There are several benefits for the EIS, or Enterprise Investment Scheme, to make this an interesting...
Even though LLPs (limited liability partnerships) are primarily governed by the LLP Act of 2000, the regulations made under the LLP Act of 2001 and 2002 have been replaced by new regulations – which apply provisions according to the rules set out by Companies Act rules 2006.
Therefore, as an LLP member, you must understand what some of these rules mean and how they are applied.
What the new rules mean for an LLP
Owing to the jurisdictional changes, LLPs must now keep a register of members as a general rule. For a member acting as an individual, this register must contain:
- Current name along with any previous name used in the last twenty years for business purposes;
- Current service address;
- The part of UK he/she resides in;
- Date of birth;
- Whether he/she is a designated member.
For a corporate firm or member, the register must contain:
- The corporate/firm name;
- The registered/principal office;
- Place of registration and registration number if it’s an EEA company;
- For non-EFA LLBs – the legal form under which it is governed;
- Whether the corporate firm or member is a designated member.
These details must then be filed at Companies House.
The provisions within Company Act 2006 protecting the home address of all company directors now apply to the LLPs members as well. Further, LLPs are required to maintain a register containing home addresses of all members acting as individuals, although this register cannot be made available for public inspection or scrutiny. Each members’ home address must also be filed at Companies House, although again, it cannot be disclosed to the public.
The two-member requirement continues but with an exception – when membership falls back to one member, new rules come into play.
As with the previous rules prior to Company Act 2006, the LLP must have at least two members and there’s no upper limit to how many members can come aboard. However, if the number of members comes down to just one, the LLP can still trade – but if it does so in excess of 6 months, it will automatically lose its limited liability status. Consequently, the sole member will be severally and jointly liable for all debts incurred outside of this 6-month period.
The new trading disclosure rules for LLP under Company Act also deserve attention. For example, the LLP must clearly display its registered name in the following places:
- Its registered office;
- At any ‘inspection place’;
- Any location where it carries out business activities (not including a location being used as accommodation).
When it comes to execution of documents, unlike a company, an LLP can now execute a deed in one of the following ways:
- By affixing a common seal (only if there is one);
- By taking the signature of at least two members;
- By taking the signature of any one member as long as a witness attests that signature.
Understanding how the full suite of Companies Act rules affect LLP governance and management can be a tricky subject. Luckily, our friendly accountants are available to offer all the knowledge and guidance you need.