Abiblo Law - Company (4)
If a small number of persons wanted to start a business and each of them wanted to run it, the distinction between directors and shareholders in Company law may become a nuisance as they could be the same person.
Another issue focuses on the internal machinery based on Company Law which may appear troublesome in cases of small business.
As a result, a hybrid legal vehicle will be formed based on the Limited Liability Partnership Act 2000.
Hybrid legal vehicle consists of the combination of the company and the partnership. Although a hybrid , limited liability partnership is closer to the characteristic of the company than to partnership.
Limited liability partnership which is popular in terms of professional business conduct will maintain the separate corporate personality and limited liability nature.
The limited liability partnership is governed by the principle of Company Law rather than partnership law except in two circumstances :
-the taxation rules where the members are taxed as if they were partners.
-the abandon of the separation between the members and the directors in term of internal decision making. Members are partners who have the same freedom as in partnership when it comes to the internal decision making process.