The second reading debate included the maiden speech of that chief among accountants, Lord Sharman. As a former KPMG employee myself, Peat Marwick alumni will be heavily involved.
While the Bill has the Opposition’s support, it is not free of criticism.
In earlier form it went through the new select committee procedure after which unworkable and unpopular elements such as clawback, the proposal to restrict LLPs to regulated professions and a statutory requirement for capital maintenance, were removed.
But there are still concerns over a number of issues. The Bill has just 18 clauses but spawns reams of regulation and the fundamentals of the Bill can only be gleaned by reference to secondary legislation – increasingly the way in which the government legislates – which is confusing. Also, parliament has no power to amend secondary legislation and, in some circumstances, no power to veto it either.
Now there is further concern. In earlier drafts there were specific provisions that for the avoidance of doubt partnership law would apply if not otherwise specifically excluded by the LLP Bill. These provisions, however, have been removed from the Bill.
This creates uncertainty and raises the risk of partners being construed as employees with employment law ramifications.
The disclosure requirements of the Bill are also odd. Given that LLPs will have limited liability, it is essential accounts are filed at Companies House to enable creditors to monitor the health of what is a separate legal entity. But is it necessary for all the Companies Act disclosures which regulate the relationship between shareholder and company to apply?
The LLP shareholders are the partners who will have access to all the information that those provisions require to be disclosed. Surely disclosure so far as LLPs are concerned is solely about protecting the creditors, rather than protecting shareholders.
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