The Law Of Limited Liability Partnerships

by Whittaker, John; Machell, John; Ives, Colin

• ISBN13: 9780853089469
• ISBN10: 0853089469
• Edition: 2nd
• Format: Hardcover
• Copyright: 2005-06-30
• Publisher: Jordans Pub

Summary

The Law of Limited Liability Partnerships is a comprehensive guide to the law relating to this particular type of corporate vehicle, which combines a degree of protection from personal liability with the traditional flexibility of a partnership. Substantially expanded and updated since the first edition (Limited Liability Partnerships: The New Law), the second edition addresses the issues which practitioners find are arising, as increasing numbers of businesses and existing partnerships become LLPs. New material includes: -The effect of the SORP for accounting by LLPs, issued in May 2002 -The application to LLPs of confidentiality orders, permitting the non-disclosure of addresses -A new section on LLPs as collective investment schemes -The implications for LLPs of the new insolvency provisions introduced by Insolvency Act 2000 and the Enterprise Act 2002 -A new chapter on issues of jurisdiction and the position of overseas LLPs carrying on business in England The Law of Limited Liability Partnerships is accompanied by an invaluable CD-ROM containing the Companies Act 1985, the Insolvency Act 1986 and the Company Directors Disqualification Act 1986, as modified by the various regulations accompanying the Limited Liability Partnerships Act 2000. Additional statutory and regulatory material is also included, such as the LLP SORP and EU Insolvency Regulation. CONTENTS: -Overview and Introductory Matters -Incorporation -The Corporate Entity -Formalities and Requirements after Incorporation -The LLP and the Outside World -Property and Charges -Conversion from a Partnership -Membership: General Matters -The LLP Agreement -Designated Members -The Duties and Responsibilities of Members -The Rights of Members -Funding and Profits and Losses -Management and Decision Making -The Member and the Outside World -Cessation of Membership and its Consequences -Foreign Connections and Overseas LLPs -Individual Accounts and Audit -Auditors -Investigations and Striking off -Taxation of a Limited Liability Partnership and its Members -Insolvency and Winding up of LLPs - A General Introduction -Voluntary Arrangements -Administration -Receivership -Commencement of Winding Up -Unfair Prejudice and Just and Equitable Winding Up -Conduct of the Liquidation -Misfeasance and Adjustment of Prior Transactions -Completion of the Winding Up and Dissolution -Arrangements and Reconstructions -Disqualification

Table of Contents

Foreword to the first edition	v
Preface	vii
Notes on the CD-ROM	ix
Table of Cases	xxi
Table of Statutes	xxxv
Table of Statutory Instruments, Statements of Practice etc	li
Table of EC and International Materials	lix
Table of Abbreviations	lxi
Chapter 1 Overview and Introductory Matters	1	(12)
A new business entity	1	(1)
Disclosure and regulation	2	(1)
The registrar	3	(2)
'Limited liability partnership search'	5	(1)
Scheme of the legislation	5	(4)
Partnership law	9	(1)
Punishment of offences	9	(1)
Great Britain'	10	(1)
Financial services	10	(1)
Groups and subsidiaries	11	(2)
Chapter 2 Incorporation	13	(20)
Introduction	13	(15)
(a) Two or more persons subscribe	13	(7)
(b) The incorporation document	20	(6)
(c) Compliance statement	26	(2)
Certificate and registration	28	(2)
Notice of issue of certificate	30	(1)
Inspection	30	(1)
Trading not commenced	31	(2)
Chapter 3 The Corporate Entity	33	(12)
Introduction	33	(1)
'Unlimited capacity'	34	(1)
Banks and landlords	35	(1)
Piercing the corporate veil	35	(1)
Notification to the registrar	36	(1)
The registered office	37	(2)
Collective investment schemes	39	(3)
LLP ceasing to satisfy section 2(1)(a)	42	(3)
Chapter 4 Formalities and Requirements after Incorporation	45	(12)
LLP identification	45	(3)
Companies Act 1985 requirements	45	(1)
