Partner of The Limited Liability Partnership (LLP)
Limited Liability Partnership (LLP) is a hybrid combination between a company and conventional partnership. Nowadays, LLP is a popular alternative selection of the business, besides company, sole proprietorship and conventional partnership. Let us examine the role of partners.
Who can be a partner?
Any person who is appointed and registered under the Limited Liability Partnership (LLP) as a partner. Each LLP shall required to have 2 or more partners and no limitation of total number of partners with the view to making profit. The partner can be either a natural person or a corporation. The partner may resign, remove, retire and an appointment of a new partner shall not affect the continuing of the operation of the LLP.
If the LLP has changed the partners, such changes of the partner required to lodge a statement to notify the Registrar of such changes within 14 days. Then, the LLP shall amend the LLP Agreement with a Supplementary Agreement to reflect the changes.
If the partner who are in the professional practice, all the partner shall be the same professional.
What is the liability of the partners?
Since the LLP and the partners are separate legal entity, any debts, and obligations of the LLP will be borne by the assets of the LLP, therefore, each partner’s liability shall be limited to their agreed contribution in the LLP which may be tangible or intangible or both tangible or intangible in nature. The partner will not responsible or liable for another partner’s misconduct or negligence.
Even though, the LLP Agreement is not mandatory, but in the absence of LLP agreement, the mutual rights and liabilities of the partners shall be determined as provided under the Second Schedule of The LLP Act 2012. According to the schedule, each partner will be subject to equal payment or personal liabilities incurred by the partner, giving the LLP.
What is the right and the power of the partners?
The partners shall govern by The LLP Agreement, such as the capital contribution, sharing the profit and loss, the acceptance of an admission of new partners and cessation of existing partners. A partner may draw a salary from LLP, the salary will be subject the personal income tax at the scale rate provided such salary has been provided in the LLP agreement.
However, if the absence of LLP Agreement, the Second Schdule shall apply, where each of the partners shall enjoy a mutual rights and duties among / between the partners, Furthermore, all the partners are entitled to share equally in the capital and profits of the LLP and even each partner may take part in the management of the LLP.
When will a partner cease to be a partner?
A partner may resign and retire from the LLP, the cessation of the partner may accordance with the LLP agreement. In the event of absence of agreement, the outgoing partner may give a 30 days’ notice to the other partners of that partner’s that his / her intention to resign as a partner.
Upon a partner who has passed away, then the partner ceases to be a partner.
How would a partner disqualify to act as a partner?
If the LLP is a professional firm, the partner ceases to be a partner if he / she is disqualified from carrying out the professional p practices.
If a partner has been declared a bankruptcy, the partner shall cause himself / herself cease to be a partner and prohibited to interfere with the day to day management of the LLP including attending a meeting, signing of a cheque, made all decisions. However, the partner still entitled to receive a distribution under the LLP agreement provision. Unless, he / she obtain a leave from the court or the Director General of insolvency.
Conclusion
The partners are much secured and less complicated to comply if we compare with sole proprietors, conventional partnership and company
