Limited Liability Partnerships

Limited liability partnerships are becoming increasingly common, especially in the professional services sector.

Limited liability partnerships (‘LLPs’) were introduced by the Limited Liability Partnerships Act 2000. An LLP isn’t quite a partnership or a company but something which sits between the two.

An LLP has a separate legal identity from its members. It can enter into contracts and own property in its own name. Also like a company, it has to be formed by being registered at Companies House.

The LLP resembles a company in how it deals with outsiders. However, it is similar to a general partnership in the way it is managed and its internal arrangements, potentially offering far greater flexibility.

As an LLP is responsible for its own debts, its members have limited liability and are not generally liable to contribute to the assets of the partnership (although there are exceptions).

Partners in LLPs are technically ‘members’. An LLP must have at least two ‘designated members’ who have particular responsibilities and functions within the organisation.

The rights and duties of members between themselves, and between them and the LLP, are often set out in a written agreement. This deals with issues like profit shares, management responsibility and the appointment and retirement of members. This agreement is a private document and confidential to the members of the LLP.

If there is no written agreement, then there are default rules that apply to regulate the relationship between the members. However, it is unlikely these default provisions will be suitable for most LLPs.

We provide the expertise you need to understand the rules and written agreements that regulate LLPs, so you have the insight you require when it matters most.