Limited Liability Partnerships Regulations 2001

• Citation: S.I. 2001/1090
• Sections: 73

Section 1 Citation and commencement

These Regulations may be cited as the Limited Liability Partnerships Regulations 2001 and shall come into force on 6th April 2001.

Section 2 Interpretation

In these Regulations—

“the 1985 Act ” means the Companies Act 1985 ;

“the 1986 Act ” means the Insolvency Act 1986 ;

“the 2000 Act ” means the Financial Services and Markets Act 2000 ;

“devolved”, in relation to the provisions of the 1986 Act, means the provisions of the 1986 Act which are listed in Schedule 4 and, in their application to Scotland, concern wholly or partly, matters which are set out in Section C.2 of Schedule 5 to the Scotland Act 1998 as being exceptions to the reservations made in that Act in the field of insolvency;

“limited liability partnership agreement”, in relation to a limited liability partnership, means any agreement express or implied between the members of the limited liability partnership or between the limited liability partnership and the members of the limited liability partnership which determines the mutual rights and duties of the members, and their rights and duties in relation to the limited liability partnership;

“the principal Act ” means the Limited Liability Partnerships Act 2000; and

“shadow member”, in relation to limited liability partnerships, means a person in accordance with whose directions or instructions the members of the limited liability partnership are accustomed to act (but so that a person is not deemed a shadow member by reason only that the members of the limited partnership act on advice given by him in a professional capacity).

Section 3 Application of the accounts and audit provisions of the 1985 Act to limited liability partnerships

(1) Subject to paragraph (2), the provisions of Part VII of the 1985 Act (Accounts and Audit) shall apply to limited liability partnerships.

(2) The enactments referred to in paragraph (1) shall apply to limited liability partnerships, except where the context otherwise requires, with the following modifications—

(a) references to a company shall include references to a limited liability partnership;

(b) references to a director or to an officer of a company shall include references to a member of a limited liability partnership;

(c) references to other provisions of the 1985 Act and to provisions of the Insolvency Act 1986 shall include references to those provisions as they apply to limited liability partnerships in accordance with Parts III and IV of these Regulations;

(d) the modifications set out in Schedule 1 to these Regulations; and

(e) such further modifications as the context requires for the purpose of giving effect to those provisions as applied by this Part of these Regulations.

Section 4 Application of the remainder of the provisions of the 1985 Act and of the provisions of the Company Directors Disqualification Act 1986 to limited liability partnerships

(1) The provisions of the 1985 Act specified in the first column of Part I of Schedule 2 to these Regulations shall apply to limited liability partnerships, except where the context otherwise requires, with the following modifications—

(a) references to a company shall include references to a limited liability partnership;

(b) references to the Companies Acts shall include references to the principal Act and regulations made thereunder;

(c) references to the Insolvency Act 1986 shall include references to that Act as it applies to limited liability partnerships by virtue of Part IV of these Regulations;

(d) references in a provision of the 1985 Act to other provisions of that Act shall include references to those other provisions as they apply to limited liability partnerships by virtue of these Regulations;

(e) references to the memorandum of association of a company shall include references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part I of Schedule 2 opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect to that legislation as applied by these Regulations.

(2) The provisions of the Company Director Disqualification Act 1986 shall apply to limited liability partnerships, except where the context otherwise requires, with the following modifications—

(a) references to a company shall include references to a limited liability partnership;

(b) references to the Companies Acts shall include references to the principal Act and regulations made thereunder and references to the companies legislation shall include references to the principal Act, regulations made thereunder and to any enactment applied by regulations to limited liability partnerships;

(d) references to the Insolvency Act 1986 shall include references to that Act as it applies to limited liability partnerships by virtue of Part IV of these Regulations;

(e) references to the memorandum of association of a company shall include references to the incorporation document of a limited liability partnership;

(f) references to a shadow director shall include references to a shadow member;

(g) references to a director of a company or to an officer of a company shall include references to a member of a limited liability partnership;

(h) the modifications, if any, specified in the second column of Part II of Schedule 2 opposite the provision specified in the first column; and

(i) such further modifications as the context requires for the purpose of giving effect to that legislation as applied by these Regulations.

Section 5 Application of the 1986 Act to limited liability partnerships

(1) Subject to paragraphs (2) and (3), the following provisions of the 1986 Act, shall apply to limited liability partnerships—

(a) Parts I, II , III , IV, VI and VII of the First Group of Parts (company insolvency; companies winding up),

(b) the Third Group of Parts (miscellaneous matters bearing on both company and individual insolvency; general interpretation; final provisions) .

