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1 October changes to LLPs

The Background: The Companies Act 2006

The Companies Act 2006 (the 2006 Act) is the most significant overhaul of company law legislation since its predecessor, the Companies Act 1985 (the 1985 Act). One of the 2006 Act's principal objectives is to bring major benefits to business by modernising and simplifying company law.

A number of the 1985 Act provisions apply to limited liability partnerships (LLPs). A Department for Business Innovation and Skills (formerly the Department of Business Enterprise and Regulatory Reform and the Department of Trade and Industry) consultation on the extent to which the 2006 Act should be applied to LLPs led to the conclusion that the 2006 Act should be applied to LLPs to the same extent that the 1985 Act applies to LLPs (with consequent amendments). The alternative proposals of retaining the 1985 Act for application to LLPs or extending the 2006 Act to LLPs as far as possible were rejected.

In summary, generally speaking, LLP users should not experience many significant changes in practice as a result of the application of the 2006 Act to LLPs. However, the legislative framework will change and there are a number of changes, some of which are referred to below.

Timetable for implementation

A number of 2006 Act accounting changes are already in force for LLPs, but in-keeping with the implementation timetable for the final changes applicable to companies, the remaining provisions affecting LLPs take effect from 1 October 2009.

Key changes

A full explanation of the changes resulting from the application of the 2006 Act is beyond the scope of this bulletin, but the key changes which may affect LLP users from 1 October 2009 include the following.
New requirement to maintain internal registers

From 1 October, every LLP must maintain an internal register of members and an internal register of members' residential addresses.
The requirement to maintain internal registers is in addition to the requirement to notify Companies House of changes in members' details.

We are able to provide pro-forma registers on request. Please email info@MTGLLP.com

Content of LLP's internal registers

Although many professional practices already maintain a register of members as a matter of good practice, from 1 October maintaining these registers will become a statutory requirement.

Even if an LLP already maintains an internal register, changes will be required to ensure that the correct details are recorded in respect of every member. The principal reasons for these changes are:
corporate and individual members are now treated differently; and
individual members will have to register both a residential address and an address for service

Content of LLP's internal registers - individual members

To protect LLP members' personal information, the 2006 Act draws a distinction between a member's "service address", which is publicly available, and their "residential address", which can only be disclosed by the LLP in very limited circumstances. As you would expect, the residential address is that member's usual residential address, but their service address can be stated to be "the LLP's registered office".

The LLP register must include the member's name and former name, his or her service address and the country or state in which he or she is usually resident, his or her date of birth and whether the member is a designated member.

The LLP's register of members' residential addresses will include details of each individual member's usual residential address or, if it is the same as the service address, a statement noting that such member's residential address is the same as the service address.

In order to compile the new registers, LLP users should note that the residential address notified to Companies House before 1 October 2009 will be treated as both the member's service address and their residential address until another service address is notified.

Content of LLP's internal registers - corporate members

Details of each corporate member's corporate name, registered address and whether it is a designated member must be included on the LLP's register of members. In addition, EEA companies to which the First Company Law Directive applies must register details of the company file (including details of the relevant state) as set out in that Directive together with its registration number in that file.

Corporate members which are not EEA companies must register their legal form, the law by which they are governed and, if applicable, the register in which they are entered (including details of the state) and their registration number.

Companies House

When the information in the LLP's internal register or register of members' residential addresses changes, there is an obligation to notify Companies House of those changes within 14 days.

However, the creation of the registers on 1 October should not result in the need to make any additional filings at Companies House, as the introduction of the duty to maintain registers does not in itself give rise to any filing obligations.

Creating the registers and recording each member's residential address as his or her service address on 1 October would not require any filing at Companies House.
If a member moved house after 1 October and consequently his home address changed, the internal LLP register and the register of residential addresses would be updated and as a result of the change to the internal registers, Companies House would need to be notified on the relevant form. That member may prefer to keep his new home address confidential, in which case he may choose at that stage to state his service address as "the LLP's registered office" and Companies House should be notified accordingly.

Inspection of LLP registers

The LLP's internal register must be kept at the LLP's registered office or another alternative inspection location which has been notified to Companies House under the 2006 Act. The LLP register must be open for inspection by a member without charge or by any other person upon payment of a charge (currently £3.50).

The register of residential addresses contains "protected information" because it reveals the member's residential address or the fact that the member's service address is also his or her residential address. Disclosure of this "protected information" by the LLP can only be made without the member's consent in very limited circumstances, for example, to update Companies House or pursuant to a Court order.

The information continues to be "protected information" even after a member has ceased to be a member of the LLP.

Changes to LLP forms

All of the forms used by LLPs have been amended to reflect the new provisions in the 2006 Act. For example, the relevant forms will now reflect the distinction between corporate members and non-corporate members. LLPs should ensure that those responsible for LLP filings are using the new forms from 1 October.

As the form numbers reflected 1985 Act provisions, the names of the forms have all changed. The full list is available from the Companies House website, but frequently used forms are set out in the table below:

Previous form New Form
LLP2 (Incorporation of an LLP) LL IN01
LLP288a (Appt of new member) LL AP01 or LL AP02 (corp)
LLP288b (Termination of member) LL TM01
LP288c (Change of details) LL CH01 or LL CH02 (corp)
LLP363 (Annual return) LL AR01

Execution by LLPs

The position in relation to execution of documents by LLPs is largely unchanged, except that 1985 Act provision noting that a document may be validly executed by an LLP if it is signed on behalf of the LLP by two members has now been extended in line with the approach to companies under the 2006 Act. An LLP may now also execute a document if it is signed on behalf of the LLP by one member in the presence of a witness who attests the signature.

Where a person signs a document on behalf of more than one LLP, or on behalf of an LLP and a company, it is not duly signed unless it is signed by that person separately in each capacity.

If you would like more information or a pro-forma register, please contact Richard Turnor (richard.turnor@MTGLLP.com) or Corinne Staves (corinne.staves@MTGLLP.com)

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