Who can use this Limited Liability Partnership Agreement
Any individuals or companies establishing a LLP will need a limited liability partnership agreement t. It is written for 3 or more partners.
What is this LLP Agreement for?
A limited liability partnership is similar to a general partnership in many respects. Each partner or ‘member’ is an owner and receives a share of profits. Unlike a limited company, the LLP does not pay tax, this is paid by each member on their profit share. But as with a limited company, the liability of the members is limited.
The LLP agreement sets out the rules for ownership and management of the business. Unlike a limited company, there are no standard articles of association. The members of an LLP need to create their own – hence they need a LLP agreement
What are the main issues?
These are similar to an unincorporated partnership. They include:
The Business. The nature of the business will be identified as well as the name.
Capital contributions and profit shares. These will be set out in the agreement or in an attached schedule. The duties of the members to contribute additional capital may also be included. As with the general partnership, the members are not employees and instead they will draw income from the business on account of their share of profits. The LLP agreement sets out the rules, including what happens if there isn’t enough money to pay them all.
Designated members. At least two members have to be identified on the Companies House register as “designated members” – i.e. the members responsible for filing returns at Companies House.
Governance and management. The LLP agreement will say how decisions are arrived at – the voting rights of each member and whether all or only some decisions will require unanimity or a special majority.
More routine matters such as holidays, sick pay etc. should also be dealt with.
Introduction of new members, retirement and expulsion. The procedure for appointing new members as well as notice periods for retirement and payment of capital and profits to outgoing members will be set out.
What detailed terms does the LLP Agreement contain?
This thirteen page document contains 25 clauses covering:
For more information on each of these sections, see our Explanatory Notes which you will receive when you download the document from our website.
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When I download the document, can I change it and/or use it more than once?
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