Partnership and LLP formation - Registration process for LLP...

Learning Outcomes

This article outlines the statutory process for forming a Limited Liability Partnership (LLP) in England and Wales, including:

• Companies House registration steps and required documentation and information under the LLPA 2000 and associated regulations
• How and when an LLP acquires separate legal personality and limited liability
• Minimum membership and designated member requirements at incorporation and the consequences of prolonged single-member status
• The content of the incorporation document (Form LL IN01) and the role of the statement of compliance
• Name rules and registered office requirements, including jurisdiction choices
• Maintenance and filing obligations following incorporation, including PSC registers, annual accounts, and confirmation statements
• The effect and importance of the certificate of incorporation
• The role of the LLP agreement and the default rules that apply in its absence
• Distinctions between LLP incorporation and formation of general partnerships or companies

SQE1 Syllabus

For SQE1, you are required to understand the procedures and documentation required to form an LLP and other steps required under companies and partnerships legislation to enable the entity to commence operating. This includes understanding the constitutional documents and Companies House filing requirements specific to LLPs. An appreciation of the formal incorporation process for LLPs is essential for advising clients on setting up this type of business structure, with a focus on the following syllabus points:

• the distinction between LLPs and general partnerships regarding formation formalities
• the specific documents and information needed for LLP registration at Companies House
• the role and responsibilities of designated members in the registration process
• the significance of the certificate of incorporation for an LLP.
• identification and disclosure of People with Significant Control (PSC) in LLPs and maintenance of a PSC register
• post-incorporation filing obligations (accounts and confirmation statement) that mirror company requirements applied to LLPs
• default LLP Regulations provisions (profit sharing, management rights, indemnities) where no LLP agreement exists
• the effect of membership falling below two for more than six months on liability.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. Which Act primarily governs the formation of Limited Liability Partnerships in the UK?
   1. Partnership Act 1890
   2. Companies Act 2006
   3. Limited Liability Partnerships Act 2000
   4. Insolvency Act 1986
2. What is the minimum number of designated members required for an LLP?
   1. One
   2. Two
   3. Three
   4. No minimum

3. True or false? An LLP comes into legal existence as soon as the members agree to form it.

4. Which form must be submitted to Companies House to incorporate an LLP?
   1. Form IN01
   2. Form LL IN01
   3. Form SH01
   4. Form NM01

Introduction

Unlike general partnerships formed under the Partnership Act 1890, Limited Liability Partnerships (LLPs) require a formal registration process to come into existence. LLPs are a distinct legal entity, separate from their members, providing the benefit of limited liability similar to a company, while often retaining the operational flexibility of a partnership. This section details the statutory procedure for registering an LLP with Companies House, a critical step mandated by the Limited Liability Partnerships Act 2000 (LLPA 2000).

Key Term: Form LL IN01
The official application form submitted to Companies House for the incorporation of a Limited Liability Partnership.

Key Term: Registered Office
The official address of the LLP for service of documents. It must be in the jurisdiction selected on incorporation (England and Wales, Wales, Scotland, or Northern Ireland) and is publicly available on the register.

Key Term: Statement of Compliance
A formal statement delivered to the registrar confirming that the legal requirements for LLP registration under the LLPA 2000 and applicable regulations have been met.

Key Term: People with Significant Control (PSC)
Individuals (or registrable legal persons) who own or control an LLP, typically by holding more than 25% of voting rights or rights over surplus assets on a winding up, or by having rights to appoint/remove a majority of those who take part in management, or otherwise having significant influence or control. LLPs must maintain a PSC register and deliver PSC information to Companies House.

The Incorporation Process for LLPs

Formation of an LLP is achieved through incorporation by registration with the Registrar of Companies at Companies House. This process confers upon the LLP its separate legal personality and limited liability status.

Key Requirements for Formation

Section 2 of the LLPA 2000 sets out the core requirements for forming an LLP:

• Two or more persons: An LLP must be formed by at least two 'persons associated for carrying on a lawful business with a view to profit'. These persons can be individuals or corporate bodies. The requirement is at the point of incorporation; subsequent changes in membership are addressed below.
• Incorporation Document: These persons must subscribe their names to an incorporation document.
• Delivery to Registrar: The incorporation document, along with other required information, must be delivered to the Registrar of Companies.

A practical consequence of the separate legal personality is that the LLP cannot enter contracts before incorporation. Any pre-incorporation arrangements are not binding on the yet-to-be-formed LLP; those purporting to act on behalf of the LLP before incorporation will usually be personally liable unless a new contract is entered into by the LLP after incorporation.

Where an LLP’s membership later falls to one, the LLP may continue, but if it carries on business for more than six months with only one member, that sole member can become personally liable for obligations incurred after that six-month period. This is a critical risk point and emphasises the importance of swift admission of a replacement member.

The Incorporation Document (Form LL IN01)

The primary document for registration is the incorporation document, currently Form LL IN01. This form requires specific information about the proposed LLP.

