Dealing with limited liability partnerships in a finance transaction—investigating capacity and authority
Dealing with limited liability partnerships in a finance transaction—investigating capacity and authority

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Dealing with limited liability partnerships in a finance transaction—investigating capacity and authority
  • Why is it important to understand the acts an LLP will perform in a finance transaction?
  • Acts of an LLP in a finance transaction
  • What is meant by 'capacity and authority'?
  • Investigating an LLP's capacity
  • Investigating an LLP's authority
  • Authority of the members
  • Committee of the members

This Practice Note considers the acts typically carried out by limited liability partnerships incoprorated under English law (LLPs) in the context of finance transactions and covers the steps which can be taken to investigate the capacity and authority of an LLP in these transactions.

The LLP was introduced as a new form of business entity in English law by the Limited Liability Partnership Act 2000 (LLPA 2000) on 6 April 2001.

LLPs are not partnerships, but are a form of corporate body. Often LLPs are used for professional services businesses, for example law or accountancy businesses.

For more information on LLPs in general, see Practice Note: The nature of a limited liability partnership and its legal framework.

Why is it important to understand the acts an LLP will perform in a finance transaction?

Lender's perspective

A lender will want to understand the acts an LLP will be performing in a finance transaction so that it can investigate whether or not the LLP has the capacity and authority to perform those acts. If it does not have the requisite capacity or authority this can have serious consequences for its contractual counterparts.

Borrower's perspective

A borrower will want to be clear about the acts it will be performing in a finance transaction because it will make a number of representations and warranties about its