LLP Formation

Partnership Agreement

Partnership Agreement

A limited liability partnership is not based on Companies Act 2006, so it is important to have a partnership agreement in place. Our limited liability partnership registration pack includes a standard limited liability partnership agreement which you can adapt to your own requirements. However, if your requirements are very specific you should draw up an agreement in consultation with a solicitor.

FAQ

Legal Requirements?

Every limited liability partnership must have at least two, formally appointed designated members at all times. If there are fewer than two designated members then every member is deemed to be a designated member. (The limited liability partnership may have decided that all members will be designated members or that only some members will be designated members).

Are there any restrictions on LLP names?

All limited liability partnership names must end with the words ‘Limited Liability Partnership’, or, their abbreviation – LLP. An LLP cannot have the same name as an existing LLP or an existing limited company. See the company names section of FAQ for private limited companies.

Who can form a limited liability partnership?

Any new or existing firm of two or more persons can form a partnership – an LLP. However, limited liability partnerships are not available for all activities such as non profit making activities. Since their introduction in April 2001 LLP’s have become a popular business vehicle for professional firms such as accountancy firms and solicitors.

What are the requirements of forming an LLP?

Every limited liability partnership must have at least two, formally appointed designated members at all times. If there are fewer than two designated members then every member is deemed to be a designated member. (The limited liability partnership may have decided that all members will be designated members or that only some members will be designated members).

What is the difference between a member and a designated member?

With the agreement of the other members, a member may become a designated member at any time. Designated members have the same rights and duties towards the limited liability partnership as any other member. These mutual rights and duties are governed by the limited liability partnership agreement and the general law. However, the law also places extra responsibilities on designated members. In particular, designated members are responsible for:

• appointing an auditor (if one is needed);
• signing the accounts on behalf of the members;
• delivering the accounts to the Registrar;
• notifying the Registrar of any membership changes or change to the registered office address or name of the limited liability partnership;
• preparing, signing and delivering to the registrar an annual return (Form LLP363); and
• acting on behalf of the limited liability partnership if it is wound up and dissolved.

Designated members are also accountable in law for failing to carry out these legal responsibilities.

Do standard Memorandum and Articles of Association apply to an LLP?

It is important to remember that an LLP has no fall-back constitution – there is no equivalent of Memorandum and Articles of Association. In addition, the applicable legislation does not provide a detailed regulatory framework in relation to the governance and practical operation of LLP’s. The management structure and other matters should therefore be addressed by the members in a separate LLP agreement. Any such LLP agreement is not registered at Companies House.