Limited Liability Partnerships (“LLP”) – a twist on the general partnership
January 20, 2012 A Blog Post, business law, Buying a Business, entrepreneur, partnership, partnerships, small business, start-up business, starting a business, types of business agent,business law,business lawyer,business structure,corporation,entrepreneur,entrepreneur law,entrepreneur lawyer,garnet brooks,Halifax lawyer,law of agency,limited liability partnership,limited liability partnership agreement,LLP,partnership,partnership act,sole proprietorship,unlimited liabilityLimited Liability Partnerships (“LLP”)
A limited liability partnership (“LLP”) is very similar to a general partnership. The biggest difference is that “innocent” partners have some protection from the unknown negligence or misconduct of other partners. Limited liability partnerships are governed by the Partnership Act, in Nova Scotia.
As in a general partnership, all partners in an LLP may participate in the management of the partnership. Although this model affords innocent partners personal liability protection from the negligence or misconduct of other partners under s. 57(1) of the Partnership Act (Nova Scotia), partners can be liable if they are aware of the negligence, and did not take any reasonable steps to prevent it.
Limited liability partnerships must carry liability insurance per s.51(1)(c) of the Partnership Act. All partners continue to remain responsible for all contractual liabilities of the firm.
Not every business may register as a limited liability partnership. The Partnership Act states in s. 51(1) that a limited liability partnership can be registered if its sole reason for carrying on business is the practise of a profession which is governed by an act (a self regulating profession) which allows for a limited liability partnership. It is common for legal and accounting firms to operate as limited liability partnerships.
