New short article on insolvent partnerships and LLPs

Elspeth Berry, 'Square pegs and round holes: why company insolvency law is a bad fit for partnerships and LLPs' (2018) 31(3) Insolvency Intelligence 88

A much longer version will appear in a forthcoming issue of the Nottingham Insolvency and Business Law e-Journal, which will also contain articles based on the papers given at the Inaugural Conference of the Forum.

Two new casenotes on partnership law

The Edinburgh Law Review has recently published two articles on partnership law:

James Bailey and Blair Munro, 'Partnerships, Joint Ventures and Duties of Disclosure: The University Court of the University of St Andrews v Headon Holdings Limited' (2018) 22(2) Edin LR 282
(free access to the full text at https://www.euppublishing.com/toc/elr/22/2)

Joseph S Liptrap, 'Mobile Dating Applications and Partnership Law: Worbey v Campbell' (2018) 22(2) Edin LR 274

New name for the Forum!

The name of the Forum has now been changed to The Partnership, LLP and LLC Law Forum.

It is hope that this change (removing the word 'Academic') will make it clear that Forum is intended to be as inclusive as possible, and in particular that practitioner involvement in the Forum is welcomed, including contributions to the website, and papers at any future conference. Please do spread the word to our practitioner colleagues!

Thank you to those who proposed and supported this change at the round table discussion at the Inaugural Conference.

Book review: Elspeth Berry, Partnership and LLP Law (2nd edn)

Partnership and LLP Law, Berry (2nd edn, Wildy, Simmonds and Hill Publishing), pp.248, ISBN: 9780854900602

This book provides a clear and concise introduction to the law relating to each of the three types of partnership contained in UK law (namely general partnership, limited partnership and LLP), providing helpful comparative explanation along the way. It highlights the peculiar nature of the LLP, which is discussed in an equal level of detail as the other two forms of partnership, thereby marking a break with traditional texts in the area that, whilst acknowledging the existence of LLPs, tend to focus on general partnerships, governed by the Partnership Act 1890, and limited partnerships formed under the Limited Partnerships Act 1907.

The new edition covers includes coverage of recent cases such as: Campbell v Campbell [2017] EWHC 182 (Ch); Flanagan v Liontrust Investment Partners [2015] EWHC 2172; Clyde and Co LLP v Bates and Van Winkelhof [2014] UKSC 32; Inversiones Frieira SL v Colyzeo Investors II LLP [2011] EWHC 1762 (Ch) and Lie v Mohile [2015] EWHC 200 (Ch). It also includes the new Legislative Reform (Private Fund Limited Partnerships) Order 2017 (SI 2017/514), which provided for another niche partnership variant.

The chapters are sensibly ordered so as to broadly track the life cycle of a partnership from formation, through management and disputes, to dissolution. It includes chapters on separate legal personality, property ownership, management and decision making in partnerships, finance and insolvency. The book can also be applauded for venturing into the (difficult) tax treatment of these business forms. The appendix contains a sample partnership/LLP agreement, with the inclusion of the LLP sample agreement further distinguishing the text from others.

The book, which states the law as at 31 December 2017, will no doubt serve as an invaluable text for those looking for an introduction into partnership and LLP law, or for others who seek to refresh and update their existing knowledge.  

New journal article: Limited partnership law and private equity: an instance of legislative capture?

Elspeth Berry, ‘Limited partnership law and private equity: an instance of legislative capture?’ (2018) Journal of Corporate Law Studies, forthcoming in hard copy.

A limited number of free e-copies are available at https://www.tandfonline.com/eprint/3N5vFFjxbgF2Jwnvz5dg/full

Abstract

The number of limited partnerships in the UK has grown rapidly since the 1980s, largely due to the use of the limited partnership vehicle by private equity. The political and economic influence of private equity has enabled it to exert considerable influence on the UK government amounting to legislative capture, and this in turn has driven reforms to limited partnership law, predominantly deregulation, for the sole benefit of private equity. This distortion of the partnership legislation disadvantages other users or potential users of the limited partnership vehicle, since the private equity-inspired reforms do not apply them, and other reforms which would be of benefit to them have been ignored. Furthermore, reduced regulation is in some respects harmful to private equity itself, and the overall result is harm to the wider economy.

