Limited Liability Partnership (LLP) Agreement

LLP Agreement: Set Out How Your Limited Liability Partnership Is Run

An LLP agreement (often called a members' agreement) is the contract between the members of a limited liability partnership. It sets out what each member has contributed, how profits are shared, how decisions are made, who the designated members are, how meetings work, and what happens when a member joins, retires or is asked to leave. Robot Lawyer drafts the agreement from your answers, for the law of the country or state you choose, and on the Verified plan a qualified legal professional checks it within 24 hours before the members sign.

CONTENTS

What Is an LLP Agreement?

A limited liability partnership combines the flexibility of a partnership with limited liability for its members. The LLP is a separate legal person, so it owns its assets and enters into contracts in its own name.

Without a written agreement, default rules set by law decide how the LLP works. In the UK, for example, the default rules say profits are shared equally and no member can be expelled. An LLP agreement replaces those defaults with rules the members have chosen.

When Should You Use One?

• Setting up a new LLP
  Agree the rules before the business starts trading.
• Professional firms
  Law, accountancy, architecture, consultancy and property firms.
• Bringing in new members
  Agree how new members are admitted and what they contribute.
• Unequal contributions or profit shares
  Record who has put in what and who receives what.
• Replacing old or informal arrangements
  Put a clear, up-to-date agreement in place.

What's Included in Your Agreement?

• The LLP and its members
  The LLP's name, registered office, business, registration number and members.
• Capital and profit shares
  What each member has contributed and how profits and losses are shared.
• Decision-making
  Day-to-day decisions, matters that need the agreement of all or most members, and voting.
• Designated members
  The members responsible for the LLP's filings and accounts.
• Duties and holidays
  Each member's duties, time commitment and holiday.
• Tax
  Holding back part of each member's profit share to cover personal tax, if you choose.
• Meetings
  Notice, quorum, casting votes, proxies and how often members meet.
• Joining and leaving
  Admission of new members, retirement, expulsion and payments to a leaving member.
• Restrictions and confidentiality
  Limits on leaving members competing or approaching clients, and protection of the LLP's information.

What Your Document Looks Like

Your agreement is a full numbered contract: the parties, background, definitions, the business, capital, profits and drawings, management and decisions, designated members, meetings, members' duties, joining and leaving, restrictions, confidentiality, disputes and general terms, with signature sections for every member and a schedule of members and their contributions. Here is an extract from a sample agreement we generated:

17. Disputes and deadlock

17.1 A Member raising a dispute concerning this agreement or the LLP must notify the other Members in writing, describing the dispute. The Members must first try in good faith to resolve it by negotiation for 14 days after that notice.

17.2 If the dispute is not resolved during that period, it must be referred to mediation. The parties to the dispute must seek to agree a mediator. If they do not agree within 14 days after referral to mediation, any of them may request CEDR to appoint a mediator.

17.3 The parties must participate in the mediation in good faith. If the dispute is not settled within 60 days after the mediator’s appointment, any party to it may bring court proceedings.

How It Works on Robot Lawyer

1. Answer the questions
   Tell us about the LLP, its members, profit shares and how you want decisions made.
2. Generate your agreement
   We draft a complete members' agreement from your answers.
3. Get it verified
   On the Verified plan, a qualified legal professional checks your agreement within 24 hours and makes amendments where needed. The Essentials plan does not include this check. See how our documents are verified.
4. Sign it
   Every member signs, and the LLP keeps the signed copy with its records.

How It Works in Different Countries

• UK
  LLPs are formed under the Limited Liability Partnerships Act 2000 and registered at Companies House, with at least two designated members. The agreement is private and is not filed. If it does not cover a point, the default rules in the Limited Liability Partnerships Regulations 2001 apply.
• United States
  LLPs are formed under state law, often limited to licensed professions, and the agreement is usually called a partnership agreement. Each state sets its own default rules.

These notes are general. Check the current rules where the LLP is registered.

LLP Agreement FAQs

Is an LLP agreement a legal requirement?

Not usually, but without one, default rules apply that may not suit the business, such as equal profit shares and no right to expel a member.

What is a designated member?

A UK LLP must have at least two designated members, who are responsible for filing the accounts and confirmation statement at Companies House.

Can a member be expelled?

Only if the agreement gives that power. Your agreement sets out when and how a member can be expelled.

How are profits shared?

In the shares you choose, whether equal shares, fixed percentages or another method.

Can I use this agreement outside the UK?

Yes. Your agreement is drafted under the law of the country or state you choose. Our lawyers are qualified in England and Wales and, on the Verified plan, check documents for good practice, clear formatting and the law of England and Wales. They are not qualified in other countries' law, so if your agreement is governed by another country's law, we recommend having a local lawyer check it too.

Create an LLP Agreement

Give your LLP clear rules that all the members have agreed. You can start with a 7-day free trial. See our pricing for the plans. Related documents: Partnership Agreement, Shareholder Agreement, Deed of Adherence and Non-Disclosure Agreement.