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COMPANY Partnership Relations

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Grandbank’s lawyers have read Allcom’s articles and have reported on them to Grandbank.Limited liability partnerships are regulated by the Limited Liability Partnership Act 2000. As the name suggests persons involved with a limited liability partnership have limited liability in respect of the debts, obligations and torts of the company.Unlike a general partnership, if the LLP becomes insolvent the individual members are not responsible for the losses. In such cases the members will only lose the money they have invested. If the LLP is guilty of fraudulent trading then the individual members can be made liable for the losses under s214 of the Insolvency Act 1986. Many investors prefer to invest in limited liability concerns as they are given a greater degree of safety in relation to their investment.As mentioned above, limited partners are only liable to the sum of the amount they have invested. Limited partners have fewer rights than general partners and cannot have any say in the management of the company. Limited partners are not entitled to withdraw the money invested during the lifetime of the company and any involvement in the management of the company would make them liable for the debts and obligations of the company.Limited partnerships have to be registered under the Limited Partnership Act 1907. Such partnerships do not normally have more than 20 persons in the firm although there are exceptions whereby there can be more as listed in s717 of the Companies Act 1985.In all types of partnerships except for limited partnerships the courts are free to decide that the partner should be held liable, although in general practice most forms of partnership are exclude from liability1.Where the partnership is a limited partnership then the partners have limited personal liability2. Limited partners are usually those that are passive investors who have no involvement with the day to day running of the business.All limited partnerships must be registered. If the partnership is not registered then all the partners will be deemed to be general partners and will all be personally liable for the debts of the company.