Concern over limited liability partnership disclosure call

PARTNERSHIP: Review may mean greater financial transparency for LLPs

Solicitors have expressed alarm at the possibility that partners in limited liability and profit share partnerships will have to disclose their personal assets.During the report stage of the Limited Liability Partnerships (LLPs) Bill in the House of Commons last week, backbench Labour MP Austin Mitchell tabled a series of amendments calling for the disclosure of the assets of all partners in LLPs and a breakdown of profit shares among partners.Mr Mitchell withdrew his amendment after trade and industry minister Dr Kim Howells said he shared Mr Mitchell's 'aspiration for transparency'.

He told the Commons that the issue was being examined by the independent company law review, which would, he hoped, make 'some insightful and radical proposals'.However, Dr Howells added: 'I do not believe that the disclosure of the net assets of members will add to creditor protection.' He also felt that the Bill's requirement to disclose total drawings and the highest paid partner was enough.Ronnie Fox, managing partner of City firm Fox Williams and chairman of the Association of Partnership Practitioners, said that he was 'appalled' by the idea that every partner's profit share should be disclosed.'I can't see any motivation beyond prurient interest behind any moves to do this.

Disclosing statements of personal assets flies against the whole concept of the LLP, because liability in a normal case would fall to the LLP and not to the individuals as partners: that is the whole point of them.'Meanwhile, the government has cleared up confusion that threatened to stop law firms taking advantage of the Bill.The Law Society had concerns that a series of clauses in existing Acts of Parliament would mean that law firms would not be able to form LLPs.

Initially, the government believed that the Bill did not give it power to amend this legislation, although the Society did.Dr Howells confirmed that Law Society research had changed the department's mind.

He said the Bill will enable legislative amendments clearing the way for solicitors to form LLPs.A Law Society spokesman said: 'The Law Society is delighted that the government has at last admitted we were right all along.'

Jeremy Fleming