Limited Liability Partnership Agreement
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To create a Limited Liability Partnership a Form LLP2 must be obtained from Companies House and submitted together with a fee. The Form LLP2 only deals with the incorporation of the LLP, all the other vital details must be recorded within a Limited Liability Partnership Agreement.
When setting up a Limited Liability Partnership it is vital to have a comprehensive agreement between the members of the LLP. This agreement sets out in detail the members' capital contributions and rights & responsibilities to the LLP and each other. An LLP is a cross between a conventional partnership and a limited company. The key advantage is that members of the LLP are able to limit their liability in the same way as a company. The only disadvantage is that like a company, the LLP has to be incorporated at Companies House and must file yearly accounts and an annual return with Companies House. The accounts and return are then available for inspection by anyone, so there is a loss of financial privacy.
There are two types of members (partners in a conventional partnership agreement) in an LLP - Members and Designated Members. Designated Members have additional management powers and obligations, which they must carry out, these are as follows:
It is for the members to decide who will be designated members, however the LLP must have at least two designated members at any given time.
The agreement also contains the following clauses:
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