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Lord Goldsmith: I agree with my noble friend that there are two distinct issues. As regards his first point, I was about to say that I do not intend to press the amendment. I have heard the remarks made by other Members of the Committee and I am happy that the Minister is willing to consider the matter further. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 8 [Designated members]:
Baroness Buscombe moved Amendment No. 29:
- Page 3, line 39, at beginning insert--
The noble Baroness said: The amendment seeks to clarify the role of a designated member. As currently drafted, the Bill does not appear to explain what a designated member is. I might sound a little like a rusty record, but I am reading the Bill from the point of view of someone considering establishing an LLP and wanting to know what the parameters are and who deals with what.
Clause 8 launches into provisions for designated members, stating that anyone can become one. An incorporation document specifies who they are, but not what they are. Therefore, the amendment attempts to overcome that by explaining their role and providing that, in any event, there must be a minimum of two in order to ensure proper compliance with the administrative and filing provisions of the Act and regulations made pursuant to it. I beg to move.
Lord McIntosh of Haringey: Clause 8(2) provides that:
I understand the difficulty with Clause 8. It sets up all the conditions under which designated members are to be appointed and changed and how notification is to be given, but it does not state what they will do. I apologise for that, but on questioning it appears that the drafting is not uncommon. The reason is that the role and responsibility of designated members is analogous to the phrase "an officer of the company" under the Companies Act. Under that Act, the obligations on an officer of the company appear all over the place in many aspects of company legislation. If we were to say that the role of a designated member is analogous to the role of an officer of the company, we might be trapped into going through company legislation and finding hundreds of instances where we should have to specify what the officer of the company, and therefore the designated member, does. For the sake of saving ink and paper, we did not want to do that.
It is right that in general a designated member has administrative and filing functions, but it would be wrong to limit his role in that way. In some provisions, he is given a task which goes beyond the mere administrative and in which he would take action that is significant for all the members. For example, designated members sign the accounts, appoint the auditors for the first financial year in respect of which auditors are appointed, and may apply to the Registrar of Companies for the LLP's name to be struck off the register.
It would be complicated, and I believe unnecessary, to include this additional provision in the Bill. Despite the clause being counter-intuitive in the sense that it does not spell out the functions, there is a good and rational reason for it and I hope that the noble Baroness will not press her amendment.
Baroness Buscombe: I thank the Minister for that explanation, but I remain unconvinced that there is an explanation of a designated member. The difficulty is in the drafting. I agree that the drafting of the amendment is unsatisfactory, but it is important that wherever possible it is clear as to who is what. I am disappointed that the Bill launches into what someone can and cannot do without explaining why a designated member differs from a member. However, I accept the Minister's response and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 9 [Registration of membership changes]:
Baroness Buscombe moved Amendment No. 30:
The noble Baroness said: The amendment seeks to allow more time when a person becomes or ceases to become a designated member. The Bill currently provides that notice shall be delivered to the registrar within 14 days. Where there is any change in the name or address of a member, notice is to be delivered to the registrar within 21 days.
I propose that in both instances 28 days should be allowed in order to give the LLPs more time to register the change. Some global partnerships have as many as 8,000 members; for example, some of the major accountancy firms. We believe that the 14 and 21 days could be increased to 28 days, providing a more comfortable period within which to register. It was discussed at the Trade and Industry Select Committee (paragraph 59 of its 4th report), which stated that the largest LLPs will have many hundreds of members. I believe that that should read "hundreds of thousands". Each year, one might have 100 new members, 150 moving house and 10 name changes due to marriage or divorce.
The amendment is designed to allow for a little more leeway in registering a change and complying with the Bill. I beg to move.
Lord McIntosh of Haringey: I am pleased to say that I can meet the noble Baroness half way. We will split
However, the noble Baroness has a point in Amendment No. 32. Indeed, in our response to the trade and industry committee, we said that we should allow returns to be made within one month of any change and her stipulation of 28 days is closer to one month than ours of 21 days. It is longer than we provide for companies but I take the noble Baroness's point about large partnerships with hundreds of members and I am willing to accept Amendment No. 32.
Lord Lucas: I should like to return to something the Minister has just said: that the matter of registering members' names and addresses was an important protection for those who deal with an LLP. In what way does Clause 6 not cover that to make such registration unnecessary? There is no obligation on someone dealing with a partnership to inquire into the register at all. As long as he believes the person to be a partner, he is safe. I cannot see what additional protection is afforded by having the register updated so frequently.
Lord McIntosh of Haringey: If I said that, I was giving the wrong impression. I did not say that registration is unimportant; it is clearly important. I said that we must have a better protection and one which is available without the proactive step of going to the register. That is why I said that, for example, on the letterhead and in any business correspondence, the members of a limited liability partnership must indicate that they are members. The fact which matters in that respect is that we are providing in the Bill a better protection than registration. It does not in any way remove the necessity to have an efficient registration system, which is what is provided for here.
Lord Lucas: I understand that, but my understanding of the Bill at present is that having the members' names on the register is not important as part of the protection of third parties and therefore it should be perfectly possible to make that time limit 28 days. Third parties gain nothing by the speedy updating of the register. Twenty-eight days would be quite sufficient because the protection is elsewhere in other clauses of the Bill.
Lord McIntosh of Haringey: The noble Lord may believe that it is belt-and-braces; that nothing is taken away by providing for 14 days. Fourteen days seems to work for limited companies. In a way, it is in the LLP's interest to notify the registrar, but the position must be the same as that for limited companies and there is no reason why it should not be.
Baroness Buscombe: I thank the Minister for his response to Amendment No. 30. I apologise for not making it clear at the outset that I would be speaking also to Amendment No. 32. I believe that the Minister judges from my inexperience here, but he obviously realised that I was referring to both amendments. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 31 not moved.]
("( ) Each limited liability partnership shall have a minimum of two designated members who shall be responsible for complying with the administrative and filing provisions of this Act and regulations made pursuant to this Act.").
"if there would otherwise be no designated members, or only one, every member is a designated member".
That is supposed to mean that there should be at least two designated members. I do not believe that the amendment makes the role of the limited liability partnership any clearer than the current provisions included in the Bill and the regulations. It provides an inaccurate paraphrase of their function because the amendment adds the requirement that designated members should be responsible for complying with the "administrative and filing provisions" as set out in the Act and regulations.
Page 4, line 22, leave out ("fourteen") and insert ("28").
7 p.m.
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