Partnerships

General partnerships

A partnership is an association between 2 and 20 persons formed to carry on a common business with a view to a profit. This limit does not apply to a partnership of practising solicitors, accountants and members of a recognised stock exchange – the correspondence can state that a list of the partners may be inspected at the partnership's principal place of business.

A partnership, or a firm as it is often called, can be set up without any written or oral agreement between the partners although a written agreement is usual. Partnerships can operate under the names of the partners or under another name.

A partnership is in Scotland a separate legal entity and legal proceedings can be instituted against a partnership in the trading name of the partnership. Action can also be taken against partners individually but this should only be done in accordance with the principles in Prosecuting Individuals.

Section 143 of the Criminal Procedure ( Scotland) Act 1995 sets out the procedure to be used when summary proceedings are to be taken against a partnership. Section 70 governs proceedings on indictment against bodies corporate but there is no similar provision for proceedings against partnerships, so the procedure to be adopted when proceedings are to be taken against a partnership on indictment should be to proceed against the firm rather than individual partners. It should be emphasised that there is no doubt partnerships can be prosecuted on indictment for health and safety offences.

Limited partnership

A limited partnership consists of one or more "general partners", who are liable for all debts and obligations of the firm, and one or more "limited partners", who are liable upon terms of limited liability to the firm's creditors. Limited partners play no part in the management of the partnership. A limited partnership, like a general partnership, is a legal entity, and should be treated as a general partnership when considering proceedings. Because limited partners play no part in the management of the business, it would be normal practice to proceed against the general partners only.

All limited partnerships must be registered with the Registrar of Companies by a statement signed by the partners, including the sum contributed by each limited partner. A search should be carried out of the Companies Register. The certified copy of the registered statement will identify the limited partners, and the contributed sum.

Limited liability partnership

Limited liability partnerships were created by the Limited Liability Partnerships Act 2000, and are known as "LLPs". They are a new form of corporate business vehicle, with their own legal personality. For enforcement purposes, they share all the features of a company.

It is misleading therefore in the HSE context to think of them as ordinary partnerships. While the LLP will be liable to the full extent of its assets, the liability of the members will be limited.

An LLP must register at Companies House,1 and its name must end with the words 'limited liability partnership', or 'LLP', or the Welsh equivalent – 'partneriaeth atebolrwydd cyfyngedig'. It must also display its name at every place where its business is carried on, (even if the premises are a member's home), and state its name on all its correspondence and documents.

As with a company, the LLP will have a registered office, recorded at Companies House. The persons belonging to an LLP may be known as 'members' or 'designated members'. All existing members or designated members of an LLP must be recorded with Companies House. 2

Designated members of the LLP have additional functions within the partnership associated with its running, eg the signing of the accounts.3 In these roles the designated members will be acting on behalf of all participants in the LLP.

If inspectors wish to speak to a person representing an LLP, or the LLP wishes to designate a person to speak on its behalf, it is advisable that a designated member provides written confirmation of the authority of that person to represent the partnership's guiding mind.

In the event of the insolvency of a limited liability partnership, the laws applicable to companies under the Companies Act 1985 and the Insolvency Act 1986 will apply.4

Enforcement will be taken against the LLP as a legal entity in its own right. Members or designated members of the partnership may also be the subject of enforcement as members of a body corporate under s.37(2) HSWA, if their conduct comes within the terms of s.37(1).

Employees and others may of course still be liable under ss.7,8 and 36 HSWA.

Care should be taken to determine individual roles and responsibilities, to ensure that any action is being taken against the most appropriate person.

Joint ventures

There may be occasions when two or more companies combine their resources to carry out a joint venture. This can take different forms:

  • Each individual company carries out a separate contract, although they may co-operate for administrative or organisational purposes.
  • Each company would be liable for its own contraventions and could therefore be prosecuted in its own name without reference to any of the other companies involved.
  • The companies involved contribute resources to the formation of a new company for the purpose of the joint venture. This separate company is a legal person which can be prosecuted in its corporate name.
  • The companies involved conduct the venture under a business name without forming a new company.
  • This may, in some cases, constitute a partnership in which the companies are the partners. The partnership will be liable for contraventions arising from the venture.

Footnotes

  1. Limited Liability Partnerships Act 2000 ss.2(1) & 2(2). Back
  2. Limited Liability Partnerships Act 2000 ss.2(2) & 8. Back
  3. Limited Liability Partnerships Regulations SI 2001/1090. Back
  4. Limited Liability Partnerships Act 2000 s.14 & Limited Liability Partnerships Regulations SI 2001/1090. Back

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Updated 2023-11-20