Blacks Solicitors’ Corporate team regularly provide sensible and pragmatic advice in relation to LLP Agreements.
A Limited Liability Partnership (LLP) Agreement is a contract formed between members of an LLP to create a relationship between them and to protect their respective interests and investment.
Usually the LLP itself is a party to the agreement to ensure the clarity and certainty of member relationships is also binding on the LLP itself. Entering into an LLP Agreement can help avoid, and even resolve otherwise potentially costly disputes before they start.
LLP Agreements can be verbal or written, however agreements in writing will provide more clarity should any problems occur. LLP Agreements need not be filed at Companies House and are therefore not available in the public domain (much like a Shareholders’ Agreement).
An LLP Agreement will usually cover the following areas:
- Nature and location of the LLP’s business
- Ownership and extent of LLP property
- Profits and distributions to members
- Capital commitments of the members
- Tax matters
- Decision making
- How meetings are convened and regulated
- Member restrictions
Frequently Asked Questions
Why do you need a LLP Agreement?
Although there is no legal requirement for an LLP to have a formal document governing the internal workings of the partnership, an LLP Agreement can provide clarity and help to avoid unnecessary misunderstandings which could lead to business disruption and/or worst still costly litigation.
If there is no LLP Agreement in place the provisions set out in the Limited Liability Partnerships Act 2000 (LLPA 2000) and the Limited Liability Partnerships Regulations 2001 (LLPR 2001), will automatically apply to the LLP. Whilst this legislation is broad and impersonal, an LLP Agreement will be bespoke to your needs and override the narrower provisions of the legislation.
What provisions automatically apply to a LLP under the LLPA 2000 and the LLPR 2001?
If there is no specific agreement to the contrary, the following provisions will automatically apply to all LLPs:
- All members to share equally in the profit and capital of the LLP (regardless of the amount they have invested)
- Every member must take part in the management of the LLP
- No member is entitled to any remuneration for managing the LLP
- Unanimous consent of the members is needed to introduce a new member
- No majority of the members can expel any member unless a power to do so has been conferred by express agreement between the members
- The LLP will indemnify the members in respect of any expenses incurred
For more information in relation to LLP Agreements please contact Blacks’ Corporate team today via email or call 0113 207 0000.