Limited Liability Partnerships Act 2000

Introductory

Limited liability partnerships

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• (1) There shall be a new form of legal entity to be known as a limited liability partnership.

• (2) A limited liability partnership is a body corporate (with legal personality separate from that of its members) which is formed by being incorporated under this Act; and—

• (a) in the following provisions of this Act (except in the phrase “oversea limited liability partnership”), and

• (b) in any other enactment (except where provision is made to the contrary or the context otherwise requires),

references to a limited liability partnership are to such a body corporate.

• (3) A limited liability partnership has unlimited capacity.

• (4) The members of a limited liability partnership have such liability to contribute to its assets in the event of its being wound up as is provided for by virtue of this Act.

• (5) Accordingly, except as far as otherwise provided by this Act or any other enactment, the law relating to partnerships does not apply to a limited liability partnership.

• (6) The Schedule (which makes provision about the names and registered offices of limited liability partnerships) has effect.

Incorporation

Incorporation document etc

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• (1) For a limited liability partnership to be incorporated—

• (a) two or more persons associated for carrying on a lawful business with a view to profit must have subscribed their names to an incorporation document,

• (b) the incorporation document or a copy of it must have been delivered to the registrar, and

• (c) there must have been so delivered a statement ... made by either a solicitor engaged in the formation of the limited liability partnership or anyone who subscribed his name to the incorporation document, that the requirement imposed by paragraph (a) has been complied with.

• (2) The incorporation document must—

• (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (b) state the name of the limited liability partnership,

• (c) state whether the registered office of the limited liability partnership is to be situated in England and Wales, in Wales , in Scotland or in Northern Ireland,

• (d) state the address of that registered office, which must be an appropriate address,

• (da) state the intended registered email address of the limited liability partnership, which must be an appropriate email address,

• (e) give the required information about each of the persons who are to be members of the limited liability partnership on incorporation, and

• (ea) in the case of each individual named as a member, state that the individual’s identity is verified within the meaning of section 1110A of the Companies Act 2006 (meaning of “identity is verified”),

• (eb) state that no person who is named as a member is disqualified under the directors disqualification legislation,

• (f) 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 limited liability partnership is a designated memberand.

• (g) include a statement of initial significant control.

• (2ZA) The required information mentioned in subsection (2)(e) is the information mentioned in sections 167J and 167K of the Companies Act 2006 as applied to limited liability partnerships by regulation 17A of the 2009 Regulations.

• (2ZB) Where any of the persons named as members would be disqualified under the directors disqualification legislation but for the permission of a court to act, the incorporation document must include a statement to that effect, in respect of each of them, specifying—

• (a) the person’s name,

• (b) the court by which permission is given, and

• (c) the date on which permission was given.

• (2ZC) Where any of the persons named as members would be disqualified under the directors disqualification legislation by virtue of section 11A of the Company Directors Disqualification Act 1986 or Article 15A of the Company Directors Disqualification (Northern Ireland) Order 2002 (designated persons under sanctions legislation) but for the authority of a licence of the kind mentioned in that section or Article, the incorporation document must include a statement to that effect, in respect of each of them, specifying—

• (a) the person’s name, and

• (b) the date on which the licence was issued and by whom it was issued.

• (2A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) If a person makes a false statement under subsection (1)(c) which he—

• (a) knows to be false, or

• (b) does not believe to be true,

he commits an offence.

• (4) A person guilty of an offence under subsection (3) is liable—

• (a) on summary conviction, to imprisonment for a period not exceeding six months or a fine not exceeding the statutory maximum, or to both, or

• (b) on conviction on indictment, to imprisonment for a period not exceeding two years or a fine, or to both.

• (5) In this section—

• “appropriate address” means an address at which, in the ordinary course of events—a document addressed to the limited liability partnership, and delivered there by hand or by post, would be expected to come to the attention of a person acting on behalf of the limited liability partnership, andthe delivery of documents there is capable of being recorded by the obtaining of an acknowledgement of delivery;

• “appropriate email address” means an email address to which, in the ordinary course of events, emails sent by the registrar would be expected to come to the attention of a person acting on behalf of the limited liability partnership

• “disqualified under the directors disqualification legislation” has the meaning given in section 159A(2) of the Companies Act 2006, as applied to limited liability partnerships by regulation 17ZC of the 2009 Regulations;

• “permission of the court to act” means permission of a court under provision mentioned in column 2 of the table in section 159A(2) of that Act, as so applied.

