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Legal Guide Pg23
1.
does not have
a separate legal identity and nor does it benefit from limited liability. The partners must contract in their own names and are each fully liable to the full extent of their assets (including their family home) on any contracts and for losses incurred by the individual, the partnership (called a firm), and losses incurred by any other partner in the course of the partnership business. The traditional advice that 'you must choose your partners carefully' continues to apply. The cost of establishing a partnership will depend upon the degree of formality required. No formal registration is required but costs from £500 for a relatively straight forward partnership agreement should be anticipated. Limited Liability Partnership ("LLP") In contrast the LLP is relevant to social enterprise and represents a new means of working which, as yet, remains relatively unexplored. This is a relatively new structure introduced by the Limited Liability Partnerships Act 2000 from April 2001. In truth it is more of a form of company than a traditional partnership and the Partnership Act 1890 does not apply. However members of the LLP are taxed as partners. In return for the benefit of limited liability this structure has certain reporting and disclosure obligations. An incorporation document (similar to a company's Memorandum of Association) is filed with the Registrar of Companies containing certain required information including the name and address of each member. The LLP is also required to file accounts and notify changes to the members (note the LLP doesn't have partners but members!). An LLP has members but no shareholders and as such has complete flexibility as to the internal structure which it wishes to adopt. There is no requirement to register any governing document or members' agreement (similar to the Articles of Association), although it is recommended that one is drafted as a private document between the members (as such it does not have to be filed and so does not form part of any public record) to ensure some certainty about each member's role and involvement. Like a company, however, an LLP must maintain accounting records, prepare and deliver audited annual accounts to the Registrar of Companies, and submit an annual return. A Guide to Legal Structures for Social Enterprise © Wrigleys Solicitors LLP Sepr 2009 (mjl) 22
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