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LIMITED LIABILITY PARTNERSHIP ACT 2012

LIMITED LIABILITY PARTNERSHIP ACT 2012

 

· This is a partnership that is registered under the Limited Liability partnership ACT

The LLP ACT creates the office of the Registrar and deputy Registrar of the limited liability partnerships which is housed under the office of attorney general, Registrar general, division.

Yes. The Registrar may refuse to register an entity, including an existing partnership or a private company as a limited liability partnership, if the Registrar is not satisfied with the information provided by the LLP entity as required under the LLP ACT.

  •  Yes. The Registrar may actually require any document to be lodged electronically. 
  • A document required to be lodged with the Registrar electronically may be lodged by an agent of the person who is required to lodge it subject to conditions which the Registrar may impose from time to time.
  • A copy of a document lodged electronically with the Registrar may be certified as a true copy of the original by the Registrar and in the absence of evidence to the contrary, may be admissible in legal proceedings as proof of the original document
  • Upon being registered under the LLP ACT, an LLP becomes a body corporate with perpetual succession.
  • An LLP has a legal personality separate from that of its partners.
  • A change in the partners of an LLP does not affect the existence, rights or obligations of the limited liability partnership.
  • An LLP is capable of suing and being sued in its name.
  • An LLP can acquire, own, hold and develop or dispose of movable and immovable property
  • An LLP can do such other things as a body corporate may lawfully do.
  • An LLP is required to acquire and maintained a common seal that bears its name and to use the seal for the execution of all documents that are by law required to be sealed.

Yes. Limited partnerships shall be subject to the partnership ACT as is expressly provided.

Any natural person or a body corporate can be a partner in a LLP

Two or more persons with interest of carrying out a lawful business with a view of making profit can register as a limited liability partnership after complying with the registration requirements under the LLP ACT 2011. (Section 16)

  • No partner is liable directly or indirectly to any responsibility that has arisen from an LLP contract or tort just because he is a member of the LLP.
  • No partner is liable for the wrongful ACT or omission of another partner of the LLP.
  • If a partner of an LLP is liable to another person who is not a partner of that LLP as a result of any wrongful ACT or omission done during a transaction or with authority of the LLP, then the LLP is liable to the same extent as the partner in crime.
  • Liabilities of the partnership shall be paid out of the profits of the LLP.
  • A partner of the LLP is the agent of the LLP.
  • LLP shall not be bound by anything done by a partner (agent) in dealing with a person if the partner/agent has no authority from the LLP to do such thing, or if the person has knowledge that the said partner has no authority from the LLP.
  • If a person ceases to be a partner of LLP, he is to receive the same treatment as a partner still unless the person has notice to show that he has ceased being a partner of the LLP or has ceased to be a partner and has delivered a notice of the same fact to the Registrar.
  • The mutual rights and duties of the partners and LLP itself will be governed by the:- 
    • Limited liability partnership agreement.
    • The limited liability Act
  • Decisions arising on ordinary issues shall be determined by way of majority votes.
  • A person may cease to be a partner of LLP by;-
    • Partnership agreement
    • By death
    • Dissolution of the partnership
    • Issuance of 90 days’ notice of intention to resighning
  • Upon ceasing to be an LLP partner, then, or otherwise provided by the LLP agreement, that person or his respective representative or liquidator is entitled to receive an amount that is ;-
    • Equal to partners’ capital contributions to the LLP
    • His rightful share of the accumulated profits after deductions of losses suffered by the LLP.
  • If there is death of a former LLP partner, his personal representative or liquidator is not supposed to interfere in the management of the partnership.
  • If a partner of an LLP is declared bankrupt by a court in Kenya or elsewhere, the bankruptcy is not in itself sufficient to make a partner cease to being a partner of the LLP.
  • The bankruptcy notice will just restrict the partner from being a manager of the LLP.
  • The official receiver or trustee of the bankrupt partner is therefore not entitled to interfere in the management of the LLP.
  • The official receiver or liquidator rather is entitled to receive distributions from the LLP that the bankrupt partner is entitled to as per the agreement.

