The LLP is different from the form of limited partnership under the Limited Partnerships Act 1907. That form of limited partnership does not allow a partner to enjoy limited liability while also participating in the management of the firm.
The LLP was developed in the UK in response to pressure from major accounting firms to ensure limited liability for their members while retaining the flexibility and tax advantages associated with a partnership. Other professional partnerships, including those of solicitors, have converted to LLP status since 2001.
The key features of an LLP are:
- Its members have limited liability.
- It is a separate legal entity.
- It is taxed as a partnership.
- It has the organisational flexibility of a partnership.
- Any members’ agreement (LLP agreement) is a private document which is confidential to the members.
- Its accounting and filing requirements are broadly the same as those of a company.
- It has the ability to create floating charges.
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