(2) The provisions of the 1986 Act referred to in paragraph (1) shall apply to limited liability partnerships, except where the context otherwise requires, with the following modifications—

(a) references to a company shall include references to a limited liability partnership;

(b) references to a director or to an officer of a company shall include references to a member of a limited liability partnership;

(c) references to a shadow director shall include references to a shadow member;

(d) references to the 1985 Act, the Company Directors Disqualification Act 1986, the Companies Act 1989 or to any provisions of those Acts or to any provisions of the 1986 Act shall include references to those Acts or provisions as they apply to limited liability partnerships by virtue of the principal Act;

(e) references to the memorandum of association of a company and to the articles of association of a company shall include references to the limited liability partnership agreement of a limited liability partnership;

(f) the modifications set out in Schedule 3 to these Regulations; and

(g) such further modifications as the context requires for the purpose of giving effect to that legislation as applied by these Regulations.

(3) In the application of this regulation to Scotland, the provisions of the 1986 Act referred to in paragraph (1) shall not include the provisions listed in Schedule 4 to the extent specified in that Schedule.

Section 6 Application of provisions contained in Parts XV and XXIV of the 2000 Act to limited liability partnerships

(1) Subject to paragraph (2), sections 215(3),(4) and (6), 356, 359(1) to (4), 361 to 365, 367, 370 and 371 of the 2000 Act shall apply to limited liability partnerships.

(2) The provisions of the 2000 Act referred to in paragraph (1) shall apply to limited liability partnerships, except where the context otherwise requires, with the following modifications—

(a) references to a company shall include references to a limited liability partnership;

(b) references to body shall include references to a limited liability partnership; and

(c) references to the 1985 Act, the 1986 Act or to any of the provisions of those Acts shall include references to those Acts or provisions as they apply to limited liability partnerships by virtue of the principal Act.

Section 7 Default provision for limited liability partnerships

The mutual rights and duties of the members and the mutual rights and duties of the limited liability partnership and the members shall be determined, subject to the provisions of the general law and to the terms of any limited liability partnership agreement, by the following rules:

(1) All the members of a limited liability partnership are entitled to share equally in the capital and profits of the limited liability partnership.

(2) The limited liability partnership must indemnify each member in respect of payments made and personal liabilities incurred by him—

(a) in the ordinary and proper conduct of the business of the limited liability partnership; or

(b) in or about anything necessarily done for the preservation of the business or property of the limited liability partnership.

(3) Every member may take part in the management of the limited liability partnership.

(4) No member shall be entitled to remuneration for acting in the business or management of the limited liability partnership.

(5) No person may be introduced as a member or voluntarily assign an interest in a limited liability partnership without the consent of all existing members.

(6) Any difference arising as to ordinary matters connected with the business of the limited liability partnership may be decided by a majority of the members, but no change may be made in the nature of the business of the limited liability partnership without the consent of all the members.

(7) The books and records of the limited liability partnership are to be made available for inspection at the registered office of the limited liability partnership or at such other place as the members think fit and every member of the limited liability partnership may when he thinks fit have access to and inspect and copy any of them.

(8) Each member shall render true accounts and full information of all things affecting the limited liability partnership to any member or his legal representatives.

(9) If a member, without the consent of the limited liability partnership, carries on any business of the same nature as and competing with the limited liability partnership, he must account for and pay over to the limited liability partnership all profits made by him in that business.

(10) Every member must account to the limited liability partnership for any benefit derived by him without the consent of the limited liability partnership from any transaction concerning the limited liability partnership, or from any use by him of the property of the limited liability partnership, name or business connection.

Section 8 Expulsion

No majority of the members can expel any member unless a power to do so has been conferred by express agreement between the members.

Section 9 General and consequential amendments

(1) Subject to paragraph (2), the enactments mentioned in Schedule 5 shall have effect subject to the amendments specified in that Schedule.

(2) In the application of this regulation to Scotland—

(a) paragraph 15 of Schedule 5 which amends section 110 of the 1986 Act shall not extend to Scotland; and

(b) paragraph 22 of Schedule 5 which applies to limited liability partnerships the culpable officer provisions in existing primary legislation shall not extend to Scotland insofar as it relates to matters which have not been reserved by Schedule 5 to the Scotland Act 1998.