Incorporation by registration

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• (1) The registrar, if satisfied that the requirements of section 2 are complied with, shall—

• (a) register the documents delivered under that section, and

• (b) give a certificate that the limited liability partnership is incorporated.

• (1A) The certificate must state—

• (a) the name and registered number of the limited liability partnership,

• (b) the date of its incorporation, and

• (c) whether the limited liability partnership’s registered office is situated in England and Wales (or in Wales), in Scotland or in Northern Ireland.

• (2) The registrar may accept the statement delivered under paragraph (c) of subsection (1) of section 2 as sufficient evidence that the requirement imposed by paragraph (a) of that subsection has been complied with.

• (3) The certificate shall either be signed by the registrar or be authenticated by his official seal.

• (4) The certificate is conclusive evidence that the requirements of section 2 are complied with and that the limited liability partnership is incorporated by the name specified in the incorporation document.

Membership

Members

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• (1) On the incorporation of a limited liability partnership its members are the persons who subscribed their names to the incorporation document (other than any who have died or been dissolved).

• (2) Any other person may become a member of a limited liability partnership by and in accordance with an agreement with the existing members.

• (2A) Subsections (1) and (2) are subject to section 159A(1) of the Companies Act 2006, as applied to limited liability partnerships by regulation 17ZC of the 2009 Regulations.

• (3) A person may cease to be a member of a limited liability partnership (as well as by death or dissolution) in accordance with an agreement with the other members or, in the absence of agreement with the other members as to cessation of membership, by giving reasonable notice to the other members.

• (4) A member of a limited liability partnership shall not be regarded for any purpose as employed by the limited liability partnership unless, if he and the other members were partners in a partnership, he would be regarded for that purpose as employed by the partnership.

Relationship of members etc

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• (1) Except as far as otherwise provided by this Act or any other enactment, the mutual rights and duties of the members of a limited liability partnership, and the mutual rights and duties of a limited liability partnership and its members, shall be governed—

• (a) by agreement between the members, or between the limited liability partnership and its members, or

• (b) in the absence of agreement as to any matter, by any provision made in relation to that matter by regulations under section 15(c).

• (2) An agreement made before the incorporation of a limited liability partnership between the persons who subscribe their names to the incorporation document may impose obligations on the limited liability partnership (to take effect at any time after its incorporation).

Members as agents

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• (1) Every member of a limited liability partnership is the agent of the limited liability partnership.

• (2) But a limited liability partnership is not bound by anything done by a member in dealing with a person if—

• (a) the member in fact has no authority to act for the limited liability partnership by doing that thing, and

• (b) the person knows that he has no authority or does not know or believe him to be a member of the limited liability partnership.

• (3) Where a person has ceased to be a member of a limited liability partnership, the former member is to be regarded (in relation to any person dealing with the limited liability partnership) as still being a member of the limited liability partnership unless—

• (a) the person has notice that the former member has ceased to be a member of the limited liability partnership, or

• (b) notice that the former member has ceased to be a member of the limited liability partnership has been delivered to the registrar.

• (4) Where a member of a limited liability partnership is liable to any person (other than another member of the limited liability partnership) as a result of a wrongful act or omission of his in the course of the business of the limited liability partnership or with its authority, the limited liability partnership is liable to the same extent as the member.

Ex-members

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• (1) This section applies where a member of a limited liability partnership has either ceased to be a member or—

• (a) has died,

• (b) has become bankrupt or had his estate sequestrated or has been wound up,

• (c) has granted a trust deed for the benefit of his creditors, or

• (d) has assigned the whole or any part of his share in the limited liability partnership (absolutely or by way of charge or security).

• (2) In such an event the former member or—

• (a) his personal representative,

• (b) his trustee in bankruptcy , the trustee or interim trustee in the sequestration, under the Bankruptcy (Scotland) Act 2016, of the former member’s estate or the former member’s liquidator,

• (c) his trustee under the trust deed for the benefit of his creditors, or

• (d) his assignee,

may not interfere in the management or administration of any business or affairs of the limited liability partnership.

• (3) But subsection (2) does not affect any right to receive an amount from the limited liability partnership in that event.

