Partnerships: Limited Liability Partnership (LLP): LLP agreement
Regulation 2, Limited Liability Partnership Regulations 2001
The UK Limited Liability Partnership (LLP) is a body corporate that is governed by an agreement, the “LLP Agreement”.
There are default provisions on how an LLP will operate which are set out in the LLP Regulations, but these will rarely apply as in most cases they are overridden by what is set out in the LLP Agreement.
It is important to recognise that the LLP Agreement is not simply the document labelled ‘LLP Agreement’.
The LLP Agreement is much wider than that document and includes not only written agreements but it also includes verbal or implied agreements.
The LLP Agreement includes any agreement that governs:
- The relationship between members of the LLP
- The relationship between the LLP and its members
It does not include agreements between the LLP and non members or between members and non members.
The document labelled ‘LLP Agreement’ may contain a clause saying that it is the entire agreement between the members. This may not be correct in all cases however, as that agreement can be amended by any subsequent agreement entered into.
For example, when a new member joins the LLP, there may be a specific agreement between the individual and the LLP, this is sometimes called the ‘deed of adherence’, and is part of the LLP Agreement.
When asking for a copy of the LLP Agreement it is worth making it clear that it is the agreement as defined in regulation 2 of the LLP Regulations 2001 and therefore that any side agreements and amendments ought to be disclosed as well. This might include minutes of meeting of the LLP or of boards and committees that regulate the conduct of the LLP or decide upon issues that govern the relationship of the LLP and its members, e.g. remuneration/ management committees, etc.
When looking at a particular member it is important to ask for a copy of any deed of adherence under which they became a member as well as any other written or oral agreements that they have entered into with the LLP.