Section 10 Application of subordinate legislation

(1) The subordinate legislation specified in Schedule 6 shall apply as from time to time in force to limited liability partnerships and—

(a) in the case of the subordinate legislation listed in Part I of that Schedule with such modifications as the context requires for the purpose of giving effect to the provisions of the Companies Act 1985 which are applied by these Regulations;

(b) in the case of the subordinate legislation listed in Part II of that Schedule with such modifications as the context requires for the purpose of giving effect to the provisions of the Insolvency Act 1986 which are applied by these Regulations; and

(c) in the case of the subordinate legislation listed in Part III of that Schedule with such modifications as the context requires for the purpose of giving effect to the provisions of the Business Names Act 1985 and the Company Directors Disqualification Act 1986 which are applied by these Regulations.

(2) In the case of any conflict between any provision of the subordinate legislation applied by paragraph (1) and any provision of these Regulations, the latter shall prevail.

K

Loans and other debts due to members (9)

L

Members' other interests

(I) Members' capital

(II) Revaluation reserve

(III) Other reserves

A

Loans and other debts due to members (9)

AA

Members' other interests

(I) Members' capital

(II) Revaluation reserve

(III) Other reserves

K

Loans and other debts due to members

L

Members' other interests

(I) Members' capital

(II) Revaluation reserve

(III) Other reserves

A

Loans and other debts due to members

AA

Members' other interests

(I) Members' capital

(II) Revaluation reserve

(III) Other reserves

Section 37A

The following information shall be given—

(a) the aggregate amounts of loans and other debts due to members as at the date of the beginning of the financial year,

(b) the aggregate amounts contributed by members during the financial year,

(c) the aggregate amounts transferred to or from the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts due to members that fall due after one year.

Section 37A Loans and other debts due to members

The following information shall be given—

(a) the aggregate amount of loans and other debts due to members as at the date of the beginning of the financial year,

(b) the aggregate amounts contributed by members during the financial year,

(c) the aggregate amounts transferred to or from the profit and loss account during that year,

(d) the aggregate amounts withdrawn by members or applied on behalf of members during that year,

(e) the aggregate amount of loans and other debts due to members as at the balance sheet date, and

(f) the aggregate amount of loans and other debts due to members that fall due after one year.

Section 56A

(1) Particulars shall be given of the average number of members of the limited liability partnership in the financial year, which number shall be determined by dividing the relevant annual number by the number of months in the financial year.

(2) The relevant annual number shall be determined by ascertaining for each month in the financial year the number of members of the limited liability partnership for all or part of that month, and adding together all the monthly numbers.

(3) Where the amount of the profit of the limited liability partnership for the financial year before members' remuneration and profit shares exceeds £200,000, there shall be disclosed the amount of profit (including remuneration) which is attributable to the member with the largest entitlement to profit (including remuneration).

For the purpose of determining the amount to be disclosed, “remuneration” includes any emoluments specified in paragraph 1(1)(a), (c) or (d) of Schedule 6 to this Act which are paid by or receivable from—

(i) the limited liability partnership; and

(ii) the limited liability partnership’s subsidiary undertakings; and

(iii) any other person.

Section 8A

The extent of the member’s and shadow members' responsibility for events leading to a member or shadow member, whether himself or some other member or shadow member, being declared by the court to be liable to make a contribution to the assets of the limited liability partnership under section 214A of the Insolvency Act 1986.

Section 19

Power to enforce any rights the limited liability partnership has against the members under the terms of the limited liability partnership agreement.

Section 74

When a limited liability partnership is wound up every present and past member of the limited liability partnership who has agreed with the other members or with the limited liability partnership that he will, in circumstances which have arisen, be liable to contribute to the assets of the limited liability partnership in the event that the limited liability partnership goes into liquidation is liable, to the extent that he has so agreed, to contribute to its assets to any amount sufficient for payment of its debts and liabilities, and the expenses of the winding up, and for the adjustment of the rights of the contributories among themselves.

However, a past member shall only be liable if the obligation arising from such agreement survived his ceasing to be a member of the limited liability partnership.

Section 86

A voluntary winding up is deemed to commence at the time when the limited liability partnership determines that it be wound up voluntarily.

Section 214A

(adjustment of withdrawals)

Section 214A

Adjustment of withdrawals

(1) This section has effect in relation to a person who is or has been a member of a limited liability partnership where, in the course of the winding up of that limited liability partnership, it appears that subsection (2) of this section applies in relation to that person.

(2) This subsection applies in relation to a person if—

(a) within the period of two years ending with the commencement of the winding up, he was a member of the limited liability partnership who withdrew property of the limited liability partnership, whether in the form of a share of profits, salary, repayment of or payment of interest on a loan to the limited liability partnership or any other withdrawal of property, and

(b) it is proved by the liquidator to the satisfaction of the court that at the time of the withdrawal he knew or had reasonable ground for believing that the limited liability partnership—

(i) was at the time of the withdrawal unable to pay its debts within the meaning of section 123, or

(ii) would become so unable to pay its debts after the assets of the limited liability partnership had been depleted by that withdrawal taken together with all other withdrawals (if any) made by any members contemporaneously with that withdrawal or in contemplation when that withdrawal was made.

