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Topic: Company and partnership documents

limited liability partnership agreement
File size:
132.98kB

# Pages:
10

Limited liability partnership agreement

Limited liability
partnership agreement

You want the features of a partnership together with the benefits of “limited liability”. You’re therefore looking to form a limited liability partnership (LLP). Use our agreement as a basic framework.

Advice

Limited liability partnerships (LLP) haven’t been around that long. They’re a cross between a partnership and a limited company. The main advantage over a traditional partnership is limited liability. This means that similar to a company, if things go wrong, the LLP is liable as opposed to the individual members. However, there’s more red tape involved than running a partnership - an incorporation document (Form LL IN01) is lodged at Companies House, together with a fee of £20. Likewise, annual accounts and an annual return (Form LL AR01) must be filed and in addition, any changes in membership (Form LL CH01) must also be notified to Companies House.

Tip

An LLP isn’t legally required to have a memorandum or articles of association like a company. However, to ensure that things run smoothly, it’s essential that all the members enter into an agreement that addresses the following:

 type of business that’s going to be carried out

 name - check that it isn’t the same or similar to your competitors or that it doesn’t fall foul of the restrictions on using various names and words that’s overseen by Companies House

 the capital contributions made by the members, how this can be increased and withdrawn?

 share of profits and losses

 accounts - who’s going to audit these?

 members - who they are, when and how can new members be admitted?

 decision-making - do all the members decide everything? Do they have equal voting rights on everything?

 designated members - who are they? What are their powers?

 retirement and expulsion - when and how will members cease to be members and what are their rights and obligations?

 any restrictions on out-going members - restrictive covenants on where, how and what they can do in order to protect the business

 winding up - what happens?

Designated members

The Act provides that any LLP must have two designated members at all time. They’re really the equivalent of the company secretary as they have various administrative responsibilities to perform that include appointing an auditor, signing the accounts, informing Companies House of any changes to the membership, preparing and submitting accounts and the annual return to Companies House etc. Failure to comply with their obligations under the Act is likely to result in fines for the designated members similar to those imposed on directors.

 

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