Business Names Act 1985	46	(2)
Formalities for contracts, deeds and other documents	48	(4)
Generally	48	(3)
Pre-incorporation contracts	51	(1)
Change of name	52	(2)
Annual return	54	(3)
Chapter 5 The LLP and the Outside World	57	(12)
Agency	57	(1)
Members and other agents acting within their authority	58	(1)
Members and other agents acting outside their authority	58	(7)
Non-member employees (and other non-member agents)	59	(1)
Members	60	(2)
Third party 'knowing' that no authority	62	(2)
No 'knowledge or belief' by third party as to membership	64	(1)
Cessation of membership	65	(1)
Vicarious liability for torts and other wrongs	65	(4)
Acts of members	65	(2)
Acts of non-member employees	67	(2)
Chapter 6 Property and Charges	69	(8)
Introduction	69	(1)
Register of charges	69	(3)
Registration of charges	72	(3)
Power of court to extend time and rectify	75	(2)
Chapter 7 Conversion from a Partnership	77	(8)
Introduction	77	(1)
The decision to convert	77	(1)
Stamp duty and stamp duty land tax	78	(1)
Transfer of the partnership business and assets	78	(1)
Customer/client contracts	78	(1)
Employees	79	(1)
Leases	80	(1)
Banking	80	(1)
Investments	80	(1)
Professional indemnity insurance	80	(1)
Indemnities	81	(1)
Annuities	81	(1)
'True and fair' accounts	82	(1)
Partnerships of accountants	82	(1)
FSMA 2000 authorised persons	83	(2)
Chapter 8 Membership: General Matters	85	(18)
Introduction	85	(1)
First members	85	(1)
New members	86	(1)
Changes in a member's name or address	87	(1)
Notice in the London Gazette	88	(1)
Confidentiality orders	88	(3)
Limited liability	91	(2)
A member's share and interests	93	(1)
Alienation of a share or interest	94	(2)
Fiduciaries as members	96	(1)
Employment	96	(3)
Leaving members	99	(1)
Shadow members	100	(3)
Chapter 9 The LLP Agreement	103	(18)
LLP Act 2000, section 5(1)	103	(1)
The position in default	104	(2)
Points for the LLP agreement	106	(7)
Accounting obligations	106	(1)
Designated members	107	(1)
Funding	107	(1)
Profits and losses	107	(1)
New members	108	(1)
Property	108	(1)
Exclusion of liability to the LLP, and indemnity	108	(1)
Declaring an interest	108	(1)
Authority	109	(1)
Assignment by a member of his share	109	(1)
Duty of good faith?	110	(1)
Unfair prejudice	110	(1)
Employee members	110	(1)
Meetings	110	(1)
Management and decision making	111	(1)
Change of name or registered office or business of the LLP	111	(1)
Power of expulsion	111	(1)
Leaving members	112	(1)
Restrictive covenants	112	(1)
Liquidation, administration and arrangements with creditors	112	(1)
Liability to contribute in a winding-up	113	(1)
Default rules	113	(1)
Variation of agreement	113	(1)
Execute before incorporation?	113	(2)
Rectification	115	(1)
Rescission for misrepresentation	116	(1)
Remedies for breach	117	(1)
Governed by foreign law?	118	(3)
Chapter 10 Designated Members	121	(12)
Introduction	121	(1)
Appointment and retirement of designated members	122	(1)
Option (i): specifying named members	122	(1)
Option (ii): all members automatically designated members	123	(1)
Ceasing to be a member	123	(1)
Duties, powers and responsibilities of the designated members	123	(7)
Annual accounts and audit	124	(2)
Annual return	126	(1)
Notices to the Registrar	127	(1)
Other duties, powers and responsibilities	127	(2)
Enforcement of duty to file with the Registrar	129	(1)
Designated members and the LLP	130	(1)
Company Directors Disqualification Act 1986	131	(2)
Chapter 11 The Duties and Responsibilities of Members	133	(20)
Introduction	133	(1)
A member's non-statutory duties to the LLP	134	(7)
Duty to account	134	(1)
Fiduciary obligations	134	(6)
Other (non-statutory) duties and responsibilities of a member	140	(1)
Statutory duties and responsibilities	141	(6)
Duties and responsibilities on members as a whole	141	(1)
Duties (with penalties for non-observance) on individual members	142	(5)
Company Directors Disqualification Act 1986	147	(1)
A member's duties to his co-members	147	(6)
Fiduciary duties?	147	(2)
Duty of good faith?	149	(3)
