The Limited liability Partnerships Act of 2000 created a new type of trading vehicle in Wales, England, Scotland and Northern Ireland jurisdictions which came in to force on the 6th April 2001.
Limited liability partnerships or LLPs are they are also known represent an amalgamation of various features present in both unincorporated partnerships and limited companies.
Similar to partnerships LLPs require at least two participants who must be stated as being designated partners and act similarly to the role of a company secretary.
They are responsible for conducting the statutory responsibilities of the limited liability partnership including filing financial accounts, Annual Returns and other changes which are typically reported to the Registrar of Companies.
LLPs enjoy inherent safeguards of limited liability which cerates distance between the people who own and run the partnership from the business itself.
The setting up of a limited liability partnership usually takes place where a traditional partnership structure would be appropriate (for example, a Solicitors, Quantity Surveyors or Accountancy practice) but the benefits afforded by limited liability are viewed as important to the participants.
Registering an LLP does confer additional responsibilities and disclosures to the partners. Statutory accounts of limited liability partnerships are placed within the public domain and are viewable for a nominal fee from the Registrar of Companies.
The extra disclosure is one of the more prominent reasons why many unincorporated partnerships choose to bypass the LLP option in favour of retaining secrecy over their financial affairs.
As with traditional partnerships LLPs are usually governed by a partnership agreement which seek to define means of organising the business in a coherent manner.
Certain specifics relating to business continuity may however be absent because LLPs do not cease to exist in the same manner in which unincorporated partnerships do where one member resigns are otherwise leaves the business.
Companies Act regulations which mandate that limited companies must have at least one natural person in the role of director do not apply to limited liability partnerships. LLP members can consist entirely of incorporated entities and therefore creates the possibility of having several layers of corporations before an individual is named.