As soon as the decision to set up a business in Ireland has been made, an early consideration must be given to the legal form a business will take. Once the business has been established and is actually worth something, unwinding the existing structure and implementation of a new one can be expensive and time-consuming. It is much better to have the right structure in place from the outset. One of the most popular forms of business structures in Ireland is a Limited Liability Partnership.
What is a Limited Liability Partnership in Ireland?
According to the Partnership Law in Ireland, a Limited Liability Partnership is the one where two or more persons conduct business together with a view to making a profit. A partnership can be made out of natural persons and corporate bodies. Remember that, it is not a separate legal entity, that is to say, a partnership has no legal personality, separate and distinct from the various partners which comprise the partnership.
Features of an LLP in Ireland
- An LP must have at least one general partner and one limited partner
- The partnership must contain more than 2 persons or, if carrying a financial business, 50 members are required
- The general partners of the company are liable for the debt and obligations of the firm
- Whereas the limited partners contribute a stated amount of capital and are not liable for the debt and obligations of the company beyond the amount contributed
- The LLPs must submit accounts and annual returns to the Registrar of Companies each year
- An LLP is not a separate legal entity
How to Form an LLP in Ireland?
A limited partnership must be registered with the CRO and in accordance with the 1907 Act; otherwise, the partnership is a general partnership. The process is simple and easy to understand, hence there won’t be much problem while registering the business if all the documents you submit are authentic. The steps to register your limited partnership in Ireland are as follows.
- The first step is to register your partnership name at the Companies Registration Office (CRO). The name must not be similar to that of any existing company in Ireland.
- An application Form LP1 must be filled and submitted to the CRO. This form must be signed by both the general and limited partners
- Next, another Form LP3 must be filled which includes a statement of the capital contributed by the partners. The form can be signed by any of the general partners
- A deed must be signed by all the partners. It must include the following content:
- Partnership name
- Nature of the business and management to be conducted for and on behalf of the LP by the general partner
- Change of partners - resignation, expulsion, transfer of interests or new additions
- Distribution/application of profits - discharging creditors should always be first
- Limits of Authority on the general partner’s powers
- The final step is to pay the registration fees after which your registration process is completed
Ireland has both a general partnership and limited liability partnership as part of their business entities. The main difference between a general partnership in Ireland and an LP is that, in the case of a limited partnership; the liability of all of the partners except one can be limited to the amount that he/she has contributed to the firm. The 1907 Act provides that a limited partnership must have at least one partner whose liability is unlimited. This partner is termed a “general partner”.
Converting an Existing Company to an LLP
Existing partnerships can convert to an LLP by exactly the same process of incorporation and providing there are no changes in membership or in the way in which the partnership operates, there may well be no impact on the partnership’s tax position. Proper care and advice need to be taken before any decisions are made.
It is not possible for a limited company to convert into an LLP and there will be a significant legal and taxation impact where an LLP takes over the business of a company.
If you are interested in setting up a partnership in Ireland, we at Business Setup Worldwide would be delighted to discuss LLP with you and demonstrate what the impact of your business would be. Contact us today for more information.