Duty to render 'true accounts' etc	152	(1)
Chapter 12 The Rights of Members	153	(8)
Introduction	153	(1)
Statutory rights of every member	153	(2)
Non-statutory rights	155	(6)
Default rules	155	(1)
Possibility of excluding a member's liability to the LLP for negligence	156	(2)
Claims by a member against the LLP	158	(1)
Derivative action by minority	158	(3)
Chapter 13 Funding and Profits and Losses	161	(6)
Funding	161	(2)
Profits and losses	163	(4)
Profits	163	(2)
Losses	165	(2)
Chapter 14 Management and Decision Making	167	(6)
Introduction	167	(1)
Management	167	(1)
Decision making	168	(1)
Death of a member or assignment of his share	168	(1)
The 1986 legislation	169	(1)
Delegation of duties laid on members as a whole	170	(3)
Chapter 15 The Member and the Outside World	173	(16)
Introduction	173	(1)
Contracts	173	(1)
Deeds	174	(1)
Torts	174	(13)
Negligence in the performance of services causing economic loss	174	(2)
Assumption of personal responsibility, and reliance on it	176	(4)
Professional advisers	180	(2)
Excluding liability in the retainer letter	182	(4)
Other torts causing economic loss	186	(1)
Joint liability with the LLP	187	(1)
Individual status of certain professionals	187	(1)
Liability in an insolvent liquidation	187	(2)
Chapter 16 Cessation of Membership and its Consequences	189	(16)
Introduction	189	(1)
Cessation of membership	189	(5)
Cessation by agreement or by 'reasonable notice'	189	(3)
Death/dissolution	192	(1)
Bankruptcy/liquidation of a member	193	(1)
Expulsion/compulsory retirement	194	(1)
Consequences of cessation of membership	194	(4)
Notification to the Registrar and cessation of agency	194	(1)
Rights and obligations of the outgoing member	194	(4)
LLP in liquidation	198	(1)
No agreement as to entitlement on cessation	198	(7)
Does a leaving member have a right to payment for the value of his 'share'?	199	(1)
Does the 'share' of a leaving member survive cessation?	200	(3)
Conclusion	203	(2)
Chapter 17 Foreign Connections and Oversea LLPs	205	(20)
Foreign connections of Great Britain LLPs	205	(1)
Jurisdiction over Great Britain LLPs	205	(2)
Oversea LLPs	207	(4)
Requirements for carrying on business in Great Britain	207	(1)
US LLPs (and LLCs)	208	(2)
Canadian LLPs	210	(1)
Jersey LLPs	210	(1)
Jurisdiction of English court over oversea LLPs	211	(2)
The juridical party	211	(1)
Service within the jurisdiction	212	(1)
Service out of the jurisdiction	212	(1)
Recognition of limited liability of oversea LLP members	213	(12)
Oversea LLP has separate legal personality	214	(4)
Oversea LLP does not have separate legal personality	218	(7)
Chapter 18 Individual Accounts and Audit	225	(24)
Introduction	225	(1)
Accounting records	225	(1)
Annual accounts	226	(1)
Financial year	226	(2)
Accounting principles: 'true and fair view'	228	(1)
CA 1985 provisions	228	(1)
Accounting standards and SORP	229	(2)
Formats	231	(1)
Information coming into the public domain	232	(3)
The balance sheet	232	(1)
Profit and loss account	233	(1)
The members' report	234	(1)
Group Accounts	235	(1)
Auditing	235	(1)
Approving the accounts	236	(1)
Filing with the Registrar	236	(2)
Revising the accounts	238	(1)
Circulation and publication of accounts	239	(1)
Exemptions for small- and medium-sized LLPs	240	(6)
Small LLP	241	(3)
Medium-sized LLP	244	(2)
Total exemptions from audit requirements	246	(3)
Chapter 19 Auditors	249	(8)
Introduction	249	(1)
Appointment	249	(1)
Access to LLP	250	(1)
Remuneration	251	(1)
Termination of appointment	252	(1)
Section 394 statement	253	(2)
Section 727 relief	255	(2)
Chapter 20 Investigations and striking off	257	(10)
DTI power to investigate or require information	257	(4)
Introduction	257	(1)
Investigation by inspectors	257	(2)
Production of documents	259	(1)
Applications to court by the Secretary of State	260	(1)
Striking the LLP's name off the register	261	(6)
Introduction	261	(1)
Registrar's initiative	261	(1)
Application by designated members	262	(2)
After striking off	264	(3)
