Skip to main content
Company & Incorporation Law

The Operation of a Limited Liability Partnership (‘LLP’) in Kenya

By 2 Aug 2021Sep 1st, 2021No Comments

COMMERCIAL LAW

The Operation of a Limited Liability Partnership (‘LLP’) in Kenya

An LLP combines the advantage of a simple partnership (one of which is flow through of taxes and no corporate taxation) and the advantage of a company (of limited liability of the incorporated entity). This article outlines the modalities of how an LLP operates.

Registration of an LLP

1. An LLP needs to be registered to legally operate.

2. An LLP is governed by the Limited Partnership Agreement.

3. Application for registration to contain inter alia the following information:

(a) the name of that partnership;

(b) the general nature of the proposed business of that partnership;

(c) the proposed registered office of that partnership;

(d) the name, identity document (if any), nationality, and usual place of

residence of each person who will be a partner of the partnership; and

(g) such other information concerning the proposed LLP as may be prescribed by the regulations.

4. An LLP shall establish and maintain a registered office within Kenya to which all communication and notices to the partnership are to be addressed.

What are the Minimum Requirements of the Membership of an LLP?

The LLP should have:

  • A minimum of 2 Partners.
  • At least one manager who is a natural person who has attained the age of eighteen years and who is resident in Kenya.

Does the LLP in Kenya have Legal Personality?

  • An LLP is a corporate person capable of holding property in its own name and being sued in its own name.

The Legal Principle of Limited Liability

  • An LLP is responsible for liability arising from breach of contract or wrongdoing by the LLP.
  • The liabilities of a limited liability partnership are payable out of the property of the limited liability partnership.

A Partner as an Agent of the LLP

  • A partner is an agent of the LLP; however, this is limited to instances when the Partner has authority to act in a certain way.

Death of a Partner and Inheritance

  • Unless partners agree otherwise, any Partner that dies ceases to be a Partner and their estate is entitled to receive capital contribution of the Partner and any profits they are entitled to at the time of said Partner’s death.

Bankruptcy of a Partner

  • The Official Receiver of the bankrupt is not entitled to interfere in the management of the limited liability partnership but is entitled to receive distributions from the partnership that the bankrupt partner is entitled to receive under the limited liability partnership agreement.

Assignment of a Partnership Interest

  • Unless the LPA stipulates otherwise, a Partner can transfer their interest to a third party.

Annual Filings Required under Law

  • The LLP’s Manager shall file an annual declaration of solvency of the LLP at least at the Registry stating whether LLP is solvent or not.

Winding Up of an LLP

  • This can be done on a court order upon the application of a Creditor or Partner.
  • An LLP can also be wound up upon the Partners’ resolution.

How does a Partner cease to be a member of a Limited Liability Partnership?

  • Death
  • Dissolution of the LLP
  • Resignation upon notice.

The provision of general information herein does not constitute an advocate-client relationship with any reader. All information, content, and material in this article are for general informational purposes only. Readers of this article should get in touch with us/a qualified advocate to obtain legal advice with respect to any particular legal matter.

RELATED ARTICLES

The Pros and Cons of Incorporating a Company Vs Sole Proprietorship Registered under a Business Name

| Company & Incorporation Law | No Comments
COMMERCIAL LAW The Pros and Cons of Incorporating a Company Vs Sole Proprietorship Registered under a Business Name In Kenya, companies are registered under the Companies Act (No. 17 of…

The Operation of a Limited Liability Partnership (‘LLP’) in Kenya

| Company & Incorporation Law | No Comments
COMMERCIAL LAW The Operation of a Limited Liability Partnership (‘LLP’) in Kenya An LLP combines the advantage of a simple partnership (one of which is flow through of taxes and…

Alternative collateral to secure a loan

| Debt Finance & Insolvency | No Comments
COMMERCIAL LAW Alternative collateral to secure a loan Collateral under a Loan Agreement Collateral is property -  whether movable or immovable, tangible or intangible - that is offered as security…