LLP formations – A handy guide to getting started
Have you decided to set up an LLP? If so, congratulations! In this article, we will guide you through the key areas you need to consider.
Choosing a name is one of the most exciting decisions about setting up an LLP, but there are rules you need to consider. For example, you cannot use a name which is the ‘same as’ an existing company or LLP, the name cannot contain anything offensive and you might need to seek permission to use certain words.
Here are some useful links to check your chosen LLP name:
Registered Office Address
The Registered Office address must be a physical address located within the jurisdiction of your LLP (so an LLP registered in England and Wales cannot have a Registered Office in Scotland).
You may not wish to use your home address as the Registered Office, as this cannot be suppressed or removed from the public record at Companies House at a later date.
If you are a Gerald Edelman client, you can use our office at 73 Cornhill as your LLP’s Registered Office for an annual fee.
All LLPs need to appoint least two ‘Designated Members’. They can also appoint additional ‘Members’.
LLPs can appoint individuals or corporate entities (such as other LLPs or companies) as designated members or members.
Members’ dates of birth and home addresses are registered with Companies House, but they do not need to be disclosed on the public record in full. Dates of birth are redacted to show only the month and year, and each member may choose to use a ‘service address’ so that their home address does not appear on the public record. Unless specified otherwise, we would use ‘The LLP’s Registered Office address’ as a default for privacy.
Designated Members vs. Members – Key Distinctions
Designated members have the same rights and duties towards the LLP as any other member, however designated members have additional responsibilities and duties, as follows:
- Appointing an auditor (if one is needed)
- Signing the accounts on behalf of the members and delivering the accounts to Companies House
- Notifying Companies House of any changes to the LLP (eg. Changes of Registered Office Address, changes to the membership or a change of name of the LLP)
- Preparing, signing and delivering to the annual Confirmation Statement LLCS01 to Companies House and acting on behalf of the LLP if it is wound up and dissolved
If you are a Gerald Edelman client, we will be happy to assist with arranging for the annual Confirmation Statement LLCS01 to be prepared and filed with Companies House, and to assist with updating the LLP records in respect of any changes.
For all designated members and members (individuals or the authorized signatories of corporate members), we will need full PIN details. This is in no way linked to a bank card PIN! It is simply a series of letters and numbers created from personal information, which then acts ‘like’ an electronic signature to authenticate that member online for the company incorporation application. We won’t be able to proceed with the application for incorporation without the PIN detail for all members.
Voting Rights and Rights to Surplus Assets on Winding Up
We will need to determine whether your new LLP will need to register any Persons with Significant Control (PSCs) on incorporation. PSCs for LLPs are firstly determined based on whether any of the designated member or members hold:
- More than 25% of voting rights in the LLP
- Rights to more than 25% of surplus assets on winding up
- Rights to appoint or remove the majority of those involved in the LLP management (this is assumed to be true for any member holding over 50% of voting rights)
In identifying PSCs and providing these percentages, you will want to take into consideration any LLP or other agreements (whether recorded in writing or implicit and arising from the way the LLP will operate in practice).
Persons with Significant Control (PSCs)
As mentioned above, usually PSCs would be members who are registrable by virtue of holding more than 25% of voting rights in the LLP, or who have the right to more than 25% of surplus assets on winding up. However, there may also be parties connected with your new LLP who do not meet the usual criteria, but still exercise ‘significant influence or control’ over the LLP.
For any individuals who are registrable as PSCs by exercising (or having the right to exercise) significant influence or control over the LLP, please provide their full details.
As is the case with members, dates of birth and home addresses for PSCs are registered with Companies House, but they do not need to be disclosed on the public record in full. Dates of birth are redacted to show only the month and year, and each PSC may choose to use a ‘service address’ so that their home address does not appear on the public record at Companies House. Unless specified otherwise, we would use ‘The LLP’s Registered Office address’ as a default for privacy.
Please contact us if you have any queries regarding your new LLP’s PSCs.
The preferred year-end relates to the accounting year-end (or ‘accounting reference date’) for your new LLP. The default year-end for new LLPs would be the same month as the month in which the LLP is formed plus one year (so an LLP incorporated on 5 January 2022 would have a default year-end of 31 January, and the first accounts would be for the period ended 31 January 2023).
You may wish to have a different year-end for the accounts, for example, aligning with the tax year or calendar year. If you wish to discuss accounting year-ends for your new LLP, speak to our Company Secretarial team today.