Yes. A partner can assign the whole or part of his interest in the partnership for as long as the assignee is entitled to receive distributions that the partner would have been entitled to receive.

Once a partner has assigned a person this will lead to the following;-

  • Termination of his position as a partner in the partnership.
  • Entitlement of the assignee to participate in the management of the LLP.

· A signed statement of the following information by the each person intending to be a partner;-

>The name of that partnership

>The general nature of the proposed business of the partnership

>The proposed registered office of that partnership

>The name, identity document, nationality, and place of residence of each person intending to be a partner of the partnership.

 

If the person is a body corporate, then;-

>The body’s corporate name

>The body’s place of incorporation/registration

>The body’s registration number

>The registered office of the body to which all communications maybe addressed to.

 

· Any other relevant information that concerns the proposed LLP as lay down by the regulations.

The statement shall be in the form prescribed or approved by the Registrar and it shall be accompanied by the prescribed fee if any.

 Yes. The Registrar may in some cases require the statements provided to be verified in a manner that he considers appropriate.

Yes. The Registrar may refuse to register a partnership as an LLP if the set requirements have not been complied with.

The Registrar may also refuse to register an entity as LLP if the Registrar is convinced that;-

  • The said entity is likely to operate an unlawful business, or a business that is contrary to the good welfare of Kenya.
  • The said business would also be contrary to the national security or public interest

The Registrar may also refuse to register a partnership if the minister in charge of internal security has issued a notice in writing to the Registrar stating that it would be contrary to the national security if the Registrar registers the said entity as LLP under the LLP Act 2011.

As soon as possible after receiving the statements lodged as per the requirements, the Registrar shall;-

  • Register the statements.
  • Issue a certificate of registration to the respective persons. A certificate being a proof that the requirements set have been complied with.
  • The Registrar shall refuse to register any entity as an LLP if the respective entity has not complied with the set requirements set out in the LLP ACT.

The names of LLP shall end with;-

  • The expression “limited liability partnership”
  • The abbreviation “LLP”

Yes. There are restrictions when it comes to registering names and changing names of LLPs. The Registrar may refuse to register a name of a partnership if the name is;-

  • undesirable
  • identical to that of any other;
    • Limited liability partnership 
    • Corporation
    • Business name
  • Identical to a name that is being reserved under the Business Names ACT (Cap.499)
  • A name of a kind that the minister has by written notice directed the Registrar not to accept for registration.

Yes. A person can apply to the Registrar for reservation of names by following the prescribed manner that is specified in the application.

Upon receiving the an application for reservation or change of name, the register will reserve the name for a period of two months from the date on which the application was lodged or for such longer period as the Registrar will see fit.

If the Registrar is satisfied that a partnership was registered by a name that nearly resembles another LLP or company or business, the Registrar will give a directive to change its name.

A directive will only be given if the registered name was given by;-

  • Mistake
  • Accident
  • Any otherwise whether at the time of registration or while changing its name.

LLP shall have to comply with the given directive within six weeks after being notified of the direction, or any longer period as the Registrar will see fit.

Yes. A person can in writing apply to the Registrar to give direction to an LLP to change its name if the name;-

>Resembles or is nearly like another LLP, company or business

>Undesirable

>Reserved under the business ACT

> Has a written notice from the minister in charge not to be accepted for registration.

· Take note that the Registrar shall not accept an application of a partnership unless the application has been received within twelve months after the date of the registration.

· If LLP fail to comply with the directive it commits an offence and thus liable on conviction to a fine not exceeding 50,000.

· If after being convicted of an offence , and an LLP still doesn’t comply with the directive given, it commits further offence each day and is liable on conviction to a fine not exceeding five thousand for each day.

· If an LLP had in fact registered a name in bad faith, the Registrar will charge a penalty that he will see fit. The Registrar can also bring such a case to competent jurisdiction.

 Yes. A partnership that feels aggrieved by the directive of the Registrar can appeal against that directive within thirty days of after the date of direction to the minister.