(3) Where this section has effect in relation to any person the court, on the application of the liquidator, may declare that that person is to be liable to make such contribution (if any) to the limited liability partnership’s assets as the court thinks proper.

(4) The court shall not make a declaration in relation to any person the amount of which exceeds the aggregate of the amounts or values of all the withdrawals referred to in subsection (2) made by that person within the period of two years referred to in that subsection.

(5) The court shall not make a declaration under this section with respect to any person unless that person knew or ought to have concluded that after each withdrawal referred to in subsection (2) there was no reasonable prospect that the limited liability partnership would avoid going into insolvent liquidation.

(6) For the purposes of subsection (5) the facts which a member ought to know or ascertain and the conclusions which he ought to reach are those which would be known, ascertained, or reached by a reasonably diligent person having both:

(a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the same functions as are carried out by that member in relation to the limited liability partnership, and

(b) the general knowledge, skill and experience that that member has.

(7) For the purposes of this section a limited liability partnership goes into insolvent liquidation if it goes into liquidation at a time when its assets are insufficient for the payment of its debts and other liabilities and the expenses of the winding up.

(8) In this section “member” includes a shadow member.

(9) This section is without prejudice to section 214.

Section 1

In section 17, after “incorporated company” insert “or by any limited liability partnership” and after “such company” insert “or a limited liability partnership”.

Section 2

After section 3, insert—

Application to limited liability partnerships.

(3A)

(1) This Act applies to limited liability partnerships as it applies to companies.

(2) In its application to limited liability partnerships, references to a resolution for a voluntary winding-up being passed are references to a determination for a voluntary winding-up being made.

Section 3

In section 2, insert at the end “or to a limited liability partnership”.

Section 4

In section 9(8)(d), insert at the end—

; and in paragraph (d) of this subsection references to the secretary, in relation to a limited liability partnership, are to any designated member of the limited liability partnership.

Section 5

In section 87, after the definition of “non-contentious business”,

insert—

“officer”, in relation to a limited liability partnership, means a member of the limited liability partnership;

Section 6

In section 11, insert at the end—

(6) This section applies to a limited liability partnership as it applies to a firm; and, in its application to a limited liability partnership, references to a partner in a firm are references to a member of the limited liability partnership.

Section 7

In section 10, insert at the end—

(5) This section applies to a limited liability partnership as it applies to a firm; and, in its application to a limited liability partnership, references to a partner in a firm are references to a member of the limited liability partnership.

Section 8

After section 32, insert—

Application to limited liability partnerships.

(32A)

(1) This Act applies to limited liability partnerships as it applies to companies.

(2) In its application to a limited liability partnership, references to a director of a company are references to a member of the limited liability partnership.

Section 9

In section 26, in subsection (1), after paragraph (bb) insert—

(bbb) which includes, at any place in the name, the expression “limited liability partnership” or its Welsh equivalent (“partneriaeth atebolrwydd cyfyngedig”);

Section 10

In section 1, in subsection (1), insert at the end—

(d) in the case of a limited liability partnership, does not consist of its corporate name without any addition other than one so permitted.

Section 11

(1) Section 4 is amended as follows.

(2) In subsection (1)(a), for “subject to subsection (3)” substitute “subject to subsections (3) and (3A)”, omit the word “and” at the end of sub-paragraph (iii) and after that sub-paragraph insert—

(iiia) In the case of a limited liability partnership, its corporate name and the name of each member, and

(3) In subsection (2), for “the subsection next following” substitute “subsection (3) or (3A)”.

(4) After subsection (3) insert—

(3A) Subsection (1)(a) does not apply in relation to any document issued by a limited liability partnership with more than 20 members which maintains at its principal place of business a list of the names of all the members if—

(a) none of the names of the members appears in the document otherwise than in the text or as a signatory; and

(b) the document states in legible characters the address of the principal place of business of the limited liability partnership and that the list of the members' names is open to inspection at that place.

(5) After subsection (4) insert—

(4A) Where a limited liability partnership maintains a list of the members' names for the purposes of subsection (3A), any person may inspect the list during office hours.

(6) In subsection (7), after “subsection (4)” insert “or (4A)” and after “any partner of the partnership concerned” insert “,or any member of the limited liability partnership concerned,”.

