HL Deb 11 July 2000 vol 615 cc132-3

1 Clause 7, page 4, line 19, leave out from ("partnership") to end of line 21 and insert— ("(3) But subsection (2) does not affect any right to receive an amount from the limited liability partnership in that event.")

Lord McIntosh of Haringey

My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1.

The aim of the amendment is to prevent difficulties that we foresaw might arise from the interpretation of the phrase may receive from the LLP any amount to which the former member, or member, would have been entitled but for that event". There is a risk that the phrase could be interpreted to mean that the only entitlement was to what the former member had been receiving before that event—the event being the circumstances set out in subsection (1)(a) to (d), such as death or bankruptcy.

In many cases, the former member or his representative would not want to receive a continuing entitlement, which the phrase implies, but would wish to have his share in the firm bought out. That may also be favoured by the limited liability partnership, which would otherwise face a continuing liability. The amendment replaces the problematic phrase with a new subsection that refers to the right to receive an amount to ensure that any buyout provision in the member's agreement is not hindered by the clause.

Moved, That the House do agree with the Commons in their Amendment No. 1.—(Lord McIntosh of Haringey.)

Lord Goodhart

My Lords, I welcome the amendment in principle. I have one technical question on it. It is understandable and correct to leave out the words that follow "partnership" in line 19, but I am not sure why it is necessary to insert a new subsection (3). Subsections (1) and (2) say that a retired member or personal representatives of the deceased may not appear in the management or administration of the business. Nothing in that would affect the right to receive a payment from the limited liability partnership by reason of retirement or death. I merely wonder why the new subsection is thought necessary.

Baroness Buscombe

My Lords, I support the amendment. I have some sympathy with what the noble Lord, Lord Goodhart, has said. The amendment may not be necessary, but I was pleased to see that it has been added to the Bill, because it clarifies a point as regards which the original drafting of the Bill was hard to understand.

Lord McIntosh of Haringey

My Lords, I am grateful for that support—one and a half times—for the amendment. Subsection (3) is there more for the avoidance of doubt than because it adds anything positive. However, it ensures certainty of rights for third parties, which is not stated anywhere else in the clause. Clause 7 is intended to ensure that third parties have no right to interfere in the activities of the limited liability partnership—both opposition parties have supported that—but it is desirable to say explicitly that their rights for repayment or for a continuing interest are ensured.

On Question, Motion agreed to.