UK: LLPs And The Companies Act 2006 - Top Ten Changes

From 1 October, every LLP will be required to keep a register of members containing a service address for each individual member. The LLP must tell Companies House where the register is available for inspection unless it is held at the registered office. The register requires to be open for inspection by members free of change and for any other person on payment of a fee.

Separately the LLP must also keep a register of members' residential addresses. It must not disclose that information to third parties unless the member consents, Companies House requires it or pursuant to a Court Order.

If there is any change in a member's details, notice must be given to the Registrar within 14 days. LLPs should be notifying their members of this requirement and obtaining any necessary changes to details.

LLPs will still require to have 2 or more members and if they carry on business without this minimum membership, for a 6 month period a member will be jointly and severally liable with the LLP for debts incurred after expiry of the 6 month period.

If an LLP has less than 2 members it is currently possible to lodge an application for it to be wound up or the Registrar of Companies can consider whether or not it should be struck off if it is no longer in operation. The new legislation will allow The Secretary of State to enforce the minimum membership requirements and any direction from him must specify what action is required to be taken to comply and the period during which it should be completed. This will allow the Registrar of Companies to keep track of which LLPs are "live".

Current legislation is inconsistent in that it allows LLPs to take the same name as an existing company and vice versa. The new legislation marries up the provisions applying to companies and LLPs. LLPs will therefore be subject to the same restrictions relating to the sensitive words and expressions in their names as companies and will have a duty to obtain consent in certain cases. In addition they will not be allowed names too similar to existing names and names can be no longer than 160 characters. New regulations relating to adjudication of name disputes will apply also to LLPs allowing any person to object if the name of an LLP is a name associated with the person making the objection in which he has goodwill or which is likely to be misleading to the public.

The new trading disclosures regime which applies to companies will apply equally to LLPs from 1 October. This will require LLPs to display their name and registered office at their registered office and any other business location, the name is not required to be placed on the outside of a building but must be in a place clearly visible to any visitor. The LLPs name, number and details must also be included on correspondence including emails and on any website.

The same penalties which apply to companies for late filing of accounts will apply to LLPs for financial years beginning on or after 1 October 2008. These have increased and now start at £350 and Companies House has little leeway for waiving fines so LLPs should ensure they get their accounts filed at least a week prior to expiry of the time limit – "its in the post" will not be sufficient to avoid a fine.

Audit reports for LLPs will require to be signed by the senior statutory auditor who is a named individual and a new offence has been created relating to causing accounts to include misleading, false or deceptive matters. These provisions apply for years commencing after 1 October 2008.

How an LLP decides to communicate with its members can still be dealt with by agreement between them. The aspects of company law regulating how companies communicate with members do not apply to LLPs however LLPs are at liberty to decide to follow the Companies Act provisions should they choose to do so.

The new rules for companies contained in Sections 1139 to 1142 of the 2006 Act will apply to LLPs. These clarify what addresses are valid for the purposes of service of documents and define "service".

In England and Wales and Northern Ireland a document is to be executed by an LLP by applying its common seal, by signature of two members or by signature of a member of the LLP in the presence of a witness. An LLP may by a document executed a deed empower a person as its attorney to execute deeds or other documents on its behalf and a deed or document so executed in the UK or elsewhere will have effect if executed by the LLP. Execution formalities in Scotland remain unchanged.

The new regime relating to Directors' duties contained in Part 10 of the 2006 Act does not apply to LLPs given that they do not have any Directors and the derivative claims regime allowing shareholders to make claims against the Directors equally does not apply.