Business Legal Aspects: LLP and Directors' Duties

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Running Head: BUSINESS AND CORPORATION LAW 0
Business legal Aspects
7/8/2018
Student’s Name

Business Legal Aspects
1
Contents
Task 1...............................................................................................................................................2
Introduction......................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................5
Task 2...............................................................................................................................................6
Introduction......................................................................................................................................6
Discussion........................................................................................................................................6
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Business Legal Aspects
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Task 1
Introduction
After sole proprietorship concern, traditional partnership and corporations, Limited Liability
Partnership is another type of business structure. Similar to any other business mode, a limited
Liability Partnership (herein after referred as LLP) also has it is benefits and limitations. In
United Kingdom, Limited Liability Partnerships Act, 2000 is the legislation that governs all the
LLPs in the country and covers the relevant provisions. This Act was come into a force in April,
2001 and this describes the powers and obligations of partners of an LLP (Ainsworth, 2011). In
addition to this, the same also content regulations and schedule related to thereon. In the given
discussion area, lead characteristics of an LLP is defined.
Discussion
As earlier discussed Limited Liability Partnerships Act, 2000 is the lead legislation that provide
provisions and rules related to LLP, it is to state that as name implies, partners of an LLP has
their limited liabilities. Section 1(2) of the Act state that an LLP is a body corporate that means
as soon as LLP get it is incorporation certificate; this get separate identity from it is members. An
LLP cannot be treated as it is partners, it has it is separate legal personality similar to a
corporation. At the time of incorporation, every LLP get an incorporation certificate in which it
receives a separate registration number.

Business Legal Aspects
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What is an LLP? In order to answer this question it can be stated that this is an advance business
structure that has created out of the combination of corporation and traditional partnership
business structure. Section 1(3) of the Act says that an LLP has unlimited capacity, here this
mean is that an LLP can do all the acts at it is own. This form of business can also enter into a
contract by it is own name (Whittaker and Machell, 2016). It can do any act that a natural
personal can do in order to run a business. As it is not a natural person itself hence for this reason
it has to work through it is partners.
Section 6 of this Act covers that partners of LLP act as an agent on behalf of the same. It means
that members of LLP have their liability up to the capital they have introduced to the firm and to
the profit; they have not drawn yet i.e. undrawn profits. However, there are some exceptions of
the rule of limited liability of partners. These exceptions are as under:-
1. Negligence- If a person get suffer with loss while dealing with an LLP due to the mistake
and negligence of it is partners then the guilty individual partner will be responsible for
such loss.
2. Wrongful Deed:- LLP is not a natural person. It does not have brain. Partners of LLP
work on behalf of the same. If any of the partners do, any wrongful or fraudulent deed in
the course of performance of his/her duty then such partner will hold liable despite the
rule of separate entity.
3. Penalties- Similar to any other procedure, penalties, and fines are also a part of business.
In case of any penalties, if court demands, partners of LLP will also be liable to pay off
the same.