Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Limited Liability definition

What does Limited Liability mean? In legal practice, limited liability means an owner’s personal exposure for a business’s debts is capped because the business has a separate legal personality. In a company limited by shares, a shareholder’s liability is limited to any unpaid amount on their shares. In a company limited by guarantee, a member’s liability is limited to the sum they agree to contribute on a winding up. These outcomes are set by statute (UK Companies Act 2006; Irish Companies Act 2014) and are broadly consistent across England and Wales, Scotland, Northern Ireland and Ireland. Related forms include UK limited liability partnerships...

Limited liability partnerships: corporate nature, legislative framework, incorporation requirements, members’ rights and liabilities, employment/worker status, designated members and agency, PSC compliance, and collective investment scheme considerations

Published by a LexisNexis Corporate expert

Practice notes

A Limited liability partnership (LLP) is not a traditional Partnership but a corporate body created under the Limited Liability Partnerships Act 2000 (LLPA 2000), which took effect on 6 April 2001. During the 1990s, many larger professional firms grew increasingly uneasy about the prospect of heavy personal exposure for partners and pressed the government to resolve the problem. Following consultation, the government introduced a new vehicle, the LLP, combining the internal flexibility associated with partnerships with Limited Liability for its partners. An LLP is therefore a body corporate rather than a conventional partnership, established by statute.

The law applying to LLPs

In practice, most rules governing LLPs are modified company law rather than partnership law. LLPA 2000 makes clear that, save as expressly provided in that Act or in regulations made under it, partnership law does not apply to an LLP. LLPA 2000 operates largely as a framework, addressing how an LLP is formed and how its members relate to one another, and is supplemented by various statutory instruments. Accordingly, the statutory regime adapts company law principles to the LLP context...

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Web page updated on 21/05/2026

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