What is the main source of law authorising this entity form?

Limited Liability Partnerships Act 2000

Limited Liability Partnerships Regulation 2001

Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009/1804

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

Has a legal entity separate from its members;

(Maximum) period of existence

N/A.

Governing document(s)

Is governed by an agreement which is a private document and confidential to its members.

In the absence of agreement between the members, the law provides some default provisions that apply.

Liability of incorporators / shareholders

Affords limited liability to its members. However, in some circumstances a member may have to contribute to its assets if, for example, that member is guilty of misfeasance.

(Governing) bodies

There are no directors in an LLP; the members have rights both to profits and to manage the business.

Other particularities

Is tax transparent and therefore not a taxable entity. Profits and losses are taxed in the hands of the members of the LLP.

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

Yes – a cross border merger is possible between an LLP registered in England and Wales and another LLP.

Can this type of entity be publicly listed or held?

No.

Can this type of entity be used for a non-profit or charitable organization?

Cannot be formed for non-profit making activities.

However, it could be argued that after incorporation, it can change to a non-profit making organisation (but note Secretary of State’s power to appoint inspectors to investigate affairs if LLP ceases to carry on business with a view to profit).

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

N/A.

Involvement of notary, company register, governmental authorities

Incorporated by registration of a completed Form LL IN01 and fee at Companies House.

Timing (estimate)

Usually processed within 24 hours if filed electronically or within 5 days of receipt if filed on paper.

Main costs, including registration and similar fees (excluding legal fees)

Fees when filing electronically: £10 standard fee; £30 for same-day service.

Fees when filing on paper: £40 standard fee; £100 for same-day service.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

No description of anticipated business or purpose of entity is necessary. The only requirement is that two or more persons named in the form are associated for carrying on a lawful business with a view to profit.

Minimum number of incorporators / shareholders and residency requirements

Minimum of 2 members (who must consent to act), however the LLP continues to exist even if membership falls to 1 (e.g., where one member dies).

Minimum of 2 “designated” members who have particular responsibilities and functions within the LLP (if none or only 1 appointed, every member deemed to be a designated member).

No residency requirements.

Minimum number of directors (or other applicable officers) and residency requirements

There are no directors but Designated Members have some responsibilities that are akin to a director or company secretary.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

No share capital but members may make capital contributions (not subject to a minimum requirement).

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

No.

Is a tax identification number, or equivalent, required? If so, how is it obtained?

An LLP will receive a Unique Taxpayers Reference (UTR) from HM Revenue & Customs shortly after incorporation.

What is the title of the applicable company registry?

Companies House.

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following must be filed at Companies House and will be publicly available:

• Confirmation statement (within which the LLP must include information about persons with significant control (PSC));
• Annual accounts;
• Notification of changes to LLP’s membership;
• Notification of changes to the registered office address;
• Notification of changes to a member’s status (from member to designated member or vice versa);
• Notification of a change in the decision that all members or only specific members are to be designated members;
• Details of any mortgage or charge created by the LLP; and
• Notice of a Single Alternative Inspection Location where LLP records are kept for inspection at an address other than the registered office.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

The members’ main tasks/responsibilities/duties are governed by the LLP Agreement. If there is not one, the default tasks/duties under the Limited Liability Partnerships Act are:

• All members to participate in the management of the LLP;
• To give true accounts and full information;
• To account for profits from competing business;
• To account for benefits derived from transactions concerning the LLP and its business or property; and
• No default obligation to contribute capital.

See also statutory duties of designated members below.

How are the members of executive body appointed, dismissed and replaced?

Unless agreed otherwise in an LLP agreement (which is usual), all LLP members must give their consent to admit a new member.

A member can only be expelled from the LLP against his/her wishes if the power to expel is granted by express agreement between members.

Is it possible to appoint corporate directors or must all directors be natural persons?

N/A.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

It is possible to appoint members with a non-executive role under the terms of an LLP Agreement.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

See above.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

The default rules set out in the law (which can be varied in the LLP Agreement) state that decisions relating to ordinary matters may be decided by a majority of the members and no change can be made to the nature of the business without the consent of all the members. However, an LLP Agreement will usually impose a more extensive governance regime customised to the needs of the LLP.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

The accountant’s/auditor’s report may be required to be filed based on size of LLP and other Companies House filing requirements.