Designated members

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• (1) If the incorporation document specifies who are to be designated members—

• (a) they are designated members on incorporation, and

• (b) any member may become a designated member by and in accordance with an agreement with the other members,

and a member may cease to be a designated member in accordance with an agreement with the other members.

• (2) But if there would otherwise be no designated members, or only one, every member is a designated member.

• (3) If the incorporation document states that every person who from time to time is a member of the limited liability partnership is a designated member, every member is a designated member.

• (4) A limited liability partnership may at any time deliver to the registrar—

• (a) notice that specified members are to be designated members, or

• (b) notice that every person who from time to time is a member of the limited liability partnership is a designated member,

and, once it is delivered, subsection (1) (apart from paragraph (a)) and subsection (2), or subsection (3), shall have effect as if that were stated in the incorporation document.

• (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (6) A person ceases to be a designated member if he ceases to be a member.

Registration of membership changes

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Taxation

Income tax and chargeable gains

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• (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• (3) In the Taxation of Chargeable Gains Act 1992, after section 59 insert—

(59A) (1) Where a limited liability partnership carries on a trade or business with a view to profit— (a) assets held by the limited liability partnership shall be treated for the purposes of tax in respect of chargeable gains as held by its members as partners, and (b) any dealings by the limited liability partnership shall be treated for those purposes as dealings by its members in partnership (and not by the limited liability partnership as such), and tax in respect of chargeable gains accruing to the members of the limited liability partnership on the disposal of any of its assets shall be assessed and charged on them separately. (2) Where subsection (1) ceases to apply in relation to a limited liability partnership with the effect that tax is assessed and charged— (a) on the limited liability partnership (as a company) in respect of chargeable gains accruing on the disposal of any of its assets, and (b) on the members in respect of chargeable gains accruing on the disposal of any of their capital interests in the limited liability partnership, it shall be assessed and charged on the limited liability partnership as if subsection (1) had never applied in relation to it. (3) Neither the commencement of the application of subsection (1) nor the cessation of its application in relation to a limited liability partnership is to be taken as giving rise to the disposal of any assets by it or any of its members.

• (4) After section 156 of that Act insert—

(156A) (1) Where, immediately before the time of cessation of trade, a member of a limited liability partnership holds an asset, or an interest in an asset, acquired by him for a consideration treated as reduced under section 152 or 153, he shall be treated as if a chargeable gain equal to the amount of the reduction accrued to him immediately before that time. (2) Where, as a result of section 154(2), a chargeable gain on the disposal of an asset, or an interest in an asset, by a member of a limited liability partnership has not accrued before the time of cessation of trade, the member shall be treated as if the chargeable gain accrued immediately before that time. (3) In this section “the time of cessation of trade”, in relation to a limited liability partnership, means the time when section 59A(1) ceases to apply in relation to the limited liability partnership.

Inheritance tax

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In the Inheritance Tax Act 1984, after section 267 insert—

(267A) For the purposes of this Act and any other enactments relating to inheritance tax— (a) property to which a limited liability partnership is entitled, or which it occupies or uses, shall be treated as property to which its members are entitled, or which they occupy or use, as partners, (b) any business carried on by a limited liability partnership shall be treated as carried on in partnership by its members, (c) incorporation, change in membership or dissolution of a limited liability partnership shall be treated as formation, alteration or dissolution of a partnership, and (d) any transfer of value made by or to a limited liability partnership shall be treated as made by or to its members in partnership (and not by or to the limited liability partnership as such).

Stamp duty

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• (1) Stamp duty shall not be chargeable on an instrument by which property is conveyed or transferred by a person to a limited liability partnership in connection with its incorporation within the period of one year beginning with the date of incorporation if the following two conditions are satisfied.

• (2) The first condition is that at the relevant time the person—

• (a) is a partner in a partnership comprised of all the persons who are or are to be members of the limited liability partnership (and no-one else), or

• (b) holds the property conveyed or transferred as nominee or bare trustee for one or more of the partners in such a partnership.

• (3) The second condition is that—

• (a) the proportions of the property conveyed or transferred to which the persons mentioned in subsection (2)(a) are entitled immediately after the conveyance or transfer are the same as those to which they were entitled at the relevant time, or

• (b) none of the differences in those proportions has arisen as part of a scheme or arrangement of which the main purpose, or one of the main purposes, is avoidance of liability to any duty or tax.