Chapter 21 Taxation of a Limited Liability Partnership and its Members	267	(26)
Introduction	267	(1)
Computation of taxable profits	267	(4)
Capital allowances	267	(1)
Income tax	267	(4)
Corporation tax	271	(1)
Associates and connected persons	271	(9)
Individual members' taxation	272	(1)
Commencement rules	272	(1)
Change of accounting reference date	273	(1)
Cessation	274	(1)
Loss relief	274	(2)
Salaried members	276	(1)
Partnership annuity payments	276	(1)
Partnership annuity transfers	277	(1)
Pension relief	277	(2)
Loan interest relief	279	(1)
Partial incorporation to an LLP	280	(1)
National Insurance contributions	280	(1)
Capital Gains Tax (CGT)	280	(2)
CGT rollover relief	282	(1)
Liquidations/winding up	282	(1)
Stamp duty	283	(1)
Stamp duty land tax	284	(3)
Double taxation relief	287	(1)
UK branches of overseas LLPs	288	(1)
Inheritance tax (IHT)	288	(1)
Value added tax (VAT)	289	(1)
Costs of conversion	289	(1)
Anti-avoidance legislation	290	(3)
Chapter 22 Insolvency and Winding up of LLPs - a General Introduction	293	(2)
Introduction	293	(2)
Chapter 23 Voluntary Arrangements	295	(10)
What is a voluntary arrangement?	295	(1)
The proposal	295	(2)
Moratorium	297	(3)
The meeting(s)	300	(2)
Challenge to the voluntary arrangement	302	(1)
Administration of the voluntary arrangement	302	(3)
Chapter 24 Administration	305	(6)
Introduction	305	(1)
Procedure	306	(1)
Role of the administrator	307	(2)
Conduct of the creditors' meeting	309	(2)
Chapter 25 Receivership	311	(5)
Introduction	311	(1)
Prohibition on the appointment of administrative receiver	312	(1)
Appointment of receivers	313	(1)
Duties and powers	314	(1)
All receivers	314	(1)
Administrative receivers	314	(1)
Statement of affairs in administrative receivership	315	(1)
Administrative receiver's report	316	(1)
Chapter 26 Commencement of Winding Up	316	(13)
Voluntary winding up	318	(2)
Types of voluntary winding up	320	(1)
Compulsory winding up	320	(2)
Determination by the LLP	320	(1)
Failure to commence business within a year or suspension of business	320	(1)
Inability to pay debts	321	(1)
Just and equitable winding up	322	(1)
Application for a winding-up order	322	(4)
Functions of official receiver and appointment of a liquidator	326	(3)
Chapter 27 Unfair Prejudice and Just and Equitable Winding Up	329	(12)
Introduction	329	(1)
The legislative provisions	329	(2)
Companies Act 1985, section 459	329	(1)
Contracting out of section 459	330	(1)
Insolvency Act 1986, section 122	330	(1)
Who can present a petition?	331	(1)
Application to LLPs	332	(9)
Breakdown of relationship between members	336	(5)
Chapter 28 Conduct of the Liquidation	341	(6)
General	341	(1)
Status of members' claims	341	(2)
Disclaimer of onerous property	343	(1)
Recission of contracts	344	(1)
Crown preference and top slicing	344	(3)
Chapter 29 Misfeasance and Adjustment of Prior Transactions	347	(14)
Malpractice and misfeasance	347	(1)
Fraudulent trading	347	(1)
Wrongful trading	348	(1)
Adjustment of withdrawals	349	(2)
Transactions at an undervalue	351	(1)
Preferences	352	(2)
Extortionate credit transactions	354	(1)
Avoidance of floating charges	354	(1)
Unenforceability of liens	355	(1)
Transactions defrauding creditors	356	(1)
Re-use of LLP names	357	(4)
Chapter 30 Completion of the Winding Up and Dissolution	361	(4)
Introduction	361	(1)
Voluntary winding up	361	(1)
Compulsory liquidation	362	(1)
Results of dissolution	363	(2)
Chapter 31 Arrangements and Reconstructions	365	(4)
Introduction	365	(1)
Companies Act 1985, section 425	365	(1)
Insolvency Act 1986, section 110	366	(3)
Chapter 32 Disqualification	369	(14)
The legislation and the scope of a disqualification order	369	(2)
Unfitness	371	(5)
Case-law	374	(1)
Collegiate responsibility	375	(1)
Other grounds for disqualification	376	(3)
Consequences of contravention	379	(2)
Applications for leave to act	381	(2)
Appendix 1 Limited Liability Partnerships Act 2000	383	(18)
Appendix 2 Limited Liability Partnerships Regulations 2001	401	(8)
Index	409