As soon as possible, the Registrar will in writing notify the entity who lodged in applications as an LLP, of the decision and the reasons on which the decisions were based on.

A partnership can convert itself into an LLP by satisfying all the requirements among which include;-

>The LLP to which it has converted to

>The partners of the LLP

>Property, assets, interests, privileges, etc.

· By converting it means total transfer of the above listed.

 

Yes. A private company can be converted into an LLP by giving the following information;

>The name and registration number of the company

>The date of incorporation under the Companies Act

>The name of the proposed limited liability partnership

>The general nature of the proposed business

>The proposed registered office

>Details of all the proposed partners

 

If the persons referred is a body corporate;

>The body’s corporate name

>The body’s place of incorporation

>The body’s registration number

>The registered office of the body to which all communications may be addressed.

 

· An LLP is required to have at least two partners.

· If LLP carries business with only one partner for a period of more than two years, that partner together with the partnership will be jointly liable.

Yes. A limited liability partnership shall have at least one manager who is;

>A natural person

>18 years of age

>Resident in Kenya

  • If LLP fails to have a manager who is a natural person, and a Kenyan resident, the partnership and its partners will be committing an offence that is liable on conviction to a fine not exceeding 100,000. If LLP has been convicted but still carries on the same offence, it will be committing a further offence and the partnership jointly with its partners will be liable to a fine not exceeding 5,000 for every single day that the offence is done after conviction.
  • If LLP fails to lodge the details of the manager to the registrar as stated, it will be committing an offence liable on conviction to a fine not exceeding 100,000.If after being convicted, the LLP still continues to commit the same offence, the partnership jointly with the partners will be committing a further offence that is liable on conviction to a fine not exceeding 5,000 for each day.

An LLP shall lodge the following details with the Registrar;-

>Details of the person to be a manager

>Consent of the proposed manager

  •  The manager shall be personally responsible for ensuring that the partnership is compliant with the LLP ACT
  • The manager shall be personally liable for all penalties imposed on the partnership in case of failure to comply with the LLP ACT.
  • The manager shall ensure that the partnership lodges annual declaration of solvency or insolvency
  • The manager will file changes in the registered office of the partnership
  • The manager shall ensure that all official documents from the partnership bear the official name and registration number of the partnership.
  • If LLP fails to have a manager who is a natural person, and a Kenyan resident, the partnership and its partners will be committing an offence that is liable on conviction to a fine not exceeding 100,000. If LLP has been convicted but still carries on the same offence, it will be committing a further offence and the partnership jointly with its partners will be liable to a fine not exceeding 5,000 for every single day that the offence is done after conviction.
  • If LLP fails to lodge the details of the manager to the registrar as stated, it will be committing an offence liable on conviction to a fine not exceeding 100,000.If after being convicted, the LLP still continues to commit the same offence, the partnership jointly with the partners will be committing a further offence that is liable on conviction to a fine not exceeding 5,000 for each day.

Yes. If an LLP has more than one manager;-

>anything that the manager is required to do under the Act can be done by any of the managers

>any offence done by a manager under this Act will be an offence done by each of the managers

 

· The manager of the LLP shall lodge a declaration with the Registrar if in his opinion the partnership is either;-

>As to the date, to be solvent

>As to date, does not appear to be solvent.

· This declaration is not to be lodged later than fifteen months after the registration of the LLP and subsequently once in every calendar year.

· The Registrar can also extend the period within which the declaration may be lodged

· Failure to lodge the declaration within the prescribed period, or within the extended period will be an offence liable to a fine not exceeding 100,000

· A manager who makes declaration without having reasonable grounds that the partnership is solvent commits an offence and is liable on conviction to;-

>100,000 if the manager is a natural person, for imprisonment for a term not exceeding twelve months or even both

>50,000, if the manager is a body corporate.

· If an offence is carried out with intention to defraud the creditor of the LLP or for any fraudulent reason, the offender will be liable on conviction to;

>A fine not exceeding 250,000 or imprisonment of a term not exceeding three years or both for a natural person.

