The LLP will give the owners the flexibility of operating as a partnership whilst giving them limited liability. It combines the benefits of a partnership with those of private limited companies. However this comes with safeguards in law to minimize abuse and provide protection to parties who deal with the LLP.
The LLP is a body corporate and has a legal personality separate from its partners. The LLP has perpetual succession. Any change in the partners of a LLP shall not affect its existence, rights or liabilities.
An LLP is capable of:
- Suing and being sued in its name;
- Acquiring and holding property in its name;
- Having a common seal in its name; and
- Doing such other acts and things in its name, as bodies corporate may lawfully do and suffer.
The partners of the LLP will not be held personally liable for any business debts incurred by the LLP.
However, a partner may be held personally liable for claims from losses resulting from his own wrongful act or omission. But a partner shall not be personally liable for such wrongful acts or omissions of any other partner of the LLP. An LLP is required to keep such accounting and other records that will sufficiently explain the transactions and financial position of the LLP. This will enable profit and loss accounts and balance sheets to be prepared to give a true and fair view of the state of affairs of the LLP. If the LLP does not do so, the LLP and every partner shall be guilty of an offence. The punishment may be a fine or imprisonment, or both. In addition, the LLP shall submit to the Registrar an annual declaration of solvency or insolvency. Such solvency status reported shall be available to the public.