Key information required on Form LL IN01 includes:

• Name of the LLP: The proposed name must comply with applicable regulations, typically ending with "Limited Liability Partnership" or "LLP" (or Welsh equivalents for LLPs registered in Wales). Restrictions apply regarding similarity to existing names, use of sensitive words or expressions (which may require additional consent), and indications of government association.
• Registered Office: The jurisdiction (England and Wales, Wales, Scotland or Northern Ireland) and full address of the LLP’s registered office must be provided. This is the official service address and appears on the public register.
• Members' Details: The names and service addresses of all proposed members must be listed. Members may be individuals or corporate bodies. In practice, Companies House will also require certain identifying particulars for individual members.
• Designated Members: At least two members must be identified as 'designated members'. If not specified, all members are deemed designated members.

Key Term: Designated Member
A member of an LLP who has specific statutory responsibilities, primarily relating to administrative and filing duties with Companies House, similar in function (though not legal status) to a company secretary or director in certain aspects.

Designated members’ core responsibilities include ensuring delivery of documents to Companies House (e.g. accounts, confirmation statements, notices of changes to membership or registered office), signing and filing the LLP’s annual accounts (or ensuring they are filed), and, where applicable, liaising over auditor appointments. They also have responsibility for compliance with the PSC regime and other statutory registers required of LLPs. If no designated members are identified, every member is treated as a designated member, and therefore each bears these obligations.

LLPs must identify their PSCs and maintain a PSC register. PSC information is reported to Companies House and kept up-to-date after incorporation. Failure to comply with PSC duties can result in criminal liability for the LLP and relevant members/designated members.

Key Term: LLP Agreement
A private contractual agreement between the members of an LLP setting out their mutual rights and duties, profit sharing, decision-making processes, and rules for joining or leaving the LLP.

Although the LLP agreement is not a filing requirement and is not public, it is highly advisable to have a written agreement in place from day one. In its absence, default provisions from the Limited Liability Partnerships Regulations apply (see “The LLP Agreement” below).

Statement of Compliance

A statement must be delivered to the registrar confirming that the requirements of the LLPA 2000 regarding registration have been complied with. This statement may be made by a solicitor involved in the formation, by one of the subscribers to the incorporation document, or by a formation agent. It supports the registrar’s decision to issue the certificate of incorporation.

Registration Fee

The appropriate registration fee must accompany the application documents submitted to Companies House. Fees vary depending on the method of submission (paper or electronic) and the desired speed of incorporation (standard or same-day). Electronic incorporation via Companies House or third-party software is common and comparatively swift. Applications may be rejected if the name is prohibited or already taken, the registered office is invalid, or compulsory information is incomplete or inconsistent.

Certificate of Incorporation

Upon successful registration, the Registrar of Companies issues a Certificate of Incorporation.

Key Term: Certificate of Incorporation (LLP)
The official document issued by Companies House confirming that the LLP has been legally incorporated and specifying the date of incorporation and the LLP's registered number.

The LLP legally comes into existence on the date stated on the Certificate of Incorporation (s 3(1) LLPA 2000). This certificate is conclusive evidence that the requirements of the LLPA 2000 regarding registration have been met. From this date, the LLP can enter contracts, hold property, sue and be sued in its own name, and the members’ liability for LLP debts is limited to the extent agreed in the LLP agreement (e.g. capital contributions), subject to statutory exceptions such as wrongful trading.

Worked Example 1.1

Asha and Ben wish to form an LLP to run their new graphic design business. They have chosen a name ('A&B Creative LLP'), identified a registered office address, and agreed they will both be designated members. What is the next essential step they must take to legally form the LLP?

Answer:
They must complete and submit the incorporation document (Form LL IN01), including all required details (name, address, member details, designation), along with the statement of compliance and the registration fee, to Companies House. The LLP will only legally exist once Companies House issues the Certificate of Incorporation.

Post-incorporation duties and filings

Once incorporated, designated members must ensure statutory filings are made on time and that records are kept up to date. Practically, the LLP should:

• register PSC details and maintain a PSC register
• file annual accounts within the relevant period (LLPs must prepare and file accounts; exemptions may apply for small LLPs, but the filing duty remains)
• file a yearly confirmation statement (form CS01) to confirm or update public information on the register, including membership, PSCs, and registered office details
• notify Companies House of changes to members (appointments, cessations, details), designated member status, registered office, or LLP name
• keep internal records (e.g. decisions/minutes) to evidence management and member decisions.

LLPs, like companies, can grant fixed and floating charges over their assets. If doing so, registration of charges at Companies House (using the applicable MR01 process and within statutory time limits) is essential to preserve priority against insolvency office-holders and creditors.

The LLP Agreement

While not required for registration, an LLP agreement is a key internal document governing the relationship between the members and the LLP's operation.

