Beruflich Dokumente
Kultur Dokumente
Limited Liability
Partnerships
(LLPs )
Tuesday 6th September 2005
connectedthinking*
PwC
Limited Liability
Partnerships
(LLPs )
John Wayman
Senior Partner
PricewaterhouseCoopers LLP
connectedthinking*
PwC
Page 3
Page 4
SLP
Holdco
LP
Carried
Interests
GP
Investors
Manager
Co
FSA Reg
GP Co
Advisor
Fee
Deal Fees
GP
Management
Fee (PPS)
Fund
(ELP)
LPs
Portfolio Companies
Page 5
LLP Members
(ie partners)
SLP
Manager
UK LLP
LP
Carried
Interests
GP
Advisor
Fee
Investors
GP Co
Deal Fees
Private Equity Club
PricewaterhouseCoopers
GP
Management
Fee (PPS)
Fund
(ELP)
LPs
Portfolio Companies
Page 6
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Manager
UK LLP
Holdco
Manager Co
GP Co
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Manager
UK LLP
Holdco
Manager Co
GP Co
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Manager
UK LLP
Holdco
Manager Co
GP Co
GOODWILL??
Page 9
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Members
Holdco
Manager Co
Member
GP Co
Manager
LLP
Valuable
goodwill
Page 10
10
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Members
Holdco
Manager Co
Member
Manager
LLP
Valuable
goodwill
GP Co
11
LLP Conversion
Impact on Employment Related Securities Exposure
Key Issue for PE House Principals
Exposure to income tax/NIC on part of carried interest
40% tax/12.8% employer NIC
MOU
Limited protection
Reallocation of forfeited carry
New PE/VC House
No employment = No ERS
Page 12
12
Partners/
Principals
LPs
LLP Members
SLP
Manager
UK LLP
LP
GP
GP Co
GP
Fund
(ELP)
Investors
LPs
Portfolio Companies
Private Equity Club
PricewaterhouseCoopers
Page 13
13
LLP Conversion
Impact of Employment Related Securities Exposure
New PE/VC Houses
No employment = No ERS
Existing PE/VC Houses
New joiners = no employment = no ERS
Existing Executives continued ERS risk
Pre LLP Funds
Reallocations of forfeited carry
Post LLP funds
Connected former employer issue
Private Equity Club
PricewaterhouseCoopers
Page 14
14
LLP Conversion
Migration from Manager Co to LLP
Partners/
Principals
Members
Holdco
Manager Co
GP Co
Member
Manager
LLP
Page 15
15
LLP Conversion
Other Practical Aspects
Tax (Other)
Tax reporting for individual partners
Partner education
Drawings v Salary
Tax reserves
Registering as self employed
Tax/NICs
VAT registration/VAT grouping
Page 16
16
LLP Conversion
Other Practical Aspects
Accounting
Format of LLP Accounts
Goodwill
Regulatory
FSA approval for LLP
Change of Entity Fast Track for conversions
3-6 months
Capital requirement of LLP
Financial Projections
Private Equity Club
PricewaterhouseCoopers
Page 17
17
LLP Conversion
Other Practical Aspects
Legal
Impact on Fund Agreement Terms
Change of manager entity
Termination of employment of key persons
Investor consent
Detailed terms of LLP Agreement
Page 18
18
Table Discussion
LLP Conversion
PwC
19
LLP Conversion
Discussion
Tax (Other)
Tax reporting for individual partners
Partner education
Drawings v Salary
Tax reserves
Registering as self employed
Tax/NICs
VAT registration/VAT grouping
PwC
20
LLP Conversion
Discussion
Accounting
Format of LLP Accounts
Need to comply with LLP SORP
Goodwill
Transfer to LLP
PwC
21
LLP Conversion
Discussion
Regulatory
FSA approval for LLP
Change of Entity Fast Track for conversions
3-6 months
Capital requirement of LLP
Financial Projections
PwC
22
LLP Conversion
Discussion
Regulatory
Considerations
FSMA requires that a new firm requires a new authorisation
FSA has developed a Simple Change of Entity process to
PwC
23
LLP Conversion
Discussion
Regulatory
Limitations on the Simple Change of Entity approach
Firm must:
Carry on regulated activities of existing firm
Have no outstanding regulatory obligations
Risk profile of business unchanged
No business scope changes
Regulatory rights and obligations transfer
Continuation of compliance arrangements and client asset
obligations
Limited changes to the Approved Persons
2004 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context
requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.
PwC
24
LLP Conversion
Discussion
Regulatory
Issues
Need to apply to transfer any existing FSMA waivers
New waivers may be needed to facilitate client transfers
Compliance arrangements need to be up to date and
PwC
25
LLP Conversion
Discussion
Legal
Impact on Fund Agreement Terms
Change of manager entity
Termination of employment of key persons
Investor consent
Detailed terms of LLP Agreement
PwC
26
LLP Conversion
Discussion
Legal
Benefits of Corporate Form
Governed by the LLP Act 2000 and the LLP Regulations
LLP has a separate legal personality (body corporate)
Two or more members can be individuals or body
corporate
Can obtain FSA authorisation
Limited liability for members
LLP Agreement Flexibility to meet commercial needs
2004 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context
requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.
PwC
27
LLP Conversion
Discussion
Legal
Liabilities
An LLP is liable for contracts entered into - same as a Ltd
Co
Members liable to contribute to LLPs assets as provided
in LLP agreement (absent intention to defraud creditors)
Members liable for fraudulent/wrongful trading
Clawback by liquidator prior 2 years
Members personal liability for negligence same as Ltd
Co
2004 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context
requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.
PwC
28
LLP Conversion
Discussion
Legal
Members Remuneration
How to share profits / losses
Flexibility - drawings, loans, distributions (cash or in kind)
Ability to segregate/designate income streams
LLP Conversions
Business Transfer issues
Valuation of assets
TUPE
2004 PricewaterhouseCoopers LLP. All rights reserved. PricewaterhouseCoopers refers to
PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context
requires, other member firms of PricewaterhouseCoopers International Limited, each of which is a
separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers.
PwC
29
LLP Conversion
Discussion Overview
PwC
30
LLP Conversion
Thank You
PwC
31