Limited Liability Partnership Agreements

If you elect to trade as an LLP then unless you specifically agree otherwise in a LLP agreement your rights and obligations as a member of the LLP will be set out in the Limited Liability Partnership Act 2000 (LLP Act).

The LLP Act is only suitable for particular partnerships and in many instances its provisions will not provide the partners with the rights that they wish to have nor the level of obligations that they wish their fellow partners to be subject to.

For example unless an LLP agreement is entered into, pursuant to the LLP Act:

• all of the profits made by the LLP will be shared equally between the members of the LLP irrespective of the amount of work that they put in.
• any difference of opinion between the members can be decided by a majority of the members except for a change in the nature of the LLP's business which requires the consent of all members.

These are just two of the many problematic situations that can arise as a result of failing to set out the members' rights and obligations in an LLP agreement.

It is often the case that a partnership agreement is not considered until a problem arises. Unfortunately, it is usually too late then for the terms of a partnership agreement to be agreed by the partners. The best time to put a partnership agreement in place is at the time of setting up the company when relations between the partners are amicable.

We have experience in drafting LLP agreements for various types of business and can help you to ensure that your intentions as your rights and obligations relating to the LLP are accurately implemented.

For further information, please contact Simon Dakin or one of the team on 0115 9 100 200 or email enquiries@actons.co.uk.