Your partnership agreement might need updating


Major reforms at Companies House are underway. Provisions of the Economic Crime and Corporate Transparency Act 2023 ('ECCTA') are now beginning to come into effect, aiming to tackle economic crime and improve corporate transparency. These reforms have been widely publicised, including by our own colleague Rosie Graham who wrote an overview of ECCTA and its impact late last year. 

For businesses registered on Companies House, there are immediate consequences – not all of which are obvious. Although the effects broadly mirror those for limited companies, ECCTA has particular ramifications for Limited Liability Partnerships ('LLPs'). 

These are the key things members of LLPs should consider:

Does your partnership have a PO box address? 

Like limited companies, an administrative consequence of ECCTA is that LLPs must have and maintain a registered office at an appropriate address.  To determine whether an address is appropriate, the principal requirement is that a document delivered would be expected to come to the attention of a person acting on behalf of the company – PO boxes are therefore no longer compliant. If your LLP is considering using a registered address service, you will need to ensure that it is staffed. 

Have you provided a registered email for electronic communications? 

LLPs must provide and maintain a registered email address to which Companies House can send electronic communications. This email address will not be available to the public but is likely to become the main contact point for communications with Companies House, replacing hardcopy letters. Existing LLPs must do this when submitting their next annual confirmation statement. 

Is your partnership name problematic? 

LLPs cannot register under a name designed to facilitate criminal purposes, which suggests a connection with a foreign government, or which contains computer code. 

What processes do you have to check the standing of your fellow partners? 

ECCTA has introduced a new requirement for the members of an LLP to remove any member from the LLP if they become subject to a director disqualification order. If the members fail to do so, every member will commit a criminal offence. However, under current legislation there is no power for the LLP members to expel a member of an LLP. The default provision in Regulation 8 of the Limited Liability Partnership Regulations 2001 is that:

"No majority of the members can expel any members unless a power to do so has been conferred by express agreement between the members."

Accordingly, in the absence of an express provision in the partnership agreement, a member cannot be lawfully expelled.

Therefore, LLPs should take steps to ensure that their partnership agreements have express provisions that deal with disqualification, including the effect expelling a member will have on capital contributions and any profit share that member is owed. They also should consider incorporating checks in relation to director disqualification during onboarding, to ensure that they are not at risk of appointing someone ineligible to be a partner. 

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ECCTA has introduced a new requirement for the members of an LLP to remove any member from the LLP if they become subject to a director disqualification order

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