New consultation on proposals for reforms to Scottish limited partnerships

The Department for Business, Energy and Industrial Strategy (BEIS) has finally followed up its 2017 call for evidence of the misuse of Scottish partnerships for money laundering and other criminal activities by launching a consultation on what changes to the law are required: https://www.gov.uk/government/consultations/limited-partnerships-reform-of-limited-partnership-law

It has been described as a 'crackdown' in the media (eg by the BBC - see https://www.bbc.co.uk/news/uk-scotland-scotland-business-43935839) but it remains to be seen which reforms eventually make it into law and whether sufficient resources are made available to enforce them - concerns which have been immediately noted by the Scottish Herald which first broke the story and which has continued to investigate and campaign for reforms (http://www.heraldscotland.com/news/homenews/16192718.Staff_shortages__threaten__crackdown_on_shell_firms/?ref=erec).

 

 

Report on the Inaugural Conference of the Partnership, LLP and LLC Law Academic Forum

Sign Welcome Desk

 

The Inaugural Conference of the Forum, which was generously supported by the Society of Legal Scholars (SLS) Small Projects and Events Fund, and by Nottingham Law School, attracted over thirty registered delegates including academics specialising in law and business from UK, Australian, US, Dutch and Italian universities, solicitors, barristers, tax advisers and students. It comprised four sessions where papers were presented followed by questions, and finished with a round table discussion on the future of the Forum.  

Conference Room

 

In the first session, Professor David Milman (Lancaster University) spoke on the problems of identifying when and whether a partnership exists. He considered the issues which trigger litigation on identification (including the desire of purported partners to claim a share of the partnership assets or profits). After discussing the limited guidance provided by the Partnership Act 1890 and a wide range of recent cases, he considered alternative non-partnership based claims, before concluding that reform is unlikely but the courts are experienced in dealing with characterisation issues across a range of other areas of law. Jonathan Hardman (University of Glasgow, and Dickson Minto) presented the results of an empirical study of the potential moral hazard of limited liability by reference to Scottish partnerships which had converted to LLP status, using evidence from publicly available records at Companies House. The research focussed on the potential risk indicators, including the granting of floating charges, delays in registering accounts, changes in drawings, and increases in liabilities. The results suggest that LLP status might lead to some increase in risk taking but that in many cases it improved the firm’s position by making membership more attractive.

Conference Delegate Reading Notes

 

In the second session, Professor Geoffrey Morse (University of Birmingham) considered whether a partner can also be an employee of the partnership with particular reference to the Supreme Court judgment in Clyde & Co. He first discussed the reasons for the incompatibility of the two statuses according to both partnership and employment law cases, and then examined whether a partner should be considered to have the capacity to be an employee. He argued that the dual capacity point was not the reason for the incompatibility but the impossibility of employment co-existing with the nature of the partnership relationship. Jason Ellis (Nottingham Trent University) then presented a paper on whether directors should be accorded employment rights, with particular reference to claims made by directors of insolvent companies against the National Insurance Fund. He examined the difficulty of reconciling separate legal personality with any attempt to consider the reality of the director’s status, particularly where the director is the sole director and sole shareholder.

