Salaried Member: Condition A: Relevant arrangements
Condition A is applied on the basis of the “relevant arrangements” in place.
This means those arrangements under which amounts are to be, or may be, payable by the LLP in respect of that member’s performance of services for the LLP in their capacity as a member of the firm.
For guidance on whether something is in the capacity of member see ESM60025.
What are “arrangements”?
“Arrangements” include any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable).
A broad and realistic view should be taken in deciding what constitutes the arrangement. This should take into account the commercial intentions and expectations of the parties, for example, the overall financial reward that the member expects to obtain when becoming a member or when negotiating terms with the LLP on how they expect to be rewarded.
Regard should be had to the financial position of the LLP and the terms and conditions under which the individual is to be remunerated, as well as any understanding between the individual and the LLP or its investors. The budget, cash flow forecast, financial projections and documentation provided to any bank may need to be considered as well as any arrangements (formal or informal) relating to the payment of bonuses or profit share allocations to the individual or others in a similar position.
An arrangement continues until such time as the arrangement changes (at which point a new arrangement is created) or until the arrangement was expected to end or be modified. Further guidance can be found on this point at ESM61020.