Lecture 6- Limited Liability Partnerships.pptx

Lecture 6- Limited Liability Partnerships.pptx - LAW OF...

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LAW OF BUSINESS ASSOCIATIONS II PART I: Partnerships
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LIMITED LIABILITY PARTNERSHIPS Since 16 th March, 2012 any 2 or more persons (individuals or companies) may form a limited liability partnership (LLP) in Kenya. This is an alternative form of business association to a partnership, a limited partnership (both governed by the Partnerships Act, 2012) or a private company (the Companies Act, 2015). In the UK, the LLP came into being as the result, initially, of pressure from the larger accountancy firms concerned by the potential liability of partners for the substantial damages awarded against them for the negligence of one partner who invariably would be based in a totally different office.
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The push was for a new entity which would preserve the internal informality of the traditional partnership whilst giving the partners limited liability for the debts or obligations of the firm. In the end the LLP was formed, not just for the professions but for other traders as well. In the UK, almost all professional partnerships of solicitors and accountants are now LLPs. The LLP was based substantially on company law (which is well known for its corporate structure and limitation of liability for its members) but with partnership connections. Accordingly, despite its name and origins, the LLP is a real alternative for all business forms or associations not just to the traditional partnership but also to the private company, either to establish or transfer the running of a business or as a vehicle for a joint venture.
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LLP LAW IN KENYA In Kenya, LLPs are formed under the Limited Liability Partnership Act , No. 42 of 2011 which received Presidential assent on 11 th November, 2011 and came into effect on 16 th March, 2012. The LLP Act deals with matters such as the register of limited liability partnerships, the nature of limited liability partnership, their registration as such, conversion of partnerships and companies into LLPs, management of LLPs as well as receivership and winding up. By the Preamble, the LLP Act is “ An Act of Parliament to make provision for limited liability partnerships and for connected purposes.”
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Section 16 of the Act provides that: Two or more persons associated for carrying on a lawful business with a view to making a profit may, by complying with the registration requirements of this Part [ie Part IV of the LLP Act which deals with Registration of Limited Liability Partnerships under the Act], register (the persons) as a limited liability partnership under this Act .” Section 2 (1) of the Act defines an LLP simply as meaning a partnership registered under the LLP Act.
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Further on, a “limited liability partnership agreement”, is defined, in relation to an LLP, by the same section as meaning an agreement (expressed or implied)— (a) between the partners of the partnership; or (b) between the partnership and its partners, that determines the mutual rights and duties of the partners and their rights and duties in relation to the partnership.
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  • Winter '16
  • Law, Corporation, Limited liability partnership, llp act, The LLP

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