Put your business partnership onto a secure footing with a limited liability partnership agreement (LLP) that limits your liability and sets clear rules for sharing power and profits.
A Limited Liability Partnership (LLP) is a form of corporate structure which is best thought of as a hybrid of a limited company and partnership. LLP’s have historically been popular with professional services organisations such as solicitors, accountants, doctors and dentists. One reason for this is that many of these professions could not historically operate as limited companies but now can. They then decide to transition to limited liability and the LLP structure can be a more attractive option than a limited company.
We advise many Limited Liability Partnerships clients. Our experience includes :-
- Advising on the legal issues and work involved in transitioning to an LLP from a partnership
- Forming the LLP structure
- Drafting, advising on or reviewing LLP Agreements
- Advising on disputes between LLP members
Key issues in the LLP agreement
The legal, financial and practical issues which are generally important in a Limited Liability Partnership Agreement are similar to those that should be considered in a shareholder agreement. If you do not have an LLP agreement in place, the relevant statutory rules provide for equal profit share. Equal decision making powers, that a member cannot be removed except by unanimous decision and no potential new member can join except with unanimous consent. For many reasons, most LLP members decide that these rules do not suit their needs.
Among the most important clauses in an LLP agreement are :-
- Ownership of assets.
- Agreed method of allocating profits.
- Whether and if so when members may be required to make capital contributions.
- How decisions are made on removing members or adding new members.
- Where only certain members will manage the LLP on a day to day basis, clarity on their powers and restrictions such as financial limits and safeguards.
- Clarity on access to information, especially financial information.
- What constitutes a ”good leaver” and what constitutes a “bad leaver” and the practical consequences.
- Valuing goodwill and obligations of any retiring members.
- Restrictive covenants and confidentiality obligations, including after departure.
- Dispute resolution mechanism.
For more information on how we can assist with protecting you and your business, please contact us at firstname.lastname@example.org