Basic LLP Agreement

Basic LLP Agreement is a short, straightforward agreement for an LLP with simple arrangements between the members. It may suit a small business (or professional services firm) that wants a clear LLP structure without a long-form document.

It is derived from the long form LLP agreement and covers the main points in a simpler form.

What does Basic LLP Agreement do?

It sets out the core terms for establishing and running an LLP on an equal-membership basis, so the members’ agreed arrangements are recorded in writing.

What does Basic LLP Agreement cover?

• Equal capital contributions.
• Equal sharing of profits and losses.
• An expectation that all members will work full time in the business and manage it jointly.
• No power to expel a member unless there is unanimous written consent of all members.
• Appointment of two designated members.

When should you use Basic LLP Agreement?

Use this agreement where the LLP’s arrangements are straightforward and the members want a simple document that deals with the key practical points.

If you need a fuller and more sophisticated LLP agreement, a longer-form LLP agreement may be more appropriate.

ECCTA 2023

This template has been updated and amended to take into account the Economic Crime and Corporate Transparency Act 2023 (ECCTA). From 4 March 2024, regulations were published which applied the first company law reforms set out in the ECCTA to LLPs. Most of these mirror corresponding changes for companies.

These changes include:

• an LLP must ensure that its registered office is situated at an appropriate address;
• an LLP must provide an email address with its next confirmation statement;
• tightening up on the choice of name an LLP may use, specifically any name that is designed to facilitate criminal purposes or which suggests a connection with a foreign government or contains computer code is not permitted;
• confirmation on incorporation that an LLP has been formed for a lawful purpose; and
• a person may not be a member of an LLP if they are disqualified from acting as a company director. If a member becomes disqualified, the members of the LLP are required to remove that member. Failure to do so is a criminal offence. This is particularly important for existing LLPs as there is no power to expel a member of an LLP under statute. The members of an LLP can do so only if the LLP agreement permits them to.

Appropriate new clauses have been added to deal with these changes.

As with private limited companies, LLPs will continue to be impacted by the ECCTA by further changes in secondary legislation, particularly the identity verification provisions. This template will be updated further once these provisions are enacted.

Tax

This template does not address tax issues and customers should seek their own tax advice in relation to any tax implications arising from this template.

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