Section 12

In section 9(8), after the definition of “multi-national partnership”, insert—

“officer”, in relation to a limited liability partnership, means a member of the limited liability partnership;

Section 13

In section 39(1), after the definition of “the Council”, insert—

“director”, in relation to a limited liability partnership, means a member of the limited liability partnership;

Section 14

In paragraph 1(3) of Schedule 2, insert at the end

; and references in this Schedule to a director, in relation to a limited liability partnership, are references to a member of the limited liability partnership.

Section 15

(1) Section 110 is amended as follows.

(2) In subsection (1), after “sold” insert “(a)” and at the end insert—

, or

(b) to a limited liability partnership (the “transferee limited liability partnership”).

(3) In subsection (2), for the words “sale,” onwards substitute

sale—

in the case of the transferee company, shares, policies or other like interests in the transferee company for distribution among the members of the transferor company, or

in the case of the transferee limited liability partnership, membership in the transferee limited liability partnership for distribution among the members of the transferor company.

(4) In subsection (4), for the words “company may,” onwards substitute

company may—

in the case of the transferee company, in lieu of receiving cash, shares, policies or other like interests (or in addition thereto) participate in the profits of, or receive any other benefit from, the transferee company, or

in the case of the transferee limited liability partnership, in lieu of receiving cash or membership (or in addition thereto), participate in some other way in the profits of, or receive any other benefit from, the transferee limited liability partnership.

Section 16

In paragraph 1(2) of Schedule 21, after “In this Schedule—”, insert—

“director”, in relation to a limited liability partnership, means a member of the limited liability partnership;

Section 17

In section 119(1), after the definition of “multi-national partnership” insert—

“officer”, in relation to a limited liability partnership, means a member of the limited liability partnership;

Section 18

(1) Section 166 is amended as follows.

(2) In subsection (5), omit the word “and” at the end of paragraph (a), and insert at the end of paragraph (b)

, and

where the employer is a limited liability partnership, if (but only if) subsection (8) is satisfied.

(3) After subsection (7) insert—

(8) This subsection is satisfied in the case of an employer which is a limited liability partnership—

(a) if a winding-up order, an administration order or a determination for a voluntary winding-up has been made with respect to the limited liability partnership,

(b) if a receiver or (in England and Wales only) a manager of the undertaking of the limited liability partnership has been duly appointed, or (in England and Wales only) possession has been taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property of the limited liability partnership comprised in or subject to the charge, or

(c) if a voluntary arrangement proposed in the case of the limited liability partnership for the purpose of Part I of the Insolvency Act 1986 has been approved under that Part of that Act.

Section 19

(1) Section 183 is amended as follows.

(2) In subsection (1), omit the word “and” at the end of paragraph (a), and insert at the end of paragraph (b)

, and

where the employer is a limited liability partnership, if (but only if) subsection (4) is satisfied.

(3) After subsection (3) insert—

(4) This subsection is satisfied in the case of an employer which is a limited liability partnership—

(a) if a winding-up order, an administration order or a determination for a voluntary winding-up has been made with respect to the limited liability partnership,

(b) if a receiver or (in England and Wales only) a manager of the undertaking of the limited liability partnership has been duly appointed, or (in England and Wales only) possession has been taken, by or on behalf of the holders of any debentures secured by a floating charge, of any property of the limited liability partnership comprised in or subject to the charge, or

(c) if a voluntary arrangement proposed in the case of the limited liability partnership for the purposes of Part I of the Insolvency Act 1986 has been approved under that Part of that Act.

Section 20

In section 6, after subsection (2) insert—

(2A) Section 1 confers no rights on a third party in the case of any incorporation document of a limited liability partnership or any limited liability partnership agreement as defined in the Limited Liability Partnerships Regulations 2001 ( S.I. No. 2001/ ).

Section 21

In each of sections 177(2), 221(2) and 232(2) insert at the end—

; and “officer”, in relation to a limited liability partnership, means a member of the limited liability partnership.

Section 22

(1) A culpable officer provision applies in the case of a limited liability partnership as if the reference in the provision to a director (or a person purporting to act as a director) were a reference to a member (or a person purporting to act as a member) of the limited liability partnership.

(2) A culpable officer provision is a provision in any Act or subordinate legislation (within the meaning of the Interpretation Act 1978) to the effect that where—

(a) a body corporate is guilty of a particular offence, and

(b) the offence is proved to have been committed with the consent or connivance of, or to be attributable to the neglect on the part of, (among others) a director of the body corporate,

he (as well as the body corporate) is guilty of the offence.

Section 1

The Companies (Revision of Defective Accounts and Report) Regulations 1990