Should LLPs have a members’ agreement and what should the agreement cover?
Unlike companies, LLPs do not have a memorandum or articles of association, however like a partnership it is important that members have a valid agreement between them in order to regulate the workings of their business.
As with a partnership agreement, there will be a range of financial, operational and termination issues that all properly drafted and considered LLP agreements should cover. Much will depend on the business and size of the LLP, how well the members know each other and their proposed level of commitment to the business, both financial and personal.
LLP agreements should set out the duties and responsibilities of the LLP members as well as profit share, decision making procedures, appointment/termination of membership and members’ retirement criteria. Many of the issues covered by a partnership agreement will be relevant to an LLP but adapted to the particular needs of the LLP corporate vehicle, for example, the need to produce statutory accounts.
A full discussion of the main issues that should be considered is set out in our Partnership section.