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

All LLPs must file annual accounts at Companies House (unless it is a dormant subsidiary which fulfils certain conditions).

Failure to do so is a criminal offence for every LLP member in default.

The deadline for filing accounts is within 9 months of the LLP’s accounting reference date.

Copies of the annual accounts and auditor’s report must be sent to LLP members and debenture holders.

Is the entity permitted to determine its own financial year?

A financial year starts on a new LLP’s day of incorporation and on the day after the previous financial year ended in subsequent years unless it has been varied.

The accounting reference period ends on the accounting reference date or up to 7 days earlier/later if LLP members choose.

For new LLPs the first accounting reference period expires on the first anniversary of the last day of the month in which incorporation (not trading) occurred.

The LLP may change its accounting reference date (ARD) by filing form LL AA01 at Companies House (as long as this is done before the deadline for filing the accounts has expired in any particular year).

Is the entity subject to any statutory (external) auditor obligations?

An LLP must prepare an auditor’s report which must be filed at Companies House along with the accounts (unless LLP qualifies as a “small LLP”, a “dormant LLP” or a “qualifying subsidiary” and claims the relevant audit exemption).

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

Minimum of 2 “designated” members who have over 20 statutory administrative obligations (together with penalties for non-compliance) and reflect those normally carried out by company director/secretary.

An auditor (unless the designated members reasonably determine that audited accounts are unlikely to be required – see above).

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

No specific title – but “interest” is usually used.

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Yes – if dealt with in the LLP Agreement. For example, different members can have weighted voting rights and different obligations to contribute to capital and profit allocations.

What documentation is required for the transfer of ownership interests?

No documentation is prescribed but usually (dependent on situation):

• Member’s Interest Purchase Agreement;
• Deeds of retirement and admissions;
• Revised LLP agreement; and
• Ancillary documents depending on the nature of the transaction.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

The LLP must notify Companies House of changes in membership within 14 days by filing:

• Form LL AP01 (appointment of individual member);
• Form LL AP02 (appointment of corporate member); and
• Form LL TM01 (termination of appointment of a member – individual or corporate).

Are there any applicable stamp duties imposed when transferring ownership interests?

Stamp duty is payable only if the LLP holds stock or marketable securities (at 0.5% of proportion of market value of stock and marketable securities). Stamp duty land tax will be payable if the LLP is a property investment partnership.

How are shares issued? (including information on payment obligations, registration requirements)

“Shares” are not “issued” – see above re admission of new members. This will be dealt with in the LLP Agreement.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Governed by LLP Agreement (but no share capital).

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Governed by LLP Agreement (but no share capital).

Any requirements with respect to distributions to shareholders?

Governed by LLP Agreement (but no share capital or shareholders).

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Governed by LLP Agreement.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

When an LLP carries on a “trade or business” with “a view to profit” all the activities of the LLP are treated as being carried on in partnership by its members and not by the LLP as a separate entity. Accordingly:

• The LLP is not a taxable entity but is normally liable to register for VAT if it meets the applicable thresholds;
• Individual members are liable to income tax or capital gains tax on their shares of the income profits or gains; and
• Corporate members are liable to corporation tax.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

No corporation tax on the LLP as it is tax transparent.

Summary of any specific matters, e.g. recent or prospective major legal developments

Brexit

As a result of Brexit, filing requirements have changed for LLP corporate members that are not limited companies registered in the UK.

An LLP now has to provide the corporate member’s legal form and its governing law, where the corporate member is registered (if applicable) and registration number (if applicable).

The Department for Business, Energy & Industrial Strategy (BEIS): consultation on climate-related financial disclosures by large LLPs.

BEIS is seeking views on proposals to require mandatory climate-related financial disclosures from LLPs which have more than 500 employees and an annualised turnover of more than £500 million.

BEIS: consultation and government response on corporate transparency and company register reform.

Following the 2019 BEIS consultation, the government is intending to move forward with its proposals to require more information about the people registering, running and owning LLPs, as well as the entities themselves, including improved checks on information and reform of the Registrar’s statutory power.