The Limited Liability Partnerships Act 2000 (c.12) is an Act of the

Parliament of the United Kingdom The Parliament of the United Kingdom is the supreme legislative body of the United Kingdom, the Crown Dependencies and the British Overseas Territories. It meets at the Palace of Westminster, London. It alone possesses legislative suprem ...

which introduced the concept of the

limited liability partnership A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore can exhibit elements of partnerships and corporations. In an LLP, each partner is not ...

into English and Scots law. It created an LLP as a body with

legal personality Legal capacity is a quality denoting either the legal aptitude of a person to have rights and liabilities (in this sense also called transaction capacity), or altogether the personhood itself in regard to an entity other than a natural pers ...

separate from its members (unlike a normal partnership) which is governed under a hybrid system of law partially from company law and partially from partnership law. Unlike normal partnerships the liability of members of an LLP on winding up is limited to the amount of capital they contributed to the LLP. Section 2 of the act provides that an LLP may be incorporated when two or more persons associated for the purpose of carrying on legal business subscribe their names to an incorporation document; that incorporation document, or an approved copy of it, has been delivered to the Companies Registrar at

Companies House Companies House is the executive agency of the company registrars of the United Kingdom, falling under the remit of the Department for Business, Energy and Industrial Strategy. All forms of companies (as permitted by the Companies Act) are in ...

; and a statement either by a solicitor or one of the subscribers that the formalities have been complied with has also been delivered to the registrar. The incorporation document must take either the prescribed form or a form as close to the prescribed form as possible. It must contain the address of the registered office of the LLP, state the name of the LLP, state the name of the members of the LLP on incorporation, state which of those members are to be "designated members" or that all members will be "designated members" and also say whether the LLP's registered office is to be situated in England and Wales, Wales or Scotland. Section 3 provides that once the formalities have been complied with, the registrar retains the incorporation document or a copy of it and issues a certificate of incorporation. That certificate is regarded as conclusive evidence that the incorporation formalities have been complied with. Membership of the LLP is initially those who subscribed to the incorporation document. A person may become a new member of an LLP with the agreement of existing members and cease to be a member with their agreement as well. As with a normal partnership, a partner of an LLP is not regarded as being employed by the LLP—they are self-employed. The relationship between members is governed by an agreement between the members. If an agreement does not exist the act provides that regulations may be made to specify the default form of such an agreement. As with normal partnerships the members of an LLP are agents of the LLP, and the LLP is liable for the actions of a member when that member acts in a wrongful way or makes an omission. However, unlike a normal partnership, the members of an LLP are not

jointly and severally liable Where two or more persons are liable in respect of the same liability, in most common law legal systems they may either be: * jointly liable, or * severally liable, or * jointly and severally liable. Joint liability If parties have joint liabili ...

for the actions of another member. This is because the LLP itself has legal personality separate from its members. If the membership of an LLP changes then the registrar must be informed within 14 days and if a member changes their address the registrar must be informed within 28 days. Members of an LLP are subject to

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Ta ...

on their income as trading income in the same way as a normal partnership. They also pay class 4

National Insurance National Insurance (NI) is a fundamental component of the welfare state in the United Kingdom. It acts as a form of social security, since payment of NI contributions establishes entitlement to certain state benefits for workers and their fami ...

contributions in the same way as anyone else who is self-employed.

Capital gains tax A capital gains tax (CGT) is the tax on profits realized on the sale of a non-inventory asset. The most common capital gains are realized from the sale of stocks, bonds, precious metals, real estate, and property. Not all countries impose a c ...

applies to members of LLPs as to those in a normal partnership. Within one year of incorporation of an LLP there is an exception to

stamp duty Stamp duty is a tax that is levied on single property purchases or documents (including, historically, the majority of legal documents such as cheques, receipts, military commissions, marriage licences and land transactions). A physical reven ...

on land transferred to the LLP if the person transferring the property is a member of the LLP and that the proportions of the property are the same as those before the transaction. LLPs are wound up and subject to

insolvency In accounting, insolvency is the state of being unable to pay the debts, by a person or company ( debtor), at maturity; those in a state of insolvency are said to be ''insolvent''. There are two forms: cash-flow insolvency and balance-shee ...

in much the same way as companies. Section 14 of the act makes provision for regulations to be made applying certain provisions of the

Insolvency Act 1986 The Insolvency Act 1986c 45 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK. History The Insolvency Act 1986 followed the publication and ...

to LLPs. Similarly, Section 15 makes provision for the making of regulations to apply company law or disapply company law and to apply partnership law as seem appropriate. Complementing the Limited Liability Partnerships Act 2000, much of the law on LLPs is in statutory instruments made under it that apply other legislation. Most importantly, many elements of the

Companies Act 2006 The Companies Act 2006 (c 46) is an Act of the Parliament of the United Kingdom which forms the primary source of UK company law. The Act was brought into force in stages, with the final provision being commenced on 1 October 2009. It largel ...

are applied to LLPs by regulations made in 2008 and 2009.

External links

*
The Limited Liability Partnerships Act 2000
as originally enacted, from the

Office of Public Sector Information The Office of Public Sector Information (OPSI) is the body responsible for the operation of His Majesty's Stationery Office (HMSO) and of other public information services of the United Kingdom. The OPSI is part of the National Archives of the Un ...

.
Explanatory notes
to the Limited Liability Partnerships Act 2000 from the Office of Public Sector Information. {{UK legislation United Kingdom company law United Kingdom Acts of Parliament 2000 Partnerships

See also

External links