Jeff Selden looks at the Companies Act 2006 and its impact on LLPs.

The Companies Act 2006 received Royal Assent in November, and its provisions are already being implemented. Earlier this year the Government, by way of the Department for Business Enterprise & Regulatory Reform (BERR), consulted on how best to apply the Act to limited liability partnerships (LLPs).

BERR has now issued a further consultation paper setting out specific proposals. The paper proposes that the provisions of the 2006 Act should be applied as far as possible to replace the provisions of the Companies Act 1985 currently applied to LLPs. Two examples of changes in the 2006 Act, which are proposed to apply to LLPs, are shortening the deadline for filing accounts at Companies House from ten to nine months, and removing the exemption from preparing consolidated accounts for medium-size groups.

With respect to auditors, the paper proposes that the ‘senior statutory auditor’ sign the audit report in his/her own name on behalf of the audit firm. It also introduces a new criminal offence of ‘reckless auditing’, which is punishable with an unlimited fine. The provisions on limiting auditors’ liability will not apply to LLPs.

Due to the fundamental differences between LLPs and companies, the duties of directors as set out in the 2006 Act will not apply to members of an LLP.

The consultation paper states that the majority of changes proposed for LLPs will be implemented in October 2009, with the following three exceptions.

  1. Part 15 (Accounts and Reports) will begin in October 2008, apart from the rules on filing deadlines and penalties, which will be implemented for accounting periods beginning after 6 April 2008.

  2. Part 16 (Audit) will start in October 2008.

  3. Provisions relating to e-communications will begin in October 2008.

We expect BERR to issue further proposals on timetable and content in early 2008.

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