>A fine not exceeding 250,000, if the offender is a body corporate.

 

· LLP should keep accounts because;-

>To sufficiently explain he transactions and financial position of the partnership.

>To enable a profit and loss account and balance sheet to be prepared from time to time thus giving a true and fair state of affairs of the partnership.

  • LLP should keep its accounts records for not less than seven years after completion of such similar matters.
  • The accounts records will be kept at a place that the partners consider fit and shall be open always to inspection by the partners.
  • The Registrar may by notice in writing to the LLP or any of the partners require the partnership accounts records to be produced for inspections at any time that he sees fit.

 

· Failure to comply to keeping proper account records as stated the LLP and each of the partners commits an offence and is liable on conviction of;-

>A fine not exceeding 100,000 or a term not exceeding 2 years or both if the offender is a natural person

>A fine not exceeding 100,000, if the offender is a body corporate

· A person who will not comply with a notice written by the Registrar will be committing an offence and liable to;-

>A fine not exceeding more than 100,000 or imprisonment for a term not exceeding two years if the offender is a natural person.

>A fine not exceeding 100,000 if the offender is a body corporate.

 

· Yes. An LLP should have an established and maintained office that is registered within Kenya to which all communications and notices will be addressed to.

· Documents needing to be signed or served will be done so in the LLPs registered office.

Failure to have a registered office in Kenya will be committing an offence that is liable on conviction to a fine not exceeding 50,000.

· If after being convicted, the partnership still persists, will lead to further offence which will be liable on conviction to affine not exceeding five thousand shillings for each offence.

· LLP should ensure that their invoices or any other of their document should bear the following;-

>The registration number of the partnership.

>A statement that it is registered as limited liability.

 

 

· If LLP wants to change any of their details, they shall lodge with the Registrar a statement specifying the nature and effective date of the change within fourteen days after the change

· Any person who ceases to be a partner with the LLP can personally lodge a statement with the Registrar if that person believes that the partnership will not lodge the statement with the Registrar.

 

· Each partner is entitled to participate in the management of the partnership

· Each partner is supposed to participate in decision making by way of casting one vote

· Each partner is supposed to give true accounts and full information of all matters affecting his area of control

· A partner who operates a similar business like the partnership without consent from the partnership is supposed to account for, and pay all the profits made by that business to the LLP.

 

 

 

· Once a private company has registered to be an LLP, the company will be dissolved and removed from the register of companies kept under the Companies Act (Cap. 486).

· All movable and immovable property vested in the company will be transferred to the LLP as stated in the LLP 2011 Act.

 

· Yes. The LLP will take up any activities that were for or against the converted company immediately before its registration as an LLP.

· Such pending activities like ruling, or conviction, agreements and contracts will now be enforced for or against the LLP.

· In the case of employment, where there is continuance of employment, the LLP will be employer instead of the company.

· Every official document of the converted company will bear the statement that it has converted (from the date it registered) from a private company to an LLP.

 

· Liability in a limited liability partnership can only arise by contract or tort, or otherwise.

 

Solvent is the state of being able to pay ones debts as they become due in the ordinary course of business.

Insolvent is the state of being unable to pay ones debt as they become due in the ordinary course of business.

 

· Winding up is the process of putting an end to the life of a partnership.

 

· If a limited liability partnership is declared insolvent, it will be brought under receivership, which means a person or manager will take possession of the assets and management of the LLP.

 

· A receiver is liable for the debts that the person incurs in the course of the receivership, goods possessed, property hired, etc.

· A receiver can apply to the court for directions in winding up or in relation to any matter arising with his performance functions. 

· A receiver is entitled to payment for his services.

· The court can appoint a liquidator as a receiver of the property of the partnership after an application to the court.

· Seven days after a notice of appointment, the person obtaining the order shall loge a notice with the registrar.

· The notice shall give details of the order of appointment.

· A person acting as a receiver shall within seven days lodge a notice of cessation with the registrar after the appointment of an official receiver.