Conference Room

 

In the third session, Professor Iris Wuisman (Leiden University) discussed current proposals in the Netherlands to reform partnership law. She noted that the traditional distinction between professional and non-professional partnerships would remain, but there would be consolidation of the relevant laws, and changes to (though not necessarily simplification of) the complicated distinctions drawn between equal liability for certain types of claim, and joint and several liability for others. The slides are available at http://www.partnershiplawforum.org/downloads/PresentationWuismanNottingham5April2018.pdfProfessor Marco Speranzin (University of Padua) gave a detailed overview of the different types of partnership available under Italian law and their key features, noting differences when compared to the position in certain other European jurisdictions including the UK, in particular regarding partners’ liability and amendments to the partnership agreement. The updated slides are available at http://www.partnershiplawforum.org/downloads/ItalianPartnershipsSlides5April2018.ppt

In the fourth session, Brett Freudenberg (Griffith University) discussed the international trend towards new business forms (such as the UK LLP and US LLC) offering limited liability, separate personality and tax transparency. He highlighted the importance of structures enabling flexibility in both partner contributions and drawings, but noted the risk of this flexibility distorting the taxation outcomes. The slides are available at http://www.partnershiplawforum.org/downloads/FreudBordenDistFlexAndTaxFlowThrough.pptProfessor Brad Borden was unable to attend due to illness but provided Conference delegates with a draft of his paper on contribution-default remedies. 

Conference Room

 
The round table discussion which concluded the event considered:
1) Publication of Conference papers in a special partnership edition of the Nottingham Insolvency and Business Law Journal, including the possibility of producing a hard copy of the edition (normally only available online).
2) The future of the Forum: 
a) The success of the Conference, both in terms of the quality of papers and the opportunity to meet colleagues working in this area of law, prompted calls to make the Conference an annual event if possible. Ideas for the future included practitioner speakers, seeking sponsorship from partnership insurers, approaching law firms to host the event, and asking a PhD student to act as Secretary of the Forum and thus of the Conference.
b) The value of the Forum website as a knowledge exchange mechanism was noted. Ideas for development included separate sections for particular jurisdictions or themes, and a change of the Forum name in order to make it clear that practitioners were welcome to participate.

Second edition of Berry, Partnership and LLP Law

The 2nd edition of this text on English partnership law has just been published by Wildy, Simmonds and Hill.  It is hoped that a book review will follow on this website in due course.

(Ab)use of LLPs and limited partnerships, and the new PSC rules

The outcome of the UK government consultation on the misuse of Scottish limited partnerships and LLPs for criminal purpose is still awaited, a year after the consultation closed.

Meanwhile, the journalists whose initial investigations led to the government consultations continue their work:

http://www.heraldscotland.com/news/15919809.UK_vow_to_crack_down_on_abuse_of_Scottish_shell_firms_by_international_criminals/

See also the highly regarded BBC Radio 4 programme Analysis' episode on this:

http://www.bbc.co.uk/programmes/b09qd714

Inaugural conference of the Partnership, LLP and LLC Law Academic Forum

Thursday 5th April 2018

Nottingham Law School, Nottingham Trent University

This one day conference, which is generously supported by a grant from the Society of Legal Scholars Small Projects and Events Fund and by Nottingham Law School, brings together papers from leading researchers in the law of partnership, LLPs, LLCs  and other alternatives to the private limited company.

This is a unique opportunity for those teaching or researching in these areas, or related areas such as company law, employment law or tax, to hear papers from academics, including Professor Geoffrey Morse and Professor David Milman and speakers from the US, Australia, Italy and the Netherlands. The conference will conclude with a discussion forum on matters arising from the papers and any other issues of interest to those working in the field.

Further details of the Conference Programme, Conference Paper Abstracts, and Conference Speaker Biographies, can be accessed via the links in the sidebar.

Attendance is free and is open to all, including academics, practitioners and postgraduate students, but advance registration is required: please email Elspeth Berry, Reader in Law at Nottingham Law School, at elspeth.berry@ntu.ac.uk.

Resources

Biographies

Links

Second Annual Conference of the Partnership, LLP and LLC Law Forum 10 January 2019

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This website is supported by the Society for Legal Scholars (SLS) Small Projects and Events Fund. The SLS is the learned society for those who teach law in a university or similar institution or who are otherwise engaged in legal scholarship. www.legalscholars.ac.uk