In the absence of an LLP agreement, the default provisions of the Limited Liability Partnerships Regulations 2001 will apply. These default provisions mirror many aspects of the Partnership Act 1890, such as equal sharing of profits and capital, and entitlement of all members to participate in management. These defaults may not be suitable for all LLPs.

Key default provisions typically include:

• equal sharing of capital and profits among members unless otherwise agreed
• no entitlement to remuneration for acting in the business or management of the LLP
• an indemnity by the LLP to members for payments made and personal liabilities incurred in the conduct of the business or to preserve LLP property
• access rights to the LLP’s books and records for all members
• every member may take part in management; ordinary matters decided by a majority, but no change in the nature of the business without unanimous consent
• members must account to the LLP for any profit made from a competing business carried on without the LLP’s consent, and for any personal benefit derived without the LLP’s consent.

Key Term: LLP Agreement
A private contractual agreement between the members of an LLP setting out their mutual rights and duties, profit sharing, decision-making processes, and rules for joining or leaving the LLP.

These default rules can produce results that are not commercially intended. For example, contributions of money or effort are not accounted for unless the LLP agreement provides otherwise. Careful drafting at the outset avoids costly disputes, ensures the intended profit and capital arrangements, sets decision-making thresholds (including any veto rights), and provides for admission, retirement, expulsion, and valuation mechanisms.

Worked Example 1.2

Farah, Gita, and Hari form an LLP but do not create a written LLP agreement. Farah contributes 60% of the capital and works full-time, while Gita and Hari contribute 20% each and work part-time. How will profits be shared according to the default provisions?

Answer:
According to the default provisions in the Limited Liability Partnerships Regulations 2001, profits will be shared equally among Farah, Gita, and Hari, regardless of their capital contributions or working hours, unless they agree otherwise.

Worked Example 1.3

Dina and Omar incorporate an LLP and appoint Dina as the only designated member on Form LL IN01. Six months later, they realise no confirmation statement has been filed and no PSC information has been delivered. Who is responsible and what should be done?

Answer:
Designated members are responsible for ensuring statutory filings, including PSC disclosures and the confirmation statement, are made on time. Dina (as the designated member) must arrange immediate filing of the overdue confirmation statement and PSC information and put systems in place to ensure timely future compliance. If no designated members were specified on incorporation, all members would be treated as designated members and share responsibility.

Worked Example 1.4

An LLP is incorporated with two members. One retires and, due to recruitment delays, the LLP carries on business with one member for nine months. What is the consequence?

Answer:
An LLP may continue with one member, but if it carries on business for more than six months with only one member, that sole member becomes personally liable for LLP obligations incurred after the six-month point. The LLP should admit a new member promptly to avoid exposing the remaining member to personal liability.

Exam Warning

Remember that while an LLP agreement is not needed for registration, its absence means the default statutory provisions apply. SQE1 questions might test your understanding of these default rules (e.g., equal profit sharing) in scenarios where no LLP agreement exists or where an agreement is silent on a particular point.

Be alert to single‑member risk. If an LLP continues with only one member for more than six months, the sole member can become personally liable for subsequent debts. This is a common trap testing your precision on LLP-specific rules.

Revision Tip

Focus on the key differences between forming an LLP and a general partnership. LLPs require formal registration via Form LL IN01 at Companies House to gain separate legal personality and limited liability, whereas general partnerships can arise informally without registration. This distinction is fundamental.

Map designated members’ statutory responsibilities: if none are specified, all members are designated. Tie this to filing deadlines for accounts, confirmation statements, PSC updates, and notifications of changes in membership and registered office.

Key Point Checklist

This article has covered the following key knowledge points:

• LLP formation requires formal registration with Companies House under the LLPA 2000.
• The primary document for registration is Form LL IN01, containing details like the LLP name, registered office, and member information.
• An LLP must have at least two members to incorporate, and at least two designated members with specific statutory duties; if none are named, all members are designated.
• A statement of compliance must accompany the registration application.
• The LLP legally exists upon the issuance of the Certificate of Incorporation by Companies House; the certificate is conclusive evidence of valid incorporation.
• LLP names must comply with naming rules (including the “LLP” suffix and restrictions on sensitive words), and a valid registered office in the chosen jurisdiction must be provided.
• LLPs must identify PSCs, maintain a PSC register, and report PSC information to Companies House; designated members are responsible for these obligations.
• Post-incorporation filing obligations include accounts and the annual confirmation statement, plus notifications of changes to members, designated members, registered office, and LLP name.
• An LLP agreement governs internal affairs; without it, default provisions apply (equal sharing of profits, management rights, indemnities, access to books, and duties to account for benefits arising from competing businesses).
• If an LLP carries on business for more than six months with only one member, the sole member may become personally liable for obligations incurred after that period.

Key Terms and Concepts

• Form LL IN01
• Registered Office
• Statement of Compliance
• People with Significant Control (PSC)
• Designated Member
• Certificate of Incorporation (LLP)
• LLP Agreement