be situated elsewhere. Here at Coddan we can assist you with this process by providing such a notice through our own form approved by the Companies House. This notice will need to be signed by one of the designated members of the LLP. We can then alter the incorporation document so that it states that the registered office address is situated elsewhere, so that it is up-to-date with the Companies House records.

The LLP may at any time change its registered office address. The change takes effect on notice being registered by the registrar; but until the end of the period of 14 days beginning with the date in which it is registered a third party may validly serve any document on the LLP at the previous registered office. Please note that a PO Box number is not acceptable by the companies House as a valid form of address.

In the same manner as the change of name, a change in the registered office address of the LLP is a procedure which requires the consent of all its members. Although the legislation does not specify any particular internal procedure by which an LLP may decide its registered office address, it is covered by a specific or general decision-making provision in the membership agreement.

Limited Liability Partnerships & Membership General Matters: Coddan

After the LLP has been incorporated with its original members; the members of an LLP can of course change, in the same manner as a traditional Partnership. Therefore, becoming a member of the LLP is a matter of contract and the LLP agreement therefore needs to make provision to the new member and a mutual agreement need to be met between the members.

Notice of any changes to the internal structure of the LLP must be submitted to the Public Registrar within 14 days of the changes taking place and the given notice is a legal requirement. Failure to submit a notice, will lead to all the members being liable to the offence.

Coddan: changes to the name or address of the members must be submitted to the Public registrar within 28 days of those changes taking place and we can update the changes with the Registrar within two working days.