Deed of Adherence to Basic LLP Agreement

This Deed of Adherence is designed for use with the Simply-Docs Basic LLP Agreement where a new member is being admitted to an LLP that is governed by that agreement.

It is drafted as a deed (rather than a simple agreement) to avoid issues that may arise if there is a lack of consideration from any of the existing members.

What this deed does for the incoming and existing members

The deed binds the incoming member into the existing LLP agreement so that they undertake the same obligations as the original members and receive the same entitlements. The existing members give the incoming member an indemnity against losses arising before the incoming member joined the LLP.

Updating members’ profit shares, losses and drawings

Admitting a new member will change the percentage shares of profits and losses for all members. This is dealt with by adding a new schedule setting out each member’s:

• capital contribution;
• profit share; and
• monthly drawings.

Signing and choosing the joining date

The deed should be executed by all members of the LLP and by the incoming member. It should be dated on the date the new member joins the LLP.

Thought should be given to the joining date. For ease of accounting, profit shares and capital contributions, this date should, if possible, be tied into the LLP’s accounting reference date (and used as the date of the deed), unless interim accounts are being prepared to bridge any gap.

Tax position and HMRC notifications

This deed does not address the potential tax consequences of a new member joining the LLP. Notifications to HMRC may be required. Independent tax and accounting advice is recommended.

ECCTA 2023 and LLP member disqualification

This template has been updated following the introduction of the Economic Crime and Corporate Transparency Act 2023 (ECCTA). Importantly, a person may not be a member of an LLP if they are disqualified from acting as a company director. Disqualification orders made against directors (or former directors) under the Company Directors Disqualification Act 1986 have been extended to LLPs. If a member becomes disqualified, the other members of the LLP are required to remove that member. Failure to do so is a criminal offence. As there is no power to expel a member of an LLP under statute, it is important that any new member contractually confirms that they are not disqualified. This deed of adherence has been amended to reflect this.

Deed of Adherence to Basic LLP Agreement is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.