When does the winding up of LLP commence?

· Winding up of the LLp starts when the partners of the LLp pass a voluntary resolution for winding up the Partnership.

· Winding up also commences at the filling of an application to wind up the partnership in court

What action does the court take when winding up an application?

· The court can dismiss the application with or without cost.

· The court can adjourn the hearing conditionally or unconditionally.

· The court can make an order that it thinks best.

· The court can allow the winding up to be amended or withdrawn.

Who is eligible to make an application for winding up?

· The winding up applicant

· The limited liability partnership

· Any person who has issued a notice of intention to appear at the winding up hearing.

SECTION

OFFENCE

PENALTY

20 (4)

Carrying on business of an LLP in a name that is not registered, or does not end with the Limited Liability Partnership, or an abbreviation “LLP” or a name that is not registered or prohibited.

Fine of Ksh. 100,000/- maximum

21 (9)

 

 

 

(10)

Carrying on a name that is undesirable, identical, or prohibited under the law.

 

If after being convicted, the LLP still persists with the offence every day.

Fine of Ksh. 50,000/- maximum

 

 

 

Fine of Ksh. 5,000/- maximum

27 (4)

 

 

 

(5)

 

 

 

(6)

 

 

(7)

Having a manager who is not a natural person, not 18 years of age, and not a Kenyan resident.

 

Failing to lodge the details of the manger with the Registrar.

 

Failing to comply with the convicted offence in section 4 each day.

 

Failing to comply with the convicted offence in section 5 each day.

Fine of Ksh. 100,000/- maximum

 

 

 

Fine of Ksh. 100,000/- maximum

 

 

Fine of Ksh. 5,000/- maximum

 

 

 

Fine of Ksh. 5,000- maximum

29 (4)

 

 

 

(5)

 

 

 

 

 

(6)

 

 

 

 

(7)

Failure to lodge the declaration within 15 months after registration of the LLP.

 

A manager who makes declaration without having reasonable grounds.

 

 

 

Giving false information knowingly.

 

 

 

Intention to defraud a creditor.

 

 

Fine of Ksh. 100,000/- maximum

 

 

 

Fine of Ksh. 100,000/- maximum or 12 months imprisonment or both. (Natural person). A fine of Ksh. 50,000/- if it’s a body corporate.

 

Fine of Ksh. 200,000/- maximum or 2 years imprisonment (Natural person). A fine of Ksh.200,000/- maximum (Body corporate)

 

Fine of Ksh. 250,000/- maximum or 3 years imprisonment or both (Natural person). A fine of 250,000/- maximum, (Body corporate)

30 (5)

 

 

 

 

 

 

 

(6)

Failure of an LLP to keep

>Proper accounts,

>Having accounts not Less than 7 years,

>Failing to keep the accounts in fit place for all times inspection.

 

 

Failure to comply with the notice given by the Registrar for accounts inspection.

Fine of Ksh. 100,000/- maximum or 2 year’s imprisonment or both, (Natural person). A fine of Ksh.100,000/- maximum, (Body corporate)

 

 

 

Fine of Ksh. 100,000/- maximum, or 2 years imprisonment or both, (Natural person). A fine of Ksh. 100,000/- maximum, (Body corporate).

32(2)

 

 

 

 

 

 

(3)

Issuing official documents without the name and registration number of the partnership and a statement to show that its registered with the LLP.

 

If after being convicted the LLp still persists with the convicted offence, the partnership and its partners will be offenders for each day.

Fine of Ksh. 50,000/- maximum

 

 

 

 

 

 

Fine of Ksh.5,000/- maximum

Fourth schedule,(Section34) 5 (3)

 

 

 

 

(4)

A person who will fail to lodge a notice with the registrar within seven days of appointment, and giving details of the same.

 

 

If after conviction, a person still fails to lodge the notice with the registrar, will be committing a further offence every day for each offence.

Fine of Ksh. 100,000/- maximum

 

 

 

 

 

Fine of Ksh. 20,000/- maximum

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