Limited Liability Partnership (LLP)

Private Limited Company - LTD
England, Wales and Northern Ireland

Unincorporated Partnership

Company Limited by Guarantee - CLG
England, Wales and Northern Ireland

Public Company Limited by Shares - PLC
England, Wales and Northern Ireland

Limited Partnerships – LP


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

Legislative Reform (Private Fund Limited Partnerships) Order 2017

Limited Partnerships Act 1907

Partnership Act 1890

The rules of equity and common law applicable to general partnerships

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

An LP is not a legal entity or a body corporate; it is a relationship between its partners.

(Maximum) period of existence

An LP has an unlimited period of existence. An LP’s duration may be for a fixed term, for a single venture or undertaking which is dissolved at the termination of the single venture or undertaking, or it can be terminated at will.

Governing document(s)

An LP is governed by a Partnership Agreement.

Liability of incorporators / shareholders

An LP has two categories of partner which have different liabilities. The general partners have unlimited liability for the firm’s debts and obligations. The limited partners have a limited liability up to the amount of capital that they have contributed.

(Governing) bodies

The general partners are responsible for managing the LP’s business. The limited partners do not take an active role in the management of the LP.

Other particularities

The general partner is usually a limited liability company.

LPs are often used for fund investment.


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

An LP can have international members and can hold international assets.


Can this type of entity be publicly listed or held?

An LP cannot be listed. The structure is typically used for sophisticated investors or as a collective investment scheme.


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

Non-profit and charitable organizations may use this structure. Registered pension funds and charities are exempt from income tax and chargeable gains derived from investments. They would however be subject to a tax liability in relation to trading income, as there is no relevant trading income exemption.



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

Main documents required

It is common to have a formal Partnership Agreement but an LP can rely on the default provisions of the LPA 1907, the PA 1890 and the general law relating to general partnerships.

Involvement of notary, company register, governmental authorities

The LP agreement is a private document and does not need to be filed at Companies House.

Timing (estimate) and main costs, including registration and similar fees (excluding legal fees)

An LP must be registered at Companies House using a Form LP5. This includes a £20 fee or a £100 fee for same day service.

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

The following information is required for the LP5:

  1. Name of the firm which the LP is to be registered;
  2. General nature of the business;
  3. Address of the proposed principal place of business;
  4. Term, if any, for which the LP is to be entered into;
  5. Name and signature of each of the general and limited partners; and
  6. Amount of capital contribution of each limited partner.

Minimum number of incorporators / shareholders and residency requirements

An LP must have at least one general partner and limited partner at any time. A person cannot be both a general partner and a limited partner at the same time. There is no maximum number of partners.


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

An LP is managed by the general partners. There is no requirement for a general or limited partner to be resident in the UK.


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

If a limited partnership is not designated as a private fund limited partnership within the meaning of the Legislative Reform (Private Fund Limited Partnerships) Order 2017, a limited partner must make a contribution of capital at the time of entry into the LP. This amount of capital must be stated on the Form LP5, any increase at a later date must be notified on the Registrar on Form LP6.


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

There is no requirement for a general or limited partner to be resident in the UK. The LP must carry out some business in the UK at the time of formation, but it need not be permanently established in the UK to take the form of an LP.


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

LPs are not generally treated as taxable entities. The partners are taxed separately on their share of the profits or losses of the partnership.



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 LP5 Form will be publically available on Companies House which includes:

  1. Name of the LP;
  2. General nature of the business;
  3. Address of the place of business;
  4. Term, if any, for which the LP is entered into; and
  5. Names of each limited and general partners.

Any LP6 Forms will be publically available on Companies House which include:

  1. Any change of name;
  2. Any change of nature of business;
  3. Any change in partners or name of partners;
  4. Any change of character or term of the partnership;
  5. Any change in the sum contributed by a limited partner;
  6. A statement of increase in capital contributions; and
  7. Any change in liability of a general partner becoming a limited partner.

The certificate of registration is available on Companies House.

Any statement of general partner becoming a limited partner or assignment of share of limited partner should be advertised in the London Gazette.



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

The general partner(s) have responsibility for managing the business of the LP. The limited partners must not be involved in management or they will lose their limited liability status.


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

This process is usually set out in the Partnership Agreement. If there is no Partnership Agreement, then the decision making abilities of the Partnership Act 1890 will be implied.


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

The general partner(s) have responsibility for managing the business of the LP.


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?

Not applicable.


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

Not applicable.


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

This depends on the partnership agreement.


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

Not applicable.


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

There is no express requirement to prepare accounts. The partners agree between themselves the form and contents of the LP’s financial statements. Unless an LP is a “qualified partnership” under the Partnerships (Accounts) Regulations 2008, then an LP is not required to audit or file a copy of its accounts with Companies House.


Is the entity permitted to determine its own financial year?

Yes.


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

No.


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

Not applicable.



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

Partnership share.


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

There are two different classes of ownership, limited partner and general partner.


What documentation is required for the transfer of ownership interests?

Form LP6 must be completed and filed at Companies House.


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

Any statement of general partner becoming a limited partner or assignment of share of limited partner should be advertised in the London Gazette.


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

Stamp duty is applicable on the transfer of interests in partnerships.


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

Not applicable.


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?

Equity contributions are governed by the Partnership Agreement.


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

Not applicable.


Any requirements with respect to distributions to shareholders?

Not applicable.


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

Yes, by way of the Partnership Agreement.



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

None.


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

LPs are not generally treated as taxable entities and are tax transparent. The partners are taxed separately on their share of the profits or losses of the partnership.



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

As it currently stands, an LP is not a legal entity and there have been proposals to change this position.

With effect from 6 April 2017, the Limited Partnership Act 1907 was amended by the Legislative Reform (Private Fund Limited Partnerships) Order 2017 with the object of making make such partnerships more effective vehicles for private equity and venture capital investments. The changes implemented by this legislation apply only to those limited partnerships that are designated as private fund limited partnerships.


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Need more information?
Contact a member firm:
Simon Bickerdike
Penningtons Manches Cooper LLP
UK - England


Catherine Moss
Shakespeare Martineau LLP
UK - England


Damian McParland
Millar McCall Wylie LLP
UK - Northern Ireland