What is a Limited Liability Partnership (LLP)?
A limited liability partnership (LLP) is a partnership with limited liability for its members. It has the flexibility of a partnership and is taxed as partnership. In other respects it is similar to a private company.
What is limited liability?
The LLP is a separate legal entity and, while the LLP itself will be liable for the full extent of its assets, the liability of the members will be limited.
How are LLPs governed?
In the United Kingdom, LLPs are governed by the Limited Liability Partnerships Act 2000 (in England and Wales and Scotland) and the Limited Liability Partnerships Act (Northern Ireland) 2002 in Northern Ireland.
What are the legal requirements of an LLP?
An LLP must have a minimum of two people who have the intention of starting lawful trade and with a view to make profit. There is no maximum number of people that can join an LLP. A partner need not be a UK resident. An LLP also requires a registered office address which must be based in the UK and cannot be a PO Box or otherwise.
Who is responsible for the company?
As with a limited company or a corporation, members of LLPs cannot, in the absence of fraud or wrongful trading, lose more than they invest.
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If you do not have an LLP agreement it is not possible to divide the share of capital and profits other than equally regardless of whether members of the LLP have invested different amounts. Also, in the absence of an agreement a member who is not performing cannot be removed from the LLP.
The applicable legislation will impose certain rights and obligations on the members which may not reflect their intentions. Having a written agreement in place gives members the opportunity to vary or exclude the default position imposed by law, and to establish an agreement in other areas.
Our draft LLP Agreement has been prepared